HomeMy WebLinkAboutNB 1 LTR UNDERSTNG 09-07-93AGENDA
NEW BUSINESS NO. 1
9-7-93
uATE:
SEPTEMBER 7, 1993
inter-Com
TO' WILLIAM. A. HUSTON, EXECUTIVE DIRECTOR & CITY MANAGER
FROM: COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: LETTER OF UATDERSTANDING WIT~ MICRO CENTER
RECOMMENDATION
It is recommended that the City Council and Redevelopment Agency
approve a LeTter of Understanding with Micro Center regarding Micro
Center's request for financial assistance and authorize the City'
Manager/Executive Director to sign and transmit to Micro Center the
attached lesser.
Fisc
While the proposed Letter of Understanding provides general terms
for negotiat±ng a future Disposition and Development Agreement, the
proposed financial assistance program recommended to be provided to
Micro Center could result in assistance payments of up to $638,000
in 1993 present value over a 10 year time frame at an 8% discount
rate. Assistance payments will be made on an annual basis by the
City and/or Agency provided certain sales tax thresholds are
achieved by Micro Center. Ir'is projected that the City's General
Fund could receive sales tax revenues ranging from $2.4 million to
$4.9 million dollars from Micro Center over 10 years.
BACKGROUND
Micro Electronics, Inc. ("Micro Center") has specifically requested
City and/or Redevelopment Agency financial assistance to assist
them in offsetting extraordinary costs in their anticipated opening
of a Micro Center facility at the southwest corner of Edinger
Avenue and Del Amo Avenue in the City of Tustin.
Micro Center operates a chain of 40,000 square feet and up retail
personal computer sEores and is based in Columbus, Ohio. Micro
Center desires to open an approximately 40,000 square foot store in
Southern Ca2ifornia. Catellus Development Corporation owns a
parcel ("Cateltus parcel") at 1100 Edinger Avenue within the City
of Tustin. Micro Center wishes to open a new store on this parcel
by leasing the site from Catellus.
City Council Report
Letter of Understanding with Micro Center
September 7, 1993
Page 2
Unfortunately, Micro Center is under a major time constraint. They
want City approval of building permits by September 8, 1993 and
would intend opening their new facility'by November 1, 1993. They
are requesting approval by the City and/or Agency of at least a
letter outlining the general fundamental principles which might
apply to an Agency/City assistance program for Micro Center. Such
a letter would set the parameters for preparation of a Disposition
and Development Agreement (DDA) to be completed within the next 90
days. They have requested approval of the requested letter of
understanding prior to pulling building permits on September 8,
1993. While a letter of understanding is not a legally binding
contract, there are a number of advantages to its use.
·
Micro Center would have more comfort in proceeding with the
lease of the Catellus owned parcel and start of construction
on the subject site;
·
The Agency/City Council would have an opportunity to review
and approve the general business terms that would be
anticipated in a DDA on the subject project before significant
staff time and attorney expenses were spent in completing a
DDA for the project.
Attached for City Council/Agency consideration is a draft letter of
understanding for the project which has been reviewed by the City
Attorney's office. A summary of staff's justification for
assistance as well as terms of the letter of understanding are as
follows:
Justification for Assistance
Prior to staff's consideration of any financial assistance for the
project, a substantial-amount of financial information and data on
the proposed project was requested from Micro Center including
Micro Center's 10 year cash flow analysis for the project. Micro
Center were also asked to provide an estimate of the sales volumes
that could be expected from the project.
Ail financial information for the project including an analysis of
Micro Center's justification or need for assistance have been
reviewed by the Agency's financial real estate consultant, Kotin,
Regan and Mouchly, Inc. (KRM).
The essential terms o~ the Micro Center - Catellus transaction are
summarized as follows:
City Council Report
Letter of Understanding with Micro Center
September 7, 1993
Page 3
.
