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5. PUBLIC HEARING AND POSSIBLE ACTION: An Ordinance Establishing a Process and Standards for Issuing Economic Development Project Revenue Bonds as Recovery Zone Facility Bonds City Manager Ruiz introduced the item, reporting that the Oregon Revised Statutes required the City to adopt a procedure and standard for receiving and processing applications for bonds. The next agenda item was related, and must be approved by the council for the Bennett Management Company project to proceed. Mayor Piercy opened the public hearing. There being no requests to speak, she closed the public hearing and called on the council for questions. Councilor Brown asked why Wells Fargo walked away from the project. Urban Services Manager Denny Braud of the Planning and Development Department responded that he could not speak to why the bank made a credit decision, but the current lending environment was quite challenging. He said the good news was that another bank was close to approving the financing. Councilor Brown determined from Mr. Braud that the City would be liable for the lease of an additional 16,000 square feet if the developer could not fill the space with a private tenant. City Manager Ruiz added that the City could also sublease the space. Councilor Brown determined from Mr. Braud that a tenant wishing to lease that space would be leasing from Bennett Management Company, and that staff anticipated rents would be $1.85 per square foot. City Manager Ruiz clarified that rents would be paid by the department occupying the space. A non - general fund department would pay rents using non - general fund moneys. Councilor Brown said he initially supported the project but no longer could because he believed the City was overextended and was taking too much of a risk. In addition, he was concerned that there would be too much office space downtown with too little demand. He said if another private entity had been willing to commit to the project, he might have been able to support it. City Manager Ruiz spoke to the City's strategy for downtown. He reminded the council of the goal to fill both of the pits that existed. He recalled that the Beam Company's original proposal was for both the Centre Court and Aster Pit, and at that time the City had guaranteed it would occupy 50,000 square feet. The City was not making a similar guarantee for the Centre Court and in fact had cut its square footage in half. City Manager Ruiz pointed out that the Bennett Management Company has increased its equity contribution from $2.25 million to $2.5 million. He continued to believe the City's investment was worthwhile. Councilor Brown said it was possible the City could be the building's only tenant for some time. He was also concerned that the project presupposed an answer for the question of what to do about City Hall by moving all the employees out. Councilor Ortiz was prepared to support the motion. She said if the City wanted to see change, it needed to invest in the downtown. Bennett Management Company had a good record and she did not hesitate to commit to the square footage. Councilor Zelenka said it clear to him that nothing would happen downtown unless the City stepped up and made it happen. The City had stepped up. All three of the projects in downtown had City participa- tion in common. Councilor Zelenka suggested a certain amount of critical mass was needed to change MINUTES— Eugene City Council December 13, 2010 Page 6 Regular Meeting