Loading...
HomeMy WebLinkAboutCC Minutes - 10/22/08 Work SessionM I N U T E S Eugene City Council Work Session McNutt Room 777 Pearl Street—Eugene, Oregon October 22, 2008 Noon COUNCILORS PRESENT: Mike Clark, Jennifer Solomon, Betty Taylor, Bonny Bettman, Andrea Ortiz, George Poling, Alan Zelenka (via telephone), and Chris Pryor. Her Honor Mayor Kitty Piercy called the meeting of the Eugene City Council to order at 12:00 p.m. Ms. Piercy noted items to be discussed that were not included in the meeting agenda concerned the updated police auditor brochure and ballot postage for the upcoming November elections. Mr. Pryor, seconded by Ms. Bettman, moved for approval of the recruitment brochure for the police auditor. The motion passed unanimously, 7:0. (Mr. Zelenka had not yet joined the meeting by phone and was not present for the vote.) Ms. Bettman, seconded by Ms. Ortiz, moved to allocate up to $2,500 from the General Fund contingency to pay for Eugene’s approximate share of postage due on mailed ballots. Ms. Bettman commented she had been alarmed to learn that the ballots provided to citizens for the upcoming elections were larger than had been anticipated and would require additional postage beyond the standard $0.42 in order to be mailed correctly, a fact which Ms. Bettman felt had not been adequately communicated to the community. She expressed that it was very important that every vote be counted properly. Ms. Piercy noted that State Representative David Edwards was also concerned about the postage matter for the ballots and had been working at the state level to provide additional funds for ballot postage. Mr. Clark said he supported the motion, noting that he had spoken to Lane County Commissioners Bobby Green and Faye Stewart regarding the matter. He noted that the Lane County Board of Commissioners had passed a motion to cover a majority of the funds that would be required to make sure that the ballots were delivered and counted properly. Mr. Poling confirmed that Ms. Bettman’s motion indicated that it would provide for any funds over the standard $0.42 postage rate so that no one’s ballot would arrive at the Lane County Board of Elections office with postage due whereupon it might be returned to the voter. Ms. Solomon asked if the City had the support of the post office regarding the motion and if they knew of the potential problem regarding the larger, heavier ballot envelopes. Ms. Piercy could not answer the question but noted that her understanding was that any ballot arriving with postage due would be rejected. Mr. Clark commented that he understood that the Lane County Commissioners had that morning agreed to accept any ballots that had insufficient postage and that such coverage would be covered out of their contingency funds. He supported Ms. Bettman’s motion and felt it was a good way for the City to step up and make sure that each vote was counted properly. MINUTES: Eugene City Council October 22, 2008 Page 1 Work Session Ms. Ortiz noted that voters could still drop their ballots off themselves at the various drop boxes throughout Lane County. Mr. Piercy noted there was a general unawareness in the community of the additional postage required by the larger ballots. She further noted that the council’s actions in this matter would not be taken on as a permanent policy, but only as a means to address this unique problem. Ms. Piercy called for a vote on Ms. Bettman’s previously stated motion. The motion passed unanimously, 7:0. (Mr. Zelenka had not yet joined the meeting by phone and was not present for the vote.) A. WORK SESSION: th Review of Outline of Terms of Sale and Development of 10 and Charnelton Site Ms. Piercy convened the meeting of the Eugene Urban Renewal Agency (URA). Ms. Piercy expressed surprise at a recent Register-Guard article and, after speaking with City Manager Jon Ruiz, felt th that the article was an inaccurate representation of the current status of the development project at the 10 and Charnelton site. Mr. Clark commented for the benefit of the board and the community that he had no current business relationship with WG Development, although Mr. Clark’s advertising business had done business with WG Advertising. He noted that he had conferred with the City attorney, who had in turn informed him that there appeared to be no actual or potential conflicts of interest represented by Mr. Clark’s involvement in any matters concerning the WG Development proposal. Planning Division Manager Michael Sullivan reiterated the statement and background of the issues surrounding the th development of the 10 and Charnelton site from the agenda item summary previously submitted to the council. Mr. Sullivan noted that the timeline regarding WG Development’s project had been amended after the timeline included in their original Request for Proposal (RFP) response appeared to be overly optimistic. He commented that, contrary to recent newspaper reports, the project