Item A: Downtown Site Development

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Under the RZ Facility Bond approach, BMC would obtain a loan from a bank. That loan would be secured by payments from BMC and other security that is required by BMC’s bank. Although the specific mechanics of how this would occur need to be worked out, the City would layer a bond structure over the bank loan in order to provide the tax-exempt interest rates. No City money would be used for the transaction. The City would not be lending money to BMC; the City would not be taking any financial risk by entering into this transaction on behalf of BMC. The City’s Recovery Zone bond allocation has a limited duration, and the State of Oregon has indicated that it will pursue the City’s allocation in September for another purpose if those allocations are not committed to local projects. To utilize the program, the BMC project would need to close its bank loan and begin drawing funds by the end of calendar year 2010. With these time constraints, the council is being asked to indicate its general support for the project concept and Recovery Zone bond financing proposal so that the necessary approvals can be considered in September. RELATED CITY POLICIES Development of the Vacant Parcel addresses many goals for Eugene and downtown, including activity in the core, employment, and sustainability. This project is supported by the Downtown Plan; Down- town Code Amendments; West Broadway Advisory Committee Recommendations; Central Area Transportation Study; Downtown Vision; City Council’s Downtown Collective Statements from August 2009; Downtown Policing Action Plan Team Short-Term Public Safety Strategy Recommendations 2004; Cultural Policy Review; Mayor’s 2004 Committee on Economic Development; Growth Management Policies; Sustainable Business Initiative; and JEO’s regional economic development principles. The City’s debt policies set out provisions for the use of conduit financing, which is what BMC has requested for this project. Under those policies (which are included as Attachment B), a project has to meet certain criteria, including that the City not incur any moral or financial obligation from the borrowing, and that the private party requesting the financing pays all of the costs of the borrowing. COUNCIL OPTIONS 1.Direct the City Manager to bring back additional project details for consideration including: a) Request for URA Board approval of the transfer of ownership of the vacant parcel from Beam to BMC, along with the assignment of Beam’s development rights under Beam’s Purchase and Sale Agreement; b) A resolution designating a Recovery Zone which would provide BMC the opportunity to utilize Recovery Zone Facility Bonds as a tool to lower interest rates on the project; and c) A resolution authorizing the City to issue Recovery Zone Facility Bonds in support of BMC’s bank financing. 2.Take no action. CITY MANAGER’S RECOMMENDATION The City Manager recommends that the council declare support for the BMC project and that the following items be brought back for consideration: a) transfer of ownership of the vacant parcel from Beam to BMC, along with the assignment of development rights under Beam’s Purchase and Sale Agreement; b) a resolution designating a Recovery Zone which would provide BMC the opportunity to Z:\CMO\2010 Council Agendas\M100811\S100811A and att's A and B.doc