The Forest Grove City Council took two big steps this week — one bold, one tentative — and moved ahead on a pair of initiatives that have been kicking around for years.

While most of the drama at Monday night’s council meeting revolved around the vote on “island annexation” (we’ll get to that), the bigger development was the decision to get serious about bringing more business to downtown and a couple other key properties.

With a degree of appropriate caution, councilors instructed the city’s community development staff to come up with more specifics about how urban-renewal districts could work in Forest Grove.

We encourage the staff to act quickly.

Urban renewal programs are often misunderstood by the public, the press and even public officials. But, they have a proven track record in other communities and, when administered correctly, provide low-risk opportunities for big-time payoffs.

They don’t involve tax breaks or tax increases. Rather, they set aside increases in property tax revenues to finance bonds used for economic development projects. So if a property’s yearly tax bill is $3,000 when a district is established and the next year it rises to $3,100, that new $100 goes towards urban renewal, while the old $3,000 continues to fund what it did before.

The idea is to include enough properties within a logical boundary for the urban-renewal money to finance significant projects.

Tualatin’s urban-renewal program, which operated from 1985-2010, funded the Tualatin Commons, which has become a regional destination for diners, shoppers, arts patrons and recreationalists. Astoria’s program, started in 1994, has sparked a downtown resurgence, including the renovation of the Astor Hotel/Fort George Brewery.

Perhaps most interesting for Forest Grove is the experience in The Dalles, a similar-sized city which established a district in 1990 and turned an abandoned flour mill into a winery and bottling business that is expected to create 80 jobs. Officials there said the cost of fixing up the mill was just too high for developers to take on without some public support.

Forest Grove has heard that refrain far too often. Albertsons looked at the vacant lot at Pacific and Highway 47, but never broke ground. A block east, Haggen Foods was interested in the large parcel next to Ace Hardware but, again, nothing has happened.

With the city’s purchase of the Times-Litho property on the edge of downtown, now is a great time for a serious discussion about urban renewal.

Annexation vexation

We understand the frustration of property owners who were told Monday night that, like it or not, their properties will be annexed by Forest Grove. The owners of these “island” properties (which are all surrounded by city property) have been enjoying many of the benefits of living in a city while paying a lower property tax rate.

It’s been a good deal, and it’s coming to an end, as it should.

While we applaud the council’s willingness to make unpopular decisions

, we do so because councilors insisted on taking steps to ensure that the newly annexed residents do not face undue financial hardships.

The increased property taxes, which will be partially offset by lower water rates, are appropriate, as they pay for city services — police, fire, libraries — shared by all city residents.

But the prospect of facing an unknown multi-thousand-dollar charge to hook up to the city’s sewer lines clearly unsettled many of the annexation opponents and at least a couple city councilors. They were right to insist that the staff come up with better estimates of sewer hook-ups and explore a financing plan that would ensure the newly annexed residents can stay in their homes should their septic systems fail.

Finally, the councilors got an earful about the horrible state of the county roads that serve some of these island properties. They insisted that the best chance for improving those streets comes through annexation. Now, they must back up those assurances with some deeds — and a fair amount of asphalt.

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