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for the Core Campus project with specific points on safety for pedestrians and bicyclers (see Attachment D). Public Benefits After reviewing the Core Campus application against the public benefit scoring criteria in the Standards and Guidelines, staff determined that the proposed development earned 290 points. (A minimum of 100 points is required for the City Manager to recommend that council approve an application.) Points were awarded for the project through the following benefits: Density: 50 points (10 points per unit in excess of the minimum code requirement; 50 point o max) Green Building Features and Quality of Building Materials: 100 points for planned LEED o certification Accessibility: 40 points (10 points per accessible unit) o Location: 100 points for being located within the Downtown Plan Area o Financial Analysis The applicant demonstrated that the project as proposed could not be built but for the benefit of the tax exemption. Core Campus will need to provide 25 percent ($11 million) of the project’s financing in the form of equity, which is likely to come from an equity investor active in the nationwide market. Additionally, the proposed project will require the investor to 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. Core Campus has indicated that their equity investor will require a minimum rate of return of 8.96 percent in the first year. Without the MUPTE savings, The Hub is projected to generate a 4.7 percent first-year rate of return, which is insufficient to attract the required equity investment. The MUPTE tax exemption would lower annual operating costs by approximately $450,000, which produces higher net operating income and results in a projected 8.7 percent first-year rate of return. (See Attachment E for more detailed financial analysis.) 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. Tax Impact The Hub in Eugene will continue to generate property tax revenue on the land. Staff estimates the property tax paid will be $11,200 in year 1. After 10 years, the entire development will be taxable, estimated at $620,000 in year 11. Core Campus states that the MUPTE is vital to the development and, if it is denied, the 12-story housing development will not be built. The chronically underdeveloped site is zoned C-2, community commercial for medium-density commercial. The surrounding area is a mix of fast food and small format motels. If the Core Campus project does not move forward, the property is likely to develop in a similar manner as the surrounding area, which would produce less value and tax revenue. S:\CMO\2013 Council Agendas\M130529\S130529B.doc