09/25/1985 Meeting - Laserfiche WebLink

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I M E M 0 RAN DUM October 2, 1985 TO: Mayor and City Council, acting as the Eugene Renewal Agency -- FROM: Downtown Commission SUBJ ECT: OVERPARK IMPROVEMENTS Issue The Overpark building in downtown provides public parking and commercial lease space, all in City ownership. Through a series of events, covered below, the financial condition of the facility has required extensive staff work in recent months. Current and projected revenues in the enterprise fund are inadequate to cover expenses. The proposed solution requires spending approximately $400,000 in Renewal Agency funds to upgrade the building and attract tenants to the commercial space. Background When the Overpark was originally constructed, ,inadequate funds were available to complete the commercial space in the building. Nils Hu1t provided funds through the vehicle of "prepaid rent" in exchange for an exclusive lease for the entire commercial floor. The City received a fixed rent, and Hu1t bore responsib1ity for all expenses, leasing, and taxes; in exchange, he received market rate lease income. This arrangement lasted for -- 12 years, until after Hu1t's death. Last year, Hu1t's business associates and the City mutually agreed to the return of control of the commercial space to the City. It was unprofitable for them, and the City was unable to upgrade the space to meet their needs. Nevertheless, the City was interested in regaining control of the building in order to upgrade it to the point where it, like the Parcade, would be a self-supporting structure with the commercial space subsidizing the parking function. Financial Details The commercial and parking functions in the building are combined into a single enterprise fund (524). Much of the operating and maintenance expenses of the facility were paid through interest income on the $2.5 million in cash reserves raised through the assessment district. When the council acted to dissolve the district and pay back the cash reserves in the fund, an operating shortage of approximately $56,000 was created. The fund was balanced by eliminating expenses in the Parks and Development Departments. However, with the return of the commercial space to City control, another negative cash flow situation was created. Current projected expenses exceed projected incom~ by $60,000. This negative cash flow could be exacerbated by the loss 'of any of the existing tenants in the building. (One currently faces eviction for non-payment of rent.) .