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HomeMy WebLinkAbout12/02/1987 Meeting M I NUT E S e Eugene City Council Lunch/Meeting McNutt Room--City Hall December 2, 1987 11 : 45 a. m . COUNCILORS PRESENT: Emily Schue, Ruth Bascom, Jeff Miller, Robert Bennett. COUNCILORS ABSENT: Debra Ehrman, Cynthia Wooten, Freeman Holmer, Roger Rutan. His Honor Mayor Brian B. Obie called the work session to order. He asked whether four councilors and he constituted a quorum. Tim Sercombe of the City Attorneys Office said a majority of councilors was required for a quorum, and four councilors might be a majority if one or more members was inactive because of a conflict of interest. He agreed to check on whether the Mayor could be counted for that majority. Assistant City Manager Dave Whitlow said the City Council could proceed with an information session at today's meeting, which had been advertised as a work session. Mr. Whitlow said councilors absent today would receive the written record, and a full report of the meeting would be adopted by the City Council. He added that no action would be taken today. e Mayor Obie recessed the meeting of the Eugene City Council and convened a work session of the Eugene Urban Renewal Agency. 1. WORK SESSION: URBAN RENEWAL DISTRICT FY89 BUDGETS FOR THE CENTRAL EUGENE PROJECT AND RIVERFRONT RESEARCH PARK Assistant City Manager Dave Whitlow introduced the item. Greg Byrne of the Development Department presented the staff report. He said the Urban Renewal Agency budget had been reviewed by the Downtown Commission subcommittee, which had developed a recommendation for the full commission. Mr. Byrne said the recommendation had not yet been reviewed by the Downtown Commission. He added that staff would review that budget and would provide information requested by councilors about the interrelationship of the several funds involved in the downtown project. A. Downtown Funds Mr. Byrne illustrated the interrelationships of downtown funds using bubble diagrams, which he noted were not proportional to the size of budgets or geographic areas. He said the three base funds used in the Community Development Division were: 1) the Tax Allocation Fund; 2) the General Fund; and 3) the Downtown Development District Fund. e MINUTES--Eugene City Council December 2, 1987 Page 1 -... - --- Mr. Byrne said the Tax Allocation Fund came from the Downtown Renewal Project, a central Eugene project covering about 20 percent of the Downtown Plan area. e The remaining 80 percent of the Downtown Plan area was covered by General Fund activities, he said, adding that the Downtown Development District was a separate district, not coterminous with the Tax Allocation District, but of about the same size and incorporating many of the same properties. Mr. Byrne sa i d all three funds contributed to recrui tment and development efforts downtown. He said the Tax Allocation Di stri ct allowed recrui tment and development of property owned by the renewal agency (currently surface parking lots). The Downtown Development District had a major focus on recruitment and development in the downtown, central core area, he said, adding that much recent activity in the district had involved a centralized retail management strategy and a transition from the Eugene Downtown Association to a new group incorporating a greater emphasi s on property owners. The Genera 1 Fund contributed to recrui tment and development for the area of the general Downtown Plan outside the other, specialized districts, he added. Mr. Byrne reviewed the relationships of the three base funds and parking funds. He said a major focus of the Downtown Development District ordinance was to provide free parking downtown, and the district accomplished that by purchasing parking spaces from facilities owned by the City and providing them free to customers. He said the Overpark Fund, for example, had a separate enterprise fund and several di fferent sources of revenue. The Downtown Development District currently purchased 200 of the 600 spaces in the Overpark garage, he said, and the Overpark enterprise fund received that income, in addition to that of other sources, such as lease of commercial space, sale of monthly parking permits, and interest income on working capital. Mr. Byrne noted that the funds for the Overpark and surface parking lots overlapped e with, and were related to, the Downtown Development District Fund. He also said the fund for the Parcade garage was related to the Downtown Development District Fund, adding that the Parcade's debt service was paid out of the Tax Allocation Fund. Responding to questions from Mayor Obie, Mr. Byrne said the City owned its surface parking lots and received no return on its investment. He said the lots were incorporated into the free parking system at the cost of providing for ope rat ions and ma i ntenance. Mr. Byrne said no property tax or tax increment income was received from those lots, and that was the reason for the City's focus on development of those sites. Mr. Whitlow said the district had purchased the spaces, which were provided free of charge to the public. Mr. Byrne added that costs of operation and maintenance were included in the annual fee of $3 per space charged to the district. He said the City managed its own properties, which