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HomeMy WebLinkAbout12/14/1988 Meeting e M I NUT E S Eugene City Council McNutt Room--City Hall December 14t 1988 11: 30 a. m. COUNCILORS PRESENT: Cynthia Wootent Ruth Bascomt Rob Bennettt Freeman Ho1mert Jeff Millert Roger Rutant Emily Schue. COUNCILORS ABSENT: Debra Ehrman The adjourned meeting of December 12t 1988t was called to order by His Honor Mayor Brian B. Obie. Mayor Obie announced that the meeting could be moved to the Council Chamber if necessary to accommodate members of the public. I. ITEMS FROM THE CITY COUNCIlt MAYOR, AND CITY MANAGER A. Lane Regional Arts Council e Ms. Bascom described an innovative new ticket packaging which will offer six tickets for six major performing arts groups at $30. B. Focused Patrols Ms. Bascom referred to a memorandum from Chief Hall and suggested that the council schedule a discussion of focused patrols for January. She was particularly interested in the possibility of focused patrols in parks during the summer. C. Trees at Fifth Avenue and Adams Street Ms. Bascom cited the trees in the area of 5th Avenue and Adams Street as an example of inept pruning. Ms. Wooten concurred with Ms. Bascom's assessment of the pruning effort and suggested that City staff might work in collaboration with EWEB to achieve a more effective and aesthetically pleasing solution to the problem of trees on the power lines. D. Parks Foundation Ms. Bascom said the Parks Foundation was saving the City money. It is currently involved in the fund-raising effort for the Maurie Jacobs Memorial project and will assist in raising funds for the Celeste Campbell Senior Center. e MINUTES--Eugene City Council December 14, 1988 Page 1 e E. Prohibition of Camping Ms. Bascom and Ms. Wooten requested a report detailing the numbers of arrests for camping, no-shows in court, and incarcerations for those violations. Ms. Wooten asked that the Public Safety Advisory Committee review the ordinance regulating camping and that consideration be given to decriminalizing camping by homeless people on public land. F. Urban Forests Ms. Bascom reported that while interest in urban forests is growing, most cities plant only one tree for every four that die. G. Maurie Jacobs Memorial Project Mayor Obie announced that Governor Goldschmidt has included $250,000 in the budget being forwarded to the Legislature for the memorial project. He reported widespread support for the project and said the $1,000 per couple fund-raising dinner is scheduled for January 31. Mayor Obie anticipated that the council would be asked to allocate some funds to help achieve the matching aspect. H. Director of Aviation Mr. Rutan said he had requested that the new Director of Aviation, Mike Boggs, be invited to address the council in January. He reported that the e airport expansion project is within budget and almost on time. I. National League of Cities Ms. Schue commented that the recent meeting in Boston had been successful and councilors would receive a written report on the workshops and discussions that occurred. She asked for the council's consideration of establishing limits on the number of councilors and staff who would attend future meetings. J. Conference Center Ms. Schue pointed out the need to differentiate between the Hilton Hotel and the Conference Center in meeting announcements. K. End of Councilor Wooten1s Term Ms. Wooten expressed her appreciation for the opportunity to serve on the council. She said she would continue to work toward long-term solutions to the problems of low-income housing. Ms. Wooten thanked City Manager Mike Gleason for his leadership. Mayor Obie thanked Ms. Wooten for her many contributions and said she would be appropriately recognized at the January 9 council meeting. Mr. Holmer e MINUTES--Eugene City Council December 14, 1988 Page 2 . e reminded Ms. Wooten that her term of office would continue until her successor had been elected and qualified. L. Gillespie Butte Ms. Wooten expressed appreciation for the efforts of Parks, Recreation, and Cultural Services Department employee Jeff Hale in managing a difficult situation when a private developer occupied public property as a construction site for an abutting property. While the problem has not been resolved, Ms. Wooten applauded Mr. Hale1s investigation which she hoped would help avoid future abuse of public land by private parties. Mr. Holmer reported that the Cal Young Neighborhood Association adopted a resolution that has been forwarded to the Planning Department and he voiced hope that an appropriate response to this concern would be forthcoming. M. Bicycle Magazine Award Mayor Obie announced that Eugene had recently been recognized as one of the ten best cycling cities in the United States. He cited the 21 miles of bike paths, 31 miles of bike lanes, 18 designated bike routes, the "bikes on bus" program, the active Bicycle Advisory Committee, and full-time Bike Coordinator Diane Bishop as components of Eugene1s successful program. Mayor Obie introduced Ms. Bishop and presented the Bicycle Magazine Award to Ruth Braemi11er, Bicycle