A RESOLUTION supporting negotiations with the Seattle-Chinatown International District Preservation and Development Authority for a possible agreement under which the City would guarantee repayment of approximately Twelve Million Dollars ($12,000,000) of debt to be issued by the Authority.

WHEREAS, the Seattle-Chinatown International District Preservation and Development Authority (the "Authority") was chartered by the City of Seattle pursuant to RCW Chapter 35.21 and SMC Chapter 3.110 to conserve and renew the unique cultural and ethnic integrity characteristic of the International District in Seattle; and

WHEREAS, the Authority completed International District Village Square Phase I ("IDVS I"), which provides low-income elderly housing, a small retail space component, parking facilities, and offices for five nonprofit agencies; and

WHEREAS, the City guaranteed Nine Million Dollars ($9,000,000) principal amount of debt issued by the Authority with respect to IDVS I, of which Eight Million Four Hundred Sixty Thousand Dollars ($8,460,000) is still outstanding; and

WHEREAS, the Authority is ready to construct Phase 2 of the Village Square development, consisting of 57 units of housing for low income families, a new branch of the Seattle Public Library, a new community center/gym operated by the City's Department of Parks and Recreation, new retail, street improvements, and a parking garage (the "Project"); and

WHEREAS, the Project will benefit the International District, and the City of Seattle as a whole, by providing the first low-income, largefamily housing complex in the central city, as well as an attractive anchor to the southeast entrance of the International District neighborhood; and

WHEREAS, the cost of developing the Project is approximately Twentyfive Million Dollars ($25,000,000), of which the City has already committed to providing Two Million Five Hundred and Fifty Thousand Dollars ($2,550,000) from the voter-approved 1995 Housing Levy, Two Million One Hundred Thousand Dollars ($2,100,000) from the voterapproved 1999 Community Center Levy, Two Hundred Eighty-nine Thousand Dollars ($289,000) from the voter-approved Libraries for All bonds; Two Hundred and Fifty Thousand Dollars ($250,000) from the Opportunity Fund from the 2000 Parks Levy, and One Hundred Ninety-nine Thousand One Hundred Forty-six Dollars ($199,146) from the Neighborhood Matching Fund; and

WHEREAS, the Authority has requested that the City facilitate financing the Project development cost by guaranteeing repayment of approximately Twelve Million Dollars ($12,000,000) principal amount of debt to be issued by the Authority for the Project, of which approximately Six Million Two Hundred Thousand Dollars ($6,200,000) would be short-term debt and approximately Five Million Seven Hundred Thousand Dollars ($5,700,000) would be long-term debt; and

WHEREAS, the City's guaranty would significantly reduce the Authority's borrowing costs, thereby enabling the Authority to provide the greatest benefits to the community in furtherance of its public purpose; NOW, THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE, THE MAYOR CONCURRING, THAT:

Section 1. The Mayor or his designee is hereby authorized to enter into negotiations with the Authority for an agreement and necessary ancillary documents, all subject to the conditions described in Section 2 below, under which the City would guarantee repayment of approximately Twelve Million Dollars ($12,000,000) principal amount of debt to be issued by the Authority to pay part of the cost of development of the Project.

Section 2. The debt guaranty agreement described in Section 1 of this Resolution shall be reviewed by the City's Director of Finance, who will assess the financial viability of the Project and financial risks for the City, and also will determine whether the following conditions are met:

a) The Project's funds are sufficient to cover all development costs.

b) All non-City Project funds will be available when needed to meet development costs.

c) Construction cost estimates are reasonable, and a minimum five percent (5%) contingency is built into the Project's development budget.

d) On-going Project revenues will be sufficient to cover all operating costs.

e) At least a 1.05 debt coverage ratio will be maintained over the life of the debt issued to finance the Project.

f) The Project can establish and maintain reasonable debt service reserves with respect to debt issued to finance the Project.

g) The Project can establish and maintain reasonable levels of operating and replacement reserves.

In addition, the Director of Finance will determine how the Project affects the City's liability under the existing City guaranty of debt issued by the Authority for IDVS I.

Section 3. Upon the successful completion of negotiations, preparation of a debt guaranty and review by the Director of Finance, the Mayor shall submit to the City Council for its approval or disapproval a proposed ordinance, with the recommended debt guaranty agreement and the report of the Director of Finance attached, authorizing the City to guarantee repayment of debt issued by the Authority for the Project and authorizing the Mayor or his designee to execute necessary documents in connection with such guaranty.

Adopted by the City Council the _____ day of _______________, 2002, and signed by me in open session in authentication of its adoption this _____ day of _______________, 2002.

________________________________________

President __________________of the City Council

THE MAYOR CONCURRING:

________________________________________

Gregory Nickels, Mayor

Filed by me this _____ day of _______________, 2002

________________________________________

City Clerk

Seal

Oscherwitz/AR

VillageSquare Debt Guaranty 2002 Reso.doc

June 6, 2002

Version 2