included about 2,000 surface lot spaces, of which about 1,300 were free. He said properties privately owned and leased by the City had been eliminated from programs. Free parking was provided on private property owned by the Bon Marche and by Sears, he said, and although those lots were managed under the City's free system, the City did not pay for use of that space. Mayor Obie asked whether the district paid the costs of developing parking structures. Mr. Byrne said the district paid the full cost of operating, maintenance, and replacement reserve. He said no debt service was owed on the e MINUTES--Eugene City Council December 2, 1987 Page 2 Overpark, and the debt service for the Parcade was covered by the tax increment (or Tax Allocation) district. e Mr. Byrne said the City currently leased spaces in parking structures for $20 to $40 per month, which was directly related to the cost of providing service. He added that if debt service were included, those costs probably would increase to about $75 per month per space, which the market would not bear. Mr. Byrne explained that spaces in the Overpark were cheaper than those in the Parcade because of facility size and the lack of debt service. Mr. Byrne said the monthly market rate was a different fee than the cost of providing services, but on average they were similar amounts. Responding to Mr. Bennett's questions, Mr. Byrne said a monthly fee of $10 to $12 per space was charged for surface lot parking. He said the fees varied from lot to lot, and the City attempted to price spaces based on the private- sector costs of surrounding lots. Mr. Bennett asked whether the fees were based on the market or on the cost of services, and he asked how management of the properties would compare if they were privately owned. Mr. Byrne sa i d surface parking probably could attract higher rates on the private market, assuming a market existed. He said some surface lots gradually had been returned to the private market, but the City had attempted to avoid flooding the market with supply. He said the Downtown Commission last year had begun offering permits for one-quarter block of parking at a monthly rate of $18 per space. Mr. Byrne said about half of that lot had been sold, and other lots could be returned to the market in the future. He said public fees were based on market rates, and fees charged to the Downtown Development District were based on the cost of providing space in each facility, with average rates e being similar. Mr. Byrne showed the connection and overlap between the Eugene Performing Arts Center (EPAC) garage and the General Fund, noting that the debt service for the garage was paid entirely out of the General Fund. Ms. Schue asked how close the facility's income came to covering costs and debt service. Mr. Byrne said the income covered costs and provided a replacement reserve but did not come close to covering the debt service. Mayor Obie asked whether that was the program's original design. Mr. Byrne said he believed it was not the original design. Mr. Byrne said the renewal expansion project included plans for the EPAC garage to support other development in the surrounding area on a fee basis as new development took place. He said the site had been acquired through the Urban Renewal program, and the renewal agency should consider that facility an asset for future private development within the renewal district. Mr. Byrne showed the overlap and relationships between the Tax Allocation Fund and the funds for the Eugene Community Conference Center and its parking garage. He said the debt services for both funds were part of the urban renewal project, and the Tax Allocation Fund paid the entire debt service. Mr. Byrne said the garage served the conference center and the Hilton hotel, with fees charged for special events or monthly permits. He said contract sta ffi ng of the garage booth had been discontinued because expenses had e MINUTES--Eugene City Council December 2, 1987 Page 3 exceeded receipts, but an enforcement program still was operated to prevent repeated use by employees. e Mr. Byrne reviewed other activities that occurred under the three funds. He said the third largest activity of the Downtown Development District, following parking and recruitment, was marketing of downtown as an institution and for seasonal, retail activities. He said that activity in the past had been handled through a private contract under the Eugene Downtown Association. Mr. Byrne noted that funds in the Downtown Development District and the Tax Allocation District were specialized and could not be used to implement other portions of the Downtown Plan. Mr. Byrne reviewed 11 areas included under the $219,000 Development Department general fund, including possible expansion of a State offi ce building, improvements just completed along 5th Avenue, Hilton-Conference Center negotiations, a streetscape des i gn task force, economi c data and market studies for recruiting efforts, the mall management program, property management for the PARCS and Public Works departments (mostly low-income residential rentals), Wi 1 lamette Street (outside of the Downtown Renewal Area) from 11th to 20th avenues, specialized housing activities such as Eugene Emergency Housing's proposal for use of the lincoln