12/14/1988 Meeting - Laserfiche WebLink

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e monthly to market that office tower and the City has committed a certain amount of staff time to the project. Mr. Gleason said if the development agreement is signed, the outstanding loans will be fully secure and the developer will have to give the City first position collateral on the construction loan or somewhere else. Ms. Schue asked if parking fees would be affected by the use of parking replacement funds for the project. Mr. Gleason explained that the replacement fund is there to replace parking and the money to repay the loan will come from the leases on that site. Space leases will be constructed to be market-driven which is why a longer term loan (3D-year) is proposed for the parking structure. Mr. Farkas said existing parking fees will continue to go into the parking replacement fund. Because this parking structure will be privately owned, it will be taxable, unlike the City's other parking lots. Prices in those other garages will continue to be set independently, based on normal market conditions. He said the Downtown Commission is considering modification of the parking program. Mr. Gleason explained that normally a parking structure is built with parking replacement funds. In this case, the money is being loaned to the private side to build the structure which will be taxed, and those taxes will be returned as part of the fees to repay the debt. At the end of 20 years, the City will have its original $2 million in addition to any taxes on the property and the leases. Ms. Wooten again asked how long the City could wait to commit to the e developer without jeopardizing the project. Mr. Gleason said the longer the City delays, the greater is the risk that the office tower will not be developed. He said Pankow needs to know the City's capital contribution before it can finalize lease agreements and make design decisions. Until the decision is reached about whether the library will occupy the lower floors, foundation work cannot commence. Until the lease structure is in place, the developer cannot obtain a bank loan, either. Mr. Gleason also said part of the agreement would allow the City to reassess its commitment if the project is not begun by December 1, 1989. Ms. Wooten asked if the project would be undertaken regardless of whether the library is part of it. Mr. Farkas said the developer wants to build an office building in downtown Eugene and original plans were to build behind the Citizens Building which Pankow already owns. It was at the City's invitation that Pankow considered the proposed mixed-use development at the 8th and Willamette site. His opinion was that without the library as part of the development, it was likely that Pankow would still build in Eugene. If construction costs are $11.32 million for the shell and tenant improvements and the total cost of the project is $13 million if parking is included, Ms. Wooten asked how much it would cost the City to extend a three- percent loan. Mr. Wong explained that an opportunity clause exists. He said if the City had the cash on hand, it could expect to receive eight percent. He said money is not being loaned out of the Bancroft funds which are debt service funds. With seven outstanding Bancroft issues that will be paid off e MINUTES--Eugene City Council December 14t 1988 Page 7