Item A: Downtown Financing Strategy

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District, and bonded debt tax rates will be reduced from year to year until the existing bonds are paid off. As can be seen in Table 8, in FY2009/2010, it is estimated that the City of Eugene would forego about $810,000 of revenue because of the Downtown Urban Renewal District tax increment financing. In FY2018/2019 after tax increment financing is terminated, the City of Eugene is estimated to receive $1,140,000 of additional tax revenue per year. Lane County is estimated to forego $150,000 of revenue in the first fiscal year, and to benefit by $210,000 of additional tax revenue per year after division of tax is terminated in FY2018/2019. The combined school districts are estimated to forego $650,000 of revenue in the first fiscal year, and to benefit by $920,000 of additional annual tax revenue after the district is terminated in FY2018/2019. As mentioned above, however, the impact on schools is really an impact on the state’s budget because schools are mainly funded on a per-pupil funding formula rather than by the level of property tax dollars generated within their boundaries. 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 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; LCC 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. Without the Downtown District tax increment financing, those funds would be used to fund school districts throughout the state. Reduced Rate Plan: The Downtown District is a “reduced rate plan” under the statutes, which means that the property taxes that may be used to fund urban renewal activities is limited to the permanent tax rates and any bonds or local option levies that were approved by voters prior to October 2001. The projected tax rate used to generate urban renewal revenues for the Downtown District will be reduced over time as bonds approved by voters before October 2001 are paid off. Urban renewal tax increment revenue is counted towards the Measure 5 general government tax rate cap of $10 per $1,000 of assessed value. In Eugene, the general government category of taxes is not currently in Measure 5 tax rate compression, so this is not a significant factor in evaluating the impact of urban renewal on the overlapping taxing district revenues. 17