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HomeMy WebLinkAboutCC Minutes - 02/27/08 Work Session M I N U T E S Eugene City Council Work Session McNutt Room – City Hall 777 Pearl Street—Eugene, Oregon February 27, 2008 Noon COUNCILORS PRESENT: Andrea Ortiz, Chris Pryor, Betty Taylor, George Poling, Mike Clark, Jennifer Solomon, Alan Zelenka. COUNCILORS ABSENT: Bonny Bettman. Her Honor Mayor Kitty Piercy called the work session of the Eugene City Council to order. A. WORK SESSION: Outdoor Smoking Areas City Manager pro tem Angel Jones introduced Land Use Supervisor for the Planning and Development Department (PDD) Mike McKerrow and indicated he would summarize the issue and answer any questions that arose. Mr. McKerrow stated that the work session served to provide an opportunity to revisit standards for outdoor smoking areas. He said the current standard required a roofed area that was 75 percent open and that the area only abutted one wall. He noted that in addition, fences or other enclosures were treated as solid walls if they were within 10 feet of the roof. He related that staff had heard from many business owners that the standards presented a challenge as fences were used for security purposes so that furniture and equipment would not be stolen and also that some enclosures did not meet the Oregon Liquor Control Commission (OLCC) standards for separation. He explained that staff had also received feedback from neighbors of bars who were impacted by smoke and noise, noting that some impacts could travel 50 to 100 feet. He provided enlarged photos on the wall showing several outdoor smoking areas. Mayor Piercy related that Ms. Taylor had accompanied her in a Mayor’s One-on-One meeting the previous day and had received feedback from people living near The Old Pad who were impacted by the outdoor smoking area. She said neighbors also complained about the noise it generated. Ms. Taylor remarked that she had heard complaints about The Old Pad “for years.” She said neighbors found it difficult to be in their yards or even to leave their windows open in the summertime. It seemed intolerable to her and she felt the ordinance should be changed. Mr. Pryor said he was not looking to change the substance of the ordinance, but he was interested in fine- tuning it so that it operated more effectively. He wanted to work on the security aspect and the limitation to minors. He asked how sufficient security could be provided to a smoking deck without impeding what the council had been trying to achieve in the larger sense, i.e. air flow. He surmised that this could be MINUTES—Eugene City Council February 27, 2008 Page 1 Work Session accomplished with an amendment that would allow fencing for security purposes with a caveat that nothing could be done to impede airflow. Mr. Poling appreciated the points made regarding security and the limitations to minors. He asked if the City ordinance governing noise worked in this situation. Mr. McKerrow replied that there were two sections in the City code; one in Chapter 6 that was more related to land use code, development standards, or commercial/industrial uses, and there was a section regulating noise in Chapter 4, enforceable by the Eugene Police Department (EPD). He reported that staff had met with neighbors of The Old Pad and its owner. He related that the officer that attended indicated that there was not always an officer to respond, but it was important nonetheless to make the call to report the noise violation so that they could be tracked. Mr. Poling said if the council decided that smoking decks should be a certain distance from houses this clause should only apply to new establishments being built. He did not support “penalizing” bar owners who keep trying to do the right thing. He noted that the Agenda Item Summary (AIS) discussed the bills adopted in the 2007 Oregon State Legislature that go into effect in January, 2009, but indicated that staff anticipated clarification on the implementation of new regulations. He asked what staff was expecting in that regard. Mr. McKerrow responded that he had been in contact with staff from the State Public Health Division who had been given the assignment to develop the administrative rules. He anticipated that they would review the bill and then decide where it needed clarification, not unlike how something would be treated municipally. Mr. Poling preferred to wait to make changes locally until it was known what changes would come from the State. Mr. Clark concurred with Mr. Poling. He noted that he never favored the ordinance in the first place. He believed the previous ordinance drove smokers outside so that they became a nuisance. He averred that additions to the current ordinance would make things worse. He felt that the ordinance, as it stood, had contributed to the closure of three establishments which resulted in a loss of jobs. Ms. Solomon inquired how many of the 27 complaints related to outdoor smoking areas in the past three years had been in regard to The Old Pad. Mr. McKerrow replied that two or three of the complaints had been about that establishment. He reviewed the changes to the Pad’s outdoor