Micro center will lease the site at 1100 Edinger Avenue in
Tustin from Catellus for fifteen years at a rental rate
starting at approximately $7.14 a square foot per year.
·
Catellus will Provide Micro Center with approximately
$1,251,200 in construction funds to partially finance building
and site improvements.
.
The preparation and ~evelopment costs for the Tustin Micro
Center facility are estimated at $4.27 million to bring the
existing building up ~o Micro Center's current specifications
and ready for retail operations.
.
After giving credit for the $1,251,200 million construction
funds provided by Catellus, it appears that Micro Center is
projecting excess ccsts of approximately $763,000 in the
development of their store in Tustin (Exhibit 1). Not all of
the excess costs are cnes which would necessarily be included
in an assistance pro~ram. For instance, Micro Center has
stated that pre-opening costs for Micro Center in Tustin are
attributable to generally high cost levels in California and
the long distance from the corporate home office. Since these
costs would apply unSformly throughout California, the case
for including them in a total assistance program is weakened.
Based on the above factors, any assistance program should be
based only on those excess costs identified at this time,
excluding excess pre-opening expenses that are not related to
site development.
Based on staff and KRM's investigation of the issue of need on the
part of Micro Center, it a~pears that a case can be made for there
being a need for Micro Cen%er to receive some level of City/Agency
assistance in order to induce them to proceed with their
development of a store in Tustin and that it is in the
City's/Agency's best economic interest to do so.
The key assumptions on which staff and KRM findings are based are
as follows:
·
Micro Center's normal $2.2 million allowance for "development
costs" (which include certain pre-opening expenses) for its
prototype store are for improvements beyond those that would
be provided by their landlord within the $7.00 per square foot
per year rent they budget for a prototype.
City Council Report
Letter of Understanding with Micro Center
September 7, 1993
Page 4
.
The as-is former Builder's Emporium store, with the $1.2
million in improvements the Catellus Development Corporation
is willing to fund, has a rental market value in the $7.00 per
square foot per year range. Catellus could expect to obtain
that level of rent from an alternative tenant and would not be
compelled to make rent concessions below that amount for Micro
Center.
·
Micro Center has a reasonable likelihood of achieving its goal
of paying rent of not more than approximately $7.00 per square
foot per year for an alternative site in an equivalent market
area in California.
.
The volume of sales which Micro Center is likely to generate
would be substantially higher than an alternative lower-
volume, higher-margin retailer or other tenant which would not
need City assistance with development of this property. Micro
Center is willing to guarantee taxable sales volumes of $25
million and have indicated that they project that sales could
range from $40 - 60 million.
The levels of sales which Micro Center appears to have achieved at
its best performing stores elsewhere in the country, and the level
of sales it projects for Tustin, would make it one of the best
possible retailers from the standpoint of sales tax revenue
generation for the City as long as point-of-sale subventions from
the State continue.
Specific economic need not withstanding, in today's environment, it
would be difficult for any city to pursue a new retailer of Micro
Center's potential without some form of assistance.
Assistance Proqram
In structuring a financial assistance program for Micro Center, KRM
suggested the following criteria in judging any assistance package
for any retail development in a redevelopment area:
Will the City receive benefits from the assisted development
which are in excess of benefits which would be derived from an
unassisted project?
2. Are .excess benefits truly new benefits to the City?
City Council Report
Letter of Understanding with Micro Center
September 7, 1993
Page 5
.
Will it cost the developer more or will the City/Agency incur
higher risk to produce the project which yields greater
benefits for the City?
Can the assistance to the developer be fully funded from a
portion of the excess benefits which the City derives from the
assisted development project?
·
After all assistance has been funded, will the City retain at
least a majority of the excess benefits being generated?
·
In the absence of any excess benefits to the City, will there
be no obligation by the City to fund assistance?
Because an assistance program for Micro Center meets the above
criteria, Agency staff and KRM believe that it would be fair,
justifiable and defensible to assist the project. A suitable level
of protection for the City and Agency can be provided as part of
the assistance program.
