Item 4 - Ordinance on Downtown Urban Renewal Plan Amendments

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Chapter 9: Fiscal Impact Statement That Estimates the Impact of the Tax Increment Financing, Both Until and After The Indebtedness is Repaid, Upon All Entities Levying Taxes Upon Property in the Urban Renewal Area Taxing bodies that overlap with the Urban Renewal Agency are affected by the use of tax increment funds to implement the Renewal Plan. When a district is first created, the assessed value within the boundaries is established as the “frozen base”. In theory, if urban renewal efforts are successful, the value of the district will grow above the base. That increase is called the “incremental value” or “excess value”.Property taxes from the overlapping jurisdictions (schools, general governments, bonds) are then divided between the jurisdictions that continue to receive taxes on the frozen base, and the urban renewal agency that receives taxes on the incremental value. In general, urban renewal does not directly affect an individual school system’s budget because schools are funded by the state on a per-pupil basis. On a state-wide basis, if there are less tax revenues going to schools because of urban renewal districts, then the state provides more general funds to make up the per-pupil funding for all the schools. If a school district is in Measure 5 tax rate compression due to a local option levy, how- ever, the urban renewal effect is different. For school districts that have a local option levy, urban renewal results in the ability for the district to collect a higher level of revenue from the local option levy. This occurs because the portion of school taxes related to the incre- mental property value within the district does not count towards the school tax $5/$1000 Measure 5 tax rate cap.Rather, that amount of taxes counts towards the general government $10/$1000 Measure 5 tax rate cap. For other taxing jurisdictions, a share of property taxes from the “excess value” or “incre- mental value” is not collected by the overlapping jurisdictions during the period of an active district. Urban renewal nominally affects voter-approved local option levies and bonds because the affected district has less property value to levy taxes against, resulting in slightly higher tax rates. For the Downtown Urban Renewal District, the property taxes that may be used to fund urban renewal activities is limited to the permanent tax rates and any bonds or local option levies that were approved by voters prior to October 6, 2001. This means that the projected tax rate used to generate urban renewal revenues will be reduced over time as existing bonds are paid off. Urban renewal is counted towards the Measure 5 general government tax rate cap of $10/$1000 of assessed value. In Eugene, the general government category of taxes is not currently in Measure 5 tax rate compres- sion, so this is not a significant factor in evaluating urban renewal tax increment revenues. The incentive for the overlapping districts to support urban renewal is higher property tax revenues in the long run. When the district is ended, the overlapping taxing districts are able to tax the entire value within the district. Under the theory of urban renewal, this value is higher than it would have been if there had been no district in effect. Report on the Downtown Urban Renewal District Plan – Circulation Draft of July 17, 2007 16