Item B - ORI/Sears Sales Terms - Laserfiche WebLink

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bulk parking permit discounts in 2000. As a result, there has been no bulk parking permit discounts offered for the past few years. Staff suggests the use of bulk parking discounts as a tool to encourage new development such as ORI, and assist with the re-tenanting of vacant office space downtown. The City would also be responsible for vacating the north/south alley on the east side of the Sears building. ORI would be committed to proceeding with the timely development of the site in a manner consistent with its proposal. Detailed terms and conditions are included in the attached terms sheet. The ORI project was selected by the URA for a variety of reasons, including project feasibility, scale and density of the development, large number of employees and clients, size of the proposed investment, and design. The ORI project is clearly a very positive addition to the landscape of development in the downtown core. ORI has proposed a purchase price of $400,000. Together with demolition and environmental costs, this transaction would provide a development subsidy of roughly $500,000 for the ORI project. As a non-profit organization with limited funding and financing options, ORI has consistently stated that project cost control is critical to project feasibility. The URA subsidy in effect enhances ORI' s equity position and supports the bond financing structure for the entire development. The URA should consider two aspects of this proposed transaction: 1) In cases that the URA owns property, discounting the sale price is one of the most effective tools to leverage the desired downtown development; and 2) considering the Sears property transaction as a whole (including the Library site), the URA and the community have received a significant return on the original investment. With these considerations in mind, the ORI purchase is considered to be, on balance, a very positive proposal. An appraisal of the Sears property completed in January 2003 indicates a fair market value of $630,000. The value conclusion includes land value of $20 per square foot, minus a deduction for building demolition. Based on market value, the 3/4-blocks of land purchased in 1993 can be valued at approximately $1.5 million. The 1/2-block of land contributed by the URA to the new library project has an assumed value of approximately $1 million. Notwithstanding future net proceeds from the sale of the Sears property to ORI, it can be concluded that the original $900,000 property acquisition investment has already been recovered through the library project. ORI has proposed the construction of a six-story, 96,000 square foot office building/research facility. The total project cost is $24 million. Portland-based Gerding/Edlen Development Company, one of the largest developers in the Northwest, is providing development services for the project. ORI will be seeking LEED (Leadership in Energy and Environmental Design) certification for the new facility. LEED is a program of the US Green Building Council designed to ensure that buildings are designed to minimize their impact on the natural environment. Additional detail on the status of the project is included in the attached Gerding/Edlen letter. The primary source of project financing will include a tax-exempt bond issue in the amount of $20 million. ORI has secured the services of Seattle Northwest Securities, one of the top underwriters in the region. Additional financing detail is included in the attached Seattle Northwest letter. Other project financing will include a $4 million facility grant from the federal Department of Health and Human Services. ORI has recently received notification that their grant request has been approved. Founded in 1960, ORI is a non-profit organization specializing in diversified fields of behavioral research associated with the prevention and treatment of health, educational, and social problems. ORI employs approximately 250 people locally and receives research funding primarily from the National Institutes of Health and the Department of Education. Research grant awards typically provide 3-5 years of financial support for direct and indirect costs. Their annual operating budget is currently $17.2 L:\CMO\2004 Council Agendas\M040623\S040623B.doc