Committee Chair. Ms. Braemiller thanked the council for its continued interest and support of the bicycle program. e II. PUBLIC HEARING: AMENDMENT TO CAPITAL IMPROVEMENT PROGRAM (CIP) FY88/89-93/94 City Manager Mike Gleason introduced the topic. Teresa Bishow, Planning Department, reported that the Budget Committee had held a public hearing December 13 to consider the proposed amendment that would allow coordination with the capital improvement programming of the State and Lane County for funding the Highway 99N improvement project. No public testimony was received at that hearing and the Budget Committee unanimously recommended approval of the amendment. Responding to Mr. Rutan's inquiry, Public Works Director Christine Andersen explained that the two-phased project would start at Roosevelt Boulevard. The first phase would occur during the summer of 1989 and would involve widening and overlay of existing pavement, street lights, and landscaping from Barger north to Beltline. Ms. Andersen said this would not be an assessment project. The second phase would address improvements from Roosevelt to Barger and would include curb and gutter, sidewalks, landscaping, street lights, and assessment. The intention is to not go south of Roosevelt because of the impact of the connection with the West Eugene Parkway. e MINUTES--Eugene City Council December 14, 1988 Page 3 . e Mayor Obie noted that an overpass for West Eugene Parkway access at the area of McKinley and Highway 99 is still undecided. Mayor Obie opened the public hearing. There being no requests to speak, Mayor Obie closed the public hearing. Ms. Wooten moved, seconded by Ms. Bascom, to amend the adopted City of Eugene Capital Improvement Program concerning improvements to Highway 99N, Roosevelt to Beltline. The motion passed unanimously, 7:0. . III. WORK SESSION: FINANCING OF THE FUTURE LIBRARY PROJECT A. Project Proposal Mr. Gleason reviewed the council's request that staff prepare a proposal for the library project that would fund the entire capital portion of the project through the parking and tax increment funds that would have no effect on the General Fund or the general Capital Projects Fund. The proposal being presented to the council had been presented to the developer who is seeking some early indication of whether the City agrees with the concept or intends to separate itself from the development. Mayor Obie noted the importance of the complex proposal's presentation to the community and asked those members of the press present to help inform the e public regarding the multitude of details. Abe Farkas, Director of Development, Planning, and Building, acknowledged the multi-departmental effort behind the library project. Mr. Farkas reviewed the project scope. He described the project, proposed for a half-block site at 8th Avenue and Willamette Street, as presenting unique opportunities because of its siting, mixed-use, and finanCing from a range of different sources. The project would develop 175,000 square feet in office space, 106,000 square feet for the library, and 50,000 square feet of below-grade parking. The office would have completely separate entrances from the 1 i bra ry . The library would occupy 17,000 square feet on the ground floor with the remainder of the library space on the second and third floors. The project would combine several components: an office tower, the library shell, library interior, the land, a parking facility, and various public improvements. The total range of costs for the entire project is between $33 million and $38.5 million, with $20 million of the total being private sector money focused on the office tower. Mr. Farkas recommended that the City be involved in short-term finanCing for the initial construction of the library shell, the parking structure, and some of the site improvements. A $9 million loan at three-percent was proposed for a period not to exceed 24 months. Those resources would come from $4 million backed by Bancroft funds, $3 million from existing tax increment fund dollars, and $2 million from the parking replacement fund. e MINUTES--Eugene City Council December 14, 1988 Page 4 e Mr. Farkas described this phase of the project as critical and said it would ultimately benefit the City to provide financing at lower rates. Mr. Farkas added that $2 million in grant/loans are being sought through the County and State. He explained that $1 million in road fund money could be available if the project results in net new job generation. Utility relocation would be funded with a $1 million public works loan/grant from the State. Half of that would need to be repaid and Mr. Farkas proposed splitting that $500,000 repayment between Pankow and the City, with repayment not starting for ten years. The City's portion would come from tax increment revenues that would be generated after that ten-year period. Long-term financing is focused on the parking facility. Mr. Farkas stressed the importance of making parking available to office tower tenants at market rates. To help accomplish this, the City would provide a longer-term low-interest loan of $2 