HomeMy WebLinkAboutItem 3 - URA/Design Fin. AgrEUGENE URBAN RENEWAL AGENCY
AGENDA ITEM SUMMARY
Action: Resolution 1032 Authorizing Execution of a Design Finance Agreement
Meeting Date: December 6, 2004 Agenda Item Number: 3
Department: Central Services Staff Contact: Dennis Taylor
www. cl. eugene, or. us Contact Telephone Number: 682-5336
ISSUE STATEMENT
This item is approval for the Urban Renewal Agency (URA) to borrow funds from McKenzie-
Willamette Medical Center for the purpose of starting design work on the Patterson Street underpass.
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 Eugene Water and Electric
Board (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.
Design Finance Agreement: 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 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.
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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.
Included as Attachment A is the resolution authorizing the URA to enter into the first $500,000 of this
transaction with McKenzie-Willamette. 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 URA nor the City would be obligated to repay this initial $500,000 investment in
design of the project. The resolution authorizes the Agency Director to continue to negotiate the design
finance agreement with McKenzie-Willamette. If any of the following major parts of the agreement are
changed in the negotiation, however, the Agency Director would have to return to the URA for
additional approval:
· Amount of the agreement - up to $500,000
· Interest rate on the borrowing - the City's reasonable estimate of the City's borrowing cost
· Repayment of the borrowing - to come from a tax increment bond sold to McKenzie-Willamette
in the event that the hospital development goes forward
Long-term Financing Agreement: In the event that the hospital development does go forward, staff
has had discussions with representatives from McKenzie-Willamette about financing the entire project.
McKenzie-Willamette has verbally agreed to pay for an approximately $12 million transportation
project through an Urban Renewal Revenue Bond agreement which is described in more detail in the
Hospital Update agenda item summary from earlier this evening.
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 development to repay the borrowing in full, no
other URA or City revenues will be used to make up the difference. 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.
RELATED CITY POLICIES
The council has identified a goal for 2004 to facilitate the development of a hospital in Eugene's central
core. In order to facilitate development of McKenzie-Willamette Medical Center at the EWEB site,
McKenzie-Willamette has identified a critical need for transportation access. It would like design work
to begin as soon as possible in order to be able to complete the project in a timely fashion.
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AGENCY OPTIONS
The Urban Renewal Agency can either approve the resolution or take no action. If the resolution is
approved, the City can begin designing the Patterson Street underpass project as soon as a bond
resolution is signed with McKenzie-Willamette. If the URA takes no action, design work will not begin,
which could jeopardize an agreement with McKenzie-Willamette to go forward with hospital
development on the EWEB site.
DIRECTOR' S RECOMMENDATION
The Agency Director recommends authorizing the execution of a design finance agreement for
construction of the Patterson Street underpass project.
S[IGGESTED MOTION
Move to adopt Resolution 1032 authorizing execution of a Design Finance Agreement.
ATTACHMENTS
A. Resolution
FOR MORE INFORMATION
Staff Contact: Dennis Taylor
Telephone: 682-5336
Staff E-Mail: Dennis. M.Taylor~ci.eugene.or.us
Staff Contact: Sue Cutsogeorge
Telephone: 682-5589
Staff E-Mail: Sue. L.Cutsogeorge~ci.eugene.or.us
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ATTACHMENT A
RESOLUTION NO.
A RESOLUTION AUTHORIZING EXECUTION OF A DESIGN
FINANCE AGREEMENT.
The Urban Renewal Agency of the City of Eugene, Oregon (the "Agency") finds as follows:
A. The Agency is authorized to incur indebtedness to finance urban renewal projects that are located in
the Riverfront Urban Renewal Area and are described in the urban renewal plan for the Riverfront Urban Renewal
Area.
B. McKenzie-Willamette Medical Center ("McKenzie-Willamette") is considering constructing a
hospital and other medical facilities at the site currently occupied by the Eugene Water and Electric Board.
Construction of the hospital and other medical facilities at that site will require construction of the Patterson Street
underpass. McKenzie-Willamette is willing to pay the City of Eugene up to $500,000 for initial costs to design
the Patterson Street underpass in order to promptly start the design process. The Agency agrees to repay the
amounts advanced by McKenzie-Willamette with interest if McKenzie-Willamette acquires the Eugene Water and
Electric Board site and completes construction of the hospital and other medical facilities with an expected value
of not less than $85 million, as provided in the attached agreement.
