Item A: Recovery Zone Bonds and Downtown Site Development

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ECC/URA UGENE ITY OUNCILRBAN ENEWAL GENCY AIS GENDA TEM UMMARY Work Session: Recovery Zone Bonds and Downtown Site Development Meeting Date: September 15, 2010 Agenda Item Number: A Department: Planning & Development Staff Contact: Denny Braud www.eugene-or.gov Contact Telephone Number: 541-682-5536 ISSUE STATEMENT The City Council and the Urban Renewal Agency are being asked to approve items necessary for the proposed redevelopment of the vacant parcel owned by Beam Development located at Broadway and Willamette Street and adjacent to the Centre Court building (“Vacant Parcel”), including: 1) the terms for Bennett Management Company’s (BMC) project; 2) creation of a Recovery Zone and authorization of Recovery Zone Facility Bonds; and 3) transfer of ownership of the vacant parcel from Beam to Bennett Management Company (BMC) along with the assignment of development rights under Beam’s Purchase and Sale Agreement. BACKGROUND At the August 11, 2010, work session, the council unanimously supported BMC’s proposal in concept, and directed the City Manager to bring back additional project details for consideration including: 1) the 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; 2) a resolution designating a Recovery Zone which would provide Bennett Management Company the opportunity to utilize Recovery Zone Facility Bonds to finance the project; and 3) a resolution authorizing the City to issue Recovery Zone Facility Bonds in support of Bennett Management Company’s project financing. The project includes construction of a 50,000 square feet mixed-use building with ground floor retail and four floors of commercial office space. Onsite parking will be embedded with underground parking being considered based on final construction costs. The total project cost, including land, is estimated at $11 million. A conceptual design from project architects Arkrom Moisan is being developed and is expected to be available prior to the September 15 work session. An outline of terms for an agreement between the City and developer for the BMC project is included in Attachment A. The terms would allow BMC to acquire the Vacant Parcel from Beam and move forward with the proposed project. Consideration for the property transaction would be limited to BMC’s assumption of the existing Downtown Revitalization Loan Program (DRLP) loan on the property. BMC will utilize the City’s Recovery Zone Facility Bond (RZFB) authority to allow the bank loan for the project to achieve a lower, tax-exempt interest rate. To help meet the bank’s 75 percent pre-leasing requirement, the City will commit to occupy up to 10,000 square feet of office space in the new building, and guarantee an additional 10,000 square feet of office space. Gap financing provided through the DRLP in an amount not to exceed ten percent of the project will be considered after the bank’s loan terms have been finalized. Wells Fargo Bank has provided a preliminary outline of financing terms which includes a loan at approximately 65 percent loan-to-