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<br />~ <br /> <br />e <br /> <br />e <br /> <br />- <br /> <br />TAX INCREMENT FINANCING <br />May 31, 1 985 <br />Page 3 <br /> <br />What Happens to Excess Revenue? <br /> <br />Excess tax increment funds remaining after payment of all debt and operation <br />of the renewal district would be returned to the taxing jurisdictions when <br />the district is closed out. The State statutes require that the County <br />treasurer disburse the funds back to the taxing jurisdictions within the <br />renewal area according to a proration formula. <br /> <br />Effect of the Proposed Sales Tax Legislation on Tax Increment Financing <br /> <br />The proposed sales tax will have different effects for renewal districts <br />established before and after the effective date of the sales tax legislation <br />(April 1, 1986). Since tax increment is dependent on the consolidated tax <br />rate of all taxing jurisdictions in the renewal area, there will be a loss <br />of revenue upon adoption of the legislation and the lowering of the educa- <br />tional districts' tax levies. That reduction is estimated at about 35 <br />percent for Eugene. For tax increment districts established prior to <br />April 1,1986, the legislature has determined a formula to gradually, rather <br />than abruptly, reduce tax increment income. This formula will reduce the <br />increment tax rate by ten percent over a nine-year period or until it <br />matches the existing rate. The County Assessor is charged with this <br />determination. This gradual phase-out is intended to avoid default of <br />outstanding bond payments. The impact of the phase-out formula will be that <br />it will take longer to generate the increment flow otherwise available. <br />This could result in a delay of implementing some projects for two to four <br />years. <br /> <br />WW:pm/197 <br />