Tax-shift plan targets RDAs
The Salt Lake County Council will get a peek today at the plan, which was drafted by County Auditor Sean Thomas to put the financial burden of redevelopment on cities who benefit from it while also making the system more transparent to taxpayers.
"I think we have a very small window of opportunity to have real solid reform going forward," said Thomas, who hopes to bring his plan to Capitol Hill this legislative session during an expected debate on the role of redevelopment areas in Utah.
The plan may be a hard sell, however, because it puts more responsibility and tax burden on cities with redevelopment areas. Sandy, for example, has several RDAs and can usually count on support from House Speaker and city resident Greg Curtis.
Thomas' plan would require cities to create a separate citywide RDA tax to garner funds for redevelopment projects instead of the current method of funneling new taxes from a redevelopment area back into that same project. Those dollars are diverted from the school district, state and county coffers that would normally receive the new revenues.
"The problem is taxpayers have no idea where their tax money is going," said Victor Sipos, special assistant to the auditor. "They think it's going to schools and in fact it's going to RDAs. What we would do is make the system honest — make it so everybody knows exactly where their dollars are going."
Thomas' proposed RDA tax, however, would appear on property tax notices as a separate item and would result in an overall lowering of tax rates across the state, Thomas said.
School districts would not have to raise taxes to compensate for money going toward RDAs, and cities without RDAs would no longer be forced to subsidize the projects of neighboring towns, he said.
"You look at a citizen in Midvale who's paying for redevelopment, and they don't have any of their own. If I were a citizen there I would say, 'Why do I have to pay?' " Thomas said.
According to Thomas' estimates, homeowners in cities including Salt Lake City, South Jordan, Sandy, Draper and West Valley City would see an increase in property taxes if his RDA plan passes. Residents in South Jordan, for example, would pay an additional $71 per year on a $200,000 home.
Other cities including Midvale and Murray, as well as the county, would actually see a decrease in taxes. Midvale homeowners would see about a $60 decrease annually on a $200,000 home.
"South Jordan gets killed, and the reason they do is because they have a lot of RDAs in the city right now. They are just being subsidized by all of the other cities to make sure that South Jordan gets their nice development," Sipos said.
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