Item B: Downtown Update - ORI (Sears Site)

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ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Downtown Development Update - ORI (Sears Development Site) Meeting Date: April 12, 2006 Agenda Item Number: B Department: Planning and Development Staff Contact: Denny Braud www.eugene-or.gov Contact Telephone Number: 682-5536 ISSUE STATEMENT This agenda item was previously scheduled to discuss Oregon Research Institute’s (ORI) proposed development of the Sears site. ORI’s Board of Directors recently decided to not move forward with the development of the site at this time. The council is being asked to consider issuing a new request for proposals for the sale and development of the Sears site. BACKGROUND In December 2002, a Request for Proposals (RFP) was issued for the sale and development of the Urban Renewal Agency-owned Sears building site. In May 2003, the Urban Renewal Agency (URA) reviewed the responses to the RFP and selected the ORI project. In June 2004, the URA reviewed the terms of the sale and directed the City Manager to sell the property to ORI. A Purchase and Sale and Development Agreement was signed in February 2005 which specified a $400,000 purchase price, a June 2005 closing date, and July 2005 construction date. In July 2005, the agreement was amended to increase the purchase price to $470,000, extend the closing date to October 2005, and extend the construction date to January 2006. In December 2005, a second amendment to the agreement was signed, extending the closing date to January 30, 2006. The second amendment also required ORI to secure project financing by February 28, submit permits by March 15, sign a construction contract by April 7, close on project financing by May 12, and begin construction by May 15. ORI did not meet the January 30 closing date as specified in the agreement. On February 13, 2006, the council directed staff to assist ORI in closing the financing gap for their project, and to bring the item back to the council within 60 days. Since February 13, staff has had ongoing discussions with ORI representatives. ORI indicated that it discontinued work with Home Street Bank, the primary lender for the project, and was seeking an alternate lender and a possible alternate source for New Market Tax Credits. Staff participated in discussions with two banks that expressed interest in the project. Staff also introduced ORI to a potential equity investor/development partner. ORI indicated that it had discussions with a second development partner. Additionally, staff continued discussions regarding an offer to use Urban Renewal and Community Development Block Grant loan funds to assist with their financing gap. The Purchase and Sale and Development Agreement signed by ORI and the URA included a $40,000 earnest money deposit that is currently being held in escrow. The disposition of the earnest money will be reviewed by the City Manager within the context of the agreement. L:\CMO\2006 Council Agendas\M060412\S060412B.doc