Urban Renewal Not Always in Public Interest
Byline: GUEST VIEWPOINT By Ray Wolfe For The Register-Guard
The Eugene City Council will soon consider establishing another urban renewal district, this one in the neighborhood of the new federal courthouse. This important development deserves careful consideration in light of more than 30 years of experience with Eugene's Downtown Urban Renewal District. City residents should be aware of the more subtle aspects of urban renewal and its handmaiden, tax increment financing.
Urban renewal has been used to remove blight, and to promote economic growth within the district. These uses differ significantly in their balance between public and special interest benefits.
Urban renewal's exclusive tax-increment fund cannot be commingled with Eugene's general budget. Urban renewal projects are excluded from the general budget's priority-setting process. They are subsidized by tax increment revenues, sometimes while critical items in the general budget are cut. They are inherently vulnerable to inefficiencies in the use of property tax revenues.
Further, urban renewal projects sometimes benefit downtown merchants with a subsidy unavailable to competitors elsewhere. All city residents benefit from updated downtown streets and utilities, but downtown merchants are primary beneficiaries. City leaders should be commended for redirecting downtown urban renewal funds to the new city library, benefiting all city residents, when this 35-year experiment was terminated.
Urban renewal projects usually are financed by selling municipal bonds, which are paid off by taxing property owners. The amount of tax revenue going to urban renewal is based on the increase in the assessed value of property within the district after the district was established - hence the name "tax increment revenue." The use of tax increment revenue outside the urban renewal district is prohibited, so it can be allocated to urban renewal projects that are relatively frivolous compared with other city needs.
Inefficiencies and irresponsibility have occurred, and are likely to occur again. For example, urban renewal alterations were made downtown for more than 10 years while north Eugene lacked adequate fire protection. Such frivolity is reprehensible under vigorous economic conditions, and is particularly onerous now.
Urban renewal districts have guaranteed revenue that increases automatically with inflation and property improvements, independent of the districts' needs. …