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Item 3: Resolution Authorizing HUD Section 108 Revenue Bonds
ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Action: Resolution 4914 Authorizing Execution of a HUD Section 108 Loan Contract in the Amount of $7,895,000 and Notes in the Amount of $7,895,000 Meeting Date: July 23, 2007 Agenda Item Number: 3 Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 682-5589 ISSUE STATEMENT The City Council has put in place the ability for the City to use federal Housing and Urban Development Section 108 Loan Guarantee Program (Section 108) funds in combination with the Brownfield Economic Development Initiative (BEDI) grant. The proposed project would use the funds to acquire property in downtown Eugene as part of the West Broadway Redevelopment Project. The current resolution, as well as an Urban Renewal Agency (URA) resolution on the same agenda, will allow the City to execute the Section 108 documents, after council approves additional actions related to the project. BACKGROUND The City received an award notice in February 2006 for a $2 million BEDI grant to assist redevelopment projects within the City's two urban renewal districts. BEDI funds must be used in conjunction with projects financed by Section 108 funds. Section 108 is the loan guarantee provision of the federal Community Development Block Grant (CDBG) program. The Housing and Urban Development agency (HUD) approved the City’s Section 108 application in July 2006, to be used with the BEDI grant for redevelopment projects within the Downtown and Riverfront urban renewal districts. The council approved an ordinance (No. 20376) authorizing the use of Section 108 as a financing tool on February 26, 2007. The ordinance established the City’s general ability to borrow for Section 108 projects with the stipulation that individual projects be approved by council resolution only after a public hearing conducted at council. The council conducted a public hearing on the proposed project to use Section 108 funds on July 16, 2007. At that public hearing, two citizens spoke about the proposed project. Subsequent to the public hearing, staff placed the draft HUD application on the City’s web site (www.eugene-or.gov/downtown), and sent a note to all interested parties about the availability of the materials. The full council and URA history on the West Broadway redevelopment effort, as well as the Section 108 and BEDI grant, can be found in Attachment A. L:\CMO\2007 Council Agendas\M070723\S0707233.doc HUD Section 108 Loan Contract To borrow money under the Section 108 loan program, HUD requires a two-step process. First, the City must enter into a loan contract with HUD. This is like a master loan agreement. Second, the City must draw down funds under a project note. The project notes are governed by the terms in the loan contract. The proposed resolution authorizes the City Manager or designee to enter into both the loan contract and one or more project notes. The City is proposing to use the Section 108 funds to acquire property for the West Broadway Redevel- opment Project. A number of repayment sources for Section 108 have been authorized by the council previously in Ordinance 20376. However, the City anticipates that the loan will be repaid from tax increment revenues of the Downtown District. It is also possible that the loan could be repaid from payments the developers make to the City to purchase the property, depending on the ultimate finance plan for the overall West Broadway Redevelopment Project. HUD requires local governments that borrow Section 108 funds to also pledge their current and future CDBG allocations as a secondary source of repayment for the borrowing. The City does not anticipate utilizing future CDBG allocations as a source of repayment for this project because the City’s Down- town Urban Renewal District has the financial capacity to make the payments on this borrowing. The CDBG Advisory Group met on July 10 to review the proposed project. It unanimously recommended “submittal of the individual project application to HUD subject to completion of public hearing and City Council approval of a project specific resolution.” The mechanism for the City to access tax increment revenues to repay the Section 108 loan is through a bond of the URA. Under this approach, the agency would issue urban renewal bonds to the City in the same amount, and under the same terms as, the Section 108 loan with HUD. In the past, the City and agency have handled this type of transaction between themselves through an intergovernmental agreement. (The library financing is one such example.) Bond counsel has advised, however, that a bond would be HUD’s preferred type of agreement. On this same council agenda, there is an item for the URA to authorize the issuance of the urban renewal bonds for this purpose. Attachment B includes the proposed City resolution authorizing the Section 108 borrowing. Attachment C includes charts that depict the relationship between HUD, the City and the URA for the initial funding under the loan and for the repayment. This council briefing statement focuses on the approvals needed for the City to sign the loan documents with HUD. Because the council has discussed the West Broadway Redevelopment Project specifics at previous meetings, details (as much as is known at this time) are included in the attachments. Attachments D and E include information about HUD’s project requirements and the properties to be purchased with the Section 108 loan. Attachment F is the draft HUD application for the project to be funded with the Section 108 loan. The draft application is currently being edited and refined, and additional versions will be posted on the City’s web site as they become available. The finalized application will be submitted to HUD by August 1. West Broadway Redevelopment Project Finance Plan The URA was presented with a preliminary finance plan on May 29 for the West Broadway Redevelopment Project. At that time, specific financial details for the joint developer plan were not yet available, but to begin the process of putting the necessary financing tools in place for this project, a preliminary finance plan was developed. Additional refinement of the finance plan is expected to occur L:\CMO\2007 Council Agendas\M070723\S0707233.doc through the summer, as the City and developers discuss key aspects of the development agreement. Once the City and developers come to a preliminary agreement and the financial information is refined, staff will bring a revised finance plan to council for approval (anticipated for September). The preliminary finance plan included a variety of financing sources, such as a Section 108 loan, a BEDI grant, urban renewal revenue bonds and cash contributions, Downtown Revitalization Loan Program funds, HOME funds, and general funds or a general fund guarantee. The finance plan assumed that the City’s financial participation in this public/private partnership will consist of several items: some contribution towards the land acquisition, public site-related costs (utilities, sidewalks, etc.), and purchase of a publicly-owned parking garage. For the housing portions of the project, the developers may request a low-income housing loan, which would be repaid over time. They may also request a 10- year Multi-Unit Property Tax Exemption or a 20-year low-income housing exemption. (This informa- tion is speculative, because the City and the developers have not yet negotiated specific financial arrangements.) Property purchased with Section 108/BEDI funds may be contributed to the project or sold to the developers depending on agreements that will be finalized in early fall. Next Steps There are three remaining steps in the process to access and use Section 108/BEDI funds for the West Broadway Redevelopment Project: 1) council approval to access (authority to borrow) the funds; 2) council approval to amend the urban renewal plan; and 3) council action related to the West Broadway Redevelopment Project to use the funds. Step 1 – Access to Funds: Prior to entering into any borrowing for an individual project, the council must approve access to the loan funds through adopting a project bond resolution, and the URA must approve a bond pledging tax increment as security for the Section 108. Action at tonight’s meeting will complete this step. Staff will then submit a project application to HUD. The HUD approval process is expected to take 30 to 60 days. Step 2 – Urban Renewal Amendments: The proposed Downtown Urban Renewal District Plan amendments need to be approved prior to entering into a loan with HUD. This is required because the district’s current maximum indebtedness limit is not large enough to secure the full Section 108 loan. Consideration of the plan amendments is scheduled for August 13. Step 3 – Use of Funds: The City will only have the ability to use the Section 108/BEDI funds after the council takes additional actions related to the West Broadway Redevelopment Project. Specifically, the council will need to a) review and approve the overall project, including consideration of any recom- mendations from the West Broadway Advisory Committee and b) approve a supplemental budget to authorize the use of funds. These actions are planned for September. The City will not borrow funds from HUD until council has taken all of the additional steps. An updated timeline for the West Broadway Redevelopment Project is included as Attachment G. RELATED CITY POLICIES Downtown development is guided by policies in the Downtown Plan and the Growth Management