million to $2.5 million at three-percent for a 30- year amortized period. The 30-year amortization would begin to be repaid after five years, and the loan would have a ten-year call. Mr. Farkas said the land, valued at approximately $1 million, is currently owned by the renewal agency. Selling the land to Pankow would probably result in the land acquisition cost being built into the office tower which could rais~ the office lease rates to a point beyond acceptability in the Eugene market. Furthermore, outright sale of the land might not result in the best return for the City. Therefore, Mr. Farkas proposed that the City receive ten percent of the cash flow from the office tower starting in the fifth year, five percent of any refinancing profit, and market value return e on the land if or when the office tower is sold. In ten years, Mr. Farkas estimated that the land would be worth ten percent of the total project. The land would become taxable. Based on a $2 million office project, the tax increment flow would be approximately $60,000 annually. The 106,000-square-foot library shell was estimated by Pankow at a cost of $6.6 million. Through negotiations, Pankow agreed to remove the developer's fee and encouraged the community to use that as a challenge grant for raising at least $280,000 in private sector contributions for the library. This agreement brought the cost of the shell down to $6.32 million. It was proposed that the City would lease the shell at 60 cents per square foot for the first five years. Tax increment from the office tower, land, and parking structure would be used ~o retire this debt (a $763,000 per year lease). At the end of five years, the City would have the option of buying the shell for $6.32 million, renewing its lease, or entering an amortized lease on a 3D-year basis. The council would have the option of bUilding-out a 106,000 square foot library or finishing 75,000 square feet and reserving the rest for interim leased space. In either case, Mr. Farkas recommended using existing tax increment resources to pay for the tenant improvements, estimated at $3 million to $5 million. e MINUTES--Eugene City Council December 14, 1988 Page 5 -- e B. Questions from Councilors Mayor Obie commented that it must be recognized that the community is entering a new era in which public and private resources must be packaged and utilized to facilitate public development. He considered it important to educate the public regarding how the various components of the proposed project would fit together. Answering Mr. Holmer1s question, Mr. Farkas said the present library site is not within the existing tax increment district. Without a project stimulating new tax increment revenue, he could not name a source of money for an expansion. Mr. Sercombe added that the current urban renewal plan would have to be amended to allow for the expenditure on the library site. Mr. Gleason pointed out that the cost of the library shell is reduced by the fact that the project is larger and would be under one management for which the City would not be paying. Referring to Mr. Gleason's statement that the developer needs some indication of the City's agreement around the project concept or the City needs to separate itself from the development, Ms. Wooten asked for clarification of what the alternative to commitment would be. Mr. Gleason responded that considerable legal work is required before construction details can be finalized. Unless the City commits to being involved before the end of January, Pankow will not be able to close lease agreements with prospective tenants. e Mr. Holmer asked if tax increment resources could be used for expansion of the library at its present site. Mr. Farkas said the present library site is not within the existing urban renewal district. He added that without new development stimulating more tax increment revenue, the funds needed for expansion would not be available. Mr. Sercombe noted that the current urban renewal plan would have to be amended to allow for an expenditure on the library site. Mr. Gleason added that the cost of the library shell is reduced by it being part of a large project and he suggested comparing the proposed construction costs to those of the EWEB, Airport expansion, or University projects. Mr. Gleason also said the mixed use portion of the parking would save a significant amount and the grants possible for the parking portion are not available on the other sites. Mr. Rutan said the average citizen will want to know how much the project will cost the individual City resident. Mr. Farkas assured him that no General Fund resource would be tapped for construction, nor would other tax dollars outside those in the existing district be used for capital expenses. In fact, Mr. Farkas said this project represents a creative way of using tax increment revenues twice to help forward the project. Mr. Rutan asked about risks to the City if several million dollars are put out to a developer. Mr. Farkas said nothing would be spent until the developer signs a development agreement and there is a commitment on the