Item 2A: Approval of City Council Minutes

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was the full amount that could be borrowed and the City had received the maximum amount of BEDI grant funds; additional funds would not be available until the loan was repaid. He said the funds were earmarked for economic development such as the Beam commercial development project. He said a project might include some infrastructure, but it would need to be related to job creation. Mr. Poling said he had some concerns with the proposed changes, but was inclined to support them because of Beam’s demonstrated commitment. He asked if there was any guarantee that Phase II would be implemented. Ms. Laurence said there was no guarantee, but the PSA terms gave Beam 12 months, from May 2010, to May 2011, to move forward or the URA had the right to repurchase the property. Mr. Poling asked what options the City had if the project did not attain a positive cash flow. Mr. Sullivan said there were multiple strategies. He noted that the BEDI funds were a grant that the City did not have to repay. He said the first option was that the project moved forward as planned and could meet its obliga- tions; another option was that the HUD 108 loan could remain in interest only for an extended period of time; and finally, the City had first collateral position on the property if it had to reacquire it because of lack of performance. He said Beam had a good track record and he felt confident in the development proposal. In response to a question from Mr. Pryor, Ms. Laurence said if the council did not approve restructuring of the PSA to allow a phased approach she did not think it would move forward. She said the developer was out of compliance with the current PSAQ because building permits were not yet submitted. Mr. Pryor said while amending the PSA would mean an increased level of risk, there was also the increased potential for payoff if the project went forward as planned. He felt the City should take advantage of the opportunity to provide the catalyst for downtown revitalization. Mr. Zelenka also viewed the project as a catalyst, but said the question was whether the project still represented a wise use of public funds. He asked for clarification of changes in the financial structure of the PSA. Ms. Laurence explained that the developer fee was deferred and the 60/40 split of net proceeds after debt service would continue until the BEDI grant funds were repaid. She said that Beam would need to have 25,000 square feet rented in order to cover debt service and there appeared to be that level of interest from potential tenants. She said the City wanted to see about 50 percent of the building pre-leased before Beam began to draw on the HUD 108 funds. Ms. Piercy said that the need for “incubator space” was identified at the recent Economic Summit. Ms. Taylor stated that the council should take advantage of the opportunity; the risk was in not taking any action. Mr. Brown asked if there were concerns with asbestos and seismic issues. Mr. Sullivan said a prior owner had considered residences on the upper floors and determined that it was not feasible, primarily because of the cost of a seismic retrofit. Ms. Laurence added that Beam was addressing seismic requirements in the code, but the Beam project did not represent a change in use. Mr. Clark agreed that Beam was committed to the project, but it now appeared there was no definitive plan to fill the pit on the vacant parcel, which had been a goal. He asked if the council should consider putting the project back out to bid to determine if there was another developer with a plan and the capacity to rehabilitate the Centre Court and refill the pit. Ms. Laurence said there had been discussions with a number of developers locally and outside the community about interest in the vacant parcel. She understood from MINUTES—Eugene City Council December 14, 2009 Page 3 Work Session