The Local Development Act, or Urban Renewal, is intended to allocate a portion of the property taxes in an Urban Renewal Area,
for a limited period of time, to assist in the financing of Urban Renewal plans, and to encourage private development in Urban Renewal Areas.
The first step to understanding urban renewal is thoroughly understanding how property taxes are calculated in Idaho. Before proceeding on this
page please read Determining
Property Taxes. Urban renewal is a complicated subject, if after reading this information you have any additional
questions please feel free to ask at
History of Urban Renewal
Laws relating to urban renewal were originally created to make it easier to remedy problem areas of the community
that are described in Idaho Code 50-2002.
Today, urban renewal districts are typically set up in areas that are already forecasted to significantly increase in value.
This is because the urban renewal district receives property taxes only on the amount the property increases in value. The more the property
value increases after the district is put in place, the greater the revenue that is generated by the urban renewal district.
Areas that would be attractive to urban renewal districts would be farm ground that has been recently purchased for development.
How An Urban Renewal District is Created
A local governing body, such as a city, finds cause for an urban renewal agency per Idaho Code 50-2005. A notice
of public hearing to discuss this option is published in the local newspaper for at least 30 days and delivered to
the affected tax districts. Once the agency is authorized, the mayor acting on the advice and consent of the local
governing body, appoints a board of commissioners. The local governing body may designate themselves as the board
of commissioners at any time per sections 2 and 3 of Idaho Code 50-2006.
The creation of an urban renewal district does not go to a vote to the public.
How Urban Renewal Generates Income
Revenue for urban renewal is determined differently than taxing districts such as the county, city, or school
district. The amount of income received by taxing districts is based on their budget, which is capped.
Property Taxes).Urban renewal is not a taxing district so it does not have the authority to create
levy rates. This means the amount of income they can generate is not determined or capped by a budget. Instead urban
renewal adopts the total levy rate (the sum of all the taxing district levies). Urban renewal's revenue is calculated
by multiplying the adopted levy rate by the difference between the current net taxable value and the value of property
the year it went into an urban renewal district.
The assessed value of the properties in an urban renewal district at
the time the district is put in place is called the Base value. The taxing districts that serve properties in the urban
renewal district can only levy property taxes on the base value during the life of the urban renewal district. See
section 4 of Idaho Code 50-2903.
The Increment value is the amount that the assessed value increases after the urban renewal district is put in place.
Urban renewal receives property tax dollars calculated on the increment value.
If an urban renewal district began in 2002, the 2002 value becomes the base. This means there is NO increment value the first
year therefore the urban renewal does not have income that year. Every proceeding year for the life of the urban renewal district
(typically 24 years) the base value is subtracted from the current year's value to calculate the increment. When the increment increases
more income is generated for urban renewal projects. (Update 2011) A revenue allocation area formed after 2011 is limited to a 20 year life.
The urban renewal district has the power to undertake and carry out any project or activity within its area of operation. The decision
of what projects are taken on by urban renewal is not taken to a vote
per Idaho Code 50-2007.
A public hearing is held before an activity may begin
per Idaho Code 50-2008.
Notice of these public hearings are published in the legal section of the newspaper.
Idaho Code 50-2905 (updated 2011)
Nothing herein shall prevent the agency from retaining assets or revenues generated from such assets as long as the agency shall have resources other
than revenue allocation funds to operate and manage such assets.
How Urban Renewal Affects Taxing Districts
Taxing districts still have the ability to collect their full budget requests. This includes the allowed 3% budget
increase and forgone amounts. This is because property taxes are budget driven not assessment driven. This means
the amount of taxes collected by taxing districts is determined by budgets not assessed values. Since taxing districts
only levy taxes on the base value, they are not able to collect on
occupancies. (new construction) located in urban
renewal districts. See Idaho Code 50-2908.
Occupancy taxes pay for growth such as added equipment and manpower needed for a fire department to adequately protect
new buildings in their area. Taxing districts are required to support all of the structures and population within
their districts regardless of the funds available to accomplish this. See
Required County Services . Urban renewal
districts often bring new construction and growth to the community. Taxing districts don't see the revenue created
by this growth until the urban renewal district ends which is typically around 24 years.
HHow Urban Renewal Affects All Tax Payers
Any given taxing district, such as the County, can cover properties both inside and outside of an urban renewal district.
The taxing district can only levy taxes on the base value of the portion of properties that are also in the urban renewal district.
This creates a tax shift and causes levy rates to increase at a faster rate (or in some cases not decrease as much as it would have otherwise).
