Consider First Amendment to Development Management Contract

On April 1, 2011, the HRA executed an agreement with Landform Professional Services to provide development management services within The COR.  This is a two-year agreement running from April 1, 2011 through March 31st, 2013.

This contract covers both administrative and incentive-based compensation for services performed.

Outlined in this contract are several provisions and calculations for how incentive-based compensation is paid on deals completed under this agreement. Total compensation is based on the total development costs of a given project, but compensation is reduced or deferred in a number of ways depending on the size, phasing, and/or level of public participation.

While there was an adjustment for public subsidies in the existing contract, there was no adjustment for any public financing on a given project.

At the request of Councilmember Tossey, the development manager has considered and prepared an amendment to the current agreement that adds an additional factor for projects that are brought forward and receive public financing.

Essentially, the total fee is calculated as under the current contract, but a pro-rata portion of the fee is deferred until such time as any financing is repaid to the City.

For example:

• A $1,000,000 project received $500,000 in public financing.
• The normal DM fee would be approximately $20,000
• Under the current agreement, the entire $20,000 would be paid out at execution, closing, and CofO.
• Under the proposed amendment, a maximum of $10,000 (50% withheld) could be paid until the public loan is repaid.
• If loan repayment is made over time, the withheld portion of the fee would be paid at the same pro-rata basis.

The development team recommends the HRA consider the proposed amendment and, is acceptable,  direct staff to execute the proposed amendment.

Land Sale Proceeds

Approve Amendment #1 of the Development Management contract and direct staff to execute the agreement.