Urban Renewal districts are a popular mechanism to finance long-term infrastructure projects for neglected neighborhoods or underutilized industrial or commercial lands. But those with experience in urban renewal ventures urge municipal leaders to tread carefully when they consider using the device.

The City of Warrenton is the latest community on the Oregon coast to create a URD. On Aug. 28, the Warrenton City Commission accepted the final boundaries of its Urban Renewal District that will include the city's downtown core and the Warrenton Marina. However, as a concession to Clatsop County officials and other local taxing districts, the city commission agreed to initially include only 20 acres of a proposed 75-acre North Coast Business Park in the URD boundary. The 20-acre site is being eyed for development of a new Costco store.

As planned, the Warrenton URD will involve a multi-phased improvement project that will cost an estimated $8 million. The improvements, including sidewalks, parks, docks, public restrooms and a fish cleaning station, will be funded by tax revenues generated by increases in assessed values of all properties in the URD and the full tax revenue of any new taxable development that occurs after the URD is established.

Under state law, these increased property tax revenues resulting from the growth in the URD must go to pay for the infrastructure and cannot be shared with other taxing districts, such as local governments, schools or fire districts.

Charles Kupper, a partner in the urban planning and development firm of Spencer & Kupper in Portland, says Urban Renewal districts have gained in popularity in Oregon, especially among smaller communities.

"They may be the only economic development tool a community can initiate themselves" to revitalize neighborhoods "and make them more livable," Kupper told Coast River Business Journal.

Kupper, a consultant on more than 30 URD projects throughout Oregon but is not involved in the Warrenton project, said the popularity of the program has grown as federal grants and other funding sources that once were available to improve blighted neighborhoods have dried up.

But he cautions communities against expecting immediate results from the program.

"One of the pitfalls is a mismatch of expectations," Kupper said. "Urban renewal is not a quick-fix program. It's especially true in smaller communities, where a lack of patience is the biggest pitfall."

The most successful urban renewal projects, according to Kupper, are those that limit the scope of improvements and set a realistic time-frame to complete the work. (URDs are usually established for a 25-year period.) The plan also should take a conservative approach in anticipating the amount of development that will be created in the revitalized area and the payback in terms of increased tax revenues to pay for the improved infrastructure.

In Warrenton, the city originally proposed including all 75 acres of the North Coast Business Park within its Urban Renewal District. However, Clatsop County officials complained that the county would lose the increased property tax revenue as development raised the value of the business park property, which is located on the east side of U.S. Highway 101 at Dolphin Road.

After weeks of negotiations, the two public entities reached a compromise that would allow the city and county to share the revenue generated by the business park as it is developed. In return, the city commission agreed to re-zone the business park property from industrial to commercial

Communication and city council commitment paid off in Tillamook

In Tillamook, the city created a URD in late 2006 that lays out plans for more than $12 million in infrastructure improvements to the city's central commercial area over the next 25 years.

That plan includes major expansion of the municipal waste water treatment facility; improvements to public buildings and the addition of traffic signals, bicycle lanes, sidewalks and landscaping.

Because funding for urban renewal projects comes from all future increases in taxes generated by new development or existing improvements to properties within the URD over the life of the district, other taxing districts may see the creation of the district as a threat to their financial well-being, since those districts won't share in the increased tax revenues.

But Tillamook City Manager Mark Gervasi said that wasn't the case when the Tillamook URD was initially proposed.

"I think most taxing districts understand the overall benefits," he said. "It didn't seem to create a lot of heartburn. But you need to explain what the effects are (to their agencies) and get them on board early."

Gervasi said community officials can avoid a lot of early miscues when planning an urban renewal project if the city council is "committed" to the effort and the city has a "good core group" of citizens supporting the program.

Astoria has learned from experience

Astoria may be the best example of both a successful urban renewal project and one that has taken some 20 years to begin realizing a return on the city's investment.

In 2002, the City of Astoria created the "Astor West" Urban Renewal District, a $9.1 million project designed to rehabilitate 205 acres that encompass most of Uniontown from the Astoria Bridge to Smith Point.

Astoria City Manager Paul Benoit said most of the property in Astor West is owned by the Port of Astoria and is zoned for industrial or commercial use. And although the port is a public entity, its properties generate property taxes when the port sells or leases property to a business subject to taxation.

While the project would include a number of improvements and public amenities such as open spaces, the largest segment of the plan involves creating a network of streets to accommodate new hotels and commercial development.

"It holds a lot of opportunities," Benoit told CRBJ. "It is the right investment in the right place at the right time."

But that hasn't been the case with the "Astor East" project, which encompasses 55 acres east of Astoria's downtown district.

Because the Astor East Urban Renewal District encompassed mostly public property, Benoit said it "didn't produce the revenues sufficient for use" in paying for the planned improvements. Only in the last five years has the venture begun to pay dividends, after the city purchased the former county fairgrounds and used the funds to build a new Aquatic Center and the Oregon State University Sea Lab.

Benoit says the city learned "a lot" from its first urban renewal endeavor and used that experience when planning Astor West.

"We were extremely careful in drawing the boundaries for Astor West," he said.

He also emphasized the importance of public involvement in any urban renewal effort, and the need to keep people informed throughout each phase of the planning and development of the district.

"Officials have an obligation to educate the public," Benoit said. "When the public isn't involved, that's where you can get into trouble."