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CCDA Financial Impact Report_2014-2015Tigard City Center Development Agency Financial Impact Report of the City of Tigard’s Urban Renewal Plan for the ﬁ scal impact year ended June 30, 2015 CCDA Tigard City Center Development Agency Financial Impact Report of the City’s Urban Renewal Plan For the fi scal impact year ended June 30, 2015 1 Introduction URBAN RENEWAL AGENCIES must prepare an annual ﬁ nancial report for the governing body and public in accordance with Oregon Revised Statutes 457.460. The report includes a ﬁ nancial summary of the preceding year and the budget for the new ﬁ scal year. It also includes an analysis of the ﬁ nancial impact of carrying out the urban plan on the tax collections for all taxing districts. Urban Renewal – An Overview The purpose of urban renewal is to improve speciﬁ c areas of a community that are poorly developed, under-utilized, or that have declined over time. These areas can have old, deteriorated buildings; streets and utilities in serious need of upgrades (or the areas can simply lack streets and utilities altogether), weak business activity, and few or aging parks and public facilities. Urban renewal is a process authorized by Oregon law (ORS 457) to ﬁ nance improvements in these areas using “tax increment ﬁ nancing.” A portion (the increment) of property tax revenues from properties within the urban renewal district are designated to support ﬁ nancing for improvements to the urban renewal area. While urban renewal provides for unique funding of improvements to a district, it is not intended that tax increment ﬁ nancing be the only source of funding. Other sources including ones typically used for capital improvements such as the gas tax, Trafﬁ c Impact Fee (TIF), System Development Charges (SDC), interagency funding, or state grants are programmed to support downtown projects. For a city government to utilize urban renewal as a funding mechanism, it must establish an urban renewal agency, and it must adopt an urban renewal plan. The Tigard City Council approved the City Center Urban Renewal Plan for Downtown in December of 2005. In May 2006, a special ballot measure was passed by the voters, authorizing the use of tax increment ﬁ nancing (urban renewal) in downtown. Urban Renewal Finance – A Summary Urban renewal is a process authorized by Oregon law to ﬁ nance improvements in those neighborhoods and districts that need special attention and revitalization. Once a district is established, the tax valuation for the district is “frozen.” As properties appreciate in value, the increase in taxes (the “increment”) generated above the frozen base are used to pay for debt on speciﬁ c projects within the urban renewal plan. These tax increments are used to repay municipal bonds. Bond proceeds are used to ﬁ nance improvements that will revitalize the district. New taxes are not imposed to fund urban renewal. Bonds and tax increment ﬁ nancing will be used to fund projects in the urban renewal plan. Under this system, the increment portion of property taxes generated within the urban renewal area is temporarily shifted to repay the bonds used to ﬁ nance projects in the City Center. 2 Tigard City Center Urban Renewal District 3 Under tax increment ﬁ nancing, when the value of a property within the urban renewal district increases, the proceeds from property taxes on the increased value (the “tax increment”) go to the urban renewal district. These proceeds fund further urban renewal projects, either directly or by providing for the repayment of municipal bonds that fund improvements. The tax increment is unique as a source of funding, because it is usable only for projects identiﬁ ed in the urban renewal plan. How Does Urban Renewal Affect Taxes? With urban renewal and the use of tax increment ﬁ nancing, there is no net change on Tigard property tax bills. New property taxes are not created as a result of urban renewal. Under today’s Oregon law, property tax rates are ﬁ xed. Tigard’s City Center Urban Renewal Plan also does not authorize any “local option” tax levies or special assessments. Tax revenues are generated from the increase in property values multiplied by current tax rates. These revenues pay for urban renewal under Oregon law. History of Tax Increment Financing In less than two decades, three ballot measures – Measure 5 (1990), and Measure 50 (1997) – have made signiﬁ cant changes to Oregon’s system of property taxation. Those changes have inﬂ uenced urban renewal programs and tax increment revenue calculations. The provisions of these changes to the property tax system, Ballot Measures 5 and 50, now are incorporated into Oregon’s Constitution, and into Oregon Urban Renewal Statutes. Those provisions