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HomeMy WebLinkAboutItem B: Downtown Update - ORI (Sears Site) ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Work Session: Downtown Development Update - ORI (Sears Development Site) Meeting Date: April 12, 2006 Agenda Item Number: B Department: Planning and Development Staff Contact: Denny Braud www.eugene-or.gov Contact Telephone Number: 682-5536 ISSUE STATEMENT This agenda item was previously scheduled to discuss Oregon Research Institute’s (ORI) proposed development of the Sears site. ORI’s Board of Directors recently decided to not move forward with the development of the site at this time. The council is being asked to consider issuing a new request for proposals for the sale and development of the Sears site. BACKGROUND In December 2002, a Request for Proposals (RFP) was issued for the sale and development of the Urban Renewal Agency-owned Sears building site. In May 2003, the Urban Renewal Agency (URA) reviewed the responses to the RFP and selected the ORI project. In June 2004, the URA reviewed the terms of the sale and directed the City Manager to sell the property to ORI. A Purchase and Sale and Development Agreement was signed in February 2005 which specified a $400,000 purchase price, a June 2005 closing date, and July 2005 construction date. In July 2005, the agreement was amended to increase the purchase price to $470,000, extend the closing date to October 2005, and extend the construction date to January 2006. In December 2005, a second amendment to the agreement was signed, extending the closing date to January 30, 2006. The second amendment also required ORI to secure project financing by February 28, submit permits by March 15, sign a construction contract by April 7, close on project financing by May 12, and begin construction by May 15. ORI did not meet the January 30 closing date as specified in the agreement. On February 13, 2006, the council directed staff to assist ORI in closing the financing gap for their project, and to bring the item back to the council within 60 days. Since February 13, staff has had ongoing discussions with ORI representatives. ORI indicated that it discontinued work with Home Street Bank, the primary lender for the project, and was seeking an alternate lender and a possible alternate source for New Market Tax Credits. Staff participated in discussions with two banks that expressed interest in the project. Staff also introduced ORI to a potential equity investor/development partner. ORI indicated that it had discussions with a second development partner. Additionally, staff continued discussions regarding an offer to use Urban Renewal and Community Development Block Grant loan funds to assist with their financing gap. The Purchase and Sale and Development Agreement signed by ORI and the URA included a $40,000 earnest money deposit that is currently being held in escrow. The disposition of the earnest money will be reviewed by the City Manager within the context of the agreement. L:\CMO\2006 Council Agendas\M060412\S060412B.doc The Sears site under consideration includes the 1/4-block former Sears building property, along with the th 1/8-block surface parking lot on the northwest corner of 10 and Olive (the other half of the surface th parking on 10 and Olive is owned by an adjacent private property). The URA purchased the Sears property in 1993. The acquisition cost of approximately $900,000 included the Sears building property, and the half-block on which the new library was constructed. An appraisal of the Sears property completed in January 2003 indicated a land value of $20 per square foot. It is estimated that current market value for the land is approaching $30 per square foot, which would result in an approximate value of $1.1 million. In 2005, the former Sears building structure was demolished for a total cost of approximately $202,000. State statutes, the downtown Urban Renewal Plan, and adopted URA procedures govern the disposition of real property held by the URA. URA procedures provide for the City Manager, as the business agent for the URA, to publicly or privately solicit proposals and negotiate with any party for the disposal of real property consistent with the Urban Renewal Plan. Any proposal which is acceptable to the City Manager must then be presented to the council (acting as the URA) for its approval. RELATED CITY POLICIES Future development of the Sears site is consistent with the policies and implementation strategies included 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. Help employers locate, remain and expand downtown by targeted use of economic tools and ? incentives. 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. Promote multi-story, mixed-use structures downtown through financial incentives or code ? amendments. In addition, the proposed future development of the Sears site is responsive to the following Growth Management objectives: 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 10: Encourage the creation of transportation-efficient land use patterns and implementation of nodal development concepts. Policy 16: Focus efforts to diversify the local economy and provide family-wage jobs principally by supporting local and environmentally-sensitive businesses. Direct available financial and regulatory incentives to support these efforts. 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. L:\CMO\2006 Council Agendas\M060412\S060412B.doc COUNCIL OPTIONS 1. Direct the City Manger to issue a new request for proposals for sale and development of the Sears site, and continue to work with ORI to site its new facility downtown. 2. Consider options for the Sears site at a later date, and continue to work with ORI to site its new facility downtown. CITY MANAGER’S RECOMMENDATION The City Manager recommends that a new request for proposals for development of the Sears site be issued within the next 30 days, with council consideration of the proposals to occur following a 60-day period for submittal of proposals. The City Manager also recommends that staff continue to work with ORI to site its new facility downtown. SUGGESTED MOTION Move to direct the City Manger to issue a request for proposals within 30 days for the sale and development of the Sears site, with council consideration of the proposals to occur following a 60-day period for submittal of proposals, and direct the City Manager to continue to work with ORI to site its new facility downtown. ATTACHMENTS None. FOR MORE INFORMATION Staff Contact: Denny Braud Telephone: 682-5536 Staff E-Mail: denny.braud@ci.eugene.or.us L:\CMO\2006 Council Agendas\M060412\S060412B.doc