HomeMy WebLinkAbout06/24/1987 Meeting
M I NUT E S
e Eugene City Council
McNutt Room--City Hall
June 24, 1987
11:30 a.m.
COUNCILORS PRESENT: Debra Ehrman, Freeman Holmer, Emily Schue, Cynthia
Wooten, Ruth Bascom, Roger Rutan, Jeff Miller, and
Rob Bennett.
The adjourned meeting of the City Council of the City of Eugene, Oregon, was
called to order by Council President Debra Ehrman.
I. URBAN RENEWAL PLAN UPDATE
Community Development Manager Elaine Stewart gave an overall staff report for
the council's discussion of the Urban Renewal Plan update. She said another
work session will be held on July 8, during which the council will continue
its discussion of the plan update. A public hearing is scheduled for July 13.
She said staff was recommending that the council hold another set of meetings
and work sessions after the public hearing in order to discuss the plan update
further. Staff was recommending this because of the public interest in, and
e controversial nature of, the Urban Renewal Plan update. Ms. Stewart mentioned
that the council's information packet contained a summary of the experience of
13 other cities with pedestrian malls. She said that staff would give
technical presentations on each of the major issues in the plan update:
--Expansion of the Urban Renewal District
--Development projects and financing
--Central plaza at Broadway and Willamette
--Willamette Street redesign from 8th to 10th avenues
--Siting of future downtown transit station and library.
She said staff would also discuss the various options that the Planning and
Downtown commissions considered in making their recommendations.
Ms. Stewart said the technical report for the expansion issue would be given
by Development Department staff members, Greg Byrne and Bob Hibschman. She
said that before this staff report Downtown Commi ssi on Chairperson Anne
Bennett and Planning Commission President Gerry Gaydos would make a few
comments.
A. Comments by Downtown and Planning Commission Chairs
Ms. Bennett said the updated plan reflects the goals for downtown that are
contained in the Downtown Plan and the original Urban Renewa 1 Plan. The
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Downtown Commission views the Urban Renewal Plan as the implementation plan
for the goals for downtown. The updated plan reflects the work of both the
e Downtown and Planning commissions. She said that she welcomed any questions
from councilors, and that she appreciated the council's review and comment on
the commissions' recommendations.
Mr. Gaydos said the two commissions have worked closely on the project of
updating the Urban Renewal Plan. He said the project was very much an
educational process. He mentioned that many Planning Commissioners initially
opposed the proposed opening to traffic of Willamette from 8th to 10th;
however, after reviewing the information and discussing the issue, the
Planning Commission decided to recommend that Will amette be opened to
vehicular traffic from 8th to 10th. He said a similar shift in opinion
occurred after the commission reviewed and discussed the issue of whether to
expand the Urban Renewal District. Mr. Gaydos emphasized that there was a
definite give-and-take and a spirit of compromise between the two commissions
as they worked to arrive at joint recommendations. He said there was near,
but not complete, unanimity on the joint recommendations.
Ms. Wooten asked staff to recap the number of opportunities the public has had
to comment on the Urban Renewal Plan update. Ms. Stewart said an information
session was held in October 1986, followed by a public hearing and joint
meeting of the Planning and Downtown commissions. A community forum was held
in February 1987. Ms. Stewart added that all of the Downtown and Planning
commission meetings were open to the public.
Mr. Holmer asked whether, in the process of updating the Urban Renewal Plan,
the commissions considered the possibility of not using the urban renewal
e process. Mr. Gaydos said this issue was discussed somewhat, but not in a
thorough fashion. He said there are City-owned properties downtown that need
to be marketed and sold. He said the assumption has been that the public
sector will be needed to stimulate private investment downtown. Ms. Bennett
said the Downtown Commission's effort is to encourage private development
downtown. She said the commission feels that public investment is needed to
do this. She said that given the City's current budget, and given the demand
on General Fund dollars, the urban renewal process is the best means by which
to encourage private investment downtown.
Mr. Rutan said he understood Ms. Bennett to be saying that the focus of the
updated Urban Renewal Plan is to encourage the private sector to develop the
downtown; however, he said the updated plan gives the impression that the
public sector will be playing the more active role. Mr. Byrne said he would
respond to this concern in more detail when he discussed the properties owned
by the Eugene Renewal Agency.
B. Councilor Bennett's Potential Conflict of Interest
Mr. Bennett announced that he may have a conflict of interest on the Urban
Renewal Plan update because he owns a business on 10th and Willamette. He
said he has asked Tim Sercombe of the City Attorney's Office to help him make a
decision regarding what his position should be on this matter. He said he has
also discussed the issue with his private attorney. Mr. Bennett said he would
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participate in the council's discussion of the plan update until such time as
he receives a legal opinion recommending that he do otherwise. He said he
e would appeciate any feedback on this matter from other councilors.
