Lower Taxes by Reigning In Urban Renewal

Here is a OP-ED piece written by our friend Wayne Hoffman of the Idaho Freedom Foundation.  Mr. Hoffman has given us permission to post his work on THE GUARDIAN BLOG.

"Earlier this month, a group of city elected officials in Idaho voted to cut taxes. How did they do it? And how can state legislators apply the same strategy to cash-strapped taxpayers statewide?


By fixing the state’s urban renewal laws.

First, an explanation of how Idaho taxpayers have been robed blind by urban renewal and its higher taxes. Let’s say we have a city in Idaho called Emerald City. In Emerald City there exists an urban renewal district. That district includes an acre of bare ground valued at $5,000.

The urban renewal district encourages a developer to put a building atop the bare ground. Now that acre of land is worth $500,000. The taxes from the increase in the valuation — the $495,000 — goes to the urban renewal district to use for their “economic development” projects.

The county, highway district, city or ambulance district — none of these entities gain from the increased valuation. As far as those taxing districts are concerned, the property is still valued at $5,000. However, because the city, county, highway district and ambulance district must still provide services to the new building, those taxing districts must increase their levies in order to bring the revenue needed to account for the increased services.

Meanwhile, Emerald City’s urban renewal district sets about its urban renewal projects. So while the local taxing districts can’t afford to hire the firefighters it might need, or has to raise tax levies to do so, the urban renewal district is putting money into arts, loans and grants to private companies and into new public buildings that would normally have to be approved by voters, were it not for the fact the urban renewal district were doing the work.

There’s virtually no limit to what an urban renewal district can’t do under state law, and little oversight because urban renewal boards are not elected. Taxpayers pay for all of this spending, much without their knowledge. Construction is occurring in town, but their tax levies keep going up. Taxpayers are at a loss as to why.

The taxpayers ask the urban renewal people if they’re to blame for higher taxes, to which we’re told the answer is no.

In truth, urban renewal does cost taxpayers. It does result in higher taxes, and here’s more evidence: The Pocatello City Council voted two weeks ago to get rid of one of its urban renewal districts. That move freed $83 million in property valuation (called tax increment) that had been locked up and applied to urban renewal. Pocatello leaders said the elimination of this urban renewal district would result in a 3.5 percent cut in taxes. Tax dollars that previously went to urban renewal are now directed to city services.

Collectively, urban renewal is spiriting away $52 million in taxes for specious projects in more than 60 Idaho urban renewal districts.

Mayors across Idaho like to tell Idaho taxpayers they’re getting something for nothing with urban renewal, that no taxpayers are harmed in the making of urban renewal districts. Our experience in Pocatello tells us that such statements are pure fantasy.

Idaho lawmakers have a chance next legislative session to rein in urban renewal, to stop Idaho taxpayers from being swindled out of their tax dollars and to apply Pocatello’s experience to the rest of Idaho. If lawmakers are looking for a good way to cut taxes statewide, here’s their golden opportunity."

 Wayne Hoffman is the executive director of the Idaho Freedom Foundation. E-mail him at wayne@idahofreedom.net.