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HomeMy WebLinkAbout12/19/1988 Meeting - ----- e M I NUT E S Eugene City Council Dinner/Work Session Jacobs Room, Hult Center December 19, 1988 5:30 p.m. COUNCILORS PRESENT: Cynthia Wooten, Ruth Bascom, Robert Bennett, Debra Ehrman, Freeman Holmer, Jeff Miller, Roger Rutan, Emily Schue, Cynthia Wooten. The adjourned meeting of December 14, 1988, was called to order by His Honor, Mayor Brian B. Obie. Carol Hildebrand reported that cost increases anticipated in the Future of Our Library report have been adjusted for the 75,000 square feet of finished library space being proposed in the Pankow project. She noted that an additional custodial staff person was included in the projected operating costs. Included in operating costs were costs for building operations and general operations (for example, computer maintenance and postage). A $100,000 increase in the books and library materials budget was requested to e enable the library to provide greater service. Comparisons with west coast libraries serving similar populations indicated that the percentage of the budget being allocated to materials is below average. Responding to questions from Ms. Wooten, Ms. Hildebrand said the annual operating budget is approximately $1.9 million presently and will be approximately $2 million in FY90. She added that anticipated revenue from a one percent utility tax could provide approximately $200,000 more than required by the increased library costs. Mayor Obie recalled some discussion in the Library Finance Committee about whether to dedicate all utility tax revenue to library operations, but he said the committee had not reached a conclusion. Mayor Obie asked Ms. Hildebrand to comment on what would happen if the new library building was approved but there was no increase in the operating budget. She anticipated that in a new library of the type and size being proposed, anticipated increase in use would result in longer lines, fewer copies available on the shelves, and possibly reduced operating hours if existing staff could not be extended to meet increased demand. Ms. Wooten asked members of the Library Finance Committee to comment on their reasons for not proposing alternatives to the utility tax as sources of funding increased operating costs. Ms. Ehrman pointed out that a two percent restaurant tax would bring in approximately the same revenue as the proposed one percent utility tax. An entertainment tax (on sporting events, theaters, e MINUTES--City Council December 19, 1988 Page 1 Work Session e video rentals, and tickets) would provide insufficient revenue ($200,000) and would have high administrative costs. Mayor Obie explained that the committee sought to avoid suggesting property taxes as a revenue source. Answering Mr. Holmer's inquiry about dedicating increased revenues from EWES's rate increase, Mayor Obie said that increase had already been included in budget projections. Finance Director Warren Wong added that increases in all franchise fees had been factored into balancing the General Fund budget in the Six- Year Financial Forecast. He went on to say that the projections included three percent per year compounded for six years (normal growth related to increases in population) and a six to ten percent rate increase. Mr. Gleason estimated the difference as amounting to $100,000 to $150,000. Tony Mounts, Finance Division staff, said that a four percent overall growth rate was anticipated. That included one percent in increased consumption and three percent for inflation. Mr. Wong reported that the difference between the projections in the forecast and those of EWES was $182,000 in FY89, $171,000 in FY90, and $265,000 in FY91. He said the current year's $182,000 was being applied against the projected General Fund deficit. Mr. Miller asked whether the use of computer technology provided an opportunity for cost savings by reducing the labor intensity of certain library functions. Ms. Hildebrand replied that labor savings from automation have already been realized and how to cut supply costs was being explored. Responding to Mr. Miller's question about user fees for special staff e assistance, Ms. Hildebrand said some services are already charged (overdue fines and reserves). Records and tapes are approximately three percent of the collection and charging for their use would probably not net significant revenue. While some services could be developed and marketed, she said staff hopes to avoid check-out charges. Ms. Hildebrand emphasized that a recent national survey found no public library that charges for a user card. Mr. Holmer anticipated public testimony regarding the accessibility of the 8th and Olive site and asked if lack of accessibility may reduce the need for additional staff. Ms. Hildebrand said increased use could be expected regardless of the library's location, but she suggested that staffing could be phased. Councilors discussed the difficulty of predicting how rapidly expanded use could be expected. Mayor Obie suggested that the council may need to consider re-ordering its priorities and including the library in the General Fund. Mr. Gleason pointed out that the council always has the option to change its priorities and he reminded councilors that $250,000 had been taken from the contingency fund as a result of the failure of the County Library levy. In the absence of a new levy, that $250,000 will have to become internal to the operating account