Upcoming legislative session could complicate Steamboat’s plans to fund downtown revitalization
December 30, 2013
Steamboat Springs — The fast-approaching 2014 legistlative session in Colorado could complicate Steamboat Springs’ desire to use tax increment financing to revitalize parts of downtown.
For several years, cities around the state including Steamboat have used tax increment financing administered by urban renewal authorities to inject millions of dollars worth of property and sales tax gains from formerly “blighted” areas into redevelopment projects.
That’s how the promenade at the base of the Steamboat Ski Area was realized along with other improvements to nearby streets and medians.
But in recent years, some Colorado legislators have scrutinized this form of financing in part because it diverts property tax gains in these revitalized areas away from counties and school districts that usually would collect these revenue increases.
In some cases, the money has been used as business incentives and to support such projects as shopping malls, further inviting scrutiny.
Rep. Dickey Lee Hullinghorst, D-Boulder, recently told the Fort Collins Coloradoan she plans to propose 2014 legislation that could give counties and other taxing entities who are affected by the use of tax increment financing more say, and power, in the process.
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"I’m looking at things that would allow all of the taxing jurisdictions that the funds come from to be involved in the decision-making process," Hullinghorst said.
According to the Coloradoan, a report from the Larimer County Budget Office estimated that in the last 25 years, around $1.4 billion in tax revenue has been diverted statewide to urban redevelopment and tax incentives.
Under current state law, the tax increment financing used in Steamboat does not require an endorsement from Routt County or the Steamboat School District if redevelopment occurs within city limits.
However, these other taxing entities were consulted in prior years, and they will be again as Steamboat continues to plan for a new form of tax increment financing in downtown that could help to fund such things as a promenade on Yampa Street, sidewalks and other improvements in the downtown district.
City Manager Deb Hinsvark said Monday if the city moves forward with tax increment financing downtown, it would have to talk to the county and the school district about the impact.
For example, she said it would have to be determined whether the redevelopment downtown would have any impact on bringing more students to the school district, and if it did, how the city should compensate for that impact.
"And there are certain negotiations that can occur as we move forward with this so the county feels comfortable what we’re doing is going to have a positive impact," she said.
The Routt County Board of Commissioners in January told the City Council they opposed Steamboat’s tentative proposal to form a downtown URA and start using tax increment financing there.
In a letter, the commissioners wrote that individual taxpayers in Routt County already pay higher property tax bills because of the funded urban renewal authority at the mountain.
Council members said the commissioners’ opposition was premature as the city’s downtown plans still were being formulated.
Hinsvark said Steamboat’s mountain URA is an example of tax increment financing done right.
"It works, and it works well," Hinsvark said, noting that since the tax increment financing was established at the base area in 2005, property values there have held up stronger than the rest of the city.
She said the diversion of tax revenue from the county and the school district hasn’t been "a complete removal" and has been offset by the growth of property taxes near the area that was redeveloped.
Hinsvark has heard about the potential changes to tax increment financing through her discussions with the Colorado Municipal League.
She said at this point, the city isn’t worried that the upcoming legislative session would derail new tax increment financing downtown.
"It shouldn’t slow down what we’re trying to do here because we’re actually looking at urban redevelopment and reinvesting money into public infrastructure,” Hinsvark said.
She said in recent years, some cities may have stretched the meaning of public infrastructure and could be inviting scrutiny from the legislature.
As an example, she said tax increment financing has been used to fund such things as parking lots at malls.
She said she expects the city and the county will continue discussing the potential of tax increment financing downtown in early 2014.