Mr. Rutan said Mr. Bennett's input on the Urban Renewal Plan update issues was
very important. He said he was comfortable with the way Mr. Bennett was
handling the potential conflict of interest. He said the most important thing
is that Mr. Bennett has informed other councilors of the potential conflict.
Ms. Ehrman said that at this point, it is somewhat of a personal decision
regarding how much Mr. Bennett should participate in the discussion of the
plan update. She said she and other councilors were interested in hearing his
views on the Urban Renewal Plan issues.
C. Expansion of the Urban Renewal District
Mr. Byrne gave the staff report for the proposed expansion of the Urban
Renewal District. He said that in February 1986, the council established the
Downtown Commission as the study committee for an Urban Renewal Plan update.
In that resolution, the council called for a study of a possible expansion of
the Urban Renewal District. This study began in early 1986.
Mr. Byrne said that under Oregon Law, an Urban Renewal District can be
expanded no more than 20 percent beyond its original area. Therefore, the
expansion area could be no more than about four blocks. He said the proposed
expansion area is about a quarter-block less than the maximum allowable size.
Mr. Byrne said staff and the Downtown Commission evaluated the property
e surrounding the Urban Renewal District. Six options were considered: 1)
expansion into an area on the west side of the existing district, on both the
north and south sides of agency-owned property; 2) expansion of the district
on the south side of 11th and on the southern portion of Willamette Street; 3)
expansion into the area between 8th and 11th, High and Pearl; 4) expansion
into the 5th Avenue area, between Willamette and Pearl; 5) expansion into the
area northwest of the Urban Renewal District; and 6) no expansion.
Mr. Byrne said several criteria were used when evaluating whether a property
or area should be included in the Urban Renewal District: 1) whether the
area's improvement-to-land (IlL) ratio was at an acceptable level; 2) whether
the area would improve access downtown; 3) whether the area would provide
potential housing sites; 4) whether the area would strengthen linkages among
other downtown assets; 5) whether the area would take advantage of nearby
public investment (especially under-utilized public investment); 6) whether
the area was adjacent to publicly owned development sites; 7) whether
inclusion of the area in the district would create the potential for future
public projects; and 8) whether the area's zoning was appropriate for the
downtown regional center.
Mr. Byrne said the recommendations made by the Downtown and Planning
commissions combine two of the six expansion options. He said the recommended
expansion area concentrates in the area northwest of the Urban Renewa 1
District, and also makes a connection close to the 5th Avenue area with some
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property under County ownership. He said the expansion area has high building
and 1 and vancancy rates. He added that only one major development has
e occurred in the area within the last 20 years (the IBM building across from
the Hult Center parking garage).
Ms. Ehrman said this building is definitely not blighted; therefore, inclusion
of it in the expansion area does not fit with the criteria for expansion. Mr.
Byrne said this building was included in the proposed expansion area because
of the desire not to create lIislandsll or non-contiguous areas in the district.
Mr. Byrne mentioned that among owners in the expansion area, there is a 75
percent approval rating of the proposed expansion (two owners oppose the
expansion). In response to a question from Mr. Rutan, Mr. Byrne said the 75
percent figure is based on land area.
Mr. Byrne said that if the expansion area is developed at the intensity
expected by staff, a new parking garage would be needed. He said the Central
Area Transportation Study (CATS) calls for an additional parking structure to
meet the needs of future development within the expansion area.
In response to this, Ms. Ehrman mentioned that the Hult Center lot is under-
ut il i zed. Mr. Byrne agreed, but said staff views this lot as serving the area
to the west.
City Manager Micheal Gleason asked Mr. Byrne to explain the improvement-to-
land (IlL) ratio. Mr. Byrne said this ratio is the value of the improvements
made to a piece of land (primarily the value of the building) divided by the
value of the land. He said that in healthy commercial districts, one expects
e this ratio to be about 3.0 or higher. Downtown Eugene's ratio is about 2.7.
He said some of the downtown's most intensely developed properties probably
have IlL ratios of 8 or 10.
Questioning the use of the IlL ratio as a measure of economic growth, Mr.
Holmer made the point that if traffic increases in front of a building, the
value of the land would increase. However, because investment in the land
would remain the same, the IlL ratio would actually decrease. Mr. Byrne
agreed that there are certain anomalies in the way the assessment system
works. For example, the assessed value of land tends to increase after it is
developed, even though the land itself has not changed.
Ms. Bascom said she had read Mr. Holmer's June 22, 1987, memo to the Mayor and
council, in which he discusses the IlL ratio in more depth. She said the ratio
can be used as a measure of economic intensity. She said a healthy downtown
area has an intensity of development different than, say, the intensity one
might see in a residential area.
