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Item A: Urban Renewal
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CC Agenda - 07/08/09 Work Session
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Item A: Urban Renewal
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Agenda Item Summary
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7/8/2009
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Summary: Potential Capacity of the Downtown Urban Renewal District <br /> Approximate for FY10 <br />Amount Remaining Under Maximum Indebtedness Limit $ 0.5 million <br />Additional Cash Available Beyond Maximum Indebtedness Limit 3.7 million <br />Borrowing Capacity – assuming plan amendment & repayment over 14 years 10.5 million <br />Downtown Loan Funds 2.5 million <br /> Total Amount Available $17.2 million <br /> <br />Downtown District “Maximum Indebtedness”: Oregon Statutes require each district that receives property taxes <br />to include a “maximum indebtedness” limit in their urban renewal plans. The Downtown District amended its <br />plan in 1998 to include a maximum indebtedness limit of $33 million. “Maximum indebtedness” is a spending <br />limit. Certain expenditures of the district are included in the “maximum indebtedness” calculation and certain <br />expenditures are excluded. For instance, interest on debt and downtown loan funds are excluded from the <br />calculation, but administrative expenses or direct cash payments for projects are included in the calculation. <br /> <br />About $0.5 million remains under the $33 million limit in the Downtown District. For the district to enter into <br />obligations that exceed the current limit (~ $0.5 million), a “substantial amendment” to the district’s plan is <br />needed. The process is determined by Oregon Statute and the district’s plan. City-wide notice is required for <br />changes in the maximum indebtedness and expansion of the district boundaries by more than 1% <br /> <br />The time necessary to complete the process for this type of special amendment is 100+ days. The major steps <br />are: <br />? <br /> Eugene Redevelopment Advisory Committee (ERAC) may meet to discuss the proposed plan <br />amendments and make a recommendation to the City Council <br />? <br /> City Council meets to initiate plan amendments <br />? <br /> URA submits plan amendments and report on the plan to taxing bodies affected by the district for <br />review and comment <br />? <br /> City sends out special City-wide notice <br />? <br /> URA meets to receive the revised plan and report on the plan <br />? <br /> City Council holds a public hearing on the plan amendment ordinance <br />? <br /> City Council meets to approve ordinance amending the plan <br /> <br />Current & Future Debt Obligations: The URA does not currently have bonds outstanding, but must pay the <br />Library Obligations through December 2009 ($2.5 million). If the Downtown District plan is amended, it would <br />be possible for the district to enter into obligations of greater than the $0.5 million allowed under the current <br />“maximum indebtedness” figure. The Downtown District is scheduled to terminate in FY24. If the district <br />entered into a new debt obligation (after substantially amending the plan) in FY10, that would leave 14 years for <br />a debt obligation to be repaid. Assuming a 14 year repayment schedule, a 1.5 times debt coverage ratio, and a <br />projected interest rate for next fiscal year, the Downtown District would have a debt capacity of approximately <br />$10.5 million. It should be noted, however, that the legislature has approved significant changes to urban <br /> <br />renewal, and those changes have not yet been analyzed and incorporated into this analysis. <br /> <br />Project Examples: Downtown Athletic Club & Eugene Public Library <br />The Downtown Athletic Club (DAC) is one of the most significant anchors downtown, employing 150 <br />individuals and drawing club members and event visitors to the core of downtown daily. The presence of the <br />, <br />DAC is also an attractive amenity for office uses downtown. In the 1970sThe URA acquired the former Ax <br />Billy Department Store building which was built in 1909. The building was mostly vacant and scheduled for <br />demolition. The URA issued an RFQ and selected the DAC proposal. The URA sold the property in 1985 for <br />its appraised value ($213,000), and also provided gap financing in the amount of $150,000 for the renovation. <br />CDBG loan funds in the amount of $300,000 were also used for the initial renovation. The Ax Billy building is <br />now on the National Register of Historic Places. All financing provided for the DAC project has been repaid in <br />
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