Item B: Core Campus Application for MUPTE for 505 East Broadway

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Public Comments A display advertisement was published in The Register-Guard on May 4, 2013, soliciting comments for 30 days on the Core Campus MUPTE application. The period ends on June 3, 2013, at 5 p.m. All written comments received by staff are included as Attachment G. The Downtown Neighborhood Association Steering Committee unanimously took a position of support for the Core Campus project with specific points on safety for pedestrians and bicyclers (Attachment H). 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 the 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 o points 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. 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. (See Attachment I for the financial analysis that was also provided in the May 29 AIS.) Tax Impact The Hub in Eugene would continue to generate property tax revenue on the land. Staff estimates the property tax paid would be $11,200 in year one. After 10 years, the entire development would 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 would 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. Need for Tax Exemptions to Encourage Ground Floor Commercial Core Campus proposes the potential inclusion of approximately 4,430 square feet of ground floor commercial space. The ground floor commercial use is considered to provide public benefit as commercial/retail uses in this area would support downtown vitality and the opportunity for project residents and others in the area to easily walk to the proposed commercial/retail services. There are risks associated with tenanting ground floor commercial at lease rates that can support the cost of constructing the space. Additionally, mixing uses within one building typically adds S:\CMO\2013 Council Agendas\M130610\S130610B.doc