C. The Patterson Street underpass is a transportation access project that is located in the Riverfront
Urban Renewal Area. This project is consistent with the goals and project activities described in the Riverfront
Urban Renewal Plan.
D. The obligation of the Agency to repay McKenzie-Willamette will be limited to the tax increment
revenues that result from increases in the assessed value of the Eugene Water and Electric Board site as a result of
McKenzie-Willamette's acquisition and construction of a hospital and other medical facilities on all or a portion
of that site.
NOW, THEREFORE,
BE IT RESOLVED BY THE URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON,
that the Agency is hereby authorized to enter into an agreement with the City of Eugene and McKenzie-
Willamette that obligates the Agency to repay McKenzie-Willamette, with interest, for amounts McKenzie-
Willamette advances to the Agency for costs of designing the Patterson Street underpass. The agreement shall
be in a form similar to the agreement attached to this resolution, but with such changes as the Agency's Director
may approve. The Agency's Director or the person designated by the Director of the Agency to act under this
resolution is hereby authorized, on behalf of the Agency and without additional action by the Urban Renewal
Agency, to execute this agreement and take any other action that is required to carry out this resolution. This
resolution shall take effect on the date of its adoption.
The foregoing resolution adopted this __ day of December, 2004.
Director
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Attachment to Resolution
FORM OF AGREEMENT TO FINANCE DESIGN COSTS
OF PATTERSON STREET UNDERPASS
The Urban Renewal Agency of the City of Eugene, Oregon (the "Agency), the City of Eugene,
Oregon (the "City") and McKenzie-Willamette Medical Center ("McKenzie-Willamette") enter
into this Agreement to Finance Design Costs as of the __ day of___, 2004.
1. Recitals.
(a) McKenzie-Willamette is considering constructing a hospital and other medical facilities
(the "Medical Facilities") on property in the City of Eugene, Oregon, that is located in the
Riverfront Urban Renewal District and is currently occupied by the Eugene Water and
Electric Board (the "Site") (see Exhibit A for a listing of the properties).
(b) Locating the Medical Facilities at the Site will require construction of the Patterson Street
underpass. The Patterson Street underpass project is described in Exhibit B.
(c) McKenzie-Willamette desires that the City commence design work on the Patterson
Street underpass promptly, and therefore enters into this Agreement with the City and the
Agency to provide financing for the initial costs of designing the Patterson Street
underpass.
(d) The Patterson Street underpass is located in the Agency's Riverfront Urban Renewal
Area. The Patterson Street underpass is a transportation access project that is consistent
with the goals and project activities described in the urban renewal plan for the Riverfront
Urban Renewal Area. Costs of designing the Patterson Street underpass are therefore
eligible for financing with tax increment revenues from the Riverfront Urban Renewal
Area.
(e) The parties contemplate that the Agency will finance the cost of designing and construct-
ing the Patterson Street underpass by selling a tax increment bond to McKenzie-
Willamette. The tax increment bond will be payable solely from the tax increment rev-
enues that result from the increases in the assessed value of the Site and improvements to
the Site as a result of McKenzie-Willamette's acquisition or development of the Site.
(f) The City is willing to undertake the design of the Patterson Street underpass if
McKenzie-Willamette finances the cost of starting the design process as provided in this
Agreement.
2. Obligations of the City.
(a) In consideration of McKenzie-Willamette financing the initial cost of designing the
Patterson Street underpass as provided in this Agreement, the City will commence
designing the Patterson Street underpass.
(b) The City will use its best efforts to complete design of the Patterson Street underpass to
the 30% level by September 30, 2005.
Page 1 Agreement to Finance Design Costs of Patterson Street Underpass
(c) The City shall file reimbursement certificates with McKenzie-Willamette and the Agency
to obtain reimbursement for the costs it incurs in designing the Patterson Street under-
pass. Each reimbursement certificate shall be in substantially the form attached to this
Agreement as Exhibit C. The City shall submit reimbursement certificates only for costs
that the City has paid to design the Patterson Street underpass. Those costs of designing
the Patterson Street underpass may include both costs the City pays to third parties and
costs of City employees that provide design services for the Patterson Street underpass,
including costs of working with third parties who provide design services.
