The Park 2 expansion project was financed with Parking Revenue Bonds in 2006.  Despite the longstanding practice of paying for parking facilities with Tax Increment Financing, the Park 2 expansion project could not be financed that way because the 1976 Downtown Tax Increment Finance District would sunset in March 2008 and that TIFD did not have sufficient funds or time to pay for the project before the TIFD expired. 

The City Council created the Expanded N. 27th Street Urban Renewal Area in 2005 and expanded the boundaries of the district in November, 2006, and December, 2008.  The Urban Renewal Plan indicated that public parking would be needed to promote revitalization and that tax increment finance would be used to finance projects in part or in whole.

Staff has developed a plan to restructure the debt that resulted from financing the Park 2 expansion.  Staff recommends using the proceeds from selling the Park 4 garage to reduce the outstanding debt balance on the Park 2 expansion, to issue new bonds for the remaining amount and apply $100,000 of tax increment annually from the Expanded N. 27th Street Urban Renewal Area to help pay for the restructured debt.

Staff requests that the City Council conduct a public hearing on the proposal and consider adopting the ordinance on first reading.

The City Council may conduct the public hearing and:

* Approve the ordinance naming the Park 2 Expansion as an Expanded N. 27th Street Urban Renewal Area project and authorizing tax increment revenue to be used for repayment of the refunding bonds, 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 this purpose.  That may make it impossible to sell the bonds and to restructure the Park 2 expansion debt.

There is no direct financial impact from adopting the ordinance. However, if Council adopts the ordinance, it will allow staff to work with bond counsel and fiancial advisors to prepare for a bond sale. Staff has estimated that refinacing the Park 2 Debt will decrease the annual payment from $495,395.00 to approximately $300,000. The Parking Division's finances will improve by about $295,000, based on $195,000 of annual savings by refinacing the debt and using $100,000 per year of Tax Increment from the Expanded N. 27th Street Urban Renewal Area.

Staff recommends that the City Council conduct a public hearing and adopt the ordinance on first reading.