Taxing the limits of ignite cda
COEUR d’ALENE — Implementing a de-annexation of certain properties within ignite cda’s urban renewal districts is going to be challenging, but leaders of that agency say it’s something they can live with.
“On balance, it’s a good exercise and good for the community,” said Denny Davis, chairman of ignite’s board of commissioners. “It’s good that we can give this relief back to the taxpayers, but it is eliminating significant revenue that can be used for future projects.” Davis is referring to the city of Coeur d’Alene’s proposal to de-annex 62 properties from the city’s urban renewal districts, which would return roughly $1.3 million to area taxing districts.
The city needs to find roughly $1 million in new revenues annually to operate a new fire station they are building near the intersection of Atlas Road and Hanley Avenue. A little over $700,000 of the $1.3 million would come to the city, the rest would be divided by other taxing districts such as North Idaho College and the county.
The proposed de-annexation is the first to be implemented in Idaho since the state legislature passed a law allowing the practice earlier this spring. As a result, implementation could be a little challenging, said Tony Berns, executive director of ignite. “This is a new one on many fronts so we have to figure out how to do this,” Berns said. “It’s so new, it’s still warm to the touch.”
Berns said there are many things the city and ignite will have to analyze before they are assured the move wouldn’t hamper any of the urban renewal projects that have been planned for the future.
Ignite has two urban renewal districts in Coeur d’Alene. One is the River District, which spans most of the property that lies west of Riverstone and east of Huetter. The second one is the Lake District and it covers the downtown area and Riverstone.
Debt owed by the Lake District is going to complicate the de-annexation to some degree, Berns said. He said ignite borrowed $16.7 million for the McEuen Park and Front Street upgrades from Washington Trust Bank a couple of years ago and used future tax revenues as collateral. The River District doesn’t have that issue.
“That encumbered all future tax revenues coming into the Lake District,” Berns said. “The bank would need to agree to this de-annexation.”
That is why ignite and the city are planning to have a third-party financial forecast conducted to determine if ignite could, in fact, meet all of its financial obligations if the de-annexation is approved.
While preliminary analysis conducted by the city shows those obligation could be met, Berns said he is little concerned the de-annexation could also impact ignite’s ability to borrow money for future projects.
“It kind of makes the lenders nervous if their collateral is subject to adjustments in the future,” he said. “Ensuring some stability in that is the challenge.”
Davis and Berns both said that de-annexation authority will result in less money their agency has access to for future projects, but it also gives them a vehicle to refund excess taxes back to the local taxing districts.
“We have considered over the years how we can give a rebate back to the local taxing districts,” Davis said. “But the law didn’t give us any mechanism to do that.”
Berns said he believes the ignite board is supportive of helping the city fund its public safety needs, but they just want to figure out how that impacts their future planning.
Davis said “there are a lot of nuts and bolts to work out,” but he is confident they can make it happen. He said the state tax commission will have to figure out how all this will work, and the county assessor will have to change the coding to make sure the proper taxing districts are collecting their share of taxes.
“I think we all recognize this is a good opportunity for the community,” Davis said. “After all, that is what urban renewal agencies were designed to do — create a tax base, and that’s what this does.”