Bill targets renewal districts

BOISE – Two North Idaho legislators have launched an effort to restrict city urban renewal districts, introducing legislation to limit their growth and to hand control from mayor-appointed volunteers to elected county officials.

Concerned that renewal districts benefit cities at the expense of county taxpayers, Sen. Michael Jorgenson and Rep. Jim Clark, both Hayden Lake Republicans, are proposing two bills aimed to increase accountability and hold districts to their original plans.

“You have tax burden or taxation without representation, and that’s a concern,” Jorgenson told members of the House Revenue and Taxation Committee Wednesday.

The committee voted to introduce both bills, although some lawmakers are concerned the legislation would hinder cities.

Leaders of North Idaho urban renewal districts strongly oppose the bills, saying current law provides accountability and needed planning flexibility.

“I just think it’s misguided legislation,” said Tony Berns, executive director of Lake City Development Corp., Coeur d’Alene’s urban renewal agency. “The system is working very well. It’s a very strong economic development tool for Idaho.”

Dan Gookin, a Coeur d’Alene author and activist who lobbied legislators to make the changes, said districts can be beneficial but the bills are needed to “rein in runaway urban renewal.”

First authorized in Idaho in 1965, renewal districts were intended to help cities prevent and eliminate “slums and urban blight” through bonded projects. The Legislature in 1988 approved tax-increment financing, which is a process of capturing property taxes on new development and applying the money to urban renewal, said Alan Dornfest, property tax policy supervisor for the Idaho Tax Commission.

Urban renewal is used in 48 districts in 18 Idaho counties, Dornfest said. Five new districts are expected this year.

Renewal agencies statewide collected an estimated $26.6 million in taxes from increment financing in 2006, Dornfest said. About $4 million went to Kootenai County.

Districts may be modified at any time by a board of three to nine commissioners appointed for up to five-year terms by a mayor and confirmed by a city council.

The bills would give county voters power to elect three commissioners who would initially serve six-year, four-year and two-year terms, starting with the 2008 general election. After those terms expire, commissioners would serve six-year terms.

Under the proposed law, new urban renewal districts would not be able to change the size or scope of their plans – a move designed to prevent them from annexing additional property, Jorgenson said.

The legislation also would change the process of removing commissioners from office and triple the time for people to protest board actions, to 90 days.

Stakeholders disagree about how renewal districts affect county property taxes, if at all.

Renewal districts have varied and complex effects on tax rates, but overall they are “nominally neutral,” Dornfest said. But he said they can cause property tax increases under certain circumstances.

Jorgenson and Gookin maintain that calculations show Kootenai County taxpayers pay 3 percent more taxes because of renewal districts. Renewal agency officials dispute that claim.

“The whole county’s upset because everyone’s taxes are raised,” Gookin said.

Jorgenson said districts have “a direct effect on taxation” and provide “little benefit.”

However, Len Crosby, chairman of the Post Falls Urban Renewal Agency, said there may be a “ripple effect” on taxes, but it’s outweighed by the economic benefits the state reaps from districts.

Jorgenson also questioned what he called “secondhand accountability” provided by city-appointed commissioners, saying some have a vested interest in the advancement of their districts.

Crosby, a Post Falls banker, said members of his board properly recuse themselves when such conflicts arise. “The whole question of ethics is sort of a red herring,” he said.

Renewal district officials said prohibiting their ability to amend their plans would be a major hindrance because they must often plan years in advance. “You cannot anticipate what you’re going to need to do,” Crosby said. “You need to maintain the flexibility.”

The changes would cause districts to create plans “as far-reaching and totally encompassing as possible,” rather than concise, narrowly tailored documents, according to the Lake City Development Corp.

Rep. Wendy Jaquet, D-Ketchum, said she will vote against the bills. She said she has worked with urban renewal projects and has seen a need for them to change their plans. Cities should retain control of their projects, Jaquet said.

Jorgenson presented the bills to the committee in lieu of Clark, who is recovering from a small stroke he suffered last weekend. Clark is expected back at the Statehouse on Monday.