Item 3 - URA/Design Fin. Agr - Laserfiche WebLink

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Budget authority for this initial $500,000 is included on Supplemental Budget #1 on December 6 (the same meeting as this item). The additional budget authority needed to construct the project will occur at a later date, possibly in the FY06 budget process. Included as Attachment A is the resolution authorizing the URA to enter into the first $500,000 of this transaction with McKenzie-Willamette. Although some of the details of the agreement are still being negotiated, McKenzie-Willamette has agreed that in the event that the hospital development does not go forward, neither the URA nor the City would be obligated to repay this initial $500,000 investment in design of the project. The resolution authorizes the Agency Director to continue to negotiate the design finance agreement with McKenzie-Willamette. If any of the following major parts of the agreement are changed in the negotiation, however, the Agency Director would have to return to the URA for additional approval: · Amount of the agreement - up to $500,000 · Interest rate on the borrowing - the City's reasonable estimate of the City's borrowing cost · Repayment of the borrowing - to come from a tax increment bond sold to McKenzie-Willamette in the event that the hospital development goes forward Long-term Financing Agreement: In the event that the hospital development does go forward, staff has had discussions with representatives from McKenzie-Willamette about financing the entire project. McKenzie-Willamette has verbally agreed to pay for an approximately $12 million transportation project through an Urban Renewal Revenue Bond agreement which is described in more detail in the Hospital Update agenda item summary from earlier this evening. Under the bond agreement, the City will build the Patterson Street underpass and McKenzie-Willamette will repay the City's costs on a reimbursement basis. When McKenzie-Willamette's property begins generating tax increment revenue in the Riverfront Urban Renewal District, the property taxes from the McKenzie-Willamette development will be used to repay the borrowing. If there are insufficient property tax revenues from the McKenzie-Willamette development to repay the borrowing in full, no other URA or City revenues will be used to make up the difference. In that event, McKenzie- Willamette will not get repaid in full for the principal amount of the borrowing. A bond resolution will be brought to the Urban Renewal Agency for the remainder of the project design and construction costs in the next few months. In addition, the Urban Renewal Agency will be asked to approve an intergovernmental agreement between the City and the URA in January. That IGA will cover the actions needed between the URA and the City to make the financing transactions work for this project. RELATED CITY POLICIES The council has identified a goal for 2004 to facilitate the development of a hospital in Eugene's central core. In order to facilitate development of McKenzie-Willamette Medical Center at the EWEB site, McKenzie-Willamette has identified a critical need for transportation access. It would like design work to begin as soon as possible in order to be able to complete the project in a timely fashion. L:\CMO\2004 Council Agendas\M041206\S0412063.doc