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HomeMy WebLinkAboutItem A: Downtown Update - East Broadway Development Project ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Downtown Update - East Broadway Development Projects Meeting Date: March 15, 2006 Agenda Item Number: A Department: Planning and Development Staff Contact: Nan Laurence www.eugene-or.gov Contact Telephone Number: 682-5340 ISSUE STATEMENT This work session will provide detailed information on actions required to move forward with the City’s participation in a public parking garage associated with the East Broadway Development Projects. This is the fourth work session for this project. There are four actions being considered at this work session: 1)City Council approval of findings and adoption of a resolution to exempt the selection of a contractor for the public parking garage from the competitive selection process; 2)City Council authorization for the City Manager to enter into legal documents for a land transaction with the Shedd Institute for the Arts; 3)City Council authorization for the City Manager to enter into a development agreement and approve related legal documents between the City, Broadway & High Associates (representing the G Group) and Gerding/Edlen Development Company; 4)City Council authorization for the City Manager to sign an intergovernmental agreement between the City and the Urban Renewal Agency. BACKGROUND The council considered this item on February 8 and on February 13 and directed the City Manager to begin negotiations on the land transaction, the development agreement, and related legal documents for public garage development Option 4. This option includes approximately th 260 parking spaces and a commercial space at the corner of 8 Avenue and High Street. On February 22, the council held a work session on this item and voted to defer action until after a public hearing on the issue of exempting the personal services contract relating to development services and selection of a general contractor for construction of the public parking garage. That public hearing was scheduled for March 13. At the work session on March 15, the council is asked to take action on four items: 1) approval of findings and adoption of a resolution to exempt the selection of a contractor for the public parking garage from the competitive bidding process; 2) the land transaction with the Shedd; 3) the development agreement between the City, Broadway & High Associates and Gerding/Edlen Development Company (B& H and GED, respectively); and 4) approval of an intergovernmental agreement between the Urban Renewal Agency and the City of Eugene. Each of these items is discussed below and described in Attachments A – E. With the exception of L:\CMO\2006 Council Agendas\M060315\S060315A.doc Item #1 and related Attachment A, which pertain to the exemption for the competitive selection process, the information included in these items and related attachments was previously included in the City Council Agenda Item Summary for February 22, 2006. 1) Exemption from competitive bidding process GED and B & H have proposed to design and build the public parking garage at the same time and with the same general contractor as would be used for the Credit Union and the Whole Foods Market. Staff recommends that City Council approve an exemption from the competitive selection process for the design and construction of the public parking garage, based on anticipated benefits in terms of construction cost-efficiencies, design integration and timing. For the City Manager to directly negotiate the contract with the developer and/or construction contractor, the council must approve an exemption from the competitive bid process. Pursuant to Eugene Code 2.1425 (1): "In its capacity as contract review board for the city, the city council, upon its own initiative, or upon request of the purchasing agent, may create special selection, evaluation and award procedures for, or may exempt from competition, the award of a specific contract or class of contracts as provided in this section 2.1425." In this case, the City would not be using a special selection or alternate method of solicitation but would instead be choosing to exempt the contract from the normal competitive bidding procedures. The City Council may approve the exemption after holding a public hearing, scheduled for March 13, 2006. Since this is a bid exemption for a Public Improvement project, the City has also followed additional requirements regarding the public hearing. A notification of the hearing was published in a trade newspaper of general statewide circulation at least 14 days prior to the public hearing. The notice stated that the public hearing was for the purpose of taking comments on the City’s draft findings for an exemption from the standard solicitation method. The approval of the exemption is by City Council resolution, and must be based on a record before the council, including findings that address how the public interest is promoted through this action. The draft resolution and findings are presented in Attachment A. 2) Land transaction with the Shedd Attachment B provides ageneral outline of terms for a land transaction between the City and the Shedd Institute for the Arts, LLC (the Shedd). Based on City Council action, this outline will be the basis of a legal agreement between the City and the Shedd to be signed by the City Manager and a representative of the Shedd. 