Urban Renewal Agency - Budget Committee Minutes

Date: 
Thu., May. 18, 2017

At 7:47 pm Mayor Drotzmann opened the meeting of the Hermiston Urban Renewal Agency Budget Committee to consider the proposed budget for the 2017-2018 fiscal year. Present were Budget Committee members: Rod Hardin, Jackie Myers, Doug Primmer, Clara Beas-Fitzgerald, John Douglass, Dave Wright, Laura Sterling, Jason McAndrew, Joshua Roberts, Joanna Hayden, Brian Misner, and Tim Beinert. Lori Davis, John Kirwan, Douglass Smith, Manuel Gutierrez, and Fred Allen, Jr., were excused.

City staff present included: City Manager Smith, Mark Morgan, Amy Palmer, Larry Fetter, Clint Spencer, Chief Edmiston, Ron Sivey, Chuck Woolsey, Holly Lambert, Barb McMahon, and Lilly Alarcon-Strong. News media present was Jade McDowell of the East Oregonian.

Mayor Drotzmann stated the committee must elect a chairman and secretary.  Brian Misner was nominated and unanimously elected chairman. Laura Sterling was nominated and unanimously elected secretary.

Chairman Misner asked Budget Officer Assistant City Manager Mark Morgan to present the HURA budget Message.

Assistant City Manager Morgan stated the proposed Hermiston Urban Renewal Agency (HURA) Budget for the 2017-18 Fiscal Year is $1,532,000.

Revenues for urban renewal agencies are based on tax-increment financing, which freezes the assessed value of the urban renewal area when it is established, and diverts all property tax revenues over and above that frozen base into the HURA to pay for improvement projects.  The frozen base of the district is $42,262,899.  Assessed value growth was flat in the 16-17 FY growing just .02%; the 2016-17 assessed value for the district was $44,391,320, an increase of $100,000 over the 15-16 FY.  The district’s revenues are generated by the difference of $2,128,421 between the frozen base and the current district value.  In order to stimulate private value adding to the area which then drives higher revenue in out-years, it is considered a best practice to perform high impact projects in the early years. 

The forecasted revenue from tax-increment revenue was budgeted very conservatively in its first three years due to the unknowns surrounding district formation and lack of immediate high value construction.  With the completion of the Holiday Inn Express hotel within the district, the first large-scale investment has been built in the district and the district is expected to receive a substantial tax increment increase in the 2017-18 FY.  The hotel will likely increase the revenue from approximately $30,000 in 16-17 to $132,000 in 17-18.  This increase in revenue will likely decrease in subsequent years as the hotel stabilizes its occupancy rate and changes how it is taxed by the assessor’s office, but this first year taxes are based on the full value of construction.

The Façade Grant program is proving to be a successful program with the 16-17 FY being the first time that 100% of the money budgeted was spent.  The intent of the program is to incentivize private investment within the area which will drive up assessed valuation.  The budget proposal for the Façade Grant program in 17-18 FY is $50,000.  This is a decrease of $14,000 from the 16-17 FY year and reflects the removal of the $36,000 grant to the hotel which is complete. 

The budget for the Festival Street is proposed to increase from $125,000 to $1,000,000 for 17-18 using tax increment revenues and bond proceeds from the city’s general fund.  Conceptual design work was completed in 2017 using a portion of the $125,000 and the remaining portion will be used to prepare construction documents.  The 16-17 FY design work was funded using tax increment revenue ($25,000) and city loan funds ($100,000).  A portion of the bond proceeds will be used to reimburse the city’s general fund for the loan for festival street design.  The remaining portion will be used to fund festival street construction during the 17-18 FY. 

Overall, the urban renewal agency will receive $1.5 million in bond proceeds.  These proceeds will fund the festival street construction as noted above.  However, this project will cost between $1 and $1.1 million.  The remaining $400,000 will be used to fund existing urban renewal projects and provide operating capital for several years.  The tax increment revenue received will now be used for debt service on the existing city loans and bond repayment.

A new project is proposed for the 17-18 FY.  In order to facilitate downtown revitalization, a series of wayfinding signs highlighting public parking and downtown points of interest (such as the Harkenrider Center and Public Library) will be designed and installed.  This is proposed as a city project rather than an urban renewal project due to the city-wide nature of the sign installations.  Thus, a portion of the funding will be provided from urban renewal funds for the signs which will be located within the district.  It is proposed that $55,000 be allocated from urban renewal funds.  The remaining $45,000 needed for the project will come from the city general fund as well as grants from Umatilla County and Travel Oregon.

It is estimated that the urban renewal agency will end the 17-18 FY with $437,521 in cash on-hand.  As noted above, this cash forward will be used to fund ongoing projects such as the façade grant program for several years until the tax increment revenue provides adequate income for both debt service and operating funds.

Upon review and completion of the budget presentation by Budget Officer Assistant City Manager Morgan, and after some discussion and answering questions regarding the budget, Joanna Hayden moved and Dave Wright seconded to approve the budget as presented. Motion carried unanimously.

The meeting was adjourned at 8:07 pm.

APPROVED:

/s/ Brian Misner
Budget Chairman
ATTEST:

/s/Laura Sterling
Budget Secretary


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