Item #01
Date: 11/05/2025
To: Mayor and City Council
From: Jim Schaad, City Manager
Dan Flores, Community and Economic Development Director Subject: Term Sheet Approval – B Street Development Loan / DDA Second Amendment Recommendation:
Staff recommends that the City Council, 1) Approve the Term Sheet between the City of Marysville and Presidio Companies, LLC, establishing financial assistance terms in support of the B Street Development Project; and 2) Authorize the City Manager to execute a Second Amendment to the Disposition and Development Agreement (DDA) consistent with the approved Term Sheet, subject to City Attorney approval as to form.
Rationale for Recommendation:
The B Street Development Project represents a major private investment in Marysville’s key commercial corridor, supporting the City’s economic development and revenue diversification goals.
City participation will assist with unanticipated site remediation costs and facilitate development of a hotel, grocery store, and coffee quick-service restaurant (QSR). Approval ensures the project can proceed while protecting public funds through performance-based reimbursement and defined repayment mechanisms.
Background:
The B Street Development Project encompasses approximately 4.93 acres at the southeast corner of B Street and 14th Street. The overall mixed-use site includes a hotel, grocery store, and coffee QSR, with the hotel occupying approximately 60% of the site.
During site preparation, unanticipated contamination was discovered that had not been identified during prior environmental due diligence or initial soil exploration. Cleanup is required to prepare the property for commercial development.
The City’s existing Disposition and Development Agreement (DDA) previously authorized negotiation of financial participation terms. The attached Term Sheet represents the final agreed-upon structure, which will be incorporated into a Second Amendment to the DDA.
Discussion & Analysis:
The Term Sheet outlines the City’s participation framework, reimbursement conditions, and repayment provisions. Key business terms are summarized below:
• City Contribution: $925,000 total
o Up to $700,000 reimbursed for verified remediation
o $225,000 deferred impact fees
• Form: Performance-based reimbursement and fee deferral • Interest: 4% simple interest on the outstanding balance • Repayment Fee: Equal to 1% of gross hotel room rent, remitted at minimum annually • Verification: Reimbursement only after City confirms cleanup to commercial standards • Reporting: Itemized documentation required for remediation and infrastructure work • If Hotel Not Constructed:
o City may repurchase the hotel parcel, crediting the $925,000 participation amount; or o Receive sale proceeds exceeding the other lender’s $1 million senior financing from hotel parcel up to the amount owed.
These terms ensure the City’s participation is tied to verified remediation and project completion milestones, while providing financial recourse if the hotel is not developed.
Alignment with City Council Goal(s):
This action directly advances the City Council’s Economic Development Goal by:
• Supporting new private investment and job creation on underutilized property; • Facilitating cleanup and reuse of a key commercial corridor site; • Enabling construction of a hotel, grocery, and QSR expected to generate $300,000 to $400,000 annually in local tax revenue through Transient Occupancy Tax (TOT), sales tax, and property tax; and
• Strengthening Marysville’s long-term fiscal stability and market competitiveness.
Legal Review:
The City Attorney’s Office has reviewed the draft Term Sheet and found it to be legally sufficient.
Execution of a Second Amendment to the DDA consistent with the approved Term Sheet will occur following City Attorney review and approval as to form.
Fiscal Impact:
With approval from the governing body, the City’s reserve will decrease by $700,000 but will remain above the 30% threshold as established by the City Council. Upon the completion of construction and issuance of final certificate of occupancy, the repayment of $700,000 accruing interest at 4% annually will begin.
The budget adjustment and supplemental authorization for FY 2025/26 will allow the City to transfer monies from the Local Agency Investment Fund (LAIF) into the City’s general fund to remit payment for the environmental remediation of the B Street project.
Completion of the hotel, grocery, and QSR is expected to generate $300,000 to $400,000 in transient occupancy tax (TOT), sales tax, and property tax. The City’s support in FY 2026 will strengthen Marysville’s long-term fiscal stability and pave the way for future development.
Attachment(s):
1. Term Sheet – B Street Development Financial Assistance / Second Amendment to DDA .