Laserfiche WebLink
priority was to fill the building with private tenants, the City was discussing a contingent or standby <br />commitment to lease some space in one of the Beam buildings. <br /> <br />Mr. Sullivan illustrated the range of lease rates currently paid by the City in the downtown area, adjusted to <br />2010 dollars because the Beam rate of $1.83 per square foot was guaranteed to 2010. He said disposition of <br />vacated space owned by the City could present a revenue opportunity by leasing it to private tenants. He <br />explained the financing structure using Department of Housing and Urban Development (HUD) and urban <br />renewal funds, which would be loaned to Beam for a ten-year term at rates consistent with the City’s <br />borrowing rate from HUD and the downtown loan fund. He said the total proposed project financing was <br />$38.4 million, of which 75 percent would come from private and conventional financing sources; the City <br />and urban renewal agency (URA) were projected to contribute $9.7 million, or 25 percent of the total <br />financing required. <br /> <br />Mr. Sullivan explained the reversionary clauses under which the property could be returned to the City. He <br />said the clauses specified two ways in which that could occur: the City preserved the right to buy back the <br />property if Beam did not meet project or timeline terms in the PSA or, if the City was unable to deliver the <br />construction loan, Beam could require the URA to repurchase the buildings. He concluded with a review of <br />the next steps in the process. <br /> <br />Ms. Taylor expressed concern with moving out of property the City owned. She preferred to see rental <br />property vacated if the City eventually occupied space in the Beam project. <br /> <br />Mr. Clark asked if the square foot costs used in the comparison of rents were net or gross rates. Mr. <br />Sullivan said he believed they were fully loaded rates, although the City had a broad range of lease <br />agreements and he would need to review the specifics of each individual agreement. <br /> <br />Mr. Clark said before making a decision he would need to know the actual cost difference between what the <br />City would pay for rent in the Beam project and what it was currently paying for space downtown. Mr. <br />Ruiz said staff would develop the most accurate information possible for the council’s consideration. He <br />said the goal was to determine the best financial arrangement for the City that met the objective of good <br />financial stewardship. He said there were some elements that would be difficult to factor in, such as <br />potential efficiencies realized through consolidation of some facilities that were currently leased. <br /> <br />Mr. Clark said the public value would come from revitalization of downtown and he wanted to understand <br />the actual annual cost of that goal and determine if it was a good comparative value. <br /> <br />Mr. Pryor recognized that this type of project was complex and could become more convoluted as it <br />progressed. He agreed that if the City moved into the Beam project it would be preferable to vacate rented <br />space first. He was pleased that the City’s loan to Beam would require repayment like a conventional <br />financing arrangement. <br /> <br />Ms. Ortiz thanked staff for an innovative approach to the project that worked within the constraints of <br />existing resources. She hoped there would be periodic reports to the council on how efficiencies were <br />realized if the City occupied the new space. She asked for clarification on the reversionary clauses. Mr. <br />Sullivan said the clauses gave the City the right to buy the property back, but did not require that. He said <br />the City could compel Beam to sell the property if it did not meet the PSA requirements and the City chose <br />not to buy. <br /> <br /> <br /> <br />MINUTES—Eugene City Council May 14, 2008 Page 5 <br /> Work Session <br /> <br />