The Oregon Constitution and Statutes allow cities and counties to establish Urban Renewal Districts for the purpose of improving specific areas, or “Plan Areas”, that contain deteriorated buildings and/or lack adequate infrastructure, or “blight” as it is commonly called. Urban renewal agencies can take on special projects, or “plans”, like improving roads, bringing sewer and water to industrial sites, developing public buildings, such as fire stations, and many other worthwhile activities.
By incurring debt to pay for these improvements, it is expected that property values within the Plan Area will increase due to private investments that would not otherwise occur. The property taxes from this increase in value, called “increment”, is then given to the urban renewal agency to pay off the debt. If there is no increase in assessed value the urban renewal agency does not collect any revenue. Local taxing districts, such as the county, city, fire district, school district and others, continue to receive the property taxes from the assessed value the district had before the urban renewal plan area plan was formed. This value is called the “frozen value”. The increase in the value of the plan area above the frozen value is called “excess value”.
Impact on Property Owners
Even though the assessed value in the plan area is frozen, property owners are still taxed the same way as before. New investment is taxable the same as all other property in the County (unless the property qualifies for exemption or special assessment under other programs). All taxing districts have a fixed tax rate for operating purposes. Those fixed tax rates for taxing districts that reside within the plan area are reduced by the increment necessary for the agency to receive the revenue attributed to the excess value. There is no impact on property owners, either positive or negative. The total tax amount remains the same.
Impact on Taxing Districts
With a rate based property tax system the impact on taxing districts is just the opposite for what it is for property owners. Like the frozen value, a taxing district’s operating property tax revenue from the plan area would be frozen since the rate cannot change. (The district could still realize an increase in property taxes from outside the plan area.) Once the debt is payed off and the Plan Area is dissolved, assessed values increase due to the private investment, and taxing districts receive property taxes from the increased assessed value.
Total Consolidated Tax Rate X Assessed Value in Urban Renewal Area = Tax Revenues
Only the taxing districts that reside within the urban renewal plan area are impacted by urban renewal. However, the impact is spread across the shared property. If the urban renewal district was established by the county, then the entire county is considered to be the shared property.
Once the total revenue for the urban renewal district is known, each district within the area has its operating tax rate reduced by the increment tax rate necessary to collect that revenue. These rates are applied to all properties within each of the affected districts’ boundaries. For more information on Urban Renewal, please see visit the Department of Revenue's website on Urban Renewal.
- Port Westward Urban Renewal 2015 TIF Explanation
- Rainier Waterfront Urban Renewal 2015 TIF Explanation
- Chart of Urban Renewal Division of Tax for 2015
- SAL Table 4c - Estimation of Urban Renewal Revenue from Excess Value, 2015-16
- SAL Table 4e - Detail of Urban Renewal Plan Areas By Taxing District, 2015-16
- SAL Table 4f - Summary of Urban Renewal Revenue, 2015-16
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