Item 4 - Ordinance on Downtown Urban Renewal Plan Amendments

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Maximum indebtedness is not a project budget. It also does not obligate the Agency to spend a particular amount of money on any specific project. The City/URA’s direct costs for the West Broadway redevelopment concept, based on prelim- inary information from the developers, are estimated at $25.6 million. The overall total esti- mated cost to the City/URA is listed in the table above as $43.8 million, which includes two non- traditional cost categories. First, interest on borrowing is included in the chart because the City/URA will need to borrow money to pay some of the project costs and some people have asked for an estimate of the interest payments on the borrowing. It is not typical, however, to include interest in the cost of purchasing an asset. For example, when a person buys a $200,000 house and takes out a mortgage, they do not say the cost of their house is really $400,000 because of the interest that will be paid over time. Second, tax exemptions are shown in the column for total City/URA costs. The project might be eligible for tax exemptions related to low income housing and downtown multi-unit housing. The exemptions are not direct checks written by the City to the developers, but rather are foregone tax revenues for a period of time. Similarly, tax exemptions are not typically included in the stated cost of a development project. It should also be emphasized that if a West Broadway redevelopment project does not go forward, or if the project does not apply for or qualify for the tax exemptions, the amounts listed here under tax exemptions are not available for spending on other redevelopment projects. The table also shows that maximum indebtedness includes a provision for district administration costs from now until the year 2030. District administration includes staff to undertake the annual tasks needed to run the district, such as developing and monitoring a budget, reporting financial results, and preparing required reports. District staff also works with downtown property owners on a variety of issues, and administers the Downtown Revitalization Loan Program. These administrative costs are not directly related to a West Broadway redevelopment project. The West Broadway redevelopment project is in a conceptual stage, and there are a number of factors that could change the cost of the project, as well as change the City/URA’s participation in the project. Some of those factors are: Because the project has not yet been designed and is still in the conceptual stage, addi- tional refinement of the project details could result in a different cost for the project. Depending on the specific properties to be acquired and the timing of the purchase option agreements, the overall cost for property acquisition could increase as the need for renewed options arises. Construction costs could also increase due to the level of inflation, interest rates and property conditions. The West Broadway Advisory Committee has been appointed to work with a consultant and the developers to refine the scope of the project, including items such as public open spaces. If the Committee recommends including public amenities that were not envi- sioned by the developers in their concepts, the result could be higher construction costs and potentially higher costs to the City/URA for the public share of the project costs.