had not suffered any delays due to recent economic downturns. Planner Nan Laurence presented an overview of the terms of the proposed purchase and sale agreement, as well as th an update on the overall status of the project. She noted that the portions of the 10 and Charnelton development site owned by Diamond Parking would soon be acquired by the URA at which time the property could be conveyed to WG Development. Ms. Laurence proceeded to brief the council on the elements of the purchase and sale agreement as reflected in her slide presentation as well as in the outline previously distributed to the council as attachment A to the agenda item summary. Ms. Laurence noted that Wally Graff and Nathan Phillips of WG Development were in attendance at the meeting, as was John Bartell of Opus NWR Development. Ms. Laurence, in reviewing the financial terms summary from her presentation, noted that the terms encompassed not only the purchase price, but also the systems development charges (SDC), building permit fees, and any costs associated with vacating the alley adjacent to the site. She reported that, under the terms of the proposed agreement, WG Development would agree to pay $500,000 for the land and another $500,000 for the SDC’s, and that the City would be responsible for both building permit fees and any fees related to the alley vacation. Mr. Zelenka joined the meeting by phone at 12:15 p.m. MINUTES: Eugene City Council October 22, 2008 Page 2 Work Session Ms. Laurence continued to review the remainder of the proposed purchase and sale agreement for the benefit of the council, also noting that the due diligence period described therein ended on March 30, 2009, not March 30, 2008, as was listed in the materials distributed to the council. Ms. Laurence noted that the alley vacation listed as part of the proposed purchase and sale agreement would not be finalized during the work session, but that the application for the alley vacation would be presented to the council for their approval in the near future. Ms. Laurence proceeded to describe the parking characteristics of the development project, as well as the initial project timeline that was listed in her October 13, 2007, memo to the council. Additionally, Ms. Laurence noted that the permits for the project were to be submitted no later than November 30, 2009, with construction to begin within 30 days after permits were issued. Ms. Laurence noted that, according to projected timelines, permits for the development project were expected to be issued in February of 2010. Ms. Laurence described additional provisions from the proposed purchase and sale agreement, including the right to repurchase, the possible application of MUPTE or vertical housing tax exemptions, and BOLI prevailing wage determinations. Ms. Laurence restated the staff recommendation from the agenda item summary before briefing the council on the next steps of the project should the terms be approved as recommended. Ms. Laurence reported that staff had worked with Opus NW Development to suggest alternative sites for their proposed student-housing development project. She noted a letter from Opus Vice President John Bartell which expressed that none of the 14 alternative sites evaluated met the criteria for the development project Opus NW had th initially intended for the 10 and Charnelton site. She noted that Opus had investigated the possibility of acquiring th the north half block of the 10 and Charnelton site, but concluded that doing so would be significantly more expensive than the south half-block of the site that was to be developed by WG. Ms. Taylor commented that the WG Development project did not look promising to her. She requested clarification on the matter of prevailing wages under BOLI standards. Mr. Sullivan responded that prevailing wages would be determined by the BOLI commissioner with respect to whether or not the development project could be considered a public work. Mr. Sullivan added that the prevailing wage for the project would most likely be well above what was required by recently passed City ordinances. Ms. Taylor expressed that the right to repurchase clause of the agreement might be overly advantageous to WG Development, and was worried that the City might find itself right back where it started if the development on the site was somehow carried out improperly or untimely and the City needed to exercise the right to repurchase. Ms. Laurence responded that the right to repurchase clause was part of standard purchase and sale agreement language. Mr. Ruiz noted that the City wanted to maintain some sort of leverage against any developers to ensure that the projects were carried out in a proper and timely manner. Ms. Laurence reiterated that the $50,000 deposit paid by WG Development against the property would become non-refundable once the due diligence period had expired. Ms. Piercy recalled that the council had requested the right to