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HomeMy WebLinkAboutItem 4: MUPTE for Student Housing Project ECC UGENE ITY OUNCIL AIS GENDA TEM UMMARY Public Hearing: for Student Housing Project Multi-Unit Property Tax Exemption Meeting Date: April 23, 2012 Agenda Item: 4 Department: Planning and Development Staff Contact: Amanda Nobel www.eugene-or.gov Contact Telephone Number: 541-682-5535 ISSUE STATEMENT The public is invited to provide comment on whether the council should approve a Multi-Unit Property th Tax Exemption (MUPTE) for the Olive & 13 Student Housing project proposed by Capstone Collegiate Communities (currently the PeaceHealth clinic site and surrounding lots). The resolutions for approval and denial are in Attachments A and B. BACKGROUND In 1975, the Oregon legislature adopted the enabling statutes for the MUPTE program. Since that time, both the State statutes and Eugene’s implementation ordinance have been amended. The council most recently extended the sunset date and reduced the boundary in September 2011. Also at that time, the council added the option to exempt the commercial portion of a multi-unit housing project to the extent that the commercial use is required or considered to be a public benefit. The council amended Eugene’s code provisions in November 2008, to assist both staff and council in evaluating a MUPTE application with 1) adoption of approval criteria and 2) direction to the City Manager to adopt a public benefit scoring system (described below). Project Capstone plans to remove the existing structures and build a five-story student housing development with structured and surface parking and one commercial space. Phase 1 is between Olive and Willamette from just north of 12th to 13th avenues. Phase 2 is between Charnelton and Olive from 12th to 13th avenues. (The Report and Recommendation of the Planning and Development Director is Attachment C and includes the list of program defined public benefits and other benefits from the project. See Attachment D for images of the project. A map of existing downtown housing is Attachment E.) The development would include embedded parking, which means the parking structures will be surrounded by the housing units on three sides and open to the alley on the fourth side. The project will have between 359 and 375 units, up to 5,000 square feet of commercial space; approximately 1,000 structured parking spaces; and up to 48 surface parking spaces. Entrance to the development would be with key card through secured private courtyards located off the public pedestrian and bike paths. The existing buildings that would be demolished are not city landmarks nor are they on the National Historic Register. The proposed schedule is to begin construction of Phase 1 in June 2012, open Fall 2013, and begin construction of Phase 2 in Spring 2013, open in Fall 2014. Services and amenities include roommate ` S:\CMO\2012 Council Agendas\M120423\S1204234.doc matching, fully furnished units; interior common areas for gathering, office/computers, gaming; and exterior common areas for small pools, bocce ball, and other recreation space. The development will have onsite staff: five full-time jobs and 12 – 15 part-time jobs. The full-time staff will consist of a manager, assistant manager, leasing director, maintenance supervisor, and assistant maintenance supervisor. Safety measures include comprehensive video camera monitoring of all public spaces in the complex; on-site courtesy officers to patrol the complex and adjacent areas several times each night; and strict lease provisions prohibiting illegal use of drugs and alcohol as well as excessive noise and other disruptive behavior. The resolution includes the provision of project management as a requirement for approval. Capstone also submitted an application for a right-of-way and alley vacations. Their proposal is to th transfer ownership of (vacate) the east/west right-of-way (West 12 Avenue, which functions as an alley) and a portion of the north/south right-of-way (Willamette Alley) from the City to the developer. The east/west right-of-way would be realigned, improved, and rededicated to provide an enhanced bike path between Olive and Willamette streets. Capstone and LTD have agreed to a new bus stop, on th Willamette Street south of 12 Avenue, which would serve Capstone residents conveniently. Public Benefits After reviewing the Capstone application against the public benefit scoring criteria in the Standards and Guidelines, staff determined that the proposed development earned 210 points. Points were awarded for the project through the following benefits: Density: 50 points (10 pts per unit in excess of the minimum code requirement; 50 point max) o Location: 100 points for being located within the Downtown Plan Area o ADA units: 60 points (10 pts per accessible unit) o The applicant indicates that LEED silver certification will be attempted with a minimum of Earth Advantage Silver. However, the project is not at a stage to complete the scoring worksheets for either, so no points were added for green building elements. Financial Analysis The applicant demonstrated that the project as proposed could not be built but for the benefit of the tax exemption. The financing for the project will be required to meet a specific Loan-to-Value underwriting criteria which is expected to be 70 percent. The Loan-to-Value assumption is consistent with today’s tighter real estate lending standards. For this large scale project, Capstone will need to provide 30 percent ($27 million) of the project’s financing in the form of equity. Unlike typical MUPTE projects financed with local equity, the proposed scale of the Capstone development will require institutional sources of equity to be attracted to the project. Additionally, the proposed project will require the investor to assume some risk from the major redevelopment costs associated with the site and from the rate of absorption of the large number of proposed units brought into the local student housing market. Capstone has indicated that their primary equity investor (Kayne Anderson Real Estate Advisors) will require a minimum rate of return of nine percent in the first year. Without the MUPTE savings, the project is projected to generate a six percent rate of return, which is insufficient to attract the required equity investment. (Capstone’s originally submitted pro-forma forecasted a 3.2 percent return on investment without MUPTE. With a more accurate tax savings figure, the projected return on investment without MUPTE has been adjusted to six percent; see Attachment F for more detailed S:\CMO\2012 Council Agendas\M120423\S1204234.doc financial analysis.) The MUPTE tax exemption lowers annual operating costs by approximately $846,000, which produces higher net operating income and results in a projected nine percent Cash on Cash rate of return. Staff and the Loan Advisory Committee reviewed the pro-forma, including assumptions regarding lease rates, operating costs, capitalization rate, lender underwriting criteria, interest rate assumption, and market expected rate of return. The Committee confirmed the financial assumptions used in the analysis and unanimously concluded that the tax exemption is needed to generate a return on investment sufficient to attract the required equity investment. Tax Impact th Olive & 13 Student Housing will generate property tax revenue on the land. Staff estimates the property tax paid will be $100,000 in year 1. After ten years, the entire development will be taxable, generating an estimated $1.2 million in year 11. If the project does not move forward, tax revenue will be minimal on the chronically underdeveloped site. (See Attachment G for the estimated allocation of tax payment for this project.) Need for Tax Exemptions to Encourage Ground Floor Commercial Capstone proposes the potential inclusion of up to 5,000 square feet