Eugene Weekly : 01.26.06

WHICH WAY ON BROADWAY

WILL THE COMMUNITY HAVE ANY SAY ON DOWNTOWN REDEVELOPMENT?

BY ALAN PITTMAN

The city of Eugene is moving forward with a developer's plan to tear down a two-block stretch of downtown to make room for parking garages wrapped in condos and shops, a hotel and a movie theater, without public input.

Ladies night at the historic Luckey's Tavern. The bar is part of a resurgent downtown nightlife but faces condemnation under the CWO development proposal.

But there's a lot to talk about. The $165 million proposal by local developers Tom Connor and Don Woolley and the Opus Development corporation offers hope of revitalizing the long-suffering center of Eugene. But it also raises many big questions. Should government by force buy property from one business to sell it to another? Will downtown reflect Eugene's funky character? How much should taxpayers subsidize private development downtown? Will the project succeed? Will Eugene citizens have a say about the heart of their city?

Condemnation

The Connor, Woolley and Opus partnership (CWO) owns about half of the buildings they want to tear down or redevelop. For the other half, CWO "expects" that the city of Eugene will acquire them and sell them to CWO at cost.

With several of those property owners refusing to sell for what CWO is willing to pay, the Eugene City Council has discussed using its condemnation power to force a sale of the businesses.

The condemnation talk has angered the downtown hold-outs and sharply divided the council.

"I enjoy my business, and I frankly don't want to go anywhere," said Jo Dee Moine who bought Luckey's tavern on Olive Street a few years ago. "For people to just come in and say, well, that's just in the way of progress, that makes me feel kind of mad."

Luckey's was relocated by urban renewal in 1972, but has been a thriving downtown business in downtown Eugene for a hundred years, Moine said.

Lazar Makyadath, owner of Lazar's Bazar on Broadway, said he was "insulted" at CWO's offer for his building and is asking for twice as much. "We've been here 32 years and people are coming to push us around."

Joshua Keim, the owner of the Ring of Fire restaurant who's renovating a Broadway building for a new nightclub, also said his property is worth about twice what CWO offered. "I don't want to get in the way of progress for downtown Eugene, but I want to be treated fairly," he said.

Moine, Makyadath and Keim said they'd like to stay and be part of the redevelopment of downtown. Each said they would do renovations on their buildings, adding more floors to match CWO's development.

"If they go four floors, we can go four floors," Makyadath said. "I don't understand why they can't work around buildings they cannot get," he said.

Moine said her building, like a home that appreciates, is part of her investment in her retirement and she doesn't want to go back to renting. "What Connor/Woolley is doing is wealth building, and that's what I'm trying to do, too," Moine said.

Tom Connor did not return a call requesting comment. But CWO's real estate broker, Sue Prichard, said its been "challenging" agreeing on a fair price with the hold-outs. She said her research indicates they are asking more than the property is worth.

The property will be worth more if the CWO development occurs around it. But Prichard said that it's fair CWO should capture that value, not the current land owners, since they're taking the "really enormous risky steps" of making the investment to increase the value.

Prichard said CWO would prefer to avoid condemnation and hopes the city can use its good relations with the property owners to settle on a fair price.

Eugene Mayor Kitty Piercy, who's going to help with the negotiation, said, "I have confidence we're all looking for a win-win."

It's unclear whether the council would vote to condemn the property if a price agreement can't be reached. Councilors Bonny Bettman and Betty Taylor have spoken sharply against using the city's condemnation authority to help developers, and believe the city should stand aside and let the market decide a fair price for the property.

"I don't think it's right using eminent domain on one business for the benefit of another business," Taylor said.

In the past the council has balked at using condemnation even for more public purposes such as park land in the south hills and Santa Clara and, ironically, to complete plans for a rail/bus depot with a new street through property Connor and Woolley own.

Kevin Matthews, director of the citizens group Friends of Eugene, said the city shouldn't only use condemnation "because somebody with a lot of money asks for it."

The city's limited condemnation experience indicates the property owners downtown may be wise to wait for a higher price. A few years ago an auto body shop on land for the new Federal Courthouse forced the city into condemnation. Rather than pursue costly litigation, the city settled for about double its initial offer.

Prichard said the CWO proposal may not be able to afford to lose pieces of property or long delays. The national retailers CWO is trying to attract want to locate near other national retailers in a big project. "It takes a certain critical mass of those national tenants to get them to all jump onboard."

If land acquisition takes too long, the retailers may also be lost to other cities, Prichard warns. Prichard said even if all goes well, the project could take up to five years to complete and rent out.

Slumming It

Condemnation opponents are particularly irked by the idea Connor/Woolley (CW) may now be trying to acquire properties after depressing downtown values by leaving the many buildings they own downtown vacant for so many years.

