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HomeMy WebLinkAbout06/13/1983 Meeting M I NUT E S e City Council Dinner/Work Session Treehouse Restaurant June 13, 1983 5 p.m. PRESENT: Mayor Gus Keller, Emily Schue, Mark Lindberg, John Ball, Betty Smith, Dick Hansen, Freeman Holmer, Brian Obie; Micheal Gleason, City Manager; David Whitlow, Assistant City Manager; Carol James; Elaine Stewart, John Porter, Barbara Bellamy, Greg Byrne, Pat Lynch, staff; Mark Matassa, Eugene Register-Guard. The meeting of the City Council of the City of Eugene, Oregon, was called to order by His Honor Mayor Gus Keller. Ms. Stewart introduced the item of discussion for the meeting, the Downtown Development Program Funding, and referred to a letter from Louis Walker of Citizens Associates. Ms. Stewart stated that the three issues involved in the situation are: 1) the tax equity of the Downtown assessment, 2) the admini- stration of the tax, and 3) the Downtown Development District's assessment as a possible deterrent to development. She stated that this meetings is a briefing on the technical information of the two tax programs, the ad valorem tax of the ODD and the 10th and Oak Overpark District assessment. She stated that this e situation has been studied over the past six months. She then introduced Carol James to make the presentation. Ms. James presented a brief overview of the 10th and Oak Overpark District since its establishment in 1966. Displaying a map of the Overpark boundaries, Ms. James expained that the properties within the boundaries were assessed based on the square footage of the land. The assessment was weighted such that the properties immediately adjacent to the Overpark were assessed at amounts approximately four times that of the properties on the edge of the district. She then explained that the Downtown Development District was established in 1972 to support free parking and the development of the downtown area. She added that the two assessment programs are governed by two separate Eugene codes and that there is not an equitable relationship between the two programs. She added that the ad valorem tax of the DDD wi 11 have some equi ty wi th the Overpark assessment on a long-term basis. Ms. James provided the following formulas in an attempt to demonstrate how the tax rates and assessed values can be compared: Assessed Value of Property "X" = P ro~erty "X II tax Assessed Value of All Property Total ax to be Allocated Tax (All) = Tax Rate AV (All) e MINUTES--Eugene City Council June 13, 1983 Page 1 Ms. James provided a description of the four classes of properties under the ad valorem tax: e Class "A"--Property having no ODD tax liability for the year. The av ail ab 1 e Overpark assessment exceeds the original ODD tax allocation. Class "B"--Property having a reduced ODD tax liability for the year. The available Overpark assessment does not exceed the original ODD tax allocation. Cl ass "C"_-Property devoted to parki ng faci 1 i ties open to the general public and under the control of the ODD. Cl ass "D"--Property that is neither A, B nor C. Ms. James expl ained that those "A" properties which pay more assessment to the Overpark District than their allocation to the ODD assessment receive a credit. In order for the ODD to have enough revenue to operate, this credit must be covered through additional assessments to the "B" and "0" properties. This is accomplished with a second allocation equaling the amount of the credit for the II A" properti es. Ms. James stated that the focus of the programs changed when free parking was established. Ms. Stewart added that the Finance Director has a current contract with the Bond Council to examine the 10th and Oak Assessment and the funding of parking in the downtown area is being studied. Mr. Hansen asked how the II A" properti es get credi t through the assessment program . Ms. Stewart explained that the Overpark assessment is stable. She e stated that the ODD assessment fluctuates based on the value of property. In a situation where the property value escalates and the ODD assessment exceeds the Overpark assessment, she explained that the property owner must pay the Overpark assessment and the difference between the two assessments. The Overpark assess- ment property owners receive a statement twice yearly as to the principal and interest owed on their property. The property owners owing ODD ad valorem taxes are notified in November of the tax due. Mr. Gleason briefly commented on the ratio of the property value and assessment as it relates to the credit received. Mr. Lindberg stated that the credit appears to relate to the equity. Ms. James explained that there is a contingent liability in the Overpark Fund to pay back the ODD Fund. She stated that the Bond Council will examine how the rebate process works, but added that there is little agreement on the issue. Mr. Gleason, referring to a previous statement on equity, commented that the value of a parking structure and and its proximity to a business property is best seen when the property is liquidated. He added that rebating taxes carries with it the question of property value and ownership. Mr. Lindberg stated that a property owner can compare the assessment of separate properties based on the available parking in the area. Mr. Gl eason stated that it is incorrect to assume this assessment to be a tax in the classic sense; he explained that the value of the land is incremented by the mortgage on the street improvements and that there is a value received from the parking as well as a tax paid. In an attempt to clarify the process by which the downtown e MINUTES--Eugene City Council June 13, 1983 Page 2 properties are assessed by the two programs, Ms. James went through an example of how the ad valorem tax is levied. She explained that the properties are . assessed based on the amount of tax to be allocated and the assessed values of the properties. She stated that if the amount to be allocated is not obtained due to some of the II A" properti es recei vi ng credit, then a second all ocati on is