February 26, 2020

Urban Renewal – Property Taxation Without Representation

Edit:  I wrote this white paper in 2017 and will continue to update as necessary.

Urban renewal is relatively unknown by the taxpayer, but it has a significant impact on our wallets.  I felt it was necessary to become more knowledgeable when I was told that urban renewal redirects property taxes from schools towards bond debt taken on by local municipalities.  After meeting with multiple local elected officials[i] that are well versed in urban renewal, it was apparent that the local taxpayer needed to be informed of how their money is being spent without their input or consent.

Property owners are generally aware of the property taxes that they pay and where the funds are allocated if they look at their property tax report from the county assessor or their mortgage statement.  However, urban renewal only shows up on the paperwork if a property is located within an urban renewal district and even then, it has no explanation of what urban renewal is or why it is being collected.  Urban renewal is a pleasant sounding, yet vague, term that perpetuates leaving the taxpayer in the dark about a small group of people deciding that taxpayer funds should go to pet projects, rather than the county, cities, schools, etc.  This is why the Idaho State Legislature needs to end the option for urban renewal to exist at all.

Urban renewal became an option in Idaho when it was inserted into state code[ii] in 1965.  The intentions behind it were to improve and rehabilitate certain deteriorating or deteriorated urban areas because they had become a drain on public resources and a threat to public safety.  Since then, several issues have arisen.

  1. Urban renewal districts are often created in agricultural areas outside of the municipality, rather than downtown areas. This is because of the way urban renewal districts calculate and collect property taxes.  As you can see on the County Assessor’s website,[iii] properties within the urban renewal district have a base value and an increment value, while properties outside of the district only have a taxable amount.  By creating an urban renewal district in an agricultural area, the base value will be low and the increment value will be much higher after construction projects are completed.  Urban renewal districts are funded by the taxes levied against the increment value.
  2. Urban renewal redirects property taxes from going to the city, county, and schools to projects that have been funded through bond debt. In Nampa, these projects include the Nampa Public Library and the Hugh Nichols Public Safety building and parking structure.  The Canyon County Administration building in Caldwell was built with funds from the East Caldwell Urban Renewal Agency.  All three of these projects are property tax exempt, meaning that they will never contribute a penny towards their construction, maintenance or the infrastructure needed to service them.
  3. Local school districts regularly seek more funding through bonds and levies that have to be voted on by the public. This is due in large part to the fact that only a portion of the taxes off of the base value of the properties within an urban renewal district go the school districts.
  4. Property taxes are higher for everyone in the county because urban renewal districts exist. The county levy rates are budget driven, meaning the rates are only as high as they need to be to fund the budget.  Since urban renewal districts most often include commercial properties of high taxable values, the majority of those property taxes (the increment value) are not used to fund the county budget.  Here is an example[iv]:

There is no workable solution to urban renewal that allows urban renewal to continue to exist.  The Idaho State Legislature allowed for urban renewal to exist in Idaho and it can, and should, repeal the entirety of the urban renewal section in Idaho code.  In 2011, the Legislature amended the urban renewal statutes[v] to force an urban renewal agency to gain approval from the majority of qualified electors before another district could be established.  This was an important step in the right direction, but it does not go far enough.  At the present time (2017), early payoffs of urban renewal bonds are not allowed.  The Legislature should look into whether or not it has the ability to pass legislation that would allow for early payoffs.

By eliminating the future potential of new urban renewal agencies and districts to be created, the taxpayers of Canyon County will be better off both individually and as a community.  They will have a lower individual tax burden and at the same time maintain, or even increase, current funding levels of schools and public services.

[i] Canyon County Clerk Chris Yamamoto, Canyon County Controller Zach Wagoner, Nampa City Councilman Paul Raymond

[ii] Idaho State Code Title 50, Chapter 20


[iv] Used by permission from Ted Brumet, 2017 candidate for Mayor of Caldwell

[v] Idaho State Code 50-2006




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