Policies. With regard to financial tools to assist with development, the Downtown Plan includes policies L:\CMO\2007 Council Agendas\M070723\S0707233.doc that state that the City should: “Use downtown development tools and incentives to encourage develop- ment that provides character and density downtown.” A number of financial policies would guide the creation of the final economic development finance plan, including the City’s debt policies. COUNCIL OPTIONS The council may adopt the resolution as proposed, suggest amendments to the resolution, or decline to authorize the resolution. If the resolution is not adopted, the City will not be able to access the $2 million Brownfields Economic Development Initiative Grant for the purchase of property in the redevelopment area. CITY MANAGER’S RECOMMENDATION The City Manager recommends adoption of the proposed resolution. SUGGESTED MOTION Move to adopt Resolution 4914 authorizing execution of a HUD Section 108 loan contract in the amount of $7,895,000 and notes in the amount of $7,895,000. ATTACHMENTS A.City Council and URA Action History B.Proposed Resolution C.Relationship Between HUD, City and URA for Section 108 Loan D.Proposed Project Details and HUD Requirements E.Redevelopment Area with Section 108/BEDI Properties F.Draft Section 108 Individual Project Application for the West Broadway Land Acquisition Project G.Updated Timeline for the West Broadway Redevelopment Project FOR MORE INFORMATION Finance Contact: Sue Cutsogeorge Telephone: 682-5589 Staff E-Mail: Sue.L.Cutsogeorge@ci.eugene.or.us PDD Contact: Denny Braud Telephone: 682-5536 Staff E-Mail: Denny.Braud@ci.eugene.or.us L:\CMO\2007 Council Agendas\M070723\S0707233.doc ATTACHMENT A Council and URA Action History: West BroadwayRedevelopment Project, BEDI, Section 108, Downtown Urban Renewal District & City Policies 1. West Broadway Redevelopment Project th URA – 1999: The first Request for Proposals (RFP) for the sale and development of the 10 & Charnelton site was issued. Responses were limited, and the Urban Renewal Agency (URA) deferred review of the responses due to pending discussion on potential sites for the new Federal Courthouse and City Hall. th URA – December, 2002: URA approved the issuance of a second 10 and Charnelton RFP. In May 2003, the URA received four responses and selected the Oregon Research Institute (ORI) project. ORI later decided to forgo the purchase and development of the site. CC –January 9, 2006: City Council (CC) discussed the Connor and Woolley/Opus development proposal for West Broadway, 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. th ERAC – April 20, 2006: Eugene Redevelopment Advisory Committee (ERAC) discussed the 10 and Charnelton RFP and encouraged a comprehensive review of how each project proposal advances the Downtown Plan and contributes to this area of downtown. th PC – April 24, 2006: Planning Commission (PC) reviewed the 1999 and 2002 versions of the 10 & Charnelton RFP and provided input regarding the issuance of a new RFP for the site. Generally, PC encouraged use of the policies and strategies in the Downtown Plan as the primary source for gauging desirable projects for the site. It also favored a less prescriptive RFP approach in comparison to the 1999 criteria to attract a broad mix of possible uses, encourage creativity in the development of the site and inspire investor confidence. April 2006: ? Connor and Woolley/Opus announced that the West Broadway project was no longer viable, primarily because of an inability 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, with the intention of bringing the purchase options, once acquired, to the URA for direction. th URA – May 24, 2006: URA approved the issuance of the third 10 & Charnelton RFP: Ms. Solomon, seconded by Ms. Ortiz, moved to approve the RFP for the sale and development th of the 10 Avenue and Charnelton Street development site and direct the City Manager to issue a request for proposals consistent with the preliminary schedule included in the draft RFP with final review of the RFP responses and approval of a project for the site provided by the Urban Renewal Agency. Vote: Passed 8:0. ~ Ms. Bettman, seconded by Mr. Kelly, moved to amend the Development Objectives to include “As a publicly solicited project with the potential for public subsidies and incentives this development addresses the needs of the community. More housing units and varied housing options are needed to accommodate projected population demographics. Central housing is a key element in the Growth Management Policies and the Downtown Plan. Downtown housing is essential for creating the critical mass of residents to support retail and to concentrate populations where services already exist within walking distance and where transit and pedestrian amenities are easily and efficiently available. Housing downtown requires public sector support in order to be competitive. Preferred proposals for the site will recognize this development site as a rare opportunity to address the significant need for downtown housing units by providing for multi-storied, very high density housing, preferably accommodating ownership options as well as affordable units. Vote: Passed 7:0 (Pape not yet arrived) ~ Ms. Bettman, seconded by Mr. Kelly, moved to change the third point on page 390 of the AIS under “Active Uses” to read as follows: “3. Major employment center for very high quality jobs and extended hours of occupancy.” Vote: Passed 5:4 (Mr. Kelly, Ms. Bettman, Ms. Taylor, Ms. Ortiz, and the Mayor voting in favor and Mr. Poling, Ms. Solomon, Mr. Pape and Mr. Pryor voting in opposition.) ~ Mr. Kelly, seconded by Ms. Bettman, moved to amend the Development Objectives to delete the third point regarding a strong relationship with key tenants. Vote: Passed 8:0. th June 2, 2006 ?: 10 and Charnelton RFP issued with a submission due date of August 15, 2006. The due date was subsequently extended to September 15, 2006. The City received responses from Beam Development, TK Partners, and Sockeye Development. th Memo – July 26, 2006: Staff memo addressed the 10 & Charnelton RFP extension. The 30-day extension was intended to be responsive to development interest in the site and maximize the opportunity to attract quality proposals. th ERAC – September 28, 2006: ERAC reviewed the 10 & Charnelton RFP responses. ERAC was expanded specifically for review of the RFP responses to include expertise in the areas of sustainability (Josh Proudfoot, Good Company), financing (Erik Riechers, Pacific Continental Bank), and housing development (Jim McCoy, Housing and Community Services Agency). ERAC recommended that staff move forward with the selection of the TK Partners proposal. th URA – October 11, 2006: URA considered the 10 & Charnelton RFP proposals. Voting on a motion to select a proposal was postponed until October 16, 2006. th URA – October 16, 2006: URA selected the TK Partners proposal for the 10& Charnelton site: Moved to direct the Agency Director to enter into a 90-day exclusive negotiation period with TK Partners for the sale and development of the 10th and Charnelton development site based upon the proposal submitted and to return to the City Council, acting as the Urban Renewal Agency, with the proposed terms of the sale and development following the negotiation period. Vote: Passed 8:0. ERAC – November 21, 2006: ERAC reviewed the draft West Broadway RFQ. Committee members provided comments on criteria and timing of the RFQ. URA – November 27, 2006: URA provided direction to issue an RFQ for the redevelopment of West Broadway with approved criteria, with the following motion: Ms. Solomon seconded by Ms. Ortiz moved to direct the Agency Director to issue a Request for Qualifications (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. The RFQ shall permit responses to deal with (a) property included only in a single option agreement for example the Centre Court Building and adjacent hole, (b) property included in more than one but less than all of the option agreements, or (c) property included in all of the option agreements. Include an additional criterion “Consistency with City Policies and Goals” in the RFQ evaluation criteria on council agenda packet pages 15 and 16; substitute the word “will” for the word “should” in subparagraphs 1 “Urban Design”, 2 “Active Uses”, and 3 “Sustainable Development” in the RFQ Evaluation criteria on council agenda packet pages15 and 16; add the phrase “and will contribute to an active around the clock 24-hour downtown” at the end of the first sentence in the paragraph under the heading “Active Uses” in the RFQ evaluation criteria on council agenda packet page15; delete the words “and assistance” from subparagraph 2 under the paragraph captioned “Public Benefit” in the RFQ evaluation criteria on page 16 of the council agenda packet; and add the following definition of the term mixed use in the RFQ evaluation criteria “Mixed use development refers to the practice of containing more than one type of use or activity in a building or set of buildings or blocks. The mix of uses can vary widely but typically includes a higher density combination of residential, commercial, industrial, office, institutional, or other activities. The uses are typically in close proximity, pedestrian-friendly and compatible with multi-modal transportation.” Vote: Passed 8:0. December 8, 2006: ? West Broadway RFQ issued with a submission due date of February 9, 2007. February 2007: ? The City received responses from Beam Development, CenterCal Properties, Greg Bryant, KWG Development Partners, and MidTown Development. KWG’s