Item A: Downtown Financing Strategy

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ATTACHMENT H General Obligation Bond – Funding Option A General Obligation (GO) Bond is a borrowing or issuance of debt, the repayment of which is made from a property tax levied upon all taxable property in the City. Under this funding scenario, the City could ask voters to approve an $8.2 million GO Bond ($8 million for the project and bond issuance costs) to fund the LCC project cost. The City would also issue a $1.2 million General Fund bond. Detailed information is provided in the chart below and followed by a simplified cash flow. (Note: The chart format is the same in each funding option attachment.) Sources of Funds Termination of tax increment financing in the Downtown District generates o several funding sources (See Attachment G): New on-going property tax revenue for - ? on-going services ? annual payments on a $1.2 million General Fund bond Existing excess cash returned to City - $1.5 million - Amount remaining under the $33 million cap - $0.9 million - GO Bonds of $8.2 million issued to pay for the LCC project and bond costs o Total sources through FY19 ~ $25.5 million o This scenario assumes that the downtown loan program continues and is not depleted to pay for project costs. Uses of Funds All recommended projects o Police officers are funded from new General Fund property taxes on-going at o $740,000 starting in FY11 Total uses through FY19 ~ $25.5 million o How it Works Voters approve a new property tax. See below for a cash flow projection that shows how the various sources are available to pay for project and on-going costs. Implementation Costs Interest on debt ~$5.9 million o Bond issuance costs ~$300,000 ($150,000 for each bond) o Project legal and professional services ~$150,000 o Project administration through FY19 ~$900,000 o Impact on taxpayers Compared to the current situation, the average taxpayer would pay about $7.34 more per year, consisting of a reduction of $1.66 per year due to termination of tax increment financing, and $9 per year for the new GO bond. (See Attachment E for example tax statement.) Effect on M5 tax rate For schools – Staff has requested information from the tax assessor on this o cap and will forward to council when received For general governments – small additional amount available under the tax o rate cap; since there is no compression currently, no impact on revenues to city or county For bonded debt – not included in M5 tax rate cap, so no effect o Financial Impact on Redistributes existing Downtown Urban Renewal cash (one-time) o overlapping taxing Ends ongoing redistribution of taxes to Downtown Urban Renewal District o districts (See Attachments G & L for projected amounts available annually if tax increment financing were to be terminated.)