Thursday August 18, 2016
City Hall, Medford Room
411 West 8th Street, Medford OR 97501
1. Future of Medford Urban Renewal Agency
Thursday August 18, 2016
City Hall, Medford Room
411 West 8th Street, Medford OR 97501
The meeting was called to order at 6:00 p.m. in Medford City Hall Medford Room, 411 W. 8th Street with the following members and staff present:
Board members Clay Bearnson, Daniel Bunn, Chris Corcoran, Dick Gordon, Tim Jackle, Eli Matthews, Kevin Stine*, Gary Wheeler, Michael Zarosinski
Pro Tem MURA Director/Finance Director Alison Chan; Deputy City Manager Bill Hoke; City Attorney Lori Cooper; City Recorder Karen Spoonts
*Arrived as noted.
Future of Medford Urban Renewal Agency
Ms. Chan, speaking as Finance Director, presented a PowerPoint presentation stating MURA has reached their maximum indebtedness and has one outstanding debt issue, the $20.9 million issued in December 2011. The current balance is $15.5 million; debt payoff is projected to be January 2018. Board member Corcoran questioned if there are prepayment penalties; Ms. Chan did not think so but is having that verified. She noted it is different than it used to be as you are limited by the amount of debt you can have vs. sunset.
Two options were presented:
Board member Bunn questioned what maximum indebtedness is; Ms. Chan noted it is based on the original allotment and you take a percentage of that with the CPI although you can do less than that.
Ms. Chan noted MURA has $100,000 funding available. Board member Bunn noted we can start the amendment process without a project determined; Ms. Chan noted you could but there is a sales job that would need to be done by Council.
*Board member Stine arrived.
The Board discussed the taxing districts; Board member Gordon stated taxing districts cannot say no to a substantial amendment although if we donít have their buy in it would be difficult.
Pertaining to Option 2, the following items were noted:
- Before debt is extinguished, proceed with a substantial amendment, establishing new projects and increasing the maximum indebtedness. Council would need to decide before the debt is paid.
- Continue on the current path Ė MURA will sunset when the debt is extinguished.
Board member Bunn questioned if the $2 million would eliminate the reimbursement from the state; Ms. Chan responded that it is a wash for them. Schools would be reimbursed by the state. It was stated that Council could determine how they want the 1.3 million spend in the General Fund.
Pertaining to Option 2b, the revenue stream could be used by the City to bond and fund several projects. With this scenario MURA would be gone. Taxes were not taken into consideration when bringing these numbers forward; figures based on todayís interest rate. Ms. Chan noted these are property taxes that the City has forgone when they started MURA. We will get it back once MURA goes away. The rate of the bond was around 2-3% interest rate. Rates could be locked in now and would not be a standard mortgage. You could also have no payment for a year but the interest rate will be higher later.
Board member Wheeler commented if we extend MURA we are limited to the MURA area whereas if we donít we could use the money elsewhere; Ms. Chan agreed and you could bond on any project you want within the City.
Ms. Chan noted if we do a substantial amendment we need to know shortly as Finance and Legal will need to put in a lot of hours to work on this. Board member Corcoran questioned if we could do it for the $100,000 we have in MURA. Ms. Chan thought possibly we could.
Ms. Chan stated that staff would like direction on whether MURA should sunset. She stated our consultant Elaine Howard, Elaine Howard Consulting, mentioned if you have a URA from the 1980ís thatís a long time. They are trying to make it more difficult not to continue one.
Board member Bearnson stated if we increase the maximum indebtedness he would like a swimming pool, or earmark the 1.3 million for the pool. If we only ask for one project that could influence others. It was noted that the 14 million bond measure for the pool failed.
Board member Stine commented that we must convince the others agencies, such as the extension service, etc. to continue the URA. Board member Bunn noted that is only when we increase our maximum indebtedness by more than 20%; we could go over 25% without permission. Ms. Chan noted that was correct.