Once need was determined, the City and KRM utilized the following
parameters in structuring an assistance program for Micro Center
that met the criteria above:
I ·
The amount of assistance should be based on the level of sales
tax revenues generated by Micro Center.
·
Only sales tax received by City on a point of sale basis
should be utilized to determine eligibility for assistance.
·
Micro Center should receive assistance only if sales tax
revenues exceed a threshold which the City _could reasonably
expect to receive from an unassisted retail operator on site.
4. The program should last no more than 10 years.
·
Micro Center should receive no assistance in any year in which
taxable sales were less than a specified threshold.
.
The City's interest should be protected if current law
relating to point of sale retail sales tax received by the
City is changed.
There are two assumptions which apply to ~he proposed assistance
program outlined in the Letter of Understanding:
City Council Report
Letter of Understanding with Micro Center
September 7, 1993
Page 6
An assumption of the potential sales tax revenue production of
the site without Agency/City assistance, and;
,
A present value amount of Agency/City assistance equal to
$638,000.
First, it is assumed that the proposed Micro Center site has the
potential to produce some level of retail sales for the City even
without an assistance program. It is reasonable to assume a
retailer with lower sales volume but higher margins than Micro
Center could produce sales in the range of $225 per square foot in
a store .the size of the present -facility. Sales at this level
should be considered a threshold and the City/Agency should only
consider assistance Which can be "funded" by revenues which are
received from taxable sales above that amount.
KRM and staff believed it was necessary to explicitly specify this
threshold in the proposed Micro Center assistance program. The
specification is in terms only of those sales tax revenues which
would be apportioned to the City on the basis of point-of-sale.
Exhibit B-1 attached to the Letter of Understanding (Exhibit'A)
~resents the amounts which should be utilized as the threshold for
--
each year. These figures are identified as "Net New Revenues" for
the Base Case Development. The difference between the tOtal sales
tax revenues from Micro Center and the threshold will be defined as
%he excess sales tax revenues.
Second, the target amount of assistance which the City will provide
is $638,000. This is derived by subtracting excess pre-opening
expenses from Micro Center's projection of the total excess costs
of opening a store in Tustin compared to a standard prototype. The
amount of assistance actually received will be measured as the 1993
present value of all assistance payments made (at an 8% discount
rate). Present value is the equivalent today of money available in
~he future. The present valUe calculation for the Micro Center
assistance program will be influenced by the 8% discount rate
applied to future assistance payments. In no case will the
application of the Micro Center assistance program result in a
present value greater than that amount being paid to Micro Center
($638,000).
The guiding principle of the proposed Micro Center assistance
program is that the annual assistance payments will be equal to a
specific scheduled percent of annual excess sales tax revenues and
will be made until the indicated present value has been paid. The
·
City Council Repc
Letter of Understa..~in9 with Micro Center
September 7, 1993
Page 7
specified percent figure which will be applied in each year is
derived by dividin9 the present value of the total excess sales
revenues at the middle range of projected Micro Center sales over
ten years by the present value of the maximum amount of assistance
proposed to be provided ($638,000). This is equal to 23.94%
(rounded to 24%). This percent will then be applied to excess
sales tax revenues on an annual basis until the accumulated present
value of the payments reaches $638,000.
The application of the proposed assistance pro~ram to a middle
range of projected sales is illustrated in Exhibit B-1 attached to
the Letter of Understanding. Micro Center receives the same
percent of excess sales tax revenues for the full ten years.
In Exhibit B-2, the low projected sales tax projection has been
utilized. Notice that although Micro Center receives the same
percent of sales.for the full ten years, because total sales are
lower than in Exhibit B-i, they will receive only ~$511,141 in
assistance, in present 1993 value. When the highest level of sales
are projected as shown in Exhibit B-3, Micro Center receives the
full $638,000, but no more, in present value and receives it over
the shorter time frame of only seven years.
