[Vision2020] Urban Renewal Agency Impact on Taxpayers

Sun Dec 7 11:53:34 PST 2008

On November 6, 2008, the Moscow Urban Renewal Agency Commissioners toured
the urban renewal districts in Coeur d'Alene that are the subject of the
first of two articles in the Coeur d'Alene Press.  The first article is
below.  Please note the subscriber comments following the article.

Apparently the Moscow URA Commissioners hoped to gather inspiration from
Coeur d'Alene on how to spend more of your tax dollars.   In particular, how
to spend your tax dollars to enrich private developers without a vote of the
taxpayers.  

Here are some other items the Moscow URA spent your tax dollars on this
year:

.         Spending up to $5,000 of your tax dollars to file a "Friend of the
Court" brief for the Rexburg Urban Renewal Agency

.         Hiring a new economic development director at a cost of $80,000+
to be shared with the City of Moscow (tax dollars funding both)

.         In addition to the economic development director salary, paying
the City of Moscow $30,000+ annually for administrative services.  This is
$5,000 more than last year because City Staff said they need more money to
manage the economic development director.  Is this compound "Bureaucracy
Gone Wild?"

The Moscow Urban Renewal Agency Commissioners have the ability to finalize
and close out the Alturas Urban Renewal District by 2010 and return $300,000
annually as a direct reduction on all property tax bills in Latah County.
They have chosen not to do this and instead vote to continue spending your
tax dollars on bureaucracy and to divert funds to the Legacy Crossing Urban
Renewal District, where nothing is happening.

Perhaps the Moscow URA Commissioners should take a field trip around Moscow
to assess our economic situation.  In particular, note that the national
recession is extending to Moscow.   There are layoffs and budget cuts,
businesses are not up-staffing and expanding like the URA; in fact, there
have been several business closures and will be more.

A $300,000 refund from the Moscow URA would be a welcome gift to property
taxpayers in Moscow and all of Latah County.

B. J. Swanson

>From the Coeur d'Alene Press, Sunday, December 7, 2008:

LCDC: Philosophies diverge on finance

By TOM HASSLINGER
Staff writer 

Would city develop without agency? How much does it really cost taxpayers?
Finding answers depends on who you ask

Editor's note: This story is the first in a two-part series on urban renewal
and the Lake City Development Corporation. Tomorrow: Would development
blossom without LCDC?

COEUR d'ALENE -- From the outdoor walkway at the Parkside building on Front
Avenue across from McEuen Field, one can see Lake Coeur d'Alene to the
southwest, flanked by Tubbs Hill, the softball fields covering McEuen Field,
the new public library and the brick and stone buildings lining Lake City's
downtown.

But the best views from the high-rise can be seen only by those who reside
in the condos, which sit inside Lake City Development Corp.'s urban renewal
district in downtown Coeur d'Alene.

So passersby strolling along the park would need keys to access the best
viewpoints, even if a portion of their property taxes went directly to the
urban renewal agency, which pledged $820,000 of taxpayer financing to the
developer for infrastructure and landscaping on the project.

Proponents say urban renewal is a recruitment tool used by a resourceful
agency whose sole purpose is to redevelop, beautify and improve a city with
enhanced aesthetics, better economy and more diversified jobs.

"Urban renewal is a philosophy," said City Finance Director Troy Tymesen.
"If you like development, then you like urban renewal. If you don't like
growth, then you probably won't like it."

For others, the mayor-appointed and City Council-approved agency can seem
like a quasi-government, which can spend tax dollars without voter approval,
and agrees to fund private developers for amenities the public will never
own -- like high-rise views from Parkside.

Ada County Commissioner-elect Sharon Ulman called urban renewal spending
"sweetheart deals that the taxpayers are subsidizing."

"How is that fair?" she said.

It's a complicated equation, and it might depend on which philosophy a
person believes.

Urban renewal financial agreements can sound like back-scratch deals.
Officials contend they are mathematical certainties designed to bring
development and economic perks to a city, which pays back developers from
the money their projects generate without any financial risk to the
taxpayer.

"The city has so few tools to offer up when we're recruiting businesses,"
Tymesen said. "It's really hard to bring in a business based on what we give
away because we don't give away anything."

The Riverstone development transformed a 74-acre former mill site into a
work-and-play, mixed-use development along the Spokane River, and the Mill
River development helped land the US Bank Call Center -- and nearly 500 jobs
with it.

