Even though the legislative session is still more than four months away, the Utah League of Cities and Towns is working on language for a bill that could overhaul the way cities direct development.
The league, which serves as a lobbying agency for the dozens of municipalities throughout Utah, has been working with Sen. Curtis Bramble, R-Provo, and a legislative working group to split redevelopment agency projects into three types, which cities could then fashion to their specific needs.
Millions of sales tax dollars pour into city coffers each year, and often those cities woo developers and large retailers by creating tax incentives for them to build within their borders. Those incentives pit neighboring cities against each other for the same stores that would likely come to cities without the tax incentives, lawmakers have said throughout months of interim meetings.
But when municipalities offer the tax breaks, it reduces revenues for schools and other entities that would share in the tax income.
During the 2005 legislative session, Bramble successfully carried a bill that eliminated cities' abilities to use eminent domain in redevelopment agency projects, or RDAs. Bramble also vowed to overhaul RDAs, and he has chaired an interim task force on tax reform. Now, approximately half-way through the interim period (the 2006 legislative session begins in January), Bramble and the task force are starting to think about specific bill language.
Most of that language will come from the league, which has proposed splitting one type of RDA into three: economic development, redevelopment and community development.
"As we found, no two communities were alike," said Lee King, Midvale city administrator, at a meeting of the RDA working group Thursday.
Currently, RDAs create development incentives by setting a base tax rate and then collecting money over that rate for approximately 20 to 25 years. The RDA spends the increment money on infrastructure improvements roads, sewers, curbs, gutters, etc. within the boundaries of the project. But because the RDA project pulls taxes away from the agencies that would ordinarily collect it school boards, counties and other taxing districts sometimes those taxing entities object to the projects.
Under the current system, the schools, counties and other taxing members cannot individually opt into or out of the project; they can only vote as a bloc to approve or reject the project.
Under the community development option, the individual taxing entities could choose to participate or ignore the project. In the economic and redevelopment tracks, any votes on the RDA project that the taxing entity committee takes must pass with a super-majority. That slight shift would give more weight to individual entities.
"We are trying to tailor-make various alternatives to the various problems cities are facing," Bramble said. "We've attempted to bring all of those (together) with strong opinions and provide them with more flexibility."
The taxing entities would also help determine how long the project will last. Current projects typically last from 20 to 25 years, but the taxing entities would vote on how much money the project needs and therefore how long the increment money would be diverted to infrastructure improvements.
The league also proposes tightening the definition of blight. Now blight can mean a lack of landscaping, broken curbs or parking that backs into a street. A refined definition would decrease the types of blight and would require the city to find more blight to mark an overall area as blighted. Unused space would not necessarily qualify for blight under the proposed changes.
The league presented its proposed changes to the working group that handles reform for RDAs and other taxes. That working group will consider the changes and make a recommendation to the full tax reform task force.
Any bill written about the RDA changes would likely approach 70 or 80 pages, said Lincoln Shurtz of the league.
"This is a mammoth task," he said. "We hope to have something for you to review in statutory form by the first part of October."
During other meetings Thursday, the property tax working group forwarded four proposals to the full task force for consideration, including one that would amend the way Truth In Taxation notices, which now are printed in newspapers prior to a tax increase public hearing, are written.
Ideally, committee members want the new notices to provide information that can easily be understood by the general public, such as the amount of the increase on an average property's tax bill, the taxing entity's contact information and the date and time of the public hearing. The goal would be to avoid more technical information, which can be misunderstood.
Another proposal would remove the current 45 percent tax exemption for primary homes after the first $100,000 of value. The sponsor of that motion, Rep. John Dougall, R-American Fork, said that it would promote "tax equity" and that tax rates would be lowered to avoid a tax increase on primary homes. It would cut taxes for businesses and second homes significantly, however.
Other proposals forwarded to the full task force included a suggested rule that would allow voted leeway issues to avoid additional truth in taxation hearings when they are implemented and for property tax rates to be increased annually for inflation.
E-mail: email@example.com Contributing: Josh Loftin.
Contributing: Josh Loftin.