URBAN RENEWALAS A MEANS OF FUNDINGPUBLIC INFRASTRUCTURE

Gary J. RiednerMoscow City Supervisor

Moscow Urban Renewal Agency Interim Director

Presentation Overview

■ Urban Renewal Basics– Legal Authority– Purpose– Tax Increment Financing (TIF)/Revenue Allocation

Financing (RAF)/Tax Allocation Financing (TAF)

■ Moscow Urban Renewal Agency (MURA)– Alturas Technology Park– Legacy Crossing Urban Renewal District– Methods of Financing URA Assistance

Understanding Urban Renewal & Revenue Allocation Financing in Idaho

■ Urban renewal and revenue allocation financing are the most significant tools available to Idaho communities for attracting and retaining businesses, generating economic development, promoting job creation, and encouraging development of deteriorating and underutilized areas.

Why Urban Renewal and Revenue Allocation?■ State limitations for cities and counties to:

– Finance site preparations– Infrastructure– Other needed incentives necessary to attract and retain business– Allows to make a site ready for development

■ Expanding water, sewer, streets and other improvements

Legal Authority for URAs

■ Urban Renewal Law—Title 50, Chapter 20, Idaho Code (1965)

– Allows a city or county governing board to designate areas for urban renewal projects.

■ Local Economic Development Act—Title 50, Chapter 29, Idaho Code (1988)

– To encourage private development in urban renewal areas,– To prevent or arrest the decay of urban areas due to the inability of existing

financing methods to promote needed public improvements,– To facilitate the long-term growth of the local tax base.

URA Powers & Duties

■ With an Adopted Urban Renewal Plan, a URA may:

– Construct/reconstruct streets, utilities, parks, playgrounds, off-street parking and public facilities, buildings and other improvements.

– Acquire and dispose of property or buildings.– Improve, renovate, clear and prepare for redevelopment of properties or buildings.– Acquire property to eliminate unsanitary or unsafe conditions, lessen density,

eliminate obsolete or other uses detrimental to public welfare.– Invest and borrow money, issue bonds, and accept loans and grants.

Public Benefits of Urban Renewal & Revenue Allocation Financing■ Job creation from the initial project/control of development

■ Underutilized and deteriorated property is returned to productive use

■ Infrastructure installation & upgrades enhance capacity for surrounding areas and community

■ Improvements to local transportation systems

■ Increasing local tax base

■ Successful projects generate increased sales and income taxes

Tax Increment Financing (TIF)

■ History:o First TIF Established in 1952 for Redevelopment Project (CA)o 48 States Now Have TIF Laws

■ TIF = Revenue Increment Financing

■ Process:o URA Establishes a Revenue Allocation Areao Base Property Assessment Value is Established (Property Tax)o Increases in Base Value Generates Incremento Increment Invested in Project Area to Increase Tax Base

How Revenue Allocation Financing Works■ Revenue allocation area is formed

■ County assessor establishes the current value for the property in the area, “base value”– Taxes generated by the base value are paid to the taxing districts

■ Over time, due to public and private investment, property values rise, different of base to increase is “increment”

– Taxes generated by the increment value are distributed to the urban renewal agency– Used to pay for improvements, revitalization activities to attract private investment,

eliminate deteriorating conditions

■ Urban renewal agencies do not determine property values or levy rates

■ Goal is to strengthen the overall economy

Tax Increment Financing (TIF)

Urban Renewal and Revenue Allocation Financing Laws■ The Idaho Urban Renewal Law – Title 50,

Chapter 20, Idaho Code– Passed 1965 by the Idaho Legislature– Allows a city or county governing board to

designate areas for urban renewal projects aimed at:

■ Eliminating or preventing deteriorated areas■ Developing and revitalizing underutilized areas– Mayor appoints and Council confirms a

board of commissioners to oversee implementation of approved plans

■ The Idaho Local Economic Development Act – Title 50, Chapter 29, Idaho Code

– Assist in financing of urban renewal plans– Encourage private development in urban

renewal areas and competitively disadvantaged border community areas

– Prevent decay of urban areas due to the inability of existing financing methods to promote needed public improvements

– Facilitate the long-term growth of the local tax base

– Encourage private investment with urban areas and competitively disadvantaged border community areas

Statutory Requirements for Urban Renewal & Tax Increment Financing Plans

■ The kind, number and location of all proposed public works or improvements within the revenue allocation area

■ An economic feasibility study

■ Detailed list of estimated project costs

■ Fiscal impact statement upon all taxing districts – Impact of revenue allocation areas, before and after bonds are repaid■ Description of the methods of financing all estimated project costs and timelines

■ Termination date for the plan and the revenues allocation area– Description of disposition or retention of agency assets

How Urban Renewal Districts are Formed■ Interest expressed by City Council, any existing urban renewal agency, property owners,

developers or any combination

■ Agency or consultant evaluates if area is eligible for urban renewal and submits report to City Council

■ City Council determines if area is eligible and if it wants an urban renewal agency to prepare an urban renewal plan

■ Urban renewal agency prepares urban renewal plan

■ City Council receives urban renewal plan and refers it to the local planning commission

■ Planning commission determines if urban renewal plan is consistent with Comprehensive Plan

■ City Council holds public hearing; determines whether to adopt plan and form district

Powers of an Urban Renewal Agency

■Pursuant an adopted urban renewal plan:

– Construct/reconstruct streets, utilities, parks, playgrounds, off-street parking and public facilities, buildings, and other improvements

– Acquire and dispose of property or buildings– Improve, renovate, clear and prepare for redevelopment properties

or buildings– Acquire property to eliminate unsanitary or unsafe conditions,

lessen density, eliminate obsolete or other uses detrimental to public welfare

– Invest and borrow money, issue bonds, and accept loans and grants

Areas Eligible for Inclusion in Urban Renewal Area

■ Idaho Code 50-2018Urban Renewal Area – A deteriorated area or deteriorating areas or a combination thereof which the local

governing body designates as appropriate for an urban renewal project.