repurchase be included in the proposed purchase and sale agreement so that the City could ensure that the property would not lay dormant and undeveloped for extended periods of time. Mr. Ruiz agreed with Ms. Piercy’s recollection. Ms. Bettman asked for clarification of the parameters surrounding the right to repurchase as it had been proposed. She felt that the relatively small amount of the deposit WG had placed on the property did not leave the City in a MINUTES: Eugene City Council October 22, 2008 Page 3 Work Session strong enough position to ensure the swift development of the site, and also that the terms of the proposed purchase and sale agreement should be more specifically defined. Ms. Bettman stated her opinion that the WG Development proposal was an overly speculative project to begin with, and that given recent economic downturns the council should seriously reconsider the Opus NWR Development proposal. Ms. Solomon, in addressing the BOLI prevailing wage and MUPTE tax exemption obstacles, noted that unfavorable determinations in either of those areas could ultimately kill the entire development project. She felt that it was highly important that the City investigate the matter more thoroughly before proceeding, perhaps even to the point where the prevailing wage and tax exemption determinations could be finalized before the approval of the purchase and sale agreement. Mr. Sullivan responded that the City would need a finalized purchase and sale agreement to present to the BOLI commissioner before the prevailing wage determination could be made. Mr. Zelenka asked how long the prevailing wage determination from BOLI would take once the final agreements had been submitted. Mr. Sullivan answered that the determination would take approximately 60 days. Ms. Sullivan, responding to a question from Mr. Zelenka, noted that the final draft purchase and sale agreement would need to be signed by all relevant parties no more than 30 days after it had been approved by the council. Mr. Zelenka asked if the proposed purchase and sale agreement specified timelines and procedures for termination by either the City or WG in the event that the BOLI determination was unfavorable. Mr. Sullivan answered that the firm property acquisition timeline listed in the purchase and sale agreement would be the timeline in which any such termination procedures would need to operate. Mr. Sullivan added that BOLI’s threshold requirement for making the prevailing wage determination was a finalized draft of the purchase and sale agreement, and that any termination of the project would subsequently be operating under the terms listed in the agreement. Mr. Ruiz asked if Mr. Zelenka was asking for some sort of pull-the-plug provision in the contract for the City where within a certain number of days after the BOLI determination all parties would be required to move forward as agreed. Mr. Zelenka answered that he did not want the City to be put in a position where WG would wait until the very end of the due diligence period only to withdraw from their commitments because of the prevailing wage determination. Mr. Zelenka agreed with Ms. Solomon’s position that the prevailing wage issue could ultimately kill the project. Mr. Sullivan responded to Mr. Zelenka’s comments by saying that some sort of short term trigger to terminate the project after the BOLI prevailing wage determination had been made would be a reasonable approach to take. Ms. Laurence, responding to a question from Mr. Zelenka, noted that the repurchase price of the property would be the original purchase price paid by WG Development, $500,000, minus any forfeited deposits. She added that the repurchase price could be reduced depending on encumbrances or liens by no more than $450,000. Mr. Zelenka noted his support for the MUPTE tax exemption for the project, and stated he would be willing to revise the timeline for the project to provide an additional six months in the hopes that economic conditions might improve within that period. Mr. Zelenka maintained that the City should be willing to shift gears and open the site to other development proposals such as Opus NW should WG Development not proceed with the project in a timely and efficient manner. MINUTES: Eugene City Council October 22, 2008 Page 4 Work Session Ms. Ortiz asked for clarification of Mr. Zelenka’s comments regarding the BOLI prevailing wage determination, adding that she would prefer to stick with the current proposed timeline rather than providing for an additional six months. Mr. Clark inferred that what Mr. Zelenka wanted with regard to the purchase and sale agreement was a short window of time following the BOLI determination during which the City could ultimately veto the project. Mr. Clark asked what elements would need to be addressed by WG Development in the event the prevailing wage determination from BOLI was unfavorable. Mr. Sullivan answered that the labor costs to WG could