Wednesday, February 29, 2012

Ketchum URA warily eyes proposed laws

Legislature bills could strip URAs of funding and authority

Express Staff Writer

Multiple bills in the Idaho Legislature could, if signed into law, have impacts on urban renewal agencies across the state, ranging from board reconfiguration to agency dissolution.

In the Wood River Valley, Ketchum, Hailey and Bellevue have urban renewal agencies. URAs are funded through tax increment financing, meaning they get the amount of property taxes that result from property value increases during the time of the URA's existence. They then use the money to invest in urban-renewal projects.

Gary Marks, Ketchum Urban Renewal Agency executive director, updated the board of directors on the bills during a meeting Feb. 21. He said the agency is monitoring eight pieces of legislation:

H0504 would require newly formed URAs to have an elected board of directors, rather than appointees. Existing URAs would need a resolution adopting the method by which board members are seated.

The bill has the potential to change the makeup of the Ketchum URA board, whose members are appointed.

The bill is in the House Local Government Committee.

H0506 would prohibit URAs from condemning property.

"It would do away with the narrow authority URAs have in the way of eminent domain," Marks said in an interview.

The impact on Ketchum's URA, Marks said, would be in its ability to issue bonds, which are used to implement URA programs.

Ketchum URA attorney Stephanie Bonney said an entity must have both state and federal authority to issue bonds. If H0506 passed, URAs may not meet federal requirements, which state that an issuing entity must qualify as a political subdivision. To qualify as a political subdivision, it must have one of three authorities: police power, power to impose taxes or power to condemn property. URAs do not have police powers and cannot impose taxes, so without the ability to condemn property, URAs would not qualify as political subdivisions and therefore could not issue bonds under federal regulations.

Bonney said URAs rarely exercise their eminent domain option.

"I am not aware of any URA [in Idaho] that has condemned property," she said.

The House passed the bill on Feb. 21; it is now in the Senate Local Government Committee.

H0507 proposes that every URA plan be limited to specific projects "clearly and concisely described in such plan and shall include specific descriptions of the development, redevelopment, improvements, land to be acquired, and which, if any, existing structures are to be removed or demolished."

"It drastically curtails what can be done," Marks said.

The bill is in the House Local Government Committee.

H0519 adds "site improvements" preceding property development to the list of "business inventory" exempt from property tax until building construction begins.

The bill passed the House by a wide margin Feb. 23 and is now in the Senate Local Government Committee.

H0547 tightens restrictions on issuing bonds. Under existing law, a URA or other public entity can obtain permission to borrow money through a bond issue by holding a public vote or by going to a court in a process called "judicial confirmation." The proposed bill would require a public vote before the URA seeks judicial confirmation. If voters reject the proposal, the URA must demonstrate to a judge that the proposed revenue bond is a necessary expense. The petition for judicial examination would have to include a cost-benefit analysis, and the court would have to determine that compelling reasons exist for the bond before issuing judicial confirmation.

The bill is in the House State Affairs Committee.

H0560 repeals the authority to create URAs.

"It [also] appears to eliminate current URAs and for cities or counties to assume the URA's debt," Bonney said.

She said that, despite language in the bill, existing law prohibits cities or counties—whichever local governing body sponsored the URA's creation—from assuming its debt.

Marks called H0560 a "kill URA bill."

"It's a no-nonsense, we're going to strip URAs out of Idaho code," he said. "That would be a great detriment to our efforts here."

The bill is in the House Local Government Committee.

H0562 would prevent URAs from taking the tax increment from community college levies.

Marks said that even though he's monitoring the bill, it bill would not affect URAs in the Wood River Valley because there are no community college taxing districts here. College of Southern Idaho's taxing district doesn't extend to the Wood River Valley.

"That impact on (on us) would be nil," he said.

The bill is in the House Revenue and Taxation committee.

H0580 would require a two-thirds "yes" vote countywide for local URA bonds.

This bill is in the House Local Government Committee.

Rebecca Meany:

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