Below are some commonly asked questions about the Ketchum Urban Renewal Agency. If there is something that is not addressed here, please feel free to contact us directly.
Urban renewal is a program, codified in state law, designed to help communities improve and redevelop areas that are physically deteriorated, unsafe, poorly planned, under-developed or in need of redevelopment. All fifty states have some form of urban renewal legislation. Urban renewal began over fifty years ago as a federal program to improve inner city housing. It has evolved from a big-government program of large-scale inner city demolition to a local, collaborative process aimed at strengthening existing communities by creating a revenue stream to fund projects of value to the community. Though it has undergone many changes since its inception, urban renewal has endured as an effective way for cities and towns to make capital investments into their future.
Funding occurs through tax increment financing; a taxing concept for economic redevelopment. The basic idea is simple: future tax revenues pay for revitalization efforts. The City Council, acting on the recommendations from the Ketchum Urban Renewal Agency (KURA), draws a line around an area (Revenue Allocation Area) and identifies desirable improvements or concepts within that area (Urban Renewal Plan). The KURA issues urban renewal bonds to pay for the identified improvements, or pays for these improvements directly out of the tax revenue, often called “pay as you go”. As property values increase in the area due to new investment, the rise in property tax revenues (called “tax increment”) is used to pay off the urban renewal bonds. This financing method is called tax-increment financing, and it is the most common method of paying for improvements in an urban renewal area.
In 2006, the City of Ketchum formed the Ketchum Urban Renewal Agency (KURA) to focus on downtown revitalization, community housing and public and private investments. It is an independent organization with its own budget, by-laws and Board of Commissioners. The agency’s activity and investment decisions are driven by an Urban Renewal Plan, which was adopted by the City Council in 2006 and amended in 2010. Its initiatives are focused exclusively on areas within Ketchum that have been identified as those that would benefit most by public investment.
Legislation enabling urban renewal in Idaho dates back to 1965. (See Idaho Code, Title 50, Chapter 20). Today, there are 42 Urban Renewal Agencies throughout the state, from Boise to smaller rural communities such as Driggs. A city can create an urban renewal agency by ordinance. Once created, they are independent of the city government and, by law, may use tax increment financing to finance the economic growth and development of urban renewal areas.
An urban renewal agency can undertake a variety of projects and tasks to help revitalize an urban area. In Ketchum, the agency’s emphasis has been on the installation of public improvements so as to encourage private investment and development. The work includes everything from planning and prioritizing which projects to undertake, working and partnering with developers to pursue and implement projects, investing dollars in public resources and strategic properties, and managing the facilities it owns. The overarching goal of all of the KURA’s activities is revitalization and ensuring the City’s economic health.
The City created the Ketchum Urban Renewal Agency and, by law, it must remain an independent organization. The KURA is governed by a separate Board of Commissioners, including four out of seven who are unelected officials. It has an entirely separate budget, and has separate by-laws. Any properties owned by the KURA, or debt issued by the agency, is independent of the City of Ketchum.
At the time of the creation of the Ketchum Urban Renewal Agency, the City identified those geographic areas of Ketchum that were in need of improvement. Those sites were included in one urban renewal district, also known as the Revenue Allocation Area. That area includes properties generally in the downtown area and in Warm Springs, and was expanded in 2010 to include the property affiliated with the River Run Annexation. By law, the current assessed value of a Revenue Allocation Area, when it is created, CANNOT exceed 10% of the assessed value of all City taxable property. In 2010, the assessed valuation of Ketchum’s taxable property was $3,367,830,238 and the assessed valuation of the Revenue Allocation Area was $330,773,455 – just under 10%.
The Ketchum Urban Renewal Agency’s goal is revitalization and ensuring the City’s economic vitality. All of its activities and projects are undertaken with that goal in mind. The impact of some projects is more immediate than others. For example, the development of the Fourth Street Heritage Corridor helped create a more vibrant, economically active Town Square area in a relatively quick period of time. The conversion of 491 Sun Valley Road into a state-of-the-art, unique visitor center is also expected to help boost the City’s marketing efforts to attract and retain more tourists. Upgrading public infrastructure and these kinds of local facilities also means more local jobs. Longer term, the KURA’s efforts to encourage development of affordable housing and hotel projects should help stimulate local economic activity by increasing both the number of residents living downtown and tourists.
Like almost all urban renewal agencies across the country, the Ketchum Urban Renewal Agency relies on tax-increment financing for funding (see question #2). That means that when the agency was created, it had no funds available for projects because no property tax revenue had been collected. So, like many young URAs, the KURA jump-started its revitalization efforts by borrowing money. Those borrowed funds (approximately $5.6 million) were used to help develop the Fourth Street Heritage Corridor and to invest in two properties that were deemed good strategic investments (491 Sun Valley Road and 211 First Street East). In 2010, the KURA refinanced the debt by issuing municipal bonds and repaying the initial three lenders. For the past five years, the KURA has collected property taxes, and is now using that revenue for repayment of the debt and general operations.
No, the existence of an urban renewal agency has no bearing on the tax rate, nor does the fact that a property lies within the Revenue Allocation Area. That is, all properties within a taxing district, whether they fall within or outside the Revenue Allocation Area, are levied at the same rate. The general idea is that the KURA’s activities will help raise property values within the Revenue Allocation Area, translating into more valuable property for the owners.
As noted in question #10, in 2010 the Ketchum Urban Renewal Agency evaluated various refinancing options and determined that issuing municipal bonds was the most cost-efficient method of managing its debt.
The average interest rate is 5.37% and the average life is 16.3 years. The average annual interest payment by the KURA is approximately $400,000.
▶ How much money in property taxes has the KURA collected since its inception, and what has it been used for?
The vast majority of the funds have been used to service the debt, as well as to build up a separate fund dedicated to future debt repayment (which was recently fully funded). Other projects include:
- Investment in the development of the Fourth Street Heritage Corridor.
- Investment in the Walkable Ketchum project.
- Initial funding for the new Ketchum Transportation Center.
- Purchase and improvements to the Visitors Center building at 491 Sun Valley Road (at East Avenue).
- Purchase of property at 211 E. First Street for community housing. That property is now under contract to be exchanged for a larger site at 611-691 Second Ave. that is more conducive to community housing.
- Investments in the development of the Downtown Master Plan and the 2010 Urban Renewal Plan
Current forecasts of future tax revenue indicate the Ketchum Urban Renewal Agency will have sufficient funds to manage the debt. A dramatic downturn in the economy beyond current conditions, or future unforeseen legislative changes in Boise, could create challenges in repayment.
That is hard for us to know, but many holders of municipal bonds are big institutional investors. We certainly do not know the names of any individual bondholders.
Just current routine expenses.
For all funding available, please reference the most current fiscal year budget.