Mr. Bennett said he interpreted Mr. Holmer's memo to mean that when
development occurs on a piece of land, if the value of the total property
increases over time, that value reverts to the land. However, he said he did
not understand Mr. Holmer's point. He said the overall goal is to increase
the intensity of downtown development. He said that when new development
occurs, the IlL ratio will increase.
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Mr. Holmer said that one purpose of the Urban Renewal Plan is to increase the
intensity of use downtown. He said that in the current Urban Renewal
e District, this intensity is not high enough. He said expansion will work
against the goal of promoting intensity of use.
Ms. Ehrman asked whether the proposed expansion area is the same as it was
when councilors took a tour of the area. Mr. Byrne said two changes have been
made since the tour. He said that Martin Henner, the owner of some
residential properties on 6th and Lincoln, objected to the inclusion of his
properties in the district and said he would redevelop his properties without
urban renewal assistance. Mr. Byrne said the Downtown and Planning
commissions agreed to exclude the Henner properties from the proposed
expansion area. He said the other change was that the Banana Warehouse
property on 5th between Olive and Charnel ton was included in the expansion
area. He said the owners of the half-block requested inclusion. He said they
would like to redevelop the warehouse and have it designated as a historic
property. The owners recently applied for, and were granted, a zone change to
Whitaker Mixed Use. Mr. Byrne said this zoning will allow a broad variety of
uses on the property. He said the owners have discussed having a brewery, a
tavern, and some specialty retail on the property.
Ms. Bascom asked how the size of the proposed expansion area was affected by
the two changes made since the council's tour of the area. Mr. Byrne said the
two changes resulted in a small increase in the expansion area's size. About
a quarter-block remains available for future expansion.
Referring to the fact that the district can be expanded no more than 20
percent beyond its original size, Ms. Bascom said Planning Commissioner John
e Van Landingham had expressed the opinion that the proposed expansion should be
as close to the 20 percent limit as possible. Mr. Byrne said the Downtown
Commission felt strongly that some of the 20 percent limit should be reserved
in order to preserve the flexibility to expand in the future in reponse to a
development. He said this is precisely what occurred with the Banana
Warehouse property. This property was not part of the original proposed
expansion area; but when the owners said they wanted to develop the property
and wanted to be included in the Urban Renewal District, the commissions
decided to include the property in the expansion area in order to make the
urban renewal tools available to this proposed new development.
Mr. Miller said his understanding was that staff and the two commissions
evaluated the property surrounding the Urban Renewal District to determine
whether any of it should be added to the district. He asked what the
motivation for doing this was. Mr. Gleason said that across the nation, urban
renewal is a tool to keep land from blighting. The classic definition of
blighting is that a piece of land's development ratio ;s falling behind the
development ratio of other lands in the community. He said the review of
properties surrounding the Urban Renewal District was done in order to see
whether the too 1 of urban renewa 1 should be applied to other parts of the
downtown.
Ms. Schue said she had never heard the notion that undeveloped 1 and is
blighted; she asked staff to elaborate on this subject. Mr. Gleason said
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there are two classic definitions of blight. One is typically appl ied to
housing and has to do with health, safety, and welfare. The other is applied
e to commercial property and has to do wi th the relative value of the
assessments in an area. For example, he said that if the assessed values of
the downtown have not been keepi ng pace wi th other developments in the
community, one can conclude that the area is not receiving its share of
investment and is not receiving the necessary public improvements. Mr.
Sercombe said the Oregon Revised Statutes have seven different definitions of
blighted area. He said blight is a flexible concept and has to do with more
than just an area's appearance.
Mr. Holmer said the draft of the report on the updated Urban Renewal Plan
calls for spending $600,000 on infrastructure improvements in the expansion
area. He said this expenditure will not begin until 1990 and will continue
until 2002. He said he did not understand the logic behind spreading out the
treatment of a blighted area over that period of time. Mr. Byrne said one of
the crucial aspects of the entire updated plan is that public investments
should be tied primarily to private investments. Rather than making
speculative public improvements, the City should make investments where
private investment is expected. He said this strategy will help ensure that
tax increment flow will be generated to pay for the public improvements. Mr.
Byrne said staff has no knowledge of any specific proposals for private
investment in the expansion area. He said the report on the updated plan
shows one possible scenario for how funds might be spent in the expansion
area. He said thi s model is meant to ill ustrate the overa 11 financial
feasibility of the plan, not to show precisely how funds will be spent. He
said that as more is learned about where private investment might occur, the
City will refine its plans (during the annual budgeting process) for making
e public investments.
Referring to Mr. Holmer's memo and comments, Mr. Bennett said a very important
question is: If the downtown is just approaching an acceptable intensity of
development in the current Urban Renewal District, why should the City be
considering expansion at this point? He said his thought in response to this
quest i on was that the current di stri ct has certain uses, demands, and
supplies. He said the district does not necessarily compete with the land in
the proposed expansion area. Development of the former does not necessarily
have to occur at the expense of the latter; therefore, expansion is not
necessarily at odds with the goal of promoting intensity. Mr. Bennett said
the overriding issue for him is whether the downtown is an area that should be
given more support than other areas of the community. He said the downtown
might be viewed as just one area among many in the city; or it might be viewed
as an area in which the entire community has a stake.
