Creation of an urban renewal distr1ct --Eugene's third-- is being considered to help Spectra-Physics Inc. pay for creating wetlands mandated by the federal government as part of a planned expansion.

The company is being required to create about five acres of wetlands at a cost of at least $600,000 to replace those that will be lost in an anticpated two-phase, $7.5 million expansion. Company officials hope to begin the expansion next year. A total of 520-650 jobs would be created.

Senior Planner Jim Crotead said Wednesday that formation of a new urban renewal district in west Eugene appears to be the best option for providing financing for the wetlands mitigation project.

Another option would be convincing the company to participate in west Eugene's enterprise zone, which would give Spectra-Physics a reduction in property taxes that could be applied to the project, Croteau said at a meeting of the City Council Committee on Economic Diversification.

He reviewed a number of other options that were considered but said most were rejected because they could not be put in place in time to meet the company's needs.

The state already has provided a $200,000 grant from lottery money toward the mitigations project.

Spectra-Physics also is being required to create another 20 acres of wetlands to replace an area that was filled when the company built its original Eugene plant in 1979. The company manufactures scanners thot read the bar codes on merchandise.

Company and city officials were unaware at the time that the site contained wetlands, which are protected by the federal government for their habitat and environmental contributions, including flood control and water purification.

The city since has discovered about 760 acres of wetlands in west Eugene, including some of the city's prime vacant industrial sites.

Charles Missar, Spectra-Physics facilities manager, said Wednesday that the company is close to finalizing the cost of buying the land to be used in the mitigation project. He did not aay where in west Eugene the land is located.

Croteau said he realizes that use of urban renewal in Eugene "gets more complex every day and more politically charged every day."

A group calling itself the Coalition for Fair Allocation of City Taxes last week submitted an initiative measure that would require city officials to seek voter approval before using tax increment financing to pay for public improvements in support of private development within urban renewal districts.

Tax increntent money is the increased property taxes generated by increased property values, either from inflation or new development, on properties within the urban renewal district. Eugene currently has two such districts -- downtown Eugene and the Riverfront Research Park.

Croteau said that unlike the downtown urban renewal district, where tax increment money is used to support new development, Spectra-Physics presents the unique situation of an existing company thai will be unable to expand unless it can obtain financing for the wetlands mitigation project.

Mayor Jeff Miller said the city should not be scared away from considering tax increment financing just because of the recent defeat of an urban renewal measure in Springfield and because of the pending initiative measure in Eugene.

"This is an unusual problem that is not of our making," he said.

Miller said he could see establishing an urban renewal district that would end when the mitigation project was completed.

Councilman Rob Bennett said the city should look for another option for Spectra-Physics. "I think this urban renewal district is a tough row to hoe," he said. Urban renewal in Eugene is "coming under close scrutiny -- there are a lot of good reasons for that," he said.

Councilman Freeman Homer said he wouldn't object to the creation of an urban renewal district for such a spe- cific purpose.

Miller said the City Council will hold a work session in the near future on the issue of how to finance Spectra-Physics' wetlands mitigation project.