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New district could help pay for pricey sewer and water projects, infrastructure if approved

SPOTLIGHT PHOTO: COURTNEY VAUGHN - Lorelei Juntunen (pictured right) of ECONorthwest and Alexandra Rains, a Scappoose city staff member, present options for an urban renewal district in Scappoose during a City Council meeting Monday, June 18.As Scappoose's need for water and wastewater infrastructure upgrades looms, city officials are exploring whether an urban renewal district could be the answer to generate needed funding.

An urban renewal district would allow the city to collect tax increment revenue on new growth to help pay for things like infrastructure, capital projects and economic development within a specified boundary.

As the city grapples with how to generate enough money to pay for improvements to its sewer system and drinking water infrastructure without saddling residents with the entire cost burden, urban renewal presents compelling possibilities, Scappoose city officials say.

"It's possible urban renewal dollars could be used to help with the debt service associated with upgrades to the plants and therefore has the potential to offset the need for rate increases in the future," Alexandra Rains, assistant to the Scappoose city manager, stated Wednesday. "However, the important thing to keep in mind about funding the plants with urban renewal dollars is that you could only fund a portion of the costs, specifically, whatever portion could be demonstrated to benefit the district." A district wouldn't come without tradeoffs.

As ECONorthwest and Tiberius Solutions — companies contracted by Scappoose to produce an urban renewal feasibility study — point out, urban renewal districts divert property tax revenues to specific projects at the expense of existing taxing districts like fire departments and libraries. Any taxing district within the urban renewal boundary loses a portion of its revenue to newly earmarked projects.

During a work session Monday, June 18, city councilors reviewed the results of a feasibility study.

Assuming a boundary of roughly 450 acres, which would encompass the city's downtown commercial core as well as its industrial area, projections indicate an urban renewal district could generate anywhere from $11 million to $25.5 million for projects over a 30-year period.

The first few years wouldn't generate much revenue, according to the analysis, because revenue is contingent on new growth in the boundary. Additionally, the city would be simultaneously trying to generate extra tax revenue from new business while offering a tax break program.

"The urban renewal agency would not have capacity to fund large-scale infrastructure projects until at least five or ten years after adoption," the analysis states. "This is, in part, due to the fact that the potential boundary used in this feasibility study overlaps with an Enterprise Zone. The Enterprise Zone offers a tax abatement which would delay the impact of new development on [tax increment financing] generation and the resulting financial capacity."

Councilors voiced initial support for the idea, but a formal approval or vote has yet to take place.

"We're not doing an urban renewal plan," ECONorthwest's Lorelei Juntunen told councilors. "We're not at that level yet."

Councilors directed staff to come back with costs for developing a plan and are expected to review the potential district again sometime this summer.

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