School site, historic rehab activities, and staffing and participation in interdepartmental task teams for projects such as the Library, EWEB plaza, common mapping, and the Riverfront Research Park. Mr. Byrne said activities in the Tax Allocation District included the renewal plan update, clearance of visual obstructions on the mall, development of e agency-owned property and supporting parking garages, redesign of the mall, work with Lane Transit District, and staffing of building loan rehabilitation programs. Mr. Byrne agreed to send copies of the diagrams and rough program figures with the reports to councilors. Mr. Miller asked about the impact of removing General Fund support and whether other options would be available. Mr. Byrne said General Fund activities could not be continued under the other two base funds, because those funds were restricted by State or Federal law to specific activities and geographic areas. He added that the City Attorney recently had been asked for an opinion about activities outside the renewal district but that would benefit the district, and those activities were prohibited by strict regulations. Mr. Miller asked whether the Public Works or PAReS departments could assume some of the General Fund responsibilities. Mr. Whitlow said he thought that was unlikely because the expertise for development deals outside the renewal district was provided by the Development Department. Mr. Byrne noted that the 5th Avenue improvement project was scheduled for funding over the next three to five years. He also said mall maintenance was handled by the PARCS Department. Ms. Bascom asked about costs of specific projects. Mr. Byrne said staff were paid according to the portion of time spent on specific projects. e MINUTES--Eugene City Council December 2, 1987 Page 4 ......, B. Central Eugene Project Budget e Bob Hibschman of the Development Department said councilors had received tax increment budgets for the Central Eugene Project and the Riverfront Research Park. He said the budget for the Riverfront project was in flux, and because no recommendation yet had been made about the source of the loan, that decision was planned for a future meeting. Mr. Hibschman distributed extra copi es of the Central Eugene Project budget, noting that they had been reviewed by a subcommittee of the Downtown Commission but not by the full commission. Mr. Hibschman reviewed revenues for the Central Eugene Project. He said the most significant revenue had been revised to reflect a decrease of about $200,000, because of a loss of $9.5 million in the assessed value of the downtown district. He added that assessed value was made up of 60 percent real property land and improvements, with personal property and accounts utilities accounting for the rest. Mr. Hibschman said the largest decrease had been about $3 million for the Hilton Hotel. He added that about 80 percent of personal property and accounts had depreciated by about 10 percent, while the number of accounts also had been reduced. He said utilities had accounted for about $2.2 million in losses because of the shift of equipment from AT&T to Pacific Northwest Bell. Mr. Hibschman said the decrease in assessed value, which amounted to about 9 percent of the total, was expected to stabilize next year and not to be part of a long-term trend. Mr. Hibschman noted that the revenue of $188,000 listed under item A.3. was e for the payoff of the Hilton debt for the use of the Conference Center, which had been amort; zed over seven years. He said total di stri ct resources remained in the range of about $6 million. Mr. Hibschman reviewed expenditures, noting items B.I.b. for current EDD projects, B.2.a. for debt service on parking garages and the conference center, and B.2.b. for half of the development funds for loans set aside to be approved by the City Council. Responding to Mayor Obie's question, Mr. Byrne said parking income and expenses were included in the ODD fund, not in the Central Eugene Project tax increment budget. He said B.2.c. represented overhead for the General Fund, B.2.d. represented beginning working capital for FY90, and B.2.e. was a reserve set aside for debt service. Mr. Miller asked about the formula used to determine B.2.c., the central service allocation. Mr. Whitlow said every fund was determined on the basis of the financial cost plan, and $100,000 was very close to the actual cost of servicing the fund. Mr. Byrne added that the actual fig u re wo u 1 d be established in January, after the Downtown Commission had finished its work on the project, and minor adjustments then would be made to the balance available. Mr. Whi t low agreed to p rev i de the counc i 1 wi th a one-page description of policy on that process. e MINUTES--Eugene City Council December 2, 1987 Page 5 ~ C. Capital Projects e Mr. Hibschman reviewed the list of capital projects for the FY89 budget. He said the second group of projects was not included in the $1.95 million total but represented a list of eligible Hult Center projects that might be included in the budget. He said the Downtown Commission budget subcommittee had included the development projects as a reflection of their recommendation in the renewal plan update that had been forwarded to the council. Responding to Mayor Obie's