Under the proposed program, Micro Center is able to more quickly
accumulate the full benefits of the proposed assistance program if
sales exceed the assumed amount.
The total sales tax revenues projected to be received over ten
years by the City based on the low, middle and high ranges of
projected Micro Center sales are presented below:
REVENUE/PROJECTIONS ($000)
Middle Low High
Tustin's Share
Total Revenues $4,299.9 $3,672.8 $6,177.9
Percent of Total 81.4 82.4 85.3
Present Value @ 8% $2,795.9 $2,388.7 $3,94_0.6
Micro Center's Share
Total Revenues 980.8 786.6 863.2
Percent of Total 18.6 17.6 12.3
Present Value @ 8% 638.0 511.4 638.0
City Council Report
Letter of Understanding with Micro Center
September 7, 1993
Page 8
Staff and KRM believe that the proposed assistance program is based
on sound rationale and consistent with criteria that should be used
in judging any retail development assistance program in a
redevelopment area. Staff will be prepared to respond to any
specific cuestions about the specific terms of the Letter of
Understanding at the September 7th meeting.
Christine A. Shingleton
Assistant Tity Manager
CAS: kbc\mcrocn~r. -_as
DRAFT
EXHIBIT A
September 7, 1993
Richard M. Mershad
Vice President
Micro Censer
1555 West Lane Avenue
Columbus, Ohio 43221
SUBJECT: LETTER OF UNDERSTANDING
Dear Mr. Mershad:
The purpose of this letter is to respond, in writing, to Micro
Center's request for assistance from the City of Tustin ("City")
and Tustin Community Redevelopment Agency ("Agency") in the
development of a retail outlet in Tustin. Before setting forth
this understanding, it is necessary to state the facts pertaining
to any agreement.
This memorandum is intended to enumerate general principles which
would apply to the City's assistance program. The memorandum will
summarize the basic terms of the Micro Center transaction, provide
comments concerning the Micro Center operational pro forma and
identify the basic elements of an assistance program. Before
setting forth this information it is necessary to state the facts
relevant to this Letter of Understanding.
Background
Micro Electronics, Inc. ("Micro Center") based in Columbus, Ohio
operates a chain of 40,000 square feet and up retail personal
computer stores. These stores are each commonly known--as "Micro
Center". Micro Center desires to open an approximately 40,000
square foot store in Tustin, California. Catellus Development
Corporation owns a parcel ("Catellus parcel") at 1100 Edinger
Avenue within the City of Tustin. Micro Center is planning to open
a new store on this parcel by leasing the site from Catellus. It
is the City and Agency's desire that Micro Center lease the
Catellus parcel for a Micro Center store. To this end, it is the
City and .Agency's intent to prepare a Disposition and Development
Agreement (DDA) for the Catellus parcel to assist in offsetting
extraordinary costs to Micro Center for locating in Tustin. Micro
Center has determined that it will enter into a lease agreement
with Catellus provided that the City and/or Agency provide
financial assistance as described in this letter.
Letter to Richard Mershad
Micro Center Agreement
September 7, 1993
Page 2
The essential terms of the Micro Center - Catellus transaction
which have a bearing on the City's evaluation of the need for
assistance are summarized as follows:
I ,
Micro Center will lease the site at 1100 Edinger Avenue in
Tustin from Catellus for fifteen years at a rental rate
starting at approximately $7.14 a square foot per year.
.
Catellus will provide Micro Center with approximately
$1,251,200 in construction funds tc partially finance building
and site improvements.
,
The preparation and development costs for the Tustin Micro
Center facility are estimated at $4.27 million to bring the
existing building up to Micro Center's current specifications
and ready for retail operations.
