Item A: Core Campus - Application for MUPTE for 505 East Broadway

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immediately stop receiving the MUPTE if Core Campus failed to make a guaranteed payment. For example, should Core Campus fail to make the proposed $30,000 year six payment, Core Campus would not receive the tax exemption that year and would instead pay property taxes on the improved value to the site (estimated tax of $520,600). Not paying property taxes would trigger default with the lender, which is a strong guarantee in itself that Core Campus would make the payments. Additionally, the guaranteed payments would survive should the property change hands; the new owner would be required to either make the payments to keep the MUPTE benefit active or, alternatively, begin paying full property taxes. A guarantee beyond the guaranteed payment language in the MUPTE resolution may not be necessary. B. A requirement to achieve LEED Silver certification; C. The provision of at least four ADA accessible units; D. Bike and Pedestrian Safety; and E. Local hiring plan with stated goals. Project Overview The Hub in Eugene would be a 12- story, $44 million project: 197 apartments with on -site parking, nearby parking, and commercial retail space. The project will have 501 bedrooms; 4,430 square feet of retail space; 34 on -site parking spaces; and 88 surface parking spaces in a nearby lot. The building would be designed to achieve LEED certification and would include a green roof among other features. The development will have onsite staff and security: six to eight full -time jobs and six part -time jobs. The proposed construction schedule would be 14 -16 months long and provide an average of 120 -150 construction jobs. If the MUPTE is approved, construction would begin in February /March 2014. Project Parking The parking will be fully enclosed as part of the architecture of the building and not readily apparent. A second parking area is proposed to be a surface parking lot within 1 /4 mile at 901 Franklin. (See the June 17 Agenda Item Summary, item B for more information.) MUPTE Program Council is discussing potential revisions to the MUPTE program and enacted a temporary suspension of the program in February 2013. Since the Core Campus application was submitted prior to the suspension, the existing program rules have been applied to this review. As ideas and potential revisions to the MUPTE program have emerged from the City Council's discussions, staff and the developer discussed the possibility of incorporating elements of the potential MUPTE revisions into proposed conditions of approval, such as affordable housing and local hiring. 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% ($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 its equity investor will require a minimum rate of return of 8.96% in the first year. Without the MUPTE savings, The Hub is projected to generate a 4.7% first year rate of return, which is insufficient to attract the required equity investment. The MUPTE tax exemption would S:ACMO \2013 Council Agendas \Ml306l7 \Sl3O6l7A.doc