response addressed the entire West Broadway Redevelopment Area, as well as the th 10 and Charnelton site, with the understanding that if not selected they would move forward with the initial TK Partners concept. ERAC – February 23, 2007: ERAC met to review the West Broadway RFQ responses. ERAC was expanded specifically for review of the RFQ responses to include representation from the arts (Tina Rinaldi), a Broadway tenant (Beth Little, Saturday Market), and a Downtown Vision Committee member (Greg McLauchlan). ERAC concluded that KWG had the strongest response to the objectives and criteria in the RFQ. The committee also expressed interest in the reuse potential of the Washburne and Centre Court buildings proposed by Beam. ERAC unanimously recommended that staff explore further the KWG and Beam responses. URA – March 12, 2007: URAwork session to review responses to the West Broadway RFQ. URA recognized Beam and KWG as qualified developers. Action was taken to direct staff to work with Beam and KWG to explore project concepts in more detail, with opportunities for community input, and to bring the following supplemental information back to the URA for review and approval: project cost and scale; development footprint; mix of uses; transfer of property; design and sustainability; parking requirements; feasibility of building reuse; preservation of Centre Court and Washburne buildings; preservation of local businesses; and level of financial participation from the URA. Memo – April 12, 2007: Staff memo addressed the financial capacity of the Downtown Urban Renewal District and the other tools to support downtown redevelopment. CC –April 16, 2007: Council workshop on downtown development issues. The council heard presentations from a mix of local developers and interested parties who described development opportunities, challenges, and policy alternatives. ERAC – April 19, 2007: ERAC reviewed the supplemental information submitted by Beam and KWG. ERAC unanimously voted in favor of moving forward in a positive manner with downtown development and concluded that the qualifications of both Beam and KWG were acceptable, with a primary preference for awarding the project to KWG and a secondary preference for awarding the project to Beam. CC & URA – April 25, 2007: Council work session on the financial tools available to support downtown redevelopment. URA work session reviewed the supplemental information submitted by Beam and KWG. URA deferred a decision on developer selection until after the scheduled April 30, 2007 public workshop. However, the URA did provide direction to the Agency Director to renew the purchase options on the Centre Court building and adjacent parcel (the hole), the Washburne Building, and the properties under option on the south side of Broadway between Olive and Charnelton streets (Diva to Shawmed property). Public Workshop – April 30, 2007 : A public workshop was held to gather input on the Beam and KWG concepts and the selection options being considered by the URA. The workshop was co- sponsored by ERAC, Citizens for Public Accountability (CPA), and the Eugene Area Chamber of th Commerce. Results of the workshop were included in the council packet for the May 9 meeting. Project Tour – May 5, 2007: The Mayor and Councilor Zalenka, along with City staff and representatives from CPA and the Chamber, toured projects completed by Beam and KWG. URA – May 9, 2007: URA considered input received at the April 30, 2007 public workshop and considered the Beam and KWG responses. Voting on a motion selected a developer was postponed until the March 14, 2007 work session. URA – May 14, 2007: Council selected Beam and KWG, with the following motion: Move to select Beam and KWG as the developers for the West Broadway project, and to direct the Agency Director to initiate actions related to agreements with the developers; public process that includes a citizen advisory committee with an independent urban planner/facilitator whose work shall be completed by the end of August and presented to the Agency in September; option agreements; financial tools; and a relocation/transition plan, all th consistent with the Agency’s May 9 discussion, with all proposed actions, other than option agreement renewals and extensions, brought back to the Agency for final authorization. This motion further directs the Agency Director to secure the services of a qualified urban planner/facilitator to oversee the public process for the West Broadway development site footprint, and to establish a West Broadway Development Advisory Committee to work with a qualified urban planner/facilitator, and the developers, to identify preferred design elements, mix of uses, public open spaces, options for parking, as well as a transition plan for existing businesses. The Agency and the Advisory Committee would also seek additional public input. The Advisory Committee shall be composed of 11 members, appointed by the Mayor after consulting with the City Council. In addition, the Agency Director shall secure the services of a qualified consultant to perform market analysis and economic feasibility studies. This research and analysis will inform the Agency and the Advisory Committee’s deliberations. Vote:Passed 6:2 (Bettman, Taylor opposed). June 27, 2007: ?First meeting of the West Broadway Advisory Committee (WBAC), attended by all 11 members appointed by the Mayor. July 2, 2007: ? HDR Town Planning, an urban planner/facilitator, was selected from the pool of four respondents to a Request for Qualifications. URA – May 29, 2007: URA work session to review a preliminary West Broadway Financing Plan. URA – July 18, 2007: Agency approved Memorandums of Understanding with the developers. Vote on Beam MOU: Passed 8-0; Vote on KWG MOU: Passed 6-2 (Bettman, Taylor opposed). 2. Brownfields Economic Development Initiative (BEDI) IGR – May, 2005: Intergovernmental Relations Committee (IGR) approved the Brownfields Grant application submission. June 2005: ?Application submitted. January 2006: ? City received award notice for a $2 million BEDI grant to assist redevelopment projects within the City's Downtown and Riverfront urban renewal districts. BEDI funds must be used in conjunction with, and for projects financed by, a HUD Section 108 guaranteed loan commitment. Memo – February 1, 2006: Staff memo regarding “Council Assignment Response: Recently- Awarded Brownfield Grant.” 3. HUD Section 108 Loan Guarantee Program (Section 108) CDBG-AC – February 1 & March 1, 2006: In accordance with application requirements, the City’s Community Development Block Grant Advisory Committee (CDBG-AC) held two public hearings regarding the Section 108 loan proposal. Opportunity for public comment was also made available during a 30-day written public comment period. On March 1, 2006, the CDBG-AC unanimously recommended submittal of the proposed $7,895,000 Section 108 application to HUD, with funding of future projects to be reviewed by the CDBG Advisory Committee and the City Council. CC – March 13, 2006: Council approved Resolution No. 4860 “A resolution authorizing submission of an application to United States Department of Housing and Urban Development (HUD) for loan guarantee assistance and related matters.” Vote: Passed 7:0 (Absent: Taylor). July, 2006: ? HUD selected the City’s Section 108 application for funding to create a $9,895,000 loan pool, together with BEDI grant funds, for redevelopment projects within the Downtown and Riverfront urban renewal districts. Memo – December 28, 2006: Staff memo regarding “HUD Section 108 Loan Authorization” described the public hearing and ordinance process. CC – February 20, 2007: Council held a public hearing on the ordinance authorizing the use of Section 108 as a financing tool. CC – February 26, 2007: Council approved the ordinance authorizing the use of the Section 108 as a financing tool. The non-emergency ordinance established the City’s general ability to borrow for Section 108 projects with the stipulation that individual projects be approved by council resolution following a public hearing. Ordinance Number 20376, Council Bill Number 4938 “An ordinance authorizing Section 108 Revenue Bonds.” Vote: Passed 7:1 (Opposed: Taylor). Memo – April 9, 2007: Sue Cutsogeorge informed council that the issue of a debt policy amendment th would be brought to council as a consent calendar item on May 14. CC – May 14, 2007: Council approved, on consent calendar, an amendment to the City’s debt policies regarding conduit financing. th Public Comment – June 20 to July 20, 2007: The 30-day public comment period started on June 20 th with an advertisement in the Register Guard. No public comments received as of July 17. CDBG-AC – July 10, 2007: The CDBG-AC met to review the individual project #1. They recommended “submittal of the individual project application to HUD subject to completion of public hearing and City Council approval of a project specific resolution.” Vote: Passed 8:0 CC – July 16, 2007: Public hearing on the project to be funded from BEDI/HUD 108 funds. Two individuals spoke at the hearing. 