With the tax value of redevelopment projects in Utah topping $1 billion this year, lawmakers are taking a second look at the controversial practices that made it possible.
Critics contend that redevelopment agencies trample on property rights, sacrifice small businesses for big ones, violate the principles of free enterprise and breed cut-throat competition among local governments.Supporters argue that RDAs eradicate urban blight, enhance economic development, increase tax revenue and serve public policy within the letter of the law.
Both sides are correct, according to a 45-page performance audit report presented to a legislative interim study committee on Wednesday.
RDAs have provoked arguments, lawsuits and political battles ever since the first one was established in Ogden in 1969, and the debate has grown with their proliferation - 49 exist today - and the increasingly liberal interpretation and application of the law.
The report says the original intent of the law - "to combat blight in aging central business districts" - is no longer the rule in practice. "The statute is now also used as the basis and control for communitywide economic development that is done, primarily, for community economic gain, not for control of blight."
The legislative auditor general found:
- The eminent-domain powers of RDAs are being used for community tax base gains rather than to eliminate true blight.
- Cities are competing for RDA projects and the associated sales tax revenue, resulting in some cities further distorting the law.
- RDAs have shifted their emphasis away from major commercial projects that enhance the property tax base to lower cost retail developments that quickly boost sales tax income.
- The definition of blight is being so liberally interpreted that "any piece of property" could be included in a project.
- Oversight of RDAs is inadequate.
"The use of eminent domain becomes a concern when it is used to promote community growth through economic development rather than social welfare through revitalization and redevelopment," the report said.
Salt Lake attorney William D. Oswald, who helped draft Utah's law and has guided RDAs for more than 20 years, believes the agencies are functioning as intended. The distinction between redevelopment and economic development is not as fine a line as critics draw it, he said.
RDA activities grew and changed as other redevelopment tools were lost to cities, Oswald said, citing the elimination of federal Urban Development Action Grants and Industrial Revenue Bonds. And he insists that those activities were anticipated by the law.
West Valley businessman William Barton, a former state senator and longtime advocate of RDA reform, disagrees. "The state law allows too much," he said.
One of Barton's own properties recently was included in a redevelopment project area in West Valley City, and while he supports the proposed development he opposes the policies that permit it. Like other RDA projects, West Valley's Willow Wood meets the letter of the law but not the intent, Barton said.
In a written response to the audit report, Blaine K. Gehring, president of the Utah Redevelopment Association, urged the Legislature to adopt amendments that will allow RDAs to maintain most of their current practices.
Among other things, Gehring specifically suggested a separate set of requirements for economic development and redevelopment within the existing statute and a provision other than "blight" to describe the need for economic development. The association also strongly opposed any curtailment of RDA eminent-domain powers.
Valuation (in millions)