How is an Urban Renewal Plan created?

An urban renewal area is created through a process that includes community input, notice to impacted taxing jurisdictions, review by the City’s urban renewal agency, planning commission, and city council. The city council hearing notice must be sent to a specified group of citizens. The adoption of a plan must be with a non-emergency ordinance by the city council that does not go into effect until 30 days after adoption. The plan, together with an accompanying urban renewal report, identifies the goals of the urban renewal area and projects to be funded with tax increment financing (TIF), describes how the area complies with statutory requirements for blight, projects tax increment revenues, and identifies a maximum amount of debt an urban renewal area can incur, among other topics.

How is an Urban Renewal Plan financed?

The urban renewal plan is funded by tax increment revenue. The private investment attracted by public urban renewal results in increased property values within the city. These increased property values bring in greater property taxes, which are then used to pay off bonds sold to finance the revitalization efforts. This unique funding mechanism is called tax increment financing (TIF).

How does Tax Increment Financing work?

Urban renewal is funded by tax increment financing (TIF). At the time an urban renewal plan is adopted, the county assessor calculates the total assessed value of the urban renewal area and establishes this value as the “frozen base” for the area.

Taxes from that frozen base continue going to all the taxing jurisdictions. Growth above the base is called the “increment”. Taxes from the increment, known as tax increment revenue, go to the urban renewal agency for projects within the urban renewal area.

What is Maximum Indebtedness?

Maximum indebtedness is the total amount of tax dollars that may be spent on the projects, programs, and administration in an urban renewal area.

When does it make sense to use urban renewal?

Generally, urban renewal makes sense in areas that have physical and/or economic conditions that cause a reduction of, or lack of, proper utilization of that area. An urban renewal agency may determine that TIF is required to:

• Support catalytic projects as needed to spur new investment in an area,
• Focus necessary public investments in a specific target area,
• Accelerate the timing of necessary infrastructure and transportation projects,
• Incentivize development, redevelopment, or major improvements to a property that might not otherwise occur without TIF, and
• Fund infrastructure projects that might not otherwise occur without TIF.

What can urban renewal pay for and what can it not pay for?

The activities eligible for urban renewal funding are determined by ORS 457; however, do sometimes change. Currently, per ORS 457.170, eligible activities include:

• Rehabilitation or conservation work,
• Real property acquisition,
• Demolition, removal, or rehabilitation of buildings and improvements,
• Installation, construction, or reconstruction of streets, utilities, and site improvements,
• Assisting in the relocation of persons,
• Disposition of property acquired in the urban renewal area,
• Undertaking and carrying out neighborhood development programs.

Ineligible activities include all other activities not listed by ORS 457, such as non-capital improvements, temporary improvements, and grants or loans for operating expenses.

Does urban renewal increase property taxes?

No, urban renewal simply allows for the reallocation of growth on taxes to the urban renewal agency rather than the overlapping taxing districts. Taxpayers within the city will see a line item on their property tax statements for urban renewal. The overall tax bill does not increase, but the allocation of revenues received from the payment is changed as a portion of that payment now goes to urban renewal. This is called “division of taxes” and is the administrative way that assessors must show the calculation of the tax increment revenue.

How does “Tax Increment Financing” affect overlapping taxing districts?

While the urban renewal area is active, a taxing jurisdiction’s revenue from that area is frozen (at the time of the urban renewal plan’s adoption) and will not increase until revenue-sharing is triggered. So, while an urban renewal area is active, taxing jurisdictions may not receive as much money as they would otherwise have received. In essence, the taxing districts forego some revenue in exchange for an eventual greater total property tax base and future revenue capacity because 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.

What about schools?

School districts are not directly affected by TIF. Under Oregon’s school funding law, the Oregon Department of Education combines property tax revenues with State School Fund revenues to achieve per-student funding targets. Under this system, property taxes foregone due to the use of tax increment financing are replaced with State School Fund revenues, as determined by the state funding formula. While TIF statewide has an impact on the amount of funding in the State School Fund, the legislature can re-allocate other funding sources to the State School Fund.

In theory, a successful urban renewal area will result in more income taxes resulting from job creation and increased property taxes than might have occurred without urban renewal, resulting in more net tax dollars for school funding in the long-term.

What are the steps to amend a TIF area/plan?

The urban renewal plan contains a section on how amendments are processed. Minor amendments may be approved by the urban renewal agency itself. Substantial amendments are those that increase the maximum indebtedness or add property that totals over 1% of the existing acreage.

What are the benefits of TIF?

TIF can grow the tax base and revitalize parts of a City that are experiencing underinvestment. The TIF is based on the diversion of tax revenue increases, but over time, the redevelopment is expected to result in a more robust tax base for the community. Those tax gains are a result of the eventual increased value in the property around a new development in addition to the potential for job growth and sales tax revenue.

