06/24/1987 Meeting - Laserfiche WebLink

Home Browse Search

Referri ng to the second fl ipchart~ Mr. Byrne out 1 i ned another fi nanci a 1 scenario~ in which the agency would decide to make a major capital - improvements expenditure: Funds Spent on Capital Projects: $ 1. 1 mill ion Ending Working Capital: $ 2.0 million Mr. Byrne said that the agency would hope that this expenditure would generate additional tax increment in future years. He said that when making decisions about spending on capital projects, the agency must determine what type of capital investment will stimulate the most tax increment flow. Another issue is whether a given capital expenditure will leave the agency with enough ending working capital. In response to a question from Ms. Ehrman, Mr. Byrne said this financial scenario was analogous to what occurred when the agency made the improvements on West Broadway: money was allocated to the West Broadway capital project; and the agency's ending working capital was reduced. Using the third flipchart~ Mr. Byrne outlined another financial scenario, in which the agency would decide to incur a new debt in order to stimulate private development (e.g. ~ the agency might incur the debt to build a parking garage). He said the updated plan recommends that new debts be incurred only in response to specific development that will generate new tax increment. He said the goal is to have the revenue from new tax increment flow offset the cost of additional debt service. He added that this new increment tends to 1 ag a year or two behi nd the debt servi ce that is incurred. The thi rd e flipchart outlined this scenario: Agency Resources: --Beginning Working Capital $ 3.0 mi 11 ion --Tax Increment Flow 2.0 million --New Tax Increment .5 million (one- or two- year lag) $ 5.5 million Agency's Fixed Expenditures: --Existing Debt Service $ 1.4 million --Agency Operations .5 million --New Debt Service .5 mi 11 ion $ 2.4 million Funds Available for Projects: $ 3.1 mill ion (resources minus fixed expenses) Funds Spent on Capital Projects: $ .1 mi 11 ion Ending Working Capital: $ 3.0 million Mr. Byrne said the updated Urban Renewal Plan's Finance Plan combines the last two financial scenarios. Sometimes large debts will be incurred (primarily to build parking structures) in support of development; following this~ tax e MINUTES--Eugene City Council June 24, 1987 Page 14