Item A: Disposition of 858 Pearl - atts A and B

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Disposition of 858 Pearl Street Property Meeting Date: December 8, 2010 Agenda Item: A Department: Planning and Development Staff Contact: Denny Braud www.eugene-or.gov Contact Telephone Number: 541-682-5536 ISSUE STATEMENT The council is being asked to approve the sale of the 858 Pearl Street surplus property to Master Development. BACKGROUND In June 2009, the City of Eugene declared the 858 Pearl Street real property as surplus, per Eugene Code 2.864. Legal notice of the surplus real property sale and request for offers to purchase was provided in July 2009. The notice indicated that the property would be sold at fair market value to the buyer whose offer was acceptable to the City Manager, with no other special conditions or evaluation criteria applied to the sale. Section 2.872 of the Eugene Code provides that a proposal for the sale of property that is acceptable to the City Manager shall be presented to council for its action. In July 2009, the City received offers from Network Charter School and Master Development. On September 30, 2009, council authorized the City Manager to enter into an agreement with Network Charter School for a two-year lease with an option to purchase the property for $1.5 million. An agreement with Network Charter School did not materialize following council action. Master Development approached the City with an updated offer to purchase the property. The proposed purchase price is $1 million ($700,000 cash paid at closing and $300,000 to be repaid from the net cash flow that is generated after the owner’s target return on investment has been realized). A detailed outline of the proposed terms is included in Attachment A. Master Development proposes to convert the upper floors to residential apartments and renovate the ground floor for retail and office uses. They anticipate creating approximately 15 new housing units. The updated appraisal in May 2010 indicated a fair market value of $1.2 million for 858 Pearl Street. The value conclusion was based on a commercial office use. RELATED CITY POLICIES Development of the vacant 858 Pearl building addresses many goals for Eugene and downtown, including promoting activity in the core and supporting sustainable development. This project is supported by the Downtown Plan; Downtown Vision; and Growth Management Policies. Increased downtown development is specifically identified as a Sustainable Development outcome in the 2010 Eugene City Council Vision, Goals and Outcomes. Z:\CMO\2010 Council Agendas\M101208\S101208A- and attsA and B.doc