HomeMy WebLinkAboutResolution No. 5086COUNCIL RESOLUTION NO. 5086
A RESOLUTION APPROVING A MULTIPLE -UNIT
PROPERTY TAX EXEMPTION FOR RESIDENTIAL
PROPERTY LOCATED AT 505 EAST BROADWAY,
EUGENE, OREGON (CORE CAMPUS /APPLICANT).
PASSED: 5:3
REJECTED:
OPPOSED: Brown, Taylor, Zelenka
ABSENT:
CONSIDERED: June 17, 2013
The City Council of the City of Eugene finds that:
A. Venator Investments LLC (P.O. Box 1202, Clatskanie, Oregon) is the owner of
real property located at 505 East Broadway, Eugene, Oregon (Assessor's Map Number 1.7 -03-
32-23, Tax Lots 1 800 and 2300) and John and Gretchen Cetaras Revocable Trust (P.O. Box 68,
Rumsey, California) is the owner of real property located at 505 East Broadway, Eugene, Oregon
(Assessor's Map Number 17- 03- 32 -23, Tax Lot 1900) ( "the property ").
B. CORE Campus (2234 West North Avenue, Chicago, Illinois) 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 commercial
space to be constructed on the property.
C. The project as proposed consists of the development of 19 studio units, 46 one -
bedroom units, 44 two - bedroom units, 25 three - bedroom units, 42 four - bedroom units, and 21
five- bedroom units, for a total of 197 residential units. In addition, the project will, include
approximately 4,430 square feet of commercial space.
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 project could not financially be built "but for" the tax exemption.
F. The applicant solicited comments from city - recognized affected neighborhood
association.
G. The requirements in the Standards and Guidelines for Multiple -Unit Housing
Property Tax Exemptions adopted by Administrative Order No. 53- 12 -01 -F related to proximity
to historic resources have been satisfied.
H. 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.
Resolution - Page 1 of 4
I. 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.
J. The proposed project will be at the time of completion, 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.
K. The project is not designed for, and will not be used as, transient
accommodations.
L. 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.
M. The Report and Recommendation attached as Exhibit A 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.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF EAAIE
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
CORE Campus for an ad valorem property tax exemption under the City's Multiple-Unit
Property Tax Exemption Program for the residential units to be constructed at 505 East
Broadway, Eugene, Oregon (Assessor's Map Number 17-03-32-23, Tax Lots 1800, 1900 and
2300), subject to the following conditions:
1. The project will consist of the development of approximately 200 units with a
total of approximately 500 bedrooms, and no more than 5,000 square feet of
commercial space. In addition, the project will include at least 4 ADA accessible
units.
Resolution - Page 2 of 4
I Payment in Lieu of Affordable Housing. |n years 6-l0ofthe tax exempt
in addition to any other fees, taxes or charges owed to the City, the owner of the
property shall make the following payments to the City hv July l5of each year:
Year h=$3O,U00
Year 7~~$60,00O
Year Q~~$]65,000
Year 9=$300,0O0
Year |0=$475,O00
lf the payment ionot made by the due date, the City Manager shall follow the
process io Section 2.947o[ the Eugene Code, \97),Va initiate proceedings for
Council to terminate the exemption. U is the intent of this Council that the funds
received pursuant to this paragraph shall be used at least in part 1ofund
emergency and temporary abcbec.
3. Local hiring. Corp Campus ubuU provide u plan with local hiring 000|a on:
a. The percent of the dollar volume nfthe combined professional services and
construction contracts to include local finnm (based in , and
b. The percent of on-site construction jobs performed hv local residents
in Oregon). Exceptions for specialty work not available in the local market
will be reviewed on a case by case basis.
Core Campus shall also demonstrate a good faith effort tosolicit bids for
professional services and construction contracts from qualified vvonzen and
minority business enterprises.
4. Bicycle and Pedestrian Access and Safety. Core Campus has committed to:
4.l Design elements bo facilitate safety and access, such as mmbeetncupcbarrier
along Buat Broadway so residents and visitors are not tempted to cross the
street mid-block.
4.2 Working with the City on options for safe pedestrian crossings.
4.3 Lighting, uigungc, and maps for residents and visitors.
5. The project shall be completed on or before January 1, 2022.
6. No later than l0 months after receiving u Certificate of Occupancy, the applicant
shall submit to the City's Planning and Development Department documentation
of Leadership in Energy & Environmental Design (L.EED) Silver certification
(copy of U.S. Green Building Council Rating Certificate and final LEED review).
Section 2. Subject to the conditions in Section | of this Resolution, 100Y6 of the
residential units and commercial space (up to 5,000 mguurc feet) described in Sect l are
declared exempt from local ad valorem property taxation beginning July I of the year following
issuance of a Certificate of Occupancy and continuing for a continuous period of 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 `s designee, is requested lo forward
copy of this Resolution to the applicants within ten days, and N cause ocopy of this Resolution
to be filed with the Lane County Assessor onm before April l,2O\4.
Section 4. This Resolution sha become effective immediately upon its adoption.
6 LiL L,�
City Recorder
Resolution ' Page 4o[4
Core Campus Application for
The Executive Director of the Planning & Development Department of the City of Eugene
Finds that:
1. Core Campus intends to purchase real property located at 505 East Broadway, Eugene,
Oregon (Assessor's Map 17-03-32-23; Tax Lots 1800, 1900, and 2300). Core Campus
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 to be constructed on the property.
2. As the City Manager's designee, I have reviewed the application and find that:
2.1 The project will provide 19 studios, 46 1-bedroom units, 44 two-bedrooms, 25
three-bedroom units, 42 four-bedroom units, and 21 five-bedrooms, for a total
of 197 residential units. The project may also include approximately 4,430
square feet of ground floor commercial space.
