12/19/1988 Meeting (2) - Laserfiche WebLink

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e $1 million to $2 million from the County and the State to assist in site improvements involving utility relocation and street rebuilding. 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. Underground parking would be available to library users in the evenings and on weekends free of charge. 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 now would probably result in the land acquisition cost being built into the office tower which could raise 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 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. Because of the office tower, the land would become taxable on completion of the building. Based on a $20 million office project on that parcel, the tax increment flow from the land would be approximately $60,000 annually. - The 106,000-square-foot library shell was estimated by Pankow at a cost of about $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 to 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 30-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. Tony Mounts, Finance Division, explained that a larger library could be expected to have additional operating costs, presently estimated at $600,000 annually. The Council Committee on Library Financing considered several options that included: 1) opening the library without additional operating money which would result in staff shortages and service impacts (possibly, reduced hours); 2) financing the additional costs within the existing General Fund budget which would add to the projected deficit; 3) additional property e MINUTES--Eugene City Council December 19, 1988 Page 2