The City Council created the Expanded N. 27th Street Urban Renewal Area in 2005. The Urban Renewal Plan indicated that public parking would be needed to promote revitalization and that tax increment finance (TIF) would be used to finance projects in part or in whole. Earlier this year the Council agreed to purchase property on Montana Avenue for constructing a new parking garage and approved a development agreement for the redeveloped Northern Hotel. In order to use tax increment finance bonds for the garage and annual increment for the development agreement, the City's bond counsel advises that the projects be specifically named as urban renewal projects.  The City Council is being asked to adopt an ordinance that has the effect of amending the urban renewal plan to include these projects and financing plan.  The Council conducted a public hearing on the ordinance on June 27 and continued the hearing and action until July 11.  Council conducted and closed the public hearing on July 11 but postponed action until August 8 because there was uncertainty about the amount of tax increment that the City will receive and how that will impact the project financing.  That uncertainty has been resolved and the City will receive most of the predicted tax increment.  Staff is requesting that the Council consider adopting the ordinance on first reading.

The City Council may:

• Approve the ordinance naming the Empire Parking Garage and Northern Hotel development agreement as Expanded N. 27th Street Urban Renewal Area projects and authorizing tax increment financing, or
• Not approve the ordinance. If the ordinance is not approved, bond counsel may refuse to give an unqualified opinion on the authority for and taxability of bonds issued for the garage. That will make bonds almost impossible to sell.

There is no direct financial impact from adopting the ordinance.  However, if the garage project proceeds, the City may issue $10 million - $15 million of tax increment bonds.  Regardless of the garage bonding, the Northern Hotel development agreement remains in effect and may cost the district up to $2.2 million over a period of years. 

Staff recommends that the City Council adopt the ordinance on first reading.