performed, and the "B" and "0" properti es receive any additional assessment which in total is equal to the amount credited to the "A" properties. She added that a third allocation is then made upon the "0" properties to allocate the credit given to the "B" properties. Mr. Lindberg commented that it appears the unproductive properties pay more. Ms. James stated that, in the short run, the "0" properti es are assessed at a hi gher rate per $1,000 of assessed val ue, but that it may not be reasonable to compare the assessments in the short run, as the ODD was operational in nature and the Overpark was capital in nature. Ms. James presented another example to demonstrate the present situation of Citizens Associates. She stated that if the assessed value of one property increases and the allocation becomes greater than the Overpark credit, then the property owner will pay the Overpark assessment and the ODD tax. She stated that this property, as "B" property, will still have a rate below that of the "0" properties on a yearly basis. Mr. Hansen referred to the 1 etter from Citizens Associates, questioning the ad valorem tax assessed upon their building. Ms. James said that the recent increased valuation of the property bumped the property from class "A" to "B," and therefore the owners will have to pay the assessment pl us the respread of the II A" property credi ts. Ms. Stewart expl ained that the assessment for Citizens Associates increased 20 percent due to the finished tenant space while the downtown assessments increased two percent. Next year the assessment for Citizens Associates and for most of the downtown e will decrease ten percent. Ms. James explained that the ODD ad valorem tax is based on the assessed value of the property and that there is no problem if the assessed values of all the properties increase together. She restated the comment made by Ms. Stewart that the Assessor's Office has forecasted a general decline in property values over the next year. In response to a question by Mayor Keller, Ms. Stewart and Mr. Gleason stated that Citizens Associates had the opportunity to appeal the new assessment of its property but perhaps did not because the assessment had not been rai sed for two to three years. Mr. Gl eason added that the staff is not trained to make assessments or to second guess the tax assessors. In response to a question, Ms. Stewart stated that the ODD assessment is determined by the Downtown Commission, which then forwards the allocation to the Budget Committee for review. Mr. Gleason added that the allocation is placed on the ballot by the City Council after the tax rate has been set. Ms. Schue stated that the general public usually votes for the parking allocation because it does not cost them anything. Ms. Stewart stated that there is presently $2,400,000 in the 10th and Oak Bancroft account, in part a result of some property owners prepaying their assessments. She added that the City has invested the money at 15 percent, with the interest being reinvested into the fund. Ms. James stated that the owners prepaying their assessments are only allowed credit in the ODD calculations on e MINUTES--Eugene City Council June 13, 1983 P ag e 3 the principal paid; she said the properties paying regularly are allowed credit e for both the principal and interest paid. Mr. Whitlow stated that the questions put forth by the Downtown Commission on the fund balance would probably be answered in a report by the Bond Council to be distributed in July or early August. In response to a question, Ms. Stewart stated that the balance of $900,000 due on the Overpark bonds cannot be prepaid until next Spring. Ms. Stewart stated that the balance is a complicated legal issue because the rebate was defined when the bonds were sold. She added that it had been assumed at that time that the Overpark was to be a paid facility and the operation would include revenue to pay back the assessments. She stated that the staff does not have the expertise to deal with the issue, but the Bond Council is presently studyi ng the issue. She stated that r'ecommendat;ans wi 11 be presented to the Downtown Commission and will be sent to the City Council around September or October. Mr. Hansen asked what will happen if the Overpark is converted to paid parking. Mr. Porter responded that the properties will go back to the original Bancroft call s pl us the factor of the time between 1970 and when the free parking system would be taken out. Ms. James stated that the code under the DDD assessment states that for the amount of the credit allowed to the Overpark payees each year, a contingent liability is being established within the Over- park Fund. This amount, which is contingently liable now, is to be returned to the DDD fund and allocated to the IIDII properties if the council declares any rebates. Ms. Stewart stated that the Downtown Commission is waiting for a report on the Overpark assessment, rebate and the prepayment of that bond. She sai d that the commission is currently looking at the Access, Circulation, and Parking element e of the Downtown Plan as well as several related issues: 1) the operation of the parking program and whether the assessments impede the downtown development; 2) the possible return to the paid parking system; and 3) the position of the 'downtown in attracting new tenants. Ms. Stewart stated that the__~c9r.!miss-ion is investigating the possibility of hiring a Downtown Manager who would identify specific vacant properties and work with those property owners to bring tenants into the downtown. Ms. Stewart said that the commission is investigating funding the manager position through the DDD assessment, the General Fund, expanding the district, and by properties outside the district that could be served by the manager. She stated that the DDD tax is presently assuming the entire responsibility. Ms. Stewart said that the commission currently contracts with the EDA for a mall manager, but that the position does not include property management or addressing vacancies in the downtown