Item 6: Resolution 5017 Authorizing Economic Development Project Revenue Bonds as Recovery Zone Facility Bonds

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The following is a summary of the proposed changes in the terms that are needed for the developer to close the bank loan prior to the December 31 deadline for issuing the Recovery Zone bonds:  To meet the bank’s pre-leasing requirement (60 percent of the space), the developer has asked the City to commit to a total of 26,000 square feet (previously 20,000). This would be accomplished by increasing the amount of guaranteed lease space from 10,000 square feet to 16,000 square feet. The City’s lease guarantee will be reduced as sufficient private lease commitments are achieved. (The City’s commitment to lease and occupy 10,000 square feet remains unchanged.)  The maximum Downtown Revitalization Loan (DRLP) would be increased from $1.1 million to $1.3 million. Consideration of the larger loan is the result of an approved bank loan ($6.9 million) that is less than projected. In addition to the requested changes to City terms, BMC/Woolworth Properties LLC has agreed to increase their equity contribution from $2.25 million to $2.6 million. Recovery Zone Facility Bonds: The American Reinvestment and Recovery Act (“ARRA”) permits issuance of the Recovery Zone Facility Bonds. ARRA and Section 147 of the Internal Revenue Code of 1986, as amended, require that recovery zone facility bonds be approved by the council after a public hearing. Notice of the hearing was published in the Register-Guard on November 1. A public hearing was held at 11:00 a.m. on November 15, 2010, before a hearings official to receive comments on the proposed issuance by the City of not more than $8 million dollars of recovery zone facility bonds to finance an approximately 50,000 square-foot mixed-use building that will be constructed on the former site of the Woolworth Building at Broadway and Willamette Streets and will be owned by Woolworth Properties, LLC. No one appeared to testify at the hearing. Resolution 5014 requires that the council give final approval to the sale of bonds for the project prior to the sale of the bonds. The resolution included in Attachment B provides for that final approval RELATED CITY POLICIES Development of the vacant parcel addresses many goals for Eugene and downtown, including activity in the core, employment, and sustainability. This project is supported by the Downtown Plan; Down- town Code Amendments; West Broadway Advisory Committee Recommendations; Central Area Transportation Study; Downtown Vision; City Council’s Downtown Collective Statements from August 2009; Downtown Policing Action Plan Team Short-Term Public Safety Strategy Recommen- dations 2004; Cultural Policy Review; Mayor’s 2004 Committee on Economic Development; Growth Management Policies; Sustainable Business Initiative; and JEO’s regional economic development principles. The City’s debt policies set out provisions for the use of conduit financing, which is what BMC/Wool- worth Properties LLC has requested for this project. Under those policies, a project has to meet certain criteria, including that the City not incur any moral or financial obligation from the borrowing, and that the private party requesting the financing pays all of the costs of the borrowing. The project financing will comply with the debt policies related to conduit financings except for the rating or credit enhancement requirement. Because the project will be financed through a bank private placement loan rather than a public bond sale, this policy requirement is not needed. The council waived that part of the policy in Resolution 5014. L:\CMO\2010 Council Agendas\M101213\S1012136 - and attA.doc