Mr. Holmer said the downtown does deserve special treatment; however, the
question is whether this special treatment should be given through the urban
renewal device, or whether this treatment should be provided as a function of
the whole city through the normal budget process. He said that even if the
City continues to use urban renewal, the basic issues of the plan should be
voted on by the public.
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Ms. Wooten asked about the amount and type of housing located in the proposed
expansion area. Mr. Byrne said that in the area bounded by 6tht 7tht Lincolnt
e and Charneltont there are some apartment units and some buil di ngs with
commercial activities on the first floor and residential units on the upper
floors. He sa i d the tota 1 expansion area contains 26 dwelling unitst all
judged to be in poor condition. Ms. Wooten said the purpose of her question
was to assess the opportunity for rehabilitation of downtown housing in the
expansion area. Mr. Byrne said there is essentially no such opportunity.
In response to a question from Ms. Ehrmant Mr. Gleason said he expected this
meeting to be used for discussion of the Urban Renewal Plan update issuest not
for the council to make any motions.
Responding to questions from Ms. Wootent Mr. Byrne said staff has almost no
information regarding the plans of property owners to redevelop in the
expansion area within the next 10 to 15 years. He said that with the exception
of the Banana Warehouse propertYt the selection of the expansion area was not
based on knowledge of plans for private redevelopment.
Mr. Hibschman mentioned that the County plans to sell the land it owns in the
proposed expansion area. Mr. Byrne said the County has been unsuccessfully
marketing its three quarter-block parcels within the expansion area for
several years. He said the County has expressed interest in having its
properties included in the Urban Renewal District.
Ms. Bascom asked what the advantage is for the County to have its properties
included in the districtt what the City could do for these properties that the
County could not do itself, and why the City should do these things for the
e County. Mr. Byrne said the City tends to be much more active in promoting
commercial development than the County is. He said a renewal agency has
powers to deal with properties that a municipal or city government do not
have. He said inclusion of the County-owned properties in the district will
mean that these urban renewal powers will be available to put the County.s
properties on the market and to work with potential developers. Alsot the
Eugene Renewal Agency could fund parking garages in the areat which would
greatly enhance the value and development appeal of the County-owned
properties.
Ms. Bascom said the tour given by staff of the expansion area was very
helpful; she encouraged councilors who have not taken the tour to do so.
Referring to the ratio of private investment to public investment in an areat
Mr. Miller asked whether there is a point at which the Renewal Agency would be
giving an unfair competitive advantage to private developers within the Urban
Renewal Distr;ct--an advantage that might create blight outside the Urban
Renewal boundary.
Ms. Stewart said that in terms of loan programst the City looks for a ratio of
3:1 (i.e. t three private dollars invested for each public dollar invested).
She said the development loan fund operates at a ratio of 6:1.
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Mr. Gleason said he was not sure how to ensure that unfair competitive
advantages are not created on a microscopic level--tax increment financing
e might create such advantages for individual deals or transactions. However,
he said that on a macroscopic level, tax increment financing does not seem to
result in unfair advantages for one area over another. He said that for both
commercially and residentially developed property, the ratio of the private
investments to the public investments is typically about 3:1. He said that
when newer sections of a city are developed, a different financing scheme is
used--primari ly the Bancroft system and a capi ta 1 improvements support,
portions of which come from the development fees assessed to new development.
He said that these tools are not available for redevelopment, particularly
commercial redevelopment. Therefore, the tax increment system is used to
bring the ratio of private to public investment closer to the typical value of
3: 1. He said tax increment is a vehicle for public reinvestment.
Mr. Bennett said that in the 20 years he has been in the development business,
he has never seen a development downtown that seriously impeded the ability of
an existing business to do business. He said he has seen situations where a
business probably would have located elsewhere in the community, but it was
attracted downtown by the urban renewal tools. Were it not for these tools, a
suburban location, for instance, might have been in a better competitive
position. He said that how one views downtown is critical in terms of whether
one thinks the urban renewal tools should be used.