of ground floor commercial space. The ground floor commercial use is considered to provide public benefit as commercial/retail uses in this area will support downtown vitality, and the opportunity for project residents and others in the area to easily walk to the proposed commercial/retail services. There are risks associated with tenanting ground floor commercial at lease rates that can support the cost of constructing the space. Additionally, mixing uses within one building typically adds construction costs related to building code requirements. Allowing the MUPTE to include the ground floor commercial/retail space will improve the financial feasibility of incorporating the space into the project and stimulate a desired form of mixed-use development. Right-of-Way & Alley Vacation As part of the redevelopment of the site, the applicant proposes to realign and improve the public bicycle and pedestrian connection through the site, between Olive and Willamette Streets. The new public path will be within a 20-foot-wide right-of-way that the applicant proposes to dedicate just south of the thth existing West 12 Avenue right-of-way. The applicant proposes to vacate the existing West 12 Avenue right-of-way to facilitate redevelopment of the site and realignment of the bicycle and pedestrian connection. The new right-of-way as proposed would not be open to vehicular use. The MUPTE resolution contains the necessary requirement to ensure that the proposed realignment of the public bicycle and pedestrian connection maintains the public interest. The applicant agreed to provide these improvements. All improvements will be subject to a more detailed review for design elements during the Privately-Engineered Public Improvement (PEPI) permit process, in which the applicant pays for all associated engineering, construction, and inspection costs related to construction of improvements for public areas. The design will be subject to the City Engineer’s approval. As part of the PEPI permit process, the improvement cost will need to be bonded prior to issuance of the complete structure building permit for the housing north of the right-of-way to be vacated. (The AIS for the public hearing on the vacation contains more detail.) Public Comments A display advertisement was published in The Register Guard on February 5, 2012, soliciting comments for 30 days. The comment period ended on March 6, 2012, however, staff continued to collect all ` S:\CMO\2012 Council Agendas\M120423\S1204234.doc comments. Written comments submitted through April 16 are available in a binder in the council office. (Six new comments were added since the April 9 work session.) The applicant attended two Downtown Neighborhood Association (DNA) meetings (January 25 and March 26). A letter from the DNA is included in Attachment H, which indicates support for the project with stated reservations and recommendations. The City, several neighborhood associations, and other organizations conducted additional public engagement: City Club on March 11 at Cozmic Pizza o Jefferson Westside Neighborhood association on March 13 at the Vets’ Club o City Open House on March 14 at the Atrium Building o Sustainability Commission reviewed the project on April 4 and plans to submit a letter to council o before the April 25 work session Timing This application was submitted on January 24, 2012. If the council has not acted in 180 days, the application is deemed approved. Work sessions on this project are scheduled for April 25 and May 9. April 9 Work Session Follow-Up Information The following is provided as follow-up information to the April 9 work session: Economic impact of the project (Attachment I) o Portland’s tax exemption program (Attachment J) o Additional information requested (Attachment K) o RELATED CITY POLICIES MUPTE is enabled by state statute. The City of Eugene has participated in the MUPTE program since 1978. Encouraging housing in the core area is consistent with numerous adopted planning and policy documents. Examples include: Growth Management Policies Policy 1 Support the existing Eugene Urban Growth Boundary by taking actions to increase density and use on 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 business and residential uses downtown using incentives and zoning. Eugene Downtown Plan Build upon downtown’s role as the center for government, commerce, education and culture in  the city and the region. 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. S:\CMO\2012 Council Agendas\M120423\S1204234.doc Use downtown development tools and incentives to encourage development that provides  character and density downtown. Stimulate multi-unit housing in the downtown core and on the edges of downtown for a variety  of income levels and ownership opportunities. Enhance functional designs for streets, sidewalks and related public improvements with carefully  chosen design elements, including materials, alignments, plantings and streetscape elements. Envision Eugene Provide ample economic opportunities for all community members  Provide affordable housing for all income levels  Plan for climate change and energy uncertainty  Promote compact urban development and efficient transportation options  Protect, repair, and enhance neighborhood livability  Protect, restore, and enhance natural resources  Provide for adaptable, flexible, and collaborative implementation  Eugene Counts Increased downtown development is one of the desired outcomes identified under the Council Goal of Sustainable Development. Additionally, the MUPTE program is consistent with the current Envision Eugene work and, specifically, the “Promote compact urban development and efficient transportation options” pillar. COUNCIL OPTIONS None. Public hearing only. CITY MANAGER’S RECOMMENDATION None. Public hearing only. SUGGESTED MOTION None. Public hearing only. ATTACHMENTS A.Resolution Approving the Property Tax Exemption B.Resolution Denying the Property Tax Exemption C.Report & Recommendation of the Planning and Development Director D.Image of the Project Location and Proposed Development E.Map of Existing Downtown Housing F.Financial Analysis G.Estimated Allocation Tax Payment H.Statement from Downtown Neighborhood Association I.Economic Impact of Project ` S:\CMO\2012 Council Agendas\M120423\S1204234.doc J.Portland’s Housing Tax Exemption Program K.Other Information Requested at the April 9 Work Session th A copy of the MUPTE application for Olive & 13 Student Housing is available in the council office for review. FOR MORE INFORMATION Staff Contact: Amanda Nobel Flannery Telephone: 541-682-5536 E-mail: amanda.nobelflannery@ci.eugene.or.us S:\CMO\2012 Council Agendas\M120423\S1204234.doc ATTACHMENT A RESOLUTION NO. _____ A RESOLUTION APPROVING A MULTIPLE-UNIT PROPERTY TAX EXEMPTION FOR RESIDENTIAL PROPERTY LOCATED IN THE TH VICINITY OF OLIVE STREET AND 13 AVENUE, EUGENE, OREGON. (Applicant: Capstone Collegiate Communities, Inc.) The City Council of the City of Eugene finds that: A. PeaceHealth, located at 123 International Way in Springfield, Oregon, is the owner of real property located between Olive and Willamette Streets from just north of 12th to 13th Avenues and between Charnelton and Olive Streets from 12th to 13th Avenues, Eugene, Oregon (Assessor’s Map 17-03-31-42; Tax Lots 700, 800, 1000, 1100, 1200, 1600, 1700, 1800, 1900, 2000, 2100, 2200, 2300, and 2400), and David R. Lyons Revocable Trust, located at 433 Spyglass Drive, Eugene, Oregon, is the owner of real property located at 1210 and 1212 Willamette Street, Eugene, Oregon (Assessor’s Map 17-03-31-42; Tax Lot 900) (“the property”). B. Capstone Collegiate Communities, Inc., (“the applicant”) located at 431 Office Park Drive in Birmingham, Alabama, intends to purchase the property, and has submitted an application pursuant to the City’s Multiple-Unit Property Tax Exemption Program (Sections 2.945 and 2.947 of the Eugene Code, 