What is redevelopment?
Redevelopment is a primary tool used by cities and counties to keep local taxes at home to revitalize areas of neighborhoods and business districts that are run-down or unsafe, or have low property values or high vacancy rates.
What is a Redevelopment Agency?
The Redevelopment Agency governs the Redevelopment Area. The Redevelopment Agency has the power to: buy private property for resale to another private person or organization; reallocate property tax "increment" in order to finance the redevelopment program of the community; and use eminent domain (condemnation) to acquire property.
Of what benefit to a citizen is being in a redevelopment project area?
Redevelopment is one of the most effective ways to breathe new life into older areas with social, physical, environmental or economic conditions that prevent new investment by private companies. Through redevelopment, a project area may receive help in any of the following ways: improving buildings that are unsafe or unhealthy; bringing necessary commercial businesses by assembling parcels large enough to develop; improving public utilities; convincing new business to relocate to vacant redevelopment property; etc. All the help is intended to increase property values throughout the redevelopment area.
Why do we have redevelopment projects?
The basic reason for establishing redevelopment projects is to get funding that can be used to attract commercial, industrial and residential development in order to improve an area.
How do Redevelopment Agencies secure funds?
The Redevelopment Agency is able to obtain funds called "tax increment financing." On the date the City Council approves a redevelopment plan, the property within the boundaries of the plan has a certain total property tax value. If this total assessed valuation increases through property improvements or new development, etc., most of the taxes that are derived from the increase go to the Redevelopment Agency. These funds are called "tax increments." Usually, the flow of tax increment revenues to the Agency will not be sufficient in itself to finance the full scope of redevelopment activities and development projects. Therefore, agencies issue bonds. These bonds are not a debt of the City or County and are repaid solely from tax increment revenues. Tax increments can be used only in the same project that generates them, except that by law, as soon as the city’s population reaches 200,000, 18% of the increment goes toward residential projects throughout the city that benefit low and moderate income households.
Will property taxes increase?
Only if property value increases. It is important to note that higher taxes from the sale, development or rehabilitation of property reflects a rise in property value and not an increase in tax rate. As improvements to properties are made and the value of a property is raised, taxes naturally increase—just as they do throughout the rest of the City.
What is relocation?
Relocation is when a business or family moves for the purpose of clearing land and preparing it for its designated use. When a person or business meets the legal qualifications, the Redevelopment Agency pays for: Assistance in finding a new location, payments to help cover moving costs and payments for certain other costs as provided by law.
If a citizen decides to sell property to the Agency, who determines the selling price?
The Agency would hire an independent appraiser to establish the fair market value of the property. If the owner is not satisfied with the appraised value of the property, he may hire his own appraiser to reevaluate the property, after which both appraisals will be compared and a selling price negotiated. Fair market value is the value the property would have if it were placed in today's market place and sold.
How will this affect city/county & other taxing agencies in regard to tax revenue loss?
Other taxing agencies will lose part of the new property taxes generated by redevelopment, but will continue receiving the base revenues. However, in older, inactive areas, the property values would not increase without redevelopment activities. Other taxing agencies will receive non-property tax revenues and revenues generated outside the project area as a direct result of redevelopment activities, i.e., sales taxes, hotel room taxes and property taxes.
Why does the Agency have the power of eminent domain (condemnation of property)?
Eminent domain is a tool that redevelopment agencies use with great caution. Most property is eligible for acquisition under eminent domain.