If Measure 3-605 passes,
how would Taxing Districts be impacted?
Background
If Measure 3-605 passes and a Town Center Urban Renewal District is formed, the county assessor would calculate the total assessed value of the property within the urban renewal area and establish this value as the “frozen base.” Taxes from the frozen base continue going to all of the taxing jurisdictions. Tax revenues generated from property outside the urban renewal area are not affected. Tax revenue growth above the frozen base, within the urban renewal area, is called the “tax increment”. Tax increment revenue goes to the urban renewal agency for projects within the urban renewal area.
If Passed, How Would Taxing Districts Be Impacted?
Taxing jurisdictions, also known as taxing districts (e.g. Clackamas County, Tualatin Valley Fire & Rescue, County Library District, City of Wilsonville, etc.) gain revenues through the collection of property taxes. It is anticipated that property tax growth would occur in the urban renewal area when urban renewal projects are completed and if private property is developed; and from the statutory limit of 3% increase in assessed values on existing real property.
What are Foregone Revenues?
If Measure 3-605 passes and a Town Center Urban Renewal District is formed, the permanent-rate property taxes on the growth in assessed value in the urban renewal area would be allocated to the Urban Renewal Agency instead of the taxing districts (See below. School funding is not directly impacted.) These revenues are called "foregone revenues." The taxing jurisdictions still collect the property tax revenues from all property not designated as an urban renewal area, as well as the assessed value of the frozen base, but increases in revenues above the frozen base of the urban renewal area (tax increment) would be foregone by taxing districts and allocated for projects within the Town Center urban renewal area until the urban renewal areas closes or until "revenue sharing" is triggered (see "Revenue Sharing" below).
In many urban renewal areas, revenue growth from new investment/development would not have occurred but for the use of urban renewal which has stimulated the growth. As such, forecasted foregone revenues would be foregone in reality to the extent that the urban renewal agency successfully stimulates assessed value growth, primarily through new development and redevelopment. Foregone revenue forecasts for the proposed Town Center Urban Renewal district can be found in the 2023 Town Center Urban Renewal Feasibility Study.
If the Measure passes, how would Revenue Sharing work?
If Measure 3-605 passes and a Town Center urban renewal district is formed, the district would share tax increment revenue with taxing districts when it begins to generate significant increment each year. Oregon law requires urban renewal agencies to share urban renewal revenue with taxing districts when the annual tax increment generated from an urban renewal district exceeds 10% of the district's maximum indebtedness (spending cap). This is often called "revenue sharing." Revenue sharing ensures taxing districts benefit financially from urban renewal, before an urban renewal district is closed.
If passed, what would happen when the Urban Renewal District closes?
When an urban renewal district closes, usually after 20-30 years, the urban renewal agency stops receiving tax increment and all of the new tax revenue growth from within the former urban renewal area then flows as it normally would to all taxing districts. To the extent the urban renewal district has been effective, the taxing districts will receive a new stream of revenue that would not have existed but for the assessed value growth stimulated by urban renewal projects and investments.
If passed, how would school revenues be impacted?
The West Linn-Wilsonville School District and Clackamas Education Service District would not be directly affected by urban renewal tax increment financing, but the amounts of their taxes divided for the urban renewal plan are shown in financial feasibility models for purposes of transparency.
Under current school funding law, property tax revenues would be combined with State School Fund revenues to achieve per-student funding targets. Under this system, property taxes foregone due to the use of tax increment financing and other economic development tax incentive programs statewide, would be replaced with State School Fund revenues as determined by a funding formula at the State level.