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HomeMy WebLinkAboutCC Minutes - 07/30/08 Work SessionM I N U T E S Eugene City Council McNutt Room—City Hall—777 Pearl Street Eugene, Oregon July 30, 2008 Noon COUNCILORS PRESENT: Bonny Bettman, Chris Pryor, Betty Taylor, Jennifer Solomon, George Poling, Andrea Ortiz, Mike Clark, Alan Zelenka. Her Honor Mayor Kitty Piercy called the work session of the Eugene City Council to order. She adjourned the meeting of the Eugene City Council and convened a meeting of the Eugene Urban Renewal Agency (URA). A. WORK SESSION: th Selection of Development Proposal for 10 and Charnelton Site City Manager Jon Ruiz stated that both development proposals were strong. He emphasized that staff would continue to work with whichever proposal was not selected by the council to determine if there were other opportunities. Mr. Clark, in the interests of full disclosure, declared that he had known Wally Graff of WG Development for over 20 years and while they had on occasion discussed the possibility of a joint business venture, there were no contracts or agreements in place. He wanted to clarify that in the event he had a future business relationship with Mr. Graff. Nan Laurence, Planning and Development Department, used a PowerPoint presentation to illustrate features and compare the proposals under consideration from WG Development and Opus NWR Development. She reviewed details of each proposal in terms of urban design and active uses and project feasibility and public benefit. In conclusion, she said that both proposals added value and activity to downtown and contributed to a quality urban environment. She said both projects were supported by the Downtown Plan and were financially feasible, although the Opus proposal was stronger financially, and both supported the goal of a revitalized downtown. She said the recommendation was to direct the agency director to enter into an exclusive negotiation period not to exceed 90 days with either WG Development or Opus NWR Develop- th ment for the sale and development of the 10 and Charnelton site and return to the URA with terms of the sale and development for approval. Ms. Bettman indicated she preferred the more urban-scale Opus design and had concerns with the design of th the WG project on 18 Avenue. She questioned whether there would be more design improvements given economic projections. Ms. Laurence said design refinements would occur when a project had moved from conceptual to schematic design. She felt both proposals presented preliminary designs and assumed that further design refinements would be forthcoming, although that did not mean that additional funds would be put into higher quality materials. MINUTES—Eugene City Council July 30, 2008 Page 1 Work Session Ms. Bettman asked for elaboration on the developers’ reliance on the projection of a better lending environment at the end of 2009 and the risk that posed. Ms. Laurence said staff used the analysis from Johnson Gardner, financial consultant, to determine where developers were in expected markets. She said the analysis assumed a conservative increase between now and 2011, but that remained a risk factor. Mike. Sullivan, Planning and Development, added that if there was significant pre-leasing and equity in a project, the development would be able to move forward, assuming the revenue model was appropriate. He said the WG borrowing model was somewhat lower than market, while the Opus model was more consistent with the market. Ms. Bettman asked why WG did not go forward with the feasibility study to provide greater assurance. Mr. Sullivan opined that WG was waiting until one was required by a financial institution. Ms. Bettman noted that abatement costs were not included and WG had indicated that the City would need to pay any abatement costs. Mr. Sullivan said that previous site studies had not indicated any potential abatement concerns. Ms. Bettman said the WG proposal did not specify who would pay the cost of administering the grant for public art. Mr. Zelenka observed that the three percent rate of return for the Opus project was far below what investors typically wanted. Mr. Sullivan said the Opus business plan was to build, stabilize and sell, with sale proceeds becoming part of the total return; on that basis the performance was quite good. Mr. Zelenka noted that there was less public subsidy for the WG project. Mr. Sullivan noted that the primary difference was the tax exemption value based on housing investment; the Opus project included far more housing units. In response to a comment from Mr. Zelenka, Mr. Sullivan said Pacific University had made a commitment of interest for 20,000 square feet of space in the WG project. Mr. Clark expressed his pleasure with the two proposals and said one of the questions was which was more appropriate from a design perspective on the site across from the Downtown Library. He asked if WG project’s courtyard would be private or public space. Ms. Laurence said she understood the courtyard would be privately owned, but available for public use under certain circumstances. Mr. Clark noted that the WG project was willing to make space available for a public safety kiosk, which would be a benefit to that area in downtown if the City had the capacity to staff it. He also liked the Opus project and the developer’s financial stability and proven track record, but favored the WG project because of the level of local involvement and commitment. He hoped the City could find a way to facilitate both projects. Ms. Piercy asked if staff had determined the feasibility of moving forward with both projects in the th downtown area. Ms. Laurence said there were no other sites in downtown equivalent to the 10 and Charnelton site that were owned by the City, but there were some privately held parcels that could be investigated. Ms. Piercy noted that the Lane Transit District station on the east side of the library included a public safety kiosk. MINUTES—Eugene City Council July 30, 2008 Page 2 Work Session Ms. Taylor commented that a public safety kiosk would benefit the developer. She was concerned with guarantees from both developers. She asked if there were any guarantees