office tower. Currently, the developer is spending approximately $40,000 e MINUTES--Eugene City Council December 14, 1988 Page 6 e monthly to market that office tower and the City has committed a certain amount of staff time to the project. Mr. Gleason said if the development agreement is signed, the outstanding loans will be fully secure and the developer will have to give the City first position collateral on the construction loan or somewhere else. Ms. Schue asked if parking fees would be affected by the use of parking replacement funds for the project. Mr. Gleason explained that the replacement fund is there to replace parking and the money to repay the loan will come from the leases on that site. Space leases will be constructed to be market-driven which is why a longer term loan (3D-year) is proposed for the parking structure. Mr. Farkas said existing parking fees will continue to go into the parking replacement fund. Because this parking structure will be privately owned, it will be taxable, unlike the City's other parking lots. Prices in those other garages will continue to be set independently, based on normal market conditions. He said the Downtown Commission is considering modification of the parking program. Mr. Gleason explained that normally a parking structure is built with parking replacement funds. In this case, the money is being loaned to the private side to build the structure which will be taxed, and those taxes will be returned as part of the fees to repay the debt. At the end of 20 years, the City will have its original $2 million in addition to any taxes on the property and the leases. Ms. Wooten again asked how long the City could wait to commit to the e developer without jeopardizing the project. Mr. Gleason said the longer the City delays, the greater is the risk that the office tower will not be developed. He said Pankow needs to know the City's capital contribution before it can finalize lease agreements and make design decisions. Until the decision is reached about whether the library will occupy the lower floors, foundation work cannot commence. Until the lease structure is in place, the developer cannot obtain a bank loan, either. Mr. Gleason also said part of the agreement would allow the City to reassess its commitment if the project is not begun by December 1, 1989. Ms. Wooten asked if the project would be undertaken regardless of whether the library is part of it. Mr. Farkas said the developer wants to build an office building in downtown Eugene and original plans were to build behind the Citizens Building which Pankow already owns. It was at the City's invitation that Pankow considered the proposed mixed-use development at the 8th and Willamette site. His opinion was that without the library as part of the development, it was likely that Pankow would still build in Eugene. If construction costs are $11.32 million for the shell and tenant improvements and the total cost of the project is $13 million if parking is included, Ms. Wooten asked how much it would cost the City to extend a three- percent loan. Mr. Wong explained that an opportunity clause exists. He said if the City had the cash on hand, it could expect to receive eight percent. He said money is not being loaned out of the Bancroft funds which are debt service funds. With seven outstanding Bancroft issues that will be paid off e MINUTES--Eugene City Council December 14t 1988 Page 7 e in the next seven years, it appears that even under the worst scenario, a line of credit would be obtained from a bank to be used to lend to Pankow for the construction financing. Because repayment is only at three percent and the City may have to borrow at eight to ten percent, there will be an interest subsidization. The City would take money out of the Bancroft funds to subsidize that interest; however, the agreement is that the Bancroft funds will 'be repaid based on certain things happening with the project. If the land is sold, the Bancroft funds are repaid immediately. Proceeds from the sale of the existing library site would be pledged to repaying the Bancroft funds. Mr. Wooten said she did not necessarily doubt that the Bancroft funds would be made whole over time, nor did she necessarily object to Mr. Wong managing what she called a "financial shell game," but she wondered how much the five to six percent difference in interest would amount to. Mr. Wong said it was approximately $1 million. Mr. Gleason said it could be as much as $1 million, but it is impossible to tell at this point because it is unknown how fast the line of credit will be borrowed down. There will be some cost to the Bancroft fund initially, but Mr. Gleason felt it is clear that the land transaction (which will be put back into the Bancroft fund) will yield more than any of the worst case scenarios in terms of repaying the Bancroft account, regardless of how long it takes to make that repayment. The Bancroft account has enough surplus so it is not being placed in any risk. Mr. Gleason said the real question for the council is whether it minds using money with a return of at least eight percent