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HomeMy WebLinkAbout04/12/1989 Meeting e e e M I NUT E S Eugene City Council McNutt Room--City Hall April 12, 1989 11:30 a,m. COUNCILORS PRESENT: Ruth Bascom, Rob Bennett, Shawn Boles, Debra Ehrman, Bobby Green, Freeman Holmer, Emily Schue. COUNCILORS ABSENT: Roger Rutan, The adjourned meeting of April 10, 1989, of the Eugene City Council was called to order by Mayor Jeff Miller, I, ITEMS FROM THE MAYOR, CITY COUNCIL, AND CITY MANAGER A, Downtown Vitality Mr, Bennett said Lerner's and Hoffman's are both considering moving to the Gateway Mall, He said this emphasizes the continuing need for the council to address downtown issues in a serious way, B. Sacred Heart General Hospital Parking Structure Ms. Ehrman said Sacred Heart General Hospital received approval to remove a number of trees surrounding its new parking structure and to replace them with only one type of tree. She said the City's tree plan encourages diversity and felt this decision works against that plan. Ms. Ehrman asked for more information about this decision. C, Proposed Parking Structure on University of Oregon Campus Ms. Ehrman said the University is planning to construct a parking structure, The primary site under consideration is located off Alder Street between 16th and 17th avenues. She expressed concern about how the structure would affect traffic on Alder Street, especially bicycle traffic, Ms, Ehrman would like the University to consider an entrance to the parking structure off of 18th Avenue. She also requested more information about the City's input into this decision. Mr, Boles did not feel an entrance off of 18th Avenue would be feasible. He suggested that the council ask the University to delay plans for construction until they have had ample opportunity to assess the impact that free bus passes will have on parking demand. MINUTES--Eugene City Council April 12, 1989 Page 1 e D. Doming of Autzen Stadium Ms. Ehrman said she attended a meeting called by State Representative David Dix regarding the doming of Autzen Stadium, The University was hoping to get funding from the City to help finance a marketing study, Ms, Ehrman said she indicated that the City would probably want to know more about the project before making a contribution. She said the University will pursue private funding for the marketing study and possibly approach the City for a contribution at a later point. E, Expansion of Human Rights Task Force Mayor Miller asked councilors to consider a proposal to expand the Human Rights Task Force to include members of the Native American and hearing- impaired community, No councilor voiced opposition to his request, II. WORK SESSION: URBAN RENEWAL DISTRICT--SITE DEVELOPMENT A, Pankow Development Abe Farkas, Director of Planning, Development and Building, reviewed the Memorandum of Understanding between the City and Pankow Development Company for a development at 8th Avenue and Willamette Street, The project will be a mixed-use development including office, retail, and parking uses, e Mr. Farkas said the first section of the memorandum describes the project. It is a 175,000-square-foot office and retail complex, The building design has been somewhat modified since the library project has been dropped. These changes include replacement of the first floor of the library with retail or service uses, substitution of parking for the second floor of the library, and the possible elimination of one floor of the office tower. Mr. Farkas said staff anticipates a minimum of 250 parking spaces to be developed for the project; it is more likely that approximately 400 spaces will be developed in three levels. The parking will be financed with a loan of approximately $2.5 million from the City's parking reserve fund. If 400 spaces are developed, Pankow will receive an additional loan of $1.5 million in tax increment funds. Mr, Farkas stressed that because this site is in a parking-exempt zone, Pankow would not have to provide parking for this site, He said the company is willing to undertake the responsibility and debt for operation and maintenance of the parking structure if the loans are provided. Mr, Farkas said the Memorandum of Understanding specifies that the parking would be used by employees during the week, but will be available for public use in the evenings and on weekends. Final terms associated with public use of the parking structure have yet to be negotiated, Mr. Farkas said the City will secure: ten percent of the annual cash flow from the project after five years; five percent of the refinance gain e MINUTES--Eugene City Council April 12, 1989 Page 2 e whenever Pankow refinances; the market value of the land upon sale; and tax increment resources after the constructed building has been assessed. Mr. Farkas said staff believes the overall value of the project will be between $4 and $4.5 million at the present value of return, Answering a question form Mr, Holmer, Mr, Farkas said the interest rate on the $2,5 million loan from the Parking Reserve Fund would be three percent, The interest rate on the $1.5 million loan from the Tax Increment Fund is still in negotiation, although it will be higher than three percent. Mr, Gleason explained that the low interest rate on this loan is not an advantage for Pankow, He said the standard across the country is to have an area of the city which is exempt from parking requirements; this induces development at a higher density. In these parking-exempt zones, parking is usually developed using public funds, Mr. Gleason said in this case, the City is asking the Pankow to provide the public parking using loans and to pay the City back. Whereas typically the City would build, pay for, and operate the parking structure, the City is loaning Pankow money to build the structures, earning interest on the loan, and Pankow will pay the taxes, operation, and maintenance costs for the