ASHLAND — The city soon will have a new tool to encourage the construction of infrastructure that could spur development.

ASHLAND — The city soon will have a new tool to encourage the construction of infrastructure that could spur development.

The Ashland City Council recently gave unanimous initial approval for an ordinance that would allow the city or a developer to pay in advance for infrastructure such as roads, sewer lines and water lines.

As later developers build out projects that tap into the infrastructure, those developers repay the city or the first developer.

The ordinance will come back before the City Council for final adoption on Tuesday, Nov. 2. The city uses a two-step process for adopting ordinances.

The new financing tool could be used, for example, if a developer wanted to build on the far side of an empty parcel. The developer would put in a road and sewer and water lines big enough to handle not only his or her project but also subsequent development along the road. The developer would have up to 20 years to recover costs — plus interest — from later developers.

The city of Ashland also could pay for infrastructure in advance — for instance, to try and attract businesses to an area.

Without the ordinance, the city or the first developer would have to absorb the costs of building infrastructure with no means of recouping costs from later beneficiaries, Ashland Public Works Director Mike Faught said.

"People will continue to get the benefit without having to pay for it," he said.

Although they voted with the rest of the council to approve the ordinance, council members Carol Voisin and Eric Navickas pointed out that the financing method does come with risks.

Voisin said if the city paid up front for infrastructure, it would assume the financial risk and have to collect from everyone who built in the future.

If other properties never get built out, the city or a private developer that paid for the infrastructure would never get paid back, Navickas said.

Navickas said he does support the financing method as a good way of encouraging projects that are built out over time.

The advance financing method is different than urban renewal financing and enterprise zones, which have also been topics of City Council discussion.

In September, the City Council approved spending $30,000 to $35,000 on a feasibility study to see if urban renewal could be used to jump start economic development at the former Croman Mill site east of Tolman Creek Road, along the railroad tracks in central Ashland and in the downtown.

Urban renewal works by taking a piece of property and designating it as an urban renewal district. The current assessed value of the property is identified. Property taxes on that "base" value continue to go as usual into government coffers.

A city borrows money to fund infrastructure and improvements to the property that could pave the way for economic development. As the improved property gains in assessed value through public and private investment that presumably follows, those property tax gains pay off the debt the city took on to make the improvements to the property.

Since the property taxes gains would be going to pay the urban renewal debt, they could not be used by the city of Ashland to fund regular needs like police and fire department operations, park maintenance and street repairs in town.

Urban renewal districts typically sunset after 20 to 25 years. At that time, the property tax gains flow into government coffers — ideally at far greater amounts than they would have done without the urban renewal improvements.

In enterprise zones, businesses have their property taxes waived for a certain period of time to encourage them to build in the designated areas.

The Ashland City Council hasn't adopted any enterprise zones.

Ashland Daily Tidings reporter Vickie Aldous can be reached at 541-479-8199 or vlaldous@yahoo.com.