SPECIAL MEETING AGENDA PACKET - Laserfiche WebLink

POLICY QUESTION #1: If the JDEDZ is adopted, should the City allow hotels (up to 231 rooms) to operate within the EDZ prior to the construction of all transportation network improvements? Or, if the JDEDZ is adopted, should all transportation network mitigation measures be in place before any new use can operate? FINANCING PLAN OPTIONS FOR TRAFFIC AND TRANSPORTATION MITIGATION MEASURES As described above, the total cost of the transportation mitigation measures is approximately $21.5 million. Of this amount, $1.5 million is the estimated cost to acquire the right-of-way required to accommodate some of the mitigation measures such as the widening of Johnson Drive. As previously noted, the actual right-of-way required will be determined during the project design phase. Thus, the exact cost of the right-of-way is not yet known. As a result, the funding scenarios discussed below for the transportation mitigation measures address the design and construction costs separately from the right- of-way costs. Developers' Ability to Fund $21.5 Million in Transportation Improvements The City contracted with Century Urban, a real estate and development economics consulting firm, to determine the extent to which Nearon Enterprises (Nearon), the current primary landowner in the JDEDZ, would be able to absorb the costs to construct the transportation improvements required to redevelop the property in the JDEDZ. Century Urban reviewed Nearon Enterprises' financial pro forma for the JDEDZ projects and concluded that Nearon Enterprises will require an outside financial contribution to construct the necessary transportation improvements in order to make development of Nearon Enterprises' parcels financially feasible. Without such assistance, Nearon Enterprises would not be able to develop their parcels in the JDEDZ as proposed. At this time, Costco is expected to purchase Parcel 6 within the JDEDZ project area, currently owned by Nearon, and would be the club retail land use identified in the DSEIR. Costco is expected to generate much of the JDEDZ's traffic impacts. As such, staff also asked Century Urban to assess Costco's ability to fund the transportation improvements identified in the DSEIR. Century Urban concluded that Costco will require partial reimbursement of an upfront contribution to construct the transportation improvements identified in the DSEIR, in order to ensure the Costco project is financially feasible. Proposal to Fund $21.5 Million in Transportation Improvements Before discussing the alternatives, it is important to note that in all funding scenarios the City is benefitting financially (the Fiscal Impact Analysis prepared for the JDEDZ indicates that the JDEDZ is anticipated to generate net revenues of approximately $2.1 million to $2.3 million annually at full buildout'). Therefore, it is in the City's interest to participate in funding the necessary transportation improvements. Since discussions began with Nearon Enterprises and Costco, Nearon has pulled back from the proposed JDEDZ and has offered Costco an option to purchase the larger of the two sites Nearon owns (Parcel 6). That leaves the City and Costco as partners to fund and In Fiscal Year 2015/2016 dollars. Page 10 of 16