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HomeMy WebLinkAboutItem B: West Broadway Purchase Options EURA UGENE RBAN ENEWAL GENCY AIS GENDA TEM UMMARY Work Session: West Broadway Purchase Options Meeting Date: November 27, 2006 Agenda Item Number: B Department: Planning and Development Staff Contact: Mike Sullivan www.eugene-or.gov Contact Telephone Number: 682-5448 ISSUE STATEMENT TheUrban Renewal Agency (URA) has secured purchase options on several downtown properties along West Broadway between Willamette Street and Charnelton Street. These options provide the opportunity to pursue a comprehensive redevelopment strategy for West Broadway. The URA is asked to consider issuing a Request for Qualifications (RFQ) for selection of a qualified developer(s) as the next step in implementing this redevelopment strategy. BACKGROUND On January 9, 2006, the City Council discussed the Connor and Woolley/Opus development proposal, including tools that the City Manager and staff might use to facilitate the acquisition of property that may be needed for any comprehensive redevelopment of the West Broadway area. The council passed a motion 7:1 to “direct the City Manager to work with Connor and Woolley on developing a more detailed proposal related to West Broadway development to be brought back to the council. This motion in no way endorses the concept of the proposal.” The City Manager understood from the discussion and action that everything short of condemnation should be pursued in order to assist in the redevelopment of the West Broadway area. At the end of April 2006, Connor and Woolley/Opus announced that the West Broadway proposal was no longer viable, primarily because they were unable to acquire the property needed for the development envisioned. Following the announcement, staff began exploring ways the City could assist in assembling land for the potential redevelopment, including the possibility of acquiring purchase options on the properties in this two-block area of downtown, with the intention of bringing the purchase options, once acquired, to the URA for direction. The URA entered into a contractual agreement with real estate professional John Brown of Evans, Elder & Brown to begin pursuing purchase options on the properties. The two-block area on both sides of Broadway includes 12 different property owners. All of the property owners, including Connor and Woolley, have received offers from the URA. Most of these offers have gone through a series of negotiations and counter offers. The URA has acquired options from six of the property owners located in this two-block redevelopment footprint along West Broadway (including Connor and Woolley for three of the properties they own along West Broadway). Negotiations with three additional property owners should be finalized in the near future. The URA has secured purchase options on properties that include a bulk of the properties along three full block faces on West Broadway, including the north and south sides of the block between Willamette Street and Olive Street, and the south side of the block between Olive Street and Charnelton Street. L:\CMO\2006 Council Agendas\M061127\S061127B.doc The option terms and purchase prices associated with each of the purchase options were negotiated independently based on each property owner’s individual circumstances. All of the agreements allow the URA to assign the purchase options to another party. Generally, a majority of the purchase options include an initial six-month option period with the ability to extend for one additional six-month period. To date, the URA has paid option money totaling $34,000 for the right to purchase property with a combined total purchase price of $13,655,000. The URA would be required to pay additional option money totaling $122,000 in order to secure the purchase options for the second six-month period. The combined total purchase price would increase to $13,825,000 after the initial six-month option period. A detailed list of the properties and option terms is included in Attachment A. All of the properties that have received purchase option offers from the URA are included in the aerial map (Attachment B). The URA’s property assembly effort was initiated by the original proposal from Connor and Woolley/Opus. The current focus is on a comprehensive redevelopment strategy that has the potential to transform West Broadway into the “Great Street” envisioned in the Downtown Plan and Vision for Greater Downtown Eugene. The Downtown Plan envisions Broadway with ground floor retail, restaurants, and sidewalk activities such as outdoor cafés. Currently, the two blocks of West Broadway are characterized by high-vacancy, low-density, and low lease rates. A majority of the properties are one- and two-story structures, many of which are underutilized and not well suited for retail use because of the narrow and deep configurations. Several issues need to be considered in assessing the future redevelopment of West Broadway, including design, mix of uses, density, market conditions, and timing. The appropriate scale, orientation and The City has been working with Thomas Hacker design of