CC Minutes - 05/14/08 Work Session

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the City could compel Beam to sell the property if it did not meet the PSA requirements and the City chose not to buy. Ms. Solomon asked if the City would have to commit additional dollars if the project costs exceeded the projected $38.4 million. Mr. Sullivan replied that the City was clear that its participation would be confined to the total of the HUD funds and a small amount of urban renewal funds if the City became a tenant. In response to a question from Ms. Solomon, Mr. Ruiz explained that the City was not required to repay the Brownfields Economic Development Initiative (BEDI) funds because they were a grant and not a loan. He said the City was loaning those funds to Beam and would be repaid when Beam reached its target return on investment. Mr. Sullivan added that the repaid BEDI grant funds would be considered Community Development Block Grant (CDBG) program income. Ms. Solomon asked if funds would remain to assist other development efforts once the Beam project financing was finalized. Mr. Sullivan said $2 million remained in the urban renewal downtown loan fund and $1.2 million remained under the urban renewal district spending cap. Mr. Ruiz said the City had attempted to minimize the contribution of redevelopment agency money in order to maximize funds available for other projects. Ms. Solomon asked if the City’s commitment to be a backstop tenant relieved Beam of its obligation to find a private tenant and placed that burden on the City. Mr. Sullivan said Beam was aggressively seeking private tenants and already had at least one commitment. He said the PSA required specific efforts by Beam to seek those private tenants and required documentation of the efforts. Ms. Bettman remarked that if the Beam project was successful it would increase the value of all property downtown. She said current rents paid by the City for downtown space were low because overall property values had been depressed by the buildings that Beam would be redeveloping. She was pleased to see the close scrutiny of the PSA and efforts to maximize the availability of resources for other projects. She asked if Beam was in agreement with the PSA provisions. Mr. Sullivan said some language details were still being finalized but Beam was in agreement with the major financial components. He said groundbreaking was currently scheduled for the spring of 2009 with a 12-month construction period. Ms. Piercy congratulated staff for doing a good job of developing a fiscally sound project and looked forward to the revitalization of downtown. Mr. Clark said he was looking forward to a revitalized downtown and his level of scrutiny related to ensuring success of the Beam project in order to pave the way for future redevelopment efforts. He said it appeared that the City could expect to pay 30 percent more in rent than it was currently paying if it became Beam’s tenant. Mr. Sullivan said the Beam rate was a fully loaded rate and he would review the current lease agreements to provide more accurate figures. Mr. Ruiz said it was possible the difference could be less. Mr. Clark expressed concern about the City’s obligation under the reversionary clauses. Mr. Sullivan said the provisions had been negotiated specifically to give the council and the urban renewal agency an opportunity to weigh in on disposition of the building and perhaps reacquire the site for a public purpose if Beam was unable to move forward with the project. He did not anticipate that the City would encounter any difficulty in delivering the second loan. MINUTES—Eugene City Council May 14, 2008 Page 6 Work Session