HomeMy WebLinkAboutCC Minutes - 08/11/10 Work SessionMINUTES
Eugene City Council
McNutt Room —City Hall
777 Pearl Street — Eugene, Oregon
August 11, 2010
Noon
COUNCILORS PRESENT: Mike Clark, Betty Taylor, Jennifer Solomon, George Poling, Andrea
Ortiz, Chris Pryor, Alan Zelenka, George Brown.
Her Honor Mayor Kitty Piercy called the August 11, 2010, work session of the Eugene City Council to
order. Mr. Zelenka joined the meeting via speaker phone.
A. WORK SESSION - Downtown Site Development
City Manager Jon Ruiz introduced Finance Director Sue Cutsogeorge and Senior Management Analyst
Denny Braud to provide planning and financial information regarding downtown site development in
Eugene.
City Manager Ruiz reminded the council that it had provided direction regarding a number of downtown
economic development strategies approximately one year ago. He briefly reviewed the downtown
development strategies for the benefit of the council, including the Centre Court building redevelopment
project and the Lane Community College development project. He noted that the Bennett Management
Company's (BMC) development proposal for the vacant parcel adjacent to the Centre Court building
space would represent a significant advancement toward several downtown economic goals.
Mr. Braud provided the council with background information regarding the subject property as well as an
overview of the BMC development proposal for the vacant parcel adjacent to the Centre Court building.
Mr. Braud reported that the construction on the Beam Development project for the Centre Court Building
had appeared to generate enormous interest in the redevelopment of nearby downtown properties and had
generally boosted confidence in the economic viability of the downtown area. He said the current
proposal before the council would allow Beam Development to transfer the property and development
rights for the vacant parcel adjacent to the Centre Court Building to BMC.
Mr. Braud briefly described BMC for the benefit of the council, reporting it was a local firm with over 40
years of experience in local property development. Mr. Braud further noted that BMC generally retained
ownership and management of the properties it had developed.
Mr. Braud stated that BMC's proposal was very similar to the original Beam Development proposal for
the vacant property. The total cost of the BMC project had been anticipated at approximately $10
million, $2 million of which BMC was immediately prepared to invest with the remaining funds to be
financed as the project moved forward.
Mr. Zelenka joined the meeting via speaker phone at 12:05 p.m.
MINUTES— Eugene City Council August 11, 2010 Page 1
Work Session .
Mr. Braud noted that the City's suggested assistance to BMC to help it meet the financial underwriting
criteria for the project was summarized in the staff memorandum to the council regarding the matter.
Mr. Braud elaborated on the use of recovery zone bonds to provide tax exempt status to elements of
BMC's financing for its development project.
Mr. Braud reported that BMC would be responsible for the repayment of its bank loan for the project and
would also assume all of the transaction costs with respect to the project financing. He stated that the
City would assume no financial risk with regard to the proposed BMC project.
Mr. Braud recommended the council approve the use of approximately $8 million of its $11 million
recovery zone facility bond authority. He noted that the bond authority allocation was required to be
drawn down by the end of the calendar year. Mr. Braud said staff was seeking the council's general
support for the proposed BMC project and that his recommendation was that the council direct staff to
return in September with additional project details for the council's consideration.
Mr. Braud, responding to a question from Mayor Piercy, stated that in its initial planning stages for the
vacant parcel Beam Development had considered the development of housing but that the lease rates for
such purposes was too low to make such considerations economically viable.
Mayor Piercy pointed out that the City remained committed to the development of housing in the
downtown area regardless of the BMC and Beam Development projects and would continue to seek
opportunities for such development.
Mayor Piercy solicited council comments and questions.
Mr. Clark thanked Mr. Braud for his presentation and indicated his general support of the proposed BMC
project.
Mr. Clark commented on the potential financing gaps Mr. Braud had referenced regarding the BMC
project and asked what portion of the City's Downtown Revitalization Loan Program might be applied to
such concerns. Mr. Braud responded that the amounts for any such assistance were currently unknown.
Ms. Cutsogeorge, responding to a question from Mr. Poling, stated that staff had been investigating
possible uses for the remaining $3 million from recovery zone facility bonds.
Mr. Poling reminded the council the staff memorandum provided to the council indicated that the State
would seek to repurpose the remaining $3 million from the recovery zone facility bonds in the event that
such funds were not committed to local projects.
City Manager Ruiz and Mr. Braud, responding to a question from Mr. Poling, stated that the City's
commitment for leased space under the current proposal for BMC was 20,000 square feet whereas the
City's original commitment with Beam Development for the site had been 50,000 square feet.
Ms. Cutsogeorge, responding to a question from Mr. Brown, stated that although the recovery zone
facility bond funds had become available in February 2009 they had not yet been committed as no viable
projects had been identified since that time.
