Item A: Downtown Development Financial Tools

Home Browse Search

1. FINANCING TOOLS A. Urban Renewal Urban Renewal Summary Currently, $4.6 million is left under the spending limit (“maximum indebtedness”) $13 million debt capacity at current level of revenue (given remaining life of district, required debt coverage ratio, & project interest rate) Debt capacity is greater than what is permitted to be spent under the current maximum indebtedness cap Substantial plan amendment needed to increase spending limit (enter into obligation > $4.6 million) or expand boundary (>1%) 100 + day process o Review by ERAC, URA, & CC; Public notice & public hearing; URA approval & CC ordinance $19.5 million available as potential development resources, assuming a plan amendment (increase maximum indebtedness, same district term, same boundary) Funds must be spent within the boundaries for projects listed in the plan Any expenditure over $250,000 (other than loans) must be explicitly approved by the URA Board Annual tax increment revenue is currently about $3.8 million. However, the district will lose the “special levy” in the next couple of years, resulting in about a 50% decrease in annual revenues 16 more years in life of district (FY24) No current outstanding bonded debt Lenders require: debt coverage ratio of 1.5; and o debt service reserve = annual debt service OR 10% of borrowing o If additional funds are required, projected incremental tax revenue from a new development could potentially be used in the calculation of debt capacity. This is more risky from a financial standpoint and would: increase the debt coverage ratio or interest rate; OR o require the City’s general resources as guarantee (full faith and credit) o Urban Renewal is a means to support economic development and civic improvement by encouraging private development and financing needed public improvements such as infrastructure, open spaces, public plazas, parking garages or environmental improvements, within designated districts. The City of Eugene Urban Renewal Agency (URA) is a separate budgetary entity authorized by state statutes. City Council acts as the Renewal Agency Board and delegates budget review to the City’s Budget Committee. The URA oversees two urban renewal districts – the Central Eugene Project (also known as the Downtown District) and the Riverfront District. Each district has its own URA adopted plan. Below is an explanation of available funds, spending limit (maximum indebtedness), the plan amendment process, current and future obligations, access to future revenue, and an example of a previous Urban Renewal project. (See Attachment A “Downtown Urban Renewal District and Tax Increment Financing” for more information.) Available Amounts for Development Projects: The Downtown District currently has an expenditure limit of approximately $4.6 million under the “maximum indebtedness” cap. The District Plan could be amended to increase the spending limit; based on current District revenues, the District would have approximately $13 Page 2 of 13