The concept of urban renewal isnít easy to get your head around.
And if you really want to get dizzy? Stir some tax increment financing into the equation.
This editorial is meant more to explain than to persuade. With urban renewal in the local news so much lately, from adoption of a new Health Corridor in Coeur díAlene to Post Falls announcing its intent to close five urban renewal districts in the next three and a half years, we thought a primer might come in handy.
At risk of oversimplifying, hereís how urban renewal works:
• Itís a public financing tool to improve underperforming property and eventually generate more taxes for the public benefit.
• When an urban renewal district is created, the current property tax within the district is essentially frozen.
• Letís say the frozen property tax is $100,000 per year. And letís say all sorts of development then takes place over several years, so eventually, the property is generating $1 million a year in property taxes. That $900,000 difference is called the tax increment.
• The frozen $100,000 every year during the life of the urban renewal district goes to all the entities that had a claim to it in the first place, like North Idaho College, Kootenai County and a local school district. The $900,000 increment goes to the urban renewal agency, which then uses the money to fund other projects aimed at improving the local economy, creating jobs and boosting business.
• Payday for the public really comes when the urban renewal district closes. At that point, the entire property tax pie goes to the existing taxing entities, and none to the urban renewal agency. Theoretically, anyway, that should improve the quality of public services or relieve some property tax pressure from residents ó or both.
Coeur díAlene and Post Falls have different urban renewal philosophies. In Coeur díAlene, the taxing districts have long lives. The Lake District was formed in 1997 and closes in 2021. The River District was created in 2003 and closes in 2027.
Between the two, millions of dollars annually that could be helping multiple taxing entities are making little impact there while keeping the cityís urban renewal agency afloat. The health of the agency overall allowed it to become a key mechanism in developing a health corridor in the community over the next two decades.
In Post Falls, however, urban renewal officials eagerly close down districts as soon as specific projects are completed or goals are reached. That turns the additional tax revenue ó the increment ó over to the public more quickly. However, when all is said and done, the tax impact is generally less profound than, say, Riverstone will be to Coeur díAlene.
While thatís a quick and crude explanation of urban renewal and tax increment financing, there are armies on both sides of the issue ready to do battle. Citizens are well-armed when theyíre informed and active before urban renewal districts are created. That way the people can help shape the discussion and the decisions.
One growing complaint is that urban renewal agency board members are appointed, rather than elected by the public. Keep your eye on that when the 2020 Idaho Legislature gets together next month. Better still, speak up.