4. Downtown Urban Renewal District July 1968: District originally created. The district plan has been amended four times: December 1968, November 1989, June 1998, and most recently in September 2004. Memo – April 12, 2007: Staff memo addressed the financial capacity of the Downtown Urban Renewal District and other tools to support downtown redevelopment. The necessity of a plan amendment was raised in connection with undertaking a large-scale redevelopment project. ERAC – April 19, 2007: ERAC viewed a presentation on the Downtown Urban Renewal District. ERAC unanimously recommended that the Downtown District Urban Renewal Plan be amended to increase the district’s financial capacity. CC & URA – April 25, 2007: Work session on the financial tools available to support downtown redevelopment. Staff alerted council to the necessity of amending the district plan to increase financial capacity. Public Workshop – April 30, 2007 : A public workshop was held to gather citizen input on the Beam and KWG concepts and the selection options being considered by the URA. The necessity of increasing the “maximum indebtedness” in the district was presented to the workshop attendees. th The results of the workshop were included in the council packet for the May 9 meeting. URA – May 29, 2007: The URA also began the process for making a substantial amendment to the Downtown Urban Renewal Plan. The Agency passed the following motion: Move to forward to the Planning Commission and overlapping taxing districts the proposed amendments to the Downtown Urban Renewal Plan, consistent with the draft plan and report included in Attachments D and E, except that the amendments shall include an increased maximum indebtedness of $40 million, for a total of $73 million and an extension of the termination date from June 30, 2024 to June 30, 2030. Vote: Passed 6:2 (Bettman, Taylor opposed). Taxing Districts Notice – June 11, 2007: The governing bodies of taxing districts impacted by the plan received notification. PC – June 18, 2007: Planning Commission met and reviewed the proposed amendments. They moved to: “Acknowledge receipt of the plan by the Planning Commission and given the relative completeness of the citizen involvement process, had no comments to offer.” Vote: Passed 6:0 Memo – June 21, 2007: Staff memo provided an update on the Plan Amendment process Public Notice – Week of June 25, 2007: A postcard notice was mailed to approximately 52,000 property owners in Eugene with information on accessing proposed plan amendments and the July th 16 public hearing. LC – June 28, 2007: City staff met with the Lane County Finance and Audit Committee (LC) to review the proposed plan amendments. The County sent a letter with suggested plan changes to the City Council for deliberation when the plan amendments are considered. CC – July 16, 2007: Public hearing on the proposed urban renewal plan amendments. Twelve individuals spoke at the public hearing. 5. Related City Policies Future redevelopment of the West Broadway Redevelopment 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. ? Provide and promote development and community events that reinforce downtown’s role as the cultural center for the city and region. ? Reinforce the creative, distinctive culture of downtown as the arts and entertainment center of the city. In addition, the future development of the West Broadway Redevelopment 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. – This item is also related to one of the 2007-2008 Council Goals: Downtown InitiativeFacilitate significant revitalization of downtown core. ATTACHMENT B RESOLUTION NO. A RESOLUTION AUTHORIZING EXECUTION OF A HUD SECTION 108 LOAN CONTRACT IN THE AMOUNT OF $7,895,000 AND NOTES IN THE AMOUNT OF $7,895,000. The City Council of the City of Eugene finds as follows: A. The City of Eugene is one of only eleven communities in the United States to be approved for a Brownfields Economic Development Initiative grant from the United States Department of Housing and Urban Development (“HUD”) in Fiscal Year 2005. The grant is in the amount of $2,000,000. B. The BEDI grant award is conditioned upon, and must be used in conjunction with, a new Section 108-guaranteed loan commitment made by HUD pursuant to section 108 of title I of the Housing and Community Development Act of 1974, as amended and 24 CFR Part 570, Subpart M (the “HUD Loan Guarantee Law and Regulations"). The guaranteed loan is expected to be in the amount of approximately $7,895,000. C. The City enacted Ordinance No. 20376 on February 26, 2007, authorizing the City to issue up to $7,895,000 of revenue bonds to finance loans and other assistance for economic development, property acquisition, public facilities, large-scale physical development projects and any other projects that are eligible for funding under Section 108 (the “Projects”). More than thirty days have passed since that ordinance was enacted, no citizens have petitioned to have the ordinance authorizing those bonds referred to the voters, and the City is now authorized to issue the revenue bonds described in that ordinance. D. Ordinance No. 20376 authorized the City to secure any HUD Loan Contracts with federal grant funds, revenues and rights the City obtains in connection with the projects, repayments of loans and other assistance provided by the City pursuant to Section 108, payments from the Urban Renewal Agency of the City of Eugene (the “Agency”), and similar amounts. The City anticipates that the Agency will authorize a resolution on the date of this resolution that will allow the Agency to sell a bond to the City in an amount equal to the amount due to HUD under the 2007 Project Notes. E. The City adopts this resolution to authorize: (i) execution and delivery of a “Contract For Loan Guarantee Assistance Under Section 108 Of The Housing And Community Development Act of 1974, As Amended, 42 U.S.C. §5308” with HUD (the “HUD Loan Contract”) in the amount of $7,895,000, (ii) the execution and delivery of a revenue bond under Ordinance No. 20376 in the form of one or more Notes that are required by the HUD Loan Contract in the amount of not more than $7,895,000 to finance property acquisition for the West Broadway Redevelopment Project (the “2007 Project”); and (iii) City staff to take other actions to obtain funds from HUD under the HUD Loan Contract for the Project. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Eugene, a municipal corporation of the State of Oregon, as follows: Section 1. HUD Loan Contract and Note Authorized. The City Council hereby authorizes the execution and delivery of the HUD Loan Contract in the amount of $7,895,000, substantially in the form which has been reviewed and approved by the City Manager or the person designated by the City Manager to act on behalf of the City pursuant to this Resolution (the “City Official”). The City Council also hereby authorizes the execution and delivery of a revenue bond under Ordinance No. 20376 in the form of one or more Notes (the “2007 Project Notes”) that are required by the HUD Loan Contract. The 2007 Project Notes shall be in a maximum principal amount of $7,895,000, and proceeds of the 2007 Project Notes shall be used to provide financial assistance for the 2007 Project. Section 2. Delegation . The City Official may, on behalf of the City and without further action by the Council: (1)Negotiate the final terms of, execute and deliver the HUD Loan Contract and the 2007 Project Notes, and perform all of the City’s obligations under the HUD Loan Contract and the 2007 Project Notes. (2)Pledge to secure the City’s obligations under the HUD Loan Contract and the 2007 Project Notes, and grant HUD a right of assignment in all or any portion of, the following: (a) the allocations or grants which have been made or for which the City may become eligible under Section 106 of title I of the Housing and Community Development Act of 1974, as amended (the “Act”), as well as any grants which are or may become available to the City pursuant to Section 108(q) of the Act; (b) “program income,” as defined at 24 CFR 570.500(a) (or any successor regulation), directly generated from the use of the amounts received by the City under the HUD Loan Contract and the 2007 Project Notes;. (c) payments made by the Agency to the City under bonds authorized by the Agency resolution adopted on the date of this resolution that authorizes issuance of urban renewal bonds to finance projects that receive funding under the HUD Loan Contract; (d) proceeds (including insurance and condemnation proceeds) from any of the foregoing; (e) funds or investments in the accounts established under the HUD Loan Contract; and (f) any other amounts that are required by HUD. (3)Negotiate the final terms of, and accept, one or more bonds issued by the Agency to pay amounts due to HUD under the 2007 Project Notes; (4)Execute and deliver any agreements or certificates and take any other action in connection with the HUD Loan Contract and the 2007 Project Notes which the City Manager finds is desirable to permit the City to sign the HUD Loan Contract, execute and deliver the 2007 Project Notes and obtain funds from HUD for the 2007 Project. Section 3. Effective Date. This resolution shall take effect immediately upon adoption. The foregoing Resolution adopted on the 23rd day of July, 2007. ______________________________________ City Recorder Attachment C HUD 108 Revenue Bond Transactions Initial Funding HUD Issues Loan/Note and 1 BEDI Grant to City HUD 2 City sends HUD Loan/Note and BEDI Grant $$ to URA CityURA URA Issues Bond to City 3 Property Purchase HUD 108 Revenue Bond Transactions Repayments 3 City Repays HUD Loan/Note* HUD CityURA URA Makes Bond Payments 2 to City from Tax Increment Revenues 1 Tax Increment Revenues *If URA or other sources of funds are insufficient, HUD will withhold CDBG funds to make loan payments. ATTACHMENT D Proposed Project Details and HUD Requirements Individual Project Approval Process To spend the Section 108/BEDI funds, HUD requires that the specific project funding re- quest be approved by council following a public comment period and a