Urban renewal districts and the agencies that administer them have been around for generations, but there seems to be a lot of misunderstanding about how they work. The concept is simple enough and generally resembles a deferred compensation program many of us invest in for our retirement.
Oregon law allows cities or counties to designate an area within their jurisdiction that is blighted or in need of renewal. Usually, the blight is self-evident in the form of vacant buildings or lots, higher crime rates, and lower property values. Urban renewal attempts to correct these problems, not by increasing taxes, but by distributing them in a different way. Property taxes within a district are directed to all the taxing entities within the district and are held constant at the time the district is created. The distribution of those taxes does not change over time. Only increases in assessed value, either from new construction or rising values, are dedicated to improvement projects within the district that help accelerate its renewal. Projects can range from infrastructure improvements to fixing up old buildings. The taxing jurisdictions, such as school districts, counties, and cities, are essentially investing the increase in value with the expectation of a much larger increase in revenue when the renewal designation expires.
The controversy over urban renewal usually arises because someone notices that tax revenues that might be applied to pressing problems today are being used for purposes that only pay off in the longer term. California Governor Jerry Brown, when faced with a fiscal crisis in his state a few years ago, terminated all of the state’s urban renewal agencies to close immediate funding gaps. This move certainly helped state government solve its most pressing shortfalls, but it did so at the expense of many cities and their future revenue growth. Just as cashing in an IRA early might allow someone to solve a financial problem today, California’s decision will mean there will be less money to support services down the road.
Urban renewal, however, isn’t just about the distant future. Albany’s urban renewal advisory board heard a report this week from local businessman Herb Yamamoto about the effects of an urban renewal partnership with his company, CADD Connections. He pointed out that the grants and loans that allowed him to purchase a dilapidated building on Seventh and Lyon not only helped remove an eyesore, but also attracted at least 16 jobs to Albany. The redevelopment of his property increased the property tax revenue from the site and added jobs to the local economy at a time during the recession when few people were investing in anything.
Anyone with a retirement account knows that not every investment is successful. Similarly, not all urban renewal investments produce a benefit in the short term. Critics point to these projects as evidence of failure, when they may only represent a relatively small percentage of the overall investment. There is an element of risk in any investment, and that’s true whether we put money into buying something we need or want today or save it for the future.
I believe Albany’s decision to form an urban renewal district nearly 15 years ago has produced visible results that a short walk through our downtown will verify. More importantly, the Central Albany Revitalization Area (CARA) has already produced significant economic benefits with the promise of more to come.