What types of projects are typically completed?

Urban renewal can fund a range of activities, including capital projects and development assistance programs, and typically include:

• Utility or infrastructure projects to support new development.
• Infrastructure: streets and utilities
• Streetscape improvements and transportation enhancements, including new lighting, trees, sidewalks, pedestrian and bicycle amenities, and intersection improvements
• Catalyst redevelopment projects, such as mixed-use or infill housing developments
• Storefront improvement grants for improvements to existing properties
• Development assistance grants or incentives for specific desired development types.
• Parks and plazas
• Property acquisition to aggregate properties for desired development
• Public buildings
• Historic preservation projects

How has urban renewal been used in City of Canby?

• Provided grants for numerous façade improvements and adaptive reuse/rehabilitation projects.
• Funded streetscape improvements, beautification, and pedestrian and bicycle infrastructure improvements.
• Built a new City Hall and Library.
• Built a new City of Canby Police Station.
• Purchased a replacement Fire Engine.
• Painted the exterior of the Fire Station.
• Funded Pioneer Industrial Park Infrastructure
• Funded street improvements in the downtown area.

How long does an urban renewal plan last?

Typical urban renewal plans are designed for a 20 to 25-year period.  Plans can be closed out if all projects are completed earlier and the debt is repaid. The current City of Canby Urban Renewal plan is to close in fiscal year 25/26.

Do Junior Taxing District receive tax revenue for new or remodeled buildings within the Urban renewal area?  

Junior Taxing Districts do not receive the permeate tax rate as established within the Urban renewal area. For example, the Canby Fire District tax rate is $1.54 per $1,000.00 of assessed valuation. All taxed properties within the City of Canby pay a lower rate of approximately $1.32 per $1,000.00 of assessed valuation. The Canby Fire District, per the Clackamas County Tax Assessor, will lose $485,000 in FY21/22 alone. This type of loss has occurred annually since the creation of the URA and will continue until the URA is closed. (See the junior taxing districts loss of revenue below.) The Canby Fire District shall continue to provide all services to the structures within the Canby Urban Renewal Area. Once the URA is closed the Canby Fire District will begin to receive full property tax funding for services provided.

The Canby Fire District loss of revenue reduces the level of staffing available for emergency apparatus to meet the demands of the continual increase in emergency call volume. The Canby Fire District Board has worked very closely with the URA since 2002 and has urged the Canby Urban Renewal Agency to close the Urban Renewal District as soon as possible.

Is the City of Canby losing tax revenue in the City’s operating budget due to the URA?

In the 2021/2022 fiscal year the City of Canby tax revenue reduction resultant of the URA is $952,516.87. All properties except tax exempt properties within the City of Canby pay to the Urban Renewal District.

Could the URA decide to close the URD prior to 2025/2026?

That is a decision of the URA. The URA refinanced the Urban Renewal loan balance in 2021 at a lower interest rate. The URA can decide to add more projects, or they can decide to pay off the URA debt and close the URA before 2025/2026.

In 2015 the City of Canby URA reached an agreement with the Canby Fire District to reduce the amount owed to the Fire District with the goal to close the URA by 2024/2025. In 2017 the URA asked the Fire District to move the close date to 2025/2026. The Fire Board agreed not to oppose the decision in good faith.

The following are all Junior Taxing Districts impacted by the City of Canby URA:

City of Canby FY21/22 Loss of Revenue:                                                                 $952,516.87

Clackamas Community College FY21/22 Loss of Revenue:                              $203,472.30

Clackamas County C FY21/22 Loss of Revenue:                                                   $656,440.05

Clackamas County R FY21/22 Loss of Revenue:                                                   $28,247.24

County Emergency Radio System FY21/22 Loss of Revenue:                          $27,317.12

County Extension & 4H FY21/22 Loss of Revenue:                                             $14,060.28

County Library FY21/22 Loss of Revenue:                                                              $112,281.36

County Soil Conservation FY21/22 Loss of Revenue:                                         $14,060.28

Clackamas ESD FY21/22 Loss of Revenue:                                                             $104,046.06

Canby Fire District FY21/22 Loss of Revenue:                                                       $501,550.18

Port of Portland FY21/22 Loss of Revenue:                                                           $19,684.40

Canby School District FY21/22 Loss of Revenue:                                                 $1,843,503.25

Vector Control FY21/22 Loss of Revenue:                                                              $1,807.75

Total FY21/22 loss of revenue due to the Canby URA:                       $4,478,987.14

Contact Information:

The Canby Fire District contact for questions or more information is Fire Chief Jim Davis.

Chief Davis may be reached via telephone at 503-266-5851

This information has been reported by the Canby Fire District.