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TO:
THROUGH: FROM: SUBJECT: ISSUE: FOR AGENCY MEETING OF:. AGENDA ITEM NO.: UR N RENEWAL AGENCY BOARD
August 22, 2011 (a)
~ J~
I
NORRIS EXECUTIVE DIRECTOR H
H
~OR
BAN DEVELOPMENT DEPARTMENT MINTO ISLAND BICYCLE AND PEDESTRIAN BRIDGE
-
WILLAMETTE QUEEN STERNWHEELER LOSS OF USE AGREEMENT
Shall the Agency Board authorize the Executive Director to execute a Loss
o
Use Agreement with the owners of the Willamette Queen Sternwheeler for compensation
o
lost revenue due to the construction
o
a low span, tied arch bicycle and pedestrian bridge between Riverfront Park and Minto Island which will prohibit the Sternwheeler s use
o
the Willamette River Slough?
RECOMMENDATION:
Staff recommends the Agency Board authorize the Executive Director to execute a Loss
o
Use Agreement with the owners
o
the Willamette Queen Sternwheeler (Owners)
or
compensation
o
lost revenue due to the construction of a low span, tied arch bicycle and pedestrian bridge between Riverfront Park and Minto Island which will prohibit the Sternwheeler s use
o
the Willamette River Slough (Slough).
BACKGROUND:
In the Spring
o
2009, staff met with the Owners to negotiate a strategy and offset the potential business losses from the reduction
in
navigability up the Slough should the Agency decide to place a low span, tied arch bridge that could restrict access. The negotiations were not successful.
In
November 2010, Council directed Staff to: (1) hire a third party, independent consultant to review the Willamette Queen Sternwheeler business to determine the financial impact
o
closing the Slough to commercial traffic and (2) re-open negotiations with the owners of the Willamette Queen Sternwheeler
in
order to reach an agreement that would allow the permit process for the construction
o
the Minto Island pedestrian bridge to proceed and compensate the Owners
or
their loss of access to the Slough.
Sternwheeler Page 1
o
3 August 22,
2 11
 
FACTS AND FINDINGS
In
January 2011, staff hired Valuations Northwest, a business financial consultant, to analyze the Willamette Queen Sternwheeler business, with the specific task of determining the financial impact to the business if the Slough were to be closed to commercial traffic due to the construction
of
a pedestrian bridge. The study concluded if the Slough was blocked from commercial traffic, the annual loss
of
revenue to the business would be 54, 216 and that without compensation; the Sternwheeler would be forced to cease operations
in
Salem. Based on the independent financial analysis, staff and the Owners completed negotiations and have agreed
in
principle, subject to Agency Board approval,
on
a mutually beneficial Loss
of
Use Agreement (Attachment A) that will both fairly compensate the Owners for their loss of revenue and allow the permit process and bridge construction to occur. Staff and the Owners have reached agreement
in
principal
on
the following key terms:
1
The Owners will be compensated up to 250,000, payable
in
five consecutive annual installments
of
50,000.
2
The Owners agree to support and not contest the permit process for the low span bridge option across the Slough.
3
Compensation will commence
in
the calendar year
in
which the Slough is blocked by bridge construction.
4
The Willamette Queen Sternwheeler must be
in
continuous operation for the twelve months prior to each payment date to receive payment.
5
The Owners agree not to sell the sternwheeler or the business prior to the Agency's receipt
of
all applicable permits unless the new owner agrees to be bound by the terms
of
the Agreement.
6
The Owners may assign the Agreement to another party with written consent from the Agency.
7
The Agreement
is
valid for a period
of
1 0 years. It is anticipated the 250,000 loss
of
revenue payment will be made from the Riverfront-Downtown Urban Renewal Area funds as a cost
of
the Minto Island Pedestrian Bridge project. ATTACHMENT A: Loss
of
Use Agreement
Report Prepared
by
Clint Dameron Real Property Services
Manager
Urban
Development Department
G:\URBANDEVIADMINISTRA TION\Final Council Staff Reports\2011\Aug 22\Sternwheeler\Council Staff Bridge Report. doc
Sternwheeler
Page 2
of
August 22,
2011
 
 GREEMENT
Agreement between the Urban Renewal Agency
of
the City
of
Salem, Oregon, a quasi-municipal corporation (the Agency), and Richard Chesbrough, Barbara Chesbrough, CBVB Associates, Inc, an Oregon corporation, and Stem Wheeler Excursions, LLC, an Oregon limited liability company (collectively the Owners).
Recitals:
(a) The Riverfront Downtown Urban Renewal Plan contains a project for the construction
of
a pedestrian bridge across the Willamette River Slough (the Slough) from Riverfront Park to Minto Island (the Bridge).
d)
Richard Chesbrough and Barbara Chesbrough are the sole shareholders
ofC V
Associates, Inc. and are the sole members
of
Stern Wheeler Excursions, LLC.
b)
CBVB Associates, Inc. is the owner
of
the Willamette Queen Sternwheeler (Willamette Queen). (c) Stem Wheeler Excursions, LLC operates the Willamette Queen, and provides forprofit excursions to the public on the Willamette River and the Slough. (e) The Willamette Queen uses the Slough for excursions when conditions on the main channel
of
the Willamette River make the main channel unsafe.
f)
The Agency desires to construct a Bridge over the Slough, to provide pedestrian and bicycle access to the City
of
Salem's Minto-Brown Park. (g) The Agency has considered two options, a low span bridge and a high span bridge. The cost
of
construction
of
a low span bridge is estimated to
be
$5,618,000; the cost
of
construction
of
a high span bridge is estimated
t
be
$9,800,000. (h) The Agency desires to construct a low span bridge (the Bridge), the effect
of
which would be to prevent the Willamette Queen from using
of
the Slough.
i)
The parties agree that Owner's loss
of
business from the construction
of
the Bridge would be approximately $50,000 per year.
j)
The Agency must obtain a Bridge Permit from the United States Coast Guard Bridge Administration Division prior
t
commencing construction
of
the Bridge (the Permit).
k)
The purpose
of
this Agreement is to make provisions for the Owners' agreement and consent to allow the construction
of
the Bridge to proceed, notwithstanding the Owners' loss
of
access to the Slough, and
t
compensate the Owner for loss
of
business related to the loss
of
access to the Slough that will be caused
by
the Bridge.
TT CHMENT

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