Revitalization Commission Agenda and Packet 2021 05 25

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SUBJECT: JOINT CITY COUNCIL/REVITALIZATION COMMISSION DISCUSSION DATE: MAY 25, 2021 PAGE 2 OF 3 requirements. The Council is contemplating a reduction in the annual paving budget from the Capital Projects Fund as well as reserves for debt payment. There was again discussion about the LRC's willingness to participate in funding for the three underpass projects in the URA. Some Councilmembers suggested this could be at a level of $500,000 annually and others contemplated a contribution closer to $1,500,000 annually given the significant expense of the three underpass projects ($26M). Since the repayment of the potential bonds for these projects could be over a 20 or 30 year period, staff received additional guidance from the City Attorney regarding the expenditure of funds beyond the life of the URA. All funds generated by property tax increment (the main source of LRC funding) remaining in the LRC's special fund must be pledged, but not necessarily spent, within the 25 year life of the TIF provision (2032). If the LRC has pledged funds under a TIF agreement or to the repayment of bonds, for example, the LRC could still use property tax increment in the special fund to pay those obligations beyond 2032. However, the LRC will not receive any increment beyond 2032, so any pledge must come from funds already deposited. If the LRC desires to cooperate with the City on this initiative, the pledge of funds would need to be structured through a cooperation agreement. This is the same mechanism used for all participation between the entities. From a timing perspective, if the LRC was willing to pledge funds formally ahead of the Council confirming a ballot question, it may allow the City to reduce the funding requested from voters. The dialogue on this topic has been evolving quickly for both City Council and LRC. At its May 12 meeting, the LRC had unanimous consensus to continue participating in discussions about funding for the URA underpasses. On May 12, the LRC also unanimously directed staff to prepare updated financial projections for the remaining life of the URA (2022 — 2032) as well as potential funding scenarios at the levels of $500,000, $1 M, and $1.5M annually. It is anticipated this information will be ready for LRC review at its June 16, 2021 meeting. The LRC was last provided projections through 2024 at its May 6, 2020 meeting (please see Attachment #2). For additional reference to LRC's current work and priorities, the 2021 adopted budget is include as Attachment #3 and the 2021 Work Plan is included as Attachment #4. To assist both Council and LRC in furthering the potential project cooperation and funding, a special meeting was requested. Staff will be present for the May 25 discussion, but the meeting is structured as an opportunity for Councilmembers and Commissioners to discuss collaboration, project questions/concerns, and next steps. There will also be additional meetings of Council and LRC in June that will continue to bring forward evolving and updated information on project designs and costs as well as budgets. CITY COUNCIL COMMUNICATION Agenda Packet P. 3