structures need to be carefully considered. Architects to help visualize the redevelopment potential for West Broadway. The City has also been working with The Farkas Group to help develop strategies for redevelopment of this area. The assemblage of property that is currently being pursued is an important first step. The URA has secured purchase options that have a limited duration; therefore, a limited window of opportunity exists for the URA to proactively pursue redevelopment of West Broadway. There are various strategies to consider regarding the purchase options that have been secured on a majority of the key properties along West Broadway, some include: 1. Issue a Request for Qualifications (RFQ) . Under this strategy, an RFQ would be issued for selection of a qualified developer(s) with a viable redevelopment concept for West Broadway and the capacity to implement a well designed, urban mixed-use development. RFQ criteria for the West Broadway area have been drafted. The criteria are designed to attract a comprehensive redevelopment approach for the area which advances the policies in the Downtown Plan. A copy of draft RFQ criteria is included in Attachment C. There are several advantages to the RFQ strategy. The scale and complexity of the potential redevelopment of this area of West Broadway, together with the limited duration of the option periods, favor an RFQ. An RFQ related to the entire West Broadway area footprint provides the best opportunity to attract the largest number of qualified developer responses and a variety of redevelopment approaches and uses that could be considered. The RFQ strategy provides an opportunity to attract developers who recognize the market potential for the area under a comprehensive redevelopment scenario. It is also possible that more than one developer could be selected to carry out different portions of the overall redevelopment project. L:\CMO\2006 Council Agendas\M061127\S061127B.doc Market conditions will also play a major role in determining how this area is redeveloped. Given the cost of construction downtown and the fact that Eugene's property values and lease rates lag behind more dense downtowns in larger metro areas, a comprehensive redevelopment approach would likely have greater potential to elevate the market values and conditions in the area more quickly, therefore making redevelopment along West Broadway much more feasible. The RFQ strategy also makes effective use of the limited option period through selection of a qualified developer who could act on the purchase options within the option period. Additionally, the RFQ strategy would take advantage of the positive downtown momentum created by the reopening of th Broadway, the new Eugene Public Library, The Tate Condominiums, WestTown on 8, and the th potential Kemper 10 & Charnelton project. 2. Purchase some or all of the properties and offer them for sale and redevelopment . The council could consider purchasing some of the key properties, or all of the properties, currently under option. Under this strategy, the URA could take advantage of the limited opportunity to acquire key properties during the option periods. Following the purchase of the property(s), the URA could seek proposals for development of individual properties or groups of properties. This strategy would require the identification of financial resources necessary to execute the purchase of properties. City staff is analyzing both Downtown Urban Renewal resources and the recently approved CDBG-HUD 108 loan and Brownfield Economic Development Initiative (BEDI) grant as potential sources of financing for acquisition. This analysis is still in progress. 3. Reopen discussions with Connor and Woolley/Opus. The council previously provided direction to work with Connor and Woolley/Opus on developing a more detailed proposal. Although it is not clear that Connor and Woolley/Opus would choose to move forward with their previously discussed redevelopment project, the City could first consider whether Connor and Woolley/Opus have an interest in properties that are currently under option. Prior discussions with Connor and Woolley/Opus revealed plans for retail, housing, entertainment, and hotel uses. The overall concept appeared to be very responsive to the goals of the Downtown Plan. If there is interest in resurrecting their project, the URA could reopen discussions with Connor and Woolley/Opus, with the goal of obtaining additional details and commitments regarding their development concept during the limited option periods, and prior to conveying the options. RELATED CITY POLICIES Future redevelopment of the West Broadway area is consistent with the policies and implementation strategies included in the Downtown Plan, including: • Downtown development shall support the urban qualities of density, vitality, livability and diversity to create a downtown, urban environment. • Actively pursue public/private development opportunities to achieve the vision for an active, vital, growing downtown. • Use downtown development tools and incentives to encourage development that provides character and density downtown. • Promote multi-story, mixed-use