Loading...
HomeMy WebLinkAboutItem B - Hospital UpdateEUGENE CITY COUNCIL AGENDA ITEM SUMMARY Work Session: Hospital Update Meeting Date: December 6, 2004 Agenda Item Number: B Department: Central Services Staff Contact: Dennis Taylor www. cl. eugene, or. us Contact Telephone Number: 682-5336 ISSUE STATEMENT This item is an update of the progress in discussions between the Eugene Water and Electric Board (EWEB), McKenzie-Willamette Medical Center and the City regarding relocation of the hospital to EWEB's headquarters site. BACKGROUND Council Action History: Initial council discussions about hospital expansion and siting in conjunction with PeaceHealth took place in 2001. At a council work session on September 18, 2002, the council directed staff to prepare a draft list of potential sites and inducements for hospital development in Eugene. A continuation of the work session on hospital sites occurred on November 13, 2002. These work sessions were in response to the intent to induce a hospital to locate in Eugene. In early 2003, the council initiated a code amendment to accommodate hospital uses in a wider range of zone districts and subsequently adopted the ordinance (that ordinance is currently at the Court of Appeals). Work sessions were held on several dates in 2004 to update the council on the status of attracting a hospital to Eugene. On January 21, the council directed the City Manager to evaluate three alternatives to extend Agate Street to provide access to a potential hospital located on the EWEB site. On June 16, the council authorized the City Manager to inform McKenzie-Willamette Medical Center ("McKenzie- Willamette") that the City would be willing to undertake construction of two transportation projects if McKenzie-Willamette constructed a hospital on the EWEB site with a value of not less than $85 million. On September 22, the council directed the City Manager to pursue a development agreement for the benefit of providing access to McKenzie-Willamette via Patterson Street, contingent upon McKenzie- Willamette's constructing an $85 million hospital development with a substantial Willamette River setback. Major Development Agreements to Date: Attachment A includes a summary of the major development agreements made between EWEB, McKenzie-Willamette, the City of Eugene and the Urban Renewal Agency (URA) to date. The attachment also sets out the main documents that will need to be executed among the parties in order to formalize those agreements. Attachment B includes an unsigned copy of the initial agreement between EWEB and McKenzie- Willamette for sale of EWEB's headquarters property. This agreement is still being negotiated between the parties and has not yet been signed. The document sets out the timeframe for the property sale, as well as the due diligence period for both EWEB and McKenzie-Willamette to use in evaluating the L:\CMO\2004 Council Agendas\M041206\S041206B.doc purchase option. It also sets the framework for the tasks that the City needs to accomplish over the next few months. Permitting Process and Issues: Attachment C sets out a synopsis of the permitting process and issues for location of a hospital on the EWEB site. Council/Agency Approvals Scheduled for Tonight: The Patterson Street underpass is a critical piece of the puzzle for McKenzie-Willamette's decision to locate a hospital on the EWEB site. In order to ensure that design work on the underpass occurs as swiftly as possible, McKenzie-Willamette has indicated through a verbal agreement that it is willing to provide up to $500,000 of funding to complete a portion of the design work. The City (through an intergovernmental agreement with the Urban Renewal Agency) will contract the design work out and expects that design will be 30% complete by September 30, 2005. Although some of the details of the agreement are still being negotiated, McKenzie-Willamette has agreed that in the event that the hospital development does not go forward, neither the Urban Renewal Agency nor the City would be obligated to repay this initial $500,000 investment in design of the project. Budget authority for this initial $500,000 is included on Supplemental Budget #1 on December 6 (the same meeting as this item). The additional budget authority needed to construct the project will occur at a later date, possibly in the FY06 budget process. Authorization for the Urban Renewal Agency to enter into a design finance agreement with McKenzie-Willamette for the $500,000 to start design work as soon as possible is also on the agenda for later in this same meeting. Future Council/Agency Approvals: Staff has had discussions with representatives from McKenzie- Willamette about the long-term financing of this project and McKenzie-Willamette has verbally agreed to pay for an approximately $12 million transportation project through an Urban Renewal Revenue Bond agreement. Attachment D contains the document the City