Bend urban renewal staff explains TIF mechanics, core-area investments and housing incentives

An urban renewal staff member told the Bend Core Area Advisory Board (CAB) on Feb. 19 that tax increment financing, or TIF, is "just a financial mechanism that uses tomorrow's dollars for today's projects," and outlined how the city plans to use TIF dollars in the core area to finance transportation, utilities, housing and business development.

The presentation explained why the Bend Urban Renewal Agency (BURA) recommends projects that address legally defined blight and described the financial mechanics that let the agency issue bonds against projected future increment. The staff member said the process for creating or amending an urban renewal area follows Oregon Revised Statutes, chapter 457, and includes feasibility studies, a consult-and-confer period with overlapping taxing districts, planning commission review, and two city council hearings.

Why this matters: TIF redirects future growth in assessed value from overlapping taxing jurisdictions into an urban renewal fund for a defined area. That affects long-term revenue and which public projects the city can fund, while developers and businesses may receive incentives tied to requirements such as affordability and energy standards.

Urban renewal basics and legal limits

The staff member summarized the legal framework under ORS chapter 457 and said BURA acts as the redevelopment agency that implements TIF in Bend. The agency is a separate corporate entity from the city but is staffed under an intergovernmental agreement with the city. Under Oregon law, the presenter said, communities under 50,000 population can put up to 25% of acreage into a TIF area; communities over 50,000 are limited to 15% of acreage and 15% of assessed value. The presenter said Bend currently has about 21,000 acres and that its urban renewal districts account for "about 7.67%" of acreage and about "5.1%" of the city's assessed value, both well below state limits.

The presentation described the "frozen base" concept: assessed value in a TIF area at plan adoption continues to be divided to taxing districts, while new growth above that base (the increment) is used for the urban renewal plan. The staff member said this does not create a new tax rate for residents: "It is not. The tax rate remains the same." The presentation also noted that certain public facilities included in a plan can require approval by the top three taxing districts in Deschutes County (the school district, the city and the county).

Planned projects, costs and financing

Staff gave a breakdown of the core-area investment plan for the plan's 30-year horizon: 40to50% for transportation, streetscape and utilities (roughly $95 million), 15to25% for affordable housing or developer incentives (about $35 million), 15to20% for business development, 10% for open space and parks (about $20 million), and roughly 5% for administration (about $10 million over the life of the plan). The core-area plan was established in 2020; staff corrected an earlier draft timeline to show the plan terminates in 2050.

Staff cited two core-area projects already underway: a Second Street streetscape with a present-day project cost of about $4.3 million and a financed cost near $7 million (financed via a 20-year bond), and a city transportation contribution to the Franklin Avenue undercrossing for $1.6 million (financed cost roughly $2.7 million). The presenter said BURA will issue its first revenue bond for the core area this year, a bond dedicated to Second Street and the Franklin undercrossing.

On debt and fiscal policy, staff said the agency uses short-term floater loans for operating expenses and issues revenue bonds for large capital projects (revenue bonds do not require voter approval). BURA applies a conservative debt-coverage standard similar to the city's policy (roughly a 1.45to1.5 coverage ratio) and said it must retire any debt by plan termination.

Housing incentives and site-specific ("tiny TIF") program

Staff described a new set of development incentives intended to encourage housing at roughly 90% of area median income (AMI). The base housing policy described gives qualifying projects up to 12 years of tax-exemption or reimbursement if at least 15% of new units are rented at 90% AMI and the developments meet limits on rent increases for the assistance period. Additional incentives are available for projects that meet energy-efficiency standards and supplier-diversity goals; staff said the supplier-diversity metric follows the HUD-style definition and targets 23% local contractors with a 5% goal for minority- or women-owned firms.

The staff member said the "tiny TIF" or site-specific incentive program launched Jan. 1; BURA will perform an initial review of the first batch of applications on Feb. 19. CAB members were told that only some early applications are located inside the core area and that projects outside an existing TIF district must still follow the statutory feasibility, consult-and-confer and plan-adoption process if a new district is proposed.

Discussion, board role and next steps

CAB members pressed staff on how assessed-value growth assumptions affect projections. Staff said the core-area financial forecast uses a 4% annual growth assumption to project increment over the plan's life (slightly above the standard 3% assessed-value growth used by the assessor). Staff also reviewed recent volatility: assessed-value growth by quarter was 2.7% in 2023, 0% in 2024 and 3.8% so far in 2025. Staff said urban renewal districts typically experience multiple up/down cycles over a 30-year plan and emphasized cash-flow management when issuing bonds.

Members discussed gentrification and protecting existing businesses and makers. Several CAB members said they want programs that support existing small businesses and artists while also encouraging new development that increases the tax base. Staff said the investment strategy to be released ahead of a council packet will include a land-development capacity assessment and short-, medium- and long-term investment options; CAB will get the investment strategy three weeks before its next review and is expected to provide feedback.

Formal actions and governance

At the close of the work session CAB members elected chair and vice chair. The board unanimously re-elected Corey Harlan as chair and elected Dale (last name not specified in the transcript) as vice chair. The transcript records motions and seconds for each nomination and a unanimous voice vote; the specific roll-call vote counts were not recorded in the transcript.

What to watch

BURA is scheduled to review site-specific TIF applications on Feb. 19; CAB's next regular meeting is on Feb. 20. Staff said the investment strategy and project-level budget materials (including bond amortization and cash-flow projections) will be provided to CAB before future work sessions so members can advise on project prioritization and a balance of short- and long-term investments.

Ending

The work session closed after the elections. CAB members and staff expressed interest in using the coming months to refine the investment strategy and to consider whether CAB should expand its advisory role to the city's other urban renewal districts (Murphy's Crossing and Juniper Ridge).