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HomeMy WebLinkAboutCC Minutes - 05/14/08 Work SessionM I N U T E S Eugene City Council Work Session McNutt Room – City Hall 777 Pearl Street—Eugene, Oregon May 14, 2008 Noon COUNCILORS PRESENT: Chris Pryor, Bonny Bettman, Andrea Ortiz, Mike Clark, Betty Taylor. COUNCILORS ABSENT: George Poling, Jennifer Solomon, Alan Zelenka. Her Honor Mayor Kitty Piercy called the meeting of the Eugene City Council to order. City Manager Jon Ruiz distributed a news release from Arlie and Company regarding potential sites for the McKenzie-Willamette Hospital. He said staff was still pursuing the council’s direction to site a hospital south of the river. A. WORK SESSION: Water Quality Protected Waterways Therese Walch, Public Works, said the intent of the proposal was to protect, rather than enhance, water quality by filling gaps in a system of waterways identified as important to water quality. She said policy and regulatory drivers for the proposal were the Metro Plan, the Comprehensive Stormwater Management Plan (CSWMP) and the Clean Water Act and the Oregon Department of Environmental Quality (DEQ). She illustrated on a map Eugene’s position in the watershed and the waterways that DEQ had determined were not meeting water quality standards. She said Eugene was subject to a total maximum daily load (TMDL) and pollutant load reduction. Ms. Walch said the identification of waterways to protect was based on a watershed approach, beginning with the waterways identified by DEQ and adding waterways that directly drained into them and headwater streams because of their particularly sensitivity. She said those waterways were then compared to waterways that were already protected and protection gaps were identified; the proposed overlay zone would fill those gaps. She illustrated the overlay zone on a map and pointed out that the concrete-lined channel of Amazon Creek was not included because it did not meet the fundamental criteria of having a water quality function, meaning an earthen bottom and vegetative slide slopes. She said the proposal included two sets of tax lots outside City limits but inside the urban growth boundary (UGB); protection would apply upon annexation to the City. Ms. Walch explained that the basic elements of the proposal included a water quality management area comprised of the waterway channel plus a 25-foot setback from the top of the bank on either side for non- headwater streams and a 40-foot setback measured from the center of the channel for headwater streams. She said the widths were consistent with Goal 5 setbacks. She said the intent was to prevent future additional encroachment into the protected area, and to protect existing vegetation and minimize piping and other disturbance. She said Planning Commission members who voted in opposition to the proposal questioned its overall benefit and wanted to expand catch basin cleaning and restoration projects to achieve MINUTES—Eugene City Council May 14, 2008 Page 1 Work Session the same results. She said staff believed the proposal was an important element of the stormwater program that could not be addressed through other means. She said the Planning Commission voted four to three to recommend approval of the water quality code amendments and directed the council’s attention to a copy of the commission’s minutes included in the agenda packet. Mr. Clark confirmed that it was primarily TMDL in the Willamette River that was being addressed by the proposal. He asked why the proposed strategy was determined to be the best choice if there was a menu of strategies for addressing TMDL. Ms. Walch replied that the City had submitted a TMDL implementation plan to DEQ in April 2008, but had not heard yet whether than plan would be approved. She said the plan relied heavily on existing activities that already addressed water quality, including the current proposal to fill gaps in the current program. Mr. Clark said he was interested in determining why staff felt the proposal was the best approach among a number of available strategies. Ms. Walch said if the subject waterways were not protected staff was concerned that activities and uses would cause further water quality degradation. Mr. Clark asked if the adjacent lands would be excluded from a buildable lands inventory. Tim Bingham, Lane County of Governments (LCOG), said evaluation of the proposal’s impact on buildable lands followed the methodology used in the metropolitan planning process and was included in the findings. He said there were reductions, but noted that a significant portion of the impact—slightly less than 50 percent—was on public right-of-way; some of the parcels that remained were public and some were private. He said based on the maximum impact to those parcels there was still a remaining surplus supply of buildable lands. Mr. Clark commented that a recent analysis of homelessness in the community determined there were approximately 2,000 people who were homeless each night. He said the challenge was to measure the human impact on water quality and TMDL of camping activities on the river bank. Ms. Taylor said the map appeared to indicate the Amazon headwaters were already protected. Ms. Walch replied most of the headwaters were protected by Goal 5 and the ones that were not were included in the proposal. Ms. Taylor asked if the City would be penalized if it did not improve water quality. DEQ representative Jared Rubin