The large Centre Court building at Willamette and Broadway was once nearly full but has been empty for three years since CW cleared it of tenants. Other shops on Broadway have left since they said CW wouldn't offer a long-term lease. A business college was interested in the vacant Symantec building, but CW declined to invest in needed improvements.

The Connor, Woolley, Opus proposal wraps condos and retail around parking garages on Broadway and includes a movie theater in the Atrium building and a hotel on Olive Street, as shown in this preliminary rough plan.

"Because Connor Woolley have done such wonders for the neighborhood, it's not worth that much," Keim said of his property. "They basically have monopolized and killed downtown Eugene."

Makyadath said it was CW's plan to let downtown die so they could buy up all the property cheap. Except for a few properties, he said, "it worked, they own it."

Prichard says she has three decades of experience with downtown Eugene leasing and said CW wasn't to blame for the downturn. "Even before they owned them, there was a pretty clear downward trend."

Rob Bennett, part owner of the Downtown Athletic Club on Willamette, agreed that the primary reason the buildings long stood vacant was a lack of demand, but he said CW also had a role. "It's hard for me to understand how they vacated the Centre Court building, which had tenants in there, and then let it sit so long," he said.

"Connor/Woolley has been putting the breaks on downtown for many years," Matthews said. "We need to be aware of what games might be going on."

Downtown Character

The downtown plan adopted by the city a couple years ago prioritizes downtown "diversity" and states that "Downtown is what is 'Eugene about Eugene.'"

But what if CWO fills downtown with high-rent national chain stores and there's nothing Eugene about it?

Prichard says CWO is looking for a mix of local and national stores and doesn't want downtown to lose it's unique Eugene flavor. "I really don't think there's a danger of that," she said, noting that Connor and Woolley are from Eugene. "That is one thing the developers are really concerned about."

But Moine doubts that many local businesses will be able to afford the high rents. "At what point do we let Eugene look like Any Town, USA?"

Makyadath said he worries that the CWO project is about forcing the poor out of downtown. "I would like to see the downtown get better, but it doesn't have to be only all these ritzy people can be downtown."

There are indications that the less well-off aren't welcome downtown. In 2004, several property owners publicly objected to a proposal to locate a thrift store in the Centre Court building.

The mix of track, tie-dye and Birkenstocks "tapestry of Eugene is actually one of our biggest assets," Matthews said. The unique character sets us apart for tourists and new residents, he said. With many of these new developments around the country, "you could be Anywhere, USA which is the same as Nowhere, USA."

Councilor Bettman points to research by planners indicating that diverse ownership also makes a downtown stronger. "You're not putting all your eggs in one basket."

But Greg Brokaw, an architect who part owns a building across Willamette from the proposed development, said that even with CWO owning a large chunk of the core, there's still room for local "funkiness."

"It's going to be two blocks out of dozens of blocks of downtown," Brokaw said. "What's great about this project is that it is the anchor that the rest of us need to remain viable," he said. "We're all going to benefit."

Taxpayer Bill

The taxpayer bill for subsidies the CWO proposal has asked for or could demand could reach $40 million. CWO has told the city that it wants the city to pay for a 455 car garage for the project. That could cost up to $22 million. CWO would also be eligible for 10-year property tax breaks on the entire project. That could add about $15 million more to the public tab. CWO also wants to buy the Atrium building from the city. Selling the building at below market value and moving city offices could increase the subsidy.

The city's downtown urban renewal district would be used to fund the garage. The district diverts money from cash-strapped school and local government funding. The spending limit on the district will likely have to be raised and the district could also run out of money because of CWO's 10-year tax break. Any money spent by the district could reduce funding available for a new City Hall/police station, police patrols, planning and other downtown projects, which could result in the city imposing higher taxes to pay for the shortfall.

Brink said the subsidies are appropriate. "Projects don't happen in downtowns strictly by market forces," Brink said. Portland's attractive downtown was built with "hundreds and hundreds of millions of dollars of public subsidies. That's the only way it happened," he said.

But Portland has put on hold its big tax breaks for downtown developers. "Each time we give a tax abatement, we are affecting how much money goes to the county and to the schools," Portland Mayor Tom Potter told The Oregonian. "We need to ask ourselves, 'Is this the best way to spend taxpayer money?'"

Even before Portland put its breaks on hold it had required developers to include low income housing and set caps on developer profits. In the past, Eugene has given away the money with few restrictions.

The city has also failed to protect taxpayers from cost overruns on "public-private partnership" projects. When Broadway Place, a similar but smaller scale project on West Broadway, went $1.2 million over budget, developers stuck their public partners with the bill.

Rather than putting so much money into CWO, Bettman and Taylor said they'd like to see the city subsidize ORI, a research non-profit, in its struggle to fund a new green building across from the downtown library employing 200 well-paid professionals.

