CC Minutes - 02/27/08 Work Session

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any funds that were left at that point could be used for other downtown priorities. She added that the project th under current discussion was located at 10 Avenue and Charnelton Street. She reviewed the timeline for acquisitions. Mayor Piercy asked if there was any difference in getting HUD approval for this project as opposed to the previous project, noting that it had contained a significant housing component. Mr. Braud replied that the City had been approved for the creation of a loan pool, defined by the $8 million in borrowing capacity and the $2 million BEDI grant. He said each individual project had to be approved by HUD in order to meet its underwriting criteria for a specific use. Mr. Clark observed that much of this was predicated on the agreement with Beam Development and that the security would be the real estate. Mr. Braud stated that because the City was borrowing from HUD it had to meet its underwriting criteria and that HUD’s intent was not to jeopardize the CDBG funds. He emphasized that this was also the City’s intent. He said the real estate would be a source of security for the loan and that the City was in the process of negotiating other security from Beam Development. Mr. Clark asked what the City’s protection was in case Beam Development did not follow through with its project. Mr. Braud responded that staff was trying to put all of the steps into place to be able to “100 percent assume” that the project was going forward. He indicated that the City’s intent was to sign an agreement with Beam Development that included a non-refundable deposit in the amount of 10 percent of the value of the property. In response to a follow-up question from Mr. Clark, Mr. Braud confirmed that the length of the agreement had yet to be negotiated. He said the length of the HUD 108 loan was assumed to be 10 years and the City would attempt to structure its agreement with Beam along those lines. Mr. Clark asked if the project’s success was predicated on having Oregon Research Institute (ORI) for a tenant. Mr. Braud averred that ORI would be a “great tenant,” but Beam Development had indicated that they were talking to other tenants as well. In response to a follow-up question from Mr. Clark, Mr. Braud clarified that the primary goal was to assist Beam Development in bringing its project to completion. Ms. Taylor asked how much had been spent in City attorney fees. Ms. Cutsogeorge estimated that attorneys had cost $50,000. Ms. Taylor asked why the City was not using tax increment funding. Mr. Braud responded that one of the “big carrots” was the possibility of grant funds. Ms. Taylor asked if there was enough money in the urban renewal funds if the grant did not work out. Mr. Braud explained that the City could likely accomplish the acquisition with the funds but the question was then whether there were enough resources for Beam to get the project off the ground. In response to questions from Mr. Zelenka, Mr. Braud clarified that the City’s agreement was with HUD and the obligation was for the City to repay the loan; Beam’s agreement would be with the City. He explained that the BEDI funds would also be applied to the acquisition and Beam Development would repay the entire acquisition cost to the City directly. MINUTES—Eugene City Council February 27, 2008 Page 6 Work Session