provide the basic framework for revenue calculations in this report. Tax Increment Calculations To determine the amount of the taxes levied, the total assessed value within each urban renewal area is segregated by the county assessor into two parts: (a) the total taxable assessed value in the district at the time the Urban Renewal Plan was adopted (the base or “frozen” value); and (b) the difference between the frozen base value and the current total assessed value (the incremental value or “excess”). Revenues derived from the application of the tax rate for each affected taxing district to the amount of the incremental value may be collected by the urban renewal agency and deposited in its debt service fund. This revenue is used to repay indebtedness incurred in carrying out the projects. Tigard City Center Urban Renewal Plan – Purpose The stated purpose of the City Center Urban Renewal Plan is to provide improvements in the downtown area so that it will be economically healthy while maintaining its “uniquely Tigard” character. The establishment of the urban renewal district provides a funding mechanism for projects in downtown Tigard. For more information, you may review the City Center Urban Tigard City Center Development Agency Financial Impact Report of the City’s Urban Renewal Plan For the fi scal impact year ended June 30, 2015 | CCDA 4 Renewal Plan and the report accompanying the City Center Urban Renewal Plan online at: www.tigard-or.gov/document_center/CommunityDevelopment/urban_renewal_plan.pdf or request a copy from the City of Tigard. How Was the Urban Renewal Plan Developed? In late 2005, the same citizen-business-city partnership that worked on the Tigard Downtown Improvement Plan collaborated to ﬁ nd ﬁ nancing for the “catalyst” projects identiﬁ ed in the Downtown Improvement Plan. Urban renewal and tax increment ﬁ nancing was identiﬁ ed as a potential source of ﬁ nancing and an urban renewal plan was prepared. The voter-approved Tigard City Center Urban Renewal Plan provides the special ﬁ nancing for the public improvement projects identiﬁ ed in the Tigard Downtown Improvement Plan. What are Tigard’s Specifi c Plans for Urban Renewal? Under Oregon law, urban renewal can provide special funding for a wide variety of projects and programs. Tigard’s approved City Center Urban Renewal Plan authorizes funding for up to 35 different projects in the city center over twenty years. Most of the proposed projects in Tigard’s plan are for public improvements and facilities, although some assistance for private businesses and property owners is provided. The intent of the projects such as new streets, parks, plazas, is to stimulate new investment in downtown and create a vibrant, new town center with public spaces that the community can use. As property values rise in the downtown urban renewal district, the increase in tax revenues generated supports the payment of bonds used to improve the area. Over time, it is expected that the value of property and taxes generated will be higher through the use of urban renewal than if left alone. The Tigard City Council, working closely with dozens of citizens (and after numerous hearings and meetings) included the following categories of projects in the urban renewal plan: Street Improvements, Streetscape Improvements, Bicycle and Pedestrian Facilities, Parks, Public Spaces, Public Facilities, Planning and Development Assistance (for privately owned properties). Effect of Urban Renewal on Taxing Districts Carrying out an urban renewal plan has an effect on the county assessor’s calculation for each taxing district that shares values with Tigard’s urban renewal agency. Some property taxes that may have been received by the taxing bodies that levy property taxes within Tigard’s urban renewal area are being paid to Tigard’s urban renewal agency. Passage of Ballot Measure 50 (Article XI, Section 11 of the Oregon Constitution) resulted in converting most property taxes from a levy-based system to a rate-based system. Page 6 of this report shows the ﬁ nancial impact by taxing district for Tigard’s urban renewal agency. Tigard City Center Development Agency Financial Impact Report of the City’s Urban Renewal Plan For the fi scal impact year ended June 30, 2015CCDA | 5 Financial Reports The ﬁ nancial reports on pages 5 and 6 account for the activities of Tigard’s urban renewal agency. In accordance with ORS 457.460 (1), these reports were prepared by the Finance Department of the City of Tigard using the same basis of accounting it uses to prepare its ﬁ nancial statements — modiﬁ ed accrual basis of accounting. These reports are due annually by January 31 and, due to an audit extension for FY 2014-15, the information and ﬁ gures contained herein are based upon draft