sent to McKenzie-Willamette to explain how the bond agreement would work. Under the bond agreement, the City will build the Patterson Street underpass and McKenzie-Willamette will repay the City's costs on a reimbursement basis. When McKenzie-Willamette's property begins generating tax increment revenue in the Riverfront Urban Renewal District, the property taxes from the McKenzie-Willamette development will be used to repay the borrowing. If there are insufficient property tax revenues from the McKenzie-Willamette develop- ment to repay the borrowing in full, no other URA or City revenues will be used to make up the dif- ference. In that event, McKenzie-Willamette will not get repaid in full for the principal amount of the borrowing. A bond resolution will be brought to the Urban Renewal Agency for the remainder of the project design and construction costs in the next few months. In addition, the Urban Renewal Agency will be asked to approve an intergovernmental agreement between the City and the URA in January. That IGA will cover the actions needed between the URA and the City to make the financing transactions work for this project. The City is also currently drafting a memorandum of agreement with EWEB that includes the following points: Acquisition of Riparian Areas. It is anticipated that the City will purchase approximately 50 to 75 feet along the riverbank for the length of the property for purposes of providing on-going protection of certain riparian areas. The exact location and amount of property purchased for this purpose will be L:\CMO\2004 Council Agendas\M041206\S041206B.doc determined in cooperation with McKenzie-Willamette and EWEB. Methods of paying for this purchase are currently being developed by City staff. Telecommunications. The City will pay for and install underground conduit and fiber optic cable to the new EWEB headquarters site. Wetlands Mitigation. EWEB's transfer to the City of the riparian areas and EWEB's relocation to the proposed headquarters site will be considered by the City in determining whether EWEB may be entitled to wetlands mitigation credits. Access and Transportation Improvements. The City will consider assisting EWEB with the cost of access and transportation improvements needed at the new EWEB headquarters site, if necessary to complete the relocation transaction. These actions will be contingent upon City Council approval of appropriation authority for these items, which will be brought to the council at future dates. RELATED CITY POLICIES The council has identified a goal for 2004 to facilitate the development of a hospital in Eugene's central core. COUNCIL OPTIONS No action is requested at this time. CITY MANAGER'S RECOMMENDATION None. SUGGESTED MOTION None. ATTACHMENTS A. Major Development Agreements B. Initial Agreement Regarding Sale of Property C. Permitting Process & Issues for EWEB Site D. Outline of Proposal to McKenzie-Willamette FOR MORE INFORMATION Staff Contact: Dennis M. Taylor Telephone: 682-5336 Staff E-Mail: Dennis. M.Taylor~ci.eugene.or.us L:\CMO\2004 Council Agendas\M041206\S041206B.doc ATTACHMENT A Major Development Agreements Among EWEB, McKenzie-Willamette, the City of Eugene and the Urban Renewal Agency McKenzie-Willamette Medical Center · Purchase a portion of EWEB's headquarters site · Construct a hospital on the site with a value of at least $85 million · Construct additional medical office facilities on the site over time · Loan funds to the URA for design, construction and purchase of right-of-way to complete the Patterson Street Underpass project Documents: 1. Initial Agreement Regarding Sale of Property (preliminary agreement attached) 2. Agreement to Finance Design Costs of Patterson Street Underpass (in draft form; to be signed in December 2004) 3. Bond Agreement (to be drafted and considered in spring of 2005) Eugene Water & Electric Board · Sell portion of headquarters property to McKenzie-Willamette · Sell portion of headquarters property to City for riparian area · Relocate headquarters to west Eugene Documents: 1. Initial Agreement Regarding Sale of Property (preliminary agreement attached) 2. Memorandum of Understanding with City and URA (in draft form; to be signed in December 2004) L:\CMO\2004 Council Agendas\M041206\S041206B.doc City of Eugene · Acquire right-of-way, design and construct the Patterson Street Underpass project to provide access to the proposed hospital site · Purchase riparian area along Willamette River from EWEB · Provide funding for location of telecommunications infrastructure to new EWEB headquarters location · Possibly provide assistance to EWEB for wetlands mitigation bank credits at the new headquarters location · Possibly provide assistance to EWEB for access and transportation improvements at the new headquarters location · Provide $500,000 reserve fund to assist with closing the funding gap, if necessary Documents: 1. Memorandum of Understanding