Moine said she wishes the big public subsidies CWO demanded were also available to her for redevelopment.

Bettman said she's concerned about a "very unlevel playing field" for businesses trying to compete downtown with a subsidized CWO. She pointed out, if all urban renewal funding is dedicated to CWO, other downtown businesses will essentially be taxed to fund subsidies for their competitor.

Parking

A publicly subsidized parking garage could cost almost $50,000 a space, based on other cities' experience.

"The less parking you build the better, because it's so costly," Brink said.

CWO told the city they need 743 new parking spaces for their development, of which they'll pay for only 288 with taxpayers coughing up for the remaining 455. Despite the big costs involved, the city hasn't taken an independent hard look at whether so much parking is actually needed.

The city already provides more than 3,350 parking spaces downtown, including seven garages. That doesn't include thousands of additional on-street parking spaces and commercial parking lots. Many of these parking spaces are only a short walk or adjacent to CWO's proposed development.

Broadway property owner and restaurateur Phil Keim tells the Eugene City Council about a state ballot initiative to ban condemnation for private interests.

The CWO proposal does factor in 1,111 currently available spaces to serve the development. But the calculation inexplicably leaves out street parking and many nearby garages and lots with unused space, particularly on nights and weekends.

In addition, the formulas CWO uses to factor parking demand for its project appear to be based more on suburban mall construction than a downtown, urban design. Downtown Portland developers demand less than half as much parking per square foot.

The project makes no apparent consideration of people walking, biking or riding the bus to its shops and theater. That's odd since a key premise of the proposal is that the included housing will provide built-in demand for the retail. It's also odd because the adjacent LTD bus station provides direct routes and service for 10,000 people per day.

Providing too much parking could undermine city goals of building a dense city center to reduce traffic congestion and sprawl and promote livability. Pedestrians don't like walking long distances past ugly garages and dodging the cars going in and out. LTD studies have shown that parking difficulty is a major incentive to ride the bus.

"The whole idea about downtown is that people will be willing to walk a little further," Bettman said.

The preliminary massing plan for the CWO project depicts retail and condos wrapping only three sides of the massive new garages, which appear to take up about half of the new construction.

"They're filling up a good deal of the space there with parking," UO landscape architecture professor Jerry Diethelm said. Diethelm said that on two of the buildings he's particularly concerned that garages will front the south facing walls. That means that the project could turn an ugly side towards the new library and proposed ORI building, and will lose the aesthetic and natural heating advantages of direct sunlight, he pointed out.

But Prichard said ample parking is crucial. "In order to be successful it's a really important key component."

"I don't love parking, but it's just an absolute reality that if you don't have it, it's not going to work," Brokaw said. "Even though there's ample parking for the amount of uses downtown, people still complain about it."

Risk

Will the CWO project succeed?

Connor and Woolley have extensive experience with development, with major projects in Eugene, Portland and California. Chicago-based Opus has $1.4 billion a year in revenue and 1,400 staff.

Brokaw said there's growing demand for the downtown living the project offers to young professionals and empty nesters. The success of another downtown condo project under construction, The Tate, in finding high-end tenants has demonstrated that, he said.

The housing and the simultaneous infusion of large-scale retail could create a critical mass that will "just radically change the character of downtown economically," Brokaw said.

There's always risk, Brokaw said. But with such a rare opportunity "it would be a real shame to not aggressively move forward."

But Moine questions CWO's commitment. "They have shown beyond a doubt that they are willing to have their properties turn into vacant shells and holes in the ground."

"There's no guarantee that if they tear those down, they're going to build something. We could have a vacant lot for 20 years," Bettman said, adding the city needs a firm contract protecting the public from that risk.

Bennett said downtown can't wait too long. "If it isn't going to work I'd like to get done with it and get on with something else," he said. The odds the CWO proposal will happen? "I'd give it 50-50," he said.

Public Input

With the public money at stake in the CWO proposal, "we have every right to demand that it be done in a Eugene kind of way," Matthews said.

"There's no reason we should be using public money to subsidize development unless there can be a quantitative demonstrable public benefit," Bettman said.

Brink said he expects the city subsidy will leverage public input on the design, "it's part of the deal."

But with downtown long in need of revitalization, the city may not be in a good bargaining position.

Prichard said she doesn't know if CWO will compromise on condemnation or other aspects. "They have not closed the door."

Without CWO, there's enough happening downtown that the city shouldn't feel desperate, Brink said.

Even if the city were desperate, which it's not, Matthews said, "the right way to respond would not be to be doormats."

"Why shouldn't we voice our aspirations?" Diethelm asks. "Why shouldn't we do everything possible to make it rich and beautiful and wonderful?"