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Agenda Item - 2024-06-18 - Number 16.2 - Approval of LORA Meeting Minutes 16.2 o,.� E 0s4a REDEVELOPMENT AGENCY REPORT N` O OSEGO\ Subject: Approval of Lake Oswego Redevelopment Agency (LORA) Board Meeting Minutes Meeting Date: June 18, 2024 Staff Member: Kari Linder, Recording Secretary Report Date: June 10, 2024 Department: City Manager's Office Action Required Advisory Board/Commission Recommendation ❑X Motion ❑ Approval ❑ Public Hearing ❑ Denial ❑ Ordinance ❑ None Forwarded ❑ Resolution ❑X Not Applicable ❑ Information Only Comments: ❑ Board Direction ❑X Consent Agenda Staff Recommendation: Approve minutes as written. Recommended Language for Motion: Move to approve the LORA meeting minutes as written. Project/ Issue Relates To: Issue before Board (Highlight Policy Question): ❑Council Goals/Priorities EAdopted Master Plan(s) ❑X Not Applicable ATTACHMENTS 1. February 20, 2024, Draft Regular LORA Meeting Minutes Respect. Excellence. Trust. Service. 503-635-0215 380 A AVENUE PO BOX 369 LAKE OSWEGO,OR 97034 WWW.LAKEOSWEGO.CITY ATTACHMENT 1 LAKE OSWEGO REDEVELOPMENT AGENCY MEETING MINUTES February 20, 2024 aRrr�o� 1. CALL TO ORDER, REDEVELOPMENT AGENCY (LORA) Chair Buck called the regular Lake Oswego Redevelopment Agency (LORA) meeting to order at 3:01 p.m. on Tuesday, February 20, 2024. The meeting was held both virtually via video conferencing and in-person in the Council Chamber at City Hall, 380 A Avenue. 2. ROLL CALL Present: Chair Buck and Board Members Mboup, Rapf, Afghan, Corrigan (via video conferencing), Wendland, and Verdick (via video conferencing) Staff Present: Martha Bennett, Executive Director; Ellen Osoinach, LORA Counsel; Kari Linder, Recording Secretary; Sidaro Sin, Redevelopment Manager; Shawn Cross, Treasurer Others Present: Elaine Howard, Principal at Elaine Howard Consulting; Nick Popenuk, Public Finance Consultant with Tiberius Solutions 3. PLEDGE OF ALLEGIANCE Chair Buck led the board in the Pledge of Allegiance. 4. BOARD BUSINESS 4.1 Urban Renewal Plans and Foothills Area Update. Sidaro Sin, Redevelopment Manager, presented via PowerPoint an overview of the Lake Oswego Redevelopment Agency, its goals, and the background of the City's two urban renewal areas (URAs), reviewing the proposed processes to close the East End URA, update the Lake Grove URA, and use urban renewal to support Foothills Redevelopment. Staff sought the Board's direction and input on the plan. Elaine Howard, Principal, Elaine Howard Consulting, continued the presentation with details on the substantial amendment process to increase the maximum indebtedness, required public input, formal review, and concurrence issues, and an estimated timeline for the amendment process. Redevelopment Agency Meeting Minutes Page 1 of 6 February 20, 2024 Nick Popenuk, Public Finance Consultant, Tiberius Solutions, resumed the presentation and provided an explanation of urban renewal finance, forecasted revenue and debt service, and projected revenues and expenditures for an amended Lake Grove plan. He also detailed the projected maximum indebtedness limits and the impact to taxing districts. Mr. Sin noted the projects presented were based on the existing Lake Grove boundary and the calculations did not consider an expansion of the district. When the district was first created in 2012, it was maxed out, but some properties annexed along Boones Ferry that could increase the boundary. Board Member Wendland asked what interest rates were used. Mr. Popenuk replied he worked with PFM Financial Advisors and used current market rates for municipal debts for the analysis, which was run about a month ago. The interest rate used was about 4 percent, though PFM ran other scenarios with the interest rate 1 percent higher or lower, shown onscreen as 100 basis points higher, about a 5 percent interest rate for the debt. Mr. Sin clarified that he believed the current interest rates were between 3 and 3.5 percent while the calculations in the presentation were about 4 percent. The rates were higher because the old debt was from 2018. Mr. Popenuk stated that one had to determine how much growth in property values would have occurred in the area with or without investments the City planned to make, which could be a challenging effort. Anecdotally, the Boones Ferry project was a beautiful road product. A lot of new construction happened along Boones Ferry, so it seemed very clear much of the new investment happened at least partially as a result of the investments the City made. The calculations reflected the total amount of revenue. Board Member Wendland noted that while the School District would not necessarily lose any money by giving up the funds, it would lose money in the macro because the State of Oregon would be missing the $45 million out of the total budget. Mr. Popenuk agreed that was an argument.When the State Legislature set the amount of per-pupil funding, it did not look at all the urban renewal areas across the state and decide those areas were taking some amount of money out of the school system so it would reduce per-student funding by an equal amount. There was not a direct connection. Someone could look at all the different property tax abatement programs and urban renewal programs that collectively whittle away local school revenues and argue that if those dollars were not being whittled away, the Legislature could fund schools more. Ms. Howard noted the Legislature had other funds besides permanent rate property tax funds, and the Legislature was able to access more of those funds to make up for urban renewal funds every two years when the budget was established. If the legislature did not have enough funding when it established its per pupil rates, it looked to other funding sources for the school fund. Board Member Wendland understood the money was taken from different places, but in the aggregate, it was still less money. It was not a problem, but the City needed to be transparent. Executive Director Bennett agreed, noting part of the theory was that good urban renewal resulted in job creation which increased state income tax. Board