Wednesday, April 5, 2006

Ketchum looks to Urban Renewal Agency for economic development

Express Staff Writer

Executives at Universal Frozen Foods had two options: expand their plant in Twin Falls, or take their millions to Grand Rapids, Mich., and expand there.

Twin Falls city officials presented the company with an offer they couldn't—and didn't—refuse.

Stay and grow with the Magic Valley city, while new water and sewer lines are installed, land for the expansion is secured and money is offered for an anaerobic digester.

The dangling carrot didn't come from property owners' pockets. Instead, the city created an urban renewal agency to pay for it.

In conjunction with the URA, Twin Falls created a revenue allocation area, which is a "receiving" area for money generated through a component of the agency.

Money from the URA, plus grants and other funding sources, allowed the company to increase employees, modernize their plant and expand product development.

"Because we were able to do what we did, Universal Foods was able to expand here rather than in Grand Rapids," said Dave McAlindin, Twin Falls' economic development director and executive director of its urban renewal agency.

The business was assessed at $15 million in 1988 before the expansion; afterwards, its assessment was $22 million.

The Ketchum City Council Monday, April 3, approved an urban renewal agency, setting their sights on economic development and affordable housing in the city's core.

They appointed themselves as the board, but could not meet as initially planned Monday because a notification has to be published first.

"The formation of an urban renewal agency is going to mean a lot to the community in the next 10 to 20 years," said Ketchum Mayor Randy Hall.

A realization that many full-time Ketchum residents were leaving town, and businesses were closing or relocating in part because of fewer customers, the city passed an emergency moratorium in October, followed by an interim ordinance last month to prohibit single-family and all-residential projects in the commercial core.

City Council members, city staff and economic development consultant Tom Hudson—as well as members of the public—are working to formulate a downtown master plan.

The idea is that by revitalizing the core visually, through amended zoning ordinances, and by creating independent governmental entities such as an urban renewal agency, the city could stem the tide of diminishing sales taxes and loss of community.

"It's a very, very good tool to address local problems and solve them locally," said Ketchum Planning Director Harold Moniz. "A lot of the rationale for Ketchum's urban development relates to economic underdevelopment. Quite a number of studies have shown that one of the limiting factors of our present economic condition is lack of affordable housing. Economic development can provide those opportunities for people to live, work, learn and play here."

In Idaho there are two pieces of enabling legislation: the Urban Renewal Law of 1964, and the Local Economic Development Act of 1988, said McAlindin, who is a regional expert on the subject.

"The initial law was done in conjunction with Housing and Urban Development," he said. "It was intended for renovation of downtowns."

Grants funded the agencies, but only for a while.

"As time went on, those grants became less available and finally disappeared," McAlindin said.

In the 1980s, in order to kick-start the urban renewal idea, many states looked to other funding mechanisms.

Idaho approved the tax increment finance component, adding on to the original law.

"It allows for an urban renewal agency to take the increase in the property taxable investment over and above what is currently paid on a piece of property," McAlindin said. "It allowed for a revenue stream."

Property taxes do not go up; rather, the increment, or annual surplus in the defined area, is allocated to the URA rather than districts such as cemeteries and parks and recreation.

School districts are not affected.

A URA will help Ketchum's goals of affordable housing and other projects through its ability to dispose of land in more flexible ways than a city can, McAlindin said.

"One of the stated goals of Ketchum is affordable housing," he said. "If the city and the urban renewal agency were to obtain property, they could turn around and offer it to a developer at a reduced price."

Municipalities have to first offer land to other governmental agencies, said Ketchum City Administrator Ron LeBlanc, then try to sell it at market rate to the highest bidder.

"That may or may not further your goal," McAlindin said.

By enabling developers to buy land at a reduced, fair-value rate, private investment is encouraged, he added.

Cities wherein urban renewal agencies were not successful too often pursued too much, rather than focusing on particular private investment projects, McAlindin said.

"There has been resistance in the other parts of the state," he said, adding that URAs encounter opposition "where they have tended to be greedy. We have been fortunate and targeted specific projects."

The answer to that, he said, is to limit the scope of revenue allocation areas—or "receiving" areas—to less than the boundaries of the urban renewal area, and to stay out of public works projects.

"It has always been our philosophy that less is better," McAlindin said.

Coming next: How money is generated and how the city will be affected.

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