Form revised February 6, 2008

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	DOF Analyst/Phone:
Office of Economic Development	Ken Takahashi/684-8378	Kristi Beattie/684-5266

Legislation Title:

AN ORDINANCE relating to economic and community development; authorizing a loan of federal Section 108 loan proceeds to finance acquisition and development of 9800 40th Avenue South and refinance existing debt; appropriating and authorizing the disbursement of Brownfields Economic Development Initiative grant ("BEDI Grant") funds to provide loan loss reserves on the loan and to finance project costs; authorizing loan documents, amendments, replacements and related documents and actions; appropriating and authorizing the collection of loan origination fees associated with the loan; and authorizing amendments to the City's 2005-2008 Consolidated Plan to reflect the transactions contemplated by this ordinance; all by a three-fourths vote of the City Council.

· Summary of the Legislation:

This legislation authorizes OED, on behalf of the City, to make a $3,785,000 Section 108 loan to finance development costs of the Alpha Cine project in Southeast Seattle, which will help retain a motion picture laboratory business in Seattle that is important to the local film industry by financing the acquisition and development of approximately 28,000 square feet of industrial/commercial space at 9800 40^th Avenue South in Southeast Seattle.  This legislation also authorizes the disbursement of companion Brownfields Economic Development Initiative (BEDI) funds in the amount of $757,000 to serve as a loan loss reserve and to cover  project costs, and provides appropriation authority for a loan origination fee to be paid to the City.  This legislation authorizes the appropriation and disbursement of federal Brownfields Economic Development Initiative grant (“BEDI Grant”) funds in the amount of $757,000.  The BEDI Grant will be used to provide loan loss reserves on the loan and to finance project costs.  This legislation authorizes the appropriation of a loan origination fee of no more than one percent (1%) of the loan amount, which is no more $37,850. The loan fee is deposited to the Special Purpose Grants Fund (17820), and may be applied to legal and other costs related to the administration of the transaction authorized by this ordinance, and/or applied to payment of expenses incurred in the administration of any federally funded economic development loan projects or programs administered by the OED Director. 

· Background: Loan proceeds will come from a previously approved federal Section 108 loan fund in the amount of $10 million (Ordinance 122139).  The Alpha Cine project will be financed under the $10 million loan fund.  The Executive Director of the Rainier Valley Community Development Fund (RVCDF) is recommending that the RVCDF participate as a lender in this transaction in a shared position with the City, subject to RVCDF Board and Loan Committee’s approval.  Under the proposed arrangement, the RVCDF would purchase $250,000 of the City’s Section 108 loan.  Alpha Cine would pay debt service on the entire $3,785,000, and OED would direct debt service payments to CDF in an amount corresponding to CDF’s participation.

BEDI Grant funds will come from a previously approved companion BEDI grant in the amount of $2 million.  The loan origination fee of no more than one percent (1%) of the loan amount is paid to the City by Lake Dell, Inc., a Washington corporation doing business as Alpha Cine Labs.

· Please check one of the following:

____ This legislation does not have any financial implications.

__x__ This legislation has financial implications.

Appropriations: 

Fund Name and Number	Department	Budget Control Level*	2008 Appropriation	2009 Anticipated Appropriation
Special Purpose Grants Fund (17820)	Office of Economic Development	OED – HUD Special Grants (6XD20)	$757,000	0
Special Purpose Grants Fund (17820)	Office of Economic Development	OED – HUD Special Grants (6XD20)	$37,850	0
TOTAL			$794,850

Notes: 

Proceeds of the $3,785,000 Section 108 loan will be deposited directly by HUD to the City’s trustee/custodian known as The Bank of New York (“Custodian”).  Also, proceeds from the BEDI Grant in the amount of $757,000 will be deposited by the federal Treasury Department to the City, and the City will then deposit such funds with the Custodian.  According to an agreement with the Custodian, the City will direct the Custodian to disburse Section 108 and BEDI Grant funds to the borrower, and the Custodian will also be authorized to receive loan repayments from the borrower.

Anticipated Revenue/Reimbursement: Resulting From This Legislation:

Fund Name and Number	Department	Revenue Source	2008 Revenue	2009 Revenue
Special Purpose Grants Fund (17820)	Office of Economic Development	BEDI Grant Funds	$757,000
Special Purpose Grants Fund (17820)	Office of Economic Development	Loan Origination Fee	$37,850
TOTAL			$794,850

Notes:

Of the $2 million BEDI Grant awarded by HUD to the City, $757,000 is allocated for use in the Alpha Cine project.  HUD calculates the allocable amount of BEDI Grant funds to this project by determining the proportion of the Section 108 note to be disbursed to the total amount of Section 108 loan guaranty.  This percentage is then applied to the total amount of the BEDI Grant.  This legislation includes approval of the disbursement of $3,785,000 in Section 108 loan funds of the total $10 million loan fund, or 37.9% which when applied to the total BEDI Grant, results in $757,000 being allocated to the City.

Total Regular Positions Created, Modified, Or Abrogated Through This Legislation, Including FTE Impact: 

Position Title and Department	Position # for Existing Positions	Fund Name & #	PT/FT	2008 Positions	2008 FTE	2009 Positions*	2009 FTE*
N/A
TOTAL

Notes:

· Do positions sunset in the future? N/A 

Spending/Cash Flow:

Fund Name & #	Department	Budget Control Level*	2008 Expenditures	2009 Anticipated Expenditures
N/A
TOTAL

Notes:

· What is the financial cost of not implementing the legislation?  There is no financial cost for not implementing the legislation.  The cost would be measured in terms of unachieved public benefits in Southeast Seattle.

· What are the possible alternatives to the legislation that could achieve the same or similar objectives?  None.

· Is the legislation subject to public hearing requirements:  Yes. A public hearing will be held before Council committee consideration of this ordinance.

· Other Issues: None.

Please list attachments to the fiscal note below:  N/A