Mr. Brown noted his support of every element of the BMC redevelopment proposal with the exception of
the provision that the City guarantee 20,000 square feet of leased space in the developed property.
MINUTES— Eugene City Council August 11, 2010 Page 2
Work Session
Ms. Ortiz noted her support of the BMC redevelopment project but also noted her concern that members
of the community would perceive the proposal as "good old boys just helping each other out." She asked
if any other local property development firms had expressed interest in the vacant parcel adjacent to the
Centre Court building. Mr. Braud noted that although representatives from Beam Development had
conferred with other local property development firms, the BMC proposal had been determined as the
only viable project that had met the redevelopment criteria.
Ms. Ortiz was pleased that BMC was a local development firm and further hoped that the project would
ultimately be constructed by local construction firms:
Mr. Braud, responding to a comment from Mr. Zelenka, stated that no City money would be used for the
BMC project with the exception of certain funds to be provided from the City's Downtown Revitalization
Loan program. Mr. Braud further maintained that the amount from the loan program used for the BMC
project would be less than $1 million.
Mr. Braud reinforced the information in the agenda item summary memorandum that the underlying debt
on the subject property of approximately $404,000 might need to be restructured in some way.
Mr. Zelenka asked how the council and staff might consider additional allocations of the recovery zone
facility bonds for other projects beyond the BMC proposal. Ms. Cutsogeorge responded that Congress
had not yet made any determination as to whether the facility bond funds would be extended. She further
noted that the State of Oregon was also currently seeking recovery zone facility bond funding for another
large project. She stated that if the City of Eugene missed its opportunity to use the recovery zone facility
bond funding there would not be a similar opportunity in the future.
Mr. Braud, responding to a question from Mr. Zelenka, confirmed that the recovery zone facility bonds
were not eligible for the development of residential housing.
Mr. Braud, responding to a request for clarification from Mr. Zelenka, stated that the staff s reference to a
subordination of the existing $404,000 downtown revitalization loan program financing addressed the
City's current lien on the subject property. He continued to describe the financing process whereby the
City's lien would be subordinated to BMC's financial obligations regarding the development of the
property.
Mr. Braud, responding to a question from Mr. Zelenka, described the distinctions between the City's
10,000 square feet occupation requirement versus the City's additional 10,000 square foot lease
requirement. He further noted that the City's lease obligations would be reduced as private sector
commitments for the leased space in the building were added and that in the best - possible scenario the
City would never be made to make payments on the leased square footage once the building had been
constructed.
Mr. Braud, responding to a question from Mr. Zelenka, stated it might be possible that the City would be
released from its 20,000 square foot commitment in the event that other interested parties stepped in to
take over the space.
Ms. Cutsogeorge, responding to a question from Mr. Poling, stated that the remainder of the recovery
zone facility bonds could not be used in place of the City's facility reserves for the construction or
development of a new police facility.
Ms. Taylor was supportive of the BMC proposal and was also pleased that BMC was a local firm.
MINUTES— Eugene City Council August 11, 2010 Page 3
Work Session
Mr. Braud, responding to a question from Ms. Taylor, stated that the City of Eugene currently leased
approximately 40,000 square feet of space in the downtown area. He noted that the most of the leases for
that space were expected to expire within the next five years.
Ms. Taylor believed that the City might transfer some of its offices from the currently leased spaces into
the building to be developed by BMC.
City Manager Ruiz, responding to Ms. Taylor's comments, noted that further discussions surrounding the
City's use of leased space in the downtown area, including the use of the 20,000 square feet of space in
the BMC development, would occur concurrent with the September discussions regarding the fate of the
Eugene City Hall facility. City Manager Ruiz further noted that information regarding what agencies the
City currently leased spaces from would also be provided.
Mr. Braud, responding to a question from Mr. Brown, stated that the downtown revitalization loan used to
purchase the property would be transferred from Beam Development over to BMC but that the final terms
of the transfer had not yet been finalized.
Mr. Braud, responding to a comment from Mr. Brown, stated that much of the administrative and legal
fees associated with BMC's use of the recovery zone facility bonds would be the responsibility of BMC.
Mr. Brown suggested it would be useful to have information regarding the allotments of square footage in
the current City Hall facility once the Eugene Police Department had relocated.
Mr. Pryor agreed with Ms. Taylor and Mr. Brown's comments indicating that additional information
regarding the current and future use of the City Hall facility would be useful in discussions of the City's
downtown development strategies.
Mr. Clark, seconded by Ms. Taylor, moved to support the Bennett Management
Company proposal in concept, and direct the City Manager to bring back additional
project details for consideration including a) the transfer of ownership of the Vacant
Parcel from Beam to Bennett Management Company, along with the assignment of
development rights under Beam's Purchase and Sale Agreement; b) a resolution
designating a Recovery Zone which would provide Bennett Management Company the
opportunity to utilize Recovery Zone Facility bonds to finance the project; and c) a
resolution authorizing the City to issue Recovery Zone Facility Bonds in support of
Bennett Management Company's project financing. The motion passed unanimously,
8:0.
