How can number crunching from base assessment rolls and increment values turn into more affordable housing in Ketchum?
The city's formation of an urban renewal agency and the accompanying approval of a revenue allocation area will allow yearly increases in property values to be rerouted into an economic redevelopment fund.
The funds, to be used at the discretion of the URA, will be injected into projects, namely affordable housing, within the boundaries of the urban renewal area.
"The urban renewal agency will invest money in infrastructure and projects," said Ketchum City Administrator Ron LeBlanc. "That infrastructure will generate more growth, and the projects will bring value in to the districts."
Without increasing property taxes and without affecting the school district, the method instead captures new growth values that otherwise would go to taxing entities such as the city, county, and cemetery, recreation, ambulance and fire districts.
School districts are exempt.
If a bare piece of ground within a defined area is built upon, or if a building is renovated, the urban renewal agency would get the increase in assessed value from one year to the next, a figure known as the "increment."
The amount to be generated for Ketchum's urban renewal agency is so far an unknown.
LeBlanc is in the process of tallying properties' values.
"It's a very involved process," he said. "There are 850 properties I have to go through and verify their current assessed value."
That will determine the base assessment roll, which is the value of all taxable property within the urban renewal area.
That number will also help determine the increment value, which is the difference between current assessment and any new development or increase in value that occurs during the year.
The starting point, if approved at the Urban Renewal Agency's first meeting on April 17, will be retroactive to Jan. 1, 2006. That assessment will become the base amount.
"The growth that occurs during the 12-month period will become the increment," LeBlanc said.
URAs use the sum of all increment mill rates—a way of figuring taxes based on property value—for taxing entities except school districts.
Urban renewal agencies approve the agency's boundaries. The urban renewal area is called the "sending area."
In Ketchum, the sending area will likely include the commercial core, the Warm Springs Ranch property in northwest Ketchum, and Warm Springs Village at the base of Bald Mountain. Increment taxes from those areas, reviewed by the county assessor, will eventually find their way into the agency's budget.
Inside the urban renewal area, the agency, for now comprising the City Council, pinpoints revenue allocation areas, or "receiving areas." Those spots are targeted for their potential for affordable housing units, parking structures or streetscape improvements as outlined in the forthcoming downtown master plan, LeBlanc said.
"We left the door open for the urban renewal agency to enhance that or maybe do it quicker," he said of the downtown plan. "The other priority is affordable housing."
Advocates of urban renewal areas say that, despite increment taxes from a larger area being used for specific projects, the effort will do more good than harm overall.
That's due in part to urban renewal areas jumpstarting private investment, said Dave McAlindin, Twin Falls' economic development director and executive director of the city's urban renewal agency.
A Universal Frozen Foods plant in Twin Falls before URA-assisted expansion was valued at $15 million. After the development, the plant's assessment increased by $22 million.
That's investment that would not have happened in the absence of an urban renewal and revenue allocation area, McAlindin said, adding that the expansion also brought more jobs to the area.
Additionally, he noted, the increment was put back in the urban renewal agency's budget, thus paying for the initial outlay as well as facilitating other projects.
By targeting specific projects, development is encouraged in other places, both inside and outside the urban renewal area, he said.
URAs have the flexibility to put restrictions on land and sell it to private parties at fair value, rather than at market value to the highest bidder as municipalities must do, McAlindin said. Therefore, urban renewal agencies can control projects they feel are necessary, such as affordable housing.
Since URA boards are appointed, the public hearing phase during the plan's formation will ensure public buy-in for projects.
As for schools, LeBlanc maintains they will benefit from increased property values—the taxes from which go to school districts—wrought by economic development.
"It's good for schools," he said.
The agency will have to plan ahead in the event of an economic downturn, LeBlanc added.
"We'll need to prepare for those types of situations," he said. "We'll plan for cash-funded projects and be very cautious about debt."
If the current economy holds, the city can expect to see a check in January 2007 for increments tallied from this year, LeBlanc said.
The county assessor and tax collector will issue a check to the urban renewal agency like they do for all taxing agencies, LeBlanc said.
"We'll have a budget and operate just like the city does," he added.
Money wouldn't all be spent on projects directly, however, said Ketchum Planning Director Harold Moniz.
"The board has the capability of entering into contracts," he said. Funds "can and should be spent on studies, designs, and other things to further the goals and mission."