area. Mr. Obie stated that the EDA has the old boundaries and Mr. Gleason added that the commission has broader boundaries than the EDA. Mr. Ball asked if any agency has spoken of developing a delegation to motivate the property owners in the downtown. Mr. Holmer stated that the Chamber has not taken the lead in this issue. Mr. Gleason commented that this responsibility must be an ongoing program to develop and maintain a good tenant mix. He stated that the downtown manager position must be a consultant and an advocate for developing interest among the brokers and organizing the concern for the down- town properties. Mr. Ball questioned whether the downtown manager could organize a program to develop another area in which the plasma centers could operate. e MINUTES--Eugene City Council June 13, 1983 Page 4 Mr. Gleason stated that the property is presently under construction and that . some person could conceivably work with property owners to arrange a deal for replacement of the plasma centers. Ms. Smith commented that this issue should be pursued if the options exist. Mr. Lindberg stated that the Vagrancy Task Force has discussed the issue and that the property owners have become interested in the situation due to its visibility. He said that the property owner wishes to improve the property and is presently working to modify the appearance and structure of the building since he does have a fifteen-year lease. Ms. Smith said that the situation should be investigated even if nothing can be done. Mr. Lindberg stated that the managers of the plasma centers are currently circulating petitions stating that the centers provide a critical service for the poor people and that their locations are critical. He said that the managers are mobilizing their resources to resist the City's actions. Mr. Homer said that the Chamber intervened in the Sears problem and that something similar should be done. Mr. Gleason said that the issue should be left with the Downtown Commission. He said that the ability to intervene is presently limited and that the commission feels that similar circumstances might be avoided in the future. Mr. abie stated that the problem might be solved through zoning. Mr. Lindberg stated that the Vagrancy Task Force had reached the same conclusion and added that the Planning Commission will soon be updating the commercial code. He said that the City Council could possibly accelerate the process. Mr. abie stated that the problem should be given to the downtown manager with the time to work out a solution. He added that it might be feasible to change the di recti on of the downtown before provi di n9 more fundi ng through the General Fund. Ms. Stewart stated that the commission agrees with Mr. abie's statement and they are currently looking at their contract relationship with the EDA to e focus attention on the product to be marketed and to increase its marketability. tvls. Smith questioned the role of the BAT in this situation. Mr. Porter said that the BAT is concerned with city-wide issues, but it is recommending some changes for the downtown. He said the Downtown Commission is not satisfied with the status quo and will be making changes such as the pedestrian and circulation patterns in the downtown area. He said that the Downtown Commission is planning to bring some changes before the public and the City Council before Christmas. He said that the commission feels that the present retail area is too large to be sustained. Mr. Hansen said he was concerned with the amount of communication between the commission and the property owners. Mr. Porter stated that the City Council structured the commission to have five members who are owners or business managers. He stated that two of the commission members are also EDA members, so cross-over does exist. Mr. Gleason stated that the commission held a workshop with the property owners and retailers. Ms. Stewart added that downtown property owners were invited to the two workshops, but the commission has not spoken directly to them. Mr. Porter said that people will begin to communicate when changes to the mall are proposed. Mr. Porter said that there are some real tors involved in the commission, but there are others who feel that the City should not become involved in the private sector. He said the commission is hoping that the owners will do the real job once they realize that they can make more money if the property is correctly utilized. Mr. Gleason stated that the property owners wont't speak up until the proposal for changes are made. e MINUTES--Eugene City Council June 13, 1983 Page 5 Mr. Hansen urged that the commission listen to the property owners and what problems they feel are important. Mr. Gleason stated that every city has a . downtown with unique properties and problems. Mr. Hansen agreed that problems similar to those of Eugene can happen in any area where detrimental businesses can operate within the code. In response to a question, Mr. Porter stated that the commission has several options in formulation for the downtown area, to include concentrating the retail area, opening up the streets, expansion of LCC, introducing housing and more office space into the area, a gallery, relocating the library, and possible addition of hotels near the Hult Center. He stated that the commission is looking at long-term strategies to revamp the mall to provide more intimacy and security. Mr. Obie suggested that part of the area be designated as a park. Mr. Porter responded that the staff will investigate all options because there is too much commercial space in the mall area for the market in the foreseeable future. Ms. Schue questioned whether the problem of generating parking for downtown housing has been considered. Mr. Porter responded that there will be a recommendation on parking for residential uses and how it is to be financed. He stated that there does not appear to be a short-range need for housing; he said this need would grow as the community gets bigger. at 7:10 p.m. e PL:TS:ce/CM23a1 e MINUTES--Eugene City Council June 13, 1983 Page 6