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Economic Development

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1. What is a redevelopment agency?

Redevelopment agencies (RDA's) are a tool used by local government to clean-up blight and to implement the development goals of the communities. Each RDA consists of elected council or commission which is the RDA board by state statute. The RDA board adopts the plans, policies and budgets which are implemented by the agency.

2. What do redevelopment agencies do?

RDA's assist communities to addressing three types of issues:

Redevelopment. Encourage private and public investment in previously developed areas that are blighted.
Economic Development. Work with businesses to increase the jobs available in the community and the state as a whole.
Housing Development. Increase the amount and variety of affordable housing within the community.

3. What is a project area?

A project area is a part of a community, usually less than 100 acres in size, which has been targeted for RDA assistance. RDA's create a project area by adopting a plan for redevelopment or economic development of a specific geographic area. Many communities have multiple RDA project areas.

4. How do RDAs pay for community improvements?

In most cases RDA's pay for only a fraction of development costs related to the new development they encourage. The RDA's share of development costs is paid through the use of property tax increment. Property tax increment is the increase in the property taxes generated in a project area over and above property taxes generated prior to the new development (base taxes). Generally, base taxes are not used to pay project costs. The use of tax increment must be approved by a committee made up of representatives from each of the affected property taxing entities.

5. How are redevelopment plan and budget adopted?

There is a six step process which must be followed to adopt a redevelopment plan and budget.

First, a blight survey area is identified for study. The study entails gathering information on the condition of buildings and improvements, the existence of hazardous materials, social factors and safety concerns.

Second, the RDA board holds an evidentiary hearing to determine whether or not all or part of the area qualifies as blighted. If an area is blighted, it is eligible for redevelopment assistance. "Blight" is a legal term defined in the Utah Neighborhood Development Act.

Third, the RDA prepares a redevelopment plan and project area budget to identify how redevelopment would be encouraged. The planning process varies in each community. Typically planning includes formal or informal discussions with property owners, investors, taxing agencies, community planners and others to identify planning objectives, strategies and implementation costs.

Fourth, the planning commission for the community reviews the redevelopment plan to assure it conforms to the community's master plan.

Fifth, the RDA board holds one or more public hearings to obtain comments and suggestions on the proposed plan and budget. The RDA board and the community council or commission then adopt, adopt with modifications or reject the plan. Adopting the plan establishes a redevelopment project area.

Sixth, if the plan includes the use of tax increment, a committee of representatives from the affected taxing agencies approves, approves with changes, or rejects the project area budget.

6. What happens after a redevelopment plan and budget are adopted?

After plan and budget adoption, the RDA implements the plan as funds become available. The RDA adopts an annual implementation budget for each project area. In the early years of a redevelopment project area, the tax increment collected is often minimal; therefore, redevelopment agencies work with private property owners, developers, and others to facilitate redevelopment.

7. When is eminent domain used?

Eminent domain is sometimes used to assemble property when the size of the parcels and/or the condition of the improvements are an obstacle to redeveloping an area. To exercise eminent domain the RDA must follow a legal process which has been established to make certain property owner and tenants receive a fair price, relocation assistance is provided and owners are reimbursed for actual relocation costs. An RDA can only use eminent domain after a redevelopment plan is adopted which authorizes the use of eminent domain. Eminent domain can only be used during the first five years of a redevelopment project area.
If a private individual threatens to acquire your property by eminent domain, notify the RDA immediately. Private individuals may not acquire property by eminent domain.

8. What type of housing do RDAs encourage?

RDA's encourage needed types of housing in specific areas within redevelopment project areas. Outside of project areas, RDA's help communities develop affordable housing. Affordable is defined as housing made available to low and moderate income residents.

9. How does the RDA pay for housing?

RDA's seek private and public housing partners which include homeowners, non-profit and for-profit developers, community development corporations, housing authorities and local financial institutions.

RDA's can use up to 20% of the tax increment generated by an economic development or redevelopment project area to encourage the development of affordable housing throughout the community. RDA's use tax increment as it becomes available to stimulate housing rehabilitation, adaptive re-use and new development within redevelopment project areas.

10. How are an economic development plan and budget adopted?

A five step process must be followed to adopt an economic development plan and budget.

First, an area is targeted for economic development. This is called a "survey area."

Second, the RDA prepares an economic development plan and project area budget describing the economic development project to be accomplished as a result of RDA participation.

Third, the community planning commission reviews the plan to be certain it conforms to the community's master plan.

Fourth, the RDA board holds one or more public hearings to obtain comments and suggestions on the proposed plan and budget. The RDA board and the community council or commission then adopt, adopt with modifications or reject the plan. Adopting the plan establishes an economic development project area.

Fifth, if the plan includes the use of tax increment, a committee of representatives from the affected taxing agencies approves, approves with changes, or rejects the project area budget.

11. What happens after an economic development plan and budget are adopted?

After plan and budget adoption, the RDA negotiates an economic development agreement with an employer who will provide the additional employment opportunities. If the plan is prepared without a specific economic development partner, the RDA follows the plan to encourage economic development.