The city of John Day is getting closer to establishing an urban renewal area intended to encourage new home building in the community, the John Day City Council learned Feb. 13.
City staff presented preliminary boundaries for the program to the Project Advisory Committee during its Jan. 29 meeting, City Manager Nick Green told the council.
State law limits urban renewal areas to 25 percent of a city’s land area and 25 percent of its assessed value. John Day’s 1,376 total acres are assessed at about $100 million. The city’s consultants at Elaine Howard Consulting recommended including up to 286 acres in order to leave room for future amendments.
Under the city’s current proposal, new home construction would be encouraged by offering a 7 percent cash rebate based on the assessed value of each new home, to be provided after the home was placed on the tax rolls. The city also would waive all system development fees.
The city plans to recoup those stimulus payments through increased property tax revenue over seven years, but the city will need sufficient investment capital to provide these incentives. With an average financial incentive of $20,000 per home and a goal of building 100 homes, the urban renewal program would need a maximum indebtedness of $2 million over the expected 20-year duration of the program, Green said in his council report.
Green said the city wanted to be proactive rather than wait for incremental tax increases to accrue following private sector development. He noted that property tax values in John Day have increased by an average of 2.4 percent over the past 10 years.
“This represents a ‘no growth’ environment,” he said. “Urban renewal agencies in a no growth environment cannot function because there is not a sufficient increase in the underlying tax base to support the urban renewal programs.”
The Project Advisory Committee discussed the need to address urban blight — including older homes with deferred maintenance that need significant repair. According to Grant County Assessor David Thunell, the minimum investment in a home that will trigger a new assessed value is $10,000. Increased assessed value would mean more tax revenue to the city.
“Incentives for development proposals less than $10,000 would not result in a return on investment for the city and should be excluded from the program,” Green said.
The majority of the committee recommended limiting the proposed home-building incentives to site-built homes and excluding manufactured homes. Property owners could continue to place manufactured homes in John Day where allowed, but they wouldn’t be eligible for the incentive program.
The preliminary boundaries for the urban renewal area include two categories:
• Tier 1, about 45 percent of the urban renewal area, is defined as buildable land zoned residential and adjacent to city services. This includes the neighborhoods of Valley View/Ironwood Estates, Charolais Heights/Bridge Street, North Canton Street, Southwest Fourth Avenue/Airport Road and Strawberry View Estates, along with 4.85 miles of “cherry stems” connecting the neighborhoods.
• Tier 2, about 20 percent of the urban renewal area, includes higher-density areas with older properties zoned residential limited. This includes about 27 acres west of the fairgrounds, 31 acres east of downtown and 12 acres south of downtown.
The Project Advisory Committee will meet again at the John Day Fire Hall at 4 p.m. March 14. According to an anticipated timeline, a draft version of the urban renewal plan and report will be completed in April, and review and adoption hearings will be held in June.