structures downtown through financial incentives or code amendments. • Stimulate multi-unit housing in the downtown core and on the edges of downtown for a variety of income levels and ownership opportunities. L:\CMO\2006 Council Agendas\M061127\S061127B.doc In addition, the future development of the West Broadway area is responsive to the following Growth Management policies: Policy 1: Support the existing Eugene Urban Growth Boundary by taking actions to increase density and use existing vacant and under-used land within the boundary more efficiently. Policy 2: Encourage in-fill, mixed-use, redevelopment, and higher density development. Policy 3: Encourage a mix of business and residential uses downtown using incentives and zoning. Policy 10: Encourage the creation of transportation-efficient land use patterns and implementation of nodal development concepts. Policy 14: Development shall be required to pay the full cost of extending infrastructure and services, except that the City will examine ways to subsidize the costs of providing infrastructure or offer other incentives that support higher-density infill, mixed-use, and redevelopment. COUNCIL OPTIONS 1. Issue an RFQ for selection of a qualified developer(s) with viable redevelopment concepts for West Broadway and the capacity to implement a well designed, urban mixed-use development. 2. Identify a funding source for the URA’s purchase of some or all of the properties under option. 3. Reopen discussions with Connor and Woolley/Opus regarding their proposed development, including the possibility of assigning purchase options to them for their project. 4. Do not act on the purchase options at this time, and let them expire. CITY MANAGER’S RECOMMENDATION The City Manager recommends that the URA direct the Agency Director to issue an RFQ for the redevelopment of West Broadway based on the draft RFQ criteria included in this agenda item, with the responses to the RFQ to be brought back to the URA for consideration in early Spring 2007. SUGGESTED MOTION Move to direct the Agency Director to issue an RFQ for the redevelopment of West Broadway based on the draft RFQ criteria included in this agenda item, with the responses to the RFQ to be brought back to the URA for consideration in early Spring 2007. ATTACHMENTS A. List of Purchase Option Properties B. West Broadway Redevelopment Area Aerial Map C. Draft RFQ Criteria FOR MORE INFORMATION Staff Contact: Mike Sullivan Telephone: 682-5448 Staff E-Mail: mike.c.sullivan@ci.eugene.or.us L:\CMO\2006 Council Agendas\M061127\S061127B.doc Summary of West Broadway Purchase Options 1st Option 1st Option 2nd Option 2nd Option AddressOwnerPurchase Price Notes TermMoneyTermMoney Dan Davis Family, LLC$ 625,000 6 months$ 3,000 6 months$ 10,000 77 W. Broadway (John Henry's) purchase price increases by $70,000 Joshua Keim $ 830,000 6 months$ 3,000 55 W. Broadway 6 months $ 4,000 (formerly Latham's) during 2nd option term Sanjacron LLC$ 1,200,000 12 months$ 3,000 12 months$ 2,000 39 W. Broadway & 800 Willamette (Taco Time building) purchase price increases by $100,000 Lazar & Rosa Makyadath $ 1,450,000 12 months$ 3,000 57 & 79 W. Broadway 12 months $ 4,000 (Lazar's Bazaar) during 2nd option term Jens Brunn $ 1,700,000 6 months$ 6,000 856 & 888 Willamette 6 months $ 12,000 (Scan Design) Evergreen Associates $ 1,900,000 6 months$ 4,000 6 months$ 20,000 62 to 94 W. Broadway (Washburn Building) (Connor & Woolley) Prado Partners $ 2,800,000 6 months$ 6,000 6 months$ 30,000 44 W. Broadway & 950 Willamette (Center Court Building & Hole) (Connor & Woolley) Evergreen Associates $ 3,150,000 6 months$ 6,000 6 months$ 40,000 110 to 198 W. Broadway (Diva to Shawmed) (Connor & Woolley) Total $ 13,655,000 $ 34,000 $ 122,000 Attachment A West Broadway Redevelopment Area Kemper Development Site Received purchase option offer Signed purchase option agreement ATTACHMENT C West Broadway Redevelopment Area DRAFT Request for Qualifications Criteria November 27, 2006 OVERVIEW The Urban Renewal Agency of the City of Eugene seeks statements of qualifications from developers for the redevelopment of a multi-parcel downtown area along West Broadway, between Willamette and Charnelton Streets (the “Redevelopment Area”). Through the Request for Qualifications (RFQ), the Urban Renewal Agency seeks to select a qualified developer(s) with a viable redevelopment concept and the capacity to implement a well designed, urban mixed use development. Although the focus of the solicitation is on the qualifications of prospective development teams, the Urban Renewal Agency also requests each developer’s vision, including a description of the proposed mix of uses and the general configuration and scale of the concept. Responses to the RFQ should include a development team with the experience, expertise, vision, talent, and financial capability to successfully complete a mixed-use redevelopment project, based on: Experience with successful developments in urban areas; ? Track record of superior architectural and urban design; ? Access to financial resources consistent with project requirements; and ? Experience with public/private development. ? The Urban Renewal