at some time in the future, without any risk, on the transaction of land. Mr. Gleason agreed with Ms. e Wooten1s assessment that there would be a IIshort-term hole" of approximately $1 million. He disagreed that the long-term replacement could take as long as 30 years or as little as ten years, and said we could have the land money immediately. Mr. Farkas said profits from refinancing could be available in five years for repayment and Mr. Gleason said property tax from the project could start repaying the fund immediately. He said all the reports and analyses that were done had used the $13 million figure, but none of them included short-term financing (the cost of borrowing the money and building the project before taking out long-term financing). He said those reports were unrealistic in not considering the interim need for financing to allow the builder to pay contractors and employees. On the open market, Mr. Gleason said that interim cost would amount to approximately $2.25 million. He added that this need for short-term financing would exist with or without this project if the library were to be built on any site. Ms. Wooten noted that councilors have an obligation to ask the most difficult questions possible in order to obtain all the information about the project for public review. Mayor Obie asked if there was any guarantee that the project would happen once the community takes a "leap of faithll and moves ahead with an agreement with the developer. Mr. Gleason pointed out that builders do not build on their own cash but deal with banks. Bank loans are not available until leases are finalized and e MINUTES--Eugene City Council December 14, 1988 Page 8 . e Pankow cannot prepare leases until the City decides whether it is part of the project. He said the City had assurances from the Pankow Company that if in a reasonable term (negotiated to be December 1, 1989), they are unable to put the financing together to start the project, the City can reassess whether to continue or withdraw its participation. At that time, the City would expect to be repaid for its real expenses, not to exceed $100,000. He said Pankow would take out an instrument of credit (a line of credit, a security deposit) of $1 million to secure that agreement as a good-faith projection. They further state that they are already in this community with several million dollars in existing projects, they have been here for several years, their good name and reputation are at stake, and the company does not usually announce projects and then not do them. Beyond that, Mr. Gleason said it was a good-faith item. Mayor Obie said there is nothing wrong with telling the community there are no guarantees. Responding to Mayor Obie1s inquiry about concessions for library parking, Mr. Farkas said the proposal is for Pankow to build and own the parking. If it is a 240-space facility, those spaces will be used for the office tenants during the day. In the evenings and on weekends, those spaces would be available to the library at no charge. A two-level parking garage would have 320 spaces, and Mr. Farkas said the decision on facility size would depend on cost and a water table problem. Mayor Obie asked about the current library, and Mr. Farkas said it was an e entirely separate issue with which the council would have to deal. Mr. Gleason added that the existing library and property were not on the table as part of the Pankow proposal. He said there was no truth to rumors Ms. Wooten had heard that Pankow would buy the existing library for $1 million, raze it, and build another commercial/professional building at that site. There is no current intention to demolish the present library structure. Mr. Gleason assured Ms. Wooten that if a major downtown bank becomes a tenant in the Pankow building, the City would not be responsible for taking the major tenant1s old building off its hands. Mr. Gleason said if the library only occupies 75,000 square feet, the remainder of the 106,000 square foot shell would be leased by the City to itself or to another tenant. Mayor Obie stated that other than staff time and limited planning investment, the City has no risk until the developer secures a permanent financing commitment and is ready to move ahead with construction. Mr. Gleason confirmed that there is no risk until the development agreement is signed, but he said it is still unclear when that agreement must be signed. The statement or resolution that the City is in or out of the development that is needed from the council by January represents no financial risk to the City; it is not a development agreement, but it will enable Pankow to proceed with architectural and engineering design, marketing, banking, and loan instruments. He said if lIit all implodes, then we walk the deal.1I The council will have to authorize the City Manager to enter into the development agreement and Mr. Gleason said that agreement would not be signed until the e MINUTES--Eugene City Council December 14, 1988 Page 9 e council had reviewed the document. He anticipated it taking take three to four months to prepare the development