Resolution No. 5057 - Laserfiche WebLink

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assume some risk from the major redevelopment costs associated with the site and from the rate of absorption of the large number of proposed units brought into the local student housing market. Capstone has indicated that their primary equity investor (Kayne Anderson Real Estate Advisors) will require a minimum rate of return of 9% in the first year. Without the MUPTE savings, the project is projected to generate a 6% rate of return, which is insufficient to attract the required equity investment. The MUPTE tax exemption lowers annual operating costs by approximately $846,000, which produces higher net operating income and results in a projected 9% Cash on Cash rate of return. Staff and the Loan Advisory Committee reviewed the pro- forma, including assumptions regarding lease rates, operating costs, capitalization rate, lender underwriting criteria, interest rate assumption, and market expected rate of return. The Committee confirmed the financial assumptions used in the analysis and unanimously concluded that the tax exemption is needed to generate a return on investment sufficient to attract the required equity investment. 2.8 Presentations concerning the Olive & 13 Student Housing project were given to the Downtown Neighborhood Association on January 25 and March 26. The Association submitted a letter indicating support for the project with stated reservations and recommendations. 3. A display ad soliciting recommendations or comments from the public regarding this project was published in the Register -Guard on February 5, 2012. The 30 -day period for comment expired on March 6, 2012 at 5pm. Staff received 29 written comments within that period. Additional comments were submitted to staff or directly to City Council after the official comment period. All comments received as of April 13 were provided to City Council with the materials for the April 23 Public Hearing. Therefore, based upon the above findings, the proposed project is in conformance with all applicable local plans and provisions of the Eugene Code, 1971, planning regulations, the Metropolitan Area General Plan, and the criteria set forth in the City's adopted Standards and Guidelines, and I recommend that the application be approved. Dated this 2-0 day of April, 2012. Sarah J. Medary Executive Director, AIC Planning & Development Depart ent