Judge's ruling opens doors for urban renewal

Observers filled the Coeur d’Alene Public Library on Wednesday afternoon to listen to city officials and engineers detail what comes next for the Atlas Waterfront urban-renewal district.

Many of the crowd of mostly developers and contractors left business cards to signify their interest in a piece of the estimated $96 million project.

Idaho’s urban renewal districts got a green light Friday: Judge Lynn Norton, a district-court judge in Ada County, tossed a lawsuit filed by the Idaho Freedom Foundation that challenged the constitutionality of an urban-renewal district in Boise. The foundation claimed that urban renewal districts were “alter egos” of cities, and, because such districts may incur debt without voter approval, they violate the Idaho Constitution, which requires two-thirds of voters to sign off on any debt.

Judge Norton disagreed, leading the conservative government watchdog to voice its displeasure as well as wonder who would pick up the tab if an urban renewal district went into an unrecoverable financial tailspin.

Dustin Hurst, the foundation’s communication director, said the worst-case scenario of bankruptcy would likely leave its partner city holding the bag.

“The problem is, it hasn’t happened yet, which is a good thing,” Hurst said. “Hopefully it will never happen, but if it does, we need to know who will support a failed urban renewal district. Our contention is, it’s the city that would. Who else would pick up the tab?”

“In my experience, the financial feasibility studies that come before these boards are the first real steps to determine whether an urban renewal district will succeed,” Phil Boyd, president of Welch-Comer, said after Wednesday’s meeting. “The ignite board’s approach has always been very financially conservative in that regard.”

Coeur d’Alene and its urban renewal agency, ignite cda, are juggling several urban-renewal district possibilities, including a potential Health Corridor, a Seltice Way revitalization project, the Atlas Waterfront redevelopment and an attempt to generate interest in a district around East Sherman Avenue. While Hurst emphasized he wasn’t speaking about Coeur d’Alene districts specifically, he urged the public to remain cautious about such endeavors.

“If people understood the funding behind [typical] urban renewal districts, they would go berserk,” Hurst said. “This is funding that would go to police departments, go to fire departments, to schools. If people truly understood the funding, they would shut them down in a second.”

Hurst’s position, which mirrors the foundation’s, is that urban-renewal districts have become havens for financial abuse in an undemocratic process, two things he doubts will change with Norton’s ruling.

“You’re likely to see more abuse of the renewal process,” he said, “more handouts to cronies, more slush funds for central planners to dictate the culture of a city, more abuse — and it’s rather unfortunate, I think.”

Boyd said the Atlas project, like the projects he’s worked on in the past with Coeur d’Alene, serves a valuable function.

“Urban-renewal districts are good for developers and for the city,” he said, “because they can take on more complicated projects than what the city could typically do. I don’t know if the city could take on a project of this size.”

Tony Berns, executive director of ignite cda, spoke to the Coeur d’Alene Press before Hurst critiqued urban renewal districts. He could not be reached for comment before deadline, but he said urban-renewal districts represent a critical part of the city’s future.

“The city and ignite cda will continue to evaluate the use of urban renewal districts in the community,” he said, “where both the city and ignite cda believe the use of this redevelopment tool will help create public benefit for the community.”

Berns added Norton was on solid ground when throwing out the foundation’s case.

“Urban-renewal districts are financially separate from the cities,” he said. “If a Health Corridor urban-renewal district is created, the city will not be liable for any debt obligations incurred by ignite cda. As ignite cda’s track record has proven in our other districts, the agency only enters debt obligations that can be serviced by tax increment revenues or other revenues originating from within the district.”

Boyd tended to agree.

“This is why ignite phases projects in response,” he said. “For example, land sales from a first phase would help pay to minimize debt for the next phase. ignite is very conservative in that regard. All through the process, ignite kept looking at each portion of the Atlas Waterfront project, saying ‘No, no no.’ They are very cautious with tax [increment].”

Berns said resistance to urban renewal districts is understandable, and that opposing voices should be heard.

“I think some people do not like to see their communities grow beyond a certain point, and thus are concerned with more growth,” Berns added. “Coeur d’Alene will continue to grow. That is inevitable. [The city, ignite cda and the community] need to embrace this fact and focus on “smart growth” that benefits the community in the long run.”