Let's start with the relevant information information gleaned from the "Discussion of Juniper Ridge Costs and Financings Needed Issue Summary":
Juniper Ridge Costs to Date
The Juniper Ridge fund has incurred $12.6 million to date as follows (see attached
Detail of Juniper Ridge Costs Through FY 07-08):
FY05-06 thru FY07-08
Construction of infrastructure (Cooley impvs, pump station,
utilities & Les Schwab SDCs ) $ 8,291,388
Payment to Juniper Ridge Partners (per MOU sect 11.5) 2,500,000
Legal and consulting 923,463
Personnel and overhead costs 917,033
Total incurred and required $12,631,884
Note the bolded part: Les Schwab SDCs. We'll come back to that.
We also get this:
(1) The Les Schwab property sale is expected to close within the next few months with proceeds of $3 M to $3.2M.
If we look at the related document, "Detail of Juniper Ridge Costs Through FY07-08", we see the exact amount of the Les Schwab SDCs being paid by the city taxpayers: $474,120
So we know that the expected proceeds from the first sale are $3M to $3.2M, and that the SDCs are being waived, i.e. the city is paying them, not Les Schwab.
Now lets take this and see how it relates to the actual "Agreement of Purchase and Sale". First we see:
The Purchase Price of Phase 1 is the product of the number of
square feet contained in Phase 1 as determined by the Survey
(see Paragraph 5) multiplied by $7.00; provided, Seller has the
right to elect the Alternate Phase 1 Purchase Price as discussed
in Paragraph 1.2. The Purchase Price for Phase 2 is the product
of the number of square feet contained in Phase 2 as
determined by the Survey multiplied by $7.00; provided if the
Phase 2 Closing Date designated by Buyer is after the first
anniversary of the Phase 1 Closing Date, then the Purchase
Price of Phase 2
Hmmm, what is this "Alternate Phase 1 Purchase Price"??
1.2 Alternate Phase 1 Purchase Price. Seller has the right, by written notice given no later than the earlier of March 31, 2007 or ten (10) days following the date the Contingency Removal Notice is given, to require that the Purchase Price for Phase 1 shall be $6.00 per square foot of Phase 1 as shown on the Survey (the "Alternate Phase 1 Purchase Price") rather than $7.00 per square foot. If Seller timely elects the Alternate Phase 1 Purchase Price, then Paragraph 4.7.2 below shall be applicable.
So the City has the right to decide whether to charge $6 or $7 per square foot. Why would it charge less? Well, looking further we see:
4.7.1 Generally. It is the intent of the parties that, except only as provided in Section 4.7.2 below, Buyer will not be required to pay any additional amounts for off-site infrastructure, will not be required to pay any amount regarding any present or future local improvement districts, and will not otherwise be asked to pay any amount for present or future development of Juniper Ridge or other properties. Buyer will be responsible for all the cost of all service connections and customary connection charges for utilities. Except as provided in Section 4.7.2 below, Seller, not Buyer, shall pay all such amounts that would otherwise be payable by Buyer, including all System Development Charges (SDC's) applicable to the Property and its development or use, within ten (l0) days of request by Buyer. If any such additional amounts are requested from or charged to Buyer or are assessed against any part of the Property, Seller shall pay the same within ten (10) days of request by Buyer. The Purchase Price for the Property has been negotiated on the basis that Buyer shall not be responsible for any such amount and that Seller shall pay all such amounts. However, it is understood that Buyer, not Seller, shall pay, on the same basis as do other owners, typical land use application fees, building permit fees and the cost, if any, of special inspections. Buyer, not Seller, is responsible to obtain required land use and building permits and for the cost of any appeals of such permits.
4.7.2 Payments for Phase 1. If Seller timely elects use of the Alternate Phase 1 Purchase Price, then, notwithstanding Paragraph 4.7.1 above, Buyer shall pay up to $525,000 of SDC's applicable to Phase 1 and Seller shall pay all SDC's, if any, applicable to Phase 1 above $525,000.
So this difference in price is related to the SDC issue.
Let's summarize: If $6, Les Schwab pays up to $525,000 in SDCs; if $7, the City pays all SDCs.
Read this through and it looks like the city pays for everything but the building itself and the related landscaping. Sweet deal! And one I'm sure every future potential tenant of Juniper Ridge will be asking for.
OK, now let's do a little math. From the Annexation Map we know that the first parcel is 524,610 sq. ft. So what are the potential proceeds?
524,610 * $6 = $3,147,660
524,610 * $7 = $3,672,270
So, since the city is expecting $3 to $3.2 million, it must be $6 per square foot, right? Meaning the city has elected to use the Alternate Purchase Price.
But if so, Les Schwab is responsible for paying the SDCs, up to $525,000.
Yet, the city has budgeted for paying $475,000 in SDCs.
That is what puzzles me.
I calculated the estimated SDCs on a 120,000 sq. ft. office building using the current SDC rates and came up with roughly $475,000, which matches what the city is budgeting.
Which makes it even more puzzling.