The list of proposed actions by COP or PDC is detailed below and summarized in Attachment A.

Transcription

1 President Wim Wiewel 1600 SW 4 th Avenue, Suite 850 Portland, OR Dear President Wiewel: Thank you for taking the time a few weeks back to meet and outline the terms of a potential agreement between the City of Portland and PSU. Our conversation was extremely helpful in deepening our understanding of your priorities and defining how the City might help achieve the long range goals of the University. As promised, what follows are the proposed terms and conditions of a Master Development Agreement (the Agreement ) between the City of Portland (COP), the Portland Development Commission (PDC) and (PSU) concerning the planned investments by PDC and COP in PSU related projects, including investments funded by tax increment financing (TIF) from an expanded North Macadam Urban Renewal Area (NMACURA). While the following terms and conditions reflect the best efforts of COP and PDC to define its commitment to support the long term growth of PSU, such a commitment will be formalized in the Agreement to be negotiated over the next nine months. The Agreement must be approved by all appropriate PSU and COP boards, including the PDC Board of Commissioners and the Portland City Council. It is the intent of all the parties to have the Agreement negotiated and approved by December 1, No action on either the existing NMACURA or Education Urban Renewal Area will be taken prior to the approval of the Agreement. The list of proposed actions by COP or PDC is detailed below and summarized in Attachment A. I. Jasmine Block - PDC will transfer ownership of the property consisting of two parcels totaling 33,500 square feet known as the Jasmine Block to PSU for $1 not later than June 30, a. PDC values the property at $120 per square foot for an estimated value of $4 million. b. In exchange for this transfer of property, PSU agrees to develop the property before January 1, Should PSU fail to develop the property by 2024, the parcels shall

2 Page 2 of 7 revert back to PDC at a purchase price to PSU equal to 50 percent of any appreciation above and beyond the current estimated value of $4 million.. c. PSU also agrees to develop the property in a manner consistent with its 2010 University District Framework Plan, including active ground-level uses with a public space to create a varied and engaging public realm. II. University Place PDC will support the redevelopment of the 4 acre property at 310 SW Lincoln known as University Place as both a long term development partner and investor. a. Termination of the Doubletree Agreement - PDC and PSU will terminate the Doubletree Agreement for Disposition and Development of Property ( Doubletree Agreement ) entered into as of February 13, 2004, with all its obligations and payments, concurrent with the execution of the Agreement. i. Upon termination of the Doubletree Agreement, PSU will be permanently relieved of all obligations to make Payment in Lieu of Taxes (PILOT) payments related to the property to PDC. ii. Relieving PSU of all remaining PILOT payments represents a nominal investment by PDC of $1.8 million in the redevelopment of University Place. b. Redevelopment Partnership - PDC and PSU both agree that current market condition are well-suited to attracting private developer interest in a dense, mixed use development on the site that would not only meet PSU s priorities for the site but also result in a mix of housing, commercial office and hospitality uses. This type of dense development is consistent with the 2014 Lincoln Station Development Strategy being developed for the site. i. The Agreement shall articulate PSU s goals for the redevelopment of University Place, including long term ownership of the property, return on investment expectations, programming needs, and campus planning objectives. ii. Upon execution of the Agreement, PDC will assist PSU in soliciting developers for the site. iii. PDC will also provide assistance in structuring the financing, development, and ownership of the project, which, subject to PSU s approval, may include the disposition of all or a portion of the site, a long term ground lease with a developer, and/or other partnership options that will provide a market rate of return to PSU and adds taxable value projected for TIF availability within the

3 Page 3 of 7 district. Such assistance will include identifying an appropriate financing structure for the redevelopment. c. PDC Investment - As early as resources allow, but not later than June 30, 2021, PDC will provide $13 million in NMACURA TIF 1 to assist in either the development of or to retire some or all of PSU s debt related to University Place. i. Should PSU determine that the development of University Place not require $13 million at the time resources become available, PDC shall make the resources available for other TIF-eligible PSU related projects in NMACURA. ii. If development is phased, PDC s investment may be phased as well subject to the availability of resources. iii. The availability of NMACURA TIF for this project will be determined by COP Debt priority over the University Place redevelopment. Projects will be prioritized based on their ability to increase districtwide taxable value in order to meet the projected TIF availability within the district. III. Budget Rent a Car On behalf of PSU, PDC will secure from TriMet the rights to develop and eventually own and transfer to PSU at a cost of $1, the 21,300 square foot property at 2033 SW Fourth Avenue with an estimated value of $2 million, known as the Budget Rent a Car property. a. Upon execution of the Agreement, PDC will negotiate with TriMet to secure, on behalf of PSU, development rights for the property. PDC will use its best efforts to complete this transfer by September 1, b. PSU, in consultation with PDC and TriMet, will develop a redevelopment plan for the property. Such a plan could be stand-alone or in conjunction with the adjacent Art School property. c. PSU agrees to develop the property in a manner consistent with its 2010 University District Framework Plan, including active ground-level uses with a public space to create a varied and engaging public realm. d. In the event PSU and PDC are unable able to secure a transfer of ownership of the property from TriMet as a result of an increase in transit ridership resulting from 1 All forecasts of available NMACURA TIF in this letter assume 50% of TIF investments produce new taxable assessed value in two years based on 6:1 private investment to TIF leverage.

