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

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lower annual operating costs by approximately $450,000, which produces higher net operating income and results in a projected 8.7% first year rate of return. (See Attachment F for the 10 -year pro -forma with MUPTE.) 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 tax exemption 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. (Potential tax revenue under different development scenarios is included in Attachment B.) Timing This application was submitted on January 24. By state statute and code, if council has not acted within 180 days from the application date, the application would be deemed approved. RELATED CITY POLICIES Utilization of the MUPTE program to stimulate new multi -unit housing development addresses many goals for Eugene and downtown, including: Eugene Downtown Plan ➢ Stimulate multi -unit housing in the downtown core and on the edges of downtown for a variety of income levels and ownership opportunities. ➢ Downtown development shall support the urban qualities of density, vitality, livability and diversity to create a downtown, urban environment. ➢ Actively pursue public /private development opportunities to achieve the vision for an active, vital, growing downtown. ➢ Use downtown development tools and incentives to encourage development that provides character and density downtown. ➢ Facilitate dense development in the courthouse area and other sites between the core of the downtown and the river. Envision Eugene Pillars ➢ Promote compact urban development and efficient transportation options. • Integrate new development and redevelopment in the downtown, in key transit corridors and in core commercial areas. • Meet the 20 -year multi - family housing need within the existing Urban Growth Boundary. S:ACMO \2013 Council Agendas \Ml306l7 \Sl3O6l7A.doc