Title
Amend Agreements with HPPC, LLC and Park Central Community Facilities District (Ordinance S-50400)
Description
Request to authorize the City Manager, or his designee, to amend agreements with HPPC, LLC and the Park Central Community Facilities District to modify terms pertaining to the City’s contribution of Transaction Privilege Tax (TPT) necessary to satisfy Assessment Bonds issued by the Park Central Community Facilities District (CFD).
Report
Summary
In 2018, the Owner and Developer of the former Park Central Mall located at 3100 N. Central Ave. (Site), HPPC, LLC (HPPC) applied to the City Council for the creation of a CFD upon the 36 acres of the Site under its control in order to facilitate bond financing of a parking facility that would allow for the mixed-use redevelopment of the Site. Council approved the creation of the CFD and an Intergovernmental Agreement (IGA), Contract 149553-IGA as amended, between the City, HPPC and the CFD to allow for issuance of $30 million in Assessment Bonds (Bonds) by the CFD in order to construct the Catalina Drive Parking Garage located at 150 W. Catalina Drive, which opened in October 2020. The Bonds are backed by revenues from long-term user agreements with surrounding entities such as Dignity Health, Creighton Medical School and other Park Central tenants. In order to support HPPC’s redevelopment of the Site, Council authorized a contribution of site-generated TPT for a term of 25 years toward bond re-payment.
Following the creation of the CFD, HPPC has carried out a large-scale redevelopment of the Site, turning Park Central from a failed shopping mall into a dynamic mixed-use destination with renovation of the mall into office space, new retail tenants and redevelopment of the former parking field into Creighton Medical School, multi-family apartments, additional retail and a 207-room Hilton-branded hotel planned to open next year. To date, HPPC has been responsible for a capital investment of $300 million at Park Central.
Another 11 acres of the Site is planned for future redevelopment generating revenue benefiting bond re-payment. Unfortunately, due to a recent change in State Law, anticipated future site-generated TPT amounts from rental residential housing will not be collected and remitted to repay the Bonds. For this reason, staff requests a modification to the terms of the City’s contribution of TPT. Currently 100 percent of the City’s portion of site-generated TPT is remitted to the CFD for Years 1-6 of the agreement. In Year 7, beginning in Fiscal Year 2025-26, the portion is reduced to 50 percent through the conclusion of the 25-year term. Staff requests the portion be raised to 100 percent for Years 7-25. All other terms and conditions shall remain unchanged.
The change in term will match most of the infrastructure development agreements approved by Council in the last five years as has staff requested 100 percent of the TPT in these agreements for the entire term.
Financial Impact
Staff anticipates the Site-generated City-share of TPT remitted to the CFD will increase by $500,000 annually by raising the portion from 50 percent to 100 percent for Lease Years 7-25. It is important to note that the City owns the parking garage which was constructed by the bond funds of the CFD and will continue to own the garage at the end of the term of the agreement.
Concurrence/Previous Council Action
Council authorized the creation of the CFD (Resolution 21669) and the Intergovernmental Agreement (Ordinance S-44953) at the Aug. 29, 2018 Formal Council Meeting.
Location
The Site includes 10 individual parcels, collectively known as Park Central located at 3100 N. Central Ave. The Catalina Parking Garage owned by the CFD is located at 150 W. Catalina Drive.
Council District: 4
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.