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Item 6: Resolution 5017 Authorizing Economic Development Project Revenue Bonds as Recovery Zone Facility Bonds
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Item 6: Resolution 5017 Authorizing Economic Development Project Revenue Bonds as Recovery Zone Facility Bonds
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12/13/2010
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<br />The following is a summary of the proposed changes in the terms that are needed for the developer to <br />close the bank loan prior to the December 31 deadline for issuing the Recovery Zone bonds: <br /> <br /> <br /> <br />To meet the bank’s pre-leasing requirement (60 percent of the space), the developer has <br />asked the City to commit to a total of 26,000 square feet (previously 20,000). This <br />would be accomplished by increasing the amount of guaranteed lease space from <br />10,000 square feet to 16,000 square feet. The City’s lease guarantee will be reduced as <br />sufficient private lease commitments are achieved. (The City’s commitment to lease <br />and occupy 10,000 square feet remains unchanged.) <br /> <br /> <br /> <br />The maximum Downtown Revitalization Loan (DRLP) would be increased from $1.1 <br />million to $1.3 million. Consideration of the larger loan is the result of an approved <br />bank loan ($6.9 million) that is less than projected. <br />In addition to the requested changes to City terms, BMC/Woolworth Properties LLC has agreed to <br />increase their equity contribution from $2.25 million to $2.6 million. <br /> <br />Recovery Zone Facility Bonds: <br />The American Reinvestment and Recovery Act (“ARRA”) permits <br />issuance of the Recovery Zone Facility Bonds. ARRA and Section 147 of the Internal Revenue Code <br />of 1986, as amended, require that recovery zone facility bonds be approved by the council after a <br />public hearing. Notice of the hearing was published in the Register-Guard on November 1. A public <br />hearing was held at 11:00 a.m. on November 15, 2010, before a hearings official to receive comments <br />on the proposed issuance by the City of not more than $8 million dollars of recovery zone facility <br />bonds to finance an approximately 50,000 square-foot mixed-use building that will be constructed on <br />the former site of the Woolworth Building at Broadway and Willamette Streets and will be owned by <br />Woolworth Properties, LLC. No one appeared to testify at the hearing. Resolution 5014 requires that <br />the council give final approval to the sale of bonds for the project prior to the sale of the bonds. The <br />resolution included in Attachment B provides for that final approval <br /> <br /> <br />RELATED CITY POLICIES <br />Development of the vacant parcel addresses many goals for Eugene and downtown, including activity <br />in the core, employment, and sustainability. This project is supported by the Downtown Plan; Down- <br />town Code Amendments; West Broadway Advisory Committee Recommendations; Central Area <br />Transportation Study; Downtown Vision; City Council’s Downtown Collective Statements from <br />August 2009; Downtown Policing Action Plan Team Short-Term Public Safety Strategy Recommen- <br />dations 2004; Cultural Policy Review; Mayor’s 2004 Committee on Economic Development; Growth <br />Management Policies; Sustainable Business Initiative; and JEO’s regional economic development <br />principles. <br /> <br />The City’s debt policies set out provisions for the use of conduit financing, which is what BMC/Wool- <br />worth Properties LLC has requested for this project. Under those policies, a project has to meet certain <br />criteria, including that the City not incur any moral or financial obligation from the borrowing, and that <br />the private party requesting the financing pays all of the costs of the borrowing. The project financing <br />will comply with the debt policies related to conduit financings except for the rating or credit <br />enhancement requirement. Because the project will be financed through a bank private placement loan <br />rather than a public bond sale, this policy requirement is not needed. The council waived that part of <br />the policy in Resolution 5014. <br /> <br /> L:\CMO\2010 Council Agendas\M101213\S1012136 - and attA.doc <br /> <br />
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