public hearing. Citizen participation involves a 30-day public comment period, review by the CDBG Advisory Committee, and a public hearing conducted at council. Final action will in- clude council review and financing resolution followed by HUD approval. The proposed loan would draw down all of the Section 108/BEDI funds at once for the acquisition of thth properties in the area bounded by Willamette and Charnelton Streets between 8 and 10 Avenues. Projects that receive Section 108/BEDI funds must meet project preference criteria, as follows: a) meet a CDBG national objective of benefiting low or moderate income per- sons or eliminating conditions of slums or blight, b) lead to economic revitalization in connection with brownfields, c) be financially feasible, d) be within reasonable risk, e) be likely to be repaid, and f) provide permanent, full-time employment for low and moderate income individuals. The project preference criteria are designed to provide an objective evaluation of the project’s ability to produce an effective and timely outcome. Proposed Individual Project TheUrban Renewal Agency (URA) has secured purchase options on several downtown properties along West Broadway between Willamette Street and Charnelton Street. Sec- tion 108/BEDI funds could be used to purchase properties within the Redevelopment Area. The properties are: 43 West Broadway, 858 Willamette, 44 West Broadway (Centre Court Building) and adjacent subsurface lot, 62 West Broadway (Washburne Building), and 110 and 164 West Broadway. (See Attachment E.) The properties are proposed for acquisition using Section 108/BEDI funds due to their unique ability to meet a combination of Federal requirements. The proposed property acquisition would cost $10.8 million under the current purchase option terms (Section 108 of $7,895,000, BEDI grant of $2,000,000, and Urban Renewal funds of $905,000). The proposed acquisitions are a portion of the overall redevelopment concept for West Broadway. The purchase of other optioned property would have to be financed with a combination of other funds. The final agreements, as approved by council, will deter- mine if the properties purchased with Section 108 funds will be contributed to the project or sold to the developers. Section 108 is a loan guarantee program that generally follows the same regulations as the CDBG program. Public benefit is determined by the ultimate development and use of the property that is acquired with Section 108 funds. The majority of the funds for the proposed project would be used to benefit low-income persons. Potential end uses for the property acquisition include retail, office, hotel, cinema, and housing, as detailed in the Request for Qualification responses from Beam Development and KWG Development Partners. The potential mix of uses will be reviewed by the West Broadway Advisory Committee whose recommendations will be forwarded to council in September 2007. Development on the Section 108 funded properties will create at least 283 jobs. Con- sistent with CDBG requirements, a minimum of 51% of the jobs will be available to low or moderate income individuals. Brownfields are defined as vacant and underutilized properties whereredevelopment is complicated by actual or perceived environmental contamination. The privately-owned two-block stretch of West Broadway has been characterized by high vacancy rates and depressed market conditions for over 20 years. The area suffered following the exit of major department stores, including JC Penney, Sears, Bon Marche, Kaufman’s, Wool- worth’s, and Newberry’s. Many of these buildings remain vacant. Additionally, the Woolworth’s and Sears buildings were demolished (in 2001 and 2005, respectively). The JC Penney building (also known as the Centre Court building) has been vacant for years. Citizen Participation The citizen participation component includes a comment period, CDBG Advisory Com- mittee review, application draft review, and a public hearing. The 30-day public com- th ment period officially began on June 20 with an advertisement in the Register Guard. The ad explained the potential use of Section 108/BEDI funds and the process for provid- ing comments. Staff gathered written comments and comments via phone or email th through July 20. (As of July 17, no comments had been received.) The CDBG Advis- ory Committee reviewed the proposed project on July 10 and unanimously recommended “submittal of the individual project application to HUD subject to completion of public hearing and City Council approval of a project specific resolution.” In addition, a draft of the Section 108 individual application was made available at the reception desk of the Atrium Building starting on July 13, and on the City’s web site on July 17. (An adver- tisement in the Register Guard notified the public of the availability of the application materials.) Federal Regulations Other federal regulations include environmental review and acquisition/relocation pro- cedures. The environmental review process includes documentation to show compliance with various federal laws and authorities, consultation with appropriate federal agencies, a public notification and advertising period, and a review period by HUD’s Portland Office. Relocation and acquisition procedures which include appraisals and notifications are done in compliance with the Uniform Relocation Act. Staff is developing the neces- sary documentation, has commenced consultation with federal agencies, and expects to complete the federal processes by September. ATTACHMENT E Redevelopment Area with Section 108/BEDI Properties A = 110 and 164 West Broadway B = 62 West Broadway C = 44 West Broadway and adjacent subsurface lot D = 43 West Broadway E = 858 Willamette Attachment F Draft Section 108 Individual Project Application for the West Broadway Land Acquisition Project DRAFT Section 108 Individual Project Application City of Eugene, Oregon, West Broadway Land Acquisition (Ten basic questions) 1.Project Description a. Background The City of Eugene proposes to utilize a combination of federal and local funds to support the redevelopment of properties along two blocks of West Broadway (the Redevelopment Area). The Redevelopment Area is approximately 5.2 acres. West Broadway historically served as the commercial center of downtown Eugene. However, at present, the area is characterized by significant vacancies and deteriorating buildings, parking lots, and excavated building sites. The Redevelopment Area was selected due to its strategic importance for commerce and opportunity to create sustainable models for living close to employment, retail, and services. A critical part of the vision is to create more opportunities for people to live in high density, location-efficient residences, quality jobs and services, and to better utilize alternative modes of transportation to reduce overall impacts on the environment. The Redevelopment Area is surrounded by community assets that make it the ideal location for urban infill and redevelopment. The intersection of Willamette Street and Broadway, located at the eastern edge of the Redevelopment Area, is considered to be the very center of Eugene. Downtown Eugene is occupied by businesses and government offices that employ over 11,000 people. Residents and employees within downtown Eugene already have immediate access to alternative travel modes including the Lane Transit District Downtown Transit Station, comprehensive bike path system, and pedestrian facilities. Access to retail, parks, and cultural facilities also make downtown Eugene an attractive location for additional development. Over the past ten years, the City of Eugene and other private entities have attempted to support the development of portions of the Redevelopment Area. The challenges of downtown development and fragmented ownership have thwarted previous efforts for a more comprehensive redevelopment approach. In April 2006, the City of Eugene started to explore ways to assemble the property and commenced negotiations with the property owners within the Redevelopment Area. At this time, the City holds purchase options for all of the properties except one, which is currently under negotiation.Property options will start to expire in September 2007, leaving a very small window for acquisition. The City of Eugene seeks to acquire five properties (nine tax lots) in the Redevelopment Area with $7.895 million in Federal Section 108 Loan Guarantee Program funds and $2 million in BEDI grant funds (Section 108/BEDI Properties). See Exhibit A. In December 2006, the Urban Renewal Agency of the City of Eugene (URA) issued a Request for Qualifications (RFQ) for a development team with the capacity to redevelop properties along West Broadway. The RFQ specified that development concepts must be compatible with downtown zoning and goals and should incorporate a mix of uses including active ground floor uses such as retail or entertainment, office, ownership units, and rental units. In addition, the RFQ specified that development concepts should incorporate sustainable development practices including the use of multistory buildings, green building features, and a mix of housing units available to persons at various income levels. In May, the City selected two of the five RFQ respondents, Beam Development and KWG Development Partners, as qualified developers for the Redevelopment Area. The City is in the process of finalizing a Memorandum of Understanding with each party. Based on concepts presented in their RFQ responses, the visions of the developers are to remake the Redevelopment Area into a