05/23/1983 Meeting (2) - Laserfiche WebLink

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e e e The staff notes and minutes were entered into the record and the public hearing was closed. Councilor Lindberg asked if the subordination of the loan had precedent and had been agreed to by staff. City Attorney Tim Sercombe stated that this procedure fits within the guidelines of Federal regulations. Mr. Lindberg asked if the $55,000 approved from CDBG funds would revert to Housing if the project were not supported. Ms. Decker stated that it was her understanding that those funds would be reprogrammed. Councilor Smith asked if the offer proposed by Mr. Bennett is acceptable to the Hessels. Mr. Gallagher said that the offer is acceptable as long as the conditions of the loan and the subordination are met. Councilor Obie asked the staff to sumarize the three funds and interest rates to be used for financing the City's portion of the project. Ms. Decker said the funding would be composed of: 1) $50,000 from the Commercial Redevelopment Loan Program to reduce the interest rate on market rate funds to six points below the market rate; 2) $55,000 from CDBG funds at an interest rate of three percent; and 3) $20,000 from the Historic Restoration Loan Program at an interest rate of three percent. Mr. Obie asked if any of the funds would affect the City's economic redevelopment program. Ms. Decker said they would not. Mayor Keller asked what the terms of the loans would be. Ms. Decker said that it would be a determination of staff for either 30 years at an appropriate interest rate or a 30-year amortization period with a call at 10-12 years on anyone of the loans. Councilor Ball asked what the fair market value of the property would be after restoration and how that value was determined. Ms. Decker said an appraisal by HUD would have to be performed and that it was staff's determination that the fair market value exceeded the loan. She added that the total amount of the funds for the project is 80 percent of the $418,000 for development costs. She said she was not aware of a fair market value having been set. Mr. Gleason stated that an appraisal will be performed after the project is put together and it will be reviewed by HUD. Mr. Ball asked if the staff had calculated the difference to the tax base of the renovated building versus the parking lot. Ms. Decker stated that this had not been done. Mr. Ball asked if staff had calculated the total subsidy, given the two options for the loans. Ms. Decker said this had not been done, adding that the issues the council is dealing with are primarily of policy. She said that the terms of the loan would be determined after staff had received the council's approval for further negotiation. Mr. Ball asked Mr. Bennett what percentage of the building space his company planned to occupy, the construction time frame, and tentative move-in date. Mr. Bennett responded that he would occupy 75-100 percent of the office space, depending on the layout of the bUilding. He said he wished to begin construction before the Fall and complete construction in the Spring. He said that his occupation of the building depended on finding a subtenant for his present office, his lease having two years to run. Mr. Ball asked why Mr. Bennett had used a "no vacancy" factor in his projection. Mr. Bennett admitted that it was not the usual method, but he had attempted to make the figures appear better based on his plans to occupy the space. MINUTES--Eugene City Council May 23, 1983 Page 5