Bill would give Colorado counties more say in how cities form urban renewal authorities
April 14, 2014
Steamboat Springs — A debate between Colorado’s cities and counties about cities’ use of tax increment financing to restore blighted areas has again reached the statehouse, and the result could impact Steamboat Springs.
House Minority Leader Brian DelGrosso, R-Loveland, on Friday introduced a bill that aims to give counties and other taxing entities more say in the process through which cities form urban renewal authorities and capture property and sales tax growth to restore blighted areas.
Cities including Steamboat see these URAs as an important tool to restore run-down or “blighted” areas, while some counties see them as an abused tool that has diverted millions of dollars’ worth of property taxes away from counties, school districts and other entities.
"We feel that the tool is unsustainable," Gini Pingenot, a policy and research supervisor for Colorado Counties Inc., said about the legislation her organization is supporting. "I think this (bill) is a very surgical approach that maintains a municipality’s unilateral authority in almost every respect."
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The new legislation specifically would give counties the power to appoint one URA board member.
It also would require municipalities to pledge an equal proportion of their municipal sales tax revenue to the revitalization project, unless a deal is reached on some other amount between a city and taxing entities that are impacted by the project.
The Colorado Municipal League, an organization that lobbies on behalf of cities, opposes the changes.
The legislation comes as the city of Steamboat continues to research the possibility of creating a new URA to help fund downtown improvements.
Some county officials across the state, including here in Routt, are critical of the fact that cities can largely develop URAs and redirect future property tax gains without their approval.
"Anything is better than where it is right now," Routt County Commissioner Doug Monger said Friday before the bill officially was introduced. "Anything that allows better representation from counties (and other taxing entities) is a better step forward."
When the city first announced last year that it was looking into creating a new URA downtown, Monger and his fellow commissioners quickly sent city officials a letter saying they tentatively opposed the effort.
In the letter, they cited a number of concerns, including the fact that URAs are formed without an election and that tax revenue from the county and other entities would be diverted to the improvement projects without voter input.
The commissioners also wrote that they thought private development and infrastructure improvements would take place downtown without the formation of a new URA.
Steamboat Springs City Council members said the commissioners’ opposition to the plan was premature because it still was in the concept phase.
Cities continue to see URAs as a way to restore previously blighted areas that cities think would not be improved on their own by private development.
It’s how this city and stakeholders at the base of Steamboat Ski Area were able to realize a popular promenade and other infrastructure improvements at a base area that once was disjointed.
"This is by far the most effective tool municipalities have to revitalize stressed neighborhoods and retail areas within their city," Municipal League Legislative Advocate Mark Radtke said. "The only reason you turn to an urban renewal project is the marketplace won’t address that on their own."
He said about 40 cities in the state have URAs.
How the legislation could impact a new URA in Steamboat isn’t exactly clear yet because the city still is in the research phase of the project.
City Manager Deb Hinsvark said last week that the city still is working with a consultant to determine the potential of using tax increment financing downtown and what the possible impact on the other taxing entities would be.
After the report is done, the city is expected to start talking with those taxing entities about the next steps.
She said while some other municipalities have rushed to beat the legislation, Steamboat is not altering its timeline.
Monger said he remains skeptical of the plan to form a downtown URA, but he will keep an open mind.
He said he appreciated that city staff met with county staff early in the process to discuss a possible URA.
"We’re not going to place judgement on it yet," he said. "We’re taking it one step at a time. We’re just trying to get this process a little more fair and equitable so we’re not the walking tread on the door mat."
State Rep. Diane Mitsch Bush, D-Steamboat Springs, said she had not read the bill yet Monday and would not comment until she had.