3) Development Agreement Attachment C provides ageneral outline of terms for a development agreement between the City, Broadway & High Associates, LLC (B & H), and Gerding/Edlen Development Company (GED). Based on City Council action, this outline will be the basis of a legal agreement between (a) the City and (b) B & H and GED. Following agreement on the specific terms of the agreement, it will be signed by the City Manager and representatives of B & H and GED. L:\CMO\2006 Council Agendas\M060315\S060315A.doc The development agreement will specify that the completed public parking garage will be similar in scope and design with drawings submitted by GED, as presented to the council at the February 13 work session. Staff will continue to address the urban design goal of orienting the commercial space along 8th as much as possible. Publicly-owned, privately leased commercial space exists in many of the other City-owned garages. Based on City Council discussion on February 13, staff is also exploring the option of structuring the ownership and design of this commercial space so that it could be sold or maintained as publicly-owned space. GED will be responsible for constructing the parking structure (including the commercial space). Because that structure is a public improvement project, GED will have to comply with all applicable public contracting laws and prevailing wage requirements. 4) Intergovernmental Agreement between the City and Urban Renewal Agency An intergovernmental agreement between the City and the Urban Renewal Agency (URA) would cover the terms of the agency’s participation in the garage purchase. It would also set out the agreement for the agency to reimburse the City for the facility reserve’s contribution to the garage project. The IGA would have to be approved by both the City and the URA. Attachment D includes the outline of terms for this agreement. At the February 22 City Council meeting, a question was raised about the reimbursement component of the proposed intergovernmental agreement. Under the proposed IGA, the URA will send one-half of any excess of current year revenues over current year expenses back to the City to reimburse the City’s contribution from the Facility Reserve. The question raised was whether the URA had the ability to increase spending in the budget each year to ensure that there was no excess available to be sent back to the City. The answer to the question is yes, the URA has the ability to increase spending in the budget. It would be the City Council (when it acts as the URA board), however, that would approve any budget changes and choose whether or not to ensure excess funds are available to repay the City’s contribution from the Facility Reserve. That decision cannot be made unilaterally by staff or by the Eugene Redevelopment Advisory Committee. It is only a decision of the City Council when they act as the URA board. Financial and/or Resource Considerations The financing strategy recommended by staff is for the Riverfront Urban Renewal District to pay for as much of the costs of the garage project as possible. Attachment E includes the details of the strategy. On March 15, the council will be asked to consider a supplemental budget for the costs of the City’s participation in this project. The total cost, including payment to the developer and other related City costs, is estimated to be $8,035,000. Funding for the project would come from several sources: Riverfront Urban Renewal District revenue bonds of $4 million; Riverfront District cash of $1.5 million; City stormwater funds of $0.25 million; City Library Debt Service Fund reserves of $0.475 million; and City Facility Reserve of $1.8 million. Under this approach, the Riverfront Urban Renewal District would pledge all of its revenues, after paying for district administration costs, to this garage project, either as an up-front cash contribution or to service debt in future years. L:\CMO\2006 Council Agendas\M060315\S060315A.doc There was a suggestion at the February 13 City Council meeting that the relative shares of Urban Renewal Agency and City contribution might be reconfigured to provide the URA with more flexibility to conduct future projects. If that approach were chosen, the City could take more funds from the Facility Reserve, and the agency could borrow less. While this strategy would allow the agency the ability to work on unspecified future projects, it could also reduce funds available for future projects, including the City Hall project, depending on the speed with which the Urban Renewal Agency is able to reimburse the City. Timing Prompt action is recommended. GED and B & H are ready to move forward immediately based on timelines established with Whole Foods. RELATED CITY POLICIES This project addresses implementation strategies and policies from the Downtown Plan, the Growth Management Policies and the Goals and Objectives from the Riverfront Urban Renewal District Plan. This project does not directly address or affect council goals or priorities. Relevant Downtown Plan policies include the following: 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. Facilitate dense development in the Courthouse area and other sites between the core of ? downtown and the river. The Downtown Plan policies emphasize downtown Eugene as a strong regional center, and a diverse, dense, economically strong urban center. The proposed Whole Foods Development Project addresses these policies as a higher density, pedestrian-oriented, public/private redevelopment project in the area of the Wayne Morse Federal Courthouse. The following project is listed in the Downtown Plan as an example of a possible action to address the Implementation Strategies in the plan: Construct a new parking garage to support the east side of downtown and the new ? Courthouse district. Relevant Growth Management Policies include the following: Policy 1 Support the existing Eugene Urban Growth Boundary by taking actions to increase density and use existing vacant land 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 businesses and residential uses downtown using incentives and zoning. The Whole Foods Development project is consistent with the Goals and Objectives of the Riverfront Urban Renewal District Plan, in particular the following: 4. To stimulate development activity and amenities near the new federal courthouse. L:\CMO\2006 Council Agendas\M060315\S060315A.doc COUNCIL OPTIONS The council can choose to take action in support of the East Broadway Development Projects by approving the suggested motions below or decline to support the project as proposed. CITY MANAGER’S RECOMMENDATION The City Manager recommends that the council take action in support of the East Broadway Development Projects by approving the four motions suggested below. SUGGESTED MOTIONS 1)Move to adopt Resolution No. 4862 granting an exemption from competitive selection requirements for a personal services contract relating to developer services and developer’s selection of a general contractor for construction of a public parking facility; and approving findings relating thereto. 