The House Revenue and Taxation Committee voted today to introduce draft legislation that would prevent urban renewal districts from gerrymandering. The proposed legislation would prevent “shoestring” additions to urban renewal districts, said Rep. Phil Hart, R-Athol.
A shoestring addition refers to an urban renewal district that expands its borders to pick up new areas that may not be blighted at all, often down major arterials, to collect the tax increment from big new developments.
When urban renewal districts are formed, the property taxes the city and county receive within the district’s boundaries are capped at that year’s level. But property values in the district continue to grow. The property tax cities and counties collect on growth within the district is the tax increment, which goes to the urban renewal district.
When urban renewal districts gerrymander their borders, they may take more than their fair share of tax increment from the city and prevent the city from lowering taxes, according to an opinion from the Idaho Attorney General’s office.
Idaho code doesn’t allow municipalities to make shoestring additions, Hart said. Nor does it allow gerrymandering of legislative districts.
The proposed legislation would also address deadlines for urban renewal districts to sunset. Currently, districts are supposed to sunset after 24 years, but there’s been confusion about what happens when the district expands, Hart said. Does the addition have to sunset at the same time as the original district? Does it get its own new 24-year deadline? Does the clock start over?
Hart’s proposal would prevent district expansions from extending the timeline for retiring the district. The expanded area would have the same deadline as the original district.
A third provision would require urban renewal agencies to issue a report every year that would include the tax increment the agency received from every urban renewal district in the city and the assessed value of all the property in the municipality.
According to Idaho law, property in urban renewal districts must not exceed 10 percent of the assessed value of the municipality, Hart said. But he’s concerned that law isn’t being followed, especially when districts expand and new districts are formed in the same city. As with gerrymandering, that leaves taxpayers to pick up the slack, Hart said.
Under his proposal, if agencies exceed the 10 percent limit, they would not receive their tax increment that year, he said.
“It throttles back the size of an urban renewal district so that tax impact on the rest of the community is not too great,” Hart said.
The proposed legislation now becomes a bill and will be sent back to the committee for further debate.
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