What Is Urban Renewal?
Urban Renewal is an economic development tool used by local governments across the country. More specifically, it is a method of economically revitalizing areas of "blight" through public investments that stimulate private development. Examples of blight include buildings that are unsafe or unfit for occupancy, inadequate streets, or environmentally contaminated areas. Due to these conditions, private real estate developers, property owners or business owners are unable to generate a sufficient profit on potential development in the area. As a result, private investment stalls and the blighted conditions remain.
Public investment is sometimes necessary to support and enable private investment. Public investments might include improving roads and infrastructure, technical and financial assistance to developers, or enhancing community amenities. Once private development becomes economically practical, investment returns to the area. As physical and economic conditions improve over time, further private investment is stimulated and the local economy is strengthened. The economic vitality, livability, and environmental sustainability of the wider city are often improved by Urban Renewal investments.
How Urban Renewal Strengthens a City's Economy
Urban Renewal works because it stimulates a cycle of private investment by removing the blighted conditions that act as a barrier to new development. Without the public investments made through Urban Renewal, blighted conditions would remain and private investment would be less likely to occur.
Additionally, Urban Renewal allows a city to increase the level of public investment by providing funds that other regional, state or federal governments will match for a specific project. For example, the Oregon Department of Transportation may provide funding for a roadway improvement, but the city is required to pay a minimum matching amount. Cities with declining tax revenue, which need the public investment the most, often cannot raise the necessary amount. Urban Renewal provides a financing tool to match these grant funds and greatly increase the total level of public investment.