smoking area that had been implemented with iterations of the outdoor smoking ordinance. Ms. Solomon remarked that she did not hear many complaints regarding outdoor smoking. She was starting to wonder if this was more of a neighborhood issue that the council could possibly help involved parties to resolve. She noted the one meeting that had occurred and wondered if more meetings should be planned. She was not certain the ordinance should be amended in response to complaints about one establishment, adding that she supported waiting until changes made at the state level were known. Ms. Ortiz agreed that the council did not need to take action until what the state intended to do was known. She commented that the only change she had noticed with the advent of the ordinance was that people thanked her for helping to make it happen. She knew it was challenging to live next to an area with a lot of smoking and indicated her willingness to support changes in fence height or other alterations in order to ameliorate the situation. Mr. Zelenka felt it was important to recall why the ordinance was in place – it was a health issue. He averred that the whole point of requiring a space to be 75 percent open was to gain the airflow necessary to MINUTES—Eugene City Council February 27, 2008 Page 2 Work Session provide a safe working environment for the people who worked in those establishments. He related that he also had heard a lot of compliments from people regarding the ordinance, especially people from out of town. Regarding noise levels, he asked why if the code said 10 p.m.; there was no enforcement until 11 p.m. Mr. McKerrow responded that the EPD may have changed this. He said it often could be a low priority for the EPD. Mr. Zelenka asked how a noise violation was treated when it came from a business; would it be issued to the patrons violating the ordinance or would it be issued to the owner of the establishment. Mr. McKerrow replied that civil penalties had been issued to business owners for violations of the smoking ordinance. He was uncertain whether individuals were cited within a business establishment. He noted that if the noise ordinance under Chapter 6 was violated, both the person responsible for the violation and the property owner were notified. Mr. Zelenka echoed comments regarding a requirement for higher fences. He also was not certain that existing businesses should be made to meet further requirements. Mayor Piercy remarked that if this one situation was generating a lot of complaints then some extra effort should be made to resolve it. Ms. Taylor said the smoking ordinance was intended to protect people. She felt this particular issue was a byproduct of the ordinance which was harming people’s health inadvertently. She also thought the noise and litter were hazards to the neighbors’ mental health. She thought any time something was permitted, the effects of a project on its surrounding neighborhood should be assessed. She added that she had heard many complaints regarding the establishment in question. She averred that this was a nuisance and it was up to the government to step in and take care of it. Mr. Pryor appreciated the conversation. He reiterated his support for leaving the ordinance as it currently stood until the State’s actions were known. He noted his specific interest in formulating language that was targeted regarding security fencing. Mr. McKerrow responded that the administrative rule had an allowance for security fencing. Mr. Zelenka asked how specific the language regarding the fencing could be. Mr. McKerrow replied that the language could be very specific. Ms. Taylor thought the council should look into instituting penalties for business owners. Mr. McKerrow noted that Ms. Ortiz had mentioned “green buffers” and pointed out that a downtown establishment had such a buffer, but had been disallowed from having tall vegetation as it had been determined to violate the regulations governing air flow. Regarding Ms. Taylor’s comments pertaining to the permitting process, he assured her that the applications were reviewed thoroughly to ensure they were in compliance. He said occasionally they passed on advice to applicants based on past experience with neighborhood conflicts. He related that in the case of The Old Pad there were no current violations at that property which meant staff could provide advice but could not sanction the establishment. Mr. Zelenka asked how a new business would be handled so that another problem such as the one in question would not arise. Mr. McKerrow explained that presently if a permit came in for a smoking area the City would apply all of the current outdoor standards and the administrative rule. He said at present there was not a distance measure or a fence option. MINUTES—Eugene City Council February 27, 2008 Page 3 Work Session MINUTES—Eugene City Council February 27, 2008 Page 4 Work Session Mayor Piercy adjourned the meeting of the City Council at 12:27 p.m. and convened the meeting of the Eugene Urban Renewal Agency. B. WORK SESSION: Finance Plan for Property Acquisition Senior Development Analyst for the Community Development Division, Denny