said the Willamette River had a number of water quality concerns and was not meeting standards for things like bacteria, temperature and some metals, but that was not just a City of Eugene issue and the State was working with a number of entities to implement programs to address water quality. He said there were many contributing uses upstream and it would be difficult to penalize Eugene for not meeting standards. He said the objective was to have TMDL limitation plans in place and Eugene had complied with that requirement. Ms. Taylor noted that Amazon Creek was within the City and had been out of compliance for several years. Mr. Rubin agreed that responsibility for Amazon Creek fell within the UGB and DEQ would like to see a plan and implementation activities. He said the proposal would protect existing resources. Ms. Taylor asked if there had been any consideration of removing the concrete lining from the Amazon channel. Ms. Walch said it had been a discussion point in the metro waterways study, but it was deemed to be so constrained and expensive that it was not included on the project list. She said there was a potential project to create a low flow channel in the concrete lined section to concentrate flow during dry parts of the year and mitigate temperature problems. MINUTES—Eugene City Council May 14, 2008 Page 2 Work Session Ms. Taylor observed that the setbacks were not as wide as previously suggested and asked why they had been reduced from the 75-foot width originally proposed. Ms. Walch responded that the revision was made after much input from the public in order to create an implementable approach. She said the proposed setbacks were consistent with Goal 5 setbacks and were within the scientific spectrum for water quality setbacks. Ms. Solomon arrived at 12:30 p.m. Ms. Taylor asked if other water quality strategies were being considered. Ms. Walch said a shading plan was being developed and there were regulatory restrictions on removal of vegetation. Ms. Bettman asked how many of the 75 miles of waterways not included in the proposal already had protections. Ms. Walch said all were protected with the exception of three or four miles within the West Eugene wetlands plan boundary. She said those sections did not have wetland buffer or setback protections but it was felt that the policies within the wetlands conservation plan area would prevail. Ms. Bettman remarked that the 40-foot setback for headwaters meant the wider the waterway, the less the setback. Ms. Walch agreed, but pointed out that the typical width of headwaters streams was seven feet. Mr. Bettman commented that 90 miles of waterways had been reduced to 15 miles and the ordinance allowed development and spraying of pesticides, herbicides and toxic fertilizers. She said it was unclear how much of the 15 miles would actually be protected and asserted the proposal was doing nothing to protect waterways. She said the funds used for planning projects and staffing the regulation and enforce- ment activities could be better used to purchase conservation easements on those waterways. She characterized the ordinance as “lip service” while the community’s most important resource essential to life was not drinkable or swimmable. Mr. Pryor thanked staff for an excellent job of trying to balance many needs and interests. He felt the proposal took a citywide approach by establishing major protections in the northern side of town and identifying and filling in gaps in the southern part. He appreciated the fact that the proposal did not look at one particular area for one particular interest. He said protecting water quality was essential and staff had made efforts to arrive at the best solution. He acknowledged that there was more that could still be done, but the proposal was a good first step and not “lip service.” Mr. Clark also appreciated the work that had gone into the proposal, but his challenge was the significant impact it had on a small number of people to address a value that was shared by everyone. He agreed that purchasing conservation easements was a good idea. He was also concerned about the campsites and other illegal activities along the river bank that were contributing to water quality problems. He asked how the City was mitigating that direct human impact on the river. Ms. Walch said she would obtain that informa- tion from Parks and Open Space staff as she knew there were programs to address that. Mr. Clark also expressed concern about the methodology for determining top of bank and procedures for resolving disputes. Ms. Taylor stated it was inexcusable not to do everything possible to protect water quality. She was most immediately concerned with taking action within two or three weeks after the public hearing as there were MINUTES—Eugene City Council May 14, 2008 Page 3 Work Session many people in the community who would be concerned about the proposal. She preferred to hold another work session to consider their input before taking action. Ms. Bettman said she did not mean to cast aspersions on staff because they had worked hard to create a proposal that had the absolute least impact on the development community. She said it was not staff’s fault that the conventional posture of the organization was to facilitate development at all costs and at the same time put something on the table to convince DEQ that the City was making an effort, regardless of how ineffective, at protecting waterways. She