Referring to the County-owned parcels in the expansion area and the projected
necessity for a parking garage if those properties are developed, Ms. Schue
said that in other parts of the city, developers are required to provide a
certain amount of parking; however, in the downtown, parking is provided by
e the public sector. Mr. Gleason said that through the use of C-3 zoning and
district parking, the City encourages downtown development to occur to the
property lines. This is done because of the large public investment in the
infrastructure, and in order to encourage intense development. He said that
when development occurs to the property lines, parking needs cannot be met by
surface lots. He said that if individual developers provi ded thei r own
parking, economies of scale would be sacrificed and only the largest
developers could afford to locate downtown. Mr. Byrne added that in terms of
parking, Eugene is in somewhat of a diffi cul t mi ddl e ground. Sma 11 er
downtowns can meet their parking needs with on-street, surface, and individual
development parking. In very large and intense downtowns, the private sector
can actually make a profit by providing parking. Mr. Byrne said that the City
is trying to encourage the development of an intense downtown, but in a city
the size of Eugene, the private sector cannot profitably provide the necessary
parking.
Ms. Ehrman asked whether, if the district is expanded, there would be any sort
of priority to spend urban renewal funds in the expansion area as opposed to
spending these funds in the original district. Mr. Byrne said there is no
such priority. He said staff has projected the need for infrastructure
improvements, but has not tried to be too specifi c about when such
improvements might occur. He said that for the most part, such improvements
should be made in support of private investments. He added that the agency
owns no property in the expansion area, and that staff does not recommend that
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the agency acquire any. He said that if staff ever makes such a
recommendation, it would be in response to a specific development proposal.
e In response to a question from Mr. Holmer, Mr. Byrne said acquisition of
property would require Renewal Agency approval.
Mr. Gleason said that if councilors would like additional staff research on
any of the plan update issues, they should inform staff now.
Ms. Ehrman said,one of her concerns is the inclusion of the IBM bUilding in the
proposed expansion area. She said she realized that not including it would
create an "island" in the district, but she made the point that the building
is definitely not blighted.
Ms. Schue asked whether the agency would ever spend any money on the IBM
building, and whether the addition of the building to the district would
increase the funds available to the agency. She said she would like staff to
address these questions and the concerns raised by Ms. Ehrman in more detail.
Mr. Bennett said that in his memo, Mr. Holmer made the point that financing
for downtown projects should be consistent with how projects are financed in
other parts of the community. He said tax increment financing is a tool that
works very well. He said it has allowed development to occur downtown much
sooner than would have happened without this method of financing.
Ms. Schue agreed, but said the City has been using tax increment financing
downtown for almost 20 years, and may use it for 20 more. She said it is
important to realize that the use of tax increment financing imposes a cost on
the rest of the community. She said it makes the general tax levy higher. She
e said that at some point, the City must ask: When has this special benefit for
downtown run its course, and when to the taxes on downtown properties begin to
go into the whole community budget?
Mr. Holmer agreed. He added that in the past 20 years, there has not been a
true increment of value, on which the tax increment system rests. He agreed
that improvements have been made downtown; however, beyond inflation, the
total value of the real property in this community has not increased.
Ms. Wooten said the council was once again discussing whether tax increment
financing should be used. Ms. Ehrman said that perhaps the issue should be
rediscussed, because Mr. Holmer had raised it in connection with the proposed
expansion of the district.
Mr. Rutan said that whether to use tax increment financing is one of the
overriding issues before the council. He said the council has not addressed
this often enough in the past. Mr. Gleason said that several months ago, the
council discussed and voted on the issue. Only one councilor, Mr. Holmer,
voted against the use of tax increment financing.
Ms. Wooten asked whether the use of tax increment financing was, therefore,
not an issue relative to the Urban Renewal Plan update.
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Ms. Ehrman said that since the council has recently voted on the topic,
whether to use tax increment financing no longer seems to be an issue that the
e council has to decide.
Ms. Schue agreed, but said the issue is not simply whether to use tax
increment financing in the Urban Renewal District; rather, the issue is
whether this tool should be extended to another area.
In response to a question from Ms. Wooten, Mr. Byrne said staff forecasts no
return from the expansion area for six or seven years for purposes of cash
flow projections.
Ms. Wooten said the public does not understand tax increment financing. The
City needs to undertake a broad and incisive public education program on this
topic. She said tax increment benefits the whole city. She said it would be
foolish to abandon this tool that can be used to improve a crucial part of the
city.
Ms. Ehrman asked whether staff had any preferences other than tax increment
finanCing for the expansion area. Mr. Byrne said staff did not.
Mr. Miller said the City began using urban renewal in order to accomplish a
job, but the job never seems to be done; and members of the community ask in
frustration, "When will urban renewal end?1I He said it seems as though the
public sector is continually subsidizing the downtown. He said it would be
nice if the public sector could actually complete the job it set out to do with
urban renewal; and then let the private sector take over, so that the public
sector would be able to use its resources to accomplish other things.
e Ms. Wooten said she appreciated Mr. Miller's comments. She said she too is
frustrated by the heavy subsidization that the public sector has to provide in
order to leverage private investment downtown. She said there is not enough
private capitalization in Eugene for this type of investment to occur by
itself. She said no one knows the answer to the questions, "When will urban
renewal end? When will the City accomplish the desired level of redevelopment
and leveraging?1I She said increment is being generated and redevelopment is
occurring through the urban renewal process; however, this is occurring more
slowly than the City had anticipated.