This affect on the levy rate applies to all of the properties within the taxing district whether or not they are located in an urban renewal
district. This means each tax payer is responsible for providing a larger percentage of the tax district's budget.
When there isn't an urban renewal district in place a taxing district levies taxes against the entire taxable value of every property
in their code area. See the table below.
When an urban renewal district is in place, the taxing district must subtract the increment value (of the properties
that are also in the urban renewal district) from the total assessed value of all of the properties within that taxing
district. See the table below.
The tables above illustrate the affect urban renewal has on levy rates. The assessed value of the individual property and the taxing
district budget are exactly the same in both instances above. Yet, the individual tax bill increased. This increase would be exactly the
same if the property were inside or outside of the urban renewal district. NOTE: These two charts are meant to illustrate the impact to a
taxpayer if no urban renewal district existed. These are representative numbers which have been rounded for the purpose of this illustration.
No other purpose is intended or implied.
For purposes of calculating the rate at which taxes shall be levied for each taxing district in which a revenue allocation area is located,
the county commissioners shall, with respect to the taxable property located in such revenue allocation area, use the equalized assessed value
of such taxable property as shown on the base assessment roll rather than on the current equalized assessed valuation of such taxable property,
except the current equalized assessed valuation shall be used for calculating the tax rate for:
- Levies for refunds and credits pursuant to section 63-1305 Idaho Code , and any judgment pursuant to section 33-802(1), Idaho Code, certified after December 31, 2007;
- Levies for payment of judgments pursuant to section 63-1305A, Idaho Code;
- Levies permitted pursuant to section 63-802(3), Idaho Code, certified after December 31, 2007;
- Levies for voter approved general obligation bonds of any taxing district and plant facility reserve fund levies passed after December 31, 2007;
- Levies set forth in paragraphs (1)(a) through (d) of this subsection, first certified prior to December 31, 2007, when the property affected by said levies is included within the boundaries of a revenue allocation area by a change in the boundaries of either the revenue allocation area or any taxing district after December 31, 2007; and
- School levies for supplemental maintenance and operation pursuant to section 33-802(3) and (4), Idaho Code, approved after December 31, 2007.
*Tax Billing table NOTE: the school bonding and supplemental tax calculation do not go to Urban
The Pie Graph display is based on the information contained on the tax billing data above for a single property within the URD.
NOTE: Kootenai County has five school districts of which two do not levy against increment for bonds and supplemental levies at
this time. They passed bonds or supplemental levies before the law change in January, 2008.
Urban Renewal districts have the ability to sell bonds using their future property tax income as collateral per
Idaho Code 50-2909.
In other words, the urban renewal district is borrowing money to increase their short term revenue. This
money is paid back with interest by the urban renewal district as revenue becomes available.
Urban renewal districts only levy taxes on increment value. There is only increment value when assessed values
increase. If the assessed values of property with in an urban renewal district decrease the district does not receive
income. This could cause the urban renewal district to default on these bonds. If this happens, the municipality, the
state, or any political subdivision can not be held liable. Nor will the bonds be paid out of any funds other than
those of the urban renewal agency. See Idaho Code 50-2012.
Closing the Urban Renewal District
For the fiscal year that immediately predates the termination date for an urban renewal plan involving a revenue allocation area or will
include the termination date, the agency shall adopt and publish a budget specifically for the projected revenues and expenses of the plan
and make a determination as to whether the revenue allocation area can be terminated before the January 1 of the termination year pursuant
to the terms of section 50-2909(4), Idaho Code.
In the event that the agency determines that current tax year revenues are sufficient to cover
all estimated expenses for the current year and all future years, by September 1 the agency shall adopt a resolution advising and notifying
the local governing body, the county auditor, and the state tax commission and recommending the adoption of an ordinance for termination of
the revenue allocation area by December 31 of the current year and declaring a surplus to be distributed as described in
section 50-2909, Idaho Code, should a surplus
be determined to exist. The agency shall cause the ordinance to be filed with the office of
the county recorder and the Idaho state tax commission as provided in section 63-215, Idaho Code. Upon notification of revenues sufficient
to cover expenses as provided herein, the increment value of that revenue allocation area shall be included in the net taxable value of the
appropriate taxing districts when calculating the subsequent property tax levies pursuant to section 63-803, Idaho Code. The increment value
shall also be included in subsequent notification of taxable value for each taxing district pursuant to section 63-1312, Idaho Code, and
subsequent certification of actual and adjusted market values for each school district pursuant to section 63-315, Idaho Code.