Presented with two strong downtown development proposals, the Eugene City Council on Wednesday picked a local developer to build apartments and offices at West 10th Avenue and Charnelton Street.
Councilors voted 7-1 to select Eugene-based WG Development to redevelop the half-block, city-owned site, which includes the excavated pit north of the public library that fills with water during the winter.
"We are looking forward to working with the city of Eugene and closing the swimming pool across from the public library," said Wally Graff, co-owner of WG Development.
The council's decision doesn't ensure that WG's project will get built. But it instructs City Manager Jon Ruiz to negotiate a sale and development agreement with Graff and his partner, Nathan Philips. The sides have 90 days to work out details, which then would be presented to the council for final approval.
WG hopes to break ground early next year and complete the project by fall 2010, Graff said.
If built, the project would be a milestone for city center redevelopment, covering up an eyesore, bringing scores of people to live in the heart of downtown, and creating new commercial space there, too.
The city bought the pit property in 1993 and has struggled ever since to get it redeveloped.
Before their decision on Wednesday, councilors debated the merits of WG's proposed five-story office and apartment building with those of the competing project for the site - a six-story apartment building geared for college students by Opus Development of Portland, a major Northwest developer.
Opus had proposed a $40 million, six-story building with 201 apartments for 472 college students.
WG Development wants to build a $34 million, five-story structure, with the first two floors reserved for offices and retail space, including the Eugene branch of Pacific University, and 83 apartments on the upper three floors. Underground parking would provide most but not all of the parking spaces for the building. WG also hopes tenants would be able to rent parking spaces in the city's nearby Broadway Place garage.
Ruiz, the city manager, had recommended Opus over WG, mainly because of Opus' financial strength and its plans to start the project quickly.
But ultimately the council preferred the idea of offices and apartments vs. student housing.
The Opus project would produce a college dormitorylike structure, Councilor Alan Zelenka said. Downtown would be better served by WG's mixed-use building, he said.
Zelenka said he also was troubled by the Opus proposal because the developer indicated that it would sell the building after it was completed. City planners told councilors that WG holds onto what it builds.
"It's a close call, but I'm for WG," Zelenka said.
Councilors Jennifer Solomon, Betty Taylor, Andrea Ortiz, George Poling and Mike Clark also endorsed WG. Councilor Bonny Bettman, who preferred the Opus project, cast the lone dissenting vote.
Under the deal, the city would give WG the land for free. The city estimates it has a market value of $1.6 million. Also, the city would waive property taxes for 10 years on the residential portion of the building. That waiver would be worth $2.2 million, the city said. WG would pay taxes on the land and on the commercial/retail portion of the structure.
WG also has asked for $117,000 in improvements from the city on the site, and that the city abandon a public north-south alley on the parcel, worth $74,000. Altogether, WG has requested $3.9 million in city subsidies.
Opus had requested $6.2 million in subsidies, $4.3 million of which would have come from 10 years' of property tax breaks.
A crucial step now is for WG to cement Pacific University as a tenant in the commercial space, Graff said.
Pacific University could occupy up to 20,000 square feet of the building's 59,000 square feet of office space, making it an anchor tenant, he said.
The private university, based in Forest Grove, has always been "key to this project," he said. "We really wouldn't have chased this project if Pacific had not shown any interest."
The university, now in 9,000 square feet of leased offices on East Broadway in downtown, wants to expand in Eugene, Graff said.
Graff said he's confident that he will be able to reach a lease agreement with the school. "I'm sure we'll have a lease," he said. "We don't want to start anything without a lease. That is not our modus operandi."
Typically on commercial development projects, a lender wants to be certain that a big portion of a project has been pre-leased before they will provide construction money to the developer.
After councilors chose WG, they instructed city staff to see whether Opus would want to put the student housing project north of where WG would build, on West Broadway, between Olive and Charnelton street.
The property, a collection of old one-story retail buildings, is owned by Eugene landlords Tom Connor and Don Woolley, who had previously offered to sell the parcel for $3.15 million.
But Opus Vice President John Bartell, who attended the council meeting, said that property wouldn't work for student housing. "It's the wrong location," he said.
Nor did Bartell think Opus would be interested in another development project, such as an office building, elsewhere in downtown.
Besides WG's project, he said, the proposed redevelopment of the Centre Court building at Broadway and Willamette Street by Portland-based Beam Development would add 150,000 square feet of office downtown, space that will have to be filled before another similar development could take place.
In the past several weeks, councilors and the mayor heard about the topic from residents who live in or near downtown. Most residents backed WG's proposal. Elizabeth Henning, for example, said putting nearly 500 college students downtown would hinder downtown revitalization.
"The Opus project isn't going to attract future Rhodes scholars," she wrote in an e-mail. "It's going to attract kids with fake ID's who love to party, which there is certainly no shortage of at UO. Those of us who live downtown can attest that it's already often a zoo over by the bars. Imagine what it will be like if another 500 bodies were thrown into that mix."
Graff, a developer of medical office buildings, said he expects to raise $4 million to $7 million from local investors, plus up to another $2 million from an investor group led by Jean Tate, the former Eugene real estate broker and developer of The Tate condominiums near West 13th Avenue and Olive Street.
The gap between the investor money and the project's eventual cost, about $25 million, would come from loans, he said.
Graff said he hopes to nail down the redevelopment agreement with the city quickly so he can begin construction early next year.
"We are very confident that we will not have any problem funding this," he said.
In another matter, the council responded to the news that police auditor Cristina Beamud is leaving to take a similar job in Atlanta by offering the job of interim police auditor to deputy police auditor Dawn Reynolds.
The interim appointment will last until councilors find a replacement for Beamud.
Reynolds' appointment will take effect on Aug. 23, a day after Beamud's last day on the job.
Reynolds, in a letter to councilors, said she will apply for the permanent position.