2)Move to authorize the City Manager to enter into a land transaction agreement between property owned by the City and property owned by the Shedd Institute for the Arts, LLC for the purposes of participating in the East Broadway Development Projects, in substantial conformity with the outline of terms described in Attachment B. 3)Move to authorize the City Manager to enter into a Development Agreement with Broadway & High Associates and Gerding/Edlen Development Company for the public garage as part of the East Broadway Development Projects, in substantial conformity with the outline of terms described in Attachment C. The Development Agreement shall include a maximum payment to B & H and GED for the garage construction of $7 million. 4)Move to authorize the City Manager to sign an intergovernmental agreement between the City of Eugene and the Urban Renewal Agency in substantial conformity with the outline of terms described in Attachment E. ATTACHMENTS: A. Resolution No. ___ B. Land Transaction with the Shedd C. Development Agreement D. Intergovernmental Agreement E. Financing Strategy FOR MORE INFORMATION Staff Contact: Nan Laurence Telephone: 682-5340 Staff E-Mail: nan.laurence@ci.eugene.or.us L:\CMO\2006 Council Agendas\M060315\S060315A.doc ATTACHMENT A RESOLUTION NO. _____ A RESOLUTION GRANTING AN EXEMPTION FROM COMPETITIVE SELECTION REQUIREMENTS FOR A PERSONAL SERVICES CONTRACT RELATING TO DEVELOPER SERVICES AND DEVELOPER’S SELECTION OF GENERAL CONTRACTOR FOR CONSTRUCTION OF A PUBLIC PARKING FACILITY; AND APPROVING FINDINGS RELATING THERETO. The City Council of the City of Eugene finds that: A. The implementation strategies and policies set forth in the Downtown Plan, the Growth Management Policies and the Goals and Objectives from the Riverfront Urban Renewal District Plan (the “Implementation Strategies and Policies”) support downtown development that enhances the urban qualities of density, vitality, livability and diversity. The Implementation Strategies and Policies recognize the advantage of public/private development opportunities in achieving the vision of an active, vital growing downtown, facilitating dense development in the area of the Wayne Morse Federal Courthouse (“Courthouse”) and constructing a new parking facility that supports the east side of downtown and the new Courthouse district. B. Broadway & High Associates, LLC owns approximately one-half of the city block th located between 8 and Broadway and Mill and High Streets. The Oregonians Federal Credit Union (the “Credit Union”) owns approximately one-quarter of the block and the City will acquire the remaining one-quarter block for the purposes of participating in this project. Broadway & High Associates, LLC and Gerding/Edlen Development Company (collectively, “B&H”) have entered into a contract for development of this property, as owner and developer, respectively. B&H has entered into certain agreements with Whole Foods Market (“Whole Foods”) and the Credit Union regarding the development of the entire block. C. B&H’s development plans include two projects: the construction of a grocery store with two levels of parking intended for private ownership and use (the “Whole Foods Project”) and the construction of a four level, 260 space public parking structure that includes, on the ground level, a small publicly-owned commercial space and a second commercial space that will be privately owned and occupied by the Credit Union (the “Parking Project”). D. The Whole Foods Project and the Parking Project are consistent with the Implementation Strategies and Policies. E. B&H has proposed, and the City of Eugene (“City”) has agreed, that the City will participate in the development of the Parking Project. After construction of the Parking L:\CMO\2006 Council Agendas\M060315\S060315A.doc Project, B&H shall establish condominium units and City shall purchase the Parking Facility (which shall be comprised of the parking facility, including a ground level commercial space, but not the space intended for use by the Credit Union), for approximately$6,700,000. F. B&H proposes to act as the developer of the Parking Project and provide necessary developer-related services including, but not limited to, contracting for design services; conducting environmental investigations of the area in and around the Parking Project; obtaining all necessary government approvals and permits necessary for construction; selecting and contracting with a general contractor to construct the Parking Project; creating condominium units; post-construction, transferring ownership of the Parking Facility to the City; and providing such other services as may be described in the Agreement for the Disposition and Development of Property between the City of Eugene and B&H (the “DDA”). The Parking Project is scheduled to be completed by the fall of 2007. G. B&H has indicated to City that B&H wishes to select and enter into two separate construction contracts with Lease Crutcher Lewis, LLC (“LCL”) as the general contractor for both the Whole Foods Project and the Parking Project. H. It is the policy of the City to utilize public contracting practices and methods to maximize the efficient use of public resources and purchasing power of public funds. Absent particular circumstances, such rules and laws require the City to use a competitive selection process to select a developer to provide the types of services offered by B&H and to select and award a contract to a general contractor. I. The particular circumstances of the Parking Project, including the development proposal presented by B&H involving both the Whole Foods Project and the Parking Project (together, the “East Broadway Development Projects”), the needed level of experience and the current schedule for completion of the Parking Facility, do not allow for such a competitive selection process. Instead, the City Council, after considering the attached findings, wishes to directly procure developer-related services from B&H and to further authorize B&H to directly select LCL as the general contractor for the Parking Project, as set forth in the DDA. 