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Senate Bill 1303 — Urban renewal, property tax

Senate Bill 1303 — Urban renewal, property tax

Parrish Miller
February 13, 2022

Bill Description: Currently, an urban renewal district receives 100% of the revenue generated by the incremental increase of the assessed value of property within the district. Senate Bill 1303 would reduce that number to 95% for newly created urban renewal districts. 

Rating: +1

Does it transfer a function of the private sector to the government? Examples include government ownership or control of any providers of goods or services such as the Land Board’s purchase of a self-storage facility, mandatory emissions testing, or pre-kindergarten. Conversely, does it eliminate a function of government or return a function of government to the private sector?

Urban renewal districts (URDs) and tax increment financing are tools used to expand the size and scope of government and to compete with the private sector.

Essentially, URDs are new taxing districts that claim credit for any increases in property values over the period the district exists, which could last for decades. If a business in a URD remodels its facilities, the increased value (or increment) in the value of its property is credited to the URD, which receives new funds to spend at its discretion.

This process significantly reduces revenue for the county (and any cities or other local taxing districts that overlap with the URD). This is because the increased valuations that would have happened naturally are credited to the URD, which siphons off those tax dollars for its cronyistic endeavors. As a result, the county and other local taxing districts increase property tax rates overall and thereby force property owners outside the URD to subsidize the spending within the district.

The URD process is riddled with corruption and serves no function other than to increase taxes and funnel the money to well-connected developers. 

Senate Bill 1303 amends Section 50-2908, Idaho Code, in a manner which would take a tiny step toward rectifying the glaring flaws in this system. Rather than crediting the URD with 100% of the increased property values within its borders, the district would receive only 95% of the increased value, leaving the remaining 5% to be divided up among the county and other local taxing districts.

This is a very small adjustment, and it would only apply to new URDs created after July 1, 2022. It would be a far better solution to abolish URDs in Idaho altogether. 


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