October 1, 2009

Urban Renewal: A New Beginning


Fall 2009

Finally — after three legislative sessions and years of frustration, there is real change and relief from the historical operation of urban renewal districts (URDs). Over the years, special districts have pushed for modifications to urban renewal statutes due to the burdens of increased service demands while at the same time losing the tax revenues that the development would ordinarily bring. Now, through collaborative efforts and a deeper understanding of the issues by all parties, HB 3056 has become law. Urban renewal, with the role of special districts, has the potential to become a cooperative process, with special districts receiving a greater share of tax revenues as the demand for services grows.

Until now, providing services to growing and vibrant URDs had become a financial strain because there was no associated tax revenue to support the additional service demand. Because future tax revenues were diverted to the URD, the financial cost to special districts and school districts was staggering. Coupled with the flexible nature of URDs, such as the ability of the sponsoring agency to amend, extend, and modify the urban renewal projects, these service obligations were, in effect, permanent. Little relief was available under the existing URD laws because the primary expenses for special districts were for operations rather than for capital projects, and urban renewal funding could apply only to "bricks and mortar." Added to that reality was the creative and evolving ability of URDs to find blight and other implementation justifications in fields of grain, also known as "green fields," that were neither urban nor in need of renewal.

To get relief, special districts explored a number of legislative concepts, such as redefining blight, allowing an under-levy, and challenging the constitutional and statutory basis of the URD's formation and implementation. Politically, while some sponsoring agencies had been sympathetic to the problem, the promise of economic development was also a powerful political obstacle. Over time, however, relief came in the form of allies from other special districts, including school districts, and in recognizing the need to fund the increased demand created by successful URDs. Going it alone evolved into a strong guiding coalition of special districts and the political capital achieved from three prior legislative sessions.

The coalition of special districts, with assistance and participation from Special District Association of Oregon (SDAO) and the Oregon School Boards Association, formed a work group to consider issues and provide direction, regarding political feasibility, legal obstacles and opportunities, and the strategic process with the greatest likelihood of success. Through the efforts of lobbyists, the participation of political leaders (including the Speaker of the House, Dave Hunt), and — perhaps most important — the participation of the Association of Oregon Redevelopment Agencies, the Portland Development Commission, and the Oregon School Boards Association, common ground and acceptable solutions were identified. In the end, HB 3056 was adopted and provides for the following:

  1. A limit on the size of the URD based on the size of the tax base.
  2. A mechanism for the assessor to release assessed value to overlapping taxing jurisdictions, using both time-based and performance-based formulas.
  3. A voluntary process, which will require the mutual discussion and agreement of the parties.
  4. A limit on the growth of an urban renewal plan. If proposed amendments to the plan increase debt by more than 20 percent of the original plan, then the sponsoring agency must get concurrence of the overlapping taxing jurisdictions that represent at least 75 percent of the taxes divided in the previous year.
  5. Slightly different provisions for Multnomah County and the City of Portland due to the larger size of the URDs.

The new law will apply to new urban renewal plans and all substantial plan amendments to existing plans, after the effective date of the act, which is January 1, 2010. Further changes may be proposed in future legislative sessions, but the parties have agreed to a framework for change by establishing a standing group for an ongoing dialogue. Because the parties recognize that urban renewal could have many benefits once the financial needs of special districts are recognized and addressed, they have pledged to participate in that process and not pursue legislative changes without fully vetting and agreeing on the proposed solutions. Individual districts with particular concerns or suggestions should bring them to the standing group for further consideration.


Alec Jensen

Alec Jensen is the Executive Officer for Tualatin Valley Fire and Rescue where he has worked for the past eighteen years. Alec serves on SDAO's Legislative Committee and the Joint Fire Service Legislative Committee and is responsible for managing TVF&R's legislative efforts. Prior to joining the fire service, Alec was a paramedic and operations manager for Buck Ambulance Service in Portland.

Kyle Gorman

Kyle Gorman is the Executive Officer of Clackamas County Fire District #1, where he has served for the past 17 years. Kyle is responsible for government relations for the fire district as well as long-term planning. He also serves on the U.S. Department of Transportation's National EMS Advisory Council in Washington, D.C.

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