Item A: Downtown Financing Strategy

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If the City of Eugene terminated tax increment financing in the Downtown District, the City’s General Fund would receive an estimated $810,000 in additional property taxes, using current year data. The Downtown District pays the General Fund for a portion of the City’s shared overhead services, such as payroll, accounts payable, human resources and information services. The General Fund would lose that on-going revenue if tax increment financing were terminated. The FY10 amount paid by the Downtown District is $17,500, so that is subtracted from the additional property taxes received in order to determine the net benefit to the General Fund. (For the purposes of this AIS, the on-going amount will bond for $7 million in the “Existing Resources” option, $1.2 million in the “GO Bond” option, and $9.5 million in the “Local Option Levy” option. See Attachments F, H, I, and J.) Impact on Schools The net impact of the Downtown District on local schools is a loss of about $31,000 per year (based on FY10) after accounting for the State’s system for school funding. The State determines how much money must be allocated for the education of each pupil across the state. If the money is not available from local property taxes, the State will make up the difference. In FY10, the Downtown District diverted $650,000 of local property taxes that would have gone to local education. The State made up the difference. If the Downtown District had not diverted those funds, the State would have had the additional $650,000 to allocate as it chose. In other words, the State could have chosen to allocate the money to education or to some other budgetary priority. Had the State chosen to keep the money in education, some of that money would have returned to Eugene schools based on the applicable statewide school funding formula. Under the formula, Eugene School District 4j would have received about $20,000; Lane Community College would have received about $10,000; and Lane Education Service District would have received about $1,000. As a result of the Downtown District, the State provided a net $629,000 for spending in Eugene in FY10. Without the Downtown District tax increment financing, those funds would likely have been used to fund school districts throughout the state instead. Measure 5 & Compression: The taxes generated by the local option levy for Eugene School District 4j are not directly affected by termination of downtown urban renewal tax revenue collections, but there may be an indirect impact from Measure 5 compression on the levy. Staff has asked the Tax Assessor to provide information on this topic; that information will be provided to the URA Board/City Council when it is available. Impact on Tax Bills and Tax Rates The impact of urban renewal is a redistribution of taxes from schools, city, and county line items into an urban renewal line item. (A detailed explanation and example is shown in the Report on the Plan included in Attachment L.) If the Downtown District tax increment financing was terminated, there would be some shifting of the amounts on the line items within an individual tax bill, and a small decrease in bonded debt tax rates. (See Section 3 below.)