Along with those projects are ones the agency supported for aesthetic perks,
such as $12,000 for maroon banners on Parkside the public will never own.

For fiscal year 2008-09, which runs Oct. 1 to Sept. 30, LCDC expects to
receive $2.82 million in tax increment financing inside its Lake District
and $1.4 million inside its River District.

Those totals are up from the 2007-08 fiscal year's estimated $3 million
total, according to David McDowell, Kootenai County finance director.

During a slumping economy, the philosophical question about urban renewal
becomes even more pointed than usual. Are urban renewal agencies at all
responsible for increased property taxes for people outside the districts?
If the agency is receiving taxes the cities and counties aren't, are
taxpayers picking up the rest of the slack?

...

On Oct. 19, Mary Souza wrote in her Sunday column for the Coeur d'Alene
Press that because of urban renewal, Kootenai County residents are seeing a
4.3 percent hike in their property tax bill, while Coeur d'Alene residents
are getting a 10 percent spike.

Around the same time, commercial property tax bills around the county were
growing.

Art Williams, owner of the Flamingo Hotel on Sherman Avenue, was floored by
the 55 percent increase on this year's bill.

"When I saw it, I went nuts," said Williams, whose hotel sits inside LCDC's
Lake District.

Surrounded by LCDC-aided projects like McEuen Terrace and Sherman Lofts,
Williams felt the agency was raising his taxes even more than Souza had
written.

Itemized on the assessment was the increment split LCDC was to receive: 60
percent of his total. A few blocks away soars the condo Williams doesn't
have keys to access.

"They're using my money they can spend freely," he said. "They're giving it
to schools, the Kroc Center. They can do whatever they want with that money
and they haven't done anything with parking in the downtown, which it
desperately needs."

The agency could spend Williams' money, but according to state, city and
county officials, it didn't raise his property taxes: The state of Idaho
did.

"There are several issues that impact our taxpayers, but urban renewal is
not one of the significant players. Legislative changes routinely dwarf
other sources," said Kootenai County Assessor Mike McDowell.

Last year, a change in state legislation prohibited taxing agencies like
cities from claiming new construction growth inside urban renewal districts
as their own growth, which they had done in previous years.

The decrease in new growth dollars for the city led to a decrease in what
Coeur d'Alene could calculate as its total valuation -- or overall worth --
which affected the levy rate taxing entities like the city, county, college
and fire districts set to multiply their taxing share.

It's those levies, multiplied by the property tax assessment, which is the
property tax bill. (Urban renewal agencies cannot levy taxes.)

When valuations are down, levy rates generally go up, and on a property with
equal or increased valuation, higher levy rates would mean higher taxes.

But a more direct effect on property taxes was a higher homeowner's
exemption legislators enacted at the same time: $100,938 off each
owner-occupied house's taxable valuation -- and off the city's taxable
worth.

That action spared homeowners greater increases in this year's bill, but
shifted the financial burden on commercial businesses like hotel owners.

The shift in the tax exemption accounted for Coeur d'Alene's depreciation in
the last year, Tymesen said. Meanwhile, the Lake District's total valuation
rose by $80 million, while the River District increased by $65 million.

But while the districts appreciated and the city did not, one is not the
result of the other, officials contend.

"Urban renewal's impact on the taxpayer is nominal," said Alan Dornfest of
the Idaho State Taxing Commission.

"There are too many moving parts, too many variables to pin rising property
taxes on urban renewal," Tymesen said.

---------------------------------------

Mary Souza wrote on Dec 7, 2008 9:57 AM: 

" I don't agree with Troy Tymeson's comment that "If you like development,
then you like urban renewal. If you don't like growth, then you probably
won't like it."

Many pro-business people are unhappy about the way urban renewal is used
here in CdA. Giving tax money to private developers to enhance their profit
levels is not capitalism, it verges on corporate welfare and is unfairly and
unevenly distributed for seemingly arbitrary reasons.

This creates not only the unnatural "bubble", as Dan described in his
comment below, it is also unfair competition for other businesses that don't
receive urban renewal money. Their taxes are still raised to pay for
subsidies to competitors.

I'm all for good development, done in a smartly managed way, with developers
taking both the risks and the rewards, on their own...the old-fashioned,
American way. "

Niles wrote on Dec 7, 2008 9:37 AM: 

" spenman... The LCDC has taken far more than $4.2 million of our property
tax dollars. That is what they are getting just this year. Last year it was
$3.0 million. That is a 140% income growth in one year .... and that is not
unlike previous years. 

