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HomeMy WebLinkAboutCC Minutes - 11/27/07 URA Workshop M I N U T E S Eugene Urban Renewal Agency Workshop McNutt Room – City Hall 777 Pearl Street—Eugene, Oregon November 27, 2007 6 p.m. COUNCILORS PRESENT: Andrea Ortiz, Bonny Bettman, George Poling, Jennifer Solomon, Betty Taylor, Mike Clark. COUNCILORS ABSENT: Chris Pryor, Alan Zelenka. Her Honor Mayor Kitty Piercy convened the Eugene Urban Renewal Agency Workshop at 6:10 p.m. A. WORKSHOP: West Broadway Project City Manager Pro Tem Angel Jones stated that the purpose of the meeting was to hear from the body of the council on how the City should move forward after the defeat of the ballot measure. She related that staff had outlined options that captured different approaches considered for the West Broadway area. She underscored that there were other ideas that could be put on the table and the council should not limit itself. She said some of the options included in the Agenda Item Summary (AIS) went beyond what staff would recommend, but were included to provide a broad range. Ms. Jones extended her appreciation to Brad Malsin, Pete Eggspuehler, and Thomas Kemper for taking the time to be present. Denny Braud, Senior Development Analyst for the Planning and Development Department (PDD), provided a power point presentation outlining the Options for West Broadway Redevelopment. He reiterated that the purpose of the meeting was to seek the possible next steps for the Broadway area redevelopment. He noted that both the presentation and the options would be available on the City’s Web site. Executive Director for PDD, Susan Muir, said Mr. Braud had prepared a suggested motion. She underscored the need for direction, either by utilizing the prepared motion or from councilors in the form of feedback. She related that they were very aware that the “clock was ticking” on the options the City had taken to purchase some of the properties. She stated staff’s intention to prepare an additional recommendation based on the feedback received. She asked Tom Kemper, KWG Development Partners, to comment on what had been presented and possible next steps. Mr. Kemper expressed disappointment in the results of the election. He related that KWG Development Partners had been surprised by the vote as they had been led to believe by some studies that there was a fair amount of support for downtown redevelopment. He wondered if this was attributable to a lack of understand- MINUTES—Eugene Urban Renewal Agency November 27, 2007 Page 1 Workshop ing of how urban renewal worked or to true opposition to spending any money on the downtown project. He underscored that urban renewal funds did not take money from schools. Mr. Kemper stated that the original proposal for the Sears site for residential and live/work units as mixed use development would have been difficult to pull off on that site. He related that when the Request for Qualifica- tions (RFQ) came up for the Broadway area it presented the opportunity to create a whole district. KWG thought it could change that area of the downtown significantly, but to do so would take a project of a scale that would create a synergy between the participating entities and was planned to include an upscale neighborhood with hotel, restaurants, and residential units with retail below them among other things. He indicated that KWG Partners was willing to explore options, but it was difficult to be “excited” about moving forward given the results from the election. He said at this point KWG was reluctant to proceed with the Sears site because of the current housing market. Mr. Malsin, of Beam Development, thanked those present for inviting him. He said to a great degree he would mirror Mr. Kemper’s comments. He believed that the downtown needed “a shot in the arm in a considerable way.” He stated that whether the City redeveloped in a piecemeal fashion or something else, the redevelopment needed the support of the community or it would not work. He attributed their confusion to not knowing the reason the ballot measure had not passed. He was uncertain whether it was too big or whether citizens just did not want it to happen. He averred that taking no action would be the wrong thing to do. He said if there were to be a vital downtown the City would have to make a commitment to it; the risk could not be mitigated by inaction. He indicated that Beam Development was still interested in discussions. He agreed with Mr. Kemper that the market had changed. Mayor Piercy thanked Mr. Kemper and Mr. Malsin for coming. Ms. Bettman attributed the failure of the ballot measure to “sticker shock.” She believed the actual financing mechanism was flawed. She felt the City was out of touch with the general population. Ms. Bettman, seconded by Ms. Taylor, moved to direct the City Manager/Agency Director to bring back to the City Council/Urban Renewal Agency for consideration at the December 10, 2007 work session, a proposal(s) that would be consistent with