Recommended 2005-06 Budget
. 2005-06
. .
-,", ./,'H :', "
Rec'om.tnended
. .
.Annual Urban
Renewal Budget
Urban Renewal Budget Committee Public Hearing
Draft
(
BUDGET MESSAGE
Urban Renewal Agency Budget Committee
270 Montgomery Street
W oodbum, OR 97071
RE: Proposed Urban Renewal Budg;et for 2005-06
Ladies and Gentlemen:
Presented for your consideration and recommendation to the Woodburn Urban Renewal
Agency is the proposed Urban Renewal budget for 2005-06. The recommended budget of
$1,257,500 for 2005-06 represents an increase of $306,500 (32.20/0) over the amended budget
for 2005-06. This budget provides funding to reimburse the City for completion of the
Agency's share of the first phase of the Front Street improvement project, and for the entire
cost of Phase II. The budget also provides funding to reimburse the City for limited
administrative costs.
Statute requires the Agency to expend funds for debt service. The amount recommended for
2005-06 is presented in a debt service budget. Projects at this stage of the Agency's evolution
are joint City/Agency projects, and there is currently no urban renewal project budget. Projects
are budgeted in the City's Streets CIP Fund, and the Agency reimburses the City for its share
of costs. Reimbursements are made in accordance with a reimbursement agreement that is
effective for fiscal years 2004-05 and 2005-06. As Agency financing capacity grows, the
Agency will adopt it's own project budgets. Projects were presented in the past two budgets as
part of an Agency CIP and Capital budget. Due to the limited number of projects currently
underway, uncertainty regarding future projects to be undertaken, and for the sake of
simplicity, no Capital budget, or CIP plan is presented with the 2005-06 budget.
(
The 2005-06 budget is presented as a debt service budget. The budget includes $611,000 to
complete Phase I of the Front Street project, and $640,000 to complete Phase II. The
individual components of these projects were discussed in detail in last year's budget message.
The budget also includes $6,500 to reimburse administrative costs associated with the
Agency's share of a citywide financial audit, consulting fees for project planning and
financing, and legal fees related to issuing debt. Administrative costs are reduced from
previous year's levels, based on historical experience and anticipated need in 2005-06. Debt
was contractually established between the City and the Agency in 2004-05 for a two-year
period. In 2004-05, tax increment monies were used to repay the Agency's debt related to the
Plaza project, and to reimburse the City for administrative costs. This avoided the cost and
complication of small, private issue borrowing. In 2005-06, tax increment is insufficient to
finance the first two phases of the Front Street project. Project need is estimated at $1,251,000,
and beginning fund balance is estimated at $293,000. Tax increment receipts for the year
provide an additional $330,000. Accordingly, as has been discussed in the past, the Agency
needs to initiate a borrowing. As indicated would be done, in the 2004-05 urban renewal
budget message, revised cash flow projections were completed. These projections are
1
Urban Renewal
_~--_-n_J -----0 ----.... -..--.-.... y....n... uuuvn.uo' "V v""' ,,",VU,,",lYU~U ;)UUlI.1Y i11U;f un:: ot::glnnlng
of fiscal year 2005-06. Proceeds will complete the Front Street project. Further financial
analysis is needed, however, and is being sought, to determine how much more should be
borrowed at the present time. That analysis will take into account the time required to bring
other projects on line, and the interest costs of borrowing money in the meanwhile.
The City Council determined in its goals for 2004-05 and 2005-06 that more downtown
planning is needed before a long-term program can be developed. This plan will put meat on
the bones of the urban renewal plan and act a guideline for future activities. A grant was sought
during 2004-05 to fund that planning, but was not obtained. The Council authorized staff to
submit another grant application in 2005-06. In the meanwhile, the Agency will progress on
the Front Street project. Once planning is completed and additional financial analysis related
to debt timing is done a comprehensive, longer-term, Agency budget can be developed.
The 2005-06 Agency budget is simple; there's not a lot more to say about it. I'll address the
remainder of this message to urban renewal activities in 2004-05.
The 2004-05 budget funded Downtown Plaza Project, Phase I and the agency's share of the
Front Street Project, Phase 1. The Plaza got off to a slow start. Design delayed project bidding
until winter 2004/05. The project was awarded in Spring 2005, is now underway, and is
expected to be complete in early July. Total construction costs grew to approximately
$385,000 due to escalating construction material costs, and issues discovered during parking
lot demolition. Budget adjustments were made to address the increases and were supported
with additional urban renewal, and City, funding. To date, the project is on schedule, and was
not included in the 2005-06 budget. As noted last year, construction excludes the Gazebo.
$100,000 more is needed to build the structure. A fund raising campaign is underway and
several commitments have been received from area foundations, businesses, and individuals.
