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CC Minutes - 05/14/08 Work Session
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CC Minutes - 05/14/08 Work Session
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City Council Minutes
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5/14/2008
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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 <br />not to buy. <br /> <br />Ms. Solomon asked if the City would have to commit additional dollars if the project costs exceeded the <br />projected $38.4 million. Mr. Sullivan replied that the City was clear that its participation would be confined <br />to the total of the HUD funds and a small amount of urban renewal funds if the City became a tenant. <br /> <br />In response to a question from Ms. Solomon, Mr. Ruiz explained that the City was not required to repay the <br />Brownfields Economic Development Initiative (BEDI) funds because they were a grant and not a loan. He <br />said the City was loaning those funds to Beam and would be repaid when Beam reached its target return on <br />investment. Mr. Sullivan added that the repaid BEDI grant funds would be considered Community <br />Development Block Grant (CDBG) program income. <br /> <br />Ms. Solomon asked if funds would remain to assist other development efforts once the Beam project <br />financing was finalized. Mr. Sullivan said $2 million remained in the urban renewal downtown loan fund <br />and $1.2 million remained under the urban renewal district spending cap. Mr. Ruiz said the City had <br />attempted to minimize the contribution of redevelopment agency money in order to maximize funds available <br />for other projects. <br /> <br />Ms. Solomon asked if the City’s commitment to be a backstop tenant relieved Beam of its obligation to find <br />a private tenant and placed that burden on the City. Mr. Sullivan said Beam was aggressively seeking <br />private tenants and already had at least one commitment. He said the PSA required specific efforts by Beam <br />to seek those private tenants and required documentation of the efforts. <br /> <br />Ms. Bettman remarked that if the Beam project was successful it would increase the value of all property <br />downtown. She said current rents paid by the City for downtown space were low because overall property <br />values had been depressed by the buildings that Beam would be redeveloping. She was pleased to see the <br />close scrutiny of the PSA and efforts to maximize the availability of resources for other projects. She asked <br />if Beam was in agreement with the PSA provisions. Mr. Sullivan said some language details were still being <br />finalized but Beam was in agreement with the major financial components. He said groundbreaking was <br />currently scheduled for the spring of 2009 with a 12-month construction period. <br /> <br />Ms. Piercy congratulated staff for doing a good job of developing a fiscally sound project and looked <br />forward to the revitalization of downtown. <br /> <br />Mr. Clark said he was looking forward to a revitalized downtown and his level of scrutiny related to <br />ensuring success of the Beam project in order to pave the way for future redevelopment efforts. He said it <br />appeared that the City could expect to pay 30 percent more in rent than it was currently paying if it became <br />Beam’s tenant. Mr. Sullivan said the Beam rate was a fully loaded rate and he would review the current <br />lease agreements to provide more accurate figures. Mr. Ruiz said it was possible the difference could be <br />less. <br /> <br />Mr. Clark expressed concern about the City’s obligation under the reversionary clauses. Mr. Sullivan said <br />the provisions had been negotiated specifically to give the council and the urban renewal agency an <br />opportunity to weigh in on disposition of the building and perhaps reacquire the site for a public purpose if <br />Beam was unable to move forward with the project. He did not anticipate that the City would encounter any <br />difficulty in delivering the second loan. <br /> <br /> <br /> <br />MINUTES—Eugene City Council May 14, 2008 Page 6 <br /> Work Session <br /> <br />
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