with EWEB and URA (in draft form; to be signed in December) 2. Agreement to Finance Design Costs of Patterson Street Underpass (in draft form; to be signed in December) 3. Intergovernmental Agreement with URA (in draft form; to be signed in January) 4. Budget authority for first $500,000 of design costs on SB#1 in FY05 and remainder of project in FY06 proposed budget L:\CMO\2004 Council Agendas\M041206\S041206B.doc [lrban Renewal Agency of the City of Eugene · Borrow funds from McKenzie-Willamette for acquisition of right-of-way and design and construction of the Patterson Street Underpass project · Reimburse the City for costs incurred in acquiring right-of-way and designing and constructing the Patterson Street Underpass project · Repay McKenzie-Willamette from tax increment revenues generated by McKenzie- Willamette's acquisition or development of EWEB's headquarters property Documents: 1. Memorandum of Understanding with EWEB and City (in draft form; to be signed in December) 2. Resolution Authorizing Execution of a Design Finance Agreement (in draft form; to be considered at December 6 council meeting) 3. Agreement to Finance Design Costs of Patterson Street Underpass (in draft form; to be signed in December) 4. Resolution Authorizing Execution of an Intergovernmental Agreement with the City for the Patterson Street Underpass (in draft form; to be considered by the Urban Renewal Agency in January) 5. Intergovernmental Agreement with the City (in draft form; to be signed in January) 6. Resolution Authorizing Execution of a Bond Agreement (to be drafted and considered in spring of 2005) 7. Bond Agreement (to be drafted and considered in spring of 2005) 8. Budget authority for first $500,000 of design costs on SB#1 in FY05 and remainder of project in FY06 proposed budget L:\CMO\2004 Council Agendas\M041206\S041206B.doc ATTACHMENT B INITIAL AGREEMENT REGARDING SALE OF PROPERTY Eugene Water & Electric Board 500 East 4th Avenue P.O. Box 10148 Eugene, OR 97440 "Seller" McKenzie-Willamette Regional Medical Center Associates, LLC c/o Triad Hospitals, Inc. 5800 Tennyson Parkway Plano, Texas 75093 "Purchaser" AGREEMENT Subject to the terms and conditions of this Initial Agreement Regarding Sale of Property, Seller agrees to sell and Purchaser agrees to purchase the Property, as defined below. 1. PROPERTY. "Property" means the following described real property, together with its associated easements, improvements, hereditaments, appurtenances and entitlements described as: Approximately 22.47 acres of land and improvements thereon situated in the City of Eugene, Lane County, Oregon, upon which Seller currently conducts its operations and commonly known as 500 East 4th Avenue, Eugene, Oregon, excepting: Ownership of the land adjacent to the Willamette River (the riverbank), existing water rights from the river, together with easements for water transmission lines from the current water intake site to a future site pursuant to terms and conditions of an easement agreement ("Easement Agreement") to be agreed upon by Seller and Purchaser by the end of the later of the Purchaser's Certificate Period (hereinafter defined) or the Seller's Financing Period (hereinafter defined). The Property does not include approximately 3.21 acres of land owned by Seller (which includes bicycle and foot paths) (herein the "Riparian Land"), nor the RFR Property (hereinafter defined), all of which shall be retained by Seller. Seller may convey the Riparian Land to the City of Eugene at closing. L:\CMO\2004 Council Agendas\M041206\S041206B.doc When the survey contemplated by Paragraph 11 is completed, the parties shall attempt to agree on mutually agreeable descriptions for the Property, the Riparian Land, the RFR Property (defined below), and description for areas of the Property subject to the Easement Agreement ("Easement Area"). 2. PURCHASE PRICE. The Purchase Price shall be $24,625,000, payable in cash at closing. 3. INDEPENDENT CONTRACT CONSIDERATION. Upon execution of this Agreement, Purchaser shall deliver to Seller in cash the sum of One Hundred and No/100 Dollars ($100.00) (the "Independent Contract Consideration"), which amount has been bargained for and agreed to as consideration for Purchaser's exclusive right to purchase the Property, the Purchaser's Inspection Period (hereinafter defined) and the Purchaser's Certificate Period, and for Seller's execution and delivery of this Agreement. The Independent Contract Consideration is in addition to and independent of all other consideration provided in this Agreement, and is non-refundable in all events. 4. CONTRACT. Purchaser and Seller shall attempt to negotiate the terms and conditions of a mutually agreeable purchase and sale agreement for the Property (herein the "Contract of Sale"). It is intended that all terms and conditions will be negotiated and the Contract of Sale finalized and signed by both parties by the end of the later of the Purchaser's Certificate Period or the Seller's Financing Period; otherwise, this Agreement shall be null and void, and neither party shall have any further rights or obligations hereunder to the other except as provided herein, unless a written extension is executed by both parties. 