question, Mr. Hibschman said the list would implement the plan. Mr. Hibschman said the City Attorney had reviewed the list of Hult Center capital projects and had determined that those projects would help stimulate nighttime activity and thereby enhance patron comfort, which was one of the goals in the renewal district. Mr. Miller asked about the source of funds for Hult Center projects. Mr. Hibschman said it was proposed that 50 percent of funds for the marquee come from the Tax Increment Fund and 50 percent from the Conference Center Fund. That proposal would use no General Fund money, he added. Responding to questions, Mr. Byrne said the Hult Center projects were not included in the recommendation from the Downtown Commission subcommittee. He said the subcommittee had felt that construction of the Hult and Conference centers had been intended to stimulate activity, and it recommended that smaller capital projects come from the General Fund because of the lack of a direct tie to private-sector development. Ms. Bascom noted that the legal opinion on the use of funds for Hult projects had been requested by Councilor Holmer. She said she thought the marquee e certainly had been needed for some time, and she noted that providing funds would mean removing something from the list of development projects. Mayor Obie asked when the projects were scheduled for a City Council decision. Mr. Byrne said the projects would be included in the budget process to occur later this year and then would come before the City Council and the Renewal Agency. Mr. Miller asked about the process that had been used to consider alternatives and to select the cost of a marquee. Mr. Whitlow said the Performing Arts Commission had discussed the issue for several years and worked with PARCS Department staff. Ms. Bascom added that the Eugene Arts Foundation had set aside funds from the sale of personalized bricks to be used for a marquee, but the foundation would not release the funds until a design contract existed. Mr. Whitlow said a range of alternatives had been considered, and the intent was not to purchase an elaborate marquee. Mr. Miller requested a report on the alternatives considered. Mr. Bennett said he thought the Hult Center projects were important, but he did not think funds should be taken away from development projects. He said he favored allocating funds in a way that would create new activities and development, adding that he supported the subcommittee recommendation and hoped the Hult Center projects could look to another source for funding. e MINUTES--Eugene City Council December 2, 1987 Page 6 Mr. Whitlow said the first two Hult Center projects already were included in the funded portion of the Capital Improvements Program for next year, assuming e passage of council funding. Ms. Bascom noted that the last time it had dealt with the Hult projects, the Budget Committee had postponed those items for two years. Mr. Miller and Mr. Bennett said they agreed that the Hult Center projects were important, but they did not agree with the proposal for a funding source. Ms. Schue said she would be willing to include the heating, ventilating, and air conditioning (HVAC) system in the capital projects budget. "An unheated stage in Oregon in December is something you ought to fix," she said. She said she also favored improvements to outside lighting, because of risk management concerns, but she thought the marquee could be funded by a different source. Mr. Byrne noted that the draft budget proposal included expenditures that were considerably greater than the revenue received, for a negative net amount of about $2.4 million. He said that spending would be a good investment if it stimulated private development, particularly on Ci ty-owned property. It would be a poor investment if funds were spent on speculative capital projects or on "window-dressing," he said, and that could send the fund in a backwards direction without anticipating new tax increment receipts. Downtown Commission Chair Roger Neustader said that even with the capital projects line, a balance of $1 million still would be available, plus another $1 million that would remain in an unallocated business development fund. Mr. Whitlow said the balance available at the beginning of next fiscal year was e shown in line B.2.d. and would be $1,051,147 at the start of FY89. Mr. Byrne said discussion of the Riverfront Research Park budget would be deferred to a future meeting. Mayor Obie adjourned the meeting of the Eugene Renewal Agency and reconvened the meeting of the Eugene City Council. II. WORK SESSION: URBAN RENEWAL PLAN UPDATE (DISTRICT EXPANSION/ DEVELOPMENT PROJECTS/FINANCING) Greg Byrne and Bob Hibschman of the Eugene Development Department presented a staff report on follow-up information from the Ci ty Counci 1 meeting of September 30, 1987. Mr. Byrne said staff would address questions about the expansion area, business loan activity, and property owner plans in the proposed expansion area. Mr. Byrne reviewed background information in the agenda item summary, noting council direction to continue with tax increment financing as a policy tool and achievement of most of the original program objectives. He said the major unachieved objective was development of the vacant property owned by the City. He