Correction (published Sept. 3, 2014): It cost the Eugene Water & Electric Board $71 million to build its operations center on Roosevelt Boulevard in west Eugene. A Sunday Page One story incorrectly said the center cost $84 million.
Eugene taxpayers may not know it yet, but they will probably pay to help transform the Eugene Water & Electric Board property along the Willamette River.
City leaders hope the industrial site can be redeveloped over several years into a pedestrian- and environmentally friendly area of apartments, condos, offices, shops and restaurants connecting downtown to the river.
Private developers are expected to finance and construct most of the buildings, streets and other features on the utility's mainly vacant property on downtown's east edge. The amount of private investment won't be known for years, but observers expect the figure to be well more than $100 million.
But public amenities are planned to enhance the area, such as a 3-acre park along the river, public plazas, bikepaths and railroad crossing improvements. And that's where millions of dollars in public money will be needed.
"It's an important piece of land along the river," said Lew Bowers, a former Eugene community development manager who spent 12 years with the Portland Development Commission before retiring last year. "If it's handled correctly, it can be an incredible jewel along the river."
EWEB moved much of its operations from the riverfront area four years ago after opening a $84 million center on Roosevelt Boulevard in west Eugene. The utility's administrative and customer service staff remain in its headquarters building on the south bank of the river near the Ferry Street Bridge.
In addition to paying for public improvements, public subsidies for the site could come from federal and state tax credits to build affordable housing. The city also may offer loans to developers or limited-duration property tax waivers for the construction of apartments and condos.
But Eugene officials expect many of the public improvements in the redevelopment to be financed by taxpayers through the city's Riverfront Urban Renewal District.
Authorized under state law, urban renewal districts are meant to stimulate private investment within their boundaries by allowing public urban renewal agencies to buy land and pay for such amenities as streets, plazas, lighting and parking garages.
"That is why the urban renewal district was created," said Council President Chris Pryor. "Public-private partnerships are how this stuff gets done."
Eugene developer Dan Neal, who led a group that unsuccessfully applied to be the EWEB master developer, said the utility's property has "transformative potential" for Eugene because of its location and size. But public investments is needed for the development to achieve its full potential, he said.
"Other Oregon communities such as Bend and Portland have created strong connections between the river and their downtowns with great success," Neal said. "Here in Eugene, we will have only one opportunity to achieve this, so we have a lot riding on the outcome of this process. I maintain that our collective effort to transform the EWEB riverfront site could radically and favorably shape our community's future and serve as a tremendous gathering place for future generations of Eugeneans."
Denny Braud, the city's community development manager, said it's too early to know what financial help developers will ask the city to provide.
"But generally the message is that if we want this to be a legacy project that the community has envisioned, then we assume that we'll need to invest public resources to make this a special place," he said.
City has two tax districts
Eugene has two urban renewal districts that use so-called tax increment financing to pay for public improvements within their boundaries.
City Council approval is needed for all projects, except for loans, that cost more than $250,000.
"It's the City Council's ultimate decision," said EWEB President John Brown. "The council will decide what are the public benefits and how they should be paid for."
Over the years, the council has used urban renewal financing to support several downtown and riverfront area projects, including the Riverfront Research Park, Eugene Public Library, the Wayne Morse Federal CoTurthouse, Broadway Commerce Center, Woolworth Building and Lane Community College's downtown campus.
However, before the city can partner with a developer, EWEB has to pick one. Th
e master developer is expected to buy all or most of the 27-acre site from the utility, and redevelop the property guided by EWEB's city-approved master plan.
The EWEB Board of Commissioners this fall is expected to select one of three groups as master developer. Vying for the designation are Williams & Dame Development and Trammel Crow, both of Portland, and the Eugene-based University of Oregon Foundation.
The foundation, which has assembled a team of land development experts for the project, expects urban renewal district funding to play a major role in the redevelopment.
"We anticipate the city's strategic use of tax increment financing resources for infrastructure such as streets, storm drains, railroad crossing, quiet (railroad) zone, park development, green infrastructure and shared parking," said Jay Namyet, the foundation's chief investment officer. "Specific financing information will be determined once a master developer is selected and a fair market value is reached" for EWEB's land.
