12/14/1988 Meeting - Laserfiche WebLink

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e Mr. Farkas described this phase of the project as critical and said it would ultimately benefit the City to provide financing at lower rates. Mr. Farkas added that $2 million in grant/loans are being sought through the County and State. He explained that $1 million in road fund money could be available if the project results in net new job generation. Utility relocation would be funded with a $1 million public works loan/grant from the State. Half of that would need to be repaid and Mr. Farkas proposed splitting that $500,000 repayment between Pankow and the City, with repayment not starting for ten years. The City's portion would come from tax increment revenues that would be generated after that ten-year period. Long-term financing is focused on the parking facility. Mr. Farkas stressed the importance of making parking available to office tower tenants at market rates. To help accomplish this, the City would provide a longer-term low-interest loan of $2 million to $2.5 million at three-percent for a 30- year amortized period. The 30-year amortization would begin to be repaid after five years, and the loan would have a ten-year call. Mr. Farkas said the land, valued at approximately $1 million, is currently owned by the renewal agency. Selling the land to Pankow would probably result in the land acquisition cost being built into the office tower which could rais~ the office lease rates to a point beyond acceptability in the Eugene market. Furthermore, outright sale of the land might not result in the best return for the City. Therefore, Mr. Farkas proposed that the City receive ten percent of the cash flow from the office tower starting in the fifth year, five percent of any refinancing profit, and market value return e on the land if or when the office tower is sold. In ten years, Mr. Farkas estimated that the land would be worth ten percent of the total project. The land would become taxable. Based on a $2 million office project, the tax increment flow would be approximately $60,000 annually. The 106,000-square-foot library shell was estimated by Pankow at a cost of $6.6 million. Through negotiations, Pankow agreed to remove the developer's fee and encouraged the community to use that as a challenge grant for raising at least $280,000 in private sector contributions for the library. This agreement brought the cost of the shell down to $6.32 million. It was proposed that the City would lease the shell at 60 cents per square foot for the first five years. Tax increment from the office tower, land, and parking structure would be used ~o retire this debt (a $763,000 per year lease). At the end of five years, the City would have the option of buying the shell for $6.32 million, renewing its lease, or entering an amortized lease on a 3D-year basis. The council would have the option of bUilding-out a 106,000 square foot library or finishing 75,000 square feet and reserving the rest for interim leased space. In either case, Mr. Farkas recommended using existing tax increment resources to pay for the tenant improvements, estimated at $3 million to $5 million. e MINUTES--Eugene City Council December 14, 1988 Page 5