dynamic 24-hour community with restaurants, a multi-screen movie venue, night clubs, a mix of national and local retailers, a large grocer, a high-end hotel, office, and a dense mix of rental and ownership housing. The scale of the buildings will entail varied modules of two to five story structures with differentiated architectural styles and materials. The end uses related to the Section 108/BEDI Properties include hotel, cinema, grocery store, retail, office, and affordable rental housing. The grocery, affordable housing, and cinema, will extend beyond Section 108/BEDI Properties to other properties within the Redevelopment Area. See Exhibit B. The five story hotel, set over underground public parking, is anticipated to be boutique in style and size with approximately 96 rooms and a restaurant and meeting facilities on the ground floor (total of approximately 86,000 square feet). A grocery store of 55,000 square feet is anticipated for the far west portion of the Redevelopment Area with four levels of affordable rental housing above and two levels of parking underground.The affordable housing will be approximately 170 units at 60% average median income. On the eastern side of the same block will be a cinema, estimated at 55,000 square feet, with twelve screens over ground level retail and an underground parking garage. Additionally, historic rehabilitation of two buildings on West Broadway will contribute approximately 28,000 square feet of retail below 60,000 square feet of office. The grocery, housing, and cinema, will extend beyond Section 108/BEDI Properties. See Exhibit B. b. Purpose / Community Development Objectives: The BEDI/108 funds will result in economic and community development that affects an important area within the City: the Downtown Urban Renewal District. The project will further the City’s economic development priorities listed in the Eugene-Springfield Consolidated Plan 2005. The Community Development component of the Plan provides the following summarized objective: “Promote economic development and diversification through the creation of jobs.” The five-year projected outcomes are for 200 jobs and 50 economic development loans. BEDI/108 funds will be used to complement other City programs designed to achieve these objectives. Specifically, the City’s Business Development Fund (BDF) will provide below- market financing to local business that create or retain jobs available to low and moderate income persons. The BDF may also provide financing for activities that eliminate slums or blight. In addition, at least 25% of the funds will assist emerging or high risk businesses facing extraordinary credit barriers through the Emerging Business Loan Pool. The downtown area is the economic and cultural center for the entire City. Prevalent levels of economic distress within the City’s center have a major impact on the quality of life for the entire community. The Redevelopment Area is in the Downtown Urban Renewal District, which is characterized by a high poverty rate, high unemployment rate, and other evidence of distress including extraordinary rental cost burden, high commercial vacancy rate, very low household income, and high crime rates. See Exhibit C. c. Land Ownership: Currently, the Section 108/BEDI Properties are privately owned by four entities who have signed five purchase option agreements with the URA. The URA would like to use proceeds from Section 108/BEDI to purchase the properties. Subsequently, the URA would sell/convey the property to the development teams. Beam Development (Beam) would retain ownership. KWG Development Partners (KWG) would retain ownership of a majority of their development with the exception of the hotel. See Exhibit B. d. Improvements Ownership: The improvements will be owned by the respective developers. The preliminary development program calls for the construction of embedded and below grade parking. A portion of the parking would be owned by the City for public parking. e. Business Types to be Assisted: As BEDI/108 funds will be used by the Urban Renewal Agency, no businesses will be assisted directly other than through relocation benefits as appropriate. f. Location / Address / Neighborhood / Map: The Redevelopment Area is in the Downtown Urban Renewal District. The District, originally established in 1968, includes an area of approximately 70 acres. The goals of the Downtown Urban Renewal District are to 1) improve the function, condition, and appearance of the development area, 2) eliminate blight and blighting influences, and 3) strengthen the economic conditions of the plan area and to improve the downtown’s importance in the region by strengthening its economic base and to enhance its role as a central location for public and private development and investment. Development in the District is intended to implement the adopted policies contained in the Downtown Plan. Specifically, the objectives of the plan are related to land use, access and circulation, public facilities and improvements, and rehabilitation. The project is located in Tract 3900, Block group 1 from the Census 2000. Section 108/BEDI funds will be used to purchase five properties (nine tax lots). The addresses and associated map letters for Exhibit A are: 43 West Broadway (D), 858 Willamette (E), 44 West Broadway and adjacent subsurface lot (C), 62 West Broadway (B), and 110 and 164 West Broadway (A). The properties are in the Downtown Neighborhood Association neighborhood. 2.Sources & Uses Preliminary Development Financing Plan for the Redevelopment Area Total SOURCES OF FUNDS Private Investment Total Private Investment $161,800,000 Public Investment HUD Section 108 Loan 7,895,000 BEDI Grant 2,000,000 Urban Renewal Revenue Bonds 6,600,000 Urban Renewal Cash 5,580,000 DRLP Funds 1,495,000 HOME Funds 800,000 City General Funds/Loan Guarantee 1,250,000 Total Public Investment 25,620,000 Total Sources $187,420,000 USES OF FUNDS Private Investment Land Assembly, Construction, Etc. $161,800,000 Public Investment Land Assembly, Utilities, Off-Site, Etc. 9,400,000 Public Parking (turnkey purchase) 13,500,000 Affordable Housing Loan 1,300,000 Other City Costs 1,420,000 Total Public Investment 25,620,000 Total Uses $187,420,000 For the KWG portion of the project, debt is anticipated to be at the lesser of 75% of fair market value or 85% of cost. For the Beam portion of the project, debt is anticipated to be 71% of the total cost. Urban Renewal Cash and Borrowings: The cash balances in the urban renewal funds, plus cash that becomes available over the next few years, would be used to pay for development costs. In addition, the URA is anticipated to finance a portion of the purchase of a turnkey public parking garage. Downtown Revitalization Loan Program: The Downtown Urban Renewal District has a loan program called the Downtown Revitalization Loan Program (DRLP). DRLP funds could also assist with the redevelopment. Specifically, once the project is complete, the DRLP can make loans to businesses within and around the area.A portion of a potential affordable housing loan to the developers could be made from the DRLP. The remainder of the DRLP funds could be used to assist with the cost of purchasing the turnkey garage. HOME Funds:This preliminary plan assumes $800,000 of HOME funds would be used to make an affordable housing loan to the developers.Annually, the City offers federal HOME funding for the development of low-income housing projects. A Request for Proposals (RFP) is issued under the auspices of the Housing Policy Board. Generally, about $800,000 is available for use in the subsequent fiscal year. The RFP is usually released in late fall with applications due in February. Council typically approves uses of HOME funds for specific projects by May. General Funds: If needed, the City’s general funds might make a minimal contribution to the project. An alternative would be for the Urban Renewal Agency to take on a higher level of debt that would be guaranteed by the City’s full faith & credit. These decisions will not be made until the City is ready to purchase the turnkey garage. 3.Project Structure & Participants a. Principal Developers: The City selected Beam and KWG for the Redevelopment Area. Beam is responsible for the renovation and development of two properties (the Centre Court and Washburne buildings). KWG is responsible for the remaining Redevelopment Area. The City is in the process of negotiating a Memorandum of Understanding (MOU) with each developer. The MOU is a non- binding agreement that states the intent of the City and developer, the roles and responsibilities of the parties, and establishes the period of exclusive negotiation to finalize a development agreement. The City expects to have binding agreements in the form of a Purchase and Sale Agreement (PSA) signed with each developer within the next six months. The PSA will fully delineate the obligations of each developer including the form and character of the development, timing, the mix of uses, required private financing and equity, and other obligations including those associated with federal program compliance. b. Developers’ Contractor & Leasing Agency: The contractors have yet to be selected by either development team. Beam will be responsible for securing leases for their buildings. Leasing for KWG will be completed by Gray & Associates, one of the four KWG principals. c. Private Funds Source: The PSA will include requirements for commitment of all necessary private financing and equity. Financing commitments will also be a condition precedent to closing on the property transactions with the developers. Beam equity will originate from company cash and New Markets and Historic tax credits, as applicable. Beam’s financing options include Gilbert Brothers Commercial Real Estate, Bank of the Cascades, and National Trust Community Investment Corporation. KWG’s most likely equity partner will be ScanlanKemperBard Companies (SKB), a Portland, Oregon based real estate investment banking firm. Other potential sources include NBS Realty Capital, Somera Capital, and other local high net worth individuals in the Portland area. KWG’s financing will most likely come from SKB with additional funds from Bank of America. d. Asset Ownership Upon Completion: Beam will own the Centre Court and Washburne buildings and the development on the adjacent property that is currently a subsurface lot. KWG will own the retail, cinema, grocery, and affordable housing. A private hotelier will own the boutique hotel. The City will own public parking (under the cinema and grocery). See Exhibit B. e. Borrower: The City of Eugene will act as borrower for the Section 108 loan funds. The City will enter into an agreement with the URA to carry out the project. (The URA would use Section 108/BEDI funds to purchase the properties. Subsequently, the URA would sell/convey the property to the development teams.) 