Memorandum

City of Lawrence

City Manager’s Office

TO:	David L. Corliss, City Manager
FROM:	Cynthia Boecker, Assistant City Manager
CC:	Ed Mullins, Finance Director
Date:	December 20, 2007
RE:	Recommendation of Springsted for Financial Feasibility Services related to the proposed Oread Inn TIF

Kansas statute requires as part of any tax increment financing (TIF) project, completion of a feasibility study.  A funding agreement between Triple T, LLC, the developer of the proposed Oread Inn, and the City of Lawrence was approved November 27 whereby the developer agrees to fund the City’s costs associated with bond counsel work and the feasibility study for this project.

Following execution of the funding agreement, a Request for Proposal for Financial Services was issued.  Three responses to the RFP were received and reviewed by Finance Director Ed Mullins and myself.  The RFP and responses (Development Strategies, Real Estate Research Consultants, and Springsted Incorporated) are attached. 

Based on review of the responses, it is recommended that Springsted be hired to complete the financial feasibility study relating to the proposed Oread Inn TIF.  Springsted is the City’s current financial advisor and completed the analysis of the 900 block of New Hampshire TIF.  This study is attached.  While the private redevelopment of this project did not occur as anticipated, analysis of the proposal was thorough.

Springsted’s proven understanding of the municipal market is particularly important in the review of proposed methods of financing the public assistance.  The RFP includes examination of potential funding mechanisms and a proposal of alternatives to limit the overall risk and exposure to the City’s tax base.

The proposal includes an alternative to complete a financial needs analysis, commenting on the reasonableness of the profit/return considering the type of project, current market conditions and developer at risk equity. 

The work is proposed to be completed in two weeks.  This will provide the analysis prior to the January 30 anticipated completion date outlined in the draft TIF calendar.  The proposed price for the analysis is $11,000, including the financial needs analysis.  As noted above, these costs will be paid by the developer through the funding agreement.  The developer will subsequently be reimbursed by TIF revenues if the project is completed.

While this work falls within the approval authority of the City Manager, City Commission review and approval is sought due to the unique nature of this project.