■ Deteriorated Area“Predominance of buildings or improvements…which by reason of dilapidation, deterioration, age or obsolescence, inadequate provision for ventilation, light, air, sanitation, or open spaces, high density of population and overcrowding, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors is conducive to ill health, transmission or disease, infant mortality, juvenile delinquency, or crime, and is detrimental to the public health, safety, morals or welfare”

■ Deteriorating Area“Substantial number of deteriorated or deteriorating structures, predominance of defective or inadequate street layout, faulty lot layout in relation to size, adequacy, accessibility or usefulness insanitary or unsafe conditions, deterioration or site of other improvements, diversity of ownership, tax or special assessment delinquency exceeding the fair value of the land, defective or unusual conditions of title, or the e3xistence of conditions which endanger life of property by fire and other causes, or any combination of such factors, substantially impairs or arrests the sound growth of a municipality, retards the provision of housing accommodations or constitutes an economic or social liability and is a menace to the public health, safety, morals or welfare in its present condition…”

Transparency and Accountability Mechanisms■ Idaho Public Record Law

■ Public meetings, with public notice and agenda, meeting minutes kept and available

■ Commissioners are required to disclose conflict of interest pursuant to the Idaho Ethics in Government Act and Idaho Urban Renewal laws

■ Required to comply with Local Government Competitive Bidding Law

■ Same financial requirements as municipalities

■ Annual budget must by approved by the board following public notice and hearing

■ Required to prepare and file an annual report of activities, publish notice of the report’s availability upon request of any citizen

– Completed financial statement■ Assets, liabilities, income and operating expenses

FAQs■ Could property owners pay higher property taxes due to revenue allocation financing?– Property owners pay no more than they would without TIF– URA efforts are intended to increase the tax base allowing for a reduction in tax levies

■ Do businesses pay less in property taxes due to revenues allocation financing?– No, businesses are subject to the same tax levy rates as all other property owner

■ Are there limits on the size of revenue allocation areas– Yes, Idaho Code 50-2903(15) provides that area base values “shall not exceed at any time 10% of

the current assessed valuation of all taxable property within the municipality”

■ Can revenue allocation financing negatively impact taxing districts?– During the life of the district, taxes from the increment are diverted to spur improvements, once

the district closes, taxes are then paid to the districts

MURA’s 2 Districts

Alturas Technology Park

■ Alturas Technology Park - 1996

– “Greenfield” development– Economic development project– Lack of private interest/investment– RTO zone / high-tech companies– Revenue Area: 62.1 Acres– Phase I: 7.37 acres, 1996– Phase II: 6.34 acres, 2005– MURA is developer in the Park

Alturas Revenue Allocation Area

Alturas Technology Park

Alturas Successes

■ Increased Tax Base:– 1995: $4.6 Million– 2008: $22 Million■ 12.79% Annual Growth Rate

■ Job Creation: – 200+ highly skilled jobs– Average Wage Range $50,000■ Economic Development:– Out of Region Sales, Multiplier

Effects, Cluster Synergy

■ High-Tech Companies:– Alturas Analytics – EMSI– Comtech AHA– Anatek Labs– Bio-Tracking– Pacific Simulation

Legacy Crossing Urban Renewal District

Legacy Crossing

■ Legacy Crossing – Plan approved in 2008

– “Classic” urban renewal - redevelopment– Revenue/Project Area: 163 acres– Plan Completed June 2, 2008– Limited Increment Revenue to Date– MURA owns one keystone property– Brownfields / Mixed-Uses

Legacy Crossing Objectives■ Provide for new commercial and mixed-use

development.

■ Eliminate unsafe and hazardous conditions.

■ Assist private development through parcel aggregation, acquisition, demolition, and disposition.

■ Improve multi-modal transit and parking opportunities.

■ Prevent blight and deterioration.

■ Promote sustainable development to minimize environmental impacts and promote wise use of natural resources.

Legacy Crossing

■ Established 2008

■ Brownfields Redevelopment

– 6th & Jackson Property purchased by the MURA

■ Purchased 2010

■ Brownfield Cleanup

■ Eastbound Traffic Lane Alignment Planning 2014

■ RFP for Redevelopment 2014

Agency Successes

■ Leveraging Federal, State, Local, & Private Funding

– EMSI– Intermodal Transit Center & College Street– 6th & Jackson Redevelopment Process

■ Management

– Grant Manager

Methods of Leveraging URA Assistance

■ “Direct” financial assistance o Cash/Direct Participation (URA

builds/finances public improvements)o Somewhat risky on URA’s part

“Indirect” financial assistanceo Grants/Indirect Participation (URA

facilitates construction of public improvements through financing programs, i.e. EPA, DEQ, CDBG, EDA, etc.)

o Less risky – other agencies’ money

Developer financial assistanceo Owner/Developer Participation

Agreementso Risk is on the owner/developer

Questions?