HomeMy WebLinkAboutItem B: Selection of Development for 10th and Charnelton
EURA
UGENE RBAN ENEWAL GENCY
AIS
GENDA TEM UMMARY
Work Session: Selection of Development Proposal for 10th and Charnelton Site
Meeting Date: July 30, 2008 Agenda Item Number: B
Department: Planning & Development Staff Contact: Nan Laurence
www.eugene-or.gov Contact Telephone Number: 682-5340
ISSUE STATEMENT
A Request for Proposals (RFP) was issued in March 2008 for the sale and development of the
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10 and Charnelton development site. The Urban Renewal Agency (URA) is asked to review
the responses to the RFP and to direct the Agency Director to enter into exclusive negotiations
with the preferred RFP respondent.
BACKGROUND
At a work session on July 14, 2008, staff presented information about the five proposals received
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in response to the RFP for the 10 and Charnelton site. In the materials presented, staff focused
the analysis on the WG Development and Opus NWR Development proposals. Staff analyzed
both proposals in terms of the Development Objectives approved by the Urban Renewal Agency
as part of the RFP. Staff also considered the analysis from Johnson Gardner, financial
consultant, which provided an assessment of development risks, in addition to comments from
the Eugene Redevelopment and West Broadway advisory committees.
Based on that analysis, staff determined that both proposals addressed the development
objectives in the RFP, and that the proposal from Opus was stronger in terms of market
feasibility, financial feasibility, developer capacity and timeliness.
The URA discussion at the July 14 work session indicated a preference for the WG Development
proposal, based on a number of factors including the mix of uses and the design. In response to
questions regarding financial feasibility and possible phasing, the URA directed staff to request
supplemental information on the proposal submitted by WG Development, as well as from Opus
Development. The requests for supplemental information and the responses provided by the
development teams are included as Attachments A and B. Additional information on the
materials provided will be included in a staff presentation at the July 30 work session.
Staff has evaluated the supplemental information received from WG Development and Opus
Development as well as the analysis from Johnson Gardner. Many of the questions identified by
the URA regarding the financial feasibility, timeliness, and net financial cost/benefit of the WG
proposal were addressed by the supplemental information presented.
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In the initial memo from Johnson Gardner, “Assessment of Development Risks” (included in the
Council packet of July 14, 2008), the projected office lease rate in the WG proposal was
considered to be on the high end of lease rates for class “A” office space in downtown Eugene.
Staff requested follow-up information to address concerns regarding revenue assumptions for the
office space, which represents 32% of the total gross revenues of the project. The follow-up
memo, “Supplemental Review of WG Development Proposal,” is included as Attachment C.
The memo indicates that lease rates assumed in the WG pro forma exceed the expected office
market in 2011 by a significant amount.
Johnson Gardner and staff reviewed a set of comparable construction projects, and determined
that the estimate of construction costs included in the WG proposal are at the middle of the range
for comparable projects in the area, and appear to be within acceptable market expectations. WG
provided a letter in support of the construction estimates as part of their response to the request
for supplemental information.
The equity in the WG project appears strong. The supplemental information provided new detail
on possible equity participants. The Jean Tate group is considering an investment that could
represent as much as 25% of the total equity needed for the project. In addition, Pacific
University, the identified anchor tenant, is apparently considering an equity position in the
project.
The supplemental information submitted by Opus addresses the anticipated design refinements
and provides more detail on the student residents and the financial participation requested from
the City. No supplemental information was requested on the market and financial feasibility of
the Opus proposal; the proposal appears very strong in terms of these development objectives.
Both the assumptions of construction costs and projected revenues are within market
expectations, in addition to other project feasibility and financing indicators.
Both the WG and Opus proposals satisfactorily address the development objectives in the RFP.
Both proposals represent multi-story dense downtown developments. The Opus proposal appears
stronger in terms of project feasibility specifically with respect to projected revenues. Both
proposals appear to be well designed development projects, with a desirable mix of activities and
architectural forms that would contribute to the vitality of downtown. In each case, the design
addresses the goal of an active pedestrian realm, with high quality materials, elements of scale
and architectural interest, and embedded parking. The development of either project would
compliment other public and private investments in the area. Staff is committed to working with
the development team and proposal selected by the URA; staff will also continue to work with
the development team and proposal not selected to provide assistance with possible alternate
sites downtown.
RELATED CITY POLICIES
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Future development of the 10 and Charnelton site is consistent with the policies in the Eugene
Downtown Plan, including:
Downtown development shall support the urban qualities of density, vitality, livability and
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diversity to create a downtown, urban environment.
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Stimulate multi-unit housing in the downtown core and on the edges of downtown for a
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variety of income levels and ownership opportunities.
Actively pursue public/private development opportunities to achieve the vision for an active,
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vital, growing downtown.
Use downtown development tools and incentives to encourage development that provides
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character and density downtown.
Relevant Downtown Plan Implementation Strategies include the following:
Promote multi-story, mixed-use structures downtown through financial incentives or code
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amendments.
Encourage education-related development downtown, such as student housing and support
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services.
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In addition, the proposed future development of the 10 and Charnelton site is responsive to the
following Growth Management policies:
Policy 1: Support the existing Eugene Urban Growth Boundary by taking actions to increase
density and use existing vacant and under-used land within the boundary more
efficiently.