Board member Jackle noted we canít decide for a future council; Ms. Chan noted if/when we lock in determines the interest rate. She noted this would be similar to what we did for the Police. Board member Wheeler noted we can establish the direction based on what we do. Ms. Chan noted the Board could go with Board member Bunnís proposition and begin looking at projects and lock rates today. We would have to budget in the general fund to pay the interest rates.
Board member Matthews would like community input on projects/needs/priorities. Ms. Chan noted it would take work on the councilís part to sell it. Extending a 1980ís URA politically would be difficult. She noted you had 30 years to address the blight; the public will ask why it had not been taken care of.
Board member Wheeler noted he served on MURA in the 1980ís and the promise was to let MURA run out after all money was used; then sunset. The other taxing districts are anticipating that it will go away.
Board member Bunn noted we can raise money either way. Board member Zarosinski thinks the pool is a bit of a stretch if URAís goal is to clean up blight. Ms. Chan noted either way; there is a substantial amount of money available. It shouldnít be money driving the decision. The commitment for the board will be to promote. Now URAís are done for one project, you say the amount of money needed, it gets built and then it is done. Deputy City Manager Hoke stated a city with a URA will pick a few blocks and then it is shut down. Portland does this very well although they have the staff to put this together.
Board member Gordon noted there will be 3-5 different faces on Council and thinks it needs to wait. He favors continuing MURA as the 1.3 million in the general fund will be absorbed. The state is paying about a third of the taxes; some of the special districts get that from the state. The difficulty is what we are going to do with the money and that needs to be determined quickly. He thinks it should be affordable housing. We could reimburse developers for fees to encourage getting into the Beatty/Manzanita area. He doesnít know about the tax and has other questions on the amount to borrow.
Board member Stine stated if you want to do a project, keep MURA, otherwise we let it expire. Board member Corcoran questioned if this body should decide this. Board member Stine noted every council needs to decide what is best now.
Board member Bunn questioned the timing for the process; Ms. Chan noted it is approximately nine months. Board member Wheeler noted this council has worked in the field and we should make a decision based on our experience. He does not worry about the next council. Board member Bunn noted we would only be doing the paperwork; the 13 million would not be till next year. The amount borrowed would be determined by the maximum indebtness. Mr. Hoke noted South Gateway is almost built out. What you can borrow and pay back are two different things.
Board member Matthews questioned how difficult would it be if we sunset and started a new URA; Ms. Chan noted a substantial amendment would be about the same as a new MURA.
Board member Bearnson stated if we extend MURA bonds we will receive political blowback or new bonds new blowback as well. 1.3 million will not increase their taxes. He like the idea of affordable housing as Board member Gordon mentioned. Ms. Chan noted if you issue a bond the money will need to be saved to pay back the bond.
Ms. Chan wanted them to remember a substantial amendment is a large project; otherwise how do you want to spend the 1.3 million. She wants council to have a decision whatever they do.
Board member Bunn stated if we want to do something different we do the city route; otherwise it would be blight. Mr. Hoke noted we went through this five years ago and it took about five meetings to work it out. He noted it worked but everyone knew what the end goal was. Thatís when we added the extra projects. Board member Bearnson questioned how much special money is lost. Ms. Chan noted 3 million. Board member Corcoran requested a copy of the PowerPoint presentation.
The Board wanted to meet in two weeks; Ms. Chan will check dates. Mayor Wheeler questioned if we had the MURA budget committee involved as well; Mr. Hoke noted they were for part of it.
The meeting adjourned at 7:02 p.m.
Karen M. Spoonts, MMC
- Property owners - $3.0 million (decrease in property taxes)
- $1.3 million will flow into the General Fund as an increase in property taxes
- Direct staff through the 2017-2019 biennial budget process
- Other taxing entitles - $2.0 million increase in property taxes
- The revenue stream could be used by the City to bond and fund several projects
- 30 year bond - $24,000,000
- 25 year bond - $22,000,000
- 20 year bond - $20,000,000