Item 3A: Approval of City Council Minutes

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Mr. Clark asked about the impact of the recovery zone bond on the bank loan. Mr. Braud said that because the loan was tax exempt, the bank could offer a lower interest rate to a private company. The City was assuming no risk. Mayor Piercy suggested that current economic conditions and the community’s interest in downtown revitalization justified the establishment of the zone. Ms. Taylor determined from Ms. Cutsogeorge that the bank did not have to pay income taxes on the loan, which Ms. Taylor concluded took money away from government. She asked how many housing units the Lane Community College (LCC) project would contain. Mr. Braud said LCC was discussing housing between 200 and 220 students with an array of unit types. LCC was in the design phase and would attempt to appeal to different students with its design. He did not know how much rent would be charged. He reported that initially, units would be targeted toward LCC students but he envisioned that they could be made available to students from other local colleges. Ms. Taylor observed that community college students generally did not live on campus. Mr. Braud agreed, but noted that many students were starting their college careers at community colleges due to the higher cost of attending four-year universities. However, they were still looking for a college-like experience, and the market for those students was changing. Ms. Taylor asked what happened if no one rented the housing and what risk the City bore. Mr. Braud reiterated that recovery zone bonds had no risk for the City. LCC would issue the bonds and assume all risks associated with the performance of the student housing. He noted that LCC was planning on debt financing for the facility, and that would be supported by rents. Mr. Zelenka commended staff for its creative work on the proposal. He acknowledged the complexity of such financing arrangements. Speaking to the information presented on the recovery zone bonds, he asked what “used by” meant. Mr. Braud said that it mean a substantial draw, which in this case would be an amount of money drawn down to support soft costs, such as architectural costs, related to the project. The timing appeared to work for the Bennett Management Company and LCC project because LCC was already in design and Bennett Management Company could be in design quickly. Mr. Zelenka asked if Bennett Management Company experienced difficulty in securing financing. Mr. Braud said the company was working with Wells Fargo Bank, which had examined the project and issued some initial terms. An appraisal would be required. Bennett Management Company had a long history of working with Wells Fargo, and every indication the City received from the bank was that the project was headed in the right direction. Mr. Zelenka expressed enthusiasm for both the Bennett Management Company and LCC projects and indicated his intent to support a motion to that effect. Responding to questions from Mr. Brown, Ms. Cutsogeorge confirmed the deadlines involved with the use of the funding source. Mr. Brown reported that his research indicated the funding in question had been available for nearly two years but very little of it had been used because it had been difficult for people to understand how to use it. He was happy to see that Eugene was able to make use of the funds. MINUTES—City Council September 15, 2010 Page 2 Work Session