04/12/1989 Meeting - Laserfiche WebLink

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e whenever Pankow refinances; the market value of the land upon sale; and tax increment resources after the constructed building has been assessed. Mr. Farkas said staff believes the overall value of the project will be between $4 and $4.5 million at the present value of return, Answering a question form Mr, Holmer, Mr, Farkas said the interest rate on the $2,5 million loan from the Parking Reserve Fund would be three percent, The interest rate on the $1.5 million loan from the Tax Increment Fund is still in negotiation, although it will be higher than three percent. Mr, Gleason explained that the low interest rate on this loan is not an advantage for Pankow, He said the standard across the country is to have an area of the city which is exempt from parking requirements; this induces development at a higher density. In these parking-exempt zones, parking is usually developed using public funds, Mr. Gleason said in this case, the City is asking the Pankow to provide the public parking using loans and to pay the City back. Whereas typically the City would build, pay for, and operate the parking structure, the City is loaning Pankow money to build the structures, earning interest on the loan, and Pankow will pay the taxes, operation, and maintenance costs for the structure, Mr. Farkas added that if the City were to build and operate a new parking garage, it would cost the City between $115 and $150 per space a month to cover all expenses, Thus, a 400-space parking structure would cost the City between $552,000 and $750,000 per year to operate, This is an expense the City will not incur if Pankow develops its own parking and, indeed, the City will receive a return on its investment, Ms. Bascom noted that Pankow is willing to develop the parking because it can secure tenants more easily if parking is provided on-site. e Referring to Section 3.4 of the Memorandum of Understanding, which states that Pankow has an option of purchasing the land at any time for its then market value and concludes, "upon a sale of the land to Pankow, the (Eugene Renewal) Agency's entitlement to a percentage of cash flow and refinancing gains will terminate," Mr. Boles asked what would happen if Pankow buys the land at the end of five years. He was concerned that Pankow would be tempted to do this and that the City would not receive the refinancing gains, Mr. Farkas said although the City does stand to gain more over a longer period, it cannot lose under this scenario; the market value of the land should go up considerably once the site has been improved, and the Eugene Renewal Agency (ERA) will be receiving the tax increment flow, Mr. Bennett asked if Pankow feels it will need 400 parking spaces. Mr. Farkas said Pankow would own the structure and if the company did not need all the parking spaces for its tenants, it could lease the extra spaces. Mr. Bennett said he continues to be concerned that the ERA would be using all its tax increment capital in conjunction with this project. Based on his work with the Downtown Development District Review Group (DDDRG), Mr. Holmer felt all 400 spaces would be needed, Answering a question from Mr. Boles, Mr, Farkas said the $2.5 million loan to Pankow would exhaust the Parking Reserve Fund at this time. He stressed that e MINUTES--Eugene City Council April 12, 1989 Page 3 ~'.