said bonding costs were about the same for tax allocation and for general obligation bonds. He a 1 so noted that expendi tures and revenues for the proposed expansion area were expected to balance over the next 10 years. e MINUTES--Eugene City Council December 2, 1987 Page 7 Mr. Byrne said some discussion had occurred about whether the expansion area would compete with the downtown core. He said staff evaluation had concluded e that the core area by its nature would receive the most intensive development, with less intensive and more right-of-way-oriented development in the expansion area. Mr. Byrne said all development was a piece of implementing the Downtown Plan, and staff saw the expansion as spreading a tool to a broader part of the central Eugene area. Mr. Byrne said Councilor Holmer had asked about the use of tax increment funds for business development loans to the private sector. He said Mr. Holmer since had spoken with City Attorneys and had satisfied his concern about the issue. He asked whether other councilors wished to address the issue. None responded. Mr. Hibschman reviewed the criteria and process used to determine the proposed expansion area. He showed a map identifying downtown property development according to a ratio of improvements to assessed values. Mr. Hibschman said a 3:1 ratio was an indicator of ideal health, and the highest ratios in the expansion area were 2:1. He noted many low concentrations in the west, north, and northeast areas, and said that these low ratios had been used as an indicator of blight. Mr. Hibschman said consideration also had been given to several goals in the Downtown Plan, such as more intense development; improved access and entrances (e.g., 6th and 7th avenues); linkages with other assets (e. g. , 5th Avenue, train station); taking advantage of underused public facilities (e.g., EPAC garage); developing land adjacent to publicly owned sites; providing potential for housing development (particularly in the area to the west); and identifying land for future public projects that would stimulate development. e Mr. Hibschman said staff had contacted several property owners about plans for properties. He noted that one property owner who had submitted a letter for the record since had been granted approval for a change to commercial zoning. He reviewed the areas to be included in the recommendation from the Downtown Commission and the Planning Commission, which would use all of the 20 percent expansion allowance, except for about one-third block. Mr. Hibschman showed a summary of statistical information about individual parcels, with 23 or 24 buildings rated in poor condition and with improvements for the entire area valued at less than the land. He said the area definitely satisfied the requirement for blighted conditions. Mr. Miller asked about the parcel being considered for development by the State. Mr. Hibschman showed the area being considered under the current recommendation and said the block between 6th and 7th avenues and between Oak and Pearl streets had been included in the expansion in order to assist with development or expansion of a State Office Building, parking, or hote 1 expansion, as well as to assist with the development of parcels offered for sale by Lane County. He added that the IBM Building, a portion of 6th Avenue right-of-way, and the Banana Warehouse building had been proposed to be removed from the expansion area. Mr. Hibschman said information in the packet i ndi cated that Federal and State programs were available to he 1 p wi th deve 1 opment of the Banana Warehouse building. Councilors a s ked how the e MINUTES--Eugene City Council December 2, 1987 Page 8 property owners felt about plans to exclude the Banana Warehouse, and Mr. Hibschman said they had not yet been contacted since the decision to remove e the building. He said staff felt other tools were available because of the historical orientation, which also was expected to result in less intensive development. He said it was felt that development of an alternate parcel would provide greater leverage for the renewal district. He added that staff planned to contact the owners after today's meeting. Mr. Miller said he was concerned about the impact on the central area, and he asked about the need to use up the expansion allowance now. He added that he was comfortable with the proposal for development to the east, but he thought moving west seemed contrary to other developments that were planned to the east. He suggested waiting to see what happened in the near future. Ms. Bascom said a factor in developing the area to the west was the underused EPAC garage. She asked whether the new proposal had been required because of new ownership of the Hilton hotel and because of the State office building being considered. Mayor Obie said expansion would provide an opportunity for tax increment funding that could be used in the rest of the district. Mr. Byrne said the Downtown Commission and the Planning Commission had not yet reviewed the recommendation or submitted it to the council, but that would occur in the future. Ms. Schue asked about the likelihood of State approval for an office building. Mr. Byrne said staff negotiations had been occurring for about eight or nine months, and the possibility of private