agreement. Ms. Bascom asked what projects the City would not be able to do if tax increment funds were used for the library project. Mr. Farkas said $3 million would come from what is currently set aside for a Willamette Street public plaza. He said $1 million in development funds are set aside to stimulate projects such as this one. An additional $1 million would come from the tax increment reserve which is not earmarked for any particular project. The only two projects that would be deferred would be the opening of Willamette Street and the public plaza. Mr. Farkas said the Pankow project would generate tax increment itself which would in turn stimulate other private development and additional tax increment. Mr. Miller asked for comments on phasing the project. Specifically, he asked if the shell could be built without tenant improvements. Mr. Farkas said the shell could be built and tax increment flow from the office tower could be used to pay for the shell. Mr. Gleason added that tenant improvements would be a separate act and council would have to bid out tenant improvements through the usual public bidding procedure. Those improvements would be owned by the City of Eugene. Mr. Miller asked about the impact of a recession and the potential loss of tenants from the building. Mr. Farkas responded that the assessor would then determine the value of the building. If the assessment goes down, there is probably enough coverage to absorb some of the tax revenue loss. Even if the e bank assumed ownership of the building, the City would still have a survivability agreement which gives the City its lease on the shell and its arrangement on the parking facility. In the financing proposal, Mr. Gleason said there had been no calculation of growth in value of the building. If that value increases, the flow will grow at an average of three to five percent per year. If that occurs, he said a reserve account could be built against the expenses of a downturn in the economy. No growth was calculated in the total increment itself, no reserves were calculated on the lien on the library building itself, and no parking revenue payments to the reserve account were calculated. Therefore, Mr. Gleason said there were four places where there should be real money that are not in the deal. Mr. Holmer asked if there were restrictions affecting the City's ability to lease the unneeded 31,000 square feet of space. Mr. Farkas said it could be leased to the private sector, a non-profit organization, or a City department. No taxes would be paid if the lessee was a non-profit. The City would control that space entirely and could convert it to its own use. Mr. Rutan asked whether the Library Financing Committee had reviewed the information that had been presented to the council. Mayor Obie explained that the committee had reviewed the information in separate pieces but had not seen the entire proposal at once. Mr. Gleason said all the affected department staffs had reviewed the proposal. e MINUTES--Eugene City Council December 14, 1988 Page 10 - -- -- ---- e Mr. Rutan asked how the council should present the information at a public hearing December 19 in a way that would be meaningful. Mayor Obie said the hearing had been adequately advertised and he hoped that Mr. Gleason and Mr. Farkas would present the proposal to members of the public in a way that would be similar to their presentations to the council. Mr. Rutan said that the average person's concerns would focus on the project's cost to the individual citizen, the risks involved, and whether the individual would end up paying for the project in some other way. He suggested answering those questions in written form in a single page. Next, Mr. Rutan recommended holding an in-depth session with the media to provide an opportunity to review the proposal in detail. He considered this one of the best ways to communicate the information to the public. Mayor Obie concurred with Mr. Rutan's suggestion and asked for a question and answer sheet to be prepared as a handout to be distributed at the public hearing. Mr. Rutan said the complexity of the project is not what should be debated at the public hearing, but community feedback on the use of our resources, the risks being undertaken, and what the project will cost should be the focus. There was consensus that the council's questions and staff's answers should be presented to the public and to the council in written form at the public e hearing. Mr. Bennett referred to the City being in first position on the construction loan. Mr. Farkas said to be adequately secure, Pankow had agreed to guarantee the 24-month term. Answering Mr. Bennett's next question, Mr. Farkas said when the tax increment flow would actually start would depend on when construction is finished, and it could be anywhere between three months and one year after the project is completed. Part of the agreement with Pankow specifies that the City will pay no rent until there is tax increment flow. First-year backup in terms of the lease payment is being negotiated now. Ms. Schue said that while all the information