12/19/1988 Meeting (2)
City of Eugene
12/19/1988 Meeting (2)
7/23/2007 9:09:50 PM
11/2/2006 4:31:08 PM
City Council Minutes
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<br /> e $1 million to $2 million from the County and the State to assist in site <br /> improvements involving utility relocation and street rebuilding. <br /> Long-term financing is focused on the parking facility. Mr. Farkas stressed <br /> the importance of making parking available to office tower tenants at market <br /> rates. Underground parking would be available to library users in the <br /> evenings and on weekends free of charge. To help accomplish this, the City <br /> would provide a longer term low-interest loan of $2 million to $2.5 million <br /> at three percent for a 30-year amortized period. The 30-year amortization <br /> would begin to be repaid after five years, and the loan would have a ten-year <br /> call. <br /> Mr. Farkas said the land, valued at approximately $1 million, is currently <br /> owned by the renewal agency. Selling the land to Pankow now would probably <br /> result in the land acquisition cost being built into the office tower which <br /> could raise the office lease rates to a point beyond acceptability in the <br /> Eugene market. Furthermore, outright sale of the land might not result in <br /> the best return for the City. Therefore, Mr. Farkas proposed that the City <br /> receive ten percent of the cash flow from the office tower starting in the <br /> fifth year, five percent of any refinancing profit, and market value return <br /> on the land if or when the office tower is sold. In ten years, Mr. Farkas <br /> estimated that the land would be worth ten percent of the total project. <br /> Because of the office tower, the land would become taxable on completion of <br /> the building. Based on a $20 million office project on that parcel, the tax <br /> increment flow from the land would be approximately $60,000 annually. <br /> - The 106,000-square-foot library shell was estimated by Pankow at a cost of <br /> about $6.6 million. Through negotiations, Pankow agreed to remove the <br /> developer's fee and encouraged the community to use that as a challenge grant <br /> for raising at least $280,000 in private sector contributions for the <br /> library. This agreement brought the cost of the shell down to $6.32 million. <br /> It was proposed that the City would lease the shell at 60 cents per square <br /> foot for the first five years. Tax increment from the office tower, land, <br /> and parking structure would be used to retire this debt (a $763,000 per year <br /> lease). At the end of five years, the City would have the option of buying <br /> the shell for $6.32 million, renewing its lease, or entering an amortized <br /> lease on a 30-year basis. <br /> The council would have the option of building-out a 106,000-square-foot <br /> library or finishing 75,000 square feet and reserving the rest for interim <br /> leased space. In either case, Mr. Farkas recommended using existing tax <br /> increment resources to pay for the tenant improvements, estimated at $3 <br /> million to $5 million. <br /> Tony Mounts, Finance Division, explained that a larger library could be <br /> expected to have additional operating costs, presently estimated at $600,000 <br /> annually. The Council Committee on Library Financing considered several <br /> options that included: 1) opening the library without additional operating <br /> money which would result in staff shortages and service impacts (possibly, <br /> reduced hours); 2) financing the additional costs within the existing General <br /> Fund budget which would add to the projected deficit; 3) additional property <br /> e MINUTES--Eugene City Council December 19, 1988 Page 2 <br />
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