1971), with respect to residential units and possible commercial space to be constructed on the property. C. The project will be constructed in two phases and is proposed to consist of the development of between 350 and 375 residential units. In addition, the project will include structured and surface parking spaces, and may include commercial space. On-site resident management and courtesy officers will be provided as described in Section 1, paragraph 2 below. D. As part of the redevelopment of the site, the applicant proposes to realign and improve the public bicycle and pedestrian connection through the site, between Olive and Willamette Streets. The new public path will be within a 20-foot wide right-of-way that the applicant proposes to dedicate just south of the existing West 12th Avenue right-of-way. The applicant proposes to vacate the existing West 12th Avenue right-of-way to facilitate redevelopment of the site and realignment of the bicycle and pedestrian connection. The new right-of-way will not be open to vehicular use. To ensure that the proposed realignment of the public bicycle and pedestrian connection maintains the public interest, the applicant has agreed to the following: Resolution - Page 1 of 5 The proposed 20-foot wide right-of-way will be dedicated and the following public improvements will be constructed: (1) A 10-foot wide two-way bicycle facility that is clear of obstructions and separated from pedestrians, within the new 20- foot right-of-way; th (2) A bicycle crossing island at the intersection of West 12 Avenue and Olive Street that prohibits left turns for automobiles; and (3) A replacement crosswalk within Willamette Street that aligns the proposed bicycle connection through the site with the existing bicycle way east of Willamette Street. All improvements will be subject to a more detailed review for design elements during the Privately-Engineered Public Improvement (PEPI) permit process, for which the applicant will pay all associated engineering, construction, and inspection costs. The design will be subject to the City Engineer’s approval. As part of the PEPI permit process, the improvement cost will need to be bonded prior to issuance of the complete structure building permit for the housing north of the right-of-way to be vacated. E. The project is located within the boundaries of the downtown area as described in subsection (2) of Section 2.945 of the Eugene Code, 1971. F. The project could not financially be built “but for” the tax exemption. G. The applicant solicited comments from city-recognized the affected neighborhood association. H. The requirements in the Standards and Guidelines for Multiple-Unit Housing Property Tax Exemptions adopted by Administrative Order Nos. 53-09-01-F and 53-11-05 related to proximity to historic resources have been satisfied. I. The applicant has complied with the provisions of the Standards and Guidelines as described in the Report and Recommendation attached as Exhibit A to this Resolution which was prepared by the Executive Director of the Planning and Development Department (“the Executive Director”) as designee of the City Manager. J. The project will be completed on or before January 1, 2022, and the owner has agreed to include in the construction one or more public benefits. Resolution - Page 2 of 5 K. The proposed project will be in conformance with all local plans and planning regulations, including special or district-wide plans developed and adopted pursuant to ORS chapters 195, 196, 197, 215 and 227, that are applicable at the time the application is approved. L. The project is not designed for, and will not be used as transient accommodations. M. Granting the application is in the public interest. In making this determination, the City Council has considered the number of points awarded to the project based on the public benefit scoring system contained in the Standards and Guidelines. N. The Report and Recommendation recommends that the application be approved and the exemption granted. In making that recommendation, the Executive Director found that the applicant submitted all required materials, documents and fees as set forth in Section 2.945 of the Eugene Code, 1971, and the Standards and Guidelines, and the applicant is in compliance with the policies contained therein. 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. Based upon the above findings which are adopted, and the City Council’s review of the Executive Director of the Planning and Development Department’s Report and Recommendation which is attached as Exhibit A, the City Council approves the application of Capstone Collegiate Communities, Inc. for an ad valorem property tax exemption under the City’s Multiple-Unit Property Tax Exemption Program for the residential units to be constructed on real property located between Olive and Willamette Streets from just north of 12th to 13th Avenues and between Charnelton and Olive Streets from 12th to 13th Avenues, Eugene, Oregon (Assessor’s Map 17-03-31-42; Tax Lots 700, 800, 900, 1000, 1100, 1200, 1600, 1700, 1800, 1900, 2000, 2100, 2200, 2300, and 2400), subject to the following conditions: 1. Phase 1 of the project shall consist of development of approximately 232 units with a total of approximately 790 bedrooms, 603 structured parking spaces, and 48 surface parking spaces. Phase 2 of the project shall consist of development of approximately 142 units with a total of approximately 514 bedrooms and 430 structured parking spaces. Phase 2 of the project must be completed within 36 months of the issuance of the Certificate of Occupancy for Phase 1 in order to be eligible for the multiple unit Resolution - Page 3 of 5 property tax exemption granted by this Resolution. If Phase 2 is not completed within 36 months, the property owners may reapply for the tax exemption. In no event will the total number of units for Phase 1 and Phase 2 exceed 375. Ground floor commercial space may be included in either phase of the project. If such commercial space is included, it shall be eligible for the tax exemption up to 5,000 square feet. 2. On-site management is required. On-site management functions shall include: 2.1 Maintaining leasing, property/resident management office on-site that is staffed during normal working hours; 2.2 Have at least one employee residing on-site; 2.3 Have on-site one or more courtesy managers making nightly property inspections; and 2.4 Providing information to residents about the sensitivities of neighboring properties, including Olive Plaza, as part of the lease documents. 3. As part of Phase 1, a 20-foot wide right-of-way south of the existing West th 12 Avenue right-of-way shall be dedicated and the following public improvements shall be constructed: (1) A 10-foot wide two-way bicycle facility that is clear of obstructions and separated from pedestrians, within the new 20- foot right-of-way; th (2) A bicycle crossing island at the intersection of West 12 Avenue and Olive Street that prohibits left turns for automobiles; and (3) A replacement crosswalk within Willamette Street that aligns the proposed bicycle connection through the site with the existing bicycle way east of Willamette Street. 4. Both phases of the project shall be completed on or before January 1, 2022. 