provisions of Option 2 offered by staff/Eugene Redevelopment Advisory Committee at the April 25, 2007 council work ses- sion as follows: Option 2 engages Beam to proceed with “renovation of the Center Court building and the Washburne building and a yet-to-be-defined level of new construction on the adjacent vacant land;” and, includes that the City Council/Urban Renewal Agency “would also continue to th move forward with the TK Partners project as previously selected on the 10 and Charnelton Request for Proposals process” (consisting of 106 “homes” on the Sears pit site). This motion assumed a proposal(s) coming back to the council would define the use and inten- sity for the Aster Pit development; and maintain Beam and Kemper as separate entities. Ms. Bettman acknowledged Mr. Pryor’s and Mr. Zelenka’s opposition to taking action at the present workshop. She said the reason she wanted to move forward was that Mr. Pryor and Mr. Zelenka had not asked for a postponement of action until they had learned that she would be placing the motion on the table. She affirmed that it was the councilors’ prerogative to request that action be delayed, but she declared that in this case it was important to take the first step. Mayor Piercy verified that Mr. Zelenka and Mr. Pryor had requested that no motions be made at the present meeting. MINUTES—Eugene Urban Renewal Agency November 27, 2007 Page 2 Workshop Ms. Taylor averred that it was important that action be taken. She believed that people had not voted against the ballot measure because they did not wish to redevelop the downtown area. She felt the message was that the public did not want a large project and did not want to “destroy” what was there. Ms. Ortiz said she would honor her council peers’ request to not take action. She felt they could still have a good robust discussion about what the next steps should be. Mr. Poling, seconded by Mr. Clark, moved to table the motion. Mr. Clark expressed his feeling that his colleagues should respect Mr. Zelenka’s and Mr. Pryor’s request. He noted that Mr. Zelenka had participated in the advisory committee process. He said it was important that the community spoke together. The motion passed, 4:2; councilors Taylor and Bettman voting in opposition. Mayor Piercy stated that the motion would be deferred to December 10. Ms. Taylor said they needed to find out if Kemper was still willing to build housing at the Sears site. Ms. Ortiz welcomed Mr. Kemper and Mr. Malsin to the meeting. She remarked that she was not surprised by the vote but she had been disappointed. She asked if it would be possible to reconfigure the project and move forward with a different footprint. She wanted to know if KWG Partners would be willing to do a more scaled- back project. Mr. Kemper, who had driven from Portland to participate in the discussion, said if the City proceeded with a housing project, it could “blow” the opportunity to do something bigger that would be a more desirable project for the downtown. He stated that he was far less enthusiastic about the Sears proposal than he had been 15 months earlier. He would not be inclined to “step up to” the timeline they had agreed upon at the time. He recalled that they had discussed scaling back the density and the parking and whether that made sense, but one of the strongest desires was to create a district with some unique restaurants and retail spaces. He was not sure a scaled-back version of the original concept would work. Mayor Piercy asked for clarification on the original timeline. Mr. Kemper replied that under the original proposal for the Sears site they had intended to break ground in 12 months, but at present he would choose to slow that down. Mr. Poling thanked the developers for remaining interested. He averred that the third reason the ballot measure had not passed was that the citizens wanted the streets to be fixed, increased public safety, and economic redevelopment. He felt these were legitimate concerns. He favored the proposed motion in the AIS. He did not want to spend General Fund money on the redevelopment project. He also supported inclusion of the properties that were south of Broadway and the Roberts building and Scan Design properties. Additionally, he would support the inclusion of a park space in the redevelopment project only if it was developed along with redevelopment of the downtown area. Mr. Clark echoed Mr. Poling’s comments. He thanked Mr. Kemper and Mr. Malsin for their time investment in the process. He shared their disappointment in the outcome of the election, but he was sensitive to what the voters said. He also did not favor spending General Fund money on the project until there was a clear way of addressing the needed transportation funding and the need to increase funding for public safety. MINUTES—Eugene Urban Renewal Agency November 27, 2007 Page 3 Workshop Ms. Bettman was also not in favor of using General Fund money. She favored using the Facility Reserve fund as security on Housing and Urban Development