3. Obligations of McKenzie-Willamette.
(a) McKenzie-Willamette will pay the Agency for all of the City's initial costs in designing
the Patterson Street underpass on a reimbursement basis, up to a maximum cost of Five
Hundred Thousand Dollars ($500,000), as provided in this Agreement.
(b) Within five business days after receipt of each reimbursement certificate that is filed by
the City, McKenzie-Willamette shall pay to the Agency the amount described in the
reimbursement certificate, provided that McKenzie-Willamette shall not be obligated to
pay more than an aggregate amount of Five Hundred Thousand Dollars ($500,000).
Amounts due to the Agency shall be paid by wire transfer to the account of the City
indicated in each reimbursement certificate. If the amount described in any reimburse-
ment certificate is not paid within five business days after McKenzie-Willamette receives
the reimbursement certificate, the unpaid amount shall begin to accrue interest at the rate
of five percent per annum, compounded monthly.
4. Obligations of the Agency.
(a) The Agency shall pay McKenzie-Willamette the amount McKenzie-Willamette has paid
to the Agency under this Agreement, plus interest at the City's reasonable estimate of the
City's borrowing cost, but only if:
1. McKenzie-Willamette or a related party has acquired the Site and has commenced
construction of the Medical Facilities no later than [insert date]; and,
2. McKenzie-Willamette has provided to the Agency information sufficient to
demonstrate that McKenzie-Willamette's investment in the Medical Facilities is
reasonably projected to have a value of at least $85 million and that value is
reasonably expected to be subject to property taxation in Oregon.
(b) The Agency shall be obligated to pay McKenzie-Willamette under this Agreement, and
to finance the costs of constructing the Patterson Street underpass, solely from the tax
increment revenues of the Riverfront Urban Renewal Area that are allocable to the
increase in value of the Site and the improvements at the Site that occur as a result of
McKenzie-Willamette's acquisition or development of the Site, or from proceeds of tax
increment bonds that are secured solely by those tax increment revenues.
(c) Unless the parties otherwise agree in writing, if any payment is due from the Agency to
McKenzie-Willamette under this Agreement, the Agency may pay the amount due
McKenzie-Willamette under this Agreement by:
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1. including the amount due to McKenzie-Willamette as a cost of the Patterson Street
underpass, financing that cost with the tax increment bond that the Agency sells to
McKenzie-Willamette, and paying McKenzie-Willamette from the sale proceeds
of that bond; or,
2. tendering to McKenzie-Willamette a tax increment bond that is:
a) secured on a parity with the tax increment bond that the Agency sells
to McKenzie-Willamette to finance the cost of the Patterson Street
underpass; and,
b) is in a principal amount that is equal to the amount that is due to
McKenzie-Willamette.
(d) IfMcKenzie-Willamette does not qualify for payment under Section 4(a), neither the
City nor the Agency shall have any obligation to repay McKenzie-Willamette for any
amounts McKenzie-Willamette provides to the City under this Agreement.
(e) If the Agency is obligated to pay McKenzie-Willamette under this Agreement, the
Agency shall not grant any lien or encumbrance on the tax increment revenues described
in 4(b) until McKenzie-Willamette has been paid as provided in this Agreement.
5. Default and Termination. If the Agency fails to comply with any of its obligations under
this Agreement, McKenzie-Willamette may exercise any remedy available at law or in equity.
No remedy shall be exclusive. McKenzie-Willamette may waive any default by the Agency, but
no such waiver shall extend to a subsequent default.
IfMcKenzie-Willamette fails to comply with any of its obligations under this Agreement,
the City may cease design efforts, and the Agency and the City may exercise any remedy avail-
able at law or in equity. No remedy shall be exclusive. The Agency and the City may waive any
default by McKenzie-Willamette, but no such waiver shall extend to a subsequent default.
6. Attorney Fees, Costs and Expenses. If any party incurs any expenses in connection with
enforcing this Agreement, the losing party shall pay to the prevailing party, on demand, the
prevailing party's reasonable costs and reasonable attorneys' fees, whether at trial, on appeal or
otherwise. Each party shall be responsible for paying fees and costs of its attorneys, architects,
agents and advisors, to the extent such fees and costs are incurred in negotiating or approving
this Agreement.