4 Page 4 of 7 development on the property, PDC will contribute up to $2 million from NMACURA TIF toward the purchase of the property by PSU. i. PDC s contribution shall be made as early as resources allow, but not later than January 1, ii. The availability of NMACURA TIF for this project will be determined by COP Debt priority over the Budget Rent a Car redevelopment. Projects will be prioritized based on their ability to increase districtwide taxable value in order to meet the projected TIF availability within the district. iii. PDC s investment in the project will be targeted to the development of commercial and retail space in the building and infrastructure that supports such uses in the building, follows TIF eligibility requirements, and does not impact regional education spending. iv. Should NMACURA TIF be used to purchase the property, PSU agrees to develop the property by a date identified in the Agreement but not later than the last date to issue debt within the NMACURA. Should PSU fail to develop the property by that date, the parcels shall revert back to PDC at a purchase price to PSU equal to 50 percent of any appreciation above and beyond the current estimated value of $2 million. IV. School of Business As early as resources allow, but not later than June 30, 2017, PDC will provide $2 million in NMACURA TIF PDC to assist in the renovation of the property located at SW 4 th and Harrison Street known as the School of Business Administration or SBA property. a. PDC s investment in the project will be targeted to the development of commercial and retail space in the building and infrastructure that supports such uses in the building, follows TIF eligibility requirements, and does not impact regional education spending.. b. PSU agrees to develop the property in a manner consistent with its 2010 University District Framework Plan, including active ground-level uses with a public space to create a varied and engaging public realm. c. Should the development of the SBA property not require $2 million at the time resources become available, PDC shall make the resources available for other TIFeligible PSU related projects in NMACURA. i. The availability of NMACURA TIF for this project will be determined by COP Debt

5 Page 5 of 7 priority over the SBA property renovation. Projects will be prioritized based on their ability to increase districtwide taxable value in order to meet the projected TIF availability within the district. V. COP-PSU Tenanting Partnership - COP will lease or purchase a minimum of 30,000 square feet of office space in a newly-constructed or remodeled PSU building. a. COP seeks to obtain space in a building that offers space of a quality comparable to other COP buildings. b. PSU seeks to secure a Letter of Intent from COP by June 30, 2014 for COP to be an owner or to lease space in a building to be constructed at SW Park Avenue and SW Mill Street, with said space becoming available to COP on or before October 1, c. If PSU is unsuccessful at seeking funding for the project at SW Park Avenue and SW Mill, the Agreement will include a mutually agreeable date by which PSU must make space available to COP at either the Jasmine Block or Budget Rent a Car property so that COP can incorporate this opportunity in its space planning. d. The terms of the lease or purchase, including price per square foot, length of lease, etc., will be negotiated by December 1, 2014 concurrent with the Agreement. e. Given the objective of using COP s tenancy or ownership as match for project financing for the building, the terms may need to reflect minimum standards required to be considered match for PSU s purposes. VI. Fourth Avenue Building - As early as resources allow, but not later than June 30, 2025, PDC will invest a minimum of $2 million in NMACURA TIF PDC to assist in the renovation and expansion of the property located at 1930 SW 4 th Avenue known as the School of Engineering property. a. PDC s investment in the project will be targeted to the development of commercial space in the building, following TIF eligibility requirements, and without impact to regional education spending. Although it is not a condition of PDC s investment in the project, PDC has a particular goal of adding incubator and other space for new and emerging businesses. b. Should the development of the School of Engineering property not require $2 million at the time resources become available, PDC shall make the resources available for other TIF-eligible PSU related projects in NMACURA. i. The availability of NMACURA TIF for this project will be determined by COP Debt

6 Page 6 of 7 priority over the School of Engineering property redevelopment. Projects will be prioritized based on their ability to increase districtwide taxable value in order to meet the projected TIF availability within the district. As the above proposed actions indicate, the City of Portland and PDC remain committed to supporting and investing in the long term success of PSU. We appreciate your willingness to consider a different set of investments than was proposed under the Education Urban Renewal Area. Given the shorter time frame for accessing resources under this proposal, and the growing opportunities for partnership between the City and PSU along the new Orange Line MAX, we believe this proposal better supports PSU s future growth. We look forward to working with you to negotiate a final agreement and move forward on fulfilling PSU s destiny as one of the great urban universities in the U.S. Sincerely, Charlie Hales Mayor City of Portland Scott Andrews Chair Portland Development Commission Patrick Quinton Executive Director Portland Development Commission CC: Ms. Monica Rimai, Vice President for Finance & Administration, PSU Portland City Council Portland Development Commission Board of Commissioners

7 ATTACHMENT A City of Portland - Portland Development Commission Master Development Agreement Summary of Actions Nominal Present Action Date Value Value I. Transfer Jasmine Block 6/30/15 $4,000,000 $3,883,500 II. Redevelop University Place a. Terminate University Place DA; end PILOT 12/1/14 $1,822,844 $1,667,400 c. Extinguish University Place debt 6/30/21 $13,000,000 $12,621,000 III. Transfer Budget Rent a Car property a. Transfer Development Rights 9/1/15 N/A N/A d. Transfer Property Ownership 1/1/25 $2,000,000 $1,941,750 IV. Invest in School of Business Property 6/30/17 $1,950,000 $1,893,200 V. COP PSU Tenanting N/A TBD TBD VI. Invest in School of Engineering Building 6/30/25 $3,000,000 $2,912,600 TOTAL $25,772,844 $24,919,450