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Talent district would scoop up post-fire taxes

Urban renewal districts are a powerful tool that allow cities to revitalize areas that have deteriorated. A new district proposed by Talent city officials is not an appropriate use of this tool, and residents should demand a full accounting of the consequences.

The key to urban renewal districts is a clever device called tax increment financing. It essentially allows a district to borrow money up front, spend it to improve blighted neighborhoods, then pay off the debt with the increase in property tax revenue generated by the improvements.

The operative word in that description is “blighted.” Run-down sections of a city, if left alone, will continue to generate property tax revenue at the same rate, increasing gradually as overall property values rise over time. By adding improvements — street lighting, building facade improvements, renovation of old structures through low-interest loans to property owners — values can be made to rise more quickly. By capturing the resulting increases for a fixed period — usually 30 years — the entire community benefits.

Other taxing districts such as schools, fire districts and city government itself don’t benefit from the increased tax money until the bonds are paid off and the district dissolves. But without the improvements, those increased values would not have occurred.

That’s the way it’s supposed to work. But that’s not what Talent is proposing.

The potential urban renewal district there would take in part of the Almeda fire scar. That area is not “blighted” — it was completely destroyed. The only property value left was in the land, because the buildings were gone.

Setting the starting point of the renewal district’s tax diversion four months after the fire, as is proposed, means the increase in property value of every new home or other building constructed there would go entirely to the urban renewal district.

It’s not surprising that officials of Fire District 5, which protects that area and relies on property taxes for its operating expenses, are not thrilled at the prospect of not seeing any of that revenue for three decades.

District 5 officials say they might have to ask voters for a tax levy to maintain services. The district lost the use of one of its three stations in the fire.

The fire district is not the only taxing entity that would be affected. Jackson County, Phoenix-Talent School District, the Rogue Valley Transportation District, Jackson County Library Services and others would also see money diverted.

The Oregon Legislature provided three years of funding to replace property taxes lost to the fire, but that help is temporary.

Talent has posted an online survey asking residents what they think, but it doesn’t explain the consequences very well. It calls the urban renewal district “simply a financing tool,” stressing that “It DOES NOT increase property taxes.”

Well, no, it doesn’t. Taxes will increase all by themselves as properties are rebuilt. What it will do is scoop up all of that increase for 30 years.

The money will help the rebuilding process, no question. But at what cost?

Talent Mayor Darby Ayers-Flood, who also acts as chair of the Talent Urban Renewal Agency Board of Directors, urged patience, saying people should wait for an economic analysis of the impact of the proposal before forming opinions. That analysis should be completed and made public quickly.

In the meantime, Ayers-Flood and other city officials should get ready to explain why the urban renewal agency should get all the benefit of the rebounding property values while vital tax-supported services go begging.