Adopted Program Budget - 2008-09WOODB
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ADOPTED BUDGET
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BUDGET MESSAGE
Ladies and Gentlemen:
Presented for your approval and recommendation to the Woodburn Urban Renewal Agency is
the proposed Urban Renewal budget for 2008-09. The recommended budget of $3,022,548
represents an increase of $646,853 (27.2%} from the revised budget for 2007-08. The budget
will reimburse the City for the Agency's share of completing the Front Street improvement
project. The budget also supports debt service payments for the borrowing transacted in 2005-
06, maintains a required reserve for debt service, reimburses the City for administrative costs,
and includes a small contingency.
Statute requires the Agency to expend funds for debt service. The budget is comprised of debt
service appropriations, Contingency, and a Reserve for Debt Service (which is required by the
loan agreement). The Front Street project is a joint City/Agency project and is budgeted in the
City's Capital Improvement Program. The Agency reimburses the City for its share of costs.
Reimbursements are made in accordance with an agreement between the City and the Agency.
Debt was contractually established between the City and the Agency and will be reestablished
prior to June 30, 2008 for another year. Because the tax increment received on an annual basis
was insufficient to fund projects on a pay-as-you-go basis, the Agency borrowed $1.85 million
in 2005-06 to complete Front Street. A debt service payment of $229,000 is included in this
budget. $342,000 more is set aside as a debt service reserve, pursuant to the borrowing
agreement.
Because the Agency is currently involved in only one project, and because decisions remain to
be made regarding projects to be undertaken in the future, no Capital budget or CIP plan is
presented for 2008-09. This is the last year this budget will be so abbreviated. A downtown
plan is being completed, which will recommend projects that will form the basis for the
Agency's six-year capital plans beginning in 2009-10 and continuing through the life of the
program. The Downtown Plan should be finished early in calendar 2009. When it is, and
additional financial analysis related to debt timing is done, a comprehensive Agency budget
and capital improvement plan can be developed.
This budget includes $2,050,000 for the Front Street project, which is $290,000 more than was
approved in 2007-08.
The Urban Renewal Plan represented a snapshot of renewal need at a point in time and is not
controlling on a project-by-project basis. The Agency can dedicate funds to projects that are
not in the Plan if those projects fit into the expenditure categories outlined in the Plan, and the
Agency can dedicate more or less funding to projects identified in the Plan than was originally
estimated based on changing needs and priorities.
It's important to remember that urban renewal is an incremental process. Changes occur one at
a time, over time. Urban renewal requires time to build momentum, and it builds momentum in
two ways.
APPENDICFS 224 Appendices
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First, tax increment increases gradually, until a borrowing can be supported. Then work is
done. While that work is being done and that debt is being serviced, funding increases to build
capacity to borrow again so more work can be done, and so on. Depending on cost, one
project, such as Front Street, may be all an urban renewal agency can afford for a period of
years. So it is important that agencies select projects carefully, to have the greatest positive
influence on private investment. Our Agency has done this, thus far. The Downtown Plaza
created a city-center where none existed, and has had a positive influence in upgrading the
appearance of surrounding businesses. The Plaza is viewed as a pivotal asset and a key
amactor to mixed use development in the Downtown Plan that is currently being drafted.
Likewise, the Front Street project is integral to providing easy access to the Downtown;
necessary if more people are going to live in the area, and if businesses there are to thrive.
Second, private investment must take root, and grow. Urban renewal will not succeed if the
Public is the only actor. The Public's role is to invest in projects that foster private investment.
This means providing infrash-ucture: streets, utilities, and open spaces - the things public
agencies do best; and the creation of incentives to entice private investors who would
otherwise look elsewhere to generate rehirns on their investments, until such time as those
incentives are no longer necessary because increasing property values and enhanced economic
vitality are investment incentive enough. Ultimately the success of urban renewal relies on
private investment, willingness to invest in properties and business ventures, the amount or
timing of which cannot be accurately predicted.