Braud, explained that the purpose for the presentation was to review the financing strategy for the Centre Court, the Washburn, and the Diamond lot properties. He intended to talk about the proposed use of the Department of Housing and Urban Development (HUD) 108 loan and the Brownfields Economic Development Initiative (BEDI) grant for the acquisition of the properties. He provided a power point presentation entitled West Broadway Acquisitions Financing Plan, hard copies of which were provided to everyone present. th Mr. Clark asked staff to remind him of the appraised value of the lot at 12 Avenue and Oak Street. Mr. Braud replied that they had assumed a cost of approximately $30 per square foot. Mr. Braud explained that the HUD 108 program would allow the City to borrow up to five times the amount held for its annual federal Community Development Block Grant (CDBG) allocation; in this case the City had received approval for just under $8 million. He said the City had also been approved for a $2 million BEDI grant that was required to be used with 108 funds on a prorated basis. He stated that the City could draw down $1 in grant funds for every $3.95 borrowed under the 108 program. He stressed that these were federal funds and must meet national objectives. He indicated that these projects would meet the objectives of eliminating slums and blight and creating jobs. Mr. Braud summarized the required Transactions for Beam Acquisitions. He stressed that Beam Development would pay the acquisition costs over time and not up front, because it would not be feasible for Beam to obtain conventional financing for the acquisition within the option period. He explained that the Urban Renewal Agency (URA) would use the proceeds from Beam’s repayment of the note to repay the 108 loan. He further explained that because the City ultimately pledged future CDBG allocations as security for the HUD 108 loan, it was essential that the City’s borrowing provided enough security that future CDBG funds would not be jeopardized. Sue Cutsogeorge, Financial Analysis Manager for the Central Services Department, reviewed the details of the preferred funding plan for the acquisitions, a plan that would maximize the use of the HUD 108 loan and the BEDI grant funds. She underscored that this depended on HUD agreeing that this was “the way to go.” She stated that the budget request, scheduled for March 10, was based on a conservative funding scenario in which HUD did not approve the maximum amount the City hoped to get. She said this would mean the City would have to utilize $3 million in URA funds, rather than the $800,000 included in the preferred funding strategy. She explained that if the City Council and the Eugene Urban Renewal Agency approved this request, staff would present HUD with an application that would maximize the use of 108 funds. She stressed that in either scenario the total cost for the acquisition was the same, the only difference lay in funding sources. Ms. Cutsogeorge discussed the URA Financial Capacity given the failure of the City ballot measure. She said if HUD did not approve the use of the 108 loan without urban renewal backing the City would only have approximately $2 million left. She explained that any remaining money would be used first to meet any obligations left from the Beam project, noting that those costs were being negotiated. She stated that MINUTES—Eugene City Council February 27, 2008 Page 5 Work Session any funds that were left at that point could be used for other downtown priorities. She added that the project th under current discussion was located at 10 Avenue and Charnelton Street. She reviewed the timeline for acquisitions. Mayor Piercy asked if there was any difference in getting HUD approval for this project as opposed to the previous project, noting that it had contained a significant housing component. Mr. Braud replied that the City had been approved for the creation of a loan pool, defined by the $8 million in borrowing capacity and the $2 million BEDI grant. He said each individual project had to be approved by HUD in order to meet its underwriting criteria for a specific use. Mr. Clark observed that much of this was predicated on the agreement with Beam Development and that the security would be the real estate. Mr. Braud stated that because the City was borrowing from HUD it had to meet its underwriting criteria and that HUD’s intent was not to jeopardize the CDBG funds. He emphasized that this was also the City’s intent. He said the real estate would be a source of security for the loan and that the City was in the process of negotiating other security from Beam Development. Mr. Clark asked what the City’s protection was in case Beam Development did not follow through with its project. Mr. Braud responded that staff was trying to put all of the steps into place to be able to “100 percent assume” that the project was going forward. He indicated that the City’s intent was to sign an agreement with Beam Development that included a non-refundable deposit in the amount of 10 percent of the value of the property. In response to a follow-up question from Mr. Clark, Mr. Braud