that a developer would fill the open pit on the site if a project was unable to move forward. Mr. Sullivan said that could be included in the terms of the agreement with the prevailing party. th Ms. Taylor indicated she did not like the design of the WG project on 18 Avenue and wanted a guarantee that the downtown project would not be similar. She also was interested in a guarantee that the project’s open space would be available to the public. She had hoped the City would sell half of the site and put a park on the other half. She asked if staff had discussed that possibility with the developers. Ms. Laurence said staff was responding to the URA’s development objective for dense, quality urban development, which meant the entire half block would be used for development. Ms. Taylor expressed concern about the prospect of Opus selling its project after a few years and the possibility of having dormitories in downtown that might be eventually abandoned. Mr. Pryor agreed with Mr. Clark that both proposals incorporated many benefits to the downtown area. He was leaning toward the Opus project because of the larger number of housing units and the potential for moving forward quickly, but hoped that both projects could be implemented. He liked the design of WG’s th 18 Avenue building. Ms. Solomon asked if there would be urban renewal funds available to assist a second project if a site was identified. Mr. Sullivan said there were remaining proceeds in both the downtown and riverfront districts th and resources would not be exhausted by the 10 and Charnelton site. Mr. Poling said there was only a few months difference in the timing of the projects and both would provide housing for students. He was somewhat concerned about a concentrated population of college-age residents and associated problems. Ms. Bettman asked if the WG project was requesting a grant or a loan for project enhancements. Mr. Sullivan said there was no specific request; the developer had indicated they might require some additional assistance for project enhancements. Ms. Bettman expressed concern with subsidizing a development that would house businesses that competed with downtown businesses and office space. She said a market analysis was needed from WG and asked if there would be consequences if the project timeline was not met. Ms. Laurence said the project timeline would be included in the development agreement and failure to meet it could be a breach of contract. Mr. Sullivan said the consequences would depend on what stage the project was in at the time and include remedies such as taking the property back. Ms. Bettman asked if there was any guarantee that WG would not sell the project once it was completed. Mr. Sullivan said there was no guarantee, but that was inconsistent with the company’s business plan in the community. Ms. Bettman indicated she preferred the Opus project because of its greater financial certainty and its urban-scale design. MINUTES—Eugene City Council July 30, 2008 Page 3 Work Session Mr. Zelenka asked if the development agreement could include a requirement that the project design be similar to what had been included in the proposal. Ms. Laurence said that could be done, but there were also cost issues to be considered. Mr. Zelenka said he did not feel the need for additional market analysis for either housing or commercial space. Ms. Laurence noted that the Opus study had only addressed student housing. Mr. Zelenka felt that both projects were strong and very similar in terms of design and quality, but preferred the WG proposal because of the mixed use and local involvement. Mr. Ruiz agreed that both proposals were very good, but still recommended the Opus project because of the certainties regarding financial stability and ability to implement quickly. He said the Beam mixed use project was somewhat similar to the WG project, which raised a concern about adding more of that type of space to downtown. He said staff was willing to work with both developers. Mr. Pryor reiterated that both were great projects and would be a credit to downtown. He would be pleased with whichever project was selected. Mr. Pryor, seconded by Ms. Bettman, moved to direct the agency director to enter into an exclusive negotiation period not to exceed 90 days with Opus NWR Devel- th opment, LLC, for the sale and development of the 10 and Charnelton development site and return to the City Council, acting as the Urban Renewal Agency, with the proposed terms of the sale and development following the negotiation period. Ms. Ortiz, seconded by Mr. Zelenka, moved to amend the motion by substituting WG Development for Opus NWR Development. Ms. Ortiz asserted that both were good, viable projects and the community was fortunate to have such a choice. She hoped that the City Manager would continue to pursue working with whichever developer was not selected. Ms. Solomon said that WB’s proposed occupancy date was September 2011 and Opus’s occupancy date was July 2010. Ms. Bettman felt that choosing WG would kill the Opus project because its financial projects were based on moving forward immediately. She wanted additional time to gain better understanding of WG’s financial nuances. She preferred to move forward with the Opus project and negotiate for another site for the WG project while addressing some of the questions regarding the WG proposal. She would not support the amendment to substitute WG Development. Ms. Taylor said she was not interested in the City assisting with two projects. She said she was initially inclined to support Opus because of the connection with the University of Oregon, but many people in the community had spoken against siting a dormitory in downtown. She was concerned with taking the land back in the event of a breach of contract and preferred another remedy such as a non-refundable deposit. Mr. Zelenka clarified that the occupancy dates for Opus and WG were July 2010 and September 2010 respectively, a difference of only a few months. MINUTES—Eugene City Council July 30, 2008 Page 4 Work Session Ms. Bettman asked how another site for the Opus project would be funded if the WG project was selected th for the 10 and Charnelton site. Mr. Sullivan