being discussed is essential for the public to have, she anticipated different questions being asked by the public. She reported concerns about security downtown and parking problems on Saturday afternoons in the summer when the Saturday Market is operating and there is no parking available in the Parcade. She said those details must be addressed at Monday night's meeting. Ms. Schue's second concern was that if Pankow has to be given a commitment soon, significant questions about operations and maintenance must be answered. e MINUTES--Eugene City Council December 14, 1988 Page 11 -------~ e Mayor Obie said two issues would be before the council December 19: the first would be financing and commitment to construction, and the second would be the utility tax as a means of financing operations and maintenance. Architectural, servicing, parking, and accessibility issues deserve a forum and were appropriate issues at the public information sessions December 10 and 13. Ms. Schue anticipated questions from the public asking how the council could make a decision on construction before it knows how the operations and maintenance will be funded. Mayor Obie said that was the question the council would have to decide Monday night. Ms. Wooten agreed that operation and maintenance issues need to be addressed and she felt the council needs an additional work session on the utility tax before it can make a decision. She indicated that she was leaning toward conditional support of that tax but needs to discuss it with her colleagues. Referring to the suggested question and answer sheet, Ms. Wooten said it needs to address the reasons that expansion at the present site is not being considered. She mentioned asbestos, parking, and engineering and construction costs as the reasons she had been given and said those reasons should be explained to the public. Ms. Wooten asked for clarification of an earlier statement that the City would be given first position on the construction or somewhere else. Specifically, she asked what other collateral might be. Mr. Farkas replied that first position on the construction may involve more risk than other forms of collateral such as a performance bond, a guaranteed letter of e credit, a surety bond, or other property. Ms. Wooten returned to the issue of the utility tax and the time available. She said the real key to gaining the confidence and trust of the public is the education process. Calling the project "complicated stuff," she questioned the necessity of reaching a decision on either construction or operation and maintenance funding by the end of the year and asked why the process could not be elongated. While he said he did not know at what point the project would be jeopardized by delay, Mr. Gleason said insecurity is what kills projects. He explained that Pankow1s original proposal was to consider the City's suggestion of an 8th and Willamette mixed-use development if the City's participation was decided by September 1988. Pankow accepted a delay until October and finally agreed to wait until January. Mr. Gleason again pointed out the impossibility of Pankow negotiating leases without knowing whether the library will occupy space in the building. He said it is important to inform Pankow, on the capital side, whether these deal points are things the City wants to proceed with and whether the City wants to be in the deal. As the council has discussed, Mr. Gleason said that agreement would not put the City in a position from which it could not retreat. While Ms. Bascom and Ms. Wooten felt a decision on construction must be reached by the end of January, Mayor Obie indicated that he hoped the council would reach a decision December 19. e MINUTES--Eugene City Council December 14, 1988 Page 12 e Mr. Boles asked whether the projection of tax increment money was based on any projected increased valuation of the building. Mr. Gleason said the calculation of the building's value was based on Pankow's engineering reports which did not calculate any increase. He added that separate construction financing analysis supported those calculations. Mr. Boles asked whether Pankow or the City would own the physical space of the library. Mr. Farkas said that, in the end, the City would own the physical space with no additional investment beyond the financing package being presented. Mr. Gleason likened that ownership to a home mortgage in which someone owns his or her home after the mortgage has been closed. Ms. Bascom said there would be various decision points during 1989 at which times the City would have an opportunity to discontinue its participation in the project. She said she considered the utility consumption tax the preferred method of financing operation and maintenance and she hoped to hear the community's opinion about that sometime in 1989. If the community does not support the utility consumption tax, she said there are other options to consider and she felt it was not necessary to resolve the issue at this time. Ms. Bascom suggested presenting the design ideas offered at the public information sessions on some sort of