ﬁ nancial statements. At the end of each ﬁ scal year, June 30, this ﬁ nancial impact report is prepared which shows the urban renewal tax impact by taxing district. Copies are available by January 31 at the Tigard Permit Center, 13125 SW Hall Blvd., Tigard, 97223. Statement of Resources and Requirements As summarized below, City Center Development Agency’s 2014–15 total requirements were $3,412,397 for expenditures charged to the district as of June 30, 2015. For ﬁ scal year 2015–16, total budgeted resources were balanced with requirements of $769,489. The district uses the funds it receives from the division-of-taxes method of calculating property taxes to ﬁ nance various urban renewal projects and activities. These property taxes totaled $350,653 in FY 2014–15 and are expected to increase slightly to $397,792 in FY 2015–16 per the Washington County assessment summary received after budget adoption. Tigard City Center Development Agency Financial Impact Report of the City’s Urban Renewal Plan For the fi scal impact year ended June 30, 2015 | CCDA Note: Figures are based upon draŌ ﬁ nancial statements. DebtServiceFund CapitalProjectsFund Total Actual Budget Actual Budget Actual Budget 2014Ͳ15 2015Ͳ16 2014Ͳ15 2015Ͳ16 2014Ͳ15 2015Ͳ16 Resources: BeginningFundBalance 834,558170,69751,870 Ͳ886,428170,697 TaxIncrementPropertyTaxes 350,653397,792 Ͳ Ͳ350,653397,792 RentalIncome Ͳ Ͳ Ͳ84,000 Ͳ84,000 InterestIncome 1,7681,000 Ͳ Ͳ1,7681,000 OtherFinancingSources Ͳ Ͳ2,173,548 116,0002,173,548 116,000 TotalResources 1,186,979569,4892,225,418 200,0003,412,397 769,489 Requirements: DebtService 273,151278,498 Ͳ Ͳ273,151278,498 TransfersOut 516,391116,000 Ͳ516,391116,000 CapitalOutlay Ͳ Ͳ1,770,924 200,0001,770,924 200,000 EndingFundBalance 397,437174,991454,494 Ͳ851,931174,991 TotalRequirements 1,186,979569,4892,225,418 200,0003,412,397 769,489 6 Detail of Purpose Financial Impact of Urban Renewal Plan on Tax Collections Tigard City Center Development Agency Financial Impact Report of the City’s Urban Renewal Plan For the fi scal impact year ended June 30, 2015CCDA | Baseyear FY2014Ͳ15 FY2005Ͳ06 Changein Taxeslevied Percentof Total Permanent Incremental Incremental Incremental Impact ontotal TaxesDivided Assessed Tax Assessed Assessed Assessed on Assessed for TaxingDistrict Value Rate Value Value Value Taxes Value UrbanRenewal Education PCC 5,710,010,3090.282898,217,70969,207,37829,010,3318,204.121,614,7911.72% NWRegionalESD 5,710,010,3090.153898,217,70969,207,37829,010,3314,461.79878,2001.72% Tigard/TualatinSchoolDistrict 5,710,010,3094.989298,217,70969,207,37829,010,331144,738.3428,488,3831.72% BeavertonSchoolDistrict 5,710,010,3094.693098,217,70969,207,37829,010,331136,145.4826,797,0781.72% LocalGovernment WashingtonCounty 5,710,010,3092.248498,217,70969,207,37829,010,33165,226.8312,838,3871.72% Metro 5,710,010,3090.096698,217,70969,207,37829,010,3312,802.40551,5871.72% PortofPortland 5,710,010,3090.070198,217,70969,207,37829,010,3312,033.62400,2721.72% TVFire&Rescue 5,710,010,3091.525298,217,70969,207,37829,010,33144,246.568,708,9081.72% CityofTigard 5,710,010,3092.513198,217,70969,207,37829,010,33172,905.8614,349,8271.72% TigardTualatinAquatic 5,710,010,3090.090098,217,70969,207,37829,010,3312,610.93513,9011.72% ExcludedfromMͲ5ratelimitation Metrobonds 5,710,010,3090.265998,217,70969,207,37829,010,3317,713.851,518,2921.72% PCCbonds 5,710,010,3090.439498,217,70969,207,37829,010,33112,747.142,508,9791.72% Tigard/TualatinSchoolDistrict 5,710,010,3091.475298,217,70969,207,37829,010,33142,796.048,423,4071.72% CityofTigard 5,710,010,3090.417998,217,70969,207,37829,010,33112,123.422,386,2131.72% TVFire&Rescue 5,710,010,3090.115998,217,70969,207,37829,010,3313,362.30661,7901.72% BeavertonSchoolDistrict 5,710,010,3092.093898,217,70969,207,37829,010,33160,741.8311,955,6201.72% Note:ThedivisionͲofͲtaxesprocessresultsinsomepropertytaxesthatmayhavebeenreceivedbythe"taxingdistricts"that levypropertytaxeswithintheurbanrenewalarea(forexample,WashingtonCounty,NWRegionalESD)beingpaidoverto Tigard'surbanrenewalagency.Thetaxingdistrictsforgoashareofthepropertytaxincomeduringthelifeofanurbanrenewal plansothattheurbanrenewalagenciescancarryoutactivitiesthatincreasepropertyvaluesinthelongterm.Theabovetable showstheurbanrenewaltaximpactbytaxingdistrictusingpermanentratesestablishedpursuanttoMeasure50. CapitalProjectsFund Actual Budget 2014Ͳ15 2015Ͳ16 DetailofPurpose: CapitalOutlay: ProfessionalandTechnicalServices 29,18535,000 PlanningandDevelopmentAssistance 319,956135,000 PublicSpaces 30,000 StreetscapeImprovements 74,659 LandAcquisition 1,347,124 Bike/PedestrianFacilitiesandPublicFacilities 1,770,924200,000 Note:Figuresarebasedupondraftfinancialstatements. Attachments Notice of Report Availability – published twice in the Tigard Times.