> Urban Renewal Agencies are public bodies created by state law which
> can be activated by municipal resolution. The agencies were created in
> response to a recognized "need to raise revenue to finance the economic
> growth and development of urban renewal areas and competitively
> disadvantaged border community areas".
Of course, this statement, taken from 50-2902 I.C., gets to the crux
of the unlawful(?) action on the part of the City of Moscow. Urban Renewal
Agencies cannot be created solely for the purpose of utilizing the tax increment
financing scheme allowed under the Economic Development Act. Urban
Renewal Agencies are granted authority to engage in development projects
if, and only if, "the local governing body shall have adopted a resolution
finding that: (1) one or more deteriorated or deteriorating areas as defined
in this act exist in such municipality; (2) the rehabilitation, conservation,
redevelopment, or a combination thereof, of such area or areas is
necessary in the interest of the public health, safety, morals or welfare of the
residents of such municipality; and (3) there is need for an urban renewal
agency to function in the municipality." (I.C. 50-2005).
The Urban Renewal Act does not provide for "disadvantaged
border community areas" to meet the definition of "deteriorated area"
in the Urban Renewal Act. In short, in order for an Urban Renewal Agency
to exercise its authority, there must be (or have been) genuinely
blighted or "deteriorated areas" as defined under Urban Renewal Law and
substantiated with findings in a municipal resolution. Post Falls, ID skirted
this legal issue because it already *had* a lawfully created Urban Renewal
Agency which met the proper definition when it began plans to create
a tax increment financing district in an undeveloped area.
Had the City of Moscow created the Urban Renewal Agency
with an eye to the definition of "deteriorated" from the Urban Renewal
Act, and not from the Local Economic Development Act, it would have acted
within Idaho Code. As it stands now, any action the newly Urban Renewal
Agency takes (its "exercise of authority") can be legally challenged because
it does not meet the necessary conditions identified in 50-2005 cited above.
> Due to a lack of appropriate relocation space, the technology-based
> companies graduating from the Business Technology Incubator have been
> relocating elsewhere.
This begs the key question for policy makers. How big is this
problem? How many businesses have located elsewhere? Does one
business (AHA) constitute a "problem"? Furthermore, even assuming it is
a "problem," is it a *public* problem, one that can *only* be solved
through government intervention?
> Tax allocation financing is a method of targeting a portion of the
> INCREASED tax revenue generated from a project FOR A LIMITED
> PERIOD OF TIME, to pay for the construction of the infrastructure for
> a project.
Bonds can be floated for extended periods of time. During this
time, the subsidized development does not contribute revenues
to the general tax fund. If schools get overcrowded (and they will--
after all, the business park is *supposed* to stimulate growth) and a
levy override is needed (Moscow has had its share), revenues from
the subsidized development will not help because they are being
used to repay the bonds.
> (Although some may wonder about targeting tax revenues to a
> specific project, when you really think about it, cities target tax revenues
> to specific projects and activities every year through the process of developing
> and adopting a budget).
Not a good analogy. Cities target revenues to specific "public"
projects--not "private" projects such as a business park.
> Tax allocation financing provides a tool for municipalities to
> construct projects that otherwise would not have occurred.
If Moscow is a such a good community to locate in permanently,
won't the private sector provide such opportunities? One has to wonder--
if the private sector won't undertake such a project, why should
the government? Perhaps the EDC should focus on
promoting Moscow as a community for businesses to locate in without
special government tax carrots.
> These projects
> bring enhanced economic activity and increase the tax base, creating extra
> funding for schools, roads and parks.
This is a claim that is unsubstantiated and contradicts
real world experience such as Rio Rancho, NM where the tax increment
financing actually reduced the per capita funding available for schools
roads, and parks because the additional revenues were locked into
repaying the bonds. Growth without the revenues from the growth is
the worst kind of growth.
> As it is proposed, not only will this project provide a relocation
> site for technology-based businesses, it will also enhance the quality of
> life for everyone in Moscow by the addition of a segment of linear park and
> the development of a small park in the interior.
Of course, absent from any of this discussion is how Moscow intends
to meet its water budget which it continually fails to meet every year. How
does the EDC propose to get Moscow within its water budget?
-- Greg Brown (gregb@uidaho.edu) Computer Services Adjunct Assistant Professor, College of Forestry,Wildlife,& Range Sciences University of Idaho Moscow, ID 83843 (208) 885-2126 Fax: (208) 885-7539