B. WORK SESSION - Downtown Parking
City Manager Ruiz introduced the item. He suggested that a primary value of providing free parking in
the downtown area was that it sent a strong message that the City was committed to a revitalization of
downtown Eugene. He noted his concerns regarding the use of General Fund dollars to fund free parking
strategies in the downtown area.
Parking Manager Jeff Petry provided an update on the City's parking program and noted that the program
supported both existing and new development. He briefly elaborated on a number of elements that had
contributed to the role of downtown parking in Eugene.
MINUTES— Eugene City Council August 11, 2010 Page 4
Work Session
Mr. Petry noted that the City's parking program had been designed with the goal of reducing the number
of parking tickets issued. He noted that parking tickets issued by the City were typically half the amount
of parking tickets issued in the private sector.
Mr. Petry demonstrated how the number of parking citations issued since 1973 had steadily decreased.
Mr. Petry briefly described the primary elements of the parking strategy that had been presented to the
council at its February 17, 2010, meeting.
Mr. Petry also described how an easy payments strategy had been incorporated into the City's existing
parking system and noted that credit card compatible parking meters had been installed in the campus
parking district near the University of Oregon after a successful pilot run in the downtown area. He
further noted that "pay -by- cell" phone parking capabilities had also recently been implemented.
Mr. Petry noted that the previously described easy payment strategies had not resulted in the elimination
of any of the previous payment options.
Mr. Petry briefly described efforts to market the City's downtown parking program.
Mr. Petry described additional projects designed to supplement the City's parking program including the
use of mobile phone applications and on- street bike corrals.
Mr. Petry provided information regarding the City's Parking Enterprise Fund and noted that the fund was
unfortunately projected to decline to a zero balance within the next two years. He stated that 70 percent
of the overall decline had been attributed to increases and enhancements in the City's parking garage
security. He briefly described the various strategies that had been planned to help balance the parking
enterprise fund over the next year.
Mr. Petry shared graphic representations that delineated the jurisdiction of the City's Parking Services
Program and both off - street and on- street parking availability in downtown Eugene.
Mr. Petry summarized the direction provided by the City Council at its February 17, 2010, meeting
regarding the implementation of additional free parking strategies. He reviewed the three options
prepared by staff.
Mayor Piercy called on the council for comments and questions.
Mr. Clark expressed appreciation for the staff presentation. He said he believed free parking strategies
were an integral part of the City's comprehensive plans for the continued improvement of the downtown
area.
Ms. Taylor noted that she had served on the City Council's Downtown Parking Subcommittee and in that
context had suggested that the free parking areas be extended south as far as 16th Avenue and east as far
as High Street. She believed that such a strategy would make downtown Eugene a more welcoming
environment. She further suggested that any free parking areas have their time limits increased to three
hours in order to be competitive with the free parking areas of certain local businesses.
Mr. Poling agreed with Mr. Clark's previous comments and appreciated the breadth of information
provided by staff.
MINUTES— Eugene City Council August 11, 2010. Page 5
Work Session
Mr. Zelenka commended the efforts of Mr. Petry and also noted his appreciation of the new pay options
that had been implemented as part of the City's parking program.
Mr. Zelenka maintained that there was essentially no such thing as "free parking" and that the elimination
of all of the City's parking meters would represent a loss of revenue to the General Fund of approximately
$650,000.
Mr. Zelenka commented that there appeared to be no clear linkages between the availability of free
parking and increased economic activity. He believed that the City's recent free downtown parking pilot
program had been a failure in that it had not definitively demonstrated any positive effects on economic
activity in or around the downtown area.
Mr. Pryor expressed that the availability of free downtown parking would be a good outcome for the City
but agreed with Mr. Zelenka's comments that doing so might come at significant expense to the City's
General Fund. He hoped that any staff proposals regarding free downtown parking would come with
information regarding what other City areas might be affected by such strategies.
In response to Mr. Pryor's comments, City Manager Ruiz said it would be important for the council and
staff to discuss the long -term health of the City's Parking Fund again in six months. He said while the
Parking Fund would be able to accommodate the staff - recommended options in the immediate future,
there were several factors that might adversely impact the Parking Fund later on.
Mr. Pryor asked City Manager Ruiz if he was optimistic regarding the state of the Parking Fund after the
next six months. City Manager Ruiz stated that he was optimistic regarding the nature of the future
conversations regarding the City's Parking Fund.