Policy 2: Encourage in-fill, mixed-use, redevelopment, and higher density development.
Policy 3: Encourage a mix of business and residential uses downtown using incentives and
zoning.
Policy 10: Encourage the creation of transportation-efficient land use patterns and
implementation of nodal development concepts.
Policy 14: Development shall be required to pay the full cost of extending infrastructure and
services, except that the City will examine ways to subsidize the costs of providing
infrastructure or offer other incentives that support higher-density infill, mixed use,
and redevelopment.
AGENCY OPTIONS
1. Direct the Agency Director to a) enter into an exclusive negotiation period not to exceed 90
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days with WG Development for the sale and development of the 10 and Charnelton
development site; and b) return to the URA with terms of the sale and development for
approval.
2. Direct the Agency Director to a) enter into an exclusive negotiation period not to exceed 90
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days with Opus NWR Development L.L.C. for the sale and development of the 10 &
Charnelton development site; and b) return to the URA with the terms of the sale and
development for approval.
3. Defer selection of a proposal at this time and recommend next steps to the Agency Director.
AGENCY DIRECTOR’S RECOMMENDATION
Direct the Agency Director to a) enter into an exclusive negotiation period not to exceed 90 days
with either WG Development or Opus NWR Development L.L.C. for the sale and development
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of the 10 and Charnelton development site; and b) return to the URA with the terms of the sale
and development for approval.
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SUGGESTED MOTION
Move to direct the Agency Director to a) enter into an exclusive negotiation period not to exceed
90 days with either WG Development or Opus NWR Development L.L.C. for the sale and
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development of the 10 and Charnelton development site, and b) return to the City Council,
acting as the Urban Renewal Agency, with the proposed terms of the sale and development
following the negotiation period.
ATTACHMENTS
A.July 17, 2008, request for Supplemental Information from WG Development
B.July 17, 2008, request for Supplemental Information from Opus NWR Development
C.Supplemental Review of WG Development Proposal from Johnson Gardner
FOR MORE INFORMATION
Staff Contact: Nan Laurence
Telephone: 682-5340
Staff E-Mail: nan.laurence@ci.eugene.or.us
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ATTACHMENT A
Planning & Development
Community Development
City of Eugene
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99 W. 10 Avenue
Eugene, Oregon 97401
(541) 682-5443
(541) 682-5572 FAX
www.ci.eugene-or.gov
July 17, 2008
Wally Graff
Nathan Philips
WG Development
541 Willamette Street, Suite 109
Eugene, OR 97401
Dear Wally and Nathan,
As you know, the Eugene Urban Renewal Agency met on Monday, July 14, 2008 to consider the
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proposals received in response to the Request for Proposals for the 10 and Charnelton Site. Based on
their discussion, we request supplemental information on your proposal, in addition to the information
requested on June 24 and submitted on June 30, 2008.
The issues are as follows:
1.Provide clarification and detail on the financial commitments you would ask the city to make as
part of this project, including the alley improvements or off-site improvements, loans or grants,
reductions in SDCs, and expectations around a downtown police patrol presence at the site.
2.Provide an updated purchase offer.
3.Clarify the need for a market feasibility analysis, and any City financial assistance required.
4.Clarify the issue of project phasing.
5.Provide additional information or revised images to convey the architectural design and materials,
particularly on the first floor.
6.Provide additional information on project timing, including the possibility of an earlier start date.
7.Provide information on possible tenants.
8.Address the potential to convert the residential rental units to ownership units in the future.
9.Provide more detail regarding estimated costs and project financing and an updated project pro
forma, if available.
We would like to receive the information by 5:00 PM Tuesday, July 22, 2008. If you have any questions,
please contact me at 682-5340 or Denny Braud at 682-5536. Again, thank you for working with us on
this project.
Sincerely,
Nan Laurence
Community Development Planner
Planning & Development Department
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ATTACHMENT B
Planning & Development
Community Development
City of Eugene
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99 W. 10 Avenue
Eugene, Oregon 97401
(541) 682-5443
(541) 682-5572 FAX
www.ci.eugene-or.gov
July 17, 2008
John Bartell
Opus NWR Development, L.L.C.
1500 S.W. First Avenue, Suite 1100
P.O. Box 10638
Portland, OR 97201
Dear John,
As you know, the Eugene Urban Renewal Agency met on Monday, July 14, 2008 to consider the
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proposals received in response to the Request for Proposals for the 10 and Charnelton Site. Based on
their discussion, we are providing the opportunity for you to further refine your proposal and respond to
questions and issues that were raised at the Agency’s meeting. The Agency’s request for supplemental
information on the proposal is in addition to the information requested on June 24.
Issues that you may want to consider addressing are as follows:
1.Further design refinements anticipated.
2.The demand for student housing, the support services provided to retain student residents, and
the potential impact on the surrounding area.
3.Anticipated profile and any eligibility requirements for potential tenants.
4.The potential uses for the units during the summer months.
5.Detail regarding financial and other assistance that is being requested from the Agency.
We would like to receive the information by 5:00 PM Tuesday, July 22, 2008. If you have any questions,
please contact me at 682-5340 or Denny Braud at 682-5536. Again, thank you for working with us on
this project.
Sincerely,
Nan Laurence
Community Development Planner
Planning & Development Department
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