5. LEASEBACK. If a Contract of Sale is finalized and signed by both parties, Seller and Purchaser acknowledge that Seller will need to retain possession of the Property after closing for a period of time to enable Seller to complete its new facilities on Seller's alternate site. During the Purchaser's Inspection and Certificate Periods and Seller's Due Diligence and Financing Periods, Purchaser and Seller shall attempt to negotiate the terms and conditions of a mutually agreeable lease of the Property by Seller ("Lease"). It is intended that all terms and conditions will be negotiated and the Lease finalized and signed by both parties by the end of the later of the Purchaser's Certificate Period or the Seller's Financing Period; otherwise, this Agreement shall be null and void, and neither party shall have any further rights or obligations hereunder to the other except as provided herein, unless a written extension is executed by both parties. 6. RIGHT OF FIRST REFUSAL. If a Contract of Sale is finalized and signed by both parties, Seller shall grant Purchaser at closing the right of first refusal to purchase a parcel of approximately 1.37-acres as improved with an approximately 28,329 square foot steam plant. During the Purchaser's Inspection and Certificate Periods and the Seller's Due Diligence and Financing Periods, Purchaser and Seller shall attempt to negotiate the terms and conditions of a mutually agreeable form of agreement for the right of first refusal ("RFR"), and concurrently shall attempt mutually to agree on the description of the parcel subject to the RFR ("RFR Property"). The RFR Property shall not include any water rights or riparian area. It is intended that all terms and conditions of the RFR and L:\CMO\2004 Council Agendas\M041206\S041206B.doc the Easement Agreement will be negotiated and the RFR and the Easement Agreement finalized and signed by both parties by the end of the later of the Purchaser's Certificate Period or the Seller's Financing Period; otherwise, this Agreement shall be null and void, and neither party shall have any further rights or obligations hereunder to the other except as provided herein, unless a written extension is executed by both parties. 7. SELLER'S ALTERNATE SITE AND RELOCATION FEASIBILITY PERIOD. Seller shall have a period of time (the "Seller's Due Diligence Period") commencing on the date of this Agreement and expiring 240 days later to conduct its feasibility studies with respect to alternate sites and building and relocation costs to determine whether or not Seller can identify a suitable alternate site and whether or not the construction and relocation costs related thereto are satisfactory in all respects to Seller. In the event, and at any time, Seller determines that either the alternate site or the construction and relocation costs in connection with relocating to the alternate site are not satisfactory to Seller for any reason, Seller shall have the right to terminate this Agreement in which event neither party shall have any further rights or obligations hereunder to the other except as provided herein. In addition Seller shall have up to twelve months ("Seller's Financing Period") from the date of this Agreement in which to obtain all approvals and financing for its alternate site, its improvement and all related relocation costs. Such approvals may include a public vote authorizing part or all of the financing, at Seller's discretion. In the event that during Seller's Financing Period Seller is unable to obtain all such approvals and financing on terms and conditions acceptable to Seller or an Easement Agreement, Contract of Sale, Lease, RFR, and Sale of Riparian Land to the City of Eugene have not been negotiated, finalized and signed acceptable to Seller, Seller shall have the right to terminate this Agreement in which event neither party shall have any further rights or obligations hereunder to the other, except as provided herein. 8. P[IRCHASER'S INSPECTION PERIOD. Purchaser shall have a period of time to conduct its feasibility studies of the Property commencing on the date of this Agreement and expiring on the latter to occur of (i) 240 days after the date of the Agreement (the "Purchaser's Inspection Period") or (ii) the date Purchaser obtains all licenses necessary for the operation by Purchaser of the contemplated acute care hospital to be built on the Property (including, without limitation, a final, unconditional and unappealable certificate of need for such use and operation) but not to exceed twelve months from the date of this Agreement ("Purchaser's Certificate Period"). In the event Purchaser determines that the Property is not satisfactory to Purchaser within Purchaser's Inspection Period for any reason, or in the event that during the Purchaser's Certificate Period, Purchaser is unable to obtain all licenses and/or the certificate of need or an Easement Agreement, Contract of Sale, Lease and RFR have not been negotiated, finalized and signed acceptable to Purchaser, Purchaser shall have the right to terminate this Agreement in which event neither party shall have any further rights or obligations thereunder to the other, except as provided herein. 