Thursday, January 15, 2015

A Primer on Urban Renewal Areas (and Agencies)

     State laws throughout the U.S. allow a city’s governing officials to designate deteriorated or undeveloped but problematic areas in their jurisdiction as Urban Renewal Areas. Once designated, the area becomes a focus of economic development. A URA Board is appointed by local government and expected to follow a detailed publicly-approved master development plan consonant with city codes and ordinances.
     URA's initially have a 24-year life span, although they can be terminated earlier for various reasons, including having fulfilled the plan. They are primarily funded by “tax increment financing” or TIF. With TIF, the County Assessor establishes the “base” property value for the entire redevelopment area. As development occurs, the URA’s property values (and taxes) increase. The difference between the base year’s taxes and each subsequent year’s taxes are returned to the URA for further development on URA land. Other typical taxing entities (the City, County, school and other taxing districts) continue to receive their share of taxes from the base property value.  However, they lose all tax increments over that value for the life of the URA. 
     URAs use their funds to acquire land; to rehabilitate and replace aging public buildings; to stimulate industrial, business and job growth; to improve safety, sanitation, electrical, street, and communications infrastructure; and to provide for public parking and amenities such as parks, walking paths, and urban streetscapes. They are also used to assist the private development of commercial buildings and affordable housing. Business costs for relocating or expanding are thus reduced. 
     In recent years, URAs have come under increasing scrutiny for improper management. Idaho's Legislature has twice attempted to curtail them. Therefore they must be properly established and managed. Advocates praise URAs for their success in resuscitating blighted urban areas in cities like Detroit. Critics contend that TIF hurts other taxing entities for a long period of time. They also cite public-private collusion to use URAs primarily for the benefit of private interests. 


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