5. The project shall be in conformance with all local plans and planning regulations, including special or district-wide plans developed and adopted pursuant to ORS Chapters 195, 196, 197, 215 and 227. Section 2. Subject to the conditions in Section 1 of this Resolution, 100% of the residential units and commercial space (up to 5,000 square feet) described in Section 1 are declared exempt from local ad valorem property taxation beginning July 1 of the year following issuance of a Certificate of Occupancy for each phase and continuing for a continuous period of Resolution - Page 4 of 5 ten years unless earlier terminated in accordance with the provisions of Section 2.947 of the Eugene Code, 1971. Section 3. The City Manager, or the Manager’s designee, is requested to forward a copy of this Resolution to the applicants within ten days, and to cause a copy of this Resolution to be filed with the Lane County Assessor on or before April 1, 2013. Section 4. This Resolution shall become effective immediately upon its adoption. The foregoing Resolution adopted and effective the ____ day of __________, 2012. _______________________ ______ AIC City Recorder Resolution - Page 5 of 5 ATTACHMENT B RESOLUTION NO. _______ A RESOLUTION DENYING A MULTIPLE-UNIT PROPERTY TAX EXEMPTION FOR RESIDENTIAL PROPERTY LOCATED IN THE TH VICINITY OF OLIVE STREET AND 13 AVENUE, EUGENE, OREGON. (Applicant: Capstone Collegiate Communities, Inc.) The City Council of the City of Eugene finds that: A. PeaceHealth, located at 123 International Way in Springfield, Oregon, is the owner of real property located between Olive and Willamette Streets from just north of 12th to 13th Avenues and between Charnelton and Olive Streets from 12th to 13th Avenues, Eugene, Oregon (Assessor’s Map 17-03-31-42; Tax Lots 700, 800, 1000, 1100, 1200, 1600, 1700, 1800, 1900, 2000, 2100, 2200, 2300, and 2400), and David R. Lyons Revocable Trust, located at 433 Spyglass Drive, Eugene, Oregon, is the owner of real property located at 1210 and 1212 Willamette Street, Eugene, Oregon (Assessor’s Map 17-03-31-42; Tax Lot 900) (“the property”). B. Capstone Collegiate Communities, Inc., (“the applicant”) located at 431 Office Park Drive in Birmingham, Alabama, intends to purchase the property, and has submitted an application pursuant to the City’s Multiple-Unit Property Tax Exemption Program (Sections 2.945 and 2.947 of the Eugene Code, 1971), with respect to residential units and possible commercial space to be constructed on the property. C. The proposed project would be constructed in two phases and is proposed to consist of the development of between 350 and 375 residential units. In addition, the project would include structured and surface parking spaces, and might include commercial space. On- site resident management and courtesy officers would be provided. D. The project is located within the boundaries of the downtown area as described in subsection (2) of Section 2.945 of the Eugene Code, 1971. E. The Report and Recommendation of the Executive Director of the Planning and Development Department (“the Executive Director”) as designee of the City Manager attached as Exhibit A to this Resolution recommends that the application be approved and the exemption granted. In making that recommendation, the Executive Director found that the applicant submitted all required materials, documents and fees as set forth in Section 2.945 of the Eugene Code, 1971, and the Standards and Guidelines, and the applicant is in compliance with the policies contained therein. Resolution - Page 1 of 2 F. Notwithstanding the recommendation to approve the application, the City Council has determined that granting the application is not in the public interest. 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. Having considered the above findings and the Report and Recommendation of the Executive Director attached as Exhibit A, the City Council finds that it would not be in the public interest to grant the application of Capstone Collegiate Communities, Inc., for an ad valorem property tax exemption under the City’s Multiple-Unit Property Tax Exemption Program for the residential units and commercial space to be constructed on the property (Assessor’s Map 17-03-31-42; Tax Lots 700, 800, 900, 1000, 1100, 1200, 1600, 1700, 1800, 1900, 2000, 2100, 2200, 2300, and 2400). Therefore, the application is denied. Section 2. The City Manager, or the Manager’s designee, is requested to forward a copy of this Resolution to the applicant within ten days. Section 3. This Resolution shall become effective immediately upon its adoption. The foregoing Resolution adopted and effective the ____ day of _________, 2012. _______________________ ______ AIC City Recorder Resolution - Page 2 of 2 ATTACHMENT D Image of the Current Site & Proposed Development ATTACHMENT F Financial Analysis The financial information Capstone submitted in their application is based on projections prior to finalizing financing, construction, and tenanting. This analysis is based on the conservative approach that the project is built at one time. (Phasing would increase the cost of the project due to mobilization, lost economies of scale, and increased design and other soft costs; and reduce the return on investment.) The financial assumptions included in Capstone’s MUPTE application pro-forma have been analyzed and adjusted as necessary to more accurately reflect the expected financial performance of the project. Of particular note, the projected tax savings in Capstone’s pro-forma were overstated by their assumption that the full construction value of the project would be used for tax assessment purposes. The changed property ratio used in assessing real property would result in a lower taxable value and lower tax savings than projected in their pro-forma. The result of this adjustment is an increased projected return on investment in the “without MUPTE” scenario. Capstone’s originally submitted pro-forma forecasted a 3.2% return on investment without MUPTE. With the more accurate tax savings figure, the projected return on investment without MUPTE has been adjusted to 6%. There are no adjustments made that result in a lowering of the projected return. Sources Annual debt Total Cost service Equity $ 27,176,000 30% Conventional Debt $ 61,963,000 70% $4,699,780 Total project $ 89,139,000 The $27 million in equity is anticipated to come primarily from Kayne Anderson Capital Advisors, a firm that provides private real estate equity principally in off-campus student housing properties located in close proximity to large universities. A minimum of 9% return (Cash on Cash) is needed in year 1 to secure the proposed equity investment. Capstone plans to use conventional bank construction financing, with the permanent, take-out financing anticipated from Fannie Mae’s Dedicated Student Housing program. Underwriting for the permanent financing is based on a maximum 75% loan-to-value and minimum 1.30 debt service coverage ratio. Additionally, the project must be near a campus with student enrollment of 10,000 (50% full-time), be within two miles of campus or on a university sanctioned public transportation line, have 12-month leases with parental guaranties, and not be on university- owned land nor offer food service. Based on Capstone’s experience financing similar projects, they project that the project will be underwritten at 70% loan-to-value. Standard underwriting criteria for similar projects typically require one parking space per bedroom. Capstone originally proposed 0.9 spaces per bedroom. Further discussions with their lender have yielded a negotiated reduction to 0.8 spaces per bedroom based on other project features, such as proximity to the transit line. Pro-Forma The pro-forma in this memo is derived from applying market-based assumptions (described below) to the information provided by the developer. Without MUPTEYear 1Year 2Year 10 Income$ 9,946,200$ 10,045,700$ 10,878,100 - Vacancy (6%)$ 602,400 $ 608,500 $ 658,900 = Effective Gross Rent$ 9,343,800$ 9,437,200$ 10,219,200 - Operating Exp (32%)$ 2,990,000$ 3,019,900$ 3,270,100 = NOI$ 6,353,800$ 6,417,300$ 6,949,100 - Debt Service$ 4,699,800$ 4,699,800$ 4,699,800 = CF$ 1,654,000$ 1,717,500$ 2,249,300 Cash on Cash Return 6%6%8% Value$ 87,639,000$ 88,514,000$ 95,850,000 DCR 1.35 Rents & Vacancy Income for the pro-forma is based on the following: Residential rents from $1.48 - $1.88 per square foot per month (based on unit type) Commercial rent $1.50 per square foot per month Parking $35 per month per space Miscellaneous (vending, fees, & cleaning) at 2% of residential income The pro-forma uses market assumptions for vacancy: 5% for residential and commercial income and 30% for parking. The vacancy rate of 6% is the blended average for all income. An 1% annual escalation rate is used for the income. Operating Expenses For most multi-family projects, the standard assumption for operating expenses is 25% to 30%. Operating expenses assumed for the proposed Capstone project are estimated at 32% of effective gross rental income. Slightly higher operating cost are expected from enhanced on-site management personnel costs and the operation and maintenance costs associated with higher than standard amenities such as open space, structured parking, pools, and furnished units. An 1% annual operating expense escalation rate is assumed. Debt & Interest Rate Debt service is based on a 30-year fixed loan at 6.5% from Fannie Mae. The City’s financial advisor at Western Financial Group confirmed that the interest rate assumption is reasonable based on a recent comparable student housing project financed by Fannie Mae and on the hedge needed to account for estimating a rate two years from now. Banking industry representatives on the City’s Loan Advisory Committee also confirmed that the interest rate assumption is reasonable. Return & Value Without the MUPTE savings, the year 1 return on equity is forecasted to be 6% (Cash on Cash). The projected market value for the completed project is $87.6 million, as determined by the Net Operating Income (NOI) divided by the capitalization rate. The estimated capitalization rate is 7.25% based on information from a local appraiser who indicated an acceptable range up to and including 7.5%. ANALYSIS Although the without MUPTE pro-forma seems to qualify for debt (with adequate debt coverage ratio of 1.35 and loan-to-value of 71%), the project lacks the ability to attract the needed equity. The proposed project will require the investor to assume some risk from the major redevelopment costs associated with the site and from the rate of absorption of the large number of proposed units brought into the local student housing market. Capstone has indicated that their primary investor will require a minimum return of 9%. Without the MUPTE savings, the project generates a 6% return, which is insufficient to attract the required $27 million equity investment. The Cash on Cash only reaches 8% by year 10 in the absence of the MUPTE. Pro-Forma With The MUPTE With MUPTEYear 1Year 2Year 10 Income$ 9,946,200$ 10,045,700$ 10,878,100 - Vacancy (6%)$ 602,400 $ 608,400 $ 658,800 = Effective Gross Rent$ 9,343,800$ 9,437,300$ 10,219,300 - Operating Exp (32%)$ 2,990,000$ 3,019,900$ 3,270,100 - Property Tax $ (846,000)$ (871,400)$ (1,103,700) (saved by MUPTE) = NOI$ 7,199,800$ 7,288,800$ 8,052,900 - Debt Service$ 4,699,800$ 4,699,800$ 4,699,800 = CF$ 2,500,000$ 2,589,000$ 3,353,100 Cash on Cash Return 9%10%12% Value$ 99,308,000$ 100,535,000$ 111,074,000 DCR1.53 The pro-forma above shows that the project improves with the MUPTE. The Cash on Cash return reaches 9% in year 1 and 12% by year 10, consistent with long-term expectations for multi-family housing investments. The project valuation is 62% loan to value. Tax Savings Calculation The MUPTE property tax savings shown above is calculated from the estimated value of the project: Assessed Value X Tax rate – Land Property Tax = MUPTE Savings Assessed Value = Value X Changed Property Ratio = $87,639,000 X 0.5938 = $52,039,100 Tax Rate = $18.18 per $1,000 in assessed value Land Property Tax = $100,000 The land property tax must be subtracted from the total because the MUPTE only applies to the value of the improvements. The estimated property tax for the land is $100,000 ($25.80/square foot, which is on the conservative side of land assessed values in the area). Disclaimers:  The current tax rate is used for the 10 year period, although the rate will likely change each year.  Assessed value increases annually by 3% for the 10 year period, which assumes there is no significant change in the way assessed value is calculated; also the property will be reassessed when the exemption expires. Capstone estimated the taxes in their application for year 1 at $1.6 million without the MUPTE and $147,000 for the land (a savings of $1,453,000 if the MUPTE is approved). For financing purposes, Capstone uses the full value of the project (instead of estimating the assessed value) to estimate property taxes. They did not include the changed property ratio. (As shown above in the Pro-forma With MUPTE, staff estimates the MUPTE savings for year 1 at $846,000.) Since submitting their application in January, Capstone’s due diligence on the project has led to fine tuning costs based on additional information and phasing construction of the east and west blocks. The impact is that the project cost increases to as much as $97 million. The additional costs are the result of replicated mobilization and design costs and the loss of materials and labor economies of scale associated with a larger project. The result of a higher cost, phased project is increased equity and additional debt, and, ultimately, a reduced Cash on Cash return. Staff used the original non-phased pro-forma for the analysis, as it is more conservative. ATTACHMENT G Estimated Allocation of Tax Payment Below is the estimated allocation of tax payment. The dollar amounts are calculated using staff’s estimate of property tax based on the pro-forma valuation derived from applying a standardized set of assumptions (described in the “Financial Analysis” attachment) to the information provided by Capstone. Allocation of Tax Payment to Overlapping Taxing Jurisdictions Estimate, Net of Discounts and Delinquencies based on 2012 tax rate Land Improvements Rate per Rate as ONLY ONLY Taxing District $1,000 AV a % City of Eugene General Taxes 6.8991 38% $ 38,000 $ 302,000 Downtown Urban Renewal 0.1764 1% $ 1,000 $ 8,000 Riverfront Urban Renewal 0.0824 0% $ - $ 4,000 Bonds (I & II) *** 1.139 6% $ 6,000 $ 50,000 Other Jurisdictions (incl. taxes & bonds) School District 4j 7.4256 41% $ 41,000 $ 325,000 Lane Community College 0.8679 5% $ 5,000 $ 38,000 Lane ESD 0.2199 1% $ 1,000 $ 10,000 Lane County 1.3732 8% $ 8,000 $ 60,000 $ 795,000 Total Consolidated Rate 18.1835 100% $ 100,000 * AV = Assessed Value * The estimated property tax revenue on the improvements is $795,000. The estimated property tax savings for the Capstone pro-forma is $846,000. The difference between the two amounts is the county-wide collection rate of 94%. Ultimately, the question is how much revenue the city (and others) is giving up. That is determined by the county-wide collection rate. If the developer chooses to pay their taxes on 11/15, they get a 3% discount right off the top. The rest of the collection rate is made up of delinquent payers. Capstone tax payments would be deposited into the County unsegregated tax account that is shared by all jurisdictions in the County; the City gets a proportionate share of that based on the taxes levied that year. ** All but one tax lot was tax exempt last year. The taxable property owed just under $5,000. *** The impact on bonds from exempting property taxes on the improvements is a higher tax rate for everyone (so that the same amount is collected to pay the bonds in any case). The estimated property tax is calculated from the estimated value of the project: (Assessed Value X Tax rate – Land Property Tax) X collection rate = Est. Forgone Tax Rev. Assessed Value = Value X Changed Property Ratio = $87,639,000 X 0.5938 = $52,039,100 Tax Rate = $18.18 per $1,000 in assessed value Land Property Tax = $100,000 Collection Rate = County-wide collection rate = 94% Disclaimers:  The current tax rate is used for the 10 year period, although the rate will likely change each year.  