Idaho

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Why Urban Renewal Faces Resistance In Idaho

Molly Messick / StateImpact Idaho

Melinda Anderson shows off what will be a new downtown headquarters for dairy manufacturer Glanbia. It's a project aided by Twin Falls' urban renewal agency.

Urban renewal districts allow communities to leverage property tax dollars to support local economic development. There are more than 60 of them in Idaho. But this legislative session has brought fresh signs that, in some corners, urban renewal isn’t exactly popular – even as it supports the state’s most touted new company.

 
Melinda Anderson has worked in economic development for twenty years, focusing on small communities.That brought her to Twin Falls, and gave her the chance to work on the biggest economic development deal she’s ever been a part of.

Last week, she took me for a drive. “You see those tall silos and that tall building?” she exclaimed as we approached the plant. “That’s Chobani!  Just from a physical standpoint, it’s just massive!”

We got out of the car to look at the oblong white building that’s a new feature of Twin Falls’ north side. Clearly, Anderson is excited. You’d be hard-pressed to find a local or state official who’s not. The Greek yogurt plant employs hundreds of workers. It buys milk from local dairies. Anderson says it’s a testament to the importance of urban renewal.

“It was able to pay for all of the new infrastructure, mostly water and wastewater improvements, that needed to be made,” Anderson explained. “So that’s the big role that urban renewal played in this process.”

Basically, the urban renewal process generated $30 million dollars. That’s two thirds of the total incentives – federal, state and local – that helped convince Chobani to choose Twin Falls, Idaho.  Without that money, Anderson says, this behemoth yogurt plant wouldn’t be where it is.

“They would have absolutely gone someplace else,” she says. “We would not have that investment here in Twin Falls.”

How does urban renewal funding work? Say a city council wants to achieve something, like job growth, or downtown revitalization. It forms an urban renewal agency. With the city council’s approval, that agency has the authority to draw a line around a section of the city to create an urban renewal district. For the next 20 years, any taxes on increased property value in that district can go to the urban renewal agency. In Twin Falls, the agency leveraged those future tax dollars to secure a bond. And that’s how they made infrastructure improvements Chobani needed.

It’s a process that draws pithy criticism from Randal O’Toole, a senior fellow with the libertarian Cato Institute. “It’s portrayed as free money,” he says. “Nobody loses, everybody gains. And it’s not true!”

O’Toole points to the example of California, which did away with urban renewal districts in 2011.  He alleges that urban renewal agencies siphon off tax dollars that would otherwise go to schools and other local services. He says communities are offering up precious local dollars unnecessarily.

“If cities weren’t engaging in this kind of bribery to get corporations to move to their cities, where would the plant have located?” he asks. “It probably would have located exactly where it did anyway.”

O’Toole authored an Idaho Freedom Foundation report that calls for getting rid of urban renewal agencies in the state. Last year, a legislative committee printed a bill to do just that. This session has seen more signs of opposition. A draft personal property tax bill singled out urban renewal districts by giving them no replacement funding.

Boise attorney Ryan Armbruster says that would be a mistake. “The ability to implement tax increment financing is the only local economic development tool that’s available,” he explains.

Armbruster works with urban renewal agencies. He says urban renewal funds are key because they give communities a way to improve downtown infrastructure, or meet the needs of a particular business, like Chobani. But he acknowledges the resistance the agencies face.

“I think the pushback at some levels has centered on the fact that these folks are not elected by the public,” he says. “Does that create an issue? Are there monies being spent that shouldn’t be spent? I think that’s, you know, a fairly philosophical question to ask.”

It’s a philosophical question because it gets back to something the Cato Institute’s Randal O’Toole said — that if no communities offered urban renewal funds, companies would be left to choose the locations that serve them best. Future tax dollars wouldn’t be sacrificed in the name of economic development.

Susie Davidson of the Idaho Department of Commerce says that’s a fine idea, in theory.

“Theoretically, it would be great if everyone said, ‘Okay, starting tomorrow no one would offer incentives.’ But who would be the first to do that?” she asks.

Davidson is the department’s business attraction manager. Like it or not, she says, economic development is competitive. The fact is that businesses – she calls them customers – have the upper hand.

“The customer has all the cards,” she says. “They know what their cost structure is and what they need to do to be profitable and to decide to establish a site. Then we have the opportunity to play the cards that we have.”

It’s not ideal. But not participating in that system could have costs, too. Costs like that gleaming new yogurt plant on the outskirts of Twin Falls.

Comments

  • NoFreeLunches

    Ryan Armbruster is lying, but what do you expect from a lawyer who represents urban renewabl districts? There are other tools – such as the current law which allows county commissioners or city councils to forgive property taxes for up to five years for new developments. That is certainly a more transparent way to use taxpayer dollars. At least if the taxpayers don’t like it, they can campaign against those who voted for the decision, unlike unelected and unaccountable urban renewal boards. Urban renewal is so convoluted no taxpayers can see where the money is coming from and how it affects their tax bills. It is terrible policy, even California of all places has decided it is no good!

    • SimpleTruth

      Mr. NoFreeLunches,
      Your dishonesty is crushing. All Urban Renewal Agencies conduct their meetings in the open. All records are available to the public. They can take no action without prior approval of their plan from the elected city council. If you don’t like the actions of the board, pressure the council. As to accountability, if the board’s actions don’t meet the expectations of the elected city council, they can be removed. There can be no debt without council approval. There can be no plan without council approval. Who elects the council? You do. Who appoints the members of the boars? The very people you trusted when you voted for them. Generated tax dollars are very trackable, it just sounds better for those that don’t agree with URA to muddy the discussion with convoluted charges of a lack of transparency in an effort to confuse those who are not as familiar with the process as they need to be. Good day sir.

      • NoFreeLunches

        Now that you have finished your ranting, perhaps you could address the main point in my comment above, there are other tools that are more transparent and more accountable to the taxpayers, notably the ability of county Commissions and city councils to forgive property taxes for up to five years. You conveniently omitted any mention of that. Surely you jest when you imply that urban renewal is in any way transparent. Ask any citizen on the street if they understand how an urban renewal agency gets money and you will see a lot of blank stares. However, seeing a business get a tax break to pay for its own infrastructure every taxpayer can understand and is far more transparent any way you look at it.

  • SimpleTruth

    Just a couple of clarifications. 1) No one involved in URA ever refers to Tax Increment Financing funds as “free money”. The only people that do are those opposed to URAs and are trying to sway the uninformed. 2) Taxes generated through URAs don’t include school district funds. Those dollars pass through from the county who collects them directly to the district. School districts do not experience a delay in receiving tax monies when a URA/TIF is used. 3) Tax revenue generated through a TIF does have an impact on other agencies because the tax reciepts are delayed. However, in most cases it is not revenue they would have received otherwise. In most instances, when asking relocated companies where TIFs have been used, they would not have come. The haters can challenge that all they want, but the reality is, when talking to the companies, they would not have relocated here. We are at a great disadvantage with other states how have much stronger economic development incentives. URA/TIF, when used properly, specifically, carefully, sparingly and for the shortest life possible, can and do succeed in lowing property taxes in the long run because of the new development it attracts. It would be a much better discussion if those that are opposed to the use of URAs would have the intellectual honesty to debate that facts rather than the political hot buttons.

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