The projects the Agency undertakes and the programs it implements must generate the
maximum private investment in the urban renewal area. This is why a thoughtful and thorough
development strategy, in the form of a downtown plan, is so important. Staff is making a
concerted effort to work with the consulting team and the community to prepare a practical
plan that addresses all of the factors that influence private investment in, and the vitality of, a
downtown.
I am pleased to present this budget to you, and look forward to answering any questions you
may have regarding it.
Sincerely
Scott D. Russell
Interim City Administrator
APPENDICES ~~5
Appendices
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DEPARTMENT: URBAN RENEWAL
URBANRENEWAL DIVISION: DEBT SERVICE
FUND: DEBT SERV[CE
PROGRAM DESCRIPTION
This program repays 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. Urban renewal
does not place an additional burden on taxpayers. Rather, it shifts existing tax growth to the
Agency from the taxing entities that would have otherwise continued to receive it had the
Agency not formed. In Woodburn's case, these entities include the City of Woodburn, the
County of Marion, the Woodburn School and Fire districts, Chemeketa Community College
and the Chemeketa Cooperative Regional Library Service, and the Willamette Special
Education District. Pursuant to State Law, the State of Oregon "backfills" on an annual basis
the amounts shifted away from the School district. Proceeds for 2008-09 are estimated at
~524,000. Debt obligations for 2008-09 are established in two ways: by contractual
arrangement with the City of Woodburn, for charges associated with audit, legal, and
consulting services and for the Front Street project; and for debt service of a$1,850,000, ten-
year, obligation entered into with Bank of America during 2005-06.
PROGRAM FINANCIAL SUMMARY
Account 2005-06 2006-OT 2007•08 2007-08 2008-09 Change Change
Received Received Amended Yr End Est Recom'd (a~ ("/,)
Working Capital CO 1,827,695 2,080,548 2,443,548 615,853 33.70%
Property Tax 419,961 460,301 493,000 499,000 524,000 31,000 6.29°10
Interest on Invest 54,857 96,937 55,000 92,000 55,000 0 0.00%
Note Proceeds 1,847,650 0 #DIV/O!
TOTAL REVENUE 2,322,468 557,238 2,375,695 2,671,548 3,022,548 646,853 27.23%
Object Class 2005-06 2006-07 2007-08 2007-08 2008-09 Change Change
Expended Expended Amended Yr End Est Recom'd (~) (~/,)
Debt Service 806,758 267,732 1,999,500 228,000 2,293,000 293,500 14.68%
Equity 0 0 376,195 0 729,548 353,353 0.00°k
TOTAL EXPENSE 806,758 267,732 2,375,695 228,000 3,022,548 646,853 27.23%
RECOMiVIENDED BUDGET
APPENDICES 226 Appendices
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The recommended budget of $3,022,548 for 2008-09 represents a increase of $646,853
(27.2%) from the revised budget for 2007-08.
The Debt Service Budget of $2,293,000 increases 14.7 percent over 2007-08 and reflects
budgeting for the Front Street widening and renovation project ($2,p55,000). 'This budget also
supports the cost of servicing the debt incurred in 2005-06 to pay for renewal projects
($229,000) and reimburses the City for special administrative, legal, and auditing services
supporting the urban renewal program ($9,000).
Equity for 2008-09 includes a$342,000 reserve for bond indebtedness and a Contingency of
$387,548. The reserve for bond indebtedness represents 150 percent of the maximum debt
service amount, and is required pursuant the Agency's agreement with Bank of America.
Contingencies represent the amount of funding on hand after 2008-09 obligations are met.
POLICY ITEMS (Recommended)
O $2,055,000 in Debt Service increases the Agency's share of Front Street improvements,
from Cleveland Street to the High School including undergrounding utility lines,
renovating and widening the roadway streetscape, and renovating and installing curbs,
gutters, and sidewalk, and installing landscaping and lighting.
O $9,000 in Debt Service maintains the Urban Renewal Agency's share of the cost of a
citywide audit ($3,000), and consulting services associated with project planning and
financing (~,3,000) and specialized legal services ($3,000).
APPENDICFS 22,~
Appendices