The portion of property tax money the LCDC gets is the increment from what
properties were paying when the LCDC started some 11 years ago and what the
property taxes are on those properties now. But all new properties, like
those in Riverstone, pay all of their property taxes to the LCDC because
they did not exist when the LCDC started. So as all those new million dollar
homes and businesses are sold the amount of money taken by the LCDC grows
,,and it does grow dramatically. (BTW developer John Stone doesn't pay taxes
because the Mayor gave him a $3.2 million tax break for his donating
Riverstone Park to the city. I always thought 'donate' meant 'give' not
take.)

The Mayor and the LCDC plan to keep the LCDC open for the longest time frame
allowed by law. They could close parts of it early but they will not even
discuss doing so. The LCDC is slated to continue until 2021. If the growth
continues as is has soon the LCDC will take in more property tax money than
the city does. Already the LCDC has taken 10's of millions. If left alone
they will end up having used 100's of millions of our property tax money how
they decided. 

NO public vote on the education corridor. Just some inside deals a tarnished
appraisal and poof $10 million public dollars goes into Chesrowns pocket. "

richard wrote on Dec 7, 2008 9:32 AM: 

" The Press asks, " Would development blossom without LCDC?" Nice propaganda
spin on the Press' fave word, development. Development 'blossoms'? How about
- development distorts, blights, ruins? Depends on whose ox is being gored,
I imagine. "

spenman wrote on Dec 7, 2008 8:55 AM: 

" Niles, Dan G, Mary S need to run for office....again. I supported Dan the
last go around but with all the government subsidies going around I think
the time is right. I am willing to go door to door if I have to in support
of these great candidates (potential). Art, please be willing to put signage
on your property( I did ) when we go to battle in two years if your not
taxed out of business.$4.2 million of our tax dollars for a few hundred low
paying jobs....I just don't get it. "

Dan Gookin wrote on Dec 7, 2008 8:50 AM: 

" The LCDC is shifting its raison d'tre from "blight" to "economic
development." Technically, it's a shift from Chapter 20 to Chapter 29 in
Title 50 of state code. But the "economic development" seems limited to
construction, not job opportunities. While they claim the 500 jobs at the US
Bank call center, credit goes 90% to Jobs Plus.

I also take issue with Tymeson's comment about growth and urban renewal,
which demonstrates false logic; being against the kind of "urban renewal"
the LCDC practices doesn't make anyone anti-growth. Urban renewal
irrationally accelerates growth by providing public money to help developers
underwrite cost. That artificially inflates the rate of growth, which
increases property values disproportionally. In other words, it helps create
a growth "bubble" that eventually collapses. To argue that the LCDC can help
this situation means than one fails to see the big picture, i.e., the good
of the community.

The bottom line for me is jobs. Tymeson and other LCDC supporters claim that
urban renewal is "the only" economic development tool available to cities.
Fine. Then use it to attract career-level jobs. Sadly, the only way I think
that's going to happen is when we replace four members of City government
next year. "

justme wrote on Dec 7, 2008 7:57 AM: 

" I have to agree with Niles! "

Niles wrote on Dec 7, 2008 7:08 AM: 

" Okay Dan here are the numbers you asked for. The total property taxes
anticipated going to the city for 2008/2009 are just over $14 million. This
comes from the 2008/2009 budget posted on their website. The incremental
property tax income total going to the LCDC for the same fiscal year is
$4.22 million. That means the total property tax income is around $18.22
million of which $4.22 million goes to the LCDC. The LCDC is skimming 23% of
the city property tax revenues for its private usage.

23% of Coeur d"Alenes property taxes directly to the LCDC to use without any
public vote and little or no public input. Taxation without representation.
Adding insult to injury the city raises all of our property taxes to help
make up for this lost revenue. We pay extra so that the LCDC can give out
money to their developer buddies. Chesrown is about to get handed a $10
million sweetheart deal for property valued at the peak of the market by a
boldly biased appraisal. That is our money getting stuffed into Chesrowns
pockets.

Where is the blight Mayor? Close down the LCDC. Return those tax revenues
back to where they serve the citizens who pay them and not your developer
friends. Where's the blight Mayor? Where? "

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