Member Wendland noted some constituents within the community believed urban renewal costs, but it was actually a good program that did not hurt school districts. Mr. Popenuk said all the foregone revenues were shown to be completely transparent with the caveat that there was not a direct connection between local school taxes and the actual amount of spending in the classroom. It was not that there was no impact, it was that there was no direct impact. Mr. Popenuk continued the presentation reviewing the financial conclusions for the Lake Grove Village Center proposed amendment: the impending revenue sharing would limit the growth in Redevelopment Agency Meeting Minutes Page 2 of 6 February 20, 2024 annual Tax Incremental Financing (TIF) revenues going forward. New debt that could be supported by the remaining cash flow, combined with existing fund balance and surplus TIF revenue, had the estimated ability to fund $51 million in future projects with a $46 million increase in maximum indebtedness. Chair Buck asked about the factors that would tip Lake Oswego into the revenue sharing scenario. Mr. Popenuk clarified revenue sharing was based on annual revenue collections as a percentage of original maximum indebtedness. The original maximum indebtedness was $36 million. Once the City received 10 percent of that per year, it had to start sharing a percentage- based amount of the growth above that level. The City was at a little over $3 million in revenue right now and it would not take much more to reach the$3.6 million threshold. Once Lake Oswego realized 12.5 percent of the total maximum indebtedness on an annual basis, around $4.5 million, it was a hard cap, and the City could not collect more than that per year. There was some unclear language in statute as to whether that was supposed to be $4.5 million the assessor imposed or $4.5 million the City received—a subtle distinction but a difference of a couple hundred thousand dollars per year. Before Lake Oswego got to that point, the City's Attorney would want to weigh in and have a conversation with the Assessor. Mr. Popenuk clarified the City had not hit that point for the East End URA. Most URAs only hit the cap if the maximum indebtedness was increased by a significant amount and the URA was around for longer than planned. If Lake Oswego did not do the amendment, it would be close to hitting the maximum indebtedness and closing things down and it would not be an issue. Mr. Sin added that he believed revenue sharing came online in 2012. Chair Buck noted it was not applicable to the East End. Board Member Mboup asked what would happen if one of the impacted districts refused the proposal. Ms. Howard replied the City had to get to 75 percent concurrence of its taxing districts to agree to the increase of maximum indebtedness. That 75 percent could be reached through a combination detailed in three different scenarios outlined in the report. The easiest scenario would be if the County approved, but sometimes Clackamas County did not like urban renewal. Mr. Sin stated if the Board directed Staff to move forward with the proposal, Staff would return in a study session to present more details about the TIF revenue generation, project scopes, and a schedule. If the process began within a few months, it could be finished by the end of 2024 or early 2025. The process would include engagement with stakeholders and the community, as well as different funding strategies, such as Local Improvement Districts or SDCs, if the projects exceeded TIF revenue. Mr. Sin resumed the presentation and provided details on the two-step plan to update the revised Foothills Framework Plan and prepare a new urban renewal plan for the Foothills area. Ms. Howard continued, detailing the steps needed to adopt a Foothills Urban Renewal District and a potential timeline for the process. Mr. Popenuk provided a revenue projection for the Foothills area based on three different boundary options and three different potential growth rates, as well as forecasted revenue, potential capacity, and impacts to taxing districts. Only permanent rate taxes would be impacted and there was no direct impact on school funding. The project would transform vacant area in Foothills into a higher density product that created tens of millions or hundreds of millions of dollars of new assessed value. That value would be paid into the local option levy that would generate increased revenue for the School District; that money would go into the classroom and was not subject to the state/school equalization formula. There were Redevelopment Agency Meeting Minutes Page 3 of 6 February 20, 2024 positives for the School District as well as the Construction Excise Tax. In addition, the income tax generated supported state revenues so indirectly went into the School Fund. Board Member Afghan asked if there was an advantage or disadvantage to including the wastewater facility in the Foothills URA. Mr. Sin replied keeping the wastewater facility in the URA would be an advantage. As a government-owned property, the wastewater treatment plant could not generate TIF, but the plant could expand the district in the future because currently, there was a 20 percent cap on how much more the district could be expanded. The six-acre wastewater facility could add another 1.2-acre expansion to the URA. Board Member Wendland asked why the district did not include the apartments. Executive Director Bennett clarified the map on display was the existing Foothills district. The apartments Board Member Wendland referenced were in the current East End district and not shown. Mr. Sin added that the map displayed the adopted Foothills URA. Staff ran three other scenarios that included the Oswego Point Apartments. Other scenarios expanded the district a bit into the East End to determine whether projects not completed in the East End could be included in Foothills. The displayed map showed the most conservative scenario. Board Member Wendland asked if the City could use any of the 2012 work done on the Foothills district. Ms. Howard replied the 2012 plan was based on a much different type of development