Mr. Gleason said the goals of the Urban Renewal Plan have not been completely
realized, because the plan was predicated on attracting a major retail
development to the downtown. He said the City made a huge effort to do this,
but failed. He said staff has concluded that this effort was not the wisest
course to follow. He said the City has decided to make an effort to attract
smaller redevelopments to downtown, instead of focus i ng its efforts on
attracting one major development. Since this more incremental approach has
been adopted, substantial improvements have been rea 1 i zed downtown. Mr. ,
Gleason said the City was using a poor redevelopment strategy for 15 years,
and that is why an updated Urban Renewal Plan is needed.
In response to a question from Mr. Bennett, Mr. Byrne said the updated plan
has a 20-year hori zon. All debts incurred during the course of the plan will
e MINUTES--Eugene City Council June 24, 1987 Page 10
be retired by year 20. He added that the Downtown Commission and staff went
through the exercise of determining how rapidly the Renewal Agency could
e retire its existing debts and completely get out of the urban renewal
business. Mr. Hibschman said this would take six or seven years. Mr. Byrne
said the agency could decide to do this at any time.
Mr. Rutan said it is important to realize that the City is trying to generate
an economic inertia--a situation in which the development of downtown property
is economically feasible; an environment in which private citizens can make
money. He said this is what capitalism is all about. He sa i d the Urban
Renewal Plan1s emphasis should not be on the public sector playing the most
active role; rather, the plan should emphasize that the public sector's role
is to encourage and facilitate private sector redevelopment of the downtown.
He said Mr. Holmer had informed him that 14 percent of downtown office space
is occupied by government or non-profit organizations. He said government has
had to become a tenant in many cases in order to make property deals
financially feasible.
Ms. Wooten mentioned that another reason behind this statistic ; s that
government should be located in the city center.
Mr. Rutan said that at some point, the public sector cannot take
responsibility for making deals economically feasible; at some poi nt, an
economic environment has to be achieved where the private sector can make
money on its own.
Mr. Bennett agreed. He added that a major issue is: What kind of deals can be
made that require the least amount of public involvement? He said that in the
e housing area, for instance, so much public support is required to develop an
economically successful housing program that this has not been achieved in the
downtown.
Ms. Wooten said one should consider the downtown redevelopment efforts of
other cities, such as Portland. Although these cities may have resources to
attract development that Eugene lacks, their level of investment in joint
public-private downtown redevelopment has been greater than that of Eugene.
She said Eugene will not achieve its goals for downtown without continuing
some level of public investment in downtown redevelopment.
D. Process for Discussion of Urban Renewal Plan Issues
At the suggestion of Ms. Bascom, the council decided to move to a discussion
of another Urban Renewal Plan issue.
Ms. Ehrman suggested that the lengthy discussion of the Willamette Street
redesign and reintroduction of traffic from 8th to 10th be deferred to the
meeting on July 8.
Not being able to attend the July 8 meeting, Mr. Holmer said he would like to
mention that the redesign recommended by the Downtown and Planning commissions
accords wi th his own view of what downtown needs. However, he said the
Willamette redesign issue is so important and controversial that the redesign
e MINUTES--Eugene City Council June 24, 1987 Page 11
should be voted on by the citizens of Eugene, as was done for the 6th Avenue
and 7th Avenue redesign and the Mahlon Sweet Airport expansion. He said the
e City has an obligation to ensure full citizen participation on the Wi 1 lamette
Street redesign issue. In response to a question from Ms. Ehrman, he sa i d
this vote would be advisory if the tax increment district were still in
effect.
Ms. Wooten said other councilors should consider the suggestion offered by Mr.
Holmer. She said holding a vote would not be an attempt to avoid a decision by
the counci 1. She said the council should make a firm decision on the redesign
issue.
In response to a question from Ms. Wooten, Mr. Gleason said the decision on
the redesign issue can be made when the council is ready to do so. He said
there is little chance to get it on the council agenda before August or
September.
Mr. Holmer said he wants to review a detailed design of the proposed reopened
street before deciding the issue.
Ms. Ehrman said the council may want to take tentative action on the opening
and direct a design process to occur. She added that it will be crucial for
all councilors to attend the vote on the redesign issue.
