Supporters say it’s a valuable economic development tool. Critics say it siphons off property taxes with little accountability.
Lawmakers and other critics cite these complaints:
- Cities create urban renewal agencies without a vote of the public. The boards of the agencies get to spend property tax dollars and have power to condemn property, but are appointed, not elected.
- Once created, agencies can start up urban renewal districts and go into debt without a public vote.
- Urban renewal districts keep the property tax money generated by new development, leaving others to pick up the costs of fire, police and other services that new development demands.
While some lawmakers are champing at the bit to curtail the agencies, others urge caution. Sweeping change could make it difficult for cities and urban renewal agencies to do their jobs — attracting businesses, creating employment and boosting the economy.
REASONS LEGISLATORS WANT CHANGES
- Debt: According to the Idaho Constitution, a city or other local government that wants to build a new building or other capital project must pay cash or get two-thirds voter approval to incur debt.
Urban renewal agencies do not need voter approval to issue bonds — take on debt — to finance a project. Those agencies should be “treated like every other taxing district,” said Rep. Phil Hart, R-Hayden. “They’ve got to get voter approval before they go into debt.”
- Over-broad powers: All it takes to create an urban renewal agency or a district is a city council vote. Under state law, urban renewal areas are intended to address blight. But in the past, farm, forest and even desert land has been deemed blighted. The city of Nampa took a chunk of agricultural land to build the Idaho Center; Coeur d’Alene created an urban renewal district next to a resort.
- Board accountability. Last year, the 40 urban renewal agencies in Idaho took in about $52 million in property taxes. The boards for school, highway and irrigation districts that control how property tax money is spent are elected. But mayors appoint urban renewal agency board members, who also have the power of eminent domain.
- Unfair distribution of taxes. New buildings in an urban renewal district place new burdens on fire, police and roads. But the tax revenues from those new buildings go back to the agencies to finance urban redevelopment, not government services.
WHAT PROPONENTS SAY
Urban renewal supporters say that all these criticisms miss the mark. Cities, counties and the state ultimately benefit from the new development — and urban renewal spending — through increased sales and income taxes.
“Urban renewal has been one of the cornerstones of economic development in this state and a proven jobs generator. Look at Twin Falls last year, where an urban renewal project created 700-plus jobs in the depths of the recession,” said Mark Rivers, who developed the BoDo project in Downtown Boise and is working with the Twin Falls urban renewal agency.
Proponents also note that the property tax diversion is temporary. Urban renewal districts use that “incremental” property tax for the 24-year life of the district (although legislators want to change that to 20 years). When the district expires, the gains in value are added to the tax rolls.
“Many of Boise’s best projects were made possible through urban renewal, including The Grove Plaza, the Wells Fargo and One Capital Center buildings, BoDo, the 8th Street market, the Basque Block, the Convention Center, and a long list of others,” said CCDC’s Kushlan.
Proponents note that mayors and city councils are the elected officials who oversee urban renewal agencies — and do answer to voters. Agency board members often are selected for their business, legal or financial expertise.
WHAT’S LIKELY TO HAPPEN?
Because it’s hard to change agencies retroactively — many are in the middle of decades-long bonding projects — urban renewal critics are likely to return in future legislative sessions for more tinkering. No law changed this session will end the debate.
Rivers, who testified last month at a House committee hearing, said he came away believing “legislators themselves don't even understand the policy.”
Critics’ misinformation, he said, hurts cities that are trying to increase jobs, investment and economic activity.
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