Urban renewal will have a financial effect on local taxing jurisdictions, but the impact is different for schools than for other districts. An urban renewal area does not directly affect school districts. Other taxing districts may experience fiscal impacts that limit their total revenue capacity while the urban renewal area is in place. While the urban renewal area is active, a taxing jurisdiction’s revenue from that area will be frozen, and will not increase until revenue-sharing is triggered. So, while an urban renewal area is active, taxing jurisdictions will not receive as much money as they would otherwise have received. In essence, the taxing districts forego some revenue in exchange for a greater total property tax base and revenue capacity as a result of urban renewal investments. The goal of urban renewal is to spur development that would not have occurred but for urban renewal, so when the urban renewal area expires, taxing jurisdictions can expect to receive more tax revenues than they would have had the urban renewal area never existed at all.
In 2009, the Oregon legislature passed HB 3056, which enacted what is known as “revenue sharing”. Revenue sharing requires urban renewal agencies to share increment when certain thresholds are met. The thresholds are tied to the area’s “maximum indebtedness”, or the limit on the amount of debt that the agency can incur in an area. The revenue sharing legislation means that successful urban renewal investments begin creating returns for overlapping taxing districts in advance of an urban renewal area’s expiration.