9. ENTRY AND INDEMNITY. Seller hereby agrees to provide Purchaser and its agents or consultants with reasonable access to the Property and to copies of all studies and reports in the Seller's possession concerning the Property. In connection with any entry by Purchaser, or its agents, employees or contractors onto the Property, Purchaser shall L:\CMO\2004 Council Agendas\M041206\S041206B.doc give Seller reasonable advance notice of such entry and shall conduct such entry and any inspections in connection therewith so as to minimize, to the greatest extent possible, interference with Seller's business and the business of Seller's tenants and in a manner reasonably acceptable to Seller. Without limiting the foregoing, prior to any entry to perform any on-site testing, Purchaser shall give Seller advance notice thereof, including the identity of the company and person(s) who will perform such testing and the proposed nature of the testing. In the event that Purchaser proposes to perform any destructive or invasive testing, Seller shall authorize or not authorize, in its sole discretion, entry for the proposed destructive or invasive testing within three (3) business days after receipt of Purchaser's advance notice. Seller's failure to provide such notice shall be deemed non authorization of the entry for the testing. Seller or its representative may be present to observe any testing or other inspection performed on the Property. Purchaser shall promptly deliver to Seller a copy of any reports relating to any testing or other inspection of the Property performed by Purchaser or its agents, employees or contractors. Purchaser shall maintain, and shall assure that its agents or contractors maintain, public liability and property damage insurance in amounts and in form and substance adequate to insure against all liability of Purchaser and its agents, employees or contractors, arising out of any entry, testing or inspections of the Property pursuant to the provisions hereof, and Purchaser shall provide Seller with evidence of such insurance coverage upon request by Seller. Seller shall be a named insured on all such policies, which shall be in form and substance reasonably acceptable to Seller. Purchaser shall indemnify and hold Seller harmless from and against any costs, damages, liabilities, losses, expenses, liens or claims (including, without limitation, reasonable attorneys' fees) arising out of or relating to any entry on the Property by Purchaser, its agents, employees or contractors in the course of performing the inspections, testing or inquiries provided for in this Agreement. The foregoing indemnity shall survive beyond the closing, or, if the sale is not consummated, beyond the termination of this Agreement. 10. CLOSING. The closing date shall be on the first business day after the date which is 30 days after the expiration of the longer of Purchaser's Certificate Period, or the Seller's Financing Period. At closing, Seller and Purchaser shall each deliver to the other usual and customary conveyancing documents. Seller will furnish to Purchaser and pay for a standard owner's title insurance policy insuring fee simple title to the Property in the amount of the Purchase Price. Title will be conveyed by a statutory special warranty deed subject only to mutually agreeable exceptions. Seller shall use its best efforts prior to closing to obtain tenant estoppel certificates and subordination, attornment and non- disturbance agreements in mutually agreeable form from each of the tenants of the Property. 11. TITLE AND SURVEY. Purchaser shall obtain, at Purchaser's sole cost and expense, a current title commitment and a survey of the Property. Purchaser shall provide Seller a copy of the survey when it has been completed. Purchaser has until the end of the Purchaser's Inspection Period to review and notify Seller in writing of any objections to title and survey. It is a condition to Purchaser's obligations to consummate the closing that Seller delivers the Property to Purchaser free and clear of all liens and encumbrances and other matters except for mutually agreeable exceptions. It is a condition of the obligation of Seller and Purchaser to consummate the closing that Seller be able to obtain L:\CMO\2004 Council Agendas\M041206\S041206B.doc the lot line adjustments or partitions necessary to create the Property, the Riparian Land and the RFR Property as legal lots under applicable governmental building or zoning codes. In obtaining the survey, Purchaser shall obtain the descriptions necessary to do any lot line adjustments or partitions required in order to create the various parcels of property identified in this Agreement, including but not limited to the Property, the Riparian Land, the Steam Plant, the RFR Property, and the Easement Area. 12. "AS IS" PURCHASE. The Contract of Sale shall provide that Purchaser shall purchase the Property "AS IS" based on its own independent examination of the Property including the environmental condition, and without representation or warranty of any type, kind or nature. 