7. Notices. Any notices required to be given pursuant to this Agreement shall be given to the
following addresses:
Agency: Treasury Officer
City of Eugene
PO Box 1967
Eugene, OR 97440
Page 3 Agreement to Finance Design Costs of Patterson Street Underpass
City: Treasury Officer
City of Eugene
PO Box 1967
Eugene, OR 97440
McKenzie-Willamette: [address for McKenzie-Willamette]
8. Assignment. No party may assign any of its rights or obligations under this Agreement
without the consent of the other parties.
9. Applicable Law. This Agreement shall be governed and interpreted in accordance with the
laws of the State of Oregon.
10. Standard Contract Provisions. McKenzie-Willamette shall comply with the applicable
provisions of the City's standard contract provisions as set out in Exhibit D.
11. Severability and Waivers. If any part of this Agreement is not enforceable, the rest of the
Agreement may be enforced.
12. Amendment. This Agreement may be amended only in a writing that is signed by all
parties.
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13. Counterparts. This Agreement may be executed simultaneously in several counterparts,
each of which shall be an original and all of which shall constitute one and the same agreement.
MCKENZIE-WILLAMETTE MEDICAL CENTER
By:
Authorized Officer
URBAN RENEWAL AGENCY OF THE CITY OF EUGENE, OREGON
By:
Authorized Official
CITY OF EUGENE, OREGON
By:
Authorized Official
Page 5 Agreement to Finance Design Costs of Patterson Street Underpass
Exhibit A - List of Properties Included in the Site
FY05
Tax Map & Taxable
Lot Number Account # Value Acres Notes
17-03-29-33-01400 248714 $0 0.11
17-03-29-33-01600 248730 0 0.10
17-03 -29-33 -02000 248763 0 0.19
17-03-29-33-02600 248821 0 0.24 Storage Area South of the Substation.
17-03 -29-33 -02700 248839 0 0.56
17-03 -29-33 -02900 248847 0 0.80
17-03-30-44-07400 257517 0 0.29
17-03-30-44-08200 257590 0 0.21
17-03 -30-44-08300 257608 0 0.08
17-03-30-44-08400 257616 0 0.30
17-03-30-44-08500 257624 812,572 1.31
17-03-31-11-00100 257707 0 0.26
17-03-31-11-00300 257715 0 0.55 North Building
17-03-32-22-00100 281814 0 10.69 Parking
17-03-32-22-00300 281830 0 1.21 Parking
17-03-32-22-00400 281848 0 0.44 Parking
17-03-32-22-00401 281855 0 0.63 Parking
17-03-32-22-00800 281897 0 5.84 Midgleys
17-03-32-22-01500 281947 0 1.16 West Storage Yard
17-03-32-22-01600 281954 0 0.77
$812,572 25.74
Exhibit A - List of Properties Included in the Site
Exhibit B - Description of the Patterson Street Underpass Project
The Patterson Street Underpass is planned as a two lane facility extending from Broadway to the
north side of the Union Pacific Railroad (UPRR). The roadway will provide two-way access and
be grade-separated at the UPRR and the planned Highway 99W. On the north side of the grade-
separated crossing of the UPRR, the roadway will extend west to a point at which the roadway
meets the existing ground elevation of the EWEB property.
Exhibit B - Description of Patterson Street Underpass Project
Exhibit C - Reimbursement Certificate
REIMBURSEMENT CERTIFICATE NO.
FOR
AGREEMENT TO FINANCE DESIGN COSTS
OF PATTERSON STREET UNDERPASS
TO: McKenzie-Willamette Medical Center Wire Instructions:
[insert address]
Bank:
Address:
ABA:
Account Name:
Account Number:
Reference: Patterson Street Underpass
Reimbursement
On behalf of the City of Eugene, Oregon (the "City"), I hereby certify that:
1. This reimbursement certificate is submitted pursuant to the Agreement to Finance
Design Costs of Patterson Street Underpass that is dated as of___, 2004, and is signed by
McKenzie-Willamette Medical Center, the Urban Renewal Agency of the City of Eugene,
Oregon, and the City (the "Agreement"). I am authorized to request this reimbursement under
the Agreement and make the representations on behalf of the City that are included in this
reimbursement certificate.
2. The City hereby certifies that it is entitled to reimbursement from McKenzie-
Willamette Medical Center pursuant to the Agreement for design costs of the Patterson Street
underpass that the City has previously paid in the amount of $
3. McKenzie-Willamette Medical Center has not paid the City for any of costs described
in this reimbursement certificate.