Ms. Ortiz said that as a result of her conversations with several downtown constituents, she was
unconvinced that the free parking strategy would measurably improve downtown economic activity. She
said she would support staff s third option with a sunset provision of October 12, 2010. She believed that
the use of a sunset provision would encourage productive staff and council conversations regarding the
effectiveness of free downtown parking strategies.
Mr. Petry, responding to a question from Mr. Brown, stated that the City's parking meter revenue
increased by approximately 2 percent annually. He further expressed that it was difficult to compare the
circumstances surrounding the City's parking situation in the 1970s and 1980s with more recent factors
that had resulted in a reduction in the number of parking citations that had been issued.
Mr. Brown compared elements of the City's parking system to those of Corvallis and suggested that the
City of Corvallis had been able to strike an effective balance between the availability of free parking and
the economic needs of the community. In response, Mr. Petry said that there were several important
differences between the policies of the Cities of Eugene and Corvallis that prevented the application of
similar parking strategies.
Mr. Brown stated he was inclined to support Mr. Clark's motion with a sunset provision applied to it.
Mr. Petry, responding to a question from Mr. Brown, briefly described how other free downtown parking
strategies had been used in the past.
Mr. Brown feared that free downtown parking would be abused by employees of downtown businesses.
MINUTES — Eugene City Council August 11, 2010 Page 6
Work Session
Mr. Brown suggested that staff might contact parking representatives from Corvallis to learn how they
had prevented the abuse of free parking by downtown employees.
Mayor Piercy stated she was inclined to support the less expensive parking option presented by staff.
Mayor Piercy hoped that additional information could be provided regarding the expenses involved in
removing and potentially re- installing downtown parking meters.
Mayor Piercy expressed that there were a great deal of unknown factors at work regarding the proposed
free downtown parking options.
Mr. Clark, seconded by Ms. Taylor, moved to direct the City Manager to remove
the on- street parking meters listed within the boundaries of "Option 1" on the
Agenda Item Summary before October I" of this year, to install limited time
parking signs within the same boundaries and to hold a Council work session
within six months to discuss the long term financial direction of the parking fund.
Mr. Clark noted that he had made his motion in the spirit of best outcomes and believed that it would
create a more welcoming atmosphere for the downtown area. He suggested that the time limits for
individual free parking spaces in the downtown area should be made rotational with precise limits and
locations to be determined on input from staff. Mr. Clark agreed with Ms. Taylor's earlier comments
referencing her suggestion that the free parking area needed to be extended south the 16` Avenue.
Mr. Clark hoped that the free downtown parking strategies would not include a sunset provision.
Mr. Poling hoped that employees and business owners in the downtown area would exercise a certain
level of honesty with respect to the free parking strategies.
Mr. Poling suggested that a sunset provision of two years for a downtown free parking strategy would
provide good opportunities for the City to review the effectiveness of free parking on the overall parking
system.
Mr. Clark asked Mr. Poling if he wished to make a friendly amendment in accordance with his previous
suggestion. Mr. Poling responded in the affirmative. Mr. Clark accepted Mr. Poling's friendly
amendment. Ms. Taylor, the second to the motion, also accepted the friendly amendment.
City Manager Ruiz suggested that the determination on the time limits for the individual free parking
spaces be made by Mr. Petry and his colleagues.
Mr. Poling noted he would be happy to support Mr. Clark's motion because he was tired of the City of
Corvallis being able to publicize its free downtown parking.
Ms. Taylor believed that the City might save money by removing some of the enforcement tools currently
used in the City's parking program.
Ms. Ortiz stated that she would not support the motion. She further hoped that staff would provide more
detailed information regarding the staff or services that might be eliminated as part of a free downtown
parking strategy.
MINUTES— Eugene City Council August 11, 2010 Page 7
Work Session
Mr. Zelenka hoped that more detailed information regarding the metrics used to evaluate the effects of a
free downtown parking program would be provided as the process moved forward. He worried that a free
downtown parking program would be used primarily by employees of downtown businesses. He did not
support the motion.
Mr. Pryor trusted that the City Manager could be creative enough to execute the provisions of a free
downtown parking program in a careful and effective manner. He hoped that the meters would not be
removed and that a sunset provision for the free parking program would be used.
Mr. Clark, responding to a request from Mayor Piercy regarding the previously stated motion, stated his
preference for the physical removal of parking meters as part of the free parking strategy. He further that
he would support whatever strategy the City Manager recommended to disable or otherwise remove the
parking meters.
The motion passed, 6:2; Ms. Ortiz and Mr. Zelenka voting in opposition.
Mayor Piercy adjourned the meeting at 1:29 p.m.
Respectfully submitted,
�—� ���
Beth Forrest
City Recorder
(Recorded by Wade Hicks)
MINUTES— Eugene City Council August 11, 2010 Page 8
Work Session