Rice Consulting - Jima Rice, Ph.D.

Kudos and Criticisms for URA Projects

In Idaho, the cities of Sandpoint, Eagle, Coeur-d’Alene, Twin Falls, Rexburg, Ketchum, Jerome and others, have URAs; commissioners are usually a mix of elected officials and experts in community affairs. URAs are beneficial when used properly, but often get bad bad press for abusing their expansive powers. In the end, a URA should be judged on whether it has benefited a municipality’s economic growth/job creation in the long run, or an individual’s or group’s private interests.

News reports describe positive achievements, big and small, by URAs: 

1. Brownfield sites have been cleaned up and transformed into successful mixed-use developments.  Denver redeveloped an ASARCO site into a commercial center with 1 million+ square feet of commercial space for businesses.

2. The Detroit International Riverfront project restored its polluted riverway into a 5½-mile stretch that includes a wildlife park, restaurants, retail shops, and residences. 

3. Sandpoint, ID has built sidewalks and, as money accrues, looks to extend the Sandcreek Boardwalk and rehabilitate a former mill site for mixed-use.

4. Driggs, ID has built a sewer line interceptor, improved the downtown parking lot and buried power lines.

Negative publicity arises from projects that tilt toward benefiting private developers, rather than a municipality as a whole:

1. Coeur d’Alene asked a developer to add brick walls (cost = $400,000) to his project, then reimbursed the developer with URA funds (plus interest). 

2. A Palm Desert RDA spent nearly $17 million revamping a municipal golf club that was already one of the best golf locales in the U.S.

3. Sinclair Company sought blight designation for its 28-acre parcel in downtown Salt Lake City where it planned a Grand America hotel for the 2002 Olympics. The designation was fought by one flower shop facing demolition until Sinclair gave up as the Olympics approached – ultimately foregoing its hoped-for millions in URA monies and tax breaks. 

4. Tax diversions cost Denver schools $15.4 million and other city services $10.9 million.

In addition to diverting money from other taxing districts, URAs are criticized for imposing their own vision of an area on local citizens, promoting development that would have taken place in any case, passing developer risks onto taxpayers who must cover bond defaults should they occur, and encouraging developers to invest only where a URA exists. In the worst cases, URAs subsidize renewal projects that benefit a wealthy private party who ends up with a long-term appreciating asset while the public makes bond payments over time that, with interest, are double or triple what the bonds originally sold for.

Factors that point toward successful URA activities include whether a municipality’s economy is strong enough to sustain a URA in light of the risks, whether the public is involved in URA decision-making from A to Z, if there is an accurate and detailed URA analysis of a project’s long-term risks and investment return for a community, if there are objective measurement criteria for deciding whether a project is acceptable or not (including the ROI analysis), and displaying transparent behavior that adheres to the intent of urban renewal codes. Just about any URA project can be evaluated according to these criteria, given access to the relevant documents and inclination to do the research.