next year. Recognizing that the council already faces a $1 million shortfall in addition to an unexpected $300,000 increased labor bill, Mr. Gleason described the additional $600,000 as a challenge. e MINUTES--City Council December 19, 1988 Page 2 Work Session ----- e Ms. Schue requested information about how library patrons travel to the present site. Ms. Hildebrand reported that a March 1986 survey indicated that 90 percent arrived in cars, and 60 percent of those patrons were alone in their cars. Ms. Wooten asked why the proposed utility tax would not apply to fuel oil or fire wood. Mr. Mounts explained that taxing fuel oil consumption would provide a small amount of revenue at a high administration cost. Mr. Wong responded to Ms. Wooten's further questions by saying that utilities would be reimbursed a reasonable amount for their initial costs of setting up billing systems, but ongoing administration costs would not be reimbursed. He added that the projected telephone revenue for the first year would be one-seventh that projected for EWEB. Referring to access issues, Ms. Bascom reported a conversation with Transportation Division staff earlier in the day. She said daily automobile traffic on 8th Avenue was approximately 7,000 cars, or roughly half that on 13th Avenue. Ms. Schue asked for information about the parking situation during special events, specifically the Saturday Market. Mr. Gleason commented that as the downtown core area is developed, parking will become more of an issue. Between 240 and 320 parking spaces are planned for the new structure and Mr. Gleason felt that would be sufficient to handle evening and Saturday parking for the library. He anticipated that permit parking in the Parcade would be e moved elsewhere. Mr. Holmer asked how long it would be before an additional parking facility would be considered. Mr. Gleason replied that additional retail interest and development would occur as a result of the Pankow project and additional parking would be considered in the near future. Council members considered the format for the evening's public hearing and agreed that the public should have an opportunity to comment without the issues being debated or the council's intentions being announced. Mr. Holmer pointed out that if a utility tax were adopted and permanently dedicated to library operations, it would require a charter amendment. Mr. Sercombe noted that 35 days notice would be required to place the matter on the March ba 11 ot . Mayor Obie reported that some people would prefer a vote on a charter amendment instead of on an ordinance. Ms. Wooten observed that the council could take action on the capital portion of the project without making a decision on the utility tax. Mr. Bennett asked if there were alternatives to using tax increment funds for interior library improvements. Mr. Gleason indicated there had been attempts to do that in the CIP and within the scope of the tax itself, but the impact on the CIP would be monumental and there appeared to be few other revenue sources. e MINUTES--City Council December 19, 1988 Page 3 Work Session e Mr. Bennett objected and said the landlord could be responsible for tenant improvements if higher rents were charged and he would consider that preferable to tying up capital at the expense of other downtown projects. Mr. Gleason commented that interior improvements would be legitimate costs of the City to be publicly bid. Development Director Abe Farkas said interior costs were estimated at $3 million to $5 million. It would be possible to bond and use the interest on cash investments to payoff the debt. He added that between $3 million and $3.5 million would be committed to the library building, leaving between $1 million and $2 million in reserves. Mr. Farkas noted that at least $500,000 musts be left in reserves to protect existing bond indebtedness. Mr. Bennett said the question was whether to use the money itself or to use interest from it to bond. Ms. Ehrman reported that the Council Committee on Library Financing had discussed that question and preferred to offer the community a total package for the project. Mr. Rutan said the proposal under consideration was complex and it would be appropriate for council to schedule a work session to consider sources and commitments of funds, risk factors at different points, and the extent to which the City would be subsidizing a private developer's project. He indicated that he would be uncomfortable voting on whether to proceed with the project before his questions were answered. Mr. Miller requested additional information on the impact the project would have on tax increment flow and on what would happen if that stream did not e increase as projected. Mr. Gleason supported Mr. Rutan's suggestion for a work session. He advised the council that the proposal should be regarded as conservative because it carried no expectations of growth in the value of the structure, the land, or the shell although such growth was likely. There was no increased value assumption in the increment district itself, nor was there any assumption regarding the existing library building. Mr. Gleason stated that the City's investment in the project would benefit the City's part of the project and he considered the land transaction an excellent business decision. Mr. Bennett agreed with Mr. Gleason's assessment and complimented Pankow's participation in the development of the site. Mr. Holmer expressed his satisfaction with the