E. Development Projects and Financial Issues
Mr. Byrne said the Renewal Agency owns a substantial amount of property in the
downtown. He said one of the major unrealized goals of the 1968 Urban Renewal
e Plan was to have these properties developed by the private sector. He said
staff has studied the financial effect of having these properties developed at
three different intensities of development (floor area ratios of 1.5, 3.0, and
4.5). Based on this study, the staff recommendation is that the development
sites have an average floor area ratio of 3.0 (i.e., the sites, on average,
would be developed with three-story buildings). He said this recommendation
in the Finance Plan assumes that all three stories of this development would
be taxable. It also assumes that agency-owned or agency-developed parking
will support the development of these properties; this parking demand would be
met by either existing or new parking facilities. He said that when staff
projected the intensity of development at a floor area ratio of 4.5, the
financial situation of the agency worsened. He said the tax increment flow
generated by this intensity of development would be insufficient to pay for
the parking demands that this level of development would create.
Later in the meeting, Mr. Bennett asked why this development intensity (floor
area ratio of 4.5) would worsen the financial situation of the agency. He
suggested that if the development occurred at this intensity, the agency could
build the parking structures needed to support this development, and the
parking could be leased at a rate that would service the debt on the parking
structures. Mr. Byrne said the question is: Will the market rate for which
parking can be leased downtown service the debt on a parking structure? He
said the answer is "no." Operation and maintenance costs for a parking garage
are about $20 to $25 per space, per month. This is about the average price of
e MINUTES--Eugene City Council June 24, 1987 Page 12
monthly parking permits in the downtown; therefore, tax increment must be used
to service the debt on the parking structures. Mr. Bennett asked whether this
e assumed that a certain amount of free parking existed in the downtown. Mr.
Byrne said it did not.
Mr. Byrne said the Central Area Transportation Study (CATS) proposes that
parking garages be built to serve the areas where agency-owned development
sites exist. CATS' parking recommendations were based on employment
projections for downtown Eugene. He said the updated Urban Renewal Plan based
its parking recommendations on floor area ratio projections (projections
about the intensity of future downtown deve 1 opment) . He said these two
studies independently arrived at similar conclusions about future downtown
parking needs.
Mr. Byrne used three flipcharts to illustrate in a simplified fashion the
basic aspects of the way the Renewal Agency's financing works. Part of the
first'flipchart read as follows:
Agency Resources:
--Beginning Working Capital $ 3.0 million
--Tax Increment Flow 2.0 million
$ 5.0 mi 11 ion
Agency's Fixed Expenditures:
--Existing Debt Service $ 1.4 million
--Agency Operations .5 mi 11 ion
$ 1. 9 mill ion
e Funds Available for Projects: $ 3.1 mi 11 ion
(resources minus fixed expenses)
Mr. Byrne said one possible option for the Renewal Agency would be to do
essenti ally nothi ng--that is, to make no major expendi tures on capita 1
improvements and to spend no resources in support of development. Under thi s
scenario, the agency's ending working capital would be about the same as its
initial working capital:
Funds Spent on Capital Projects: $ .1 mi 11 ion
Ending Working Capital: $ 3.0 million
Ms. Wooten said she was stunned to see that a $.5 million expenditure on
agency operations resulted in only $.1 million in capital improvements. Ms.
Stewart emphasized that this scenario represented a lido nothing" approach--
that is, making no major capital improvements and spending no resources to
stimulate a development. She added that if this approach actually were
followed, administrative costs would be less than they are now. Mr. Gleason
added that wi thout the agency s ta ff , developments such as those at the
Schaefer Building, the McDonald Theater Building, and the Downtown Athletic
Club, along with about five other projects currently under way, would not have
occurred.
e MINUTES--Eugene City Council June 24, 1987 Page 13
Referri ng to the second fl ipchart~ Mr. Byrne out 1 i ned another fi nanci a 1
scenario~ in which the agency would decide to make a major capital
- improvements expenditure:
Funds Spent on Capital Projects: $ 1. 1 mill ion
Ending Working Capital: $ 2.0 million
Mr. Byrne said that the agency would hope that this expenditure would generate
additional tax increment in future years. He said that when making decisions
about spending on capital projects, the agency must determine what type of
capital investment will stimulate the most tax increment flow. Another issue
is whether a given capital expenditure will leave the agency with enough
ending working capital.
In response to a question from Ms. Ehrman, Mr. Byrne said this financial
scenario was analogous to what occurred when the agency made the improvements
on West Broadway: money was allocated to the West Broadway capital project;
and the agency's ending working capital was reduced.
