Opinion ID: 1155438
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Heading Rank: 2

Heading: the meaning and effect of the urban renewal provision

Text: That brings us to the urban renewal provision, Article IX, section 1c. The legislature first passed laws in 1957, materially unchanged to the present, authorizing the creation of local urban renewal agencies and generally authorizing them to incur debt and issue bonds. See ORS 457.130 (1957), renumbered ORS 457.035 (creating urban renewal agencies); ORS 457.190(1) (1957) (authorizing an urban renewal agency to borrow money    from any sources, public or private, for the purposes of undertaking and carrying out urban renewal projects). The 1957 legislature also referred a constitutional amendment to the voters, which failed at the polls in 1958. The identical measure was referred by the 1959 legislature and was enacted at the general election in 1960, Article IX, section 1c (the urban renewal provision). Tax increment financing legislation was enacted in 1961, ORS 457.420 et seq. The urban renewal provision states that the legislature may provide that property taxes may be divided so that revenues from increases in property values generated in redevelopment or urban renewal projects shall be used to pay any indebtedness incurred for the redevelopment or urban renewal project. The provision concludes: The legislature may enact such laws as may be necessary to carry out the purposes of this section. The urban renewal provision relates directly and expressly, by its terms, to the subject of segregating and utilizing property tax increment revenues to pay for any indebtedness incurred for the redevelopment or urban renewal project. The urban renewal provision states that the legislature may provide and may enact laws so that any urban renewal debt shall be paid from property tax increment revenues. The provision does not expressly or explicitly state that urban renewal agencies may issue or incur bonded indebtedness. [3] Authority to incur the indebtedness arises from ORS 457.190(1). The 1960 Voters' Pamphlet is an important resource in establishing the voters' intent in adopting the urban renewal provision. The ballot title for the measure states: FINANCING URBAN REDEVELOPMENT PROJECTSPurpose: To amend Constitution to permit payment of cost of urban renewal projects from the additional tax revenues resulting from increased valuation of the areas redeveloped. 1960 Voters' Pamphlet at 9 (emphasis added). The statutory citizens' committee Explanation of the measure states: As the ballot title shows, this measure, while it relates to taxation, does not create or authorize the creation of any new or additional taxes. If the measure is approved by the voters, it would permit the legislature to enact a statute authorizing municipalities to set aside the increase in property taxes resulting from the additional value created by an urban renewal redevelopment project. The portion of taxes thus set aside could be used to pay the indebtedness the municipality incurred in undertaking the project.      The proposed constitutional amendment is not self executing. It is a `permissive' measure, not a `mandatory' one. The voters by approving the measure will simply give the state legislature authority to pass such a law. After its passage municipalities would not be required to take advantage of it, but would have the right to do so.  Id. at 9-10 (emphasis added). The citizens' committee Explanation makes it clear that the amendment would permit the legislature to enact a law authorizing localities both to engage in tax increment allocation of revenues and to set aside that revenue for the repayment of urban renewal debt. The citizens' committee Explanation also makes it clear that, if the amendment was approved, the legislature could enact tax increment debt financing laws to retire debt secured by property tax increment revenues. The legislative committee Explanation of the measure makes the same points, even more forcefully. After stating that the measure  will provide the tools to help municipalities to raise their one-third of the cost of urban redevelopment projects (with the other two-thirds borne by the federal government), the Explanation states: With the plan that is proposed, the amount of money presently received from taxing the property would still be used by the various taxing bodies that receive them. The constitutional amendment only provides that any increase in taxable value and just the amount of the increase would be applied toward paying off any indebtedness incurred in the development of the project.     This is not a self-enacting amendment but will permit the Legislature to pass enabling legislation. Id. at 10 (emphasis added). Although neither the measure itself, the ballot title, nor the Voters' Pamphlet explanations of the measure include the word bond, the legislative history of the urban renewal provision establishes that its advocates, the legislature that referred the measure, and the media reporting on the measure understood that the measure related to the use of property tax increment revenues to pay for any urban renewal debt, including urban renewal bonds. See State v. Wagner, 305 Or. 115, 131-34, 752 P.2d 1136 (1988) (re: sources of legislative history for a referendum); Comment, Tax Increment Financing for Development and Redevelopment, 61 Or.L.Rev. 123, 136-39 (1982) (summarizing the legislative history). [4] Bonds secured by project-specific tax revenues pledged as security are commonly referred to as revenue bonds. See note 4, supra; Black's Law Dictionary 1319 (6th ed. 1990). [5] Three conclusions follow. First, unlike the explicit state bond authorizing provisions found in Article XI of the Oregon Constitution, the urban renewal provision does not explicitly state that urban renewal agencies are authorized to incur or issue bonded indebtedness. (In fact, the general authority for urban renewal agencies to issue bonds first existed by statute in 1957, three years before the urban renewal provision was enacted.) Second, the urban renewal provision expressly authorizes legislation permitting local governments to set aside and utilize property tax increment revenues to pay for any urban renewal indebtedness. Third, further action by the Legislative Assembly was required. Passage of the urban renewal provision would permit the legislature to enact laws authorizing localities to engage in tax increment allocation of property tax revenues and to incur debt, including bonded debt, for urban renewal projects secured by tax increment property tax revenues set aside for the repayment of the debt. Based on the information available to them, the voters would have been entitled to conclude that, if the amendment were approved, then there would be legislative authority to enact tax increment debt financing laws.