Pursuant to M&C C-26348, approved by the City Council on July 16, 2013, the City entered into a 10-year Tax Abatement Agreement (City Secretary Contract No. 44750) with Elan West 7th, L.P. (Company) for the construction of a multi-family development at 2726 Mercedes Avenue, consisting of apartments and townhomes with at least 374 units and a parking garage with at least 498 spaces (Development).
The Company now wishes to sell the Development to AM INT West 7TH Owner, LLC (Purchaser). As part of the sale, the Company has requested an assignment of the Tax Abatement Agreement to the Purchaser, so that the Purchaser may continue to receive the tax abatements for the remainder of the term of the Tax Abatement Agreement. Section 12 of the Agreement prohibits the Company from assigning, transferring or otherwise conveying any of its rights or obligations under the Tax Abatement Agreement to another party without the consent of the City Council.
As a condition to the zoning approval for the Development, Company submitted a list of development standards to which it agreed to abide by including a promise to adopt First Flight Park. On December 8, 2015 (M&C C-27547) the City Council authorized the execution of a License Agreement (City Secretary Contract No. 47367) with Company to construct improvements in First Flight Park and Linwood-Jesse D. Sandoval Park. As a condition of the License Agreement, Company was required to execute an Adopt-A-Park Agreement (City Secretary Contract No. 47359) for maintenance of First Flight Park until September 30, 2115. The Adopt-A-Park Agreement required Company to provide the City with a letter of credit in the amount of $500,000.00 to guarantee that the improvements in First Flight Park will be maintained if the Agreement is terminated.
As part of the Development sold to Purchaser, the Company has requested to terminate the License Agreement and the Adopt-A-Park Agreement. The Company and Purchaser have agreed that the Purchaser will pay the City $500,000.00 in lieu of the City enforcing the letter of credit. City staff will administratively execute the termination agreements for the License Agreement and the Adopt-A-Park Agreement. The $500,000.00 early termination fee will be used for the continued maintenance of First Flight Park.
The Company has constructed the required improvements, as set forth in the Tax Abatement Agreement and License Agreement, and the Purchaser will be required to meet all ongoing obligations of the Company for the Tax Abatement Agreement. The City will continue to receive the public benefits resulting from development of these projects.
This project is located in COUNCIL DISTRICT 9.