How does urban renewal impact taxing districts?
Urban renewal (also called tax increment financing, or TIF) is not a new tax. Instead, urban renewal temporarily changes where some property tax revenue goes.
In Oregon, property taxes typically increase 3% every year. Urban renewal “freezes” the amount taxing districts like the City, County, Tualatin Valley Fire & Rescue, and others receive. While they continue to collect the “frozen” base revenue while an urban renewal plan is in effect, the regular 3% increases plus any tax generated by new development goes to fund the public-benefit projects identified in the urban renewal plan.
To learn more about how urban renewal works, visit:
Urban Renewal Catalyzes Development
One goal of urban renewal is to encourage redevelopment that might not happen otherwise. If urban renewal investments create new buildings, homes, businesses, and higher property values, much of the new tax revenue would not have existed without the urban renewal projects in the first place.
In other words:
- Without urban renewal: Less redevelopment may occur, creating less new tax revenue.
- With successful urban renewal: More redevelopment can create more taxable value, but some of that new revenue is temporarily used to repay urban renewal investments.
Once the urban renewal district ends and its debt is paid off, all property taxes, including new tax revenue from new development, are directed to the regular taxing districts.
To see a year-by-year analysis of how much revenue is projected to be redirected from each taxing district while the proposed Town Center Development District is in effect, visit:
Chapter 8.0, Impact of the Tax Increment Financing, of the Accompanying Report to the Town Center Development District Plan, pg. 26-27
Education Funding is Different
School funding works differently than funding for cities, counties, fire districts, and other taxing districts. A new urban renewal district does not change the overall State School Fund (SSF) allocation to a publicly funded school district in Oregon. School districts that collect less in property tax, due to urban renewal or for other reasons, receive more from state funds, and vice versa.
To learn more about how school funding works, visit:
Would the proposed Town Center Development District affect funding available to our local schools?
Do taxing districts benefit after urban renewal ends?
Yes. Urban renewal is temporary. When the urban renewal projects are complete and debt is paid off, the district closes. At that point, 100% of the property taxes flow to the regular taxing districts. In fact, taxing districts sometimes get a portion of new revenue before a successful urban renewal district closes, sharing the benefits of the new, higher tax base in a process called ‘Revenue Sharing,’ required by statute (ORS 457.470).
If the urban renewal investments were successful, the tax base is larger than it would have been without urban renewal. That means cities, counties, fire districts, schools, and other taxing districts can receive more long-term property tax revenue than they would have without redevelopment.
To see an estimate of the amount of increased property tax revenue each taxing district is forecast to receive after the proposed Town Center Development District closes, visit:
Chapter 8.0, Impact of the Tax Increment Financing, of the Accompanying Report to the Town Center Development District Plan, pg. 29.
