Washington County commissioners approved a nearly 1,100 acre urban renewal area in north Hillsboro with a 4-1 vote Tuesday.
The area being "renewed" is part suburban, part farmland, zoned industrial — but not urban. Hillsboro Mayor Jerry Willey said the vision is for high-tech jobs in the area.
"We have the opportunity to create a world-class industrial area that creates value," Willey said.
Officials use the term "industrial renewal area" for the 1,090-acre swath of land, on the northwest edge of Hillsboro, just south of Highway 26. But the tax structure at work would be "urban" renewal, using tax increment financing.
The proposed North Hillsboro Industrial Renewal Area would cover 1,090 acres in the city of Hillsboro and Washington County.
City of Hillsboro
An urban renewal designation freezes property taxes on land inside the designated area. That's often followed by the sale of bonds — with the proceeds from the bond sale going toward improvements in the renewal area. As property values rise, the additional tax revenue (the "tax increment") either pays off the bonds, or goes toward other improvements in the renewal area, rather than into local government budgets.
The North Hillsboro Industrial Renewal Area includes grass seed farms in Washington County, and small industrial developments within the city of Hillsboro.
The land was brought within the Urban Growth Boundary through decisions at the Metro Council, and as part of state law, passed last year. Hillsboro city officials say there's a 100-acre tract that is intended to be kept intact for "large-lot industrial," and multiple 50-acre lots that are intended to be industrial, as well.
But Hillsboro officials say they're far more likely to attract industrial users — manufacturing companies, rather than developers — if public entities approve the urban renewal area in advance.
Retired political science professor, Russ Dondero, said that renewal areas short-change public services.
"There was never any intent in the original formulation of urban renewal, to make this a privilege of the private sector, to aid and abet its development interests and needs," Dondero said at Tuesday's commission meeting.
Others testified to the Washington County Board of Commissioners that by keeping the growing property taxes within renewal areas, often for decades, such areas deprive city and county programs, and, indirectly, public schools of precious tax revenue.
The North Hillsboro area pegs its maximum indebtedness at just over $172 million. Critics argued to commissioners that's an amount that could go to services and schools. City officials contend that the area will only hit that figure if they're successful in attracting private business, to the tune of $2.8 billion in value.
Supporters argue urban renewal is not just for blighted urban areas, but it can also be the best way to finance road and sewer costs for "greenfield" development, such as the North Hillsboro area.
The North Hillsboro Renewal Area is proposed for just south of Highway 26.
City of Hillsboro
Hillsboro and Washington County officials contend that without investments through urban renewal, land would remain vacant, undeveloped and relatively undervalued — and therefore wouldn't be contributing significantly to government coffers. They countered critics Tuesday by saying that as businesses move in, their employees would contribute income taxes to the state's general fund.
Complicating matters further, part of the area is already in an "enterprise zone," abating property taxes for land within the zones.
Hillsboro officials say enterprise zones may continue to be used, but in a limited way to ensure that there are sufficient property taxes within the renewal area to cover bond payments and other possible development costs.
The group Tax Fairness Oregon argued there have been other developments in Hillsboro that have not required such special tax considerations.
But government officials countered that for the kinds of large-lot industrial users they're trying to attract, and to address the area's significant infrastructure needs, such steps are necessary.
The sole dissenting member of the commission, Greg Malinowski, supported taking steps to facilitate development in North Hillsboro. But he wasn't sold on urban renewal as the best way to accomplish that.
The plan heads to the Hillsboro City Council next month for consideration.