Assessed value increases annually by 3% for the 10 year period, which assumes there is no significant change in the way assessed value is calculated; also the property will be reappraised when the exemption expires ATTACHMENT H Statement from Downtown Neighborhood Association Introduction The Capstone student housing project, proposed for the site of the former Peace Health clinic on 13th and Olive, is on the southern border of the Downtown Neighborhood. It has the potential for dramatic impact, both positive and negative, on the Eugene Downtown community, and on the city as a whole. The Downtown Neighborhood Association has taken considerable interest in this project as we have tried to “Get To Yes” in a positive approach to appropriate urban and neighborhood development. The following is a summary of our efforts to understand the implications of the Capstone project, identify obstacles, and seek to find ways to overcome those obstacles. Please note: We are not addressing the specific issue of whether or not it is appropriate to use a MUPTE tool as means of achieving this project. We have instead focused on the merits of the project itself; MUPTE is a decision best left to experts in the field. DNA’s “expertise” is limited to caring, knowledge and understanding of the neighborhood and of our neighbors. What DNA has done to understand the Capstone Project proposal  Two Downtown Neighborhood Association general meetings. Estimated total attendance of the meetings: 110.  Community Forum with City Club of Eugene. Estimated attendance: 150.  Meetings with Steve Master and Capstone representatives. Members of the DNA Steering Committee were frequently participants in these meetings.  Contacts with Olive Plaza residents, the neighbors adjacent to the proposed project, in addition to the two general meetings. Most of these neighbors are seniors who are extremely concerned about the possible consequences of this project on the quality of their lives.  Several meetings with individual citizens, both Downtown neighbors and non-neighbors.  Meetings, discussions, and email exchanges with city staff  Lengthy discussion of the Capstone project by the DNA Steering Committee.  Meetings and discussions with some City Council members and Mayor Piercy.  As of April 13: 325 emails received on the subject. What we’ve learned Downtown Neighbors’ concerns can be sorted into the following general categories: Impact on the Neighborhood 1200 new residents all at one time is a huge change for a neighborhood currently with 2500 residents. These new residents are monocultural in the sense that they are all students. Downtown neighbors would very much prefer mixed housing to maintain neighborhood diversity. (Contrary to the thoughts of a local journalist, Downtown is not a monoculture of seniors!) Transportation Buses: Will the quality of LTD service be maintained, even though there will be such increased demand? Cars: How can we discourage the use of automobiles? Parking: Does there need to be such a large parking structure? How to deal with problems caused by additional on-street parking (Olive Plaza caregivers need a place to park as near to the building as possible) Good Neighbor Behavior: Use of local labor in the construction Noise and dust during construction Any increased noise or air quality complaints need to be dealt with in a timely manner. Cooperation and sensitivity between students and neighbors Ban on bicycles and skateboards on the sidewalks Long Term Management: What happens to the quality of management and supervision of the apartments if and when Capstone sells them to another owner? Public Safety: Will there be adequate police coverage? Will there be additional night-time staffing available from EPD? Current status Impact on the Neighborhood: Capstone has indicated that there will be a phase-in plan; not all 1200 students will be brought into the neighborhood in the same year. A longer “getting used to” time between current Downtown residents and our new student neighbors will be helpful, although it doesn’t completely address the question. Capstone has also indicated the possibility (but not likelihood) that Phase Two might not be constructed. If a second building for student use is not constructed, the property could be put to some other use by another developer. There has been no conversation at this time about the potential uses of the 1000 car garage in case there is no second building constructed, leaving a maximum of 700 student residents from the phase 1 development.. Transportation: An additional LTD bus stop will be located on Willamette Street just south of the 12th Street bike path. This will relieve crowding at the LTD station and add convenience for Capstone student residents. LTD is discussing how to provide additional service to meet the needs of hundreds of new Downtown residents. Student residents’ use of cars will be discouraged by the severe limit of campus parking. Capstone will improve the 12th Street bicycle path. Capstone has agreed to set aside a to-be-determined number of parking spaces in their ample parking structure, based on actual vacancy, for reduced cost or free-of-cost use by Olive Plaza caregivers, or other local neighbors. Capstone has agreed to house a WeCar car share vehicle They will provide one bike parking slot per bed, as well as ample sheltered short-term bike parking for guests. Good Neighbor Behavior: Capstone is interviewing local contractors. Almost certainly most of the workers will be local, regardless of the contractor. Capstone has pledged to follow all city codes related to noise and air quality. They have also said that they will try to be sensitive about starting noisy construction later than 7AM if possible. Capstone has agreed to a program of systematic communication with Olive Plaza about the construction process so as to keep them updated. Capstone has agreed to a program of quarterly communications with Olive Plaza residents to ensure that there is two-way positive communication; the focus will be on “known or potential noise or other nuisance issues with the operations of the student housing community upon Olive Plaza.” (per written document, available upon request from DNA or Steve Master.) A member of the project staff will serve on the DNA Steering Committee. This will encourage further communication and accountability for all parties. “Good Neighbor” information will be provided by Capstone management to all residents of the project; this will be done in concert with the Downtown Neighborhood Association. Long Term Management: Although Capstone indicates that it is unlikely that any future purchaser of the project would have less rigorous management, Downtown Neighborhood Association remains quite concerned about this issue. Public Safety: Police Chief Kerns has answered DNA’s specific inquiry, saying he is confident that EPD can meet the challenges that may be presented by the project. Conclusion On March 28 the Downtown Neighborhood Association Steering Committee voted 6-1 to support the Capstone project with reservations. Although DNA wants to support enthusiastically the construction of the Capstone Project, we continue to have concerns. In order to address our reservations, we offer the following: Recommendations to the City Council  Consider a building code or ordinance to require 24/7, professional management and supervision (what Capstone calls “Courtesy” officers) of any building with more than a specified number of residents.  Provide for a safe, direct bicycle/pedestrian link between the University and downtown (probably on 13th Avenue, since 12th is neither very safe nor direct).  Negotiate with Capstone for the provision of an on-site Bike Share station.  Provide restricted or reserved on-street parking for Olive Plaza caregivers and/or residents.  