| Financial
and other potential incentives or motives to use or abuse blight
designations |
| To understand why a municipality and an urban renewal
authority might be interested in applying a broad definition of blight
to enlarge a blight area and to bring in raw and developed land that
reasonable persons might conclude is not blight, it is important to
review the powers of an urban renewal authority. 1. Tax-increment financing. This is a method of generating tax revenue for the urban renewal authority, which when created has no source of revenue of its own and which has no power to impose or raise any taxes. Tax-increment financing is premised on the belief that a blight area will generate more sales and property tax revenue in the future than it does now. Here's how it works simplistically: First, a sales and property tax-revenue "baseline" of the blight area is determined at the time the area is designated--that is, the municipality determines the amount of sales and property-tax revenue the area is generating. This is the amount of sales and property-tax revenue being received--shared--by the municipality and county. Second, during and after redevelopment, tax revenues generated by the area in excess of the baseline amount is paid to the authority. The authority may use these monies for any of a multitude of purposes, including paying down bonds, paying its expenses, giving incentives to developers, and financing infrastructure construction in the designated blight area (e.g., roads, sidewalks and sewers). Increasing the size of a blight area and including raw and developed land that is not blighted would serve to increase the potential tax revenue paid to the authority. A cash-rich authority has a broader range of options to accomplish its urban-renewal-plan objectives. Additionally, because a significant portion of the above-baseline tax revenue would be paid to the county but for the tax-increment scheme, the municipality and authority could view a broad definition of blight as a means to use "county dollars" to pay for municipal improvements in the blight area. There is reason to believe money is driving Louisville's decision to expand the urban renewal area well beyond the original idea of "revitalizing Highway 42." 2. Condemnation. The authority and the municipality that created thte authority have the power to condemn tracts of land within a blighted area--that is, to force a fair-market-value sale of the land to the authority--for any of a number of purposes. Those purposes could include selling the land to a developer for redevelopment, dedicating the land for public uses or transferring the land to the municipality. See, e.g., Colo. Rev. Stats. § 31-25-106. Increasing the size of a blight area and including raw and developed land that is not blighted would enhance the authority's and municipality's ability to condemn land. |
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