2.2 Construction is expected to be complete on or before January 1, 2022.
2.3 The project is located in the downtown area described in subsection (2) of
Section 2.945 of the Eugene Code, 1971.
2.4 The applicant submitted all materials, documents and fees required by the City
as set forth in Section 2.945 of the Eugene Code, 1971, and the Standards and
Guidelines for Multiple-Unit Housing Property Tax Exemptions adopted by
Administrative Order No. 53-09-01-F and 53-11-05.
2.5 The applicant has responded to the public benefit criteria as follows:
2,5.1 Public Benefits:
• Density. The project density is approximately 318 units per acre.
The project will be built in the C-2 zone and has no minimum or
maximum for residential units. Since the minimum density is zero,
the applicant was awarded 50 points, the maximum allowed.
• Green Building Features. Core Campus plans to qualify for LEED
Silver certification.
• Mixed Income. The project will not include housing dedicated to
controlled income.
• Homeownership. No units are designated for home ownership.
• Accessibility. A minimum of four units will be ADA accessible.
• Historic Sensitivity. The project is not immediately adjacent or
contiguous to a historic structure.
Pagel of
Resolution EXHIBIT A- Report and Recommendation
• Location. The project is located in the Downtown Plan Area.
• Parkin . The project is not located in a RPP zone.
Longevily of Public Benefits. All • the public benefits listed above will
extend beyond the period • the tax exemption.
2.5.3 Points Awarded. The applicant has been awarded 290 public benefit
points.
2.6 Other Benefits Provided • the Project. Based • the comments heard at
council work sessions, a number of issues or possible concerns emerged.
Below are the relevant issues and Core Campus's responses, which provide
additional benefits.
2.6.1 Payment in Lieu of Affordable Housing. Core Campus proposes to make
payments to the City of $1,030,000 during years six through ten. The
payments would be guaranteed and paid regardless of the financial
performance of the project. The average cash on cash return for the 10-
year period with the MUPTE and the additional payments from Core
Campus is estimated at 9,66%. Continuation of the MUPTE would be
conditioned on each of the guaranteed payments in the later years
being paid. The project would immediately stop receiving the MUPTE if
Core Campus failed to make a guaranteed payment. For example,
should Core Campus fail to make the proposed $30k year six payment,
Core Campus would not receive the tax exemption that year and would
instead pay property taxes on the improved value to the site (estimated
tax of $520,600). Not paying property taxes would trigger default with
the lender, which is a strong guarantee in itself that Core Campus would
make the payments. Additionally, the guaranteed payments would
survive should the property change hands; the new owner would be
required to either make the payments in order to keep the MUPTE
benefit active or, alternatively, begin payment of full property taxes.
In years 6-10 of the tax exempt period, in addition to any other fees,
taxes or charges owed to the City, the owner of the property shall make
the following payments to the City by July 15 of each year:
1 t11
Page 2 of 4
Resolution EXHIBIT A- Report and Recommendation
lim,ililli-I
119MIrri
proceedings for Council to terminate the exemption.
2.6.2 Local Hiring. Core Campus shall provide a plan with local hiring goals
on:
A. The percent of the dollar volume of the combined professional
services and construction contracts to include local firms
[Imw 4 ff M K U.M. M M
B. The percent of on-site construction jobs performed by local
residents (residing in Oregon). Exceptions for specialty work
not available in the local market will be reviewed on a case by
case basis.
Core Campus shall also demonstrate a good faith effort to solicit bids for
professional services and construction contracts from qualified women
and minority business enterprises.
2.6.3 Bicycle and Pedestrian Access and Safety. Core Campus has committed
to:
2.6.3.1 Design elements to facilitate safety and access, such as a
streetscape barrier along East Broadway so residents and
visitors are not tempted to cross the street mid-block.
2.6.3.2 Working with the City on options for safe pedestrian crossings.
2.6.3.3 Lighting, signage, and maps for residents and visitors.
2.6.4 Transportation Options. Co
allow bicycle storage within
site embedded parking.
- e Campus plans to provide a flex-car and
units, in addition to providing limited on-
2.7 The financial information Core Campus submitted in their application is based
on projections prior to finalizing financing, construction, and tenanting. The
applicant demonstrated that the project as proposed could not be built but for
the benefit of the tax exemption.
Underwriting for the permanent financing is based on a maximum 75% loan-
to-value and minimum 1.25 debt service coverage ratio. Core Campus will
need to provide 25% ($11 million) of the project's financing in the form of
equity, which is likely to come from an equity investor active in the nationwide
market. Additionally, the proposed project will require the investor to assume
some risk from the major redevelopment costs associated with the site and
Page 3 of 4
Resolution EXHIBIT A-1-Reploft,
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.
2.8 Presentations concerning the Core Campus project were given to the
Downtown Neighborhood Association on January 23, 2013. The Association
submitted a letter indicating that the Downtown Neighborhood Association
Steering Committee unanimously took a position of support for the Core
Campus project with specific points on safety for pedestrians and bicyclers.
2.9 The project is, or will be at the time of completion, in conformance with all
applicable local plans and provisions of the Eugene Code, 1971, planning
regulations, and the Metropolitan Area General Plan.
3 A display ad soliciting recommendations or comments from the public regarding this
project was published in the Register-Guard on May 4, 2013. The period for comment
expired on June 3, 2013 at 5pm. Twenty-four comments were received within that
period.
Therefore, based upon the above findings and the criteria set forth in the City's adopted
Standards and Guidelines, I recommend that the application be approved.
Ftated this A day of June, 2013,
Executive Director
Department
Page 4 of 4
Resolution EXHIBMt — ReDort anif. 12prnwu 6"WA