and a streetcar that would provide transportation to much denser development than what would be proposed now. A relook at the framework would include a discussion about what type of development could occur in Foothills given transportation access. Mr. Sin clarified the final adopted 2012 plan excluded the transit line connection. There were about $55 million worth of improvements in the urban renewal plan, $43 million of which came from tax increment revenue, the balance came from SDCs and other utility fees. Moving the wastewater treatment plant gave the City an opportunity to look for some efficiencies in the transportation system. The previous plan laid a grid over the system, which had a lot of infrastructure implications. If the plan was more organic and used the existing transportation system, it could reduce the number of improvements that the urban renewal plan would be paying for. Board Member Wendland asked about the four-year process. Mr. Sin replied that if the City went through the ODOT TGM Grant process, negotiations about the scope of work could take up to a year. The Metro process was more streamlined and could take between 5 to 6 months. The planning itself would take about 18 months to complete. The City had information on the area from its 2012 work and a 2004 completed TGM grant. The four-year estimate included everything from submittal to adoption. Board Member Wendland expressed concerns about the timeframe, and noted the City had housing goals it was supposed to meet. Inflation meant by the time the City got through the process, it could be 10 years in the future and at that point$50 million would not be a lot of money. Chair Buck commented there were good concept elements in the 2012 plan, such as connectivity, which would still be relevant today and interest the community. So much of the proposal was difficult while the City was still in the midst of this wastewater treatment plant project; seeing that forward first was critical. Board Member Wendland inquired whether it would be four years before the City could have private development come in and start their process. Mr. Sin replied that was the timeline if the Redevelopment Agency Meeting Minutes Page 4 of 6 February 20, 2024 City moved through an updated plan. Chair Buck noted the City had to complete the wastewater project and then reignite the community engagement process on the framework plan, and take that into the creation urban renewal district, which could be a few years out. Board Member Wendland commented that Intel could build a plant in 18 months or two years, and those were multi-billion-dollar projects. While those projects were on private lands, Intel still had to go through a process. It could be 10 years before something would be done. Executive Director Bennett stated the water and road infrastructure the City of Hillsboro put into place took decades to make that ground ready for Intel and that was how Lake Oswego needed to look at this; the City was making the ground ready for the development it wanted to see. Realistically, the City was still four years away from completing the wastewater plant and if it tried to do too much, none of it would be done well. Chair Buck added the old site had to be mitigated. Executive Director Bennett added the transportation planning required would be significant. The old idea to punch a second street through the public storage was unaffordable, and its idea of transit was not realistic. The old plan would provide ideas, goals, aspirations, and a vision but it would not provide the actual investments that needed to be made. Chair Buck said there were limiting factors in the location. Board Member Afghan agreed four years was a long time, but the City needed to see an integrated plan. The duration could be shorter. Mr. Sin recapped key points of the presentation, noting Staff would return with resolution to close the East End URA, look to move forward on the Lake Grove URA with some in-depth planning at an upcoming study session and to initiate and streamline the Foothills URA process. Chair Buck stated he had seen the success of urban renewal in Lake Oswego, noting the success with downtown really shaped the community. When the City went forward with the Lake Grove Urban Renewal Area initially, it was not sure it would produce the revenue needed to do a small part of the road project, but the area had brought about a lot of change and investment. The kinds of projects proposed for Lake Grove and Foothills were the type that would produce a big return for the community, keep the community moving forward, and continue outside private investment in the community. The projects aligned with the goal and were easy for the City to sell because of the great return on foregone revenue. While it was difficult to know what downtown would be without urban renewal, it would not be what it was today, and the City never would have done the road project in Lake Grove. Once the road project was in, parcels redeveloped to higher and better use which helped the City reach its other goals in terms of housing. Both the proposed URAs provided opportunities for the City to include some housing element. The downtown had produced housing out of urban renewal, but the City had identified a wider variety through the Housing Needs Analysis and urban renewal would be a great tool to produce housing. 4.2 Approval of LORA Meeting Minutes. November 7, 2023, Draft Regular LORA Meeting Minutes November 21, 2023, Draft Regular LORA Meeting Minutes Board Member Mboup moved to approve the LORA meeting minutes as written. Board Member Wendland seconded the motion. A voice vote was held, and the motion passed, with Chair Buck and Board Members Mboup, Rapf, Corrigan, Afghan, Wendland, and Verdick voting `aye', (7-0). Redevelopment Agency Meeting Minutes Page 5 of 6 February 20, 2024 5. ADJOURNMENT, REDVELOPMENT AGENCY (LORA) Chair Buck adjourned the LORA meeting at 3:58 p.m. Respectfully submitted, Kari Linder, Recording Secretary Approved by the LORA Board on {insert approval date}. Joseph M. Buck, Chair Redevelopment Agency Meeting Minutes Page 6 of 6 February 20, 2024