Eugene City Council voted 7-1 on April 12 to extend the city’s Downtown renewal plan, authorizing it to increase its debt by $50 million. Most of the money will go toward supporting additional housing downtown. 

The Downtown Urban Renewal Plan, first established in 1968, is funded by loans that are paid back with property taxes. That money can fund any projects related to downtown capital improvement. The vote raises the plan’s debt limit from $66 million to $116 million, preventing it from a projected sunset in December 2023. City staff estimated the extension will support the plan until 2043.

The urban renewal plan is separate from the city budget. The formal amendment only outlines the debt limit increase, not how it will be spent. There most likely won’t be further amendments until the debt limit is hit again in 2043. Instead, money will be allocated as projects are identified.

The plan’s debt limit was last increased in 2016, when City Council authorized an additional $19.4 million in debt to renovate Downtown’s public spaces, install a high-speed fiber network and redevelop Lane Community College’s downtown building.

Councilors rejected an outline from city staff that would have divided the money for the new increase into three buckets: $16.8 million for housing development fee assistance and land acquisition for housing, $6.7 million for physical safety improvements like improved lighting and walkability and $10.1 million for projects that haven’t yet been determined, with the rest going to support costs like administration and staff time. 

Councilors objected because the outline didn’t allocate enough toward housing. “I came with a motion prepared that boosted the amount put in the housing bucket,” Councilor Randy Groves said. Other councilors agreed they wanted to spend more on housing and opted to raise the debt limit and discuss allocation later. 

“We’re not ready at this point to make a list of projects, but we’ve learned we have to be pretty nimble, and so the more space we have to be nimble, the better,” Councilor Emily Semple said.

This desire for flexibility also led councilors to their decision to raise the limit by $50 million. 

“I think that we need to go with a higher amount,” Councilor Greg Evans said. “These projects take time. There’s always a monkey-wrench that’s thrown into them that extends the amount of time that they need to be developed and completed, and I think we need to have the maximum wiggle room possible.”

Councilor Alan Zelenka cast the one vote against the extension, saying the city should have raised the limit by a smaller amount. “Starting small with the full understanding we could grow it later if we need to —  or want to, it’s not need — is the appropriate way to go on this, especially since we don’t have a definitive project list,” he said.

While councilors didn’t determine allocation, they began discussing it. They agreed housing should be the top priority, but disagreed by how much. Councilor Zelenka suggested directing all the money toward housing, while Councilor Semple stressed the importance of the other pieces.

“To have a good place to live is not just to have a unit to live in,” Semple said. “It’s that the unit is in a place you want to live, and that includes safe sidewalks and lighting and maybe a nicer park block.”

City staff estimated that adding housing units downtown has an average cost between $300,000 and $350,000 per unit for new construction, and $150,000 to $200,000 per unit for office conversion. The city would support developers with $10,000 per unit. The possibility of rules tying affordability to those subsidies could be discussed by councilors at a later date.

An additional concern councilors raised was administrative costs. In a process called tax increment financing, debt incurred by projects in Urban Renewal Zones like the one Downtown is funded by redirecting a share of property taxes that would otherwise go to other tax-earning bodies in the zone, including 4J School District, Lane Community College, Lane Education Service District, Upper Willamette Soil and Water and the city of Eugene and Lane County.

“A lot of the times the knock against tax increment financing is the siphon effect of paying for administration,” Councilor Mike Clark said. City staff estimated “project delivery and administration” would make up $16.4 million of the $50 million.