01/11/1989 Meeting (2) - Laserfiche WebLink

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. Responding to a question from Ms. Ehrman, Mr. Farkas indicated that relocation of an EWEB steam line would be necessary. 2. Land Disposition Mr. Mounts continued to outline project elements. The second phase involves land disposition and assumes that Pankow will receive title to the property and agree to pay market price for the land at the time of the building sale. For estimate purposes, the market price of the building is assumed to be approximately $30 million at the time of sale, with the land valued at one-tenth the value of the building. If the building is refinanced, the City would receive five percent of the profit. Additionally, the City would receive ten percent of the profits from the bUilding operation. Because the land would be in private hands, the City would receive tax increment revenue on the value of that land which Mr. Mounts estimated at approximately $1 million. Within a ten-year period, Mr. Mounts anticipated a net total return of $1.9 million. Answering Mr. Boles' question, Mr. Mounts pointed out that no appreciation in value of the land was built into his analysis. Mr. Holmer suggested that an agreement should be reached specifying that land value at time of sale would not be based on assessed value but on market value at that time. Mr. Gleason responded that in the contract relationship, the type of appraisal for computing value would be specified. e 3. Construction Financing The third project phase Mr. Mounts reviewed was construction financing which would involve the City providing a $9 million Line of Credit loan to the developer at a three-percent interest rate which can be drawn down as needed during the 24-month construction period. Based on that and a current rate of 8.25 percent, the cost of the City's share would be approximately $500,000 to be added to the cost of the library. Were the developer to obtain a commercial line of credit to finance construction, close to $1 million in additional costs would be added to the cost of the library shell. The City would therefore save approximately $465,000 it would otherwise have to pay through increased lease payments to cover interest costs. Responding to Ms. Schue's comment, Mr. Mounts emphasized that the City's loan would benefit only the library shell and parking, so it represents an investment in the public portion of the project. The $9 million in resources would be found in Bancroft funds, parking reserves, and Urban Renewal Agency downtown development funds. Mr. Mounts explained that the City would borrow from a bank on a short-term basis, with the funds mentioned serving as security to that line of credit. Mr. Gleason noted that a performance bond or bankable security would protect the City's repayment within the 24-month period. 4. Parking Financing e Mr. Mounts reviewed the parking element of the proposal which involves the long-term financing of the underground parking structure with cost and revenue estimates based on the City loaning the developer $2.5 million at MINUTES--Eugene City Council Dinner/ Work Session January 11, 1989 Page 2