general framework of the project but reported that citizens did not understand why the tax increment district boundary could not be expanded to include the present library site. Ms. Wooten said her explanation to citizens was that without the new building to generate new tax increment revenue, the library could not be renovated. Mr. Gleason added that the value of the project's proximity to an existing parking structure combined with the new below-grade parking facility to be leased by Pankow, savings in architectural and engineering fees, and e MINUTES--City Council December 19, 1988 Page 4 Work Session e construction costs should not be ignored. He observed that the existing library has already been expanded to the capacity planned when the building was first constructed. Ms. Ehrman commented that enlarging the present library was the third choice of the Future of Our Library Committee and would add costs for additional parking. Answering Mr. Miller's questions, Mr. Gleason explained that the $20 million value of the building was estimated by calculating construction costs of materials and then projecting square footage costs. Ms. Schue wondered if the assessed valuation of the Hilton went down during the hotel's period of financial difficulty. Mr. Farkas answered that it had. He said that part of the agreement with Pankow would specify that appeal was not be be made to the Board of Equalization. Mr. Gleason added that the Hilton had been a joint venture structured around a tax deal and when the tax law changed, the stability of the project was disturbed. The council accepted a risk and as a result there was a major hotel in downtown Eugene. Referring to Mayor Obie's question about reserve money, Mr. Farkas said $500,000 was not usable because it had to be retained as bond assurance and it is prudent to maintain larger reserves. He said the City's ability to respond to other needs downtown was based on the amount of tax increment revenue to be generated. Mr. Farkas answered Mayor Obie's next inquiry by saying projections on the need for office space downtown were based on e private sector information. He said a consultant could provide additional information about the project's potential creation of additional vacancies and whether there could be an accompanying reduction in the assessed value of this and other projects in the area. Mr. Gleason added that leases must be obtained before an assessment could be made. He noted that some tenants are being lost because office space is not available with floor plates exceeding 15,000 square feet. Responding to Mr. Holmer's question, Mr. Farkas said the construction cycle would determine the cash flow required. Mr. Gleason told the council that the first step toward realization of the project would be for the Urban Renewal Agency to instruct management to proceed with negotiations. It would take three to six months to close the deal but no money would be committed until Pankow agreed. A development agreement might be signed in September, but the City still would not assume any risk until construction began. A second resolution before the council would instruct the City Manager to proceed with an agreement with the State of Oregon to relocate utilities. Mr. Gleason hoped that could be taken care of as soon as possible to allow design commitments to be made between February and April. Mr. Bennett observed that if first class downtown office space is available at $1.05 to $1.20 per square foot presently and Pankow offers space at $1.50 e MINUTES--City Council December 19, 1988 Page 5 Work Session - - - e per square foot. the question of whether there is an unmet need would be a concern. Ms. Bascom mentioned extending the tax increment district south to the present library site and questioned whether that area would qualify as an urban renewal area. Mr. Miller asked for clarification of the first resolution referred to by Mr. Gleason. Mr. Gleason said he expected that the deal points proposed by the City. which included the full scope of the agreement. was the proposal before the council. The council could remove shell improvements from that resolution if it chose. The City could back out of the project up until July. Mr. Rutan supported reaching a decision on the first resolution authorizing the City Manager to proceed with negotiations later in the evening. He anticipated the council would need additional work sessions to discuss other aspects of the project. Mr. Holmer referred to Charter provisions regarding the City Manager's role as the City's contract agent and asked for assurance that any contract would come back to the council for approval. Mr. Gleason stated that he expected to bring any development agreement back to the council as the Urban Renewal Agency for authorization. He added that the points on which he would execute an agreement were those in the proposal before the council. e Mayor Obie advised caution in approving an agreement authorizing construction without first knowing how library operations and maintenance will be funded. Councilors reviewed the format of the public hearing and noted that written information would be available to members of the public. The work session adjourned to the council's regular meeting at 7:20 p.m. Respectfully submitted, << , . " ~. ,. ~ ~-, ,,;"' .. ..' ~ - , , (Mi chea i Gi ~s'on': " 'J_'.~.,. -.--~.~ City Manager (recorded by Mary Feldman) mncc 121988-530 - MINUTES--City Council December 19. 1988 Page 6 Work Session