After years of complaints about the tax diversion scheme known as “urban renewal,” it’s good to see state lawmakers spending the summer studying the issue. The Legislature’s urban renewal interim committee met last Monday and heard about some of the problems with the program that redirects taxpayer dollars away from taxing districts to be spent with very little accountability.
Urban renewal is a clever scheme. It allows for the government to fictionalize property values inside the urban renewal district. When a piece of property is developed or improved, the local taxing districts are told to pretend the property is still undeveloped; they’ll still have to provide services to the developed property, but without the benefit of the increased property valuation. Only the urban renewal district gets to consider the property as developed for taxation purposes. That difference—between the value of the property as it was and as it is—is where urban renewal squeezes money out of taxpayers. That taxpayer money is often controlled by unelected and unaccountable urban renewal boards.
Urban renewal has allowed city officials to lie to their constituents and tell them that a project was paid for without a cost to taxpayers. That has included multi-million dollar capital projects. They’re financed through inflated tax levies and increased property valuations, but a lot of property owners are completely oblivious to what’s jacking up their taxes.
Urban renewal has allowed local governments to put in millions of dollars in construction projects without the required vote of the people. Nowhere is this more pronounced than in Canyon County, where the city of Nampa has funded the construction of a new police station, library and entertainment venue. In Caldwell, it’s a Canyon County government building, new Caldwell airport terminal and community college building.
Canyon County isn’t the only place where voter approval was bypassed in such a fashion. In eastern Idaho, Rexburg officials spent nearly $6 million on a waterpark which generates little more than $50,000 in net revenue a year. (It lost money last year).
Among the largest problems with urban renewal stems from the fact that it has been used to reward big developers, often directing taxpayer dollars to private projects. This includes building facade improvements, such as those in Coeur d’Alene and Caldwell, or the more dramatic developments, like the Chobani yogurt plant in Twin Falls. Urban renewal was used help finance the failed Hoku industrial project in Pocatello. Pocatello’s urban renewal was also used to provide several zero-interest loans to companies—loans that were never repaid.
Any program that tricks taxpayers, bypasses voters or embraces cronyism, as urban renewal has, ought to be repealed. It’s doubtful lawmakers will be willing to do that, but it’s fun to remain hopeful. However, at minimum, lawmakers should stop urban renewal from being used to bypass taxpayer approval for major projects. Additionally the Legislature should stop urban renewal from being used to give special favors to developers or to loan money. Finally, the Legislature should see to it that any taxpayer dollars are under the direction of people who have been elected and can be held accountable for mismanagement or misdirection of money belonging to taxpayers.
Hopefully, members of the Legislature’s interim committee will arrive at the same conclusion.