TOWN COUNCIL DISCUSSION ITEMS
Questions to, and Answers from, the Developer
— from the Pagosa Springs Town Council work session packet, September 2019.
The Pagosa Springs Town Council has been made an offer they might not be able to refuse. For the low, low price of $79.7 million, the Council could — on behalf of the community’s taxpayers — become a development partner in a project that might (or might not) build out the perpetually-vacant travertine meadow just south and west of the Springs Resort.
This “Urban Renewal” partnership has been proposed by the out-of-town investors who own the Springs Resort, as a way to help finance a multi-use, pedestrian-friendly neighborhood featuring perhaps 262,800 square feet of new commercial spaces — 170 new hotel rooms, plus offices, restaurants, retail outlets — and maybe 387,500 square feet of residential — an estimated 236 dwelling units — lining streets that do not currently exist.
262,800 square feet of commercial is about three times the size of our Walmart store. 387,500 square feet of residential is more than four times the size.
Tomorrow, Thursday September 26, the Council will meet at 5pm, in a work session to learn more about this very complex and risky proposal. (I use the word ‘risky’ because it’s a word that’s been used by the proposed developers, themselves.) Some governments are careful not to put their citizens and taxpayers at risk, financially… preferring to allow the private sector to take the risks. But that’s not necessarily been the philosophy here in Pagosa Springs in recent years. As we have seen.
In preparation for tomorrow’s work session, the Town staff presented Springs Resort managing principal David Dronet with a few questions about how his proposed “Urban Renewal” scheme might play out. We will be sharing those questions, and answers, today and tomorrow.
Q. Loveland and Durango have both included the entire town limits within their URA boundary and then have identified different “project areas.” Each project area then has its own conditions study and development plan. I’m wondering if this approach could be a useful tool for Pagosa. Would it be possible to allocate a portion of TIF revenues from one project area to another project area as long as it is documented and can be argued that the off-site location is helpful to the primary site? For example, instead of negotiating for workforce housing to be included heavily in the proposed Hot Springs project area, could TIF revenues be allocated into a different pot labeled “Workforce Housing.” Then if another project area is identified – Mountain Crossings, for example – could those TIF revenues be used? The argument could be for employee housing.
So part A – Should Pagosa Springs consider encompassing all of city limits in the URA?
A. There are actually two different components to making a URA project possible.
First, the Urban Renewal Authority. This is the governing body which in Pagosa would be made-up of Council members, and representatives of the County and other taxing bodies (school, fire, etc.). To avoid confusion that exists with the term URA, I’m going to call this the “Authority”.
Second, there are specific project areas within the Town limits which are Urban Renewal Areas (also a “URA” which is where confusion can be created), also known as Urban Renewal Plans. I’ll refer to these as “UR-Plans”. I’ve confirmed with legal counsel that the Authority has the ability to operate anywhere in the Town limits, so by its nature the Authority’s area of operation is in fact the entire Town limits. A UR-Plan on the other hand requires that a specific, and tightly defined, boundary be set to delineate specific projects from one another. This delineation is needed for a few reasons:
1) each UR-Plan starts on the date it’s approved, and runs for 25 years,
2) because the new tax revenue (TIF) created by the project in the UR-Plan area must be applied only within the boundaries of that UR-Plan, and
3) to prevent the Authority from controlling all the new tax that’s created in the entire Town.
The requirement that each UR-Plan area be as tightly defined around a specific project as possible, is a requirement of state law, but it’s also to the practical benefit of the Authority and the community. Because the 25 year time frame starts ticking immediately upon approval of a UR-Plan, so projects that don’t happen for 5 or 10 years will have a substantially smaller impact on the tax revenues the Authority receives. Also, the Authority can better capture the positive impact of a specific project by having many UR-Plans within the town, each being weighed and measured on its own merits and value. I’d also imagine that the other taxing entities besides the Town would have an issue with all new tax revenue in the whole town being controlled by the Authority, which would be the case if the UR-Plan Boundary was the same as the Town limits. Recent legal guidance and best practices have established this.
Q. Part B – can TIF revenues be used for off-site, but relatable, projects?
A. In short, no. Funds created by the development project, within the UR-Plan boundaries have to be used within those boundaries. It’s my understanding this was very intentionally set up to prevent the misuse of funds and ensure that each project can be judged on its own merits and benefits to the community.
I had the pleasure of sitting down with Pagosa Springs Town Manager Andrea Phillips yesterday, and learned that she had recently attended a symposium in Montrose, CO hosted by Downtown Colorado Inc. (DCI) One of the questions discussed at the symposium was the uses of TIF money to fund, for example, affordable housing — off-site — to address the low-paying jobs being created within the UR-Plan area, when the UR-Plan fails to address that need. Ms. Phillips told me that she has the impression TIF money could, indeed, be used for such purposes.
Mr. Dronet, apparently, does not believe this to be the case, and implies that such a use would constitute a “misuse” of funds that rightly ought to go into the developer’s pocket.
Q. It’s my understanding that the proposed public infrastructure will include a plaza, streets, and sidewalks. At what point is this infrastructure turned over to the Town to maintain?
A. Once a public road is built and the right-of-way and easements are set, the roads become public. Maintenance of those roads would turn over to the Town at that time, unless otherwise agreed to by the parties (Town & Developer).
Here we have an fascinating situation. With URA/TIF financing, the increased taxes collected within a project are paid back to the developer, reimbursing him for his infrastructure investments. So the development would pay nothing towards the maintenance of its own streets and infrastructure for 25 years.
In every subdivision ever built in Archuleta County history, the developer has always paid for the infrastructure out of his own pocket. So this proposed URA, if approved, would mark the first time a developer has been reimbursed by the taxpayers to build his own infrastructure.
Many of us believe, if it were done for the Springs Resort, it would be done again and again… for wealthy developers… long into the future…