summary sheet for review by those present at the December 19 meeting. She also asked for a summary of the reasons it is not practical to expand the library at its present site. Mr. Miller asked what would happen if there is agreement on the concept, the e building, and the shell, but the decision on tenant improvements, operation and maintenance is delayed. He also asked what would happen if the community reaches a decision not to fund operation and maintenance after construction of the shell is underway. Mr. Gleason said he thought as long as the City is paying 60 cents per square foot on the shell out of the increment on the tower, the developer would proceed with the project. He indicated that the developer feels it is an advantage to have the library be part of the project and the design characteristics of the building will be affected by the presence of the library. Mr. Miller asked whether there will be value to the community and to downtown in the City's having leased a 106,OOO-square-foot building to be used for a library or some other purpose. Mr. Gleason said his opinion was that there was value, but another chain of controversy is started by the question of what the City would do with that space. Mr. Holmer asked if the Council Committee on Library Financing was recommending referral of the utility tax to a vote. Mayor Obie responded that there would be three ordinances before the council December 19: one would be a motion to approve the construction and capital financing concept, another would be to adopt a utility tax, and the last would be to refer the utility tax to a vote. Mr. Holmer referred to Ms. Bascom's earlier comment about the various options available and commented that EWEB's adoption of a six-percent increase in the e MINUTES--Eugene City Council December 14, 1988 Page 13 . e utility fee would increase City revenues that he hoped would be dedicated to the support of operating costs of the library (he estimated that half the annual operating costs could be covered in this way). Ms. Schue likened the library lease arrangement to a condominium in which the individual owns the interior and someone else owns the physical shell, but the individual has control of it. Mr. Farkas called this a fair representation but added that eventually the City would also own the shell. Ms. Wooten declared her desire to avoid a situation Monday night in which the council has to determine whether it is right to proceed without having some assurance of a source of operation funds. She revealed her deepest fear as being that a shell will be built (although she expressed doubt that a shell could be built without some basic tenant improvements during the process of construction) and that something will eventually be referred to the voters and rejected numerous times, resulting in the necessity of cutting other programs from the operating budget in order to fund the library. She strongly opposed proceeding without a sense of how the library will be operated and she considered it unfair to enter an agreement without answering questions about operation. She thought there had not been sufficient time for the council's careful consideration of a utility tax to fund the operation of the library. There was consensus to meet at a dinner work session Monday evening before the public hearing. e Mr. Sercombe asked for councilors to communicate to him any obvious questions or suggested alternative language or concerns they would like him to bring back to the public hearing. Ms. Wooten asked if there was council agreement to an elderly low-income exemption if a utility tax is adopted. Mayor Obie responded that Mr. Sercombe could prepare that type of amendment or the council could make a motion that night suggesting such an amendment be brought back, but he considered it too early to suggest there is council agreement. While she said she would ask again Monday night, Ms. Schue said she wanted staff to be prepared to answer questions about the telephone company.s reaction to a utility tax. She said her experience during the last legislative session had led her to have real concerns about what would happen at the legislature involving the telephone company. Mr. Holmer referred to an exemption of the council from the dedication of this tax to the support of the library and asked about the implication of removing that and saying it is not a contract. He said he found that absolutely unacceptable. Answering Ms. Bascom's inquiry, Mayor Obie suggested cancelling the Council Committee on Library Financing meeting scheduled for December 15 and hearing staff's presentation on operation and maintenance at the council's work session December 19. Mr. Gleason pointed out that reducing the sQuare - MINUT~j..~U~~~~ C,t~ CoYn~i' O@c@mb8r 14, 19BB Page 14 - footage of the building would have an impact on recommendations for operation and maintenance. The meeting was adjourned at 1:45 p.m. _~e~~~~t f~l.l~b~i: ~~ ;"'.; ,. ~. . _ .-$~-:"/' .' ..,.Y' .>'" Mi'~~;v~~::/~~:w~ City Manager (Recorded by Mary Feldman) mncc 121488 e e MINUTES--Eugene City Council December 14, 1988 Page 15 .