13. PRORATIONS AND OTHER COSTS. Any interest, ad valorem taxes, rents, operating expenses, etc., will be prorated as of the closing. All other costs, except as specifically provided herein, including escrow fees and recording fees, will be equally paid by the Seller and Purchaser. Notwithstanding the foregoing, the amount of any refundable security deposits received by Seller and not applied against tenant's obligations under tenant leases shall be credited against the Purchase Price, and Seller shall be entitled to retain such deposits. Purchaser shall indemnify, defend and hold Seller harmless with respect to any prepaid amounts or security deposits delivered or credited to Purchaser at closing. The foregoing indemnity shall survive beyond the closing, or, if the sale is not consummated, beyond the termination of this Agreement. 14. COMMISSION. Purchaser and Seller agree that there is no brokerage commission or fee due to any person or firm other than to Prichard Evans Elder ("Broker"), which fee shall be entirely payable by Seller, but not to exceed Seller will indemnify Purchaser against all damages and expenses caused by any claim for brokerage commission or fee by any other party claiming a commission or fee through Seller other than Broker. Purchaser will indemnify Seller against all damages and expenses caused by any claim for brokerage commission or fee by any other party claiming a commission or fee through Purchaser other than Broker. The foregoing indemnities shall survive beyond the closing, or, if the sale is not consummated, beyond the termination of this Agreement. 15. SECTION 1031. Both parties agree to cooperate reasonably with each other to effectuate this transaction in a manner that would allow the parties, or either of them, to have the benefit of Section 1031 of the Internal Revenue Code. 16. OPERATIONS PENDING CLOSING. Purchaser shall have the right to review and approve of all new lease transactions and tenant improvements once this Agreement has been fully executed and until closing or this Agreement is terminated. Purchaser shall not unreasonably withhold, delay or condition its approval. 17. CONFIDENTIALITY. Purchaser shall maintain as confidential any and all material obtained about Seller or the Property, and shall not disclose such information to any third party except for disclosures on a "need to know" basis to Purchaser's consultants, attorneys, lenders and investors and disclosures required by court order or subpoena. L:\CMO\2004 Council Agendas\M041206\S041206B.doc Purchaser agrees to indemnify, defend, protect and hold harmless Seller from and against any and all claims arising out of Purchaser's breach of this Section. In the event that the closing does not occur in accordance with the terms of this Agreement, Purchaser shall return to Seller all of the documents, material or information regarding the Property supplied to Purchaser by Seller. This provision shall survive any termination of this Agreement but shall not survive the closing. 18. STATUTORY NOTICES. The following notice is given pursuant to ORS 93.040(2): THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A FIRE PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE AND WHICH LIMIT LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEF1NED IN ORS 30.930 IN ALL ZONES. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION FOR STRUCTURES. 19. BOARD REVIEW. Purchaser and Seller acknowledge and agree that finalization of the Easement Agreement, Contract of Sale, Lease and RFR is subject to review and authorization by each party's governing Board. Dated effective the __ day of December, 2004. PURCHASER SELLER McKenzie-Willamette Regional Medical Eugene Water & Electric Board Center Associates, LLC By: By: Name: Name: Title: Title: L:\CMO\2004 Council Agendas\M041206\S041206B.doc ATTACHMENT C McKenzie Willamette Medical Center Potential City of Eugene Permitting Process & Issues September 24, 2004 The following information represents a synopsis of existing land use information for property on East and West side of Ferry St. Bridge owned by EWEB. Existing Conditions East of Ferry St. Bridge West of Ferry St. Bridge Metro Plan Designation Heavy Industrial High Density