·
After giving credit for the $1,251,200 million construction
funds provided by Catellus, Micro Center is projecting excess
costs of approximately $763,000 5n the development of the
Tustin store (Exhibit 1). All of the excess costs would not
necessarily be included in an assistance program. For
instance, the excess costs associated with two of the
construction items are attributable to local cost factors
which would apply in any metropolisan location in California.
In addition, Micro Center has stased that pre-opening costs
for Micro Center in Tustin are attributable to generally high
cost levels in California and the long distance from its
corporate office. Since these costs would apply uniformly
throughout California, they are no5 considered excess project
costs. Based on the above factors, the City and Agency intend
to provide financial assistance based only on excess costs
identified at this time, excluding excess pre-opening expenses
that are not related to site development.
General Terms
Based on the above, the following sets f~orth in general principles
the basis for an assistance p~ogram for Micro Center to be agreed
upon through a and for negotiating a comprehensive Disposition and
Development Agreement (DDA).
·
The Agency and City will prepare and negotiate a DDA within
approximately 90 days of the date of this letter that is
consistent with the terms of this letter.
Letter to Richard MerShad
Micro Center Agreement
September 7, 1993
Page 3
.
.
.
,
.
.
The DDA will include standard enforcement clauses, including
liquidated damages, remedies in the event of breach,
termination, etc.
Micro Center will finalize lease negotiations for the
designated Catellus parcel and agree to open a Micro Center
facility on the Catellus parcel. A copy of the final executed
lease agreement shall be provided to the City prior to
finalization, approval and execution of the DDA.
Provided that Micro Center submits proper plans and
applications for a building permit., the City will make a good
faith effort to issue permits by September 8, 1993 for
construction of improvements upon the Catellus parcel. It is
Micro Center's objective to have at least a temporary
certificate of occupancy by November 1, 1993.
Micro Center will submit, process and obtain all zoning, site
plan and other approvals required by the City and Agency. The
Agency will take appropriate action to assist Micro Center
consistent with Agency objectives.
Micro Center agrees, in the event it enters into a lease for
the Catellus parcel, to inform the Agency in writing as to how
it will determine point of sale for purposes of collection of
California sales tax and to take such actions as are
appropriate to maximize the collection of sales tax in the
City of Tustin from the conduct of Micro Center's anticipated
retail business. Micro Center agrees to immediately register
with the California State Board of Equalization so that all
taxable sales at the Tustin facility (retail sales and catalog
sales) will be eligible to be apportioned to the City of
Tustin.
Micro Center agrees, in the event it enters into a lease for
the Catellus parcel, that its California address shall be
established as being in the City of Tustin for purposes of
reporting point of sales to the California State Board of
Equalization.
Except to the extent that Catellus provides Micro Center with
construction funds, all costs of planning, designing,
developing and constructing all Micro Center improvements,
including site demolition and site preparation costs shall be
borne by Micro Center.
Letter to Richard Mershad
Micro Center Agreement
September 7, 1993
Page 4
.
Based on Agency's review of Micro Center's project pro-formas,
Micro Center will initially incur substantial site preparation
costs for the project which affect the project's feasibility.
Agency and City are not in a financial position to assist
Micro Center with its front end site preparation costs.
Agency, however, does desire to financially assist Micro
Center in order to enhance the project's financial feasibility
over time by reducing certain site preparation costs to Micro
Center as authorized by California Community Redevelopment Law
and the South Central Redevelopment Plan.
The Agency's and/or City's level of financial assistance
provided to the Micro Center project shall be based on the
following terms:
a ·
The target amount'of assistance which the Agency and/or
City will provide is $638,000. This is derived by
subtracting the Agency's determined excess pre-opening
expenses from Micro Center's projection of the total
excess costs of opening a store in Tustin compared to a
standard prototype. The amount of assistance actually
received will be measured as the 1993 present value of
all assistance payments made at an 8% discount rate. In
no event will the Micro Center· financial assistance
program result in a present value greater than the amount
being paid to Micro Center. The Micro Center assistance
program will be limited to no more than ten years.
b ·
The actual amount of assistance to Micro Center will be
based on sales tax generated by the Micro Center Tustin
facility. Only sales tax allocated to the City of Tustin
on a point of sale basis will be utilized to determine
eligibility for assistance.
