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HomeMy WebLinkAboutSSM062601City of Central Point Joint City Council Study Session Tuesday, June 26, 2001 I. MEETING CALL TO ORDER AT 6:00 P.M. II. ROLL CALL City Council Mayor: Bill Walton Council Members: David Gilmour, Dick Halley, Kay Harrison, Donna Higginbotham, Dennis Richardson, Bill Stults III. BUSINESS A. Review and Discussion of Urban Renewal Options with Don Burt from the City of Medford III. ADJOURNMENT Toshmon Johnson I_~c Consultants rn Polity, Planning Bl Project Management TALENT URBAN RENEWAL AGENCY ORIENTATION: MARCH S, 2000 I. WHAT IS THE PURPOSE OF URBAN RENEWAL? The purpose of urban renewal is to improve specific areas of a city or county that aze poorly developed or underdeveloped. These azeas can have old deteriorated buildings and bad streets and utilities or they can lack streets and utilities altogether. Urban renewal provides three types of authority that are not otherwise available to local governments. First it allows for the use of tax increment financing (explained below) to finance improvement projects. Second, it allows for special powers to buy and assemble sites for development or redevelopment, if that is desired. And third, it allows for special flexibility in working with private parties to complete development projects. For a city to use urban renewal, it must establish an urban renewal agency and it must adopt an urban renewal plan. II. WHAT IS AN URBAN RENEWAL AGENCY? Urban renewal agencies created by state law (ORS Chapter 457) but are specifically "activated"' by the city council. Talent activated its agency in March, 1991. The agencies are separate legal bodies from the council, but in most cases, including Talent, the urban renewal agency board is composed of members of the city council. The Agency Board usually gets staff support from city staff and the Agency should reimburse the city for such services. The Agency Board is responsible for implementing the urban renewal plan and may make certain changes to the plan from time to time. Major changes to the plan must be approved by the City Council after proper notice, meetings with affected taxing districts and a public hearing. In implementing the plan the Board should consider the best interests of the urban renewal area ,while taking into account the interests of the city as whole. Some Agencies, especially those whose boards consist of City Council members, decide to appoint urban renewal advisory committees as a way of getting ongoing public involvement in the implementation of the urban renewal plan. These committees can Jeffrey Toshmon 503.245.7828 ^ Nino Johnson 503.245.7416 ^ FAX 503.245.3171 6585 S.W. Parkhill Drive ^ Porrlond, Oregon 97201 Talent Urban Renewal Agency Orientation Meeting: March 8, 2000 focus on complex issues related to urban renewal and then make recommendations to the Board. III. WHAT ARE URBAN RENEWAL PLANS? To do urban renewal projects with tax increment financing (see below), the projects must be authorized in an Urban Renewal Plan. The plan applies to a specific geographic azea of the city, which is called the Urban Renewal Area. In adopting the Plan, the city council must find that the area is eligible for urban renewal because of existing "blight, " which is defined as conditions such as deteriorated buildings and lack of adequate infrastructure. Talent adopted its Urban Renewal Plan in 1991. The next orientation session will focus on what is contained in this plan, how it has been amended since 1991 and how it may need further amendment. IV. WHAT CAN HAPPEN UNDER AN URBAN RENEWAL PLAN? Urban renewal agencies can do certain projects or activities under an adopted urban renewal plan. These activities include: The most common type ofurban renewal project is infrastructure development, including streets and utitities. Urban renewal also commonly funds parks, plazas, parking and pedestrian facilities. B. Rehabilitation or conservation of existing buildings An urban renewal agency can assist in rehab projects of any type (residential, commercial, industrial) typically through loans and grants to private property owners. C. Acquisition and imurovement of aropertv An urban renewal agency can acquire property, typically for re-sale for private or a combination of public/private development. The agency has the power of eminent domain (condemnation) for redevelopment purposes, which is not a clear power of cities or counties themselves. The seencv must identify_properties to be acquired in the urban renewal flan. Properties must be acquired at fair market value. Once acquired, urban renewal agencies can clear and improve the properties prior to resale or lease. Any persons or businesses displaced by agency acquisition are entitled to relocation