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. After considering and approving the findings attached to this resolution as Exhibit 1, the East Broadway Development Projects Disposition and Development Agreement between the City of Eugene and Gerding/Edlen Development Company, LLC and Broadway & High Associates, LLC (the “DDA”), which includes the direct selection of Lease Crutcher Lewis, LLC as the general contractor for the Parking Project, as defined herein, is specifically declared exempt from the state and city competitive selection requirements. Section 2. This Resolution shall become effective immediately upon its adoption. L:\CMO\2006 Council Agendas\M060315\S060315A.doc The foregoing Resolution adopted the _____ day of ________________, 2006. ________________________________________ City Recorder L:\CMO\2006 Council Agendas\M060315\S060315A.doc RESOLUTION NO. ______ Exhibit 1: Exemption from Competitive Selection - Findings The City wishes to execute the DDA on or before June 30, 2006. In order to proceed with the direct procurement of B&H’s developer-related services and authorize B&H to directly select LCL as the general contractor for the Parking Project, the City must consider and adopt certain findings and grant exemptions from the competitive selection process. The City may grant an exemption upon finding that a direct procurement (i) is unlikely to encourage favoritism or substantially diminish competition; (ii) is likely to result in substantial cost savings for the City or the public; and (iii) will otherwise substantially promote the public interest in a manner that could not practicably be realized by complying with the competitive selection process. ORS 279B.085, ORS 279C.335, EC 2.1425, and City of Eugene Public Contract Administrative Rule R-1415, subsection 3.1.1. 1.The exemption of the personal services contract, the DDA, is unlikely to encourage favoritism or substantially diminish competition because of the unique nature of the East Broadway Development Projects and the conceptual plans and designs proposed by B&H. Even if the City were to use a competitive selection process, it is unlikely that other proposers would be able to provide a similar plan for development of the area because of B&H’s ownership and control of the majority of the site targeted for development, existing contracts with Whole Foods and the Credit Union and B&H’s unique plans for and familiarity with the entire development site. Similarly, authorizing B&H to directly select LCL as the general contractor for the Parking Project, including the Parking Facility, is unlikely to encourage favoritism or substantially diminish competition because of LCL’s existing relationship with B&H and its existing familiarity with both projects. If the exemption is granted, B&H and LCL shall comply with all state and local laws relating to the development of the Parking Project as a public improvement and a public work. 2.The exemption of the personal services contract (the DDA) which includes authorization for B&H to directly select LCL as the general contractor for the Parking Project, is likely to result in substantial cost savings for the City. The City will be able to benefit from the efficiencies resulting from the familiarity of both B&H and LCL with the project site. The City is likely to benefit from the avoided time delays and costs associated with first a competitive selection process and then ramp-up time. As stated above, because of the unique characteristics of B&H, the City would not have the opportunity to participate in the development of the Parking Project absent B&H’s involvement. If the City does not allow for an exemption from competitive selection for a general contractor, the current pricing for the Parking Project, including the Parking Facility, will increase. The following additional information in support of the cost-savings findings is provided in conjunction with the requirements of ORS 279C.330: a.Operational, budget and financial data – Because of the unique nature of the East Broadway Development Projects, including B&H’s ownership of the majority of the Whole Foods Project property and LCL’s role as general contractor for the construction of the Whole Foods Project and the Parking Project, the City is L:\CMO\2006 Council Agendas\M060315\S060315A.doc obtaining needed parking spaces within the downtown area at a lower cost than it would be able to obtain the parking spaces otherwise. b.Value engineering – LCL has already been involved in studying the different aspects of the Parking Project, including determining the price and value of the Parking Facility. Granting the exemption for the direct selection of LCL as the general contractor allows the City to benefit from LCL’s past experience in value engineering on the project and to avoid the inefficiency, including cost increases, associated with bringing in a new general contractor. c.Market conditions – The construction industry is beginning to enter into its busy season when the availability of labor will decrease and the cost of both labor and materials will increase. The exemption for the direct selection of LCL ensures the City will be able to use LCL as the general contractor for the Parking Facility, allows the City to avoid the time delays associated with the competitive selection process, and allows the City to avoid such increased costs. d.Technical complexity – The construction of the Parking Facility, i.e., a multi- story, 260 space concrete parking structure that includes two commercial spaces, is a technically complex project and requires the contractor to understand the