Agenda Packet 4-15-19 Work Session

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April 15, 2019, Work Session – Item 1 How Urban Renewal Works in Oregon In Oregon, ‘Urban Renewal’ is enabled by ORS 457 and used to help cities and counties implement plans to revitalize specified areas within their jurisdiction. An Urban Renewal area has a Plan that documents planned investments and infrastructure improvements—such as parks, streets and parking garages—that stimulate private investment and attract new businesses, jobs and residents. The infrastructure improvements are financed with revenue generated from ‘tax increment financing.’ TIF is a tool to focus funds in a particular area. The investments are made to improve public space and to catalyze further private investment. TIF is the primary funding tool used within URAs. Tax increment revenue is generated within an URA after the property taxes within that area are ‘frozen’ (often called the frozen base). Any new taxes generated within that area through increased assessed value becomes the increment (see Attachment B for a graphic representation). The other taxing jurisdictions in the URA continue to collect property tax income from the frozen base but the URA collects revenue from assessed value above the frozen base. The URA then can issue bonds to pay for identified public improvements and/or investments in private projects that are in the public interest. The tax increment is used to pay debt service on the bonds. A URA Plan lays out the expected cost of infrastructure improvements and expected TIF. When a new URA is formed, the Plan sets the ‘maximum indebtedness,’ which is the total value of debt that a URA can issue. The maximum indebtedness is based on the TIF revenue capacity of the URA and the planned projects to receive TIF funding. When an Urban Renewal area is established, taxing jurisdictions that overlap the URA forgo some of the tax revenue they would otherwise collect from that area. Overlapping jurisdictions regain that revenue stream once the URA expires. To the extent that the URA increases assessed value over what would otherwise have occurred without Urban Renewal investment, the taxing districts should see an increase in tax revenues in the long-term. What a TIF Can Be Used For To be eligible for tax increment funds, projects must be included in the UR plan. The projects, however, can be broad or specific. For example, a plan can include a streetscape improvement project. The agency may identify a particular size and level of amenity at a particular location, or alternatively it may retain flexibility in the plan and simply allow for that type of project to be built with UR funds in the district. The UR agency must determine the scope and types of projects that are included in the UR plan. Oregon statutes (ORS 457.170) govern the types of projects that may be funded with tax increment funds: • Plan and implement neighborhood development programs; • Rehabilitation or conservation work; • Repair and rehabilitation of buildings and improvements; • Acquisition, sale, and lease of real property; • Clearance or rehabilitation of property acquired by the URA;