Department (HUD) loan money. She averred that it was available for redevelopment and should be used for that. She said it should not be “wasted in three or four different ways.” In terms of acquisition of property, she was not interested in acquiring properties that lay north of Broadway. She felt that her motion should have been left on the table because she believed there needed to be some decision in place in order to know what next steps to take. Ms. Bettman noted that options laid out by staff included increasing the urban renewal district spending limit by a smaller amount. She underscored her opposition to doing so. She said she had “done some numbers” and would share them with anyone who was interested. She explained that she was thinking in terms of what she thought was available from existing funds. She averred that the City had to do what it could afford. She added that housing should still be a top priority for the downtown area. She also agreed that the property across from the library should not be redeveloped solely for a park. Mayor Piercy commented that both the people who supported and opposed the ballot measure supported reinvigoration of the downtown area. She pointed out that the closer people lived to the downtown area the more likely they were to support the ballot measure. Mayor Piercy did not think the City of Eugene had “saturated” its interest in condominiums in the downtown area. She believed there was housing potential in the area that might not be true in other areas. She also thought the park idea had been couched in the context of housing and was not something that would stand by itself. Ms. Bettman wanted to hear more from the developers about what they wanted to do next. In response to a question from Ms. Bettman, Financial Analysis Manager for the Central Services Department, Sue Cutsogeorge, affirmed that a special levy was considered tax increment financing and would count as part of the spending limit for the district. Mr. Malsin commented that one challenge was not just to look at how they perceived the housing market but how housing would be financed. He explained that at present, financial institutions were hesitant to finance condominium projects. Regarding the Washburne/Centre Court/Aster pit project, he said Beam Development was still interested and believed they could make it work. He wanted to see what KWG Development would be doing because he thought there could be synergy between the two. He believed there was some formulation that existed in downtown courts that involved a critical mass of activity that would make things viable. He believed it would take more cooperation from the City financially and otherwise to be able to take smaller steps as this approach would present challenges. Ms. Solomon observed that some of the options would expire on March 24, 2008. She asked if it would be reasonable to expect a commitment from the developers at this time. Mr. Kemper called this an appropriate question. He underscored that when the project was actually initiated the developer would spend between $500,000 and $700,000 in predevelopment costs out of pocket. He said it represented a bet that at the end of the process they would be able to secure a construction loan to build the project. He stated that if they asked him at the present meeting if he was willing to “step up” and spend the money on purchase contracts the answer would be no. He added that they would continue to take the Sears site under serious consideration. MINUTES—Eugene Urban Renewal Agency November 27, 2007 Page 4 Workshop In response to a question from Ms. Taylor, Mr. Malsin said he would consider moving forward with the Beam proposal alone. Ms. Taylor asked how soon they would let the City know of their intentions. Pete Eggspuehler, also represent- ing Beam Development, responded that the original proposal was a more phased project. He said they were talking with potential tenants in order to get a better sense of their intentions. He underscored that having a tenant prior to redevelopment reduced risk. Ms. Bettman said it was important to know where the developers wanted to move with the original proposals so that the City would know how to proceed. She remarked that the City had the ability to make investments in housing. She asserted that there was a set amount of money in terms of the HUD money, the Brownfield Economic Development Initiative (BEDI) grant, what was left under the urban renewal district cap, and there were “other monies as well.” She stated that there were state HOME funds, Multiple Unit Property Tax Exemption (MUPTE) incentives, and low income housing credits for affordable housing. She hoped that City staff could talk to the developers about what options for financing were available. Mayor Piercy asked Mr. Malsin if the Beam project would go forward with the Centre Court building if the Washburne building was not included in the project. Mr. Malsin responded that he would have to consider this at greater length given