project and handle such technical complexities to construct the structure properly and within the required maximum cost and scheduling parameters. LCL has such familiarity and the requisite experience to complete the project on time and on budget, as further detailed below. e.Specialized expertise required – Because the construction of the Parking Facility is a technically complex project with a set completion date, the contractor must have sufficient specialized expertise in constructing such structures. LCL has successfully completed projects of similar size, complexity, type and cost and therefore has the specialized expertise necessary to act as the general contractor on the Parking Facility. f.Public safety – There are no public safety issues or findings associated with the exemptions for the Parking Project. g.Funding sources – To the extent possible, the City of Eugene Riverfront Urban Renewal Agency (the “Agency”), through an intergovernmental agreement between the City and the Agency, will pay for the majority of the cost of the Parking Facility and the remaining amount will be paid for by use of other city funds. These funds committed by the City and the Agency to the project will be included in the Fiscal Year 2005/2006 budget. h.Public benefits – The exemption for the direct selection of LCL as the general contractor provides many public benefits, including, but not limited to, cost savings, additional efficiency in constructing the Parking Facility, ensuring the construction is done correctly and by a contractor that has the necessary specialized expertise. L:\CMO\2006 Council Agendas\M060315\S060315A.doc 3. If granted, the exemptions will otherwise substantially promote the public interest in a manner that could not be practicably realized by complying with the competitive selection process. Direct procurement of personal services from B&H and authorizing B&H to directly select LCL as the general contractor for the Parking Project, including the Parking Facility, promotes efficiencies and cost savings in the completion of the Parking Project. This would allow the public to more quickly realize and enjoy the attendant revitalization of the development area, as well as benefit from the use of the new Parking Facility within the downtown area and the new Courthouse district. L:\CMO\2006 Council Agendas\M060315\S060315A.doc ATTACHMENT B Land Transaction with the Shedd The following is a general outline of terms for a land transaction between the City of Eugene (the City) and the Shedd Institute for the Arts, LLC (the Shedd). The terms and conditions contained herein are intended to be for discussion purposes and do not represent the final terms for this land transaction. Based on council action, the final terms will be in substantial conformity with this outline. Property Description th The City currently owns the northeast corner of the block bounded by East 8 Avenue, High Street, Broadway and Pearl Street, specifically Tax Lots 1000 and 1100, Map 17-03-31-14. The City is proposing to exchange these lots for property owned by the Shedd, specifically the th northwest corner of the block bounded by East 8 Avenue, High Street, Broadway and Mill Street, Tax Lots 1300 and 1400, Map 17-03-31-14. Both parcels consist of approximately 25,600 square feet each. Environmental Assessment An environmental assessment will be completed for each parcel. The cost of this assessment will be borne by each property owner. Based on the information provided in the environmental assessment, both the City and the Shedd must agree to either move forward with the exchange of each site or rescind the offer to exchange each site. Each party will also have the option to negotiate regarding a remedy for specific site clean-up costs if contamination is identified. Compensation Based on an appraisal completed by Charles P. Thompson, MAI, SRA, dated November 18, 2005, the value of the City’s parcel is $38.00/square foot, and the value of the Shedd’s parcel is $39.00/square foot. Based on an appraisal completed by Kent Voronaeff, MAI, CCIM, dated December 30, 2005 the value of both parcels is $33.50/square foot. Based on these appraisals, in order to complete this land transaction, the exchange of these properties can occur on an equal value basis without any compensation due either party for the value of the land. Any transaction related costs will be split equally between the parties. Property Information Upon execution of the land transaction, the City shall deliver to the Shedd all information in the City’s possession relating to the condition of the City’s parcel. Likewise, the Shedd shall deliver to the City all information in the Shedd’s possession relating to the condition of the Shedd’s parcel. Such property information shall include, but not be limited to, environmental reports, soils reports, and topographical and boundary surveys. Due Diligence Period Upon execution of the land transaction, both parties will complete all necessary due diligence including reviewing property information provided for each parcel, and conducting on-site testing to determine the condition of the property. Condition of Title L:\CMO\2006 Council Agendas\M060315\S060315A.doc The City shall deliver its property to the Shedd with clear title free of any and all encumbrances and exceptions except those as may have been approved by the Shedd in its sole discretion. Likewise, the Shedd shall deliver its parcel to the City with clear title free of any and all encumbrances and exceptions except those as may have been approved by City in its sole discretion. Both the City and the Shedd, at their own costs, shall provide a standard form of owner’s policy of title insurance in the amount of the highest appraised value of the property insuring clear title in each buyer’s name subject only to the approved exceptions. Development Purpose and Timing The land transaction between the City and the Shedd is intended for the purpose of participating in the East Broadway/Whole Foods Redevelopment Project. The City’s obligation to proceed with the land transaction