Frequently Asked Questions (FAQs)

Essentially, they are the same thing. Urban renewal was established by the Federal Housing Act of 1949 to provide funding for cities to invest in affordable housing and urban infrastructure projects in impoverished areas. Unfortunately, in many areas urban renewal has had devastating consequences, resulting in mass displacement of minorities and underrepresented populations in cities around the country. For many, the term urban renewal evokes these past practices. Because of this, the City of Milwaukie has made the conscious decision to instead use the term tax-increment financing (or TIF), which is used consistently in other parts of the nation. Throughout the City of Milwaukie website, you will now see the use of TIF Districts, though we leave language and references to urban renewal in previously adopted plans.
 

Tax increment financing is a powerful funding tool currently in place in over 75 communities across Oregon. It is used to help areas that are not performing well and/or lack public infrastructure by funding projects that fix identified problems and spur private investment that would otherwise not happen under normal market conditions.

Tax increment financing uses property taxes from within an area to fix identified problems in that same area. It often focuses on improving an area’s transportation and utility infrastructure since these kinds of improvements can unlock an area’s development potential. Tax increment financing can also be used to attract and retain small businesses, support affordable housing, and develop public spaces such as parks, plazas, and trails.

When a Tax Increment Financing (TIF) District is established, the County Assessor determines the current assessed value of all property within the district and freezes that tax base. Tax revenue from this “frozen base” continues to go to taxing districts annually for the life of the TIF District. Tax revenue on any increase in property value that would occur anyway—from new development and/or appreciation—is allocated to the TIF District Agency for projects in the TIF District. This increase above the frozen base is also called the “increment.” When the TIF District expires, the frozen base also expires, and the local taxing districts resume receiving taxes on the full assessed value of the district. 

No, urban renewal simply allows for the reallocation of growth on taxes to the urban renewal agency rather than the overlapping taxing districts. Taxpayers within the city will see a line item on their property tax statements for urban renewal. The overall tax bill does not increase, but the allocation of revenues received from the payment is changed as a portion of that payment now goes to urban renewal. This is called “division of taxes” and is the administrative way that assessors must show the calculation of the tax increment revenue.

TIF Districts have a financial effect on local taxing districts, but the impact is different for schools than for other districts. TIF Districts do not directly affect school districts because schools are funded through the State School Fund. Property tax revenues are an offset under the statewide school funding formula, and property tax revenues foregone by school districts because of TIF may be replaced with other State School Fund revenues.

Other taxing districts, such as North Clackamas Parks and Recreation, are directly affected by TIF. While a TIF District is active, revenue from that area is frozen, which means that taxing districts will not receive as much money as they would have otherwise received for the life of the TIF District. In essence, taxing districts forego some revenue now in exchange for an increase in their total property tax base later as a result of TIF Since the goal of TIF is to spur development that would otherwise not have occurred, taxing districts can expect to receive more tax revenue in the future than they would have had TIF Districts never existed.

TIF is not a new tax on property anywhere in the city—TIF only changes how tax revenue is allocated. The revenue to pay for projects in a TIF District is self-generated by new development and property appreciation in the district. Tax bills for property owners within a TIF District do not increase because of TIF; it only changes how tax revenues are allocated.

An urban renewal area is created through a process that includes community input, notice to impacted taxing jurisdictions, review by the City’s urban renewal agency, planning commission, and city council. The city council hearing notice must be sent to a specified group of citizens. The adoption of a plan must be with a non-emergency ordinance by the city council that does not go into effect for 30 days after adoption. The plan, together with an accompanying urban renewal report, identifies the goals of the urban renewal area and projects to be funded with TIF, describes how the area complies with statutory requirements for blight, projects tax increment revenues, and identifies a maximum amount of debt an urban renewal area can incur, among other topics.

TIF Funds can be used on a range of activities, including capital projects and development assistance programs, and typically include:

• Utility or infrastructure projects to support new development
• Infrastructure: streets and utilities
• Streetscape improvements and transportation enhancements, including new lighting, trees, sidewalks, pedestrian and bicycle amenities, and intersection improvements
• Catalyst redevelopment projects, such as mixed-use or infill housing developments
• Storefront improvement grants for improvements to existing properties
• Development assistance grants or incentives for specific desired development types.
• Parks and plazas
• Clean up of brownfield sites
• Property acquisition to aggregate properties for desired development
• Public buildings
• Historic preservation projects