asked what would happen if the ordinance did not pass. Ms. Walch said it was included in the TMDL plan as consideration of adopting an ordinance because the council had not yet taken action. She said if the ordinance did not pass the City would need to work with DEQ to find other ways to reduce the TDML as the proposal was considered an important part of the plan. Ms. Bettman said the City’s metropolitan wastewater facility had a stake in the outcome because it discharged into the Willamette River and was contributing to increasing the temperature. She said the City had lobbied the State to change those regulations so it could continue to dump into the river. She said it was necessary to change habits and clean up the waterways. Mr. Clark found Ms. Bettman’s comments about the motivations of the development community unfortu- nate. He said the purpose of government, as expressed in the Constitution, was to protect people’s rights. His concern was not about the development community; it was about private property when it was included in the overlay zone and how that affected owners’ right to use their property. He said it would also have an impact on businesses throughout the community. He wanted to put the right protections in place, but protect people’s rights appropriately in the process. Ms. Piercy believed that the proposal represented important steps toward compliance. She said the City should do as much as possible as quickly as it could to assure waterways were clean and ecosystems functioned. She thanked staff for its work to date. B. WORK SESSION: Beam Development Briefing Mr. Ruiz said the purpose of the briefing was to follow up on the council’s earlier executive session and move the discussion into a public setting, followed by a public hearing and council action. Mike Sullivan, Planning and Development Department, used a slide presentation to provide an overview of key features of the purchase and sale agreement (PSA). He said price reductions on both the Centre Court and Washburne buildings had been successfully negotiated; the Centre Court building was reduced from $2.8 million to $2.4 million dollars and the Washburne building was reduced from $1.9 million to $1.2 million. He said the total purchase price for both buildings was now $3.6 million, representing a reduction of $1.1 million. He said Beam had agreed to several important financial commitments, including: ? providing $50,000 in additional cash deposits as part of option negotiations with the seller, ? assuming responsibility for the City’s current deposit of $470,000, and ? agreeing to sign the PSA on May 22, which would commit Beam to purchase of the buildings by July 8 for a total of $3.6 million. Mr. Sullivan said Beam had also confirmed commitments to redevelop the Centre Court building in an historically consistent manner and redevelop approximately 120,000 square feet, split between the Centre Court building and newly constructed building on the adjacent development site. He said construction would MINUTES—Eugene City Council May 14, 2008 Page 4 Work Session be consistent with LEED certification and completed according to milestones included in the PSA. He said a certain amount of preleased space was necessary to qualify the project for financing and while the first priority was to fill the building with private tenants, the City was discussing a contingent or standby commitment to lease some space in one of the Beam buildings. Mr. Sullivan illustrated the range of lease rates currently paid by the City in the downtown area, adjusted to 2010 dollars because the Beam rate of $1.83 per square foot was guaranteed to 2010. He said disposition of vacated space owned by the City could present a revenue opportunity by leasing it to private tenants. He explained the financing structure using Department of Housing and Urban Development (HUD) and urban renewal funds, which would be loaned to Beam for a ten-year term at rates consistent with the City’s borrowing rate from HUD and the downtown loan fund. He said the total proposed project financing was $38.4 million, of which 75 percent would come from private and conventional financing sources; the City and urban renewal agency (URA) were projected to contribute $9.7 million, or 25 percent of the total financing required. Mr. Sullivan explained the reversionary clauses under which the property could be returned to the City. He said the clauses specified two ways in which that could occur: the City preserved the right to buy back the property if Beam did not meet project or timeline terms in the PSA or, if the City was unable to deliver the construction loan, Beam could require the URA to repurchase the buildings. He concluded with a review of the next steps in the process. Ms. Taylor expressed concern with moving out of property the City owned. She preferred to see rental property vacated if the City eventually occupied space in the Beam project. Mr. Clark asked if the square foot costs used in the comparison of rents were net or gross rates. Mr. Sullivan said he believed they were fully loaded rates, although the City had a broad range of lease agreements and he would need to review the specifics of each individual agreement. Mr. Clark said before making a decision he would need to know the actual cost difference between what the City would pay for rent in the Beam project and what it was currently paying for space downtown. Mr. Ruiz said staff would develop the