CC Minutes - 06/25/01 Meeting - Laserfiche WebLink

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Denny Braud of the Planning and Development Department provided the staff presentation. He said that the original proposal from the company was that the City would recapture no more than one-third of the benefit to the company. He said in the company's latest proposal, in FY02 the City would recapture 100 percent of the taxes that would otherwise have been paid without the tax exemption, and for the rest of the extension years and any future two-year extensions the City would recapture one-third of the tax exemption. He said the basic difference was that the estimated City tax revenue without the extension was $8.6 million and $2.9 million with the exemption. Councilor Taylor, seconded by Councilor Kelly, moved to deny the request of Hyundai for a two-year extension on the enterprise zone exemption. In response to a question from Councilor Kelly regarding the amount of City revenue given up in the second year of the proposal, Mr. Braud said the amount was $2.1 million. In response to a question from Councilor Pap~ regarding how the proposal would affect the financial forecast of the City in the coming years, City Manager Johnson said the proposal would make it very difficult to achieve the financial forecasts that City staff had made. He said staff did a six-year financial forecast that assumed that Hyundai would pay the full amount that it owed. In response to a question from Councilor Pap~ regarding whether Hyundai had qualified on all points of the tax exemption, City Manager Johnson said that Hyundai had complied fully with the law for the first three years and, in fact, had exceeded the requirements in many cases. He stressed that the agreement read that the City and the County may grant exemptions for years 4 and 5 but it did not say they had to. In response to a question from Councilor Bettman regarding when a new pre-certification needed to be done, Mr. Braud said that a new pre-certification needed to be done sometime in the next two years, prior to the expiration of existing tax exemptions. In response to a question from Councilor Rayor regarding the future projected tax rate dropping drastically, Mr. Braud said that a large factor of that drop was depreciation of equipment. Councilor Rayor commented that because of depreciation, the City would not see the kind of tax revenue in the future that it would be foregoing if Hyundai's extension was approved. In response to a question from Councilor Farr regarding the legality of the request, City Manager Johnson said that Hyundai had met all of the legal requirements to make the request in a timely manner. In response to a question from Councilor Farr regarding how the financial forecast would look if Hyundai had decided to relocate, City Manager Johnson said that the financial picture would look very bad. Councilor Fart said that the community had made a substantial investment in Hyundai and in return Hyundai had made a substantial investment in the community. He stressed that the investment could not be looked at in the shod term. He said that Hyundai had exceeded all of the requirements that had been placed on them and added that the company had contributed far in excess of taxes to the community in terms of jobs and contracts provided to the community. He expressed a desire to make sure that Hyundai was in the community for many years to come. MINUTES--Eugene City Council June 25, 2001 Page 15 Regular Meeting