Using the third flipchart~ Mr. Byrne outlined another financial scenario, in
which the agency would decide to incur a new debt in order to stimulate
private development (e.g. ~ the agency might incur the debt to build a parking
garage). He said the updated plan recommends that new debts be incurred only
in response to specific development that will generate new tax increment. He
said the goal is to have the revenue from new tax increment flow offset the
cost of additional debt service. He added that this new increment tends to
1 ag a year or two behi nd the debt servi ce that is incurred. The thi rd
e flipchart outlined this scenario:
Agency Resources:
--Beginning Working Capital $ 3.0 mi 11 ion
--Tax Increment Flow 2.0 million
--New Tax Increment .5 million
(one- or two- year lag) $ 5.5 million
Agency's Fixed Expenditures:
--Existing Debt Service $ 1.4 million
--Agency Operations .5 million
--New Debt Service .5 mi 11 ion
$ 2.4 million
Funds Available for Projects: $ 3.1 mill ion
(resources minus fixed expenses)
Funds Spent on Capital Projects: $ .1 mi 11 ion
Ending Working Capital: $ 3.0 million
Mr. Byrne said the updated Urban Renewal Plan's Finance Plan combines the last
two financial scenarios. Sometimes large debts will be incurred (primarily to
build parking structures) in support of development; following this~ tax
e MINUTES--Eugene City Council June 24, 1987 Page 14
increment flow will increase because of the new development, and thi s
additional flow will be used to pay the new debt service. And at other times
e during the life of the Urban Renewal Plan, capital project spending will
increase (e.g., for infrastructure improvements).
Chapter 7 of the draft report on the updated plan contains an analysis of
estimated incomes and expenditures for the 20-year life of the plan. Mr.
Byrne emphasized that this is not a budget or plan; rather, it is simply a
financial feasibility forecast. It demonstrates the financial feasibility of
the plan's goals for development intensity and public expenditures. He said
this is a very generalized model of overall financial feasibility. Specifi c
decisions about incurring new debts or funding new capital projects will be
made on a case-by-case basis.
Ms. Schue asked what an acceptable ending working capital for the agency is.
Mr. Byrne said the agency must have an ending working capital able to pay for
at least three months of operating expenses (about $165,000) because of the
lag between the beginning of the fiscal year and when the agency begins to
receive taxes. In addition to this, the agency must maintain a debt service
reserve in its ending working capital. He said this money is set aside in case
some unforseen financial catastrophe occurs. Mr. Gleason said that such a
catastrophe for the agency is always a possibility--for example, a tax revolt
or a property tax 1 i mi tat ion. Assistant City Manager David Whitlow estimated
tha t the agency would have to have a minimum ending working capital of
$500,000.
Referring to a table in Chapter 7 of the report on the updated plan (Table 6:
Estimated Income and Expenditure Analysis), Ms. Schue asked why the annual
e debt service changed only gradually from year to year. Mr. Gleason said this
was because the agency would try to structure its debt so that the yearly debt
service did not change drastically from one year to the next. He emphasized
that the table mentioned by Ms. Schue portrays only one possible financial
scenario for the updated Urban Renewal Plan. How the agency structures its
debt, what its debt service reserves are required to be, what its bond ratings
will be, and other factors will affect the actual course of the agency's
financial picture during the life of the updated plan.
F. Siting of Future Downtown Transit Station and Library
In response to a question from Ms. Ehrman, Mr. Byrne said the Lane Transit
District (LTD) Board has not chosen a site for its future downtown transit
facil i ty.
Ms. Ehrman mentioned that the Future of Our Library Commi ttee has not
recommended a site for the future 1 i bra ry . Pat Decker of the Planning
Department said the committee's final report is expected by November. The
committee will hold a public hearing on the subject in November; and the
council will hold a hearing in December.
Mr. Byrne said that both the transit facility and library are somewhat special
issues within the Urban Renewal Plan. He sa i d they dea 1 wi th inter-agency
issues, that are not the primary responsibility of the Eugene Renewal Agency.
e MINUTES--Eugene City Council June 24, 1987 Page 15
Moreover, they are developments that would be tax exempt; therefore, they
would generate no tax increment for the Urban Renewal District.
~~ The report on the updated plan contains a policy statement by the LTD Board
regarding the selection and development of a future transit facility (see
Exhibit D). Ms. Ehrman said she was somewhat bothered by the sentence in the
statement which reads, liThe station is to be jointly financed by the City of
Eugene and the Lane Transit District." She said that although she could
envision some City participation in the project, the word IIjointlyll seems to
imply something like a 50-50 split, which she does not envision. Mr. Byrne
said staff raised the same point with the LTD staff. He said City staff
included an introductory remark in Exhibit D prior to the LTD Board's policy
statement in order to address the concern expressed by Ms. Ehrman. Part of
this introduction reads as follows: "Funding participation by the Renewal
Agency could vary by both kind and amount, depending on need and availability
of funds. II
Ms. Ehrman thanked the members of the Planning Commission and Downtown
Commission who attended the meeting.
Ms. Bennett expressed appreciation for the council's commitment to downtown,
and for its recognition that downtown should be treated as a special part of
Eugene because it benefits the entire community. She also expressed
appreciation for Mr. Rutan's and others' comments about the importance of
private investment downtown.
Ms. Ehrman adjourned the meeting at 1:27 p.m. to July 8, 1987.
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City Manager
(Recorded by Monty Hindman)
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~\ MINUTES--Eugene City Council June 24, 1987 Page 16