4. The costs of the Patterson Street underpass for which the City is seeking
reimbursement in this certificate are:
[insert brief description of costs]
Dated this __ day of _, 20__
CITY OF EUGENE, OREGON
By:
Authorized Officer
Exhibit C - Reimbursement Certificate
Exhibit D - Standard Contract Provisions
The following provisions if applicable axe hereby included in and made a paxt of the attached contract between the City of
Eugene and the Contractor named thereon as provided for in the Eugene Code, 1971, the revised statutes of the State of Oregon,
and Federal laws, rules, regulations, and guidelines. Note that the City Attorney has advised that the Fair Employment Practice
Provisions of the Eugene Code do not apply to the purchase of credit, such as the City is purchasing under the Design Finance
Agreement.
1. Fair Employment Practice Provisions (Eugene Code, 1971, Section 4.625)
These provisions are applicable to any contract with a Contractor if the City purchases goods or services from the Contractor
costing $2,500 or more in any fiscal year:
1.1. During the performance of this contract, the Contractor agrees as follows:
1.1.1. The Contxactor will not discriminate against any employee or applicant for employment because of an
individual's race, religion, color, sex, national origin, maxital status, familial status, age, sexual orientation or
source of income, a juvenile record that has been expunged pursuant to ORS 419A.260 a~d 419A.262, or
because a~ individual is a person with a disability which, with reasonable accommodation by the employer
does not prevent the performance of the work involved, unless based upon a bona fide occupational
qualification reasonably necessary to the normal operation of the employer's business.
1.1.2. Those Contxactors employing 15 or more individuals will develop a~d implement an affirmative action plan
to insure that applicants are employed, and that employees axe txeated during employment, without regard to
their race, color, sex, age or national origin. Such plan shall include, but not be limited to the following:
employment, upgrading, demotion, txansfer, recruitment, recruitment advertising, layoff or termination, rates
of pay or other forms of compensation and selection for txaining, including apprenticeship.
1.1.3. The Contxactor agrees to post in conspicuous places, available to employees a~d applicants for employment,
notices to be provided by the Human Rights Commission setting forth the provisions of this
nondiscrimination clause.
1.2. The Contxactor will, prior to commencement a~d during the term of this contract, provide to the City such
documentation, and permit any inspection of records as may be required or authorized by rules adopted by the city
manager to determine compliance with paxagraph 1.1 above.
1.3. If upon an investigation conducted pursuant to rules adopted by the city manager in accordance with section 2.019 of
the Eugene Code, 1971 there is reasonable cause to believe that the contractor or a~y subcontractors of the Contractor
have failed to comply with any of the terms of paragraphs 1.1 or 1.2, a determination thereof shall be made in
accordance with the adopted rules. Such determination may result in the suspension, cancellation or termination of the
principal contract in whole or in paxt a~d/or the withholding of any funds due or to become due to the Contractor,
pending compliance by the Contractor a~d/or its subcontractors, with the terms of paxagraphs 1.1 and 1.2.
1.4. Failure to comply with a~y of the terms of paxagraphs 1.1 and 1.2 shall be a material breach of this contract.
1.5. The Contxactor shall include the provisions of paragraphs 1.1 through 1.4 in contracts with subcontractors so that such
provisions will be binding upon each subcontractor.
2. Foreign Contractor Report to Department of Revenue (ORS 279.021)(2)(a)
The following provision is applicable to all contracts with a contract price exceeding $10,000 if the Contractor is not domiciled in
or registered to do business in the state of Oregon:
The Contxactor shall promptly report to the Department of Revenue on forms to be provided by the Department of Revenue the
total contract price, terms of payment, length of contract and such other information as the Depaxtment of Revenue may require
before final payment can be received on the public contract. The City shall satisfy itself that the requirement of this subsection
has been complied with before it issues a £mal payment on this contxact.
3. Payment of Laborers and Materialmen, Contributions to Industrial Accident Fund, Liens, and Withholding Taxes
(ORS 279.312)
The Contxactor shall:
3.1. Make payment promptly, as due, to all persons supplying to such Contractor, labor or material for the prosecution of
the work provided for in such contract.
3.2. Pay all contributions or amounts due the Industrial Accident Fund from such Contxactor or subcontractor incurred in
the performance of the contract.
Exhibit D - Standard Contract Provisions