structure, Mr. Farkas added that if the City were to build and operate a new parking garage, it would cost the City between $115 and $150 per space a month to cover all expenses, Thus, a 400-space parking structure would cost the City between $552,000 and $750,000 per year to operate, This is an expense the City will not incur if Pankow develops its own parking and, indeed, the City will receive a return on its investment, Ms. Bascom noted that Pankow is willing to develop the parking because it can secure tenants more easily if parking is provided on-site. e Referring to Section 3.4 of the Memorandum of Understanding, which states that Pankow has an option of purchasing the land at any time for its then market value and concludes, "upon a sale of the land to Pankow, the (Eugene Renewal) Agency's entitlement to a percentage of cash flow and refinancing gains will terminate," Mr. Boles asked what would happen if Pankow buys the land at the end of five years. He was concerned that Pankow would be tempted to do this and that the City would not receive the refinancing gains, Mr. Farkas said although the City does stand to gain more over a longer period, it cannot lose under this scenario; the market value of the land should go up considerably once the site has been improved, and the Eugene Renewal Agency (ERA) will be receiving the tax increment flow, Mr. Bennett asked if Pankow feels it will need 400 parking spaces. Mr. Farkas said Pankow would own the structure and if the company did not need all the parking spaces for its tenants, it could lease the extra spaces. Mr. Bennett said he continues to be concerned that the ERA would be using all its tax increment capital in conjunction with this project. Based on his work with the Downtown Development District Review Group (DDDRG), Mr. Holmer felt all 400 spaces would be needed, Answering a question from Mr. Boles, Mr, Farkas said the $2.5 million loan to Pankow would exhaust the Parking Reserve Fund at this time. He stressed that e MINUTES--Eugene City Council April 12, 1989 Page 3 ~'. e the intent of that program is to provide new parking. Mr, Gleason noted that the City's policy over the last few years has been to move away from providing free parking. In order to encourage a high development density in the absence of a free parking program, the City has created the parking reserve program as a tool for financing private investment in the parking program, and then getting the program to pay for itself through user fees. Ms. Bascom moved, seconded by Ms, Schue, that the City Council and Eugene Renewal Agency approve the Memorandum of Understanding with Pankow Development Company for development of the office building at 8th Avenue and Willamette and Olive streets. The motion passed unanimously, 7:0, B. St. Laurent Development Mr. Farkas said the St, Laurent development will consist of 1/4 block owned by the ERA, located at 11th Avenue and Wi 1 lamette Street. Mr, Farkas said staff has been negotiating with the St. Laurent Development Company for the past seven months on a Memorandum of Understanding, which staff will present to the council on April 19, 1989, e Mr. Farkas said the Memorandum of Understanding for this project will describe the project as a mixed-use development containing one floor of retail, two floors of office, and two floors of housing. The project will also require the construction of additional parking, Staff has been considering a $1 million loan to provide below-grade parking for the site. He noted that the integration of housing in the downtown environment has been a long-term goal of the City. Mr. Boles asked if it would be possible for the ERA to offer relief in return for the provision of low-income housing, Mr. Farkas said there is a tax-exempt housing district surrounding and in the renewal district. This project would take advantage of that exemption for the two floors of housing. After three years, ten percent of the normal taxes paid for that housing would go into a low-income housing fund. Thus, the tax abatement does provide a stimulus for low-income housing, Mr, Farkas said in a renewal district, it is possible to provide tax abatement, in which case, no tax increment is captured. The other option is to capture tax increment, which is then invested in public projects, III, WORK SESSION: URBAN RENEWAL UPDATE Bob Hibschman, Planning, Development, and Building staff, reviewed the time line for update of the Urban Renewal Plan. Staff is proposing that the council hold a public hearing on the plan update and report in July and make a decision regarding the urban renewal district at that point. If the council decided to pursue expansion or creation of a new district, a separate process involving the Planning Commission and the Downtown Commission would be initiated. This process would take no less than five months. e MINUTES--Eugene City Council April 12, 1989 Page 4 ~ e Mr. Hibschman reviewed the options council has with regard to update of the renewal plan. These include: create a new renewal district to include all the property north of 6th Avenue and expand the renewal district to only include the property south of 6th Avenue; create a new renewal district; expand the district, staying within the 20 percent limit; create an assessment district to address parking and other needs in the area; not expand at this time. Mayor Miller asked whether the City could achieve the type of development it desires in the downtown core without the urban renewal district. Mr, Gleason shared examples from cities which do and do not have urban renewal districts, He said cities without such a district still get private development, but they do not get the type of development which makes a city "user friendly" (e,g" park blocks, parking programs, light rail systems), The only way to induce this extra public development in the absence of a renewal district is to rely on property taxes. Mr. Farkas