Consider multiple family housing a priority in future Downtown development. Submitted for Eugene City Council consideration by David Mandelblatt, Chair, Downtown Neighborhood Association, with approval of the DNA Steering Committee ATTACHMENT I Economic Impact The City anticipates that the economic impact from the Capstone project will be in three main areas: 1.Tax impacts. The land will be taxed during the MUPTE period, and the land plus the improvements will be taxed after the project is complete and the MUPTE period expires. The estimated property tax paid on the land for year 1 is $100,000. The estimated property tax for the entire development is $1.2 million in year 11. If the project does not move forward, tax revenue will be minimal on the chronically underdeveloped site. 2.Construction jobs and secondary benefit. Capstone estimates that 380 construction jobs will be created to construct the project. Based on estimates from Tim Duy, Senior Director of the Oregon Economic Forum, construction jobs generate a multiplier in the ratio of 1.84. In other words, an increase in construction spending of $100 will yield a net impact on the regional economy of $184. The mean hourly wage of all Eugene’s occupations is $20.11 an hour. An average of construction jobs’ wages in the Eugene-Springfield MSA is about $22.09 per hour, which is approximately 9% higher than the local, average job. Construction is about 3% of the local labor force. This project could be a partial counterweight for the continued sluggishness in residential/commercial construction as construction lost 200 jobs in 2011. Capstone has not made the final selection of the general contractor at this time. Capstone policy is to encourage the use of local contractors, suppliers, and workers for the project as much as possible. It is anticipated the general contractor will use a high percentage of qualified local and area subs, suppliers and workers. 3.Resident discretionary spending for downtown. Students spend discretionary funds in the community where they live. The University of Oregon’s estimate for the purpose of calculating livings costs assumes approximately $250 per student per month; the national estimate of monthly student discretionary spending is about $350. At the lower estimate, the residents of the Capstone project could spend up to $3.7 million per year. At least a portion of that could be spent downtown and may not otherwise occur if the project was located outside of downtown. 4.On-site permanent jobs. Capstone estimates five to seven permanent and fifteen to eighteen part-time operations jobs (including three professional courtesy officers), with approximately $500,000 spent on local services on an annual basis. ATTACHMENT J Portland’s Housing Tax Exemption Program Program Summary Portland, Oregon – New Multiple-Unit Housing (NMUH) Property Tax Abatement Established in 1975. Authorized under ORS 307, the same statutes that authorize the o Eugene MUPTE program. Must have 10 or more dwelling units. o Tax exemption for up to 10 years. o From 2005-2009, there was a moratorium that limited applications to only projects that were o 100% affordable. Application must include cash flow analysis and calculate an internal rate of return (IRR) on o the project to demonstrate that the abatement is required to achieve economic feasibility. All rental projects containing more than 15 units must include at least 15% of the units for o rent at rates that are affordable and restricted to households earning 80% or less of the area median income. An Extended Use Agreement (EUA) is signed that requires a 15-year affordability period. For ownership housing, the exemption is only available at an initial purchase price not o exceeding 95% of the FHA mortgage maximum and must be sold to a household earning no more than 100% of the area median income. Project must meet one of the following public benefits: o - Open space available to the general public - Day care facilities - Permanent dedications for public use - LEED Silver - 20% of the rental units have 3 or more bedrooms - 25% of the rental units are affordable to households at 80% MFI - Other public benefits approved by Portland Housing Bureau and City Council The City Council reviews and approves applications following a public hearing. o If the anticipated IRR for the project exemption period exceeds 10%, the Portland Housing o Bureau shall recommend that the application be denied. Tax exemption recipients are required to submit financial data on an annual basis to verify o the project’s IRR. Projects that exceed a 10% IRR are subject to an “Accrued Payment Liability” (APL). The EUA (15-year affordability period) is terminated at the end of 10 years if the project o does not exceed a 10% IRR during the exemption period. If the 10-year IRR is greater than 10%, then the EUA (15-year affordability period) shall be o maintained or the owner will be required to pay the APL. The amount of the APL is (1) the net present value (using 10% discount rate) of the o difference between the project’s actual annual cash flows over the exemption period and the proforma projected cash flows for the project that would provide a 10 percent IRR for the exemption period, or (2) equal to the maximum amount of property taxes that would have been assessed if no exemption had been granted, whichever is less. If the owner elects to not pay the APL, the EUA (15-year affordability period) will be o maintained on the number of units required to reduce the net present value of the project’s cash flows by an amount equal to the APL. The NMUH program is currently under review with the goal of implementing changes in o July 2012. Some new concepts being considered include: - Program cap of $1 million in foregone tax revenue annually. - 20% of units to meet affordability requirements - Add accessibility of units and location considerations to public benefit requirements - Define types of commercial uses within housing project that would be eligible for the exemption ATTACHMENT K Other Information Requested at the April 9 Work Session 1.How much is Capstone paying for the property? The City is not involved with the property sale. Capstone’s budget indicated a land cost of $6.6 million from the MUPTE application. This amount does not include the purchase of lot 900, which is still under negotiations. 2.What is the total cost of Phase I only? The estimated cost of Phase I is $52 million. 3.Provide more information on Capstone’s retention of property ownership or management. Their current business model is to maintain management but not ownership. Capstone currently manages 19 developments with a total of 11,144 beds. 4.Will Capstone use local contractor, subcontractors, suppliers, and workers? Capstone has not made the final selection of the general contractor at this time. Capstone policy is to encourage the use of local contractors, suppliers, and workers for the project as much as possible. It is anticipated the general contractor will use a high percentage of qualified local and area subs, suppliers and workers. 5.What happens to the MUPTE if the bank lowers the interest rate on Capstone’s loan? Capstone plans to use conventional bank construction financing, with the permanent, take- out financing anticipated from Fannie Mae’s Dedicated Student Housing program. The pro- forma debt service is based on a 30-year fixed loan at 6.5%. The City’s financial advisor at Western Financial Group confirmed that the interest rate assumption is reasonable based on the current market and on the hedge needed to account for estimating a rate two years from now. He cited a recent student housing project financed by Fannie Mae whose rate, adjusted to taxable was 7.5%. Additionally, the City’s Loan Advisory Committee includes two bank representatives who confirmed the interest rate estimate. Holding all other aspects of the project constant, the Capstone interest rate would need to fall by 250 basis points from today’s level (to 5%) to have the project generate 9% return needed to attract the equity without the MUPTE savings. 