construction and a capital lease, in which the State would assume ownership after 20 years, was being considered. e He said that arrangement would allow private construction and operation and the lease option would contribute to the Tax Increment district. He said the unknown factor in that arrangement or in expansion of a hotel would be parking. Responding to Ms. Schue's question, Mr. Byrne said tax increment funding then might be used to build an additional floor on the current County parking garage. Mr. Bennett said he had toured the area to the west and he recognized blight as a criterion. He said he also thought the area to the east was more developed commercially, and he asked about a connection between the east side and the central core area. He said he thought the expansion provided an opportunity for the east and central areas to become more complementary. Mr. Bennett raised the issue of market timing. He said he wanted a return on the City's investment, and although the need might be great, he asked whether the market currently was favorable for the expansion plan. Ms. Bascom asked about timing. Mr. Byrne said staff anticipated returning after the first of the year to continue discussion of the urban renewal plan update. He said plans were to first address those areas in which no conflicts of interest existed, and then to address Willamette Street and transportation issues. He said the Downtown Commission and the Planning Commission would review the plan update before it was returned to the council. e MINUTES--Eugene City Council December 2, 1987 Page 9 ~ Ms. Schue said she thought the counci 1 generally agreed with plans for development to the east, and although increased use of the EPAC garage was a e laudable goal, she had reservations about the 1 ength of the wa i t until development had occurred to the west. Mr. Byrne said staff was reluctant to predict timing of development, but it did feel that development would happen faster if the renewal agency took an active role. Mayor Obie asked about opportunities to lease part of the EPAC garage. Mr. Byrne said heavy marketing for the facility had been done, and the number of monthly parkers had increased from 20 to about 150, but the market did not provide enough demand. Mr. Miller said he would prefer not to have a parking garage dictate the vision of the renewal plan. He said he had heard suggestions about improving the She 1 ton-McMurphy House, tyi ng Skinner Butte to downtown, connecting downtown to the river at the EWEB plaza, and establishing corridors along 5th Avenue and Willamette Street. He noted that expansion did not have to occur all at once, and he preferred to retain as many options as possible. Mr. Hibschman said additional future amendments would require findings of blight and public process, which could take three to four months. Mr. Byrne said formation of a new district also was a possibility, and he noted the need to consider start-up costs. Mayor Obie said he found the EWEB building to be a major factor, and he asked about the Agri pac property. Mr. Byrne said Agripac was included in the Ri verfront di stri ct. Mayor Obi e expressed concern about the impacts of Agripac and Ferry Street Bridge on that part of downtown. He also requested that the Downtown Commission consider inclusion of the area near the train e station and the Shelton-McMurphy house. He added that he found development in the area to be interesting and viable. Ms. Bascom asked whether any areas had emerged as potential sites for housing development. Mr. Hibschman said one site, the parking lot off 10th Avenue and behind a church, had been considered, but that site had been dropped from the expansion. Ms. Bascom said she thought sites in the western area might be appropriate for housing. Ms. Schue said parking was a difficulty with housing developments, and she added that further difficulties existed with allowing residential parking in the EPAC garage. She also said housing for seniors might be developed without the parking needs, and projects in that area had been completed. Mr. Hibschman reviewed plans for property in the proposed expansion area, noting areas for sale, those whose owners opposed inclusion, those with little or no plans, and the remainder, whose owners favored more development. Ms. Bascom asked whether a housing development for elderly, middle-income res i dents woul d gain many advantages by bei ng included in the renewal district. Mr. Hibschman said he did not think inclusion would be a significant advantage, either to residents or to the renewal agency, because deve 1 opments tended to be less intensive. Mayor Obi e noted that a tax advantage district had been established to the west of downtown and included Washington Abbey and other housing developments. Planning Consultant Robin Johnson said the City had not readopted that program but could do so again. e MINUTES--Eugene City Council December 2, 1987 Page 10 - -..: Mr. Byrne said staff would report back to the commissions and to councilors who were absent today. ~ Mr. Whitlow reviewed the agenda for the next meeting. Mayor Obie adjourned the meeting at 1:30 p.m. ~~e.4~ ;/ /4"h'~~ . Mi~e;'f Gle n-,--- City Manager (Recorded by Leslie Scales) mncc1202 e 4It MINUTES--Eugene City Council December 2, 1987 Page 11