is contingent on this project. If this project does not occur, the land transaction is null and void. L:\CMO\2006 Council Agendas\M060315\S060315A.doc ATTACHMENT C Development Agreement The following is a general outline of terms for a development agreement between the City of Eugene (the City), Broadway & High Associates (B & H) and Gerding/Edlen Development Company (GED). The terms and conditions contained herein are intended to be for discussion purposes and do not represent the final terms for this land transaction. Based on council action, the final terms will be in substantial conformity with this outline. Development Purpose GED will construct a public parking garage with publicly-owned commercial space on the ground floor. GED will also construct a commercial space for the Oregon Central Credit Union (OCCU), and a grocery store with associated parking which will be owned by B & H and leased to Whole Foods Market. Project Design and Construction The design and construction of the public parking garage must be similar in scale and design with the conceptual design (including plans, section and elevations submitted by GED and attached to this outline of terms). For the construction of the public garage and associated public commercial space, the developer will comply with public contracting laws and prevailing wage requirements. The developer will allow City staff reasonable access to review and inspect the property during construction. The completed development must be in substantial conformity with the final approved design to the City’s satisfaction prior to the City's payment for purchase of the garage. Land Assembly The City will complete a land transaction with the Shedd Institute for the Arts to gain ownership of tax lots 1100 and 1000, map 17-03-31-14. This property will be the primary land for the public parking garage and embedded commercial space. OCCU owns property currently identified as tax lot 200, which will be the primary location for OCCU. The remainder of the private property on this block, specifically property currently identified as tax lots 400, 600, 700, 800 and 900, is currently in the ownership of B & H, and will be the primary location of the grocery store. The ownership of each portion of the full block redevelopment will be articulated in the development agreement between the City, B & H and GED. Alley Vacation GED shall initiate a vacation of the north-south alley and the east-west alley in a manner sufficient to meet the development plans for the site. B & H will pay the full assessment of the value for the alley vacation, estimated at approximately $225,000. Public Parking Garage Purchase Price The price for the public parking garage is estimated to be $6.7 million, assuming approximately 260 parking spaces and approximately 5,000 square feet of publicly owned commercial space. This amount includes all labor, design, site work, construction, permitting and related costs required to fully construct the public parking garage similar in scale and design to drawings submitted by GED and attached to this outline of terms. This amount is due from the City to L:\CMO\2006 Council Agendas\M060315\S060315A.doc GED when the public parking garage is completed and has a certificate of occupancy, and after final City inspection and approval. Development Timing Construction of the project shall commence in a timely fashion. Utilities Public utilities are currently located in the alleys on this block. These include a stormwater line, owned by the City and running north-south and steam distribution lines, owned by Eugene Water and Electric Board, and running north-south and east-west. These will be addressed as follows: 1)The stormwater line will remain in place. The City will pay for the costs of rehabilitating this line at an estimated cost of $250,000. GED will build over this line in a manner consistent with City specifications for location of foundations and related issues. 2)The steam lines will be relocated in a manner consistent with GED’s development plans for the site and EWEB’s need to maintain steam distribution. The costs for this relocation will be shared equally between the City and GED and are estimated at between $575,000 and $650,000. L:\CMO\2006 Council Agendas\M060315\S060315A.doc L:\CMO\2006 Council Agendas\M060315\S060315A.doc L:\CMO\2006 Council Agendas\M060315\S060315A.doc L:\CMO\2006 Council Agendas\M060315\S060315A.doc ATTACHMENT D Intergovernmental Agreement The following is a general outline of terms for an Intergovernmental Agreement between the City of Eugene (the City) and the Urban Renewal Agency (URA). The terms and conditions contained herein are intended to be for discussion purposes and do not represent the final terms for this Intergovernmental Agreement. Based on Council and URA action, the final terms will be in substantial conformity with this outline. Purchase of Parking Garage City is purchasing a parking garage from a developer that will be constructed mainly on City- ? owned property. Because the project is located in the Riverfront Urban Renewal District, the URA/Riverfront ? District is responsible for paying for as much of the project cost as possible. Payment for this project will be made from: ? URA/Riverfront District: all unobligated funds available in FY06 and FY07, funds that o were programmed for purchase of the riparian area on the EWEB site, and proceeds from the sale of urban renewal revenue bonds. City: stormwater funds for rehabilitation the storm line, Library Debt Fund reserves to o fund new debt service reserve and costs of debt issuance, and the Facility Reserve. If the City Council authorizes an alternative financing strategy, the City would enter into a HUD ? Section 108 Loan, in connection with BEDI grant funds for this project. In this event, the URA/Riverfront District would not issue urban renewal revenue bonds. The URA/Riverfront District would instead be responsible for making annual payments to the City equal to the debt service on the HUD Section 108 Loan. Reimbursement to City for Funds Advanced for Garage Purchase