Urban renewal is funded by Tax Increment Financing. It works like this:
When an urban renewal area is created, the County Assessor establishes the current assessed value of all property within the area. The Assessor “freezes” that tax base.
For the duration of the urban renewal area, the taxing districts receive revenue from that frozen base.
When the value of the properties increase, the income above the base (the “increment”) goes to the Urban Renewal Agency. This money is then spent on projects in the urban renewal area.
When the urban renewal area ends, the taxing districts receive the taxes on the full assessed value of the area.