6.How do we verify the “but for” requirement in the MUPTE analysis? The theory behind MUPTE is that multi-unit housing development is desired in the targeted area and that the development would not occur “but for” the granting of the exemption. The tax exemption is a tool used to off-set real financial obstacles associated with developing multi-unit housing in the core. The obstacles could be related to lease rates insufficient to support new construction, higher land cost, higher construction cost resulting from multi- story construction and higher quality urban design, parking constraints, code requirements, and environmental conditions related to prior uses. As property taxes are a major operating expense in a development project, the property tax exemption provided by the MUPTE program can play a significant role in improving Net Operating Income. The MUPTE can help create opportunities for financing and return-on-investment that are not otherwise achievable in core area multi-unit development. For each application, the developer provides financial information to demonstrate that the project as proposed could not be built but for the benefit of the tax exemption. Staff and the Loan Advisory Committee review the pro-forma and evaluate this conclusion. Specifically, we analyze assumptions regarding lease rates, operating expense, capitalization rate, lender underwriting criteria, interest rate assumption, market expected rate of return, and construction cost to assure that they are within the standards of this marketplace. The general issues for projects are being able to qualify for the needed debt and attract the needed equity. For debt, the issue is having sufficient loan-to-value and debt coverage ratio. For equity, the issue is having sufficient cash-on-cash return. Please see Attachment F of the April 23 public hearing AIS for information on the Capstone “but for.” 7.Will the parking structure floors be flat? No; the floors will be sloped or ramped. 8.Did previous capstone projects in other communities have a version of MUPTE? Yes; Capstone has used incentives that resemble the MUPTE program but vary by locality. For example, Capstone’s project in Tempe, Arizona received an eight year tax benefit. 9.Why are they adding a bus stop on Willamette? By adding the stop here, residents will have easy access to bus routes #28 and #76 that travel down Willamette and provide access from the project site directly to the U of O. In addition, residents will have access to the EMX line at the LTD station. 10.Will there be a police substation? What will be the coordination with EPD? The location of a substation is a decision to be made by the Eugene Police Department (EPD). Capstone has agreed to coordinate closely with EPD to promote pro-social, courteous, and safe behavior on the part of the residents. This coordination will include: Meeting with EPD Crime Prevention Unit regarding successful strategies utilized in o other parts of our community, including Crime Prevention Through Environmental Design and crime victim awareness strategies, and to discuss opportunities for support from Crime Prevention Unit and any enforcement actions taken. Working with EPD to align renter code of conduct with social host regulations. o Working with EPD to develop a protocol for responding to nearby residents and o surrounding property owner complaints on a timely basis. 11.If phase 2 is not built, how will that impact the MUPTE? The approval resolution is written to enable the project to be constructed in two phases. The resolution includes the specific number of units for each phase. If phase 2 is not built, then the MUPTE would be limited to Phase 1, and no MUPTE would be granted for Phase 2. 12.Are there incentives to not bringing a car? Yes. There is a planned LTD bus stop incorporated in the project which would include a sheltered bus stop integrated into the building. There are plans for a shared car facility (such as “WeCar”) and more bicycle parking and secured storage than required by code. Capstone is proposing to charge for parking ($35 per space per month, $420 annually). 13.Can you describe the bike parking in more detail? A large portion of the ground floor of the parking structure is dedicated to covered and th secured bike storage located directly off of the 12 Avenue bike path. The opportunity exists to increase the storage capacity in this area with hanging methods of bike storage, in addition to other locations for bike parking off the north/south vacated alley, and in upper stories of the parking garage. 14.What are the U of O’s enrollment projections? Current enrollment is 24,400. The U of O has experienced enrollment increases of approximately 4% per year over the past three years, which translates to approximately 1,000 additional students per year. Current projections expect enrollment to level off in 2014 slightly above current enrollment. 15.What is the current rental housing vacancy rate? Student housing vacancy rate? In general, apartment vacancy rates in the area have remained relatively low at approximately 4%. There is no current data available that is specific to student housing vacancy rates in Eugene. However, the draft recommendation for Envision Eugene projects a 20-year demand for 6,301 residential units on medium/high density residential land or commercial land. The Envision Eugene estimate for additional student housing units over the next 20 years is 1,300 units. Based on recent information, U of O assumes a student population increase of 4,500 over the next 20 years, 1,250 of which they plan to accommodate in UO (campus) housing. That leaves 3,250 students to account for. Average persons per unit in student-type housing is estimated at somewhere between 2.5 and 3. Assuming a “lowest case” average of 2.5 persons per unit, up to an additional 1,300 units may be needed somewhere off-campus. Some percentage of these students will be grad students, older students with families, people commuting from outside Eugene who will not be looking for typical student housing. However, this could be a reasonable “upper limit” for additional student housing need. 16.What student beds will be coming on line, MUPTE and non MUPTE? The City’s Building and Permit Services currently has active building permits for 364 multi- family units, located in different areas of the community. One MUPTE project with 100 th units (138 beds) was recently completed (approved in 2011) on 17 & Pearl, which may have some student residents. 17.What are the U of O’s dorm construction plans? Based on information from the U of O, there are currently roughly 19,000 university undergraduate and graduate student renters in the Eugene and Springfield communities. University residence halls are designed to complement and enhance student academic experience and are opportunities for personal and educational growth. The University currently houses 3,800 students in its residence halls. That number will increase by 450 to 4,250 when the Global Scholars Hall opens this fall. Over the next ten years the University plans to increase residence hall space by another 800 beds. The University has set a goal of being able to house 25% of the undergraduate student population. The University’s top priority is to house all of the first-year students that desire university housing. In addition, the University wants to offer housing to interested upper class students. However, the University's projects must a) be self-supporting, as there is no central subsidy, and b) coordinate all campus construction through the Oregon University System and the legislature, who establish limits on borrowing based on best practices for government financing. Therefore, future U of O construction projects will possibly compete with state provided bonded projects from across the state and the other six state universities when limits on binding capacity are reached.