TO: Urban Renewal Agency Board
THROUGH: Krishna Namburi, Executive Director
FROM: Kristin Retherford, Community Planning and Development Director
SUBJECT:
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North Waterfront Urban Renewal Area Update
Ward(s): Ward 1, 5
Councilor(s): Board Members - Tigan and Brown
Neighborhood(s): Grant and Highland
Result Area(s): Safe, Reliable and Efficient Infrastructure; Strong and Diverse Economy; Welcoming and Livable Community.
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SUMMARY:
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In 2024, the Urban Renewal Agency directed staff to start the process to create a new North Waterfront Urban Renewal Area (URA) north of the Riverfront Downtown URA. The purpose of this work session is to provide an update on that effort and receive feedback from the Agency on the proposed direction and next steps.
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ISSUE:
Information Only.
RECOMMENDATION:
recommendation
Information Only
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FACTS AND FINDINGS:
Urban Renewal Overview
Urban renewal, also known as tax increment financing, is a tool used throughout Oregon and other states to stimulate investment and economic development, address blight, and grow property tax valuation within communities. Urban renewal revenue can only be used for property acquisition and site readiness (demolition, environmental remediation, land use, etc.), capital projects (public infrastructure, building renovations, new construction, etc.), related design work, studies, plans, and administration.
Urban Renewal Funding Structure
State statute requires that each URA have a boundary and a plan that defines the purpose of the URA and the projects to be completed. Funds for projects can only be used within the URA boundary and for projects identified in the URA plan.
Urban renewal revenue comes from the annual property tax collections on the growth in assessed valuation within the URA boundary and is referred to as tax increment. When a URA boundary is established, the amount of property taxes collected at that time continues to be disbursed to all overlapping taxing districts, such as the City, County, schools, and transit district. This amount is referred to as the frozen base of the URA, and the URA does not receive these revenues.
As assessed valuation grows above the frozen base due to new investment or the state’s annual 3% property tax increase, and that growth is allocated to the URA as tax increment revenue to be spent on projects within the URA boundary.
Maximum Indebtedness
URAs are also required to have a spending limit, referred to as Maximum Indebtedness (MI). MI represents the total amount of tax increment revenue that can be collected and spent over the life of the URA on projects, programs, and administration.
Once a URA reaches its MI limit, the Agency may either: (1) Stop collecting further revenue, complete projects with available resources, and then begin the process of closure; or (2) Undertake a substantial amendment to increase its MI to complete existing projects or add new projects.
Relationship to Property Taxes
State law requires urban renewal to appear as a separate line item on property tax bills to show the amount of property tax revenue within a community that is diverted to URAs. Because urban renewal is not an additional tax, the closure of a URA will not reduce a property tax bill. Instead, it redirects property taxes to other taxing districts.
As a URA stops collecting tax increment, other taxing districts such as the City, the County, Transit, and others begin receiving a greater share of property tax revenue. The tax assessor follows a defined process to distribute urban renewal tax increment to URAs, which includes calculating the amount of tax increment growth within URA boundaries.
Salem’s Current Urban Renewal Capacity
As of FY 2026-27, approximately 3.7% of the city’s total acreage will be within URAs actively collecting tax increment. For a community the size of Salem, state statute allows 15% of acreage and 15% of the total property value to be within URAs. Salem is well under these limits, with approximately 1.7% of the City’s total property value currently within active tax increment-collecting URAs.
Proposed North Waterfront Urban Renewal Area
The proposed North Waterfront URA area is located north of the existing Riverfront Downtown URA and includes approximately 421 acres. The area contains a mix of industrial, commercial, transportation, and underutilized properties with redevelopment potential.
The purpose of the proposed URA is to support redevelopment and infrastructure improvements in an area experiencing underutilization, changing economic conditions, infrastructure deficiencies, and redevelopment barriers. Potential project categories under consideration include transportation and Front Street infrastructure improvements, environmental remediation, rail crossing and circulation improvements, property readiness activities, redevelopment assistance, and support for future mixed-use and multi-family housing development.
The proposed URA would also support long-term redevelopment goals by helping prepare properties and infrastructure for future private investment. Because tax increment revenue grows gradually over time, establishing a URA early allows revenue capacity to build before major redevelopment opportunities and infrastructure needs become more immediate.
Preliminary financial analysis estimates the proposed URA could support approximately $199 million in maximum indebtedness over an estimated 33-year period, with purchasing power estimated at approximately $109 million in 2026 dollars.
BACKGROUND:
The City has sufficient acreage capacity to consider establishing new URAs. In 2024, the Urban Renewal Agency directed staff to start the process to create a new North Waterfront URA north of the Riverfront Downtown URA. A brief overview of the potential new URA was provided during a broader URA update presented to the Agency in September 2025.
The purpose of the URA tool is to support redevelopment of properties that have been left blighted due to changing economics and uses. Blight is a precondition for establishing any URA in Oregon and, as described in state statute, generally includes underdevelopment or underutilization of property, poor condition of buildings, and inadequacy of infrastructure including streets and utilities.
Sara Long
Project Manager
Attachments:
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