Proposed personal property tax cut bill would cut funding from urban renewal districts
Under the proposed legislation to eliminate the personal property tax on business equipment, urban renewal districts in Lewiston and Moscow would lose as much as 39 percent of their annual property tax revenues, reports reporter Bill Spence of the Lewiston Tribune. "If we don't generate enough revenue to pay our bills, we're absolutely stuck," Lewiston Community Development Director Laura Von Tersch told Spence; click below for his full report. The draft legislation specifically excludes urban renewal districts from receiving any state replacement funds to offset the tax cut for businesses.
Urban renewal districts won't be eligible for tax money
By William L. Spence, Lewiston Tribune, Idaho (MCT)
BOISE - Urban renewal districts in Lewiston and Moscow would lose as much as 39 percent of their annual property tax revenues under a legislative proposal released for comment this week.
The plan would phase out the $141 million business personal property tax over six years. The state would reimburse local jurisdictions for about two-thirds of that revenue; however, urban renewal districts are specifically excluded from those payments.
Since the districts are established with local government approval - and since they divert property tax revenue from those local governments - some lawmakers feel it would be inappropriate to replace the lost revenue with state tax dollars.
The move would cut property tax collections in Moscow's Legacy Crossing urban renewal district by about 15 percent over six years. The Alturas Technology Park would lose 23 percent, or about $86,000 per year, according to a 2012 report from the Idaho State Tax Commission.
In Lewiston, the downtown urban renewal district would lose 34 percent of its revenue. The North Lewiston district would lose 39 percent, or about $169,000 per year.
"We just secured a bond for the downtown district," noted Lewiston Community Development Director Laura Von Tersch. "Our projected revenues from the district are about $320,000 per year. The annual bond payment is about $208,000, so if (this tax cut is approved) and everything stays the same, we should be able to pay it off. The problem is, things don't stay the same. Buildings burn down, they're purchased by public entities. If we don't generate enough revenue to pay our bills, we're absolutely stuck."
Lawmakers in Boise are often skeptical about the benefits of urban renewal districts, but Von Tersch said they're one of the few tools cities have for replacing and improving infrastructure. They capture incremental tax revenue from new development and increasing market values and reinvest that money in the district.
She said the Lewiston City Council has been approached about forming a new district around the Lewiston-Nez Perce County Regional Airport. Its water and sewer system needs an upgrade and it has other infrastructure needs, but if the proposed tax relief plan is approved, there might not be enough real property to get an airport district off the ground.
"Most of the land is publicly owned," Von Tersch said. "So if the airplane hangars are classified as personal property and they're exempted (from property tax), there wouldn't be any increment to work with."
Lawmakers debated an unrelated bill Thursday that would have made it more difficult for urban renewal agencies to establish new districts. The House Local Government Committee killed that measure on a 9-4 vote.
Spence may be contacted at bspence@lmtribune.com or (208) 791-9168.
———
©2013 the Lewiston Tribune (Lewiston, Idaho)
Visit the Lewiston Tribune (Lewiston, Idaho) at www.lmtribune.com
Distributed by MCT Information Services
_____
