Sen. Mary Souza, R-Coeur d’Alene, says she believes cities like Coeur d’Alene are using urban renewal as a “side-around” to avoid public votes on big new public projects, as would be required if the city asked voters to raise their property taxes to fund them. “Through Article 8 Section 3 of our Constitution, that has always traditionally involved the voters to say, ‘Do you want to tax yourselves in order to get this benefit to the community,’ whatever it is, library, a city hall, whatever,” she told the Legislature’s urban renewal interim committee today, on which she serves. “Urban renewal came in and has done kind of a side-around … then the public hasn’t had a vote on these kinds of issues, and I believe that it is a negative in many regards … because there is no voter buy-in, then. There’s no approval from the community. … So then you get the resentment that can start.”
She added, “I personally think that a public vote is a real benefit.”
Committee members discussed possibly separating types of urban renewal projects between those that address blight, to clean up deteriorated areas; economic development, to bring in business and jobs; and community development, to enhance public assets and buildings. Souza and committee Co-Chair Rick Youngblood, R-Nampa, favored requiring a vote for community development projects funded by urban renewal funds. “If it’s a public building that comes off the tax rolls, we should at least bring the public back in,” Youngblood said, rather than “take those tax dollars and do what maybe the public decided they didn’t want to do.”
Sen. Maryanne Jordan, D-Boise, noted that municipalities already can ask the public for an advisory vote, as Ada County did when it tapped urban renewal funds for a new county courthouse. Sen. Dan Johnson, R-Lewiston, the panel’s other co-chair, said he favors a “but-for” test, saying it’s appropriate to fund a public building or asset with urban renewal funds if that building or asset is what will drive the new development that creates the revenues. “The plan should identify those benefits and it should be justified,” he said.
Tax increment financing is the main funding source for urban renewal. That typically involves drawing a line around a redevelopment area, freezing property tax revenues from that area to local taxing districts at the current level for a fixed period of time, investing in infrastructure or other improvements designed to enhance the area and draw private investment there, and using the increment, or the increased tax revenues generated from the new private investment there, to pay off the improvements. At the end of the fixed period of time, the arrangement expires, and all taxing districts in the area begin benefiting from the increased taxes paid by the new development in the area.
Rep. Hy Kloc, D-Boise, said, “Libraries of course, in my opinion, are economic engines – they bring people to an area, they’re a destination, and the area around the destination gets developed because of the library. … One of the things I would hate for this committee to do is to throw the baby out with the bathwater. We’ve had lots of success over the years.” He noted presentations from Garden City, which said a successful urban renewal project there more than doubled tax revenues. “So I would hate to see us restricting using certain buildings as incentives, because of where the funding comes from, if in the end they produce more revenue for the city.”
Souza said, “We could set up some overarching rules from the state level. … You’re going to have a traditional need for a public building, then you must send it to a vote under these circumstances.”
She said, “I’ve looked at urban renewal for many, many years. And I pretty much had an epiphany moment in talking with Rep. Clow, because I understand for the first time how differently Twin Falls uses urban renewal than Coeur d’Alene.” She said Twin Falls identified specific projects related to bringing in new employers, while Coeur d’Alene created urban renewal areas that include the center of town. “So the increment from all the existing buildings … goes to create a very large amount of tax increment that is then at the discretion of this board that does want to use it for public purposes and there is no vote,” she said. “We had them borrow almost $17 million to create a fancier park out of an existing park, and there was no public vote on there, where traditionally there would have been, because it was such a huge expenditure.”
Souza said she favors “sideboards” on how tax increment funds can be used.