change drastically as a result of the prevailing wage determination, and that the decision to proceed with increased labor costs would rest with WG Development. Mr. Clark agreed with Mr. Zelenka’s position that the City should attempt to protect its own interests should the prevailing wage matter not play out favorably to either party, but wanted to ensure that WG was given adequate time in which to proceed properly. Ms. Piercy agreed that the City should give WG Development adequate time to execute the project, but asked the council to consider keeping the Opus NW proposal on the table as a backup plan. Ms. Laurence, responding to a request for clarification regarding the project timeline from Ms. Bettman, noted that ten months had been added to the timeline of the project since its inception in order to allow for a more thorough negotiation of the purchase and sale agreement as well as a more realistic timeframe for the drafting of design and construction documentation. She added that the City had also needed additional time in which to address a number of elements such as the alley vacation and the MUPTE tax exemptions. Ms. Bettman felt that the additional time added to the project timeline was troublesome, and worried that the development project might eventually be forced to add even more time. Ms. Laurence, responding to a question from Ms. Bettman, answered that no firm date for completion of the project’s construction had been incorporated into the proposed purchase and sale agreement, but added that preliminary estimates indicated that construction would completed in July of 2011. Ms. Bettman restated that the WG Development project was overly speculative and wanted to keep the door open for Opus NW. Ms. Bettman, seconded by Ms. Taylor, moved to direct the Agency Director to a) th immediately cease negotiations with WG Development for the 10 and Charnelton development site; b) to work with WG Development on a different site for its project; and c) to negotiate with Opus NWR Development as quickly as practicable to set a sale of terms th for the sale and development of the 10 and Charnelton site and to bring an outline of those terms back to the Agency for review and approval. Ms. Bettman noted she recently had a conversation with representatives of Opus NWR and felt they were eager to proceed with the development of their proposed project for the site. Ms. Bettman maintained that the project timelines stated by Opus in their previously submitted proposal were more certain and less speculative. Mr. Sullivan commented that completion dates for the project were dependent on a number of factors including financing. He stated that the City’s goal would be to have as much of the financing issue settled with investors and lenders as possible to make the project proceed smoothly. Ms. Laurence and Mr. Sullivan, responding to request for clarification from Mr. Pryor, restated that the timelines for the WG Development project had been revised from their initial proposals, but that they had been changed with input and discussion from the City so that both parties’ various needs could be addressed. MINUTES: Eugene City Council October 22, 2008 Page 5 Work Session Mr. Pryor noted that WG’s willingness to work with the City to determine more reasonable timelines for the project had been instrumental to his position with regard to his vote on the approval of the purchase and sale agreement. He noted that while he had initially agreed with Ms. Bettman in her support of the Opus NWR proposal, the will of the council had been to choose the WG Development proposal instead and that as such he wanted to give WG the good faith opportunity to complete the project as they had proposed. Mr. Pryor noted that while he continued to support the continued development relationship with WG Development, he was reluctant to support any further extensions to the project timelines. Mr. Clark, seconded by Mr. Poling, moved to extend the discussion of the work session agenda item for an additional five minutes. The motion passed unanimously, 8:0. Mr. Clark indicated that while he had greater confidence in the financial health of Opus NWR as a developer and agreed with certain elements of Ms. Bettman’s position, he felt that the development of the project with WG was the best option for the City, particularly in light of the architectural merits of the proposed building as well as the strong level of public support for the WG Development proposal. He stated that he would not support Ms. Bettman’s motion. th Ms. Taylor commented that while she still hoped that the City might have turned the 10 and Charnelton site into a public park or community garden, she continued to prefer the WG Development project after listening to the concerns of the community. Ms. Piercy called for a vote on Ms. Bettman’s previously stated motion. The motion failed, 2:6, Ms. Bettman and Ms. Taylor voting in favor. Mr. Pryor, seconded by