Item 2A: Approval of City Council Minutes

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Ms. Ortiz also supported the proposal. She determined from Mr. Braud that if the building was not redeveloped as housing, it would not be eligible for the Multi-Use Property Tax Exemption (MUPTE). She further determined from Mr. Braud that while the City had only two offers for the property, one from Master Development and one from Network Charter School, several parties had requested information about the property. Mr. Zelenka determined from Mr. Braud that the City had not solicited offers for the property since July 2009. Ms. Hammitt pointed out that the property had a “for sale” sign posted on it and the City had actively marketed the property since July 2009. Mr. Zelenka agreed with Mayor Piercy that it would desirable if the building was redeveloped as housing but he acknowledged the challenge of that. He believed the MUPTE was most appropriately used in the downtown area rather than in the other areas that it was being used. Mr. Zelenka asked about the difference between the appraised price and the sale price. Mr. Braud said the appraisal was based on a commercial office use rather than a housing use. It would be more challenging to convert the property to housing, which changed the economics of the real estate value. The rents charged for housing would not be more than rents charged for office use, and were generally less. Mr. Braud said staff derived a lower value for a housing project than for a commercial office use. Mr. Zelenka asked why the City was not requiring housing but would still provide the purchaser with $200,000. Mr. Braud attributed it to the market risk involved and suggested the City would not get a market value for the property because it was vacant and a purchaser would be buying a ‘spec’ office building with no tenants. Responding to a question from Mr. Zelenka, Mr. Braud confirmed there was no time limit on the note. Mr. Zelenka asked if staff had done a spreadsheet analysis of the likelihood of receiving that payment. Mr. Braud acknowledged the risk involved and pointed out that it was the same risk the City took in regard to the Beam project. The City lacked a fully fleshed out pro forma because Master Development had not gotten into the building to determine rehabilitation costs or done a market analysis for the rents. He speculated that at some point the building would be sold, which would be a logical time for the money to be paid back to the City. He suggested that it was also possible that, like Broadway Place, rents would stabilize and the City would begin to see payments. Mr. Zelenka likened the note to a zero interest loan. Mr. Braud said the City was a partner in the project as well as a participant in the success of the project. Mr. Zelenka indicated support for the proposal because he believed the City would recover its money. Mr. Clark believed that the City had other assets and properties it should dispose of to support the construction of a new city hall. He asked what City Manager Jon Ruiz planned to do with the $1 million realized from the property sale. City Manager Ruiz indicated he had planned to use it to fund implementa- tion of the strategies that came out of the Envision Eugene process. Mr. Clark strongly suggested the manager add the sale proceeds to the Facility Reserve because he believed the money should be used to defray the cost of renovating or rebuilding a new city hall. City Manager Ruiz said that the sale price would come in as unappropriated dollars, and the council could chose where to appropriate those dollars through either a supplemental budget or through the annual budget process. MINUTES—Eugene City Council December 8, 2010 Page 2 Work Session