Finding ways to finance and spur development of affordable housing, a new business park or upgrades to neglected and struggling parts of town are among the possible uses city of Durango officials are examining by creating an urban renewal authority.
The Durango Renewal Partnership is the name designated by the city for the proposed URA, which will go before the City Council on March 17 for formal establishment.
Urban renewal authorities, special districts allowed under state law, are widely used entities on the Front Range and other parts of the Western Slope to spur economic development and investment, especially in poorer, blighted parts of towns where it is difficult to attract private investment.
Montrose used an urban renewal authority to finance roads, sewage, water, sidewalks and other infrastructure needed for its business park, Colorado Outdoors. The business park has brought in several manufacturers of outdoor recreational products to town. The original purpose for the Colorado Outdoors business park was to spur job creation.
“We see this as a way to add value to the community and meet various needs, such as affordable housing,” said Scott Shine, planning manager for the Community Development Department. “It’s a tool that has the ability to realize latent development in areas that haven’t seen it.”
Some other benefits URA projects could provide to the city include, open space preservation, transportation improvements, streetscaping and landscaping, infill development, and environmental cleanup.
Tax increment financingThe key financial tool that creation of an urban renewal authority would provide Durango is the ability to use tax increment financing, or TIF, that would devote any increased sales and property taxes generated by a URA project to that specific project, paying for things like utilities and roads needed as a project builds-out over time.
Montrose’s Colorado Outdoors business park uses TIF to finance infrastructure improvements as more companies build and locate in the business park dedicated to outdoor manufacturers.
Under a URA, a baseline is established for tax revenue generated in a URA project before redevelopment occurs. This baseline tax revenue would continue to go to the city’s general fund, but TIF would devote all new taxes generated by increased sales taxes and property values from redevelopment specifically to pay for improvements in that particular URA project.
By devoting the increased tax revenue generated by development or redevelopment, the “increment” part of TIF, a URA has a financial source that it can tap to reimburse a private developer for construction of public improvements, like sidewalks and traffic lights, or it can issue bonds for the URA project based on projections of future tax revenue growth from the development and redevelopment.
In theory, sales tax and property tax revenues will grow as vacant lots, environmentally blighted areas and boarded-up buildings are redeveloped and transformed into vibrant commercial zones – retail, business parks, housing developments or any other use established by URAs.
Alex Rugoff, business development and redevelopment specialist with the Community Development Department, emphasized that TIF is not a tax increase, and he said a URA does not have the ability to increase tax rates, either sales taxes or property taxes, within its boundaries.
URAs and the projects created under their authority simply have the ability to funnel increased tax revenues generated by economic activity from redevelopment or new development to that specific area of town – the “tax increment” goes to finance improvements in the URA project, while the baseline tax revenue continues to go to the city’s general fund.
“This is not a tax increase. It allows us to direct increased tax revenue created by a particular URA redevelopment to that project,” Rugoff said.
Support for URAsCreating a URA has received support around town.
Steve Elias, dean of the Fort Lewis College School of Business Administration, wrote to city councilors offering his backing.
“I believe the URA, as well as the use of tax-increment financing (TIF), will help address neglected areas of our community and will spur local business development, help create jobs, provide housing options and contribute to our overall quality of life,” Elias wrote.
Laura Lewis Marchino, executive director of Region 9 Economic Development District of Southwest Colorado, another supporter, said creation of a URA would strengthen the city’s economic base, provide creative financing without raising taxes, facilitate infrastructure development and help redevelop targeted areas of town while protecting Durango’s unique character.
Michael French, executive director of the La Plata County Economic Development Office, also in a letter to city councilors, expressed his belief that creation of a URA would help the city recruit and retain businesses.
“The La Plata Economic Development Alliance is focused on the enablement of the economic vitality of La Plata County, and we would collaborate heavily with the URA to work on specific projects that have the potential impact on our economy such as attainable housing, creative financing for public projects such as La Posta infrastructure development, and public-private partnerships that are beneficial and needed to advance strategic initiatives,” French wrote in his letter.