The second phase of the project will proceed once sufficient donations are received.
The Front Street project is a three-year project. It began in 2004-05 with utility
undergrounding from Settlemier Avenue to Cleveland Street. That work will be completed in
July 2005. The remainder of Phase I activities are scheduled to commence shortly thereafter.
Total project cost was estimated at $2,593,000; the Agency's share is $2,051,000. Project costs
in 2004-05 were estimated at $925,000; the Agency's share is $611,000. Actual project costs
for Phase I undergrounding will be approximately $395,500, but will underground a greater
distance than was initially programmed, and will provide a cleaner, more consistent appearance
along the entirety of this segment of the project. These costs will be paid from other City
funds. Other sources of project funding include Public Works CIP funds, TIF's, and Economic
Development (ED) loan monies, and may also include Local Improvement District funding.
In past budgets I discussed the positive effect Urban Renewal will have on Woodburn's future.
That effect is taking hold, as projects are underway and property owners are beginning to take
an interest in improving their properties. I look forward to presenting this budget to you, and
answering any questions you may have regarding it.
i,
"
2
Urban Renewal
URBAN RENEWAL
DEPARTMENT:
DmSION:
FUND:
URBAN RENEWAL
DEBT SERVICE
DEBT SERVICE
PROGRAM DESCRIPTION
This program provides for repayment of the Urban Renewal Agency's debt obligations.
Statute requires that urban renewal funds be expended to support debt service. Revenues
derived from property tax increment support the fund. Urban renewal agencies do not have
permanent tax rates; they obtain funding through tax increment financing. Tax increment
financing allocates revenues to an agency based on the amount of the urban renewal area's
excess or "incremental" value, the amount of assessed value above a base value that was frozen
at a specific point in time. Woodburn's Urban Renewal frozen base value is based on the 2001
tax year. Proceeds for 2005-06, the third year's allocation of tax increment for the Urban
Renewal Agency, are estimated at $330,000. Debt obligations for 2005-06 are established by
contractual arrangement with the City of Woodburn, for charges associated with audit, legal,
and consulting services and for the Front Street project. Long-term borrowing, most likely
through a private lender, will support financing for 2005-06, and 2006-07.
PROGRAM FINANCIAL SUMMARY
Object Class 2002.03 2003-04 2004-05 2004-05 2005-06 2005-06 Change Change
Expended Expended Amended Yr End Est. Baseline Recom'd ($) (0/0)
Debt Service 0 0 951,000 331,000 1,257,500 1,257,500 306,500 32.23%
Unappropriated 0 0 0 0 0 0 0 0.00%
TOTAL EXPENDITURE 0 0 951,000 331,000 1,257 ,500 1,257,500 306,500 32.23%
RECOMMENDED BUDGET
The recommended budget of $1 ,257,500 for 2005-06 represents an increase of $306,500
(32.2%) over the revised budget for 2004-05.
The Debt Service Budget.of$I,257,500 reflects the completion of budgeting for Phase I of the
Plaza Project in 2004-05 (-$325,000), and reductions in the amounts allocated to reimburse the
City of Woodburn for the costs of urban renewal consulting (-$2,500) and legal services (-
$2,500), and the Agency's share of an annual audit (-$3,500). These decreases are fully offset
by increases related to completion 'of Phase I ($611,000), which was carried forward from
2004-05, and Phase II ($640,000) of the Front Street widening and renovation project. Phase
III will complete the project in 2006-07 to the high school at an estimated cost of $1,027,606,
of which $800,000 will be funded by the Agency. In 2006-07, and beyond, this budget will
also support the costs to service the debt incurred borrowing funds to pay for renewal projects
The Unappropriated Balance of $0 reflects no change from the budget approved for 20004-05.
Debt service projections for 2004-05 anticipate no need for an unappropriated balance.
3
Urban Renewal
- - - --.-- ,.............,"'......,U,IIo\wIJ.U\wU}
~
$6,500 in Debt Service will support the Urban Renewal Agency's share of the cost of a
citywide audit ($1,500), and consulting services associated with project planning and
financing (2,500) and legal services associated with issuance of debt.
(
~ $611,000 in the Debt Service budget will provide for the Agency's share of costs
associated with Phase 1 of the Front Street widening and renovation project. Under-
grounding for Phase I was accomplished in 2004-05, using City funds. Curbs, gutters,
sidewalks, lighting and paving for Phase I will be supported in 2005-06 by urban
renewal reimbursements.
~ $640,000 in Debt Service completes utility under-grounding in for Phase II of the Front
Street project, from Cleveland to Hardcastle Streets. Paving and other improvements
for this phase will be completed in 2006-07.
4
Urban Renewal