12/08/1975 Meeting - Laserfiche WebLink

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1 Councilman Keller asked for staff comment on the liability question. Robin Cush- man, housing expediter, said the city would not be the owner. Under contract, Sorgenfri would own the property and presumably would carry proper insurance cover- age. The question of the city's liability had not been raised in similar arrange- e ments, she said. Stan Long, assistant city attorney, said it was difficult to see any city liability, since under contract, the city would not be the owner nor have any operational control. Terms of such a contract, he said, as a matter of course would have to be performed. Councilman, Bradley asked several questions: Whether lending institutions would require city guarantee of Sorgenfri's liability; whether state law required competi- tive bidding for contracting such services, and whether there would be city liability in performing a contract with Sorgenfri without having had competitive bidding; any investigation in terms of the building's location in Fire Zone I and the recently enacted requirement for fire sprinklering systems; any individual market or income appraisal of the property other than that of the Lane County Assessor and recent sale of the property. Answers given by Ms. Cushman, Mrs. Niven, Mr. Osbron, and Manager were that the property is currently financed through a land sales contract which Sorgenfri intends to assume. Another mortgage with Citizens Bank is intended to be taken out to refinance the loan. Services are not really contracted for, only certain actions to enable the purchase to proceed. And it is assumed that in any contract, the city would include provision for sufficient liability insurance - a legal consideration in preparation of the contract. The fire protection system proposed for the building was worked out with the fire marshal, and he was in favor of the proposed as presented. There were no appraisers engaged by the city. However, financial' records showing income and expense and other items were compiled by city staff and were the basis for negotiations with the owner. Mr. Bradley expressed concern that there was no independent appraisal of the prop- erty, considering the recent purchase price quoted and the current sale price. e He thought that should be investigated. He asked if there was any feeling that the property would be used for commercial purposes if the city did not subsidize the purchase for use by elderly tenants. Mrs. Niven said there was one proposal that would have involved conversion to commercial use and that was one of the things that prompted concern of the Housing Committee. She declined to divulge particulars, saying it was improper, when Mr. Bradley asked for details. Mr. Bradley then wondered, if the property was purchased through subsidization, whe- ther the city probably should require a higher standard of fire protection than now existing in the fire code or uniform building code because of the intent to use the structure for elderly housing. Manager replied, with concurrence from Mr. Osborn, that the ionization system proposed is somewhat beyond the present code requirements. He thought the question was well taken, however, and suggested it might be investi- gated in terms of impact on insurance costs. Mr. Bradley moved second by Mr. Hamel to table the issue for two weeks II-A-2 and instruct staff to investigate with the present owner in the mean- time the possibility of at least a temporary option to purchase. In making the motion, Mr. Bradley explained that he thought some of these questions should be more carefully examined. Some of them, he said, appeared extremely rele- vant to whether the city might want to buy the equity. Vote was taken on the motion to table. Motion defeated - Council members Bradley, Hamel, and Haws voting aye; Council members Murray, Keller, Beal, e and Shirey voting no; Councilman Williams abstaining. George Boehnke said he thought the city should reconsider the price asked for the Palace Hotel in view of the value of $70,000 placed on the property by the assessor. 12/8/75 - 14 1045