Re-Development Agency (RDA)
RDAs are legal entities authorized under Utah Law by a near-unanimous Utah Legislature that are used to foster development in areas that have become “blighted” over time. (The term blight is a narrowly-defined legal term used to describe when and where RDAs can be used.) Where blight is found, RDAs are authorized to redirect property and sales taxes to invest in improving the area.
Holladay’s Redevelopment Agency (RDA) was created to incent private investment in areas of the community with a demonstrated need for economic development. These are areas that Holladay desires to see redeveloped, but the market has not done so. By creating an economic incentive for redevelopment, the RDA encourages desired development. By State Law, the elected members of the Holladay City Council serve as the Holladay Redevelopment Agency (RDA) Board . The RDA Board approves the RDA budget, programs, policies, and projects.
Where Holladay has used RDAs
Holladay Village – little investment had been made in Holladay’s central village area over the last 50 years. The Holladay RDA invested several million dollars in new road alignments, sidewalks, trees, street lamps, flower baskets, burial of power lines, a new public plaza and soon, a new cornerstone retail and office building.
Millrock - Extension of Lion Lane to Wasatch Blvd – to relieve congestion on 3000 East, a new road connection to Wasatch Blvd was created. Proceeds from TIF were used to finance a bond for the purchase of open space to create Knudsen Park.
Cottonwood Mall - TIF incentive was offered to the owner/developer of the former Cottonwood Mall. Though stalled due to the economic crash, the developer is proceeding with pre-leasing for the the $550 million project, which will be the largest commercial project and tax generator in Holladay.
How Tax Increment Financing Works
The financial incentives offered to developers by the RDA are generated by the future proceeds of the development. The incentives do not come from the city’s general fund or from other entities involved, such as the County or Granite School District. The incentives Priority development activity within targeted areas, known as “project areas,” may be eligible for financial assistance provided by the RDA. Project areas are usually less than 100 acres in size and take between three and six months to establish. more>
What about eminent domain in RDA?
The US Supreme Court ruled in Kelo v. City of New London, that RDAs can condemn property using eminent domain for economic development. more>
How Tax Increment Funding Affects School Districts
Just like the City of Holladay, school districts do not give money to the developer. They don't write a check, they don't appropriate any money in their budgets. The school district simply agrees to collect less on the additional taxes generated from future development for a period of time. The taxes that are foregone, do not exist today and would not exist “but for” the RDA, and are generated by the development itself. The development literally “pays for itself” by redirecting the taxes it generates back into the project. more>
Why Not Let the Developer Pay for it
Some propose that cities should offer no assistance to developers, under the theory that “the market will make something happen there anyway.” more>
Do RDAs expire?
Each EDA or RDA is set to expire in a certain number of years or when the financing goals are reached, whichever is soonest. Usually, they last 15-20 years. After they expire, all of the taxes generated from the project area flow to the taxing entities and not retained in the project.