C ·
d.
Micro Center will receive a certain level of annual
assistance based on the amount of sales tax the City
receives from the project above a threshold which the
City could reasonably expect to receive from an
unassisted retail operator.
--
Micro Center will not receive assistance in any year in
which taxable sales volumes attributable to Micro Center
business operations in Tustin are less than a specified
threshold.
Letter to Richard Mershad
Micro Center Agreement
September 7, 1993
Page 5
To establish the threshold upon which assistance to Micro
Center would be based, the City has estimated the taxable
sales which might reasonably be expected from an
alternative higher margin, lower volume retailer
operating in the original building. That estimate is
based on assumed annual initial taxable sales of $225 per
square foot or $8.9 million per year. This is projected
to rise to $11.2 in the fourth year with four percent
annual increases thereafter. Exhibit B-1 presents the
threshold amounts which will be utilized as the
thresholds for each year. These figures as shown in
Exhibit B-1 are identified as "Net New Revenues" for the
"Base Case Development". Over the proposed ten year
program, the City or Agency would not have an obligation
to provide assistance unless the City has received at
least $89,000 to $142,000 per year in sales tax from
Micro Center's Tustin location, as shown in Exhibit B-1.
The difference between total sales tax revenues projected
from Micro Center's Tustin facility and the threshold
will be defined as the excess sales tax revenues.
e .
Pursuant to a DDA and contingent upon Micro Center
entering into a lease for the Catellus parcel, the City
and Agency will structure the Micro Center assistance
program to require payments by the City and/or Agency to
Micro Center. The annual assistance payment would be
equal to a specified schedUled percent of annual excess
sales tax revenues received by the City. Payments would
be made until the indicated present value has been paid.
The specified percentage to be applied in each year is
derived by dividing the present value of the total excess
sales revenues at the middle range of projected Micro
Center' sales over ten years by the present value of 'the
maximum amount of assistance proposed to be provided
($638,000). This is equal to 23.94% (rounded to 24%).
This percent will then be applied to excess sales tax
revenues on an annual basis until the accumulated present
value of the payments reach $638,000.
The application of the proposed assistance program to a
middle range of projected sales is illustrated in Exhibit
B-1. Micro Center would receive the same percent of
excess sales tax revenues for the full ten years.
Letter to Richard Mershad
Micro Center Agreement
September 7, 1993
Page 6
In Exhibit B-2, the low projected sales tax projection
has been utilized. Although Micro Center would receive
the same percent of sales for the full ten years, because
total sales are lower than in Exhibit B-I, only $511,141,
in present value would be received. When the highest
level of sales are projected as shown in Exhibit B-3,
Micro Center receives the maximum of .$638,000, but no
more, in 1993 present value over a shorter time frame of
seven years.
Under the proposed program, Micro Center is able to
accumulate the full benefits of the assistance program
quicker depending upon sales volumes.
Micro Center would also agree that the Agency and/or City
would have no obligation to make an annual payment in any
year in which taxable sales are less than a minimum
threshold which the City would expect to receive from an
unassisted retail operator on the site (the "Net New
Revenue" identified in Exhibit B-i).
f ,
In the event that California law governing the payment
and/or distribution of retail sales tax is amended in
such a manner as to reduce the amount of sales tax
apportioned and paid to the City based on point of sale
("Sales Tax Change"), Micro Center will agree that it
will be entitled to assistance payments only if sales tax
revenues apportioned to the City based on point of sale
in a payment year meet the applicable sales tax
thresholds for that payment, year identified in the
assistance program.