said sites currently owned by the City could be put forward and if those were not considered by Opus to be appropriate, there were funds available in the downtown district for another site, but those funds were limited. Mr. Pryor said he would vote against the motion to substitute WG Development, but if it passed he would support the amended main motion as it was important for the council to demonstrate unanimity in its support of a project. The motion to amend passed, 6:2; Ms. Bettman and Mr. Pryor voting no. Ms. Bettman stated she would not vote for the amended motion as she was unwilling to risk public funds when the project’s financial information was incomplete. Mr. Zelenka said he would support the motion. He agreed there was somewhat more risk with the WG project, but noted that the public subsidy was $2.2 million less with the WG proposal, which outweighed the risk. The main motion as amended passed 7:1; Ms. Bettman voting no. Mr. Clark, seconded by Mr. Poling, moved to direct the agency director to explore with Opus NWR Development the possibility of developing Opus’s proposal on another site in the downtown area and report back to the agency on the results of the discussions as soon as possible. Mr. Clark said the possibility existed that privately-owned property in the immediate area might be available for the other proposal and encouraged staff to explore that with property owners. Ms. Bettman, seconded by Ms. Ortiz, moved to amend the motion to include that any City financial participation shall exclude the possibility of an increased spend- ing limit of either urban renewal district. Ms. Bettman said that locating the Opus project on another site would require the purchase of that site, which would require an additional subsidy and open a new set of issues. Mr. Zelenka did not see that implication in Mr. Clark’s motion, but would support the amendment. He asked what amount of resources would remain after the Beam and WG projects were completed. Mr. Sullivan replied that there would be approximately $4 million still available and staff would provide a memorandum detailing those financial resources. Ms. Taylor supported the amendment and was opposed to spending any additional urban renewal funds or expanding the debt limits or boundaries. She also opposed destroying the Tango Center. Ms. Bettman said her intent was to assure that any proposal was based on existing financial capacity. The vote on the motion to amend was a 4:4 tie; Ms. Taylor, Ms. Bettman, Ms. Or- tiz, and Mr. Zelenka voting yes, and Ms. Solomon, Mr. Poling, Mr. Pryor, and Mr. MINUTES—Eugene City Council July 30, 2008 Page 5 Work Session Clark voting no. The Mayor cast a vote in support of the motion and it passed on a final vote of 5:4. The motion as amended passed, 7:1; Ms. Taylor voting no. Ms. Piercy adjourned the meeting of the URA and convened the meeting of the City Council. Ms. Bettman, seconded by Mr. Pryor, moved that the City Council offer the posi- tion of interim police auditor to Deputy Auditor Dawn Reynolds and if she ac- cepted, appoint her as interim police auditor starting August 23, 2008, and direct the council officers to draft a compensation package commensurate with the interim police auditor position and bring it to the council for review and approval before the break. Ms. Solomon asked how long Ms. Reynolds had been the deputy auditor. She questioned the need to appoint an interim auditor and wondered why Ms. Reynolds could not just continue in her position as deputy police auditor. She had just seen a copy of Ms. Reynolds resume. City Attorney Glenn Klein advised appointing an interim police auditor as there was some question as to whether the deputy auditor had all of the same powers as the police auditor; an interim police auditor would have those powers. Ms. Solomon observed that there were still unresolved issues related to the functioning of the police auditor position and its interaction with the council. She hoped those issues would be addressed in a clear manner before another police auditor was hired. Mr. Poling asked if Ms. Reynolds could apply for the police auditor position given the prohibition in the last police auditor recruitment against an applicant’s having a previous working relationship with the City of Eugene or its police officers. Mr. Klein said that prohibition could be removed in the new recruitment process and Ms. Reynolds would not be precluded from applying for the position. Mr. Zelenka thanked Mr. Pryor for his due diligence in discussing the interim auditor position with Ms. Reynolds. He would support the appointment. Ms. Taylor indicated she would support the appointment of Ms. Reynolds and had confidence in Christine Beamud’s recommendation of her. Mr. Clark said he was willing to proceed on the basis of Mr. Pryor’s recommendation, although he had not had time to fully review Ms. Reynolds’s qualifications. He hoped that the process of hiring a new police auditor would not be rushed and would allow sufficient time to address the concerns raised by some members of the council and community, as well as provide for a thorough and effective recruitment process that would result in the best possible candidate being hired. Ms. Bettman thanked Mr. Pryor for pursuing the appointment of an interim police auditor. She was concerned about undue delays in the hiring process and gave examples of problems that resulted when there was a delay in hiring a city manager. MINUTES—Eugene City Council July 30, 2008 Page 6 Work Session Mr. Zelenka commented that four to six months was a typical recruitment process timeline for a position at the level of the police auditor and it should be possible to complete the process by the end of the year. Mr. Poling noted that there was a big difference between hiring a police auditor and a city manager, as the police auditor was not responsible for the day-to-day operations of the entire City organization. Mr. Pryor said a work session would be scheduled to discuss the recruitment process. The motion passed, 8:0. The meeting adjourned at 1:30 p.m. Respectfully submitted, Jon Ruiz City Manager (Recorded by Lynn Taylor) MINUTES—Eugene City Council July 30, 2008 Page 7 Work Session