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City Council discusses tax increment financing for long-term development project

PMG FILE PHOTO - The City of West Linn has talked about developing the waterfront area along the Willamette River for 30 years, and on Tuesday, Jan. 22, discussed a method for financing such a project. For years the City of West Linn has wanted to revitalize the waterfront area along the Willamette River. Two years ago, the City beganworking on a long-range master plan to redevelop the roughly 100 acres along the river.

To spark the development, the City may have to rely on tools like Tax Increment Financing (TIF), also known as Urban Renewal, which would fund basic public infrastructure of the area.

At a work session Tuesday, Jan. 21, the West Linn City Council heard information on TIF from consulting firm ECONorthwest, who pointed to recent Urban Renewal projects in Hood River, Beaverton and Millenium Plaza in downtown Lake Oswego.

"TIF is one of the largest hammers a city can wieldto promote new development in a community," said Matt Craigie, a project manager from ECONorthwest.

TIF raises revenue through property taxes and works by freezing the amount a property pays in taxes to normal taxing jurisdictions like the City and schools for a number of years. Any additional taxes for those years from that property, based on increases in assessed value, would then go to the urban renewal project.

Oregon law mandates that assessed property values cannot raise more than 3% in one year if no significant changes are made to the property.

According to ECONorthwest, it can take several years for a TIF plan to produce significant revenue.

For development of the waterfront, the City would have to create a TIF taxing district on the east side of town.

Craigie said urban renewal can be a politically contentious issue, especially when the community and other taxing districts are not carefully engaged in the planning process.

Though, to establish a TIF district, West Linn voters would have to approve the plan in an election.

Craigie noted that with the frozen tax base, budgets may be tight for City and other tax jurisdictions because they would not get new revenue from increased property values for the duration of the urban renewal program.

Community Development Director and Interim City Manager John Williams told the council that traditionally, the other taxing districts most opposed to a TIF district are fire districts. Though he noted that West Linn is served by Tualatin Valley Fire and Rescue, which covers many cities in the area and has historically supported urban renewal projects in its other jurisdictions, appreciating the long-term benefits that they would bring to the community.

ECONorthwest conducted a preliminary assessment of the waterfront area and found that the TIF woul need to generate $20 million or $28 million, depending on whether the pond area of the waterfront would be developed.

Craigie said the pond area could remain largely as is or be filled in to build on top of, which along with the basic infrastructure improvements would cost around $8 million.

ECONorthwest found in their assessment that the development could include small, infill attached housing in the Willamette area surrounding Willamette Falls Driveas well as office and retail projects on the hillside of the north Willamette area. Craigie said development could also include mixed-use multifamily housing, small office and retail properties in the area surrounding the former city hall building.

According to the assessment, there would likely be no development of the island near Willamette Falls and little to no development of the industrial area surrounding Willamette Falls Paper Company.

Craigie noted that in the plus/minus measurement, historically urban renewal projects have displaced minority populations, though he said cities like Beaverton, Portland, Albany and Bend have used it to fund affordable housing.

Craigie told the council that if TIF is a tool West Linn really wants to consider for the waterfront project, it should next conduct a feasibility study, engage with the public and other tax districts over the idea and create a TIF plan and report.

Mayor Russ Axelrod said he would like the council to continue further discussions of TIF, and said a funding plan for the waterfront area could help secure funding for the large transportation projects in the area, I-205 and Highway 43.

Councilor Rich Sakelik said he thought this project should take a lower priority at the moment, given how busy the City is with GO Bond projects. He said it could be something for the next council to look at.


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