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Mr. Beaudin outlined the location of the project and reviewed the goals and objectives for the JDEDZ, including economic vitality, infrastructure improvements, and financial stability for the City. The phasing of the project was also discussed; particularly Phase I. Costco has stated their interest in the property identified as Parcel 6. Phase I development will trigger transportation improvements. An image was displayed which outlined the five distinct transportation improvements and their related cost estimates. The improvements would be designed to handle full build-out of the entire project. The total for transportation improvements is approximately $21.47 million. The five component costs are similar to other Capital Improvement Projects the City has successfully undertaken. Finance Director Olson provided further information regarding the financing feasibility for the traffic improvements. The City hired Century Urban to analyze Costco's ability to fund 100% of the transportation improvements costs. A summary spreadsheet was displayed which included projections for years one through six. The design and construction versus right of way costs were displayed. The City is proposing to finance the project with Transportation Development Impact Fee, sales tax sharing with Costco, Costco cash contribution, and right of way not funded by the Transportation Development Impact Fee. The various finance methods were detailed. The estimated total net annual tax revenues from Phase 1 were presented. Councilmember Brown inquired regarding the proposed sales tax sharing and whether it would pay down the $6.78 million. Ms. Olson provided various comparisons for the sales tax projections. The right of way acquisition funding methodology was presented along with the proposed dedications from other properties. The transportation costs by land uses slide was displayed. The JDEDZ Transportation Fee was discussed including noting the City would recover some of its investment which will reduce the amount owed to Costco for tax sharing. Ms. Olson presented the various methods other cities utilize to encourage economic development including special districts (Mello Roos), Tax Increment Financing Districts, Special Improvement Districts, Lease Revenue Bonds or Certificates of Participation, and Tax sharing programs. She provided a history of the City's various assessment districts. The funding options were presented including sales tax sharing (staff's top preference), City inter-fund loan, issuance of bonds/secure bank loan, and the option of not financing the project. The impacts of each option were presented. Responses to comments and questions from the August 29, 2017 City Council Workshop were presented including the comment that the Costco sales tax projections were overoptimistic. The financial information was displayed. There was an impact related to foreign sales and gas prices. Costco's audited financial reports, when adjusted to account for those items, showed projected increases in sales growth. Ms. Olson presented other methods cities have provided assistance to Costco, of which most has been through sales tax sharing. She noted that the sales tax sharing agreement will not exceed 25 years regardless of any outstanding monetary obligations owed to Costco by the City and that the City has no liability to pay outstanding monetary obligations to Costco if their operations cease within the City. Cost overruns would be paid with the City's TIF and the other remaining projects would be funded equally by the City and Costco. Councilmember Narum inquired whether there are minimum annual payments required from the City to Costco, or whether the payment it just a portion of the sales tax receipts. Staff confirmed it is only the 40% payment from sales. If the JDEDZ is not completed City Manager Fialho stated that monies would flow back to the TIF fund balance and the City Council would decide what to do City Council Minutes Page 2 of 6 September 18,2017