most accurate information possible for the council’s consideration. He said the goal was to determine the best financial arrangement for the City that met the objective of good financial stewardship. He said there were some elements that would be difficult to factor in, such as potential efficiencies realized through consolidation of some facilities that were currently leased. Mr. Clark said the public value would come from revitalization of downtown and he wanted to understand the actual annual cost of that goal and determine if it was a good comparative value. Mr. Pryor recognized that this type of project was complex and could become more convoluted as it progressed. He agreed that if the City moved into the Beam project it would be preferable to vacate rented space first. He was pleased that the City’s loan to Beam would require repayment like a conventional financing arrangement. Ms. Ortiz thanked staff for an innovative approach to the project that worked within the constraints of existing resources. She hoped there would be periodic reports to the council on how efficiencies were realized if the City occupied the new space. She asked for clarification on the reversionary clauses. Mr. Sullivan said the clauses gave the City the right to buy the property back, but did not require that. He said MINUTES—Eugene City Council May 14, 2008 Page 5 Work Session the City could compel Beam to sell the property if it did not meet the PSA requirements and the City chose not to buy. Ms. Solomon asked if the City would have to commit additional dollars if the project costs exceeded the projected $38.4 million. Mr. Sullivan replied that the City was clear that its participation would be confined to the total of the HUD funds and a small amount of urban renewal funds if the City became a tenant. In response to a question from Ms. Solomon, Mr. Ruiz explained that the City was not required to repay the Brownfields Economic Development Initiative (BEDI) funds because they were a grant and not a loan. He said the City was loaning those funds to Beam and would be repaid when Beam reached its target return on investment. Mr. Sullivan added that the repaid BEDI grant funds would be considered Community Development Block Grant (CDBG) program income. Ms. Solomon asked if funds would remain to assist other development efforts once the Beam project financing was finalized. Mr. Sullivan said $2 million remained in the urban renewal downtown loan fund and $1.2 million remained under the urban renewal district spending cap. Mr. Ruiz said the City had attempted to minimize the contribution of redevelopment agency money in order to maximize funds available for other projects. Ms. Solomon asked if the City’s commitment to be a backstop tenant relieved Beam of its obligation to find a private tenant and placed that burden on the City. Mr. Sullivan said Beam was aggressively seeking private tenants and already had at least one commitment. He said the PSA required specific efforts by Beam to seek those private tenants and required documentation of the efforts. Ms. Bettman remarked that if the Beam project was successful it would increase the value of all property downtown. She said current rents paid by the City for downtown space were low because overall property values had been depressed by the buildings that Beam would be redeveloping. She was pleased to see the close scrutiny of the PSA and efforts to maximize the availability of resources for other projects. She asked if Beam was in agreement with the PSA provisions. Mr. Sullivan said some language details were still being finalized but Beam was in agreement with the major financial components. He said groundbreaking was currently scheduled for the spring of 2009 with a 12-month construction period. Ms. Piercy congratulated staff for doing a good job of developing a fiscally sound project and looked forward to the revitalization of downtown. Mr. Clark said he was looking forward to a revitalized downtown and his level of scrutiny related to ensuring success of the Beam project in order to pave the way for future redevelopment efforts. He said it appeared that the City could expect to pay 30 percent more in rent than it was currently paying if it became Beam’s tenant. Mr. Sullivan said the Beam rate was a fully loaded rate and he would review the current lease agreements to provide more accurate figures. Mr. Ruiz said it was possible the difference could be less. Mr. Clark expressed concern about the City’s obligation under the reversionary clauses. Mr. Sullivan said the provisions had been negotiated specifically to give the council and the urban renewal agency an opportunity to weigh in on disposition of the building and perhaps reacquire the site for a public purpose if Beam was unable to move forward with the project. He did not anticipate that the City would encounter any difficulty in delivering the second loan. MINUTES—Eugene City Council May 14, 2008 Page 6 Work Session Mr. Clark asked if there was concern that the rent rate quoted by Beam would increase if the project expenses increased and Beam was forced to seek additional financing. Mr. Sullivan said that issue had not been addressed but it was possible that any additional financing Beam might need to obtain could be at a higher rate. The meeting adjourned at 1:25 p.m. Respectfully submitted, Jon Ruiz City Manager (Recorded by Lynn Taylor) MINUTES—Eugene City Council May 14, 2008 Page 7 Work Session