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HomeMy WebLinkAboutItem A: URA - Update on Sale and Development of 10th and Charnelton Site EURA UGENE RBAN ENEWAL GENCY AIS GENDA TEM UMMARY Work Session: Update on Sale and Development of 10th and Charnelton Site Meeting Date: June 10, 2009 Agenda Item Number: A Department: Planning & Development Staff Contact: Nan Laurence www.eugene-or.gov Contact Telephone Number: 682-5340 ISSUE STATEMENT On March 9, 2009, the Urban Renewal Agency Board (URA) directed the Agency Director (City Manager Jon Ruiz) to allow a six-month extension to the Purchase and Sale Agreement (PSA) with W & G Development (WG) for the 10th and Charnelton site, and requested a written update on the project halfway through the six months. This Agenda Item Summary (AIS) and work session address the update and include a request by WG for further amendments to the PSA to allow project phasing and a commitment for City tenancy. BACKGROUND th On November 25, 2008, the URA Director signed a PSA with WG for the 10 and Charnelton site. The PSA required WG to purchase the property by March 31, 2009, and commence construction by November 30, 2009. On March 9, 2009, the URA directed the City Manager to amend the PSA to allow a six-month extension. The six-month extension requires the purchase of the entire property by September 30, 2009, and commencement of construction by May 31, 2010. On June 2, 2009, WG submitted a project update and requested further amendments to the PSA (Attachment A). WG stated that its commitment to the project remains strong, but that the economic conditions locally and regionally continue to be difficult. WG also noted that Pacific University, the anchor tenant identified in the proposal, will not move forward with plans to expand at this time, and attached a letter from Pacific University Vice President Darlene Morgan. WG has worked to identify other possible commercial tenants but does not have an anchor commercial tenant for the project. In light of these issues, WG requests additional amendments to the PSA, as follows: 1.WG requests flexibility to develop the property in two phases (see Attachment B: Site Diagram). Construction on the pit on the west quarter-block (Charnelton Street side) would be phase one, with construction on surface parking lot on the east quarter-block (Olive Street side) as phase two. The deadline for purchase of the property for the first phase would remain the same, September 30, 2009. 2.WG requests that the deadline for the purchase of phase two be September 30, 2010. 3.WG requests that the City commit to leasing 15,000 square feet of office space as the anchor commercial tenant in the first phase of development. The City could utilize the space for City functions, or could lease the space to other commercial tenants. Z:\CMO\2009 Council Agendas\M090610\S090610A.doc Since the PSA was signed in November 2008, staff has worked closely with Wally Graff and Nathan Phillips of WG to address or complete the requirements of the PSA, as applicable. A list of the key terms and the relevant progress on each is included as Attachment C. The implications of the amendments requested by WG are described where applicable. RELATED CITY POLICIES th Future development of the 10 and Charnelton site is consistent with the policies in the Eugene Downtown Plan, including: Downtown development shall support the urban qualities of density, vitality, livability and ? diversity to create a downtown, urban environment. Stimulate multi-unit housing in the downtown core and on the edges of downtown for a variety ? of income levels and ownership opportunities. 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. th In addition, the proposed future development of the 10 and Charnelton site 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 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. AGENCY OPTIONS 1. Direct the Agency Director to amend the PSA consistent with the updated terms included in Attachment A, as follows: a.Allow WG to purchase only the west quarter block by September 30, 2009. b.Negotiate an option for WG to purchase the east quarter-block and the alley by September 30, 2010. c.Negotiate terms for the City to lease up to 15,000 square feet of office space in the west quarter-block development. th 2. Provide other direction to the Agency Director regarding the sale and development of the 10 and Charnelton development site. 3. Take no action at this time. AGENCY DIRECTOR’S RECOMMENDATION Direct the Agency Director to amend the PSA consistent with the updated terms included in Attachment A. Update of Key Terms, as follows: Z:\CMO\2009 Council Agendas\M090610\S090610A.doc a.Allow WG to purchase only the west quarter-block by September 30, 2009. b.Negotiate an option for WG to purchase the east quarter-block and the alley by September 30, 2010. c.Negotiate terms for the City to lease up to 15,000 square feet of office space in the west quarter-block development. SUGGESTED MOTION Move to direct the Agency Director to amend the PSA consistent with the updated terms included in Attachment A: Update of Key Terms, as follows: a.Allow WG to purchase only the west quarter-block by September 30, 2009. b.Negotiate an option for WG to purchase the east quarter-block and the alley by September 30, 2010. c.Negotiate terms for the City to lease up to 15,000 square feet of office space in the west quarter-block development. ATTACHMENTS A.Letter from WG Development dated June 2, 2009 B.Site Diagram Indicating Proposed Project Phasing C.Update of Key Terms FOR MORE INFORMATION Staff Contact: Nan Laurence Telephone: 682-5340 Staff E-Mail: nan.laurence@ci.eugene.or.us Z:\CMO\2009 Council Agendas\M090610\S090610A.doc ATTACHMENT C Update of Key Terms Purchase and Sale Agreement th 10 and Charnelton Development Site a.Purchase Price. $500,000. Change Requested: WG would be allowed to purchase the west quarter block separately from the alley and remaining quarter block. The purchase price would be prorated to $239,520. b.Project Related Fees. The City committed to pay building and related permit fees. The URA Board approved expenditure authority for estimated expenses including building permits fees on March 9, 2009. c.Deposit. $50,000. WG provided a $50,000 note for the earnest money due upon WG’s acceptance of Conditions of Closing. The earnest money becomes nonrefundable at the end of the Due Diligence Period (see item d.). Change Requested: If the project is phased, the earnest money would be split evenly between the two phases. d.Due Diligence Period. The Due Diligence Period extends from November 25, 2008 to September 30, 2009, which includes the 6 month extension authorized by the URA Board on March 9, 2009. Change Requested: If the project is phased, the Due Diligence period would remain the same and apply to the west quarter-block. e.Alley vacation. City Council vacated the mid-block, north-south alley on February 23, 2009. f.Multi-Unit Property Tax Exemption (MUPTE). City Council approved WG’s application for a th MUPTE on February 23, 2009, subject to WG’s purchase of the 10 and Charnelton property by July 1, 2009. On April 13, 2009, City Council extended the deadline for the purchase of the property relative to the MUPTE to December 31, 2009. g.Bureau of Labor and Industry (BOLI) Determination. On March 4, 2009, the City received a determination from BOLI that the project is not subject to the Prevailing Wage Rate law. Although WG did not request a change related to the BOLI determination, the project will change as a result of the proposed amendment and an update will need to be provided to BOLI. h.Timing. Currently, the sale closing for the entire property must occur no later than September 30, 2009. Change Requested: The September 30, 2009 property sale closing deadline would apply to the first phase of the project (west quarter block). Purchase of the remaining property for phase two (east quarter-block) of the project would occur by September 30, 2010. i.City Tenancy. The original PSA does not include any provision for City tenancy in the WG development. Change Requested: The City would make a commitment to lease 15,000 square feet at terms to be negotiated later.