Item A: Downtown Development Financial Tools

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Small-Scale Development Example In the Small-Scale Development example, it is assumed that a development project con- sists of about $20 million of total investment, consisting of renovation of existing build- ings into office space. The project takes about two years to construct, and incremental property taxes from the development are received starting in FY11. The Downtown District can accommodate the City’s investment in the Small-Scale Development project without amending the urban renewal plan to increase the “maxi- mum indebtedness”. remembering, again, that The agreement between the City and the private developer ( this is a hypothetical example only and no agreements have been made between the City and any developer for the West Broadway development ) states that the City’s financial role in the development is to assist with the land assembly. The land assembly financial assistance consists of a contribution of $2 million City payment towards the cost of the property in FY08. Thus, the City’s share of the Small-Scale Development hypo- thetical project is 10%, while the developer’s investment is 90%. The initial incremental assessed value for the Small-Scale Development is about $10 mil- lion, after taking into account property values already in existence on the development site. The new value generates about $150,000 of annual property taxes for the District. The development project generates about $3.3 million of property taxes through the dis- trict’s termination date in 2024, which is about $1.3 million more than the City’s invest- ment in the project. These projections use conservative assumptions about property value growth over the period. The model assumes that all property in the district, including this new development, experiences assessed value increases of 2% per year. No additional development activity is assumed to occur in the district during the remaining life of the district. Because the scale of this investment is small, the City/URA’s contribution could be made with cash held by the Downtown District. As a result, the City/URA would not have to borrow money. From a financial perspective, this is a less risky scenario. On the other hand, the potential for future property tax revenues is significantly less than under the Large-Scale Development example.