The City contribution in the form of a Facility Reserve payment or BEDI grant funds shall be ? reimbursed by the URA/Riverfront to the extent possible, under the following terms: No interest will be due to the City from the URA/Riverfront District for the City’s up- o front cash contribution to this project. Each year after the audit is completed, the URA/Riverfront District will pay the City a o minimum of 1/2 of any excess of current year revenues over current year expenses in the just completed fiscal year for the combined URA/Riverfront District funds. Prior to the URA/Riverfront entering into any additional loans or debt, the o URA/Riverfront District will determine a fixed reimbursement schedule to ensure that the City will be fully reimbursed for its Facility Reserve or BEDI grant contribution to the garage project, and will include that fixed reimbursement schedule into the cash flows to determine future borrowing capacity. Other Terms If any urban renewal bond documents conflict with the terms of this IGA, then the terms of the ? bond documents will take priority over the IGA terms. L:\CMO\2006 Council Agendas\M060315\S060315A.doc ATTACHMENT E Financing Strategy for Purchase of the Garage and Commercial Space The financing strategy set out in this attachment is a description of the general approach that the City and the Urban Renewal Agency could take when paying for the garage project. Because this transaction will not occur for over one year, circumstances could change. If resources available for completion of this project are insufficient to cover the budget authorization for the project, a revised financing strategy would be brought back to council. Cost of the Garage – Option 4 Four public garage development options were described in previous council materials. The chart below sets out the costs for Option 4, which was the option chosen by council at the February 13 meeting. Option 4 260 spaces with retail Payment to Developer $6,700,000 City Project Manager 70,000 City Attorney 75,000 1% for Art 70,000 Environmental Assessment 25,000 Relocation/upgrade of Utilities 570,000 Debt Issuance Costs 75,000 Miscellaneous/Contingency 50,000 Total Project Costs $7,635,000 Debt Service Reserve Fund $400,000 Total Funding Need $8,035,000 Payment to Developer: This is the largest component of the project cost, representing payment to the developer for purchasing the garage with approximately 260 spaces for public ownership with publicly-owned commercial space. This payment includes all of the costs of completing the garage, such as the cost of site work, design, permitting and construction. City Project Manager: The City should have a staff representative that works with the developer and their architect and construction team to ensure that the garage will meet City standards for garage projects, and that the components of the project will be compatible with other City garage components. This is similar to what the City did when the Pearl Street Garage was built and subsequently purchased by the City. City Attorney: The City Attorney will work with staff and the developers to draft the Development Agreement and any other legal documents required for the project. 1% for Art: The City must contribute 1% for art on this project. Environmental Assessment: For the land swap transaction, the City will have to provide an environmental assessment of its property. L:\CMO\2006 Council Agendas\M060315\S060315A.doc Upgrade and/or Relocation of Utilities: The alleys on the development site contain a storm water line and a steam line. These utilities will need to be either upgraded or relocated in order to complete the development project. The costs for the utilities will be shared between the City and the developer. The amount shown in the chart represents the City’s share of the costs. It is assumed that the City will pay for costs of rehabilitating the storm line, the developer will pay for alley assessments (not included in the City’s financing strategy), and the City and developer will share equally the cost of relocating the steam line. Debt Issuance Costs: There are costs to the Urban Renewal Agency for entering into debt, which could include items such as preparation of offering documents, rating agency fees, bond counsel fees, financial advisor fees, and loan fees. Miscellaneous/Contingency: This is a small amount (less than 1% of the City’s total costs) to allow for potential changes in the project or for City costs that have not yet been identified. The developer included a separate contingency in the overall project budget. Debt Service Reserve Fund: The Urban Renewal Agency’s lender will probably require funds to be held in reserve to protect bondholders during the time the debt is outstanding. That amount is normally equal to 10% of the amount of the borrowing, or one year of debt service. Funding Sources To the extent possible, staff recommends that the Riverfront Urban Renewal Agency should pay for as much of the garage as it can afford. That includes both a cash contribution of available funds at the time of purchase and issuance of urban renewal revenue bonds. The proposed financing strategy for Option 4 is set out in the chart below. Option 4 260 spaces with retail Urban Renewal Contribution -Urban Renewal Revenue Bonds $4,000,000 -Reprogram of Funds to Purchase Riparian Area 400,000 -Cash Available in FY06 & FY07 1,110,000 Total Urban Renewal Contribution 5,510,000 City Contribution -Stormwater Funds (for upgrading storm line) 250,000 -Library Debt Service Fund – Debt Service Reserve 475,000 -Facility Reserve 1,800,000 Total City Contribution 2,525,000 Totals $8,035,000 Descriptions of the specific funding sources suggested for inclusion in the financing plan are described below. Urban Renewal Revenue Bonds: The Agency will issue revenue bonds backed by the future tax increment revenues in the Riverfront District. Existing tax increment revenues are about $0.5 million per year. The Whole Foods development is estimated to add $0.15 million L:\CMO\2006 Council Agendas\M060315\S060315A.doc per year