House

Bill 606, as amended

2016 Freedom Index Score (0)
Analyst: Wayne Hoffman
Date: March 21, 2016 (amended)

ANALYST NOTE: House Bill 606, as amended, makes several notable reforms to the state's urban renewal
statutes. The bill promises to increase government transparency and accountability, but urban renewal,
by its nature, makes it very difficult for people to fully appreciate how their tax dollars are diverted to
urban renewal projects. The bill does make an attempt to improve taxpayer oversight. There are positive
aspects and negative aspects of the proposed legislation. Those who have worked on urban renewal
reform for years may correctly note that the bills requirement for elected urban renewal district
members and restrictions on the use of urban renewal for debt financing could outweigh problems with
the bill, including the grandfathering of existing URA revenue allocation areas and the use of the
construction roll to provide a windfall to local taxing districts after a revenue allocation area lapses.
Because the bill truly is a mixed bag, the rating on this bill is neutral.

Point No. 8: Does it in any way restrict public access to information related to government activity or
otherwise compromise government transparency or accountability? Conversely, does it increase public
access to information related to government activity or increase government transparency or
accountability?

ANALYSIS: The proposed 50-2006(5) allows for the members of an urban renewal board to be
elected, rather than appointed, increasing the accountability of the commissioners for an urban
renewal board. (+1) The bill also requires agencies to file reports, plans and plan modifications
with the state tax commission, and provides a consequence--the loss of tax revenue--for failure to
do so.

Point No. 5: Does it directly or indirectly create or increase any taxes, fees, or other assessments?
Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

ANALYSIS: The bill makes an important modification to Idaho Code 50-2033, which was added as
part of an urban renewal transparency measure in 2011. That year, the Legislature prohibited
certain plan amendments to a revenue allocation area. House Bill 606 allows for plan
amendments to take place under certain conditions and stipulates whether or not a reset in the
base valuation in the revenue allocation area is to occur. The criteria are provided in the new
proposed Idaho Code 50-2903A. A base valuation reset is important in that it dictates whether the
urban renewal agency is to use the current property values in determining the tax increment or
whether it is to use the values from when the revenue allocation area was established. Requiring
the use of the existing property values in setting the base would result in less money for the
urban renewal district, while keeping the base from resetting would result in more money for the
district. While allows for some minor changes to the revenue allocation area without triggering a
reset, the bill also protects the urban renewal district from a reset when it is to accommodate an
existing commercial or industrial project in a revenue allocation area or when the urban renewal
district has indebtedness that cannot be repaid before the revenue allocation area is to expire.
This has the potential of prolonging a shifting the tax burden to other taxpayers while the debt is
to be repaid.


The amended version of the bill fully exempts existing urban renewal plans and their revenue
allocation areas from the provisions of 50-2903A, further exacerbating the property tax problems
by locking in base valuations. The new provisions specify that the base assessment roll of
property within the revenue allocation areas shall be determined as if the modification had not
occurred.

Point No. 7: Does it increase government spending (for objectionable purposes) or debt? Conversely, does
it decrease government spending or debt?

ANALYSIS: The proposed addition of 50-2905A would prohibit urban renewal revenue from being
used to construct certain municipal buildings (spelled out in the section) without a vote of the
public. When urban renewal dollars contribute to 51 percent or more of a project's cost, a public
vote with at least 60 percent of the participating qualified electors would be needed to approve
the project. While the notion of a public vote is a good thing, the 51 percent provision would
appear to be an invitation to fund 49 percent of a project using urban renewal dollars, allowing
voters to continue to be bypassed for debt financing purposes. Finally, omitted from our original
assessment of this bill but also very concerning is the fact that the bill, on pages 15 and 16, would
allow property within an urban renewal district revenue allocation area to become part of the
new construction roll (exempt from property tax limitations). This is a potential major revenue
windfall for various taxing districts that overlap the property in an urban renewal district and has
the potential to increase government spending.