Ms. Ortiz, moved to direct the Agency Director to enter into a th Purchase and Sale Agreement for the sale and development of the 10 and Charnelton development site consistent with the outline of terms included as Attachment A, and in the event that the URA would be unable to successfully execute an agreement by March 31, 2009, that the URA enter into negotiations with Opus NWR Development. Mr. Ruiz asked the Council to clarify the nature of Mr. Pryor’s motion with regard to the possibility of continued negotiations with Opus NWR. Mr. Pryor clarified, saying the motion directed further negotiations with Opus NWR only after March 31, 2009, and not before. Mr. Ruiz commented he was sensitive to the issue of timing with regard to continued negotiations with Opus NWR, and that it might be advisable to begin negotiating a backup plan with Opus NWR now instead of waiting for March 31. Mr. Pryor responded that, in the interest of fairness and good faith to WG Development, his motion was designed to specify a date on which to re-enter formal negotiations with Opus NWR, but that it would be acceptable if the City Manager’s office chose to proceed with informal negotiations with Opus NWR in the interim. Ms. Ortiz appreciated Mr. Pryor’s clarification of his motion, and noted her support of a continued development relationship with Opus NWR. Ms. Bettman indicated she would not support Mr. Pryor’s motion and restated her belief that the WG Development proposal was not a strong proposal to begin with. Ms. Piercy called for a vote on Mr. Pryor’s previously stated motion. The motion passed, 7:1, Mr. Pryor, Mr. Clark, Mr. Poling, Ms. Taylor, Ms. Ortiz, Ms. Solomon and Mr. Zelenka in favor. MINUTES: Eugene City Council October 22, 2008 Page 6 Work Session Mr. Ruiz reminded Mr. Zelenka that no kind of trigger mechanism with which the project could be terminated was currently being incorporated into the purchase and sale agreement. Mr. Zelenka indicated he understood Mr. Ruiz’s statement. Ms. Piercy adjourned the meeting of the Urban Renewal Agency and reconvened the work session meeting of the City Council at 12:55 p.m. B. WORK SESSION: An Ordinance Concerning Multiple-Unit Housing Property Tax Exemption (MUPTE) and Amending Sections 2.945 of the Eugene Code, 1971 Urban Services Manager Richie Weinman presented an overview of the central tenets and history of the MUPTE program for the benefit of the council as well as an overview of the proposed amendments. A copy of Mr. Weinman’s presentation was submitted to the council with their agenda materials. Ms. Taylor was opposed to expanding the boundaries of the MUPTE program as indicated in Mr. Weinman’s presentation and believed the boundaries should be back to their original designations. She indicated that the most favorable option being presented was the proposed amendment to reduce the MUPTE boundary to the Downtown Plan Area, further stating her position that the Riverfront area should not be included in the revised boundary. Ms. Taylor stated that while she approved of the points system proposed for evaluating the MUPTE criteria, she felt it was too easy for developers to meet certain portions of the proposed criteria. Mr. Clark indicated that the discussion surrounding the MUPTE program was very interesting to him in that it highlighted the taxpayers’ willingness to accept a short term tax exemption versus the long term tax assessment viability of the properties in question. He reminded the council that while buildings under the MUPTE were tax exempt under the program for the short-term, the land on which the property existed was still taxable. Mr. Clark thanked staff for their work on determining the MUPTE evaluation criteria, and further noted that he was in favor of the proposed boundary options C and F as presented by Mr. Weinman. Mr. Clark maintained that the thth inclusion of the 6 and 7 Avenue corridor and Trainsong Neighborhood into the MUPTE was essential to the well- being of the community. Mr. Clark opposed the elimination of the West University Neighborhood from the MUPTE area boundaries, particularly since his recent conversations with University representatives indicated that there would be an enormous increase in the number of students over the coming years. Ms. Solomon felt that the MUPTE boundary options presented to the council did not need to be an either/or proposition with respect to the inclusion or exclusion of the Trainsong and West University Neighborhoods. She added that she was concerned that removing the West University Neighborhood from the MUPTE boundaries would encourage competition for housing between the Trainsong and West University Neighborhoods. Mr. Weinman, responding to a question from Mr. Poling, clarified the nature of the MUPTE approval criteria points system, noting that the Council was legally obligated to retain the final decision regarding property tax exemptions and that the points system was designed