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Mr. Clark asked about the impact of the recovery zone bond on the bank loan. Mr. Braud said that <br />because the loan was tax exempt, the bank could offer a lower interest rate to a private company. The <br />City was assuming no risk. <br />Mayor Piercy suggested that current economic conditions and the community's interest in downtown <br />revitalization justified the establishment of the zone. <br />Ms. Taylor determined from Ms. Cutsogeorge that the bank did not have to pay income taxes on the loan, <br />which Ms. Taylor concluded took money away from government. She asked how many housing units the <br />Lane Community College (LCC) project would contain. Mr. Braud said LCC was discussing housing <br />between 200 and 220 students with an array of unit types. LCC was in the design phase and would <br />attempt to appeal to different students with its design. He did not know how much rent would be charged. <br />He reported that initially, units would be targeted toward LCC students but he envisioned that they could <br />be made available to students from other local colleges. <br />Ms. Taylor observed that community college students generally did not live on campus. Mr. Braud <br />agreed, but noted that many students were starting their college careers at community colleges due to the <br />higher cost of attending four -year universities. However, they were still looking for a college -like <br />experience, and the market for those students was changing. <br />Ms. Taylor asked what happened if no one rented the housing and what risk the City bore. Mr. Braud <br />reiterated that recovery zone bonds had no risk for the City. LCC would issue the bonds and assume all <br />risks associated with the performance of the student housing. He noted that LCC was planning on debt <br />financing for the facility, and that would be supported by rents. <br />Mr. Zelenka commended staff for its creative work on the proposal. He acknowledged the complexity of <br />such financing arrangements. Speaking to the information presented on the recovery zone bonds, he asked <br />what "used by" meant. Mr. Braud said that it mean a substantial draw, which in this case would be an <br />amount of money drawn down to support soft costs, such as architectural costs, related to the project.. The <br />timing appeared to work for the Bennett Management Company and LCC project because LCC was <br />already in design and Bennett Management Company could be in design quickly. <br />Mr. Zelenka asked if Bennett Management Company experienced difficulty in securing financing. Mr. <br />Braud said the company was working with Wells Fargo Bank, which had examined the project and issued <br />some initial terms. An appraisal would be required. Bennett Management Company had a long history of <br />working with Wells Fargo, and every indication the City received from the bank was that the project was <br />headed in the right direction. <br />Mr. Zelenka expressed enthusiasm for both the Bennett Management Company and LCC projects and <br />indicated his intent to support a motion to that effect. <br />Responding to questions from Mr. Brown, Ms. Cutsogeorge confirmed the deadlines involved with the use <br />of the funding source. <br />Mr. Brown reported that his research indicated the funding in question had been available for nearly two <br />years but very little of it had been used because it had been difficult for people to understand how to use <br />it. He was happy to see that Eugene was able to make use of the funds. <br />MINUTES— Eugene City Council September 15, 2010 Page 2 <br />Work Session <br />