Residential/Mixed Use Zoning PL/TD (Public Lands, Transit PL/TD, I-2/TD, I-3/TD (Public Land, Oriented Development), Light-Medium Industrial; Heavy Willamette Greenway Industrial and Transit Oriented Development) Land Use Actions Required (Based on recent amendments to Chapter 9, currently under appeal) Zone change Zone Change from PL to I-3/TD Zone Change for PL portion to R-4/TD Land Use Permits Hospital permitted use in 1-3 zone; Hospital permitted outright in R-4 (high Willamette Greenway Permit & density residential); Traffic Impact Traffic Impact Analysis required; Analysis required; Adjustment Review Adjustment Review may be needed may be needed; no Willamette Greenway required Master Plan for EWEB site required per Downtown Plan Process for Land Use Actions Pre Development Conference ~ (3 weeks lead time) o ~= Application Filed · =-~ ..o (Zone changes, Willamette Greenway, Traffic Impact Analysis, Master -~ ~ Plan & Adjustment Reviews can be processed concurrently.) E Completeness Review m,~= (maximum 30 days from date application is filed) Public Hearing with Hearings Official (45-60 days from day application is deemed complete, includes notification time and City staff recommendation) Hearings Official Decision (Appealable to Planning Commission) r Note: Schedule does not include applicant's time for application preparation or revisions; or possible appeals to the Land Use Board of Appeals L:\CMO\2004 Council Agendas\M041206\S041206B.doc ATTACHMENT D OUTLINE OF PROPOSAL TO MCKENZIE-WILLAMETTE MEDICAL CENTER McKenzie-Willamette is proposing to construct a hospital facility in the City of Eugene (the "Hospital"). The Hospital will be located in the Eugene Renewal Agency's Riverfront Urban Renewal Area. The Riverfront Urban Renewal Area will receive the "tax increment revenues" from the Hospital. The tax increment revenues are the property taxes on the increase in property value that results from the con- struction and operation of the Hospital. In order for the Hospital to go forward with the project, additional transportation access needs to be provided by constructing a Patterson Street underpass (the "Street Improvements"). The City of Eugene proposes to construct the Street Improvements and to pay for those improvements with the proceeds of a bond that is purchased by McKenzie-Willamette. The bond will be secured by the increase in tax increment revenues that results from the construction of the Hospital, but would not be secured by any other revenues of the City or its Urban Renewal Agency. The City has plans to use the other revenues of the Agency to accomplish additional high priority pro- jects within the Riverfront Urban Renewal Area. The Street Improvements are estimated to cost approximately $12 million. The Hospital is estimated to have a total taxable assessed value of approximately $61 to $72 million (assuming the property is assessed at 72% of the cost of $85 to $100 million). The property on which the Hospital will be located is currently largely exempt from property taxes, but there are a couple of tax lots that have a taxable assessed value of about $2 million*. This means that the Hospital will increase the assessed value of in the Riverfront Urban Renewal Area by about $59 to $70 million. The consolidated tax rate (the sum of all property tax rates) in the Riverfront Urban Renewal Area is currently about $18/$1,000 of assessed value. This means that the Hospital should produce about $1 to $1.2 million of tax increment revenues each year, assuming a 93% county-wide property tax collection rate. If the bond that McKenzie-Willamette purchases bears interest at 5% per annum, the tax increment revenues will repay the bond with interest in approximately 15 to 19 years. The Riverfront Urban Renewal Area will terminate on June 30, 2024. When the area terminates, the Agency will no longer be able to collect tax increment revenues. This means that the bond must also terminate in that year, regardless of whether it has been paid in full. IfMcKenzie-Willamette constructs the Hospital, maintains its value, and pays its property taxes begin- ning in 2009, the tax increment revenues from the Hospital are estimated to be sufficient to fully repay the bond between 2023 and 2027. However, McKenzie-Willamette, as purchaser of the bond, will bear the risk that property taxes on the Hospital are not sufficient to pay the bond before the date the bond terminates or when the Urban Renewal Area terminates. If the Hospital is not constructed, or has an assessed value that is less than current estimates, or is damaged or destroyed, or becomes exempt from property taxation, the tax increment revenues from the proposed facility may not be sufficient to fully repay the bond. * More research needs to be done to determine the amount of taxable assessed value within the property that the Hospital would purchase from EWEB. L:\CMO\2004 Council Agendas\M041206\S041206B.doc