Tax increment financing shifts a portion of property taxes paid by all city taxpayers to the urban renewal district that otherwise would go to other local governments, including the city's general fund. The renewal district money must be used for public purposes within district boundaries.
The financing method has critics who complain the diversion of tax dollars to urban renewal districts is a misguided way to spend the public's money and is harmful to the finances of other local governments.
The state, using state income tax revenue, largely compensates affected school districts for the property taxes that are diverted away from them through urban renewal. Other local governments, however, receive no such financial compensation.
$1 million a year in revenue
Most Eugene property taxpayers paid 11 cents per $1,000 of assessed valuation for the Riverfront Urban Renewal District in the current 2013-2014 tax year.
On a house valued at $225,000, for example, the tax was $24.75.
Collectively, nearly $1 million in property taxes a year are being diverted from other local governments to the riverfront district, which has $8 million in cash on hand, and the authority to spend another $28 million in the next 10 years.
A year ago, at the request of the City Council, city officials completed a cost analysis of the Riverfront Urban Renewal District.
Based on the EWEB master plan, officials speculated on some of the major ways the district might help redevelopment.
The scenarios showed the district spending $15 million for different purposes. However, Braud, the city's community development manager, said the figure shouldn't be considered close to an estimate because the master developer hasn't been chosen and plans haven't been presented.
"We speculated just for this exercise because the City Council asked for it," he said.
Here's a look at some of the possible public involvement and spending:
Parks/open space: A city-owned park, with a natural meadow, should extend the entire length of the EWEB site, along the river, under the master plan.
The existing bike path on the west bank of the river should be moved and widened. In February, EWEB General Manager Roger Gray and City Manager Jon Ruiz signed a "memorandum of understanding" that would require EWEB to sell the city three acres for the park for $1, and for the city to spend at least $3 million on developing the park in the next five years. EWEB will pay the city $500,000 over 10 years to maintain the park, according to the agreement.
Streets: The master plan shows the eastward extension of East Fifth and Eighth avenues into the EWEB property, plus the creation of new streets within the development. The new road network includes "Riverfront Street," which would run in a northerly direction parallel to the river, creating a loop-style connection between Fifth and Eighth Avenues.
Braud said developers could pay for most of the cost to build streets, but the city could pay for features to make them more conducive to walking and bicycling, such as extra wide sidewalks, benches and decorative street lighting.
Railroad crossing: Union Pacific railroad tracks border the west edge of the EWEB property. The current railroad crossing near the south end of the EWEB site doesn't line up with East Eighth Avenue, a projected major entry way to the riverfront area. Moving the rail crossing so it's aligned with the future East Eighth Avenue leading into the riverfront area could cost the city about $1.5 million, the city analysis showed.
City officials and developers also are interested in exploring the establishment of a railroad quiet zone.
Every day, more than 25 trains pass through Eugene, and go past the EWEB site. More than a dozen railroad crossings are in central Eugene, and federal law requires train horns to be sounded at each crossing. The noise bothers many residents, particularly at night.
The horn blaring is an "impediment to residential development on the riverfront property, particularly along its 1,400-foot railroad frontage," according to the EWEB master plan. Trammel Crow, one of the three developers competing for EWEB's property, said a railroad "quiet zone" is a "necessary step" toward developing the property. The UO Foundation also favors a quiet zone.
Federal regulations allow cities to make safety improvements as a way to eliminate the horn-sounding requirement. Potential improvements include installation of double-arm crossing gates at railroad crossings or closing crossings altogether. The city has yet to secure funding for such work or develop a final quiet zone plan.
Historic buildings: The 83-year-old former steam plant could be renovated for a brewpub or other commercial use. The plant can be "altered and/or upgraded, but the original character of the building should remain," according to the master plan. The bow-trussed former operations warehouse also could be remodeled for a new use.
Older structures "are challenging buildings" to convert, Braud said. "We may have to participate in those (restorations) at some level. When you dealing with older buildings, you are dealing with outdated electrical systems and other things, and it costs as much or more than building new."