Idaho House passes bill to reform urban renewal district funding process

The Idaho Legislature convened for House Legislative Session Day 85 on March 31, 2025, where significant discussions centered around House Bill 436, which addresses urban renewal districts and their impact on local governance and funding.

The session began with an overview of House Bill 436, which aims to clarify the processes surrounding the creation and dissolution of urban renewal districts. Currently, cities have the authority to create these districts, which utilize incremental property tax growth to fund various projects without imposing new taxes on residents. However, the existing code lacks a clear procedure for dissolving these districts, prompting the need for legislative action.

The bill proposes a structured process for cities wishing to dissolve an urban renewal district. This process includes adopting a resolution of intent, engaging with the urban renewal district to develop a dissolution plan, and passing an ordinance to finalize the plan. Importantly, if a city is satisfied with its urban renewal district, the bill does not mandate any changes.

Another critical aspect of the bill addresses the financial challenges faced by fire districts that overlap with urban renewal districts. Currently, as property values increase within these districts, the additional tax revenue is diverted away from fire districts, which continue to provide essential services without receiving the corresponding funding. House Bill 436 allows fire districts to opt out of urban renewal districts if there is no existing indebtedness, ensuring they can retain some of the tax revenue generated from new developments.

The bill also introduces provisions for new urban renewal districts, requiring fire districts to opt in if they wish to participate, thereby allowing them to retain their regular tax growth otherwise.

During the debate, various legislators expressed their views on the bill. Supporters highlighted the need for flexibility in managing urban renewal districts and the importance of ensuring fire districts receive adequate funding. Critics raised concerns about the potential negative impact on urban renewal agencies and the overall effectiveness of urban renewal as a tool for economic development.

Ultimately, House Bill 436 passed with a vote of 57 to 13, signaling legislative support for the proposed changes. The bill will now move to the Senate for further consideration.

The session concluded with a request for unanimous consent to advance House Joint Memorial 8, indicating ongoing legislative activity beyond the discussions on urban renewal. The meeting underscored the complexities of balancing economic development with the financial needs of local services, a theme that continues to resonate within Idaho's legislative agenda.