Idaho

School fund-loss claim disputed

Critics of urban renewal districts in Kootenai County have focused on the purported deep financial impact the development districts have on public schools. They’ve devoted presentations and forums to the topic, while local legislators are drafting laws to change the way the agencies affect school funding.

But officials in the Coeur d’Alene School District say there’s nothing to fix because schools don’t lose money to urban renewal districts.

“I think their hearts are in the right place, but they’re trying to solve a problem that doesn’t exist,” said Steve Briggs, business manager for the school district. “And by them telling everyone the problem exists, it causes some stress for us.”

Briggs and other school officials joined representatives from the Post Falls and Lakeland districts at a presentation last month by community activist Dan Gookin and real estate agent Sharon Culbreth on the financial impact schools feel from urban renewal districts, such as Coeur d’Alene’s Lake City Development Corp.

Urban renewal districts rope off a portion of a city and collect the extra tax revenue that comes as property values increase in the district. That money, which otherwise would go to schools, roads, police and fire services, instead is spent on development projects aimed at improving the area within the urban renewal district.

When the urban renewal district sunsets, taxes from the full value of the property – including all of the urban renewal improvements the district made – are dedicated again to the schools and other taxing districts.

Critics such as Gookin and Culbreth argue that regardless of the long-term benefit, the practice still funnels millions of dollars away from schools over the life of the urban renewal district. They point to a lawsuit a southern Idaho school district has filed against its local urban renewal district as proof that something’s wrong. Statewide, public schools could be giving up billions of dollars in tax revenue, they claim.

But school officials say it’s not so. Even without urban renewal districts, school funding levels would be the same. School districts collect a fixed amount of property taxes, and when an urban renewal district takes a portion of the taxable property off the rolls, schools make up the balance with a slightly higher tax rate on all other property in the school district.

“They’re getting it from the taxpayers” outside the urban renewal district, Culbreth said.

The money proponents of urban renewal reform say the school districts lose in the lower levy rate the schools could enjoy if the districts didn’t exist. The billions of dollars they say schools lose represents the property value accruing within the urban renewal district that the schools can’t levy taxes on. But that isn’t extra money the school districts could get, Briggs said – it means the levy rate would decrease if that property could be taxed by other districts.

“It was stated point blank that we’re losing billions of dollars,” Briggs said. “It frustrates me, because it’s not factual.”

Gookin acknowledged a packet stating the financial impact of urban renewal on Idaho school districts to be about $8 billion was inaccurate. The bulk of his argument, he said, lies in what could happen to school districts in the future if urban renewal districts grow.

Different people want different changes. Culbreth said she’d like to see all taxing districts get a return from urban renewal districts, along with a long list of other reforms. Gookin said he’s focusing on just the school districts and worries the Coeur d’Alene district is being shortsighted by saying urban renewal financing doesn’t affect its funding. The benefits of well-done urban renewal are worth the sacrifices some taxing districts make, but not for schools, he said.

The lawsuit the Vallivue School District in Caldwell filed against the urban renewal district there is a sign of what could happen here, Gookin said. That growing school district contends that the size of a newly formed urban renewal district, the Nampa Development Corp., and the property it encompasses will make school levy rates too high for voters to approve.

“It’s newly formed, it’s quite big, it captures property that arguably isn’t (appropriate for) urban renewal,” said Nick Miller, attorney for the Vallivue School District.

The school district will need a new high school within a few years, Miller said, and a high bond levy rate request could keep voters from approving it. Whether this scenario could repeat itself elsewhere depends on how the urban renewal district is set up and how easy it would be to expand district boundaries or extend the life of the district, Miller said.

“If their plans for how they’re going to use urban renewal aren’t real specific, I can see how that can become an issue,” Miller said. “I think that every school district is in a slightly different situation.”

Coeur d’Alene’s two urban renewal districts cover downtown, midtown and Northwest Boulevard and a strip of land between Seltice Way and the Spokane River. The districts are set to expire in 2021 and 2027. The chances either district’s boundary will expand to include more property, in turn increasing levy rates outside the boundaries, are “very, very slim,” said Tony Berns, executive director of the Lake City Development Corp, the urban renewal agency that oversees the districts.

“That’s not our intent,” Berns said. “Our intent is to focus on the target boundaries right now.”

In Post Falls, directing property taxes from the Post Falls urban renewal district to schools would lower the levy rate, but not by much, said Jerry Keane, superintendent of the Post Falls School District. He estimated a nickel or two for every $1,000 of assessed property value.

“It will have some positive impact, but it’ll be marginal,” Keane said.

Sen. Jim Hammond, R-Post Falls, believes the issue of how urban renewal agencies affect schools is more a taxpayer issue than a school district one, and he’s drafting legislation to address it. His bill would require urban renewal districts to give property taxes to schools when they’re collected for special levies. As it is now, urban renewal districts collect and keep property taxes for levies like the two-year supplemental levy Coeur d’Alene voters have approved since 1986. That’s not fair to the voters who approve the levies assuming everyone will pay a share, Hammond said.

“In order to ensure that the school district gets their full amount, the levy rate has to be raised,” Hammond said. “Quite frankly, I wasn’t aware that they weren’t getting those.”

State schools Superintendent Tom Luna attended the June 25 presentation by Culbreth and Gookin and spoke about the importance of education to economic development. But Luna’s spokeswoman, Melissa McGrath, said in an e-mail that Luna considers the issue one for local taxpayers to address.

“I spoke with him about this, and he reiterated that this is a local issue that must be decided at the local level by taxpayers,” McGrath wrote.

Hammond said he may expand his legislation to ensure urban renewal districts send all special levy money to the districts that float the levies like fire and highways districts, instead of just schools.

Briggs said he understands people feel passionately about their positions on the issue. He said he has close friends who side with Gookin and Culbreth’s crowd and he hasn’t been able to change their minds.

“We may develop information down the road that may be like the magic bullet that explains everything,” Briggs said. “It’s a situation where the facts do not support the contention.”



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