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purchase option. It also sets the framework for the tasks that the City needs to accomplish over the next few months. Permitting Process and Issues: Attachment C sets out a synopsis of the permitting process and issues for location of a hospital on the EWEB site. Council/Agency Approvals Scheduled for Tonight: The Patterson Street underpass is a critical piece of the puzzle for McKenzie-Willamette's decision to locate a hospital on the EWEB site. In order to ensure that design work on the underpass occurs as swiftly as possible, McKenzie-Willamette has indicated through a verbal agreement that it is willing to provide up to $500,000 of funding to complete a portion of the design work. The City (through an intergovernmental agreement with the Urban Renewal Agency) will contract the design work out and expects that design will be 30% complete by September 30, 2005. 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 Urban Renewal Agency nor the City would be obligated to repay this initial $500,000 investment in design of the project. 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. Authorization for the Urban Renewal Agency to enter into a design finance agreement with McKenzie-Willamette for the $500,000 to start design work as soon as possible is also on the agenda for later in this same meeting. Future Council/Agency Approvals: Staff has had discussions with representatives from McKenzie- Willamette about the long-term financing of this project and McKenzie-Willamette has verbally agreed to pay for an approximately $12 million transportation project through an Urban Renewal Revenue Bond agreement. Attachment D contains the document the City sent to McKenzie-Willamette to explain how the bond agreement would work. 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 develop- ment to repay the borrowing in full, no other URA or City revenues will be used to make up the dif- ference. 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. The City is also currently drafting a memorandum of agreement with EWEB that includes the following points: Acquisition of Riparian Areas. It is anticipated that the City will purchase approximately 50 to 75 feet along the riverbank for the length of the property for purposes of providing on-going protection of certain riparian areas. The exact location and amount of property purchased for this purpose will be L:\CMO\2004 Council Agendas\M041206\S041206B.doc