that at present it appeared that the tenants he was working with would require both buildings. Mayor Piercy remarked that she had heard in an earlier meeting that housing was in better shape in the northwest than in other areas of the country. Mr. Kemper replied that he thought it was an accurate assessment. He explained that the decline in prices had created difficulty for lenders but prices had not fallen significantly in the northwest. He said the other variable was the number of sales, which at this point were “way off.” Mr. Malsin concurred with Mr. Kemper. He said there were trends in development and big developers tended to look at trends rather than markets. He underscored that developers’ investments were long term investments. Mr. Clark observed that much of the conversation revolved around what the development would cost and what it would consist of. He acknowledged that developers would also look at who would move into the building and what the revenue stream would be. He asked for feedback regarding the differences between the larger project from before and what could be built at present. Mr. Kemper said KWG had proposed a mixed use concept with housing and retail, with the retail at a significant scale. He explained that the sort of retail they were looking for would want to know who the “players” would be in their neighborhood. He underscored that the scale of the project had been critical to its success. He added that the housing they had considered consisted predominantly of condominiums. He reiterated that at present getting financing for condos was “extraordinarily difficult.” Mr. Malsin said the Beam concept had been to restore buildings and to house smaller locally-owned businesses in them. He stressed that in the “real world” there had to be a lot of different uses in the downtown area. Ms. Bettman asked staff to talk about tools such as conduit loans that could be utilized for financing. She averred that the City could bypass “a reluctant banking industry.” Ms. Cutsogeorge stated that non-profit housing projects had the ability to access tax increment financing through conduit loans. MINUTES—Eugene Urban Renewal Agency November 27, 2007 Page 5 Workshop Community Development Division Manager, Mike Sullivan, explained that there was financing available for “for-profit” developers who were developing affordable housing. He stated that the Kemper group in some of its iterations had used tax credit financing and possibly state bond financing. He said the four percent tax credit could finance housing for people with 60 percent of the median family income in many communities. He noted that this was being used for the West Town project. Regarding HUD financing, he clarified that the block grant program was not available for the construction of housing under most circumstances. Ms. Bettman asked if that funding could be used to acquire property. Mr. Sullivan replied that this funding could only be used for acquisition of property if it was for the correction of slums and blights. Ms. Jones noted the time and asked Ms. Muir to summarize. Ms. Muir surmised that there was support for having the flexibility to work with the developers on their concepts, possibly including the purchase of some additional properties: the Scan Design building, the Roberts building, the Diva/ShawMed building, and the Diamond property. She said she had clearly heard that there should not be any further delay. She acknowledged the desire to continue the discussion of inclusion of open space in the larger project. Ms. Taylor reiterated her opposition to the inclusion of the Scan Design building and the Roberts building. Ms. Bettman said there was definitely not consensus to support acquisition of the properties north of Broadway. She added that purchasing additional properties was not part of her tabled motion. She averred that the Aster pit had not been defined in terms of the intensity and density of the intended use; therefore there was some flexibility in that location. She stated that the only other flexibility that she had mentioned was in regard to the potential purchase of the Diamond lot and how the “housing project” could be reconfigured to maximize community objectives. Mr. Poling asked staff to return with an amendment to include the acquisition of the Scan Design and Roberts buildings given that Ms. Bettman’s motion did not have consensus support. Mr. Clark noted that the City had been contacted by the people who owned Bradford’s about the cost to them of being vacated from that building. He asked staff to address how the City would ensure that the Bradford’s Home Entertainment business was kept whole through the process. Mayor Piercy reiterated her gratitude to Mr. Kemper, Mr. Malsin, and Mr. Eggspuehler for coming to the meeting and participating in the discussion. The meeting adjourned at 7:35 p.m. Respectfully submitted, Angel Jones City Manager Pro Tem (Recorded by Ruth Atcherson) MINUTES—Eugene Urban Renewal Agency November 27, 2007 Page 6 Workshop