Item A: Downtown Development Financial Tools

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property taxes on the frozen base while the urban renewal agency receives property taxes related to the incremental value. This is called the ?division of tax? method of raising revenue in an urban renewal district. The ?division of tax? method for funding projects results in the Urban Renewal Agency receiving significantly more tax revenue than what the City would receive in its general fund from district property. This method enables the agency to complete more projects than the City would have been able to complete during the same time period. Districts in place at the time that Measure 50 became effective were allowed to ?grandfather? the existing level of tax increment revenue and collect a City-wide levy. The Central Eugene Project District was grandfathered by City Council in June 1998. For this district, the maximum amount of tax increment revenue that may be collected depends on the level of tax increment revenue in the district in FY98 and the percentage growth in assessed value on properties in the district above the base valuation. Because this district was ?grandfathered?, the tax increment revenue for the Downtown District is collected in two ways: (1) by dividing the taxes collected within the district; and (2) through a City-wide special levy. Once the grandfather provisions are no longer in effect, the Downtown District will no longer be allowed to collect the special levy. It is currently projected that the special levy will be discontinued by FY10. The Downtown District collects incremental taxes from only a portion of the property tax bill, according to Oregon Statutes. The Downtown District may collect incremental taxes from: the permanent tax rates of the city, county and school districts plus any local option levies or bond measures that were approved by voters prior to October 6, 2001. This means that the Downtown District may not collect incremental taxes from School District 4J?s local option levy, the City?s library levy, or the most recently-passed City parks bond measure, for instance. Over time, the amount collected by the Downtown District from bonded debt taxes will decrease, as bond measures approved by voters prior to October 6, 2001 are paid off. Assessed Value History The five-year history of assessed value in the Downtown District is shown in the chart below, along with an estimate for the upcoming budget year. Downtown District Assessed Values $200,000,000 $100,000,000 $0 FY03FY04FY05FY06FY07FY08 est. $139,512,539 $122,798,693 $141,211,890 $121,964,759 $121,237,692 $124,290,000 Increment $31,386,991 $31,386,991 $31,386,991 $31,386,991 $31,386,991 $31,386,991 Frozen Base The assessed value in the district changes significantly from year to year, and can sometimes be reduced from the prior year. Because the land area involved in an urban renewal district is relatively small, changes made by a single property owner can have a large impact on the district assessed value. For FY08, assessed value is projected to increase slightly.