Item A: Downtown Financing Strategy

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2 revenues will support the $16,150,000 of increased maximum indebtedness proposed under this Plan Amendment. In addition to the redevelopment projects, the revenues will be suffi- cient to pay for administrative activities, including an allocation of central service overhead costs. Those costs are projected to increase over time due to inflation at a rate of 2% per year. The Agency will also carry a reserve on outstanding bonds until those bonds are fully paid off, as well as a balance equal to two months of operating costs each year, per City of Eugene financial policy. Chapter 9: Fiscal Impact Statement that Estimates the Impact of the Tax Increment Financing, Both Until and After the Indebtedness is Repaid, Upon All Entities Levying Taxes Upon Property in the Plan Area Taxing bodies that overlap with the Agency are affected by the use of tax increment funds to implement the Plan. When a district is first created, the assessed value within the Plan Area is established as the “frozen base.” This is a way of keeping the overlapping taxing districts “whole” as of the date the urban renewal district is created. In theory, if urban renewal efforts are successful, the value of the district will grow above the base. That increase is called the “incremental value” or “excess value.” Property taxes from the overlapping jurisdictions (schools, general governments, bonds) are then divided among the jurisdictions that continue to receive taxes on the frozen base. The URA receives taxes on the incremental value. This has an impact on the amount of revenue that the overlapping jurisdictions receive, versus what they would have received if there were no urban renewal districts in effect. Impact on Tax Bills: In addition to the impact on the overlapping taxing jurisdictions, urban renewal also makes individual tax bills look different. Urban renewal districts do not impose new taxes; rather, they redistribute taxes from overlapping taxing districts to the urban renewal districts. There are two basic steps to understand how an individual’s tax bill is affected by tax increment financing in Oregon. The first step determines the amount of property taxes that the urban renewal agency should receive, and the second step determines how the taxes are accounted for on property tax statements. The first step in determining how tax increment financing affects an individual’s tax bill consists of applying the tax rates of the taxing districts (such as the city, county and school districts) to the incremental value of the urban renewal district. That product is the amount of taxes that the urban renewal agency should receive. The second step determines how to divide or split 2 The proposed 2010 Amendment, including the maximum indebtedness increase, will be reviewed by Planning Commission, the overlapping taxing districts, and the general public. After this review, the City Council may choose a different maximum indebtedness figure. 15