Reader Advisory Warning: this article attempts to make technocratic government language a bit more understandable. If you don’t love the ins and outs of finance, read the “quick and short” section below, then jump ahead to the article on Urban Renewal: Past and Future. For those brave souls who love understanding details, head forth to the “long and detailed” section!
The quick and short:
Urban renewal is an established area within a city where the City Council has determined that it needs extra investment. Once established, a portion of the taxes from the properties within that area go into an urban renewal fund. That fund then pays for unique, tailored projects within the established area. If you’re a property owner in the urban renewal area, you don’t pay additional taxes. Instead, the other government districts that receive property taxes, such as the City of Talent, Jackson County, and Fire District 5, lose a portion of their tax revenue each year. An agency, in this case Talent Urban Renewal Agency, oversees the implementation of the urban renewal district’s projects and the spending of funds.
The long and detailed:
Urban Renewal is a funding tool to address “blight” in a community. In today’s terms, blight typically means areas where economic growth has stalled, property values have remained stagnant or are declining, and/or there is a lack of public or private investment. An urban renewal district re-funnels funds directly to a specific area, so that the City can make investments or establish programs to jump start growth and improve the overall economic health over the long run. The downside, however, is that those funds come from other taxing jurisdictions while the urban renewal district is active.
Urban renewal districts work through a mechanism called Tax Increment Financing. Each year, property owners pay their property tax to the County, and the County divides those taxes across different jurisdictions including the City of Talent, Fire District 5, Jackson County, the Library Services, the school district, etc. With an urban renewal district, a portion of those taxes are funneled away from those jurisdictions and, instead, placed in an urban renewal fund to be used within the geographic boundaries of the urban renewal district. The total amount of property taxes themselves don’t change – property owners pay the same amount they would have with or without the urban renewal district – but how they are divided up across the different agencies changes.
The specifics on how property taxes are divided up gets a little complicated with an urban renewal district. I’ll try my best here.
As property values increase, the amount of property tax collected increases. Typically, we see property values increase a bit each year, so jurisdictions often see their revenue increase. With an urban renewal district, the property values within the urban renewal district are “frozen” at a specific time (the first year that the district is established). All the jurisdictions – City of Talent, Fire District 5, the Library, etc. – continue to collect their property tax on those frozen property values each year. As property values increase over time, however, the property taxes that are applied on that increase go to the urban renewal fund. This continues until the urban renewal district ends, typically after 20-30 years.
So, what does an urban renewal district do with that tax revenue? Every urban renewal district is established with an urban renewal plan. That plan details which projects will be performed within the district. But, per Oregon state law, urban renewal can only do specific types of projects, typically having to do with infrastructure improvements or encouraging specific types of development. Urban renewal cannot be used to offset the cost of City services such as policing and code enforcement.
If it sounds like a lot, it is.
Read on to learn more about what urban renewal projects have occurred in Talent, and what City Council is considering for the future.
