Legislative History of Urban Renewal in Oregon
Many of the milestones shaping urban renewal in Oregon were state and federal
legislative actions and public votes or court decisions directly related to those
actions.126 The following is a chronology that summarizes those milestones to
date:127
1949: Congress approved Title I of the Federal Housing Act of 1949, the first
landmark legislation regarding urban renewal. The program provided a way to
finance renewal efforts through federal loans and grants to public agencies, with
detailed federal regulations and oversight for how the program was to operate.
1951: The Oregon legislature enabled housing authorities to function as urban
renewal agencies. This enabling legislation, codified in ORS Chapter 457, did not
duplicate or preempt the existing federal urban renewal program, but rather was
supported by the procedural and substantive standards of the federal law. The
Oregon Supreme Court upheld the constitutionality of the law, and specifically its
eminent domain provisions, in a landmark decision – Foeller et ux. v. Housing
Authority of Portland, 198 OR 205 (1953).
1957: The Oregon legislature made substantial changes to Chapter 457, both in the
definitions and the declaration of necessity and purpose. The legislation also
extended to city councils, county commissions, or an appointed separate body the
power to function as an urban renewal agency.
1960: Oregon voters approved a constitutional amendment, referred by the
legislature, which authorized the use of TIF to finance redevelopment. This
approval made Oregon the second state (after California which pioneered tax
increment financing in 1951) to grant such authority. The amendment provided a
way to increase local resources available for the public match for federal urban
renewal funds. Implementing legislation followed in 1961. Use of TIF was limited
to urban renewal agencies.
1974: Congress passed the Housing and Community Development Act, which
consolidated numerous federal programs and channeled them as block grants to
cities and counties, phasing out the 25 year old federal channeling of funds directly
to urban renewal programs. This congressional action opened the door for TIF as a
major local urban renewal financing method.
1977: The Oregon legislature directed an interim legislative committee to study the
whole area of urban renewal and TIF, in response to concerns that some public
agencies were using tax increment financing inappropriately. The interim
committee was asked to report back to the 1979 session. Its report was completed
by the end of 1977 and recommended significant changes in statutes governing
urban renewal agencies.
Urban Renewal in Oregon, page 55
1979: Based on the interim legislative committee’s work, HB 2083 was introduced.
The final approved legislation substantially rewrote Oregon urban renewal statutes,
providing direction in the formation and operation of renewal agencies. The
legislation expanded the permissible uses of TIF, defined “blight” which is the
defining characteristic of an urban renewal district, restricted the percentage of
assessed value that could be placed within an urban renewal district, and improved
public scrutiny of renewal efforts.
1988: The Oregon Supreme Court determined that urban renewal taxes do not need
to fit within the six percent annual limit on tax base increases. Dennehy v. Oregon
Department of Revenue, 305 OR 595 (1988).
1990: Oregon voters approved Ballot Measure 5, which created a ceiling on
property taxes for non-school and school purposes. All taxes, including tax
increment revenue, had to be categorized for general government, public schools, or
exempt (exempt taxes were those levied for voter approved general obligation
bonds).
1991: The Oregon legislature passed Measure 5 implementing legislation that
provided that all taxes collected by means of TIF be categorized as local
government taxes subject to the $10/$1,000 real market value tax limit. For many
cities this resulted in levied taxes exceeding the limit, and urban renewal agencies
generally reduced or stopped collecting tax increment revenue to lessen the
“compression” losses to general government agencies. In City of Portland v. Smith,
314 OR 178 (1991), the Oregon Supreme Court determined that taxes for payment
of urban renewal bonds were not exempt from Measure 5 limits.
1993: In a special election, Oregon voters rejected Ballot Measure 1, which would
have allowed local voters to exempt taxes for urban renewal bonds from Ballot
Measure 5 limits.
1996: Oregon voters approved Ballot Measure 47, which reduced and limited
property taxes. The impact on TIF was never determined.
1997: In response to the belief that Measure 47 could not be implemented without
substantial litigation, the Oregon legislature referred Measure 50 to a May special
election. Oregon voters approved the measure, which repealed Measure 47 and
replaced Oregon’s levy-based property tax system with a rate-based system.
Because the Measure 50 system of raising urban renewal taxes resulted in
substantially less revenue than before, specific provisions of the measure
“grandfathered” plans in place as of the effective date of Measure 47.
These provisions allowed “existing urban renewal plans” to complete their projects
by means of a special urban renewal levy, which would still be within Measure 5
local government property tax limits. The legislature also passed SB 1215, which
implemented Measure 50, and which allowed municipalities to choose among three
options for the collection of tax increment revenue. The options had different
effects on the taxes raised and the revenue impacts on overlapping taxing districts.
Urban Renewal in Oregon, page 56
2001: The Oregon legislature passed HB 3215, which exempted taxes for future
voter approved bond issues and local option levies from tax increment revenue for
certain urban renewal plans. On December 20, 2001, the Oregon Supreme Court
handed down its decision in Shilo Inn v. Multnomah County et al., 333 OR 101
(2001). This decision will affect the way urban renewal taxes are subjected to the
Measure 5 limits and create the need for yet more changes to Oregon’s property tax
system.
