The Dalles expands urban renewal spending by $6.1 million

THE DALLES—When cities are impacted by urban decay or a catastrophic event, a land redevelopment tool known as "urban renewal" allows the city to redirect a percentage of property tax revenue to deal with blighted areas and improve their tax value.

At a regular meeting Dec. 9, The Dalles City Council unanimously approved a substantial amendment to the Columbia Gateway Urban Renewal Plan. This amendment increases the total amount of money that can be spent on urban renewal projects, known as “the maximum indebtedness”, by $6.1 million.

The amendment brings the district’s maximum indebtedness up to 35 million.

“This extension allows us to finish strong and deliver transformative projects that will benefit The Dalles for generations,” said Mayor Richard Mays.

What is urban renewal?

Funds for urban renewal come through tax increment financing, which sets aside a defined district’s property tax revenue growth.

Elaine Howard, an independent consultant specializing in urban renewal, explained, “When an urban renewal area is formed, the assessor identifies the total assessed value within that area and establishes a frozen base assessed value. Any property tax revenue from increases above that base goes to the urban renewal agency.”

Howard emphasized that urban renewal does not increase property taxes but redirects growth in revenue to fund projects within the district.

State legislation permits only one substantial amendment to an urban renewal plan after 2010, making this the final opportunity for The Dalles to expand its spending capacity.

“This is the one time we can bring a substantial amendment forward,” explained Economic Development Officer Dan Spatz.

By law, the urban renewal districts’ terms require it to be sunsetted in 2029, allowing the diverted percentage of tax revenue to flow back to its regular districts.

Eric Gleason, a property owner on First Street, said during the public comment period, “It’s clear that something needs to be done. Urban renewal has transformed neglected areas, and this extension will help finish First Street.”

A downtown facelift

Established in 1990, the Columbia Gateway Urban Renewal District has funded 72 projects, including upgrades to the Sunshine Mill Winery, Granada Theater, and Commodore Hotel. Slides presented by Howard illustrated the before-and-after transformations, emphasizing urban renewal’s role in job creation and tourism growth.

The last amendment to the Columbia Gateway Urban Renewal Plan was in 2009, when the maximum indebtedness was increased to $29 million.

Since then, The Dalles has seen new opportunities for development that were not envisioned in the original plan.

Spatz noted, “We realized the 2009 plan did not take into account some projects that have developed since then. Best practices suggest keeping the plan updated to recognize major projects.”

This will allow the district to continue offering an incentive program with downtown property rehabilitation projects and contribute to major projects, including:

First Street Reconstruction: Enhancing sidewalks, trees, and public safety measures.

Federal Street Plaza Improvements: Leveraging state and federal grants to revitalize public spaces.

Basalt Commons Development: Supporting a mixed-use commercial and residential project with 116 for-rent apartments.

Tony’s Town & Country Building Redevelopment: Transforming a vacant lot into a productive site.

Michael Leash, the owner of the Sigman’s Flowers/Oaks Hotel building, shared his plans to add housing units and renovate commercial spaces.

“Urban renewal funds would be greatly beneficial for executing our vision,” he said.

Funding diverted from other city districts

Urban renewal creates benefits but also shifts resources away from other taxing districts, such as fire departments, parks, and libraries.

During the meeting, Spatz acknowledged, “Taxing districts cumulatively lose upwards of $400,000 annually due to the revenue deferral.”

Despite this, Spatz said representatives of many districts supported the amendment, understanding the long-term economic benefits of urban renewal projects.

One notable exception was the local fire district, which expressed concerns about deferred funding and would prefer to sunset the district more quickly.

A similar concern sparked in Hood River this past May with the city’s $2.15 million expansion of their urban renewal agency’s maximum indebtedness. Hood River Library Board President Brian Hackett expressed concern, saying 10% of the library’s budget had been redirected for urban renewal projects.

Councilor Darcy Long, who chairs the Columbia Gateway Urban Renewal Board, argued that other agencies’ missing income would eventually be repaid by the increased tax value of improved properties.

“We understand that the agencies are giving up some money right now,” said Long. “I firmly believe that the things we are putting in there right now are going to increase the tax base, which means that all of those agencies are going to be able to have a higher base to collect their tax percentage on when we’re done in 2030.”

Spatz told the council the county GIS was helping create a map of all 72 urban renewal projects which the public will be able to view and learn about the districts’ work to improve the downtown.