4.Repayment Schedule 5.Collateral a. Description The City will pledge payments from a bond issued by the URA as security for the Section 108 loan. The bond is expected to be authorized by the URA at its meeting on July 23, 2007. The bond is expected to be repaid over the life of the Downtown Urban Renewal District, which has a termination date of June 30, 2024. On August 13, 2007, the City Council is scheduled to consider extending the district life to June 30, 2030. b. Source The loan will be repaid from tax increment funds from the URA or with income from the resale of the properties to the two development teams. The debt capacity for the Downtown Urban Renewal District is built only on existing property and tax revenues. It does not rely on tax revenues that have not yet been realized.See Exhibit D. 6.Project Implementation a. Estimated Project Schedule & Section 108 Timing: Several required Federal processes are underway simultaneously to enable the use of Section 108 funds for the existing purchase options in the Redevelopment Area. The first purchase option the City would like to exercise with Section 108 funds expires October 19, 2007 (858 Willamette, property “E” in Exhibit A). Environmental Review – May through October 2007 The City started the required environmental review in May 2007. The size and scope of the project requires an Environmental Assessment (EA). The project aggregation area for the EA includes the entire Redevelopment Area. Phase I and Phase II environmental assessment work is complete and has revealed no significant ground contaminants. Noise studies for each block have also been completed and show noise levels just above 75 decibels, which can be mitigated through construction. The required Section 106 review for historic preservation has been completed and is currently under review by Oregon State Historic Preservation Office (SHPO) with a response expected within 30 days. A Section 7 Informal Consultation is underway with National Oceanic and Atmospheric Administration (NOAA) Fisheries and US Fish & Wildlife Services due to potential impacts of stormwater runoff from the project into the Upper Willamette, which is critical habitat for several threatened or endangered fish species. Materials have been submitted to both agencies and a response is expected within 30 days. We have not identified any other issues that require consultation or additional studies. The City's goal is to conclude negotiations with federal agencies, publish the Notice of Intent to Release Funds / Finding of No Significant Impact (NOI/FONSI) Ad in mid August, and submit the Request for Release of Funds (RROF) to HUD in September. Slums and Blight Area Determination – April through July 2007 City staff has conducted a survey of the area and is in the process of formalizing the slums and blight determination for the area. Documentation for the properties includes and general area map, aerial photo and a photo of the façade (when applicable), address, map and tax lot number, year built, land and building square footage, zoning, overlay zoning, refinement plan designation, and current use. The Oregon Revised Statutes (ORS 457.010) definitions for slums and blight were used for each property and compiled on a matrix representing findings for the area. Each property was also reviewed for the conditions described at 24 CFR 570.208(b)(1)(ii). In addition, the location and general condition of the infrastructure in the area has been identified. See Exhibit E. Acquisition Procedure 1: Appraisal and Appraisal Reviews – Summer 2007 The City has initiated the basic acquisition policies detailed at 49 CFR Part 24.102 of the Uniform Act. Appraisals are underway on fourteen properties in the area with the intent that the Section 108 funds will be used on four to five of these parcels. Owners of all fourteen parcels were invited to accompany the appraiser on the walk-through of the property. The appraisals are due August 1. Quotes are currently being obtained for the review appraisals. The reviews are scheduled to occur in August. Acquisition Procedure 2: Complete acquisitions – October 2007 through October 2008 The URA secured purchase options on several downtown properties along West Broadway between Willamette Street and Charnelton Street. The five properties were selected for acquisition based on the likelihood that the option purchase price reflects fair market value. Based on the value established in the appraisals and appraisal reviews, the City will continue the acquisition process by offering just compensation for selected properties. Section 108 funds need to be in place by September 2007 for the purchase of the first Section 108/BEDI Property in October. Relocation Services – October 2007 ongoing The City Council will take action on the proposed use of Section 108/BEDI funds on July 23. After that action, the General Information Notices (GINs) will be sent to all tenants. The City will seek quotes for providing the relocation services in accordance with the Uniform Act in August and enter into a contract for these services in September.Services will be made available to eligible tenants. In addition to the benefits and services required under the Uniform Act for properties purchased with Federal funds, the Downtown Urban Renewal District Plan requires that the Urban Renewal Agency prepare, adopt and maintain a Relocation Policy prior to acquiring any property which will cause displacement. Relocation activities will be undertaken and payments made in accordance with the requirements of ORS 281.045-281.105 and any other applicable laws or regulations. Relocation payments will be made as provided in ORS 281.060. It is also likely that the City Council will set additional standards for all tenants in the Redevelopment Area. West Broadway Advisory Committee – Summer 2007 Eugene’s Mayor Kitty Piercy appointed an 11-member Citizen Advisory Committee as part of the public involvement component for the West Broadway Redevelopment Project. The com- mittee was created based on direction from the City Council to work with a qualified urban planner/facilitator and the developers to identify preferred design elements, mix of uses, public open spaces, options for parking, as well as a transition plan for existing businesses. Recommen- dations from this committee will be forwarded to the council in early September 2007. Project Specific – October 2007 through 2010 Project Planning – October 2007 through October 2008 Permitting – October 2008 through January 2009 Construction – January 2008 through January 2010 URA authorization to issue revenue bonds for public parking garage, as applicable – 2010 7.Eligible Activity BEDI/108 funds will be used for the eligible activity described at 24 CFR 570.703(a) acquisition of improved or unimproved real property, including acquisition for economic development purposes. Uses of BEDI funds will qualify under 24 CFR 570.703(a) acquisition. 8.National Objective The proposed BEDI/108 project will qualify for compliance with national objective 24 CFR 570.208(a)(4) job creation and retention activities to benefit low and moderate income persons. The affordable housing that will be above the grocery store on the western side of property “A” in Exhibit A will qualify for compliance with national objective 24 CFR 570.208(a)(3) housing activities. In the event that the RFQ concepts that were previously submitted by the developers change to include market rate housing on Section 108/BEDI Properties, the City will submit a change memo to the HUD field office. The memo will detail the specific Section 108/BEDI Property whose national objective will change from job creation to 24 CFR 570.208(b)(1) activities to address slums and blight on an area basis. No more than $4,318,500 (30%) of the combined annual CDBG allocation and BEDI/108 funds will be spent on activities which aid in the elimination of slums or blight. 