in new tax increment. District administration costs are about $0.23 million, leaving a net of $0.42 million available to make debt service payments. It is estimated that debt service payments on the bonds will equal $0.42 million, using up all of the available tax increment revenues. The bonds will most likely be 15 year bonds, but could go as long as the ending date of the district in 2024. The lender will probably require that the agency maintain a debt service reserve fund during the term of the bonds. Urban Renewal Cash Contribution: The Riverfront Urban Renewal District has several places where a cash contribution could be generated for the garage project. In the FY06 budget, $400,000 was allocated for purchase of the riparian area in connection with the sale of the EWEB property for a hospital. Because McKenzie-Willamette has chosen an alternate site, the funds allocated to the purchase of the riparian area on the EWEB site could be reprogrammed as part of the purchase of the parking spaces. In addition, there is estimated to be about $760,000 in unallocated funds in the FY06 budget, and an additional $350,000 is estimated to be available in FY07. The total estimated cash contribution from the Riverfront Urban Renewal District is $1,510,000. Stormwater Funds: The City would use approximately $250,000 in available balances in the Stormwater Fund to pay for rehabilitation of the storm water line that runs through the project boundaries. Library Debt Service Fund – Debt Service Reserve: There is currently about $475,000 in a debt service reserve in the Library Debt Service sub-fund. This is in addition to $2.5 million that is held in reserve in the Downtown Urban Renewal District’s funds. Payments on the library obligations total about $2.5 million per year, and the payments will end with the final payment on 12/1/2009. Because the final payment date is drawing near, and because there is already a one-year reserve in the Urban Renewal Agency funds for this purpose, it would be reasonable for the City to use these funds to provide for debt issuance costs and a debt service reserve for a different financing need. Facility Reserve Fund: The City has been setting aside funds for renovation or re- placement of City Hall for several years. As a result, the current balance in the Facility Reserve is a little over $24 million. The City could use some of these funds to pay for a portion of the garage project. The Urban Renewal Agency would commit to reimbursing the City for this pay- ment over time, as funds are available in the district. The ability of the Urban Renewal Agency to repay the City will depend on future development. Although there is development interest within the district, there are no firm plans or proposals for additional development at this point. Therefore, it is not possible to accurately project a timeline for repayment of the advance from the City for this project. B & H has shown a concept for redeveloping the property that they own around the Eugene Hotel with expected new value of between $20 and $40 million. They have not indicated a timeline for that redevelopment. If that project was to occur, and using tax system assumptions for the current year, the incremental value for that project could be between $200,000 to $400,000 annually. L:\CMO\2006 Council Agendas\M060315\S060315A.doc The Agency also holds property totaling approximately 2.5 acres in the Courthouse district. Proceeds from the eventual sale of that property could be used to repay the City. However, it could take several years to accomplish the sale of City-owned property. The proposed IGA between the City and the Agency sets out the reimbursement terms for this advance. An aggressive reimbursement agreement would use all of the Agency's excess funds each year to reimburse the City. Staff is recommending that only half of the Agency's excess funds each year be used to reimburse the City, so that there would be some additional funds for the Agency to continue to fund projects within the district. This would provide a balance between a concern about the Agency's ability to continue projects and a concern about the rapidity of repayment to the Facility Reserve. Optional Financing Strategy The City received confirmation from the U.S. Department of Housing and Urban Development (HUD) in late January that it had been awarded a $2 million Brownfield Economic Development Initiatives (BEDI) grant. This grant must be used in connection with a HUD “Section 108 Loan”, which is a federal loan program backed by Community Development Block Grant (CDBG) funds. Staff is in the process of determining the costs and requirements associated with the Section 108 Loan program. Staff is exploring the possibility of using the combination of a HUD Section 108 Loan and BEDI grant money for the Whole Foods Development Project as an optional strategy. In order to move this project forward, however, it will be assumed in the financing strategy and any associated budget requests that the project will be funded using urban renewal revenue bonds and Facility Reserve funds. In the event that staff would recommend the use of the optional financing strategy using HUD Section 108 Loan funds and the BEDI grant, council approval would be required. Operating and Maintenance Costs Although not part of the plan for financing the capital costs, it is important to consider how the City will pay for the operating and maintenance costs of the new garage. In general, given the current parking rate structure and the Parking Fund’s current payment to the General Fund, parking garage revenues from City garages have been sufficient to cover only the operating and maintenance costs for the garages. Those revenues and costs are accounted for in the parking enterprise funds. It is anticipated that this will also be the case for the City’s portion of the garage connected to the Whole Foods development, and that there will not be any significant funds available from parking revenues to pay for the costs of purchasing the garage. L:\CMO\2006 Council Agendas\M060315\S060315A.doc