Item A: Downtown Financing Strategy

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ATTACHMENT I Local Option Levy – Funding Option A local option levy is a limited-term property tax that is paid by all property owners within the City limits. Under this funding scenario, the City would ask voters to approve a 5-year renewable local option levy for $5.7 million. The City would also issue a $9.5 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 $9.5 million General Fund bond Existing excess cash returned to City - $1.5 million - Amount remaining under the $33 million cap - $0.9 million - Local option levy of $5.7 million to pay for a portion of the Downtown Safety o Initiative (officers) Total sources through FY19 ~ $26.5 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 5-year renewable local option levy at o $740,000 starting in FY11 Total uses through FY19 ~ $26.5 million o How it Works 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 Interest on debt ~$7 million o Costs Bond issuance costs ~$150,000 o Project legal and professional services ~$150,000 o Project administration through FY19 ~ $900,000 o Impact on Compared to the current situation, the average taxpayer would pay about $7.34 taxpayers more per year, consisting of a reduction of $1.66 per year due to termination of the Downtown Urban Renewal district, and $9 per year for the new levy. (See Attachment E for example tax statement.) Effect on M5 tax For schools – Staff has requested information from the tax assessor on this o rate cap and will forward to council when received For general governments – small reduction in 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 caps, 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 in the District were to be terminated.)