to aid the council in that regard. thth Mr. Poling stated he was in favor of including the 6 and 7 Avenue corridor and the Trainsong Neighborhood within the MUPTE boundaries, stating that its inclusion was vital to the continued prosperity of the area. Mr. Pryor felt that the points system for the MUPTE approval criteria would best be used as a set of flexible guidelines for the council to follow in making their decisions regarding MUPTE approval. He maintained that MINUTES: Eugene City Council October 22, 2008 Page 7 Work Session MUPTE applications, regardless of their scores within the approval criteria points system, should not automatically be approved without being first thoroughly reviewed by the council. He summarized saying he supported options C and F as outlined in the agenda item summary. thth Ms. Ortiz commented that there had not been a huge rush to develop properties within the 6 and 7 Avenue Corridor and Trainsong Neighborhood areas. She further noted that her conversations with residents of those neighborhoods had indicated that MUPTE exemptions would be helpful incentive to encourage responsible development in those areas. Mr. Zelenka noted he was in favor of option D of the proposed MUPTE boundary revisions, and further stated that it was no longer necessary for the West University Neighborhood to remain within the MUPTE boundaries since it was such a highly desired location for University housing. Mr. Zelenka commented that there was no direct proof that MUPTE exemptions encouraged better development within the programs boundaries. Mr. Zelenka asked that the proposed language of the ordinance revision 2.945(8) be amended in order to preserve the council’s authority to overrule an application’s satisfaction of the MUPTE approval criteria. City Attorney Glen Klein noted that he had already made a note regarding that subsection and that the language in question would be revised in accordance with Mr. Zelenka’s concerns. Mr. Zelenka commented that the 100 point score necessary for MUPTE approval according to the proposed criteria seemed considerably low, noting that six of the nine proposed categories alone could garner the 100 points necessary for MUPTE approval. Mr. Weinman noted that staff had attempted to test the proposed MUPTE criteria against existing and proposed projects, and further noted that the scoring system could indeed be adjusted if the criteria did not prove to be stringent enough in its execution. Ms. Piercy commented that she had wrestled with the issues regarding the MUPTE for quite some time, and felt that the MUPTE was essential to the continued growth of the neighborhoods within its urban boundaries. Ms. Piercy agreed with Mr. Pryor that the MUPTE approval criteria points system should be used only as a guideline for the council and that it should retain its authority to make the final decisions regarding MUPTE applications. Ms. Piercy commented that it would be very important for the council to consider how the character of each neighborhood within the MUPTE boundaries would be affected by proposed developments. Ms. Bettman said tax exemptions such as the MUPTE should be used judiciously and as incentives to responsible property development rather than simply as a giveaway. Ms. Bettman, seconded by Mr. Zelenka, moved to direct the City Manager to schedule action on Options C, D and F as listed on the agenda item summary which expands the boundary to include the Trainsong Neighborhood, revises the selection criteria, and eliminates the West University Neighborhood. Mr. Clark, seconded by Mr. Poling, moved to substitute for Options C and F. Mr. Clark responded to Ms. Bettman’s previous comment by saying that it could not be considered a giveaway when the City was attempting to create jobs and foster similar economic growth by employing the MUPTE. He further stated that without the MUPTE in place there was little guarantee that properties would ever be developed or improved in the areas such as the West University Neighborhood. MINUTES: Eugene City Council October 22, 2008 Page 8 Work Session Ms. Taylor indicated she would not be supporting Mr. Clark’s motion, and further stated her belief that incentives such as the MUPTE often encouraged developers to tear down historic and non-tax exempt buildings in order to get a tax break by building something else. Ms. Piercy called for a vote on Mr. Clark’s previously stated motion to substitute Options C and F. The motion passed, 5:3, Mr. Pryor, Mr. Clark, Mr. Poling, Ms. Ortiz, and Ms. Solomon in favor. Ms. Piercy called for a vote on the motion that had been substituted with Options C and F in accordance with the previously passed motion. The motion passed, 5:3, Mr. Pryor, Mr. Clark, Mr. Poling, Ms. Ortiz, and Ms. Solomon in favor. The meeting adjourned at 1:31 p.m. Respectfully submitted, Jon Ruiz City Manager (Recorded by Wade Hicks) MINUTES: Eugene City Council October 22, 2008 Page 9 Work Session