9.Public Benefit Standards Under 24 CFR 570.703(a) acquisition of improved or unimproved real property, public benefit is provided by the creation of jobs that are available to persons of low and moderate income. Projects funded under 24 CFR 570.703(a) are not required to meet the public benefit test of one job per $35,000 of federal funds pursuant to 24 CFR 570.209(b). a. Jobs Created: The RFQ responses estimated that 1,600 new jobs would be created within the entire Redevelopment Area from the hotel, cinema, grocery store, and retail. Based on industry employment standards for each use, at least 660 full-time, permanent jobs will be created by uses on Section 108/BEDI Properties. A minimum of 51% of the created jobs will be available to low-moderate income individuals. See Exhibit F. b. Cost per Job Created: N/A because no public benefit calculation is necessary. 10.Brownfield Conditions Brownfields are vacant and underutilized properties whereredevelopment is complicated by actual or perceived environmental contamination. The West Broadway Redevelopment Area meets this definition in the following ways: Presence of vacant and underutilized properties – The Redevelopment Area has been characterized by high vacancy rates and depressed market conditions for over 20 years. The area suffered following the exit of major department stores, including JC Penney, Sears, Bon Marche, Kaufman’s, Woolworth’s, and Newberry’s. Many of these buildings remain vacant. Additionally, the Woolworth’s building was demolished and the excavated basement that still remains has created significant blight in the center of downtown. Presence of perceived and actual environmental contamination – The Redevelopment Area includes parcels with a number of historic uses that may have introduced ground contaminants including two gas stations, an auto repair shop, commercial dry cleaning operations, and a brewery/ice house. In addition, there are a number of underground storage tanks located within the Redevelopment Area. See Exhibit G for a map of the previous uses associated with potential ground contamination. See Exhibit H for the summary of the Phase I and Phase II Environmental Site Assessments. While recent tests within the Redevelopment Area have not identified any contamination that threatens human health or the environment, the concentration of potentially harmful historic activities creates a strong perception of environmental contamination and increases the costs and risks for redevelopment. 11.City Contact Michael C. Sullivan Community Development Division Manager th 99 West 10 Avenue Eugene, OR 97401 541-682-5448 541-682-5572 (fax) mike.c.sullivan@ci.eugene.or.us List of Exhibits A – Map of West Broadway Redevelopment Area & Section 108/BEDI Properties B – Map of End Uses & Land Ownership for Section 108/BEDI Properties C – Target Area Need, Downtown Urban Renewal District D – Downtown Urban Renewal Funds, Long-Term Financial Forecast E – Slums and Blight Area Determination Criteria F – Job Creation Titles G – Map of Previous Uses Associated with Potential Ground Contamination H – Summary of Phase I and Phase II Environmental Site Assessments for the West Broadway Redevelopment Area Exhibit A Map of West Broadway Redevelopment Area & Section 108/BEDI Properties A = 110 and 164 West Broadway B = 62 West Broadway C = 44 West Broadway and adjacent subsurface lot D = 43 West Broadway E = 858 Willamette Exhibit B Map of End Uses & Land Ownership for Section 108/BEDI Properties Exhibit C Target Area Need Downtown Urban Renewal District б°«´¿¬·±² ©·¬¸ Ü»¬»®³·²»¼ б°«´¿¬·±² ¾»´±© бª»®¬§ 1 Poverty Poverty Rate бª»®¬§ ͬ¿¬« Ô»ª»´ 27.51% Target Area îôðïð ëëí 17.10% City of Eugene ïíîôëðí îîôéïð 12.40% Nation îéíôèèîôîíî ííôèççôèïî Unemployment ̱¬¿´ б°«´¿¬·±² In Labor 2 Unemployment Rate ß¹» ïê ú Ѫ»® Force Employed Unemployed 6.62% Target Area îôéìî ïôîêç ïôïèë èì 6.20% City of Eugene (Jurisdiction) ïïîôèèì éíôéîê êçôðçì ìôëçê 5.70% Nation îïéôïêèôðéé ïíèôèîðôçíë ïîçôéîïôëïî éôçìéôîèê ر«»¸±´¼ ¬¸¿¬ ر«»¸±´¼ ¬¸¿¬ 3 °¿·¼ íðû ó ëðû ±º °¿·¼ëðû ±º Rental Cost Burden Percent of ̱¬¿´ 벬¿´ ïççç ײ½±³» ±² л®½»²¬ ±º ïççç ײ½±³» ±² Households ر«·²¹ ˲·¬ λ²¬Ø±«»¸±´¼Î»²¬ 26.83% Target Area ïîìï íðè îìòèîû ííí 29.10% City of Eugene (Jurisdiction) îéôçìé êôððí îïòëðû èôïîî 17.60% Nation íëôïççôëðî êôéëçôéïè ïçòîðû êôîðçôëêè 4 Housing Tenure Percent of ̱¬¿´ ر«·²¹ л®½»²¬ ±º 벬»® Housing Ñ©²»® ѽ½«°·»¼ ˲·¬Ø±«·²¹Ñ½½«°·»¼ 91.45% Target Area ïôíëé ïïê èòëëû ïôîìï 48.30% City of Eugene (Jurisdiction) ëéôçéè îçôççï ëïòéðû îéôçèé 33.80% Nation ïðëôìèðôïðï êçôèïêôëïí êêòîðû íëôêêíôëèè 5 Median Household Income Ò¿¬·±² üìïôççì Ý·¬§ üíëôèëð èëòíéû As % of City Median Household As % of National Median Target AreaIncome Household Income Tract and Bg 3900 1 üîíôëéï êëòéðû ëêòïðû 3900 2 üïëôðéê ìîòïðû íëòçðû 3900 3 üîðôîçè ëêòêðû ìèòíðû 1 Source: US Census 2000, SF3 Table P87 2 Source: US Census 2000, SF3, Table P43 3 Source: US Census 2000, SF3 Table H69 4 Source: US Census 2000, SF3 Table H7 5 Source: US Census 2000, SF3 Table P53 Exhibit D Exhibit E Slums and Blight Area Determination Criteria The structures in the Redevelopment Area were evaluated based upon the criteria defined by Oregon Revised Statutes (ORS 457.010 Definitions) and the Code of Federal Regulations citation 24 CFR 570.208(b)(1)(ii).To qualify as a Slums and Blighted Area, at least 25% of properties throughout the area must experience one or more of the following conditions. Oregon Revised Statutes 457.010 Definitions (1) “Blighted areas” means areas that, by reason of deterioration, faulty planning, inadequate or improper facilities, deleterious land use or the existence of unsafe structures, or any combination of these factors, are detrimental to the safety, health or welfare of the community. A blighted area is characterized by the existence of one or more of the following conditions: (a) The existence of buildings and structures, used or intended to be used for living, commercial, industrial or other purposes, or any combination of those uses, that are unfit or unsafe to occupy for those purposes because of any one or a combination of the following conditions: (A) Defective design and quality of physical construction; (B) Faulty interior arrangement and exterior spacing; (C) Overcrowding and a high density of population; (D) Inadequate provision for ventilation, light, sanitation, open spaces and recreation facilities; or (E) Obsolescence, deterioration, dilapidation, mixed character or shifting of uses; (b) An economic dislocation, deterioration or disuse of property resulting from faulty planning; (c) The division or subdivision and sale of property or lots of irregular form and shape and inadequate size or dimensions for property usefulness and development; (d) The laying out of property or lots in disregard of contours, drainage and other physical characteristics of the terrain and surrounding conditions; (e) The existence of inadequate streets and other rights of way, open spaces and utilities; (f) The existence of property or lots or other areas that are subject to inundation by water; (g) A prevalence of depreciated values, impaired investments and social and economic maladjustments to such an extent that the capacity to pay taxes is reduced and tax receipts are inadequate for the cost of public services rendered; (h) A growing or total lack of proper utilization of areas, resulting in a stagnant and unproductive condition of land potentially useful and valuable for contributing to the public health, safety and welfare; or (i) A loss of population and reduction of proper utilization of the area, resulting in its further deterioration and added costs to the taxpayer for the creation of new public facilities and services elsewhere. Code of Federal Regulations Department of Housing and Urban Development at 24 CFR 570.208(b)(1)(ii)(A): (1) Physical deterioration of buildings or improvements; (2) Abandonment of properties; (3) Chronic high occupancy turnover rates or chronic high vacancy rates in commercial or industrial buildings; (4) Significant declines in property values or abnormally low property values relative to other areas in the community; or (5) Known or suspected environmental contamination. Exhibit F Job Creation Titles Exhibit G Map of Previous Uses Associated with Potential Ground Contamination Exhibit H AttachmentG Updated Timeline for the West Broadway Redevelopment Project URA Selects KWG & Beam th May 14 Define Financing StrategyAdditional Public Participation May Advisory Committee formed Amend Downtown Urban Renewal Plan Section 108/BEDI st By June 1 (130 days) Consultant(s) Hired URA Initial OK June th May 29 Additional Public Input Process Advisory Committee & public input meetings June - July June – August Public Hearing Public Hearing thth July 16July16 CC Resolution rd July 23 Committee/Consultant Report completed CC Ordinance st By August 31 th August 13 HUD Approval (30 days) By September URA Final Project Approval & CC/URA Budget Authority September Renew Option on #10 ($2,000) Sign Purchase and Sale Agreement & Finalize Section 108/BEDI Funds Renew Option on #8 ($4,000 & price increase $70,000) September th By September 15 Renew Option on #5 & #7 ($4,000 & price increase $100,000) th By September 19 Purchase/Assign #6 ($625,000) th By September 25 Project Planning October 2007 – October 2008 Purchase/Assign #9 ($1,750,000) th By October 19 Purchase/Assign #11 ($2,800,000), #12 ($1,900,000), & #15 ($3,150,000) Permitting th By October 26 October 2008 to January 2009 Purchase/Assign #4 ($1,980,000) th Construction By November 17 January 2008 – January 2010 Purchase/Assign #8 ($900,000) URA Authorization to Issue Revenue Bonds By March 15, 2008 2010 Renew Option #3 ($12,000) URA Purchases Public Parking Garage March 19, 2008 FY10 Purchase/Assign # 10 ($1,200,000) By September 15, 2008 Purchase/Assign #5 & #7 ($1,550,000) By September 19, 2008 Purchase/Assign #3 ($2,191,140) By March 19, 2009 Purchase Remaining Necessary Property (not currently under option)