agency expects that the redevelopment concept will enhance and reinforce the City of Eugene’s vision for downtown and will: Incorporate high-quality urban design and architecture; ? Include density of development with active ground-floor uses; ? Complement the existing and planned public and private investments in the ? area; Serve as a catalyst in revitalizing the downtown area including job creation; and ? Contribute to the activity and vitality along Broadway, one of downtown ? Eugene’s Great Streets. The total Redevelopment Area footprint is approximately 168,575 square feet and includes three full block faces along Broadway. Responses to the RFQ that address a majority or all of the properties are preferred. However, responses that include development concepts for portions of the Redevelopment Area, or responses that involve a partnership approach with multiple developers for different portions of the Redevelopment Area are also encouraged. Redevelopment of West Broadway is a key step in the implementation of the Downtown Plan and the long-term vision for downtown Eugene. The forward-thinking vision seeks to capitalize on development opportunities; strengthen downtown’s role as a regional center; expand housing, cultural, and recreational opportunities; reinforce our Great Streets and special places; and strengthen the connection between downtown and the river. DEVELOPMENT OBJECTIVES The redevelopment of West Broadway presents a significant opportunity for new structures, uses and activities in an increasingly vital area of downtown. The Redevelopment Area is surrounded by a wide variety of uses, including civic, cultural, residential, retail, and office. There is an existing strong pattern of pedestrian activity on Broadway, Willamette Street, Olive Street, Charnelton Street, and 8 Avenue with active th first floor uses on surrounding blocks. The overall concept for the Redevelopment Area is a dense, multi-story, mixed use, urban development. The mix of uses desired include a broad range of downtown urban activities, such as office, retail, residential (rental or ownership, for a range of incomes), hotel, theatres and restaurants. Active uses are particularly desired on the ground floor to encourage an inviting, lively pedestrian realm. Job creation is also strongly desired as a direct outcome for the Redevelopment Area. Downtown housing is essential for creating a critical mass to support retail and to concentrate populations where transit, amenities and services are easily and efficiently available. Redevelopment concepts for the area should recognize the opportunity to address the significant need and demand for housing units. Preferred concepts will include high density housing, with a range of rental, ownership and mixed income options. The appropriate scale, orientation and design of structures are of critical importance to the success of the Redevelopment Area. The standards of the Broadway Overlay Zone and the Transit Oriented District Overlay Zone describe the desired architectural and urban form of the buildings. Multiple stories are strongly encouraged. Buildings should be brought out to the sidewalk, with entrances facing the street. The design of the first floor is also critical; use of quality materials and architectural details that provide elements of scale and visual interest is essential. If parking is included, preferred solutions are underground or embedded spaces. The Urban Renewal Agency encourages creativity in project design and intends to allow flexibility provided that the proposal is consistent with the Eugene Downtown Plan, the Eugene Land Use Code, and the objectives provided in the RFQ. EVALUATION OF RESPONSES TO THE RFQ The Urban Renewal Agency will evaluate the responses to the RFQ based on five criteria: A.Team qualifications B.Redevelopment concept C.Timeliness and market feasibility D.Financial capability E.Public Benefit The evaluation criteria are described below. A. Team Qualifications. The Urban Renewal Agency seeks responses from development teams who are capable of completing a dynamic project within the Redevelopment Area. Relevant team qualifications include experience with similar downtown redevelopment projects and the capacity to initiate and complete a viable concept for the Redevelopment Area. Applicants must demonstrate the abilities and qualifications listed below. 1. Experience with successful developments in urban areas; and 2. Track record of superior architectural and urban design. B. Redevelopment Concept. T he Redevelopment Area has the potential to become an inviting urban environment and to strengthen the overall desirability of downtown in the regional marketplace. The Urban Renewal Agency is looking for a concept that addresses the potential of the Redevelopment Area and contributes to a well designed, vibrant urban environment. Conceptual architectural images are encouraged but not required; however, the narrative description should be of sufficient detail to demonstrate an understanding and an approach to the factors listed below. 