Are Boise urban renewal districts unconstitutional? Idaho Supreme Court weighs in
The Idaho Supreme Court on Tuesday upheld Boise’s creation of two urban renewal districts, rejecting the argument from Idaho Freedom Foundation leaders and others that the district would require the city to raise taxes and take on illegal debt.
The city created both districts by ordinance in late 2018. One is the Shoreline district, which started in 2019 and covers most of the land north of the Boise River, south of River Street and between Capitol Boulevard and I-84. The other is the Gateway East District, which covers a large swath of land near the Boise Airport.
Urban renewal districts are areas approved by city councils. They can last for up to 20 years, and during that time, existing taxing districts, such as schools, cities and counties, continue to collect whatever taxes they collected within the district’s territory when the district was formed, but no more. Any new property tax revenue — known as the “tax increment” — resulting from new development or higher property values goes to the district to be spent on public improvements to foster development.
The plaintiffs, including Wayne Hoffman and Fred Birnbaum of the Idaho Freedom Foundation, G&G Ventures, and several members of the South Eisenman Neighborhood Association, alleged that the tax increment funding (often abbreviated to TIF) was unconstitutional.
In their argument, the plaintiffs alleged the city violated article VIII, section 3 of the Idaho Constitution, which bans governments from taking on debt without the approval of at least two-thirds of voters during an election. They alleged that the district plans would “inevitably” hurt the city budget and require the city to raise taxes to make up for it.
The court, however, ruled that the ordinances did not violate the constitution.
“Simply because a decision may affect the City’s budget in the future does not mean it is a liability that must be submitted to voters for approval under the Idaho Constitution,” Justice Robyn Brody wrote in the decision. “To adopt such an interpretation of article VIII, section 3 would radically expand the scope of the section to apply to nearly any action by a government subdivision. Taken to its extreme, even a decision not to increase taxes in a given year would create a “liability” under Plaintiffs’ argument because that could require higher taxes to meet needs in later years.”
The court also rejected the plaintiff’s argument that the expected revenues of the districts over 20 years — an anticipated $66.5 million for the Shoreline district and $96.5 million for the Gateway district — were a “present liability,” as the city is not obligated itself to pay those plans.
The opinion notes that the money is just what the Capital City Development Corp., Boise’s urban renewal arm, “anticipates will be invested if funding is available to complete all facets of the Shoreline and Gateway plans as projected.”
The Idaho Freedom Foundation and the city of Boise declined to comment on the ruling. A spokesperson for CCDC could not be immediately reached for comment.
This story was originally published March 23, 2021 at 6:15 PM.
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