assistance. D. Re-sale or_lease of aroaerty An urban renewal agency can sell or lease property it owns for redevelopment. Unlike cities and counties, the agency can legally sell for less than fair market value. Tashman Johnson LLC 2 Talent Urban Renewal Agency Orientation Meeting: March 8, 2000 Property can be sold for its "fair re-use value" which is the value for a specified use required in the urban renewal plan. The purchase and resale of property for redevelopment is a powerful tool. The Agency cam,fine tune the desired land uses, scale and design of development that it wishes to take place on a piece of property, solicit development proposals and negotiate with interested developers regarding the terms of the acquisition of the property. The Agency can also agree to provide infrastructure or to develop public facilities in connection with the development of the property. V. HOW ARE URBAN RENEWAL PLANS FINANCED? Urban renewal is unique in that it can use tax increment financing. Under tax increment financing, an urban renewal agency can borrow funds (by issuing bonds or notes) and repay the borrowed funds from annual urban renewal taxes. Urban renewal taxes are the taxes generated by the increase in total assessed values in the urban renewal area from the time the urban renewal azea is first established. The assessed value of urban renewal area when the plan is adopted is called the "frozen base". Growth above the base is called the "increment." Measure 50 made major changes to Oregon's property tax system in general and to urban renewal in particular. Plans that were in existence prior to December, 1996, such as the Talent Urban Renewal Plan, are "grandfathered" in the sense that they can collect almost as much as they would have prior to Measure 50 in order to complete projects. The maximum amount of revenue that the Talent urban renewal agency could receive was established by the state Department of Revenue as the amount that would have been received but for Measure 50. In following yeazs, this amount is indexed to the change (growth or decline) in the amount of "increment" or "incremental assessed value." Again, this is the amount of assessed value in any one year that is over and above the assessed value in the urban renewal area at the time the Plan was adopted. Talent receives tax increment revenues in two ways: Part of this money comes from the "divide-the-taxes" process. This process allocates part of property taxes that are already being collected to the urban renewal agency. The diagram below shows how this works. Tashman Johnson LLC Talent Urban Renewal Agency Orientation Meeting: March 8, 2000 Divide the Taxes Process Total X Assessed Value in Tax Rates Urban Renewal Area Tax Revenues Urban Renewal Taxes Increment Permanent Rates Bond Rates Local Option Rates ~ n Other Tax Rates ~/ Taxing District Certified "Pozen" Base Taxes This process only provides part of what the Agency is entitled to receive. The remainder of the money is received through the urban renewal "special levy". The special levy is paid by property owners within the City of Talent. This fiscal year, the divide-the-taxes process will result in approximately $246,000 and the special levy will result in approximately 144,000. From yeaz to year, the Agency must receive 100% of the divide-the-taxes revenues, but it can choose to receive some, all or none ofthe special levy funds. Tashman Johnson LLC 4 Talent Urban Renewal Agency Orientation Meeting: March 8, 2000 VI. DEBT FINANCING As mentioned above the Agency can finance projects by issuing some form of debt - bonds or notes -and then repaying these loans with annual revenues. The alternatives for debt include selling bonds through an underwriter to the general public and selling bonds to a private lender such as a bank. There aze costs and benefits of any approach to debt and the decision as to what kind of debt, the amount of the debt and other related issues is usually made by the Agency with the assistance of financial advisors. VII. FINANCIAL PLANNING AND BUDGETING The annual financial decisions of the Agency aze first made in preparing the proposed budget. Urban renewal agencies follow the same budget laws as cities do, and all the same procedures are required. Decisions to issue bonds or other kinds of debt are normally made by adopting resolutions. If necessary a supplemental budget can be adopted to make adjustments. Urban renewal agencies commonly use long range financial plans to guide their debt financing. Such a plan takes into account projected revenues and existing debt service and allows for advance planning of fixture debt issues. It allows an agency to see how a new financing will affect its ability to finance future projects at a later date. Tashman Johnson LLC