Cd'A to remove some properties from urban renewal districts

COEUR d’ALENE — The city of Coeur d’Alene worked quietly this year on a new provision in Idaho’s urban renewal laws, which as of July 1 will allow certain properties to be de-annexed from urban renewal districts.

As a result the city of Coeur d’Alene is now making the first proposal in the state to de-annex 33 properties from ignite cda’s Lake District and 29 properties from the River District.

The plan was presented to the Coeur d’Alene City Council Tuesday night, which gave its unanimous approval to move forward to work with ignite cda to prepare a formal proposal.

If the city council eventually approves the de-annexation, it could return roughly $1.3 million to area taxing districts, said Mayor Steve Widmyer in an interview prior to the council meeting.

“There are several taxing districts that would benefit,” Widmyer said (see related sidebar). “The city of Coeur d’Alene would see in excess of $700,000.”

That was the goal back in February when Widmyer and city staff were looking at ways to raise $1 million in new revenue to fund the new fire station that was approved by 85 percent of the voters last fall.

“I kind of hatched this plan a few months back,” Widmyer said, explaining how the fire safety bond that was passed last year will allow the city to build and equip a new fire station. “But the cost to staff it is about $1 million annually, so we knew we needed new revenue.”

Widmyer said that prompted him to start looking at the urban renewal districts in Coeur d’Alene, and how some of the revenue collected by ignite cda could be used.

The mayor said he studied the finances of the urban renewal agency and discovered that if they could de-annex specific properties within two of ignite cda’s urban renewal districts, they could generate enough revenue annually to pay for a major portion of the fire department’s needs.

But until this year’s legislative session, Idaho law wouldn’t allow de-annexation.

That is where former State Senator and City Administrator Jim Hammond comes in handy, Widmyer said.

“When they started working on that legislation this session, we suggested they put this new law in there,” Widmyer said. “Jim worked with some people he knows down in Boise to do that.”

Currently, when a new district is formed, a geographic revenue allocation area is determined. Within that area, the property taxes that go to the local taxing districts are essentially frozen at their current rates. In urban renewal language that is referred to as “the base.”

As property values increase in the revenue allocation areas, the property owners still pay taxes on the full value of their properties, but everything collected over and above the base is called “the increment.”

That “tax increment” is used to finance urban renewal projects within the district.

However there has never been a mechanism to scale down the size of an urban renewal district until all of its financial obligations are met.

“When you build districts so large, like the ones in Coeur d’Alene, it makes it difficult to close them rapidly,” Hammond said.

The new provision that will go into effect on July 1 would allow urban renewal agencies to de-annex some of the properties within “the base” and return the “tax increment” that is collected on those properties to the original local taxing districts. That’s where the $1.3 million comes from in the city’s proposal.

Widmyer said he started looking at the properties within ignite cda’s two urban renewal districts in February with the express goal of finding the revenue without hampering ignite cda’s committed projects and ability to operate in the future.

“We wanted to make sure the stuff they are committed to doing can still be done,” he said. “What we found is all of their projects can move forward.”

Hammond prepared a memo for the council detailing some of their findings.

“A preliminary analysis projects that even with the removal of these properties, ignite cda can still proceed with the $2.5 million investment to the Joint Use Higher Education Facility, $2 million for a contemplated parking structure north of Sherman, enhancements to midtown, additional improvements to the Four Corners project, funds necessary for the Seltice Way reconstruction, funds for the Transit Center, funds for the BNSF trail improvements, as well as maintenance of a reserve fund,” Hammond wrote in the memo.

Widmyer said he is proposing to de-annex all of the Lake District properties north of Interstate 90 and three commercial properties including the two hotels along Seltice Way.

In the River District, Widmyer proposed to de-annex the US Bank property, and the commercial property surrounding that building. He also wants to de-annex one apartment complex on the north side of Seltice and 22 riverfront homes in the Mill River area.

He said all of the numbers are preliminary at this time, but with council’s approval, he is planning to hire an outside firm to work with the city and ignite cda to prepare a professional financial forecast based on the proposal. Hammond is planning to take the initial proposal to the ignite cda board later this month.

Hammond told the council that city staff has already been working with ignite cda to develop the proposal.

“We feel that this effort will provide additional revenue to affected taxing agencies now rather than having to forego all those funds till the districts close,” Hammond wrote in his memo to the council. “This will be a positive move for ignite cda and will help us more effectively meet the needs of our community.”