confirmed that the length of the agreement had yet to be negotiated. He said the length of the HUD 108 loan was assumed to be 10 years and the City would attempt to structure its agreement with Beam along those lines. Mr. Clark asked if the project’s success was predicated on having Oregon Research Institute (ORI) for a tenant. Mr. Braud averred that ORI would be a “great tenant,” but Beam Development had indicated that they were talking to other tenants as well. In response to a follow-up question from Mr. Clark, Mr. Braud clarified that the primary goal was to assist Beam Development in bringing its project to completion. Ms. Taylor asked how much had been spent in City attorney fees. Ms. Cutsogeorge estimated that attorneys had cost $50,000. Ms. Taylor asked why the City was not using tax increment funding. Mr. Braud responded that one of the “big carrots” was the possibility of grant funds. Ms. Taylor asked if there was enough money in the urban renewal funds if the grant did not work out. Mr. Braud explained that the City could likely accomplish the acquisition with the funds but the question was then whether there were enough resources for Beam to get the project off the ground. In response to questions from Mr. Zelenka, Mr. Braud clarified that the City’s agreement was with HUD and the obligation was for the City to repay the loan; Beam’s agreement would be with the City. He explained that the BEDI funds would also be applied to the acquisition and Beam Development would repay the entire acquisition cost to the City directly. MINUTES—Eugene City Council February 27, 2008 Page 6 Work Session Mr. Zelenka asked why HUD would require URA backing for its loan. Mr. Braud replied that if one considered the current state of the property, it was vacant and there was no cash flow. He said the City would have to demonstrate some cash flow/debt service ratios. He stated that the question was whether the project could meet HUD’s underwriting criteria, which included debt service coverage and loan-to-value ratios without additional security. He added that when the project was complete and there was cash flow the equation had potential to change. Mr. Zelenka asked what happened to the grant amount if the project required URA backing. Mr. Braud responded that the more security the City could provide the more it could borrow. Mr. Zelenka had presumed that there would be some level of subsidy from the City. Mr. Braud reiterated that the preferred method was to loan money rather than to grant money to or invest money in the project. He said the next level of participation to help Beam construct and reconstruct the Centre Court building would be some other financing mechanism, likely using the HUD 108 loan and/or the BEDI grant to put into it. Mr. Zelenka asked if the City could use the $2 million in the URA loan program for the project. Mr. Braud replied that the URA loan program was historically used for building improvements and projects within the Downtown Urban Renewal District. Mr. Poling acknowledged that this hinged on the March 10 vote on the Supplemental Budget. He asked how firm this deadline was. Ms. Cutsogeorge responded that the City had to exercise its options by March 24 and the council break was set to begin on March 13. Mr. Poling observed that Ms. Taylor planned to be absent on March 10. He encouraged Ms. Taylor to participate by telephone rather than request the vote be deferred. Ms. Taylor asked if this vote could be conducted on March 12. Ms. Jones stated that the agenda for March 12 was “packed.” She underscored that it was the council’s decision on whether to defer the vote to that date, but the agenda items scheduled for that date were all time sensitive and required action. Ms. Taylor indicated that she would vote in favor. th Mr. Zelenka asked where the 10 Avenue/Charnelton Street project would be left if the URA funds were used to back the loan. He was concerned that it would be impacted so that no one in the downtown could be assisted through this mechanism. Ms. Ortiz remarked that it was the will of the people to keep the limit on the URA funds at the current level. th Ms. Taylor said the City should make the 10 Avenue/Charnelton Street property into a park. Mr. Zelenka commented that the Beam project seemed a little sketchy because the City did not necessarily have enough money to make it work. Ms. Solomon ascertained from Ms. Cutsogeorge that once the URA reached its debt limit the City could not collect anymore tax increment funds. Ms. Cutsogeorge stated that the money could be used to pay off another urban renewal project, such as the library, but could not be applied to new projects. Mr. Pryor, seconded by Ms. Taylor, moved to direct the Agency Director to include the budget transactions necessary to accomplish the property acquisition in the Supplemental Budget to be considered on March 10, 2008. The motion passed unanimously, 7:0. MINUTES—Eugene City Council February 27, 2008 Page 7 Work Session The meeting adjourned at 1:10 p.m. Respectfully submitted, Angel Jones City Manager pro tem (Recorded by Ruth Atcherson) MINUTES—Eugene City Council February 27, 2008 Page 8 Work Session