added that cities without renewal districts are often characterized by urban sprawl as well. Mr. Hibschman said the City presently has approximately $4 million in renewal resources, Of this total, $1.5 million will probably be committed to the development at 8th Avenue and Willamette Street, and $1 million will be committed to the development at 11th Avenue and Willamette Street. Both development sites will require site improvements, which combined are expected to total approximately $,7 million. Mr. Hibschman noted that changes to Olive Street have not been included in the estimate for site expenditures. Finally, $.8 million may be committed to the rehabilitation of existing buildings in the downtown core and/or used as leverage for development on the remaining sites owned by the ERA, e Mr. Hibschman said once the projects at 8th Avenue and Willamette Street and 11th Avenue and Willamette Street are operating (in two to three years), the City will be in the $7 million to $8 million bonding capacity range. At that time, the City will be in a much stronger position to undertake some public projects, Mr. Farkas said the City is working with the County to try to secure County road funds for the redesign of Olive Street, He said in order to secure the monies, the City would have to demonstrate that the street improvements would help create jobs; this criterion is met by the Pankow development which is expected to generate between 150 to 200 new jobs over time. In addition, the City must demonstrate that it does not have other available resources to use for the redesign. Mr. Bennett emphasized that a number of businesses on the mall that front on Willamette Street are moving and buildings are empty, He stressed that when the City is deciding how to allocate its remaining resources, these conditions should be considered along with all the other issues. Mr. Bennett added that the proposed Pankow and St, Laurent developments will not help revitalize the core area of the mall surrounding the fountain. He felt reopening Willamette Street would help this area and that the community may be willing to reconsider access when the situation on the mall gets worse. e MINUTES--Eugene City Council April 12, 1989 Page 5 ~ ~ Mr, Holmer agreed with Mr. Bennett that reopening Willamette Street is essential to the vitality of the downtown. He felt that the updated renewal plan should provide for council action to reopen Willamette Street using urban renewal revenue or, at least, for referral of the matter to the voters. Mr, Boles said he shares Mr, Bennett's aesthetic and economic interest in repairing the downtown mall. He said this will probably involve sharing space between pedestrians and other forms of transportation and that he would support referring the matter to the voters. Mr, Bennett said he would support expansion of the urban renewal district. He said the existing renewal district is not large enough to generate the money to pursue needed improvements. Mr. Bennett added that the areas to the north and east of the current renewal district boundaries are ripe for development. He felt by including these areas in the renewal district, the downtown as a whole will be able to take advantage of this development, Mr, Boles expressed concern that an expansion of the district to include the northeast quadrant will absorb the existing resources by providing some support for parking in return for new development, He also said he remains unconvinced that expansion of the district would not damage the downtown core by removing the focus from the very real problems being experienced there, e Mr, Hibschman reviewed a map of the proposed expansion area showing which properties might be included in an expansion of the renewal district and which could be deleted to stay within the 20-percent limitation. He said the recommended deletions were made based on whether the property has been developed and whether the owner indicated a desire not to be included. Properties which are currently vacant, or for which the property owner has development plans, were included in the proposed expansion. Mr, Hibschman stressed that while the proposal does stay within the 20-percent limitation, it is not ideal, He said leaving holes in the renewal district creates programmatic problems if there is a desire for land assembly in the future. Also, future development on these sites will not benefit the district, but these developments will benefit from improvements undertaken by the district, Mr. Gleason said staff is recommending expansion of the district, although all of the options have positive and negative facets. He cautioned the council that once the district has reached its 20-percent limit, it cannot be expanded further. Mr. Boles encouraged the council to remember that there are more options than expansion and/or creation of a new renewal district. He felt the council should explore the use of an assessment district to address parking and other needs in the quadrant to the northeast of the current district, Mr, Boles added that he does not consider the area to be blighted, Ms. Ehrman said the council asked staff to come up with this proposal during its last discussion and that she has not changed her mind. She said she e MINUTES--Eugene City Council April 12, 1989 Page 6 ~ e e e ~ recognizes that some opportunities to capture tax increment may be lost in the future if properties are left out. Ms, Ehrman said Eugene is growing to the northeast and felt the renewal district should take advantage of this, Mr, Boles requested financial forecasts associated with each of the expansion options for the council's next discussion of this topic. Mayor Miller felt this forecast should also include the public benefits from the increment in the area, At 1:35 p,m" the meeting was adjourned to April 19, 1989. (Recorded by Tanya Northman) MNCC 041289 MINUTES--Eugene City Council April 12, 1989 Page 7