1. Urban Design The redevelopment concept should incorporate elements that contribute to an inviting pedestrian environment. These include but are not limited to characteristics such as prominent entries facing public streets, buildings with minimal or no setbacks from the sidewalk, and appropriate treatment of parking, such as embedded or adequately screened structures. 2. Active Uses The redevelopment concept should incorporate a diverse mix of uses that bring local and regional visitors downtown day and evening. The mix of uses should include active ground floors, such as retail and entertainment, employment center for jobs, and residential opportunities (rental and ownership). 3. Sustainable Development Eugene seeks to meet its present environmental, economic, and social needs without compromising the ability of future generations to meet their own needs. Incorporation of sustainable development components should be considered, including: a.Multi-story, efficient use of the development area, green building features such as Leadership in Energy and Environmental Design (LEED) standards; b.If housing is proposed, inclusion of mixed income units; and c.If job creation is a likely outcome, availability of jobs to low income individuals. C. Timeliness and Market Feasibility. The Urban Renewal Agency is seeking a feasible redevelopment concept. Preferred concepts will include: 1.Projection of a reasonable time line for development; and 2.Understanding of market potential for the proposed concept. D. Financial Capability. The Urban Renewal Agency will consider the financial capability of the development team(s) as it relates to project feasibility. Preferred respondents to the RFQ will demonstrate: 1.Capacity to prepare a detailed financial analysis and cost estimate for project development and operation; 2.Evidence of financial capacity to implement the proposed concept; and 3.Track record of completion of similar projects within budget (or with modified budgets or financing). E. Public Benefit. The Urban Renewal Agency will consider the overall public benefit provided by the redevelopment concept, including the financial impact that the project will have in the Downtown Urban Renewal District. Preferred concepts will include: 1.Cohesive, comprehensive concept with multiple properties, high density and complete block faces; 2.Efficient use of public resources and assistance; 3.New tax increment revenue resulting from the redevelopment; 4.If housing is proposed, inclusion of mixed income units; and 5.Job creation within the Redevelopment Area. SUBMISSION REQUIREMENTS A. Team Qualifications 1.Provide the name, address, telephone numbers, and e-mail addresses of the development team. Identify the principal individual(s) within the development team authorized to serve as the spokesperson for the team. 2.Identify and describe any relationship the development team may have with subsidiaries, joint venture partners, or others who are significant to the project. 3.Provide documentation demonstrating that the development team is qualified to undertake the proposed project, including: a.Resumes of key development team members, including architectural team members; b.Experience completing projects similar to the redevelopment concept; and c.Experience with public/private development. 4.Provide examples of prior projects competed by members of the development team that demonstrate high-quality architectural and urban design relevant to the Redevelopment Area. Include as much of the following information as possible: site plans, images of completed projects, total development cost, total building area by use, role in project, financing structure and development partners. B. Redevelopment Concept 1.Provide a description of the redevelopment concept including identification of the properties involved, proposed scale and mix of uses. Describe how the concept meets the urban design, active uses, and sustainable development objectives for the Redevelopment Area. C. Timeliness and Market Feasibility 1.Describe the preferred property acquisition strategy. Be specific about which Urban Renewal Agency controlled properties are to be purchased, the timing of such purchase, and the necessity of other property acquisition or agreements with other property owners or development partners. 2.Provide a preliminary schedule for implementation of the concept, including any identified phases. The schedule should provide for development in a logical and expeditious manner. D. Financial Capability 1.Provide a preliminary financing strategy for the redevelopment concept including preliminary identification of equity and debt sources (such as developer equity, lender letters of interest, etc). 2.Demonstrate previous experience with financing similar developments in urban areas. 3.Provide a statement indicating willingness to submit corporate financial statements or other documents presenting the financial condition of the development team. E. Public Benefit 1.Describe how the redevelopment concept will integrate with and enhance downtown. 2.Describe the level of public assistance requested for the proposed project. 3.Describe benefits in terms of financial return to the city, number of housing units with range of incomes, and potential jobs created.