For the purpose of calculating the Agency's payment to
Micro Center, any reduction in sales tax received by the
City as a result of Sales Tax Change shall be offset by
the amount of any sales, use, value-added or excise tax
enacted in the future to specifically replace or
supplement sales tax lost as a result of a Sales Tax
Change ("Replacement Taxes"), to tke extent any such
Replacement Taxes collected or received by the City are
measured or determined on a point of sale basis, and to
the extent that any other sales or use tax distributions
to the City may be determined by reference to the amount
of sales or use generated on the Site. All assistance
payments which have not become due and payable to Micro
Center by virtue of the payment formula identified in
this assistance program within 10 years from the date of
issuance of a Certificate of Occupancy for the project
would no longer be an obligation' of the City or Agency.
Letter to Richard Mershad
Micro Center Agreement
September 7, 1993
Page 7
·
h.
Agency/City will agree to make assistance .payments
annually. The first assistance paYment would begin
within 30 days following the close of the first four
quarters of Micro Center retail operations on the site
that follow the City's issuance of 'a Certificate of
Occupancy for the project. PaYments to Micro Center
shall be based on quarterly sales tax returns filed with
the California State Board of Equalization for all
business operations on the site required pursuant to
California Revenue and Taxation Code Section 6452. A
copy of each quarterly sales tax return shall be supplied
to the City. This information (subject to audits by the
State Board of Equalization) will be utilized by the
Agency and City for purposes of the assistance program
outlined above. Annual paYments, where eligible, shall
continue annually until Micro Center receives the full
$638,000, but no more, in 1993 present value for no~ to
exceed ten years.
The reference to sales tax for purposes of'computing any
annual paYment is solely for computational purposes.
Sales tax revenue allocated to the City is not pledged.
The Agency and City reserve the right to make aP~.ual
payments by the Agency, as an obligation of the Agency
secured solely by and payable from tax increment revenue
of the Agency, or from General Fund revenue of the City.
The Agency and City believe that the presence of a Micro
Center facilitY'on the Tustin site forms a material par5 of
any Agency or City consideration in providing assistance to
Micro Center. Except as otherwise provided, provisions of the
DDA will condition that the site be the location of a Micro
Center facility for a period of not less than 10 years from
the date of issuance of a Certificate of Occupancy of the use.
In the event, after issuance of a certificate of occupancy,
Micro Center or property owner, at their option, elect tc use
the site for a purpose other than a Micro Center facility,
Micro Center shall after any use changes are commenced and
when written demand is made by Agency/City, pay to Agency/City
a sum equal to the Agency/City assistance paYments (subsidy)
made to Micro Center from the date of issuance cf a
Certificate of Occupancy until Micro Center or property cwner
ceases to use the site for a Micro Center, or until five years
after issuance of a Certificate of Occupancy of Micro Center's
Tustin facility, whichever occurs first.
I believe that the foregoing accurately summarizes all elements of
our understanding. It is the understanding of the Agency than in
Letter ~o Richard Mershad
Micro Center Agreement
September 7, 1993
Page 8
reliance upon this letter you intend to finalize in good faith your
lease a{reement for the Catellus parcel.
I would request that, if the foregoing terms are agreeable, you
execute this letter in the space provided below. Two original
copies have been provided of this letter, and I would request that
you exesute both letters and return one to the Agency.
We are extremely pleased that a mutually beneficial arrangement can
proceed and look forward to a long term relationship with Micro
Center.
The Cisy and Agency look forward to working with you as this
transac5ion unfolds. Christine Shingleton, of my staff, will be
available to respond to any specific concerns or questions you may
have on the terms identified above. If I can be of assistance at
any time, please do not hesitate to call me.
Sincerely,
William A. Huston
City M~nager
WA~:CAS :kbc nershad, l=r
RECEIVED AND AGREED TO ON BEHALF OF MICRO CENTER, INC.
DATE
DATE
SENT BY:KOTIN REGAN MOUCHLY
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