The Local Development Act, or Urban Renewal, is intended to allocate a portion of the property taxes in an Urban Renewal Area, for a limited period of time, to assist in the financing of Urban Renewal plans, and to encourage private development in Urban Renewal Areas.

The first step to understanding urban renewal is thoroughly understanding how property taxes are calculated in Idaho.  Before proceeding on this page please read Determining Property Taxes   Urban renewal is a complicated subject, if after reading this information you have any additional questions please feel free to ask at assessordept@canyonco.org.

History of Urban Renewal

Laws relating to urban renewal were originally created to make it easier to remedy problem areas of the community that are described in Idaho Code 50-2002.  Today, urban renewal districts are typically set up in areas that are already forecasted to significantly increase in value.  This is because the urban renewal district receives property taxes only on the amount the property increases in value.  The more the property value increases after the district is put in place, the greater the revenue that is generated by the urban renewal district.  Areas that would be attractive to urban renewal districts would be farm ground that has been recently purchased for development.

How An Urban Renewal District is Created

A local governing body, such as a city, finds cause for an urban renewal agency per Idaho Code 50-2005.  A notice of public hearing to discuss this option is published in the local newspaper for at least 30 days and delivered to the affected tax districts. Once the agency is authorized, the mayor acting on the advice and consent of the local governing body, appoints a board of commissioners.  The local governing body may designate themselves as the board of commissioners at any time per sections 2 and 3 of Idaho Code 50-2006. The creation of an urban renewal district does not go to a vote to the public.
 

How Urban Renewal Generates Income

Revenue for urban renewal is determined differently than taxing districts such as the county, city, or school district.  The amount of income received by taxing districts is based on their budget, which is capped. (see Determining Property Taxes)  Urban renewal is not a taxing district so it does not have the authority to create levy rates.  This means the amount of income they can generate is not determined or capped by a budget.  Instead urban renewal adopts the total levy rate (the sum of all the taxing district levies).  Urban renewal's revenue is calculate by multiplying the adopted levy rate by the difference between the current net taxable  value  and the value of property  the year it went into  an urban renewal district.

The assessed value of the properties in an urban renewal district at the time the district is put in place is called the Base value.  The taxing districts that serve properties in the urban renewal district can only levy property taxes on the base value during the life of the urban renewal district.  See section  4 of Idaho Code 50-2903.   The Increment value is the amount that the assessed value increases after the urban renewal district is pu

t in place.  Urban renewal receives property tax dollars calculated on the increment value.   

The table below calculates the increment value on an actual property that is located in an urban renewal district that began in 2006.  A table of actual tax bills for this property can be found at the bottom of this page.

Since this urban renewal district began in 2006, the 2006 value becomes the base.  This means there isn't an increment value the first year and urban renewal does not have income that year. Every proceeding year for the life of the urban renewal district (typically 24 years) the 2006 value is subtracted from the current year's value to calculate the increment.  The larger the increment the more income that is generated for urban renewal projects.

The urban renewal district has the power to undertake and carry out any project or activity within its area of operation. The decision of what projects are taken on by urban renewal is not taken to a vote per Idaho Code 50-2007.  A public hearing is held before an activity may begin per Idaho Code 50-2008. Notice of these public hearings are published in the legal section of the newspaper.

How Urban Renewal Affects Taxing Districts

Taxing districts still have the ability to collect their full budget requests. This includes the allowed 3% budget increase and forgone amounts.  This is because property taxes are budget driven not assessment driven.  This means the amount of taxes collected by taxing districts is determined by budgets not assessed values.  See "Determining Property Taxes".

Since taxing districts only levy taxes on the base value, they are not able to collect on occupancies (new construction) located in urban renewal districts.  See Idaho Code 50-2908. Occupancy taxes pay for growth such as added equipment and manpower needed for a fire department to adequately protect new buildings in their area.  Taxing districts are required to support all of the structures and population within their districts regardless of the funds available to accomplish this.  See Required County Services  Urban renewal districts often bring new construction and growth to the community.  Taxing districts don't see the revenue created by this growth until the urban renewal district ends which is typically around 24 years.
 

How Urban Renewal Affects All Tax Payers

Any given taxing district, such as the County, can cover properties both inside and outside of an urban renewal district. The taxing district can only levy taxes on the base value of the portion of properties that are also in the urban renewal district.  This creates a tax shift and causes levy rates to increase at a faster rate (or in some cases not decrease as much as it would have otherwise). This affect on the levy rate applies to all of the properties within the taxing district whether or not they are located in an urban renewal district.  This means each tax payer is responsible for providing a larger percentage of the tax district's budget. 

When there isn't an urban renewal district in place a taxing district levies taxes against the entire taxable value of every property in their code area.  See the table below.