A bill speeding through the state Legislature this week is drawing panic from officials in Greeley and other municipalities, who say it could make urban redevelopment — including possibly a new downtown hotel — too costly.
But Weld and other Colorado counties say it would do no such thing. They say the bill is meant to give counties and other taxing authorities, such as schools and fire districts, a voice in projects that involve their tax dollars, too.
House Bill 1375, which passed through the state House on Monday and will go before the Senate Judiciary Committee next Monday, would require municipal urban renewal boards to include one county-appointed member.
It would also require cities to contribute sales tax dollars to redevelopment projects to compensate for the loss in revenue that counties and other taxing districts experience to make the project happen.
The bill centers on tax increment financing (TIF) districts, which are blighted areas that cities identify and target for redevelopment. Cities offer an incentive, such as a tax refund on the construction of infrastructure improvements, to get a company to locate in the blighted area.
Then, once the company or companies are up and running, the extra revenue they bring due to increases in property values goes to cities to pay for the upgrades.
A TIF project normally lasts about 25 years, meaning the tax increment — the increase in property tax revenue since the time the land was blighted — eventually gets redistributed in the same way taxes were distributed before the project existed, resulting in a windfall.
But during that 25-year period, counties, schools and other special districts must continue to provide services without that property tax revenue, said Chip Taylor, executive director of Colorado Counties Inc., which has pushed for the measure in the state Legislature.
Municipal leaders argue those entities still receive the revenue they have historically made from those properties, and companies wouldn’t choose to locate in blighted areas without the TIF incentive there in the first place.
In Weld County, 96 TIF districts detract about $1.7 million from Weld County coffers, according to the Weld County Treasurer’s Office.
Weld County Treasurer John Lefebvre said that is relatively low, especially because the county has a great assessed value cushion thanks to oil and gas development.
Leaders in Weld County say they value tools like TIF districts to encourage urban renewal and they typically negotiate successfully with municipalities when a new project comes up.
But with more special districts than any other Colorado county, Weld County Commissioner Sean Conway said Weld has more at stake, and other Colorado cities have abused the state’s urban renewal law.
Becky Safarik, Greeley’s assistant city manager, said it’s concerning that the bill requires a commissioner or a commissioner-appointed member on the city’s urban renewal board.
“You usually appoint people to a board who are interested in that field and also have some allegiance to the city, and work on things in the city’s best interest,” Safarik said.
She said the things the county and other taxing districts need to know, the city communicates.
But while Conway said communication with Greeley on redevelopment projects has been good, he said there isn’t anything that requires cities to seek permission from other taxing districts when they want to reroute their property tax revenue.
“You can’t have a negotiation when you don’t have a guaranteed seat at the table,” Conway said.
Mark Radtke, legislative and policy advocate for the Colorado Municipal League, said that’s something of a moot point. Municipalities and the private sector are the only ones that invest money upfront to make the project work, he said.
What is more, the area surrounding a TIF district often also sees an increase in value after it is reassessed, and those increases do go back to taxing entities.
In the case of Leprino Foods, Safarik said there are countless other periphery industries that come to the area and contribute to Weld County’s tax base.
Safarik said she is unsure how the bill could affect the future of Greeley’s efforts to bring in a downtown hotel and convention center, but she said it does create a bad atmosphere for business. CML officials say the bill “adds another layer of complication and delay” to an already complicated negotiation.
Both Weld County and Greeley officials point to Leprino, which located in Greeley in large part thanks to financial incentives in the Great Western Sugar TIF district in east Greeley, as the “poster child” of how those districts should work.
Leprino got started on a blighted plight of land with 800,000 cubic yards of lime, significant asbestos contamination and a need for several utility and road upgrades, Safarik said. The company paid upfront to fix all of that and got reimbursed by the Greeley Urban Renewal Authority this year for $2.5 million, which is still less than what they paid in taxes, she said.
Conway said Leprino worked well because the company’s construction didn’t significantly stress county services.