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Hospital Action Plan - Exhibit 3 Outline of Proposal to McKenzie-Willamette Medical Center McKenzie-Willamette is proposing to construct a hospital facility in the City of Eugene (the ;;Hospital"). The Hospital will be located in the Eugene Renewal Agency's Riverfront Urban Renewal Area. The Riverfront Urban Renewal Area will receive the ;'tax increment revenues" from the Hospital. The tax increment revenues are the property taxes on the increase in property value that results from the construction and operation of the Hospital. In order for the Hospital to go forward with the project, additional transportation access needs to be provided by constructing a Patterson Street underpass (the ;;Street Improvements"). The City of Eugene proposes to construct the Street Improvements and to pay for those improvements with the proceeds of a bond that is purchased by McKenzie-Willamette. The bond will be secured by the increase in tax increment revenues that results from the construction of the Hospital, but would not be secured by any other revenues of the City or its Urban Renewal Agency. The City has plans to use the other revenues of the Agency to accomplish additional high priority projects within the Riverfront Urban Renewal Area. The Street Improvements are estimated to cost approximately $12 million. The Hospital is esti- mated to have a total taxable assessed value of approximately $61 to $72 million (assuming the property is assessed at 72% of the cost of $85 to $100 million). The property on which the Hospital will be located is currently largely exempt from property taxes, but there are a couple of tax lots that have a taxable assessed value of about $2 million*. This means that the Hospital will increase the assessed value of in the Riverfront Urban Renewal Area by about $59 to $70 million. The consolidated tax rate (the sum of all property tax rates) in the Riverfront Urban Renewal Area is currently about $18/$1,000 of assessed value. This means that the Hospital should produce about $1 to $1.2 million of tax increment revenues each year, assuming a 93% county- wide property tax collection rate. If the bond that McKenzie-Willamette purchases bears interest at 5% per annum, the tax increment revenues will repay the bond with interest in approximately 15 to 19 years. The Riverfront Urban Renewal Area will terminate on June 30, 2024. When the area terminates, the Agency will no longer be able to collect tax increment revenues. This means that the bond must also terminate in that year, regardless of whether it has been paid in full. If McKenzie-Willamette constructs the Hospital, maintains its value, and pays its property taxes beginning in 2009, the tax increment revenues from the Hospital are estimated to be sufficient to fully repay the bond between 2023 and 2027. However, McKenzie-Willamette, as purchaser of the bond, will bear the risk that property taxes on the Hospital are not sufficient to pay the bond before the date the bond terminates or when the Urban Renewal Area terminates. If the Hospital is not constructed, or has an assessed value that is less than current estimates, or is damaged or destroyed, or becomes exempt from property taxation, the tax increment revenues from the proposed facility may not be sufficient to fully repay the bond. * More research needs to be done to determine the amount of taxable assessed value within the property that the Hospital would purchase from EWEB.