Many of the milestones shaping urban renewal in Oregon were state and federal
legislative actions and public votes or court decisions directly related to those
actions.126 The following is a chronology that summarizes those milestones to
date:127
1949: Congress approved Title I of the Federal Housing Act of 1949, the first
landmark legislation regarding urban renewal. The program provided a way to
finance renewal efforts through federal loans and grants to public agencies, with
detailed federal regulations and oversight for how the program was to operate.
1951: The Oregon legislature enabled housing authorities to function as urban
renewal agencies. This enabling legislation, codified in ORS Chapter 457, did not
duplicate or preempt the existing federal urban renewal program, but rather was
supported by the procedural and substantive standards of the federal law. The
Oregon Supreme Court upheld the constitutionality of the law, and specifically its
eminent domain provisions, in a landmark decision – Foeller et ux. v. Housing
Authority of Portland, 198 OR 205 (1953).
1957: The Oregon legislature made substantial changes to Chapter 457, both in the
definitions and the declaration of necessity and purpose. The legislation also
extended to city councils, county commissions, or an appointed separate body the
power to function as an urban renewal agency.
1960: Oregon voters approved a constitutional amendment, referred by the
legislature, which authorized the use of TIF to finance redevelopment. This
approval made Oregon the second state (after California which pioneered tax
increment financing in 1951) to grant such authority. The amendment provided a
way to increase local resources available for the public match for federal urban
renewal funds. Implementing legislation followed in 1961. Use of TIF was limited
to urban renewal agencies.
1974: Congress passed the Housing and Community Development Act, which
consolidated numerous federal programs and channeled them as block grants to
cities and counties, phasing out the 25 year old federal channeling of funds directly
to urban renewal programs. This congressional action opened the door for TIF as a
major local urban renewal financing method.
1977: The Oregon legislature directed an interim legislative committee to study the
whole area of urban renewal and TIF, in response to concerns that some public
agencies were using tax increment financing inappropriately. The interim
committee was asked to report back to the 1979 session. Its report was completed
by the end of 1977 and recommended significant changes in statutes governing
urban renewal agencies.
Urban Renewal in Oregon, page 55
1979: Based on the interim legislative committee’s work, HB 2083 was introduced.
The final approved legislation substantially rewrote Oregon urban renewal statutes,
providing direction in the formation and operation of renewal agencies. The
legislation expanded the permissible uses of TIF, defined “blight” which is the
defining characteristic of an urban renewal district, restricted the percentage of
assessed value that could be placed within an urban renewal district, and improved
public scrutiny of renewal efforts.
1988: The Oregon Supreme Court determined that urban renewal taxes do not need
to fit within the six percent annual limit on tax base increases. Dennehy v. Oregon
Department of Revenue, 305 OR 595 (1988).
1990: Oregon voters approved Ballot Measure 5, which created a ceiling on
property taxes for non-school and school purposes. All taxes, including tax
increment revenue, had to be categorized for general government, public schools, or
exempt (exempt taxes were those levied for voter approved general obligation
bonds).
1991: The Oregon legislature passed Measure 5 implementing legislation that
provided that all taxes collected by means of TIF be categorized as local
government taxes subject to the $10/$1,000 real market value tax limit. For many
cities this resulted in levied taxes exceeding the limit, and urban renewal agencies
generally reduced or stopped collecting tax increment revenue to lessen the
“compression” losses to general government agencies. In City of Portland v. Smith,
314 OR 178 (1991), the Oregon Supreme Court determined that taxes for payment
of urban renewal bonds were not exempt from Measure 5 limits.
1993: In a special election, Oregon voters rejected Ballot Measure 1, which would
have allowed local voters to exempt taxes for urban renewal bonds from Ballot
Measure 5 limits.
1996: Oregon voters approved Ballot Measure 47, which reduced and limited
property taxes. The impact on TIF was never determined.
1997: In response to the belief that Measure 47 could not be implemented without
substantial litigation, the Oregon legislature referred Measure 50 to a May special
election. Oregon voters approved the measure, which repealed Measure 47 and
replaced Oregon’s levy-based property tax system with a rate-based system.
Because the Measure 50 system of raising urban renewal taxes resulted in
substantially less revenue than before, specific provisions of the measure
“grandfathered” plans in place as of the effective date of Measure 47.
These provisions allowed “existing urban renewal plans” to complete their projects
by means of a special urban renewal levy, which would still be within Measure 5
local government property tax limits. The legislature also passed SB 1215, which
implemented Measure 50, and which allowed municipalities to choose among three
options for the collection of tax increment revenue. The options had different
effects on the taxes raised and the revenue impacts on overlapping taxing districts.
Urban Renewal in Oregon, page 56
2001: The Oregon legislature passed HB 3215, which exempted taxes for future
voter approved bond issues and local option levies from tax increment revenue for
certain urban renewal plans. On December 20, 2001, the Oregon Supreme Court
handed down its decision in Shilo Inn v. Multnomah County et al., 333 OR 101
(2001). This decision will affect the way urban renewal taxes are subjected to the
Measure 5 limits and create the need for yet more changes to Oregon’s property tax
system.
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