Item 2: HUD Section 108/BEDI Individual Project

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followed by HUD approval. The proposed loan would draw down all of the Section 108/BEDI funds at once for the acquisition of the properties listed above. Projects that receive Section 108/BEDI funds must meet project preference criteria, as follows: a) meet a CDBG national objective of benefiting low or moderate income persons or eliminating conditions of slums or blight; b) lead to economic revitalization in connection with brownfields; c) be financially feasible; d) be within reasonable risk; e) be likely to be repaid, and, f) provide permanent, full-time employment for low and moderate income individuals. The project preference criteria are designed to provide an objective evaluation of the project’s ability to produce an effective and timely outcome. Proposed Individual Project TheUrban Renewal Agency (URA) has secured purchase options on several downtown properties along West Broadway between Willamette and Charnelton streets. Section 108/BEDI funds could be used to purchase properties within the redevelopment area. The locations of the properties are shown in Attachment A. A description of the council action history with regard to the West Broadway Redevelopment Project can be found in Attachment B. The properties are proposed for acquisition using Section 108/BEDI funds due to their unique ability to meet a combination of federal requirements. The proposed property acquisition would cost $10.8 million under the current purchase option terms: Section 108 would contribute $7,895,000, the BEDI grant, $2,000,000, and Urban Renewal funds, $905,000. The proposed acquisitions are a portion of the overall redevelopment concept for the West Broadway Redevelopment Area. The purchase of other optioned property would have to be financed with a combination of other funds. Section 108 is a loan guarantee program that generally follows the same regulations as the CDBG program. Public benefit is determined by the ultimate development and use of the property acquired with Section 108 funds. The majority of the funds for the proposed project would be used to benefit low-income persons. Potential end uses for the property acquisition would include retail, office, hotel, cinema, and housing, as detailed in the Request for Qualification responses from Beam Development and KWG Development Partners. The potential mix of uses will be reviewed by the West Broadway Advisory Committee, whose recommendations will be forwarded to the council in September 2007. At least 283 jobs will be created by development of the five properties. Consistent with CDBG requirements, a minimum of 51 percent of the jobs will be available to low- or moderate-income individuals. Brownfields are vacant and underutilized properties whereredevelopment is complicated by actual or perceived environmental contamination. The privately-owned two-block stretch of West Broadway has been characterized by high vacancy rates and depressed market conditions for over 20 years. The area suffered following the exit of major department stores including JC Penney, Sears, Bon Marche, Kaufmans, Woolworths, and Newberrys. Many of these buildings remain vacant. Additionally, the Woolworths and Sears buildings were demolished in 2001 and 2005, respectively. The JC Penney building (also known as the Centre Court building) has been vacant for years. Repayment/Security: Ordinance No. 20376 sets out the revenues that would be pledged for the Section 108 loan, including federal grant funds, revenues and rights the City obtains in connection with the redevelopment projects, repayments of loans and other assistance provided by the City pursuant to Section 108, payments from the URA, and similar amounts. Section 108 loans will not be secured by L:\CMO\2007 Council Agendas\M070716\S0707162.doc