The City’s Pulse Newsletter, by Mary Souza
Our lives are full of complex issues, but “tax increment”, which is the kind of money used by LCDC to fund urban renewal projects, is not difficult. Understanding the concept is easy if you ignore the layers of big words LCDC likes to use in describing tax increment; they want it to be intimidating.
Let’s use a local, real-life example to illustrate tax increment:
First, get a map and take a big pen and draw a line around downtown CdA, way up NW Blvd., and up 4th Street. This is one of our urban renewal districts.
Second, freeze all the property taxes on every single house, building or bare land inside those lines at 1997 levels, because that is when this district was started.
Third, for every year, send only the 1997 level of tax money to the city, county and other taxing entities.
But remember, the taxes for all the property in the district still go up every year, just like everyone else’s, so take all the increases in taxes over the 1997 level and send them to the LCDC. This increase is called the tax increment. Easy.
For the year 2008, the LCDC received a tax increment of almost $5 million dollars.
The unelected board of LCDC has complete control over how that public money is used and this district will go out to the year 2021.
Why do I mention this subject right now? Well, last week in the CdA Press, there was a column, not mine, about urban renewal that misdefined the tax increment, so I wanted to clarify the information. But, while the column was wrong about tax increment, it was right about the importance of a legal case now sitting before the Idaho Supreme Court.
The legal challenge in question started in Southern Idaho and seeks to clarify whether urban renewal agencies are alter egos of the city or whether they are fully independent municipal bodies. This is important.
If they are ruled to be alter egos of the city, they could be struck down as an illegal method for cities to get around laws requiring a public vote before big public expenditures. Any debt carried by URAs might be declared invalid, and that’s what some banks are worried about.
If the State Supreme Court rules that urban renewal agencies are separate and fully independent, then they are home free. Too free, actually. There would be huge questions of accountability. Who supervises these boards? The cities or the state? Or do they operate by using tax money and have no oversight at all?
Just so you know, both LCDC and the City of CdA gave many thousands of our public dollars to help pay for what’s called an “amicus brief”, also called a “friend of the court brief”, to push in favor of the urban renewal agencies being independent. Our tax dollars at work.
The LCDC website says, “LCDC does not raise property taxes; LCDC’s impact is ‘neutral’ to the property tax payer.” There is a convoluted explanation for Dornfest’s opinion, but so far I’ve not received a satisfactory answer to this question: If LCDC’s skimming the tax increment from the properties in each of its two projects neither decreases the amount the taxing entities receive nor increases the amount taxpayers pay, then where does the increment come from. The answer, of course, is that in order to receive the amount necessary to meet their approved budgets, the taxing entities increase the amount they levy on each taxpayer. So while it’s true the LCDC does not raise the taxes itself, it is patently false to say the LCDC’s skimming the increment does not cause our taxes to increase . The end result to the taxpayer is the same: We pay more out so the LCDC can increase its bank account. I would not call that a “tax neutral” impact.
The Hart v. Rexburg case is expected to be argued in the Idaho Supreme Court in the fall. We don’t know exactly what position the Court will take. We do know the City of Coeur d’Alene has put up $5,000 of our money to ensure its First Unregistered Bank of Idaho surrogate, the LCDC, is allowed to continue to skim the tax increment and spend tax money in ways the City could not without either a vote of the people or judicial confirmation.
Comment by Bill — June 27, 2009 @ 6:55 pm
Of course the LCDC does not raise property taxes! They can’t, legally.
The question that needs to be answered is this: “Does the LCDC impact property taxes.” The answer is a resounding YES. By its existence, urban renewal increases property taxes. The question is whether the short term pain of those increases is worth the long-term benefits that urban renewal provides. The LCDC’s track record on those long-term benefits is good for a handful of developers, and iffy for the rest of the city’s residents.
Comment by Dan — June 27, 2009 @ 7:04 pm
Ironically the term blight includes properties not occupied so in this way the LCDC has actually caused blight. Riverstone and other developments were overpriced and came to market as the bottom fell out. They sit empty and are modern day blight. I doubt if they will sell even at auction pricing.
Comment by Wallypog — June 28, 2009 @ 3:11 pm
I find it ironic that the sub-million dollar condos, built for wealthy part-time residents, are now priced at auction starting at $120,000 — a figure that once was thought of as “workforce housing.”
AND despite that, the LCDC continues to try and build “workforce housing” on 4th Street. The starting price? Why, $120,000!
Comment by Dan — June 28, 2009 @ 4:48 pm