We shared an opinion piece by Pagosa businessman Butch English yesterday, written in support of the proposed “Urban Renewal” request coming from Springs Resort managing principal David Dronet and Pagosa developer Jack Searle. The issue — a proposed Tax Increment Financing (TIF) program that might cost our community $79.7 million dollars in taxes diverted to a private development project — is complicated, and there are proponents as well as opponents hoping to influence the decision.
But as a local resident said to a friend of mine during last weekend’s Chamber-sponsored ‘Bands & Brews’ event:
“It’s not complicated. It’s common sense.”
Common sense might tell us, for example, that awarding millions of dollars in tax incentives to a couple of private developers is totally unfair to the rest of the business community, to the rest of the development community, and to the ordinary taxpayers who are lately watching their County government funnel millions of dollars into shiny new government buildings — without any voter approval for the debts being created.
Common sense might tell us that Pagosa Springs has some social and economic problems to solve over the next 25 years — failing streets and roads, lack of public transportation, an economy built on low-wage jobs, employee shortages, lack of workforce housing, aging infrastructure, drug abuse issues — and that funneling millions of tax dollars into a privately-owned luxury hotel complex might not be the smartest thing to do.
But it’s easy to put common sense aside, and get caught up in the messy details — or to fall in love with a developer’s promises of community-wide prosperity if we will merely allow them to reap some multi-million-dollar tax incentives.
And speaking of messy details, the Pagosa Springs Town Council last night discussed, for a little over an hour, the possibility of forming an “Urban Renewal Authority” and had more than a few questions answered by Town Manager Andrea Phillips — just back from a “URA” symposium in Montrose — and by their Denver-based attorney, Bob Cole, attending via video. Some of the answers were tentative, however, because there’s an awful lot we (the community and Council) don’t know about the developer’s plans or financing or projections, and even more that we don’t understand about the community-wide impact that might be created by donating $79.7 million to a couple of wealthy developers.
Mr. Cole was the only person in the room (except he wasn’t actually in the room) who has hands-on experience with URAs and TIFs, and I appreciated hearing his input. But the discussion was kicked off by Council member Maddie Bergon, who had also attended the day-long URA symposium in Montrose and who has apparently been doing independent research into the issue.
One question that wasn’t asked, or answered, is whether the Pagosa economy has, or will have, a demand for what the developers are proposing to build on 27 vacant acres of travertine. But let’s run through a few of the questions that were answered, at least tentatively.
How big would the URA be?
Colorado’s Urban Renewal Authority law applies to municipalities: incorporated cities and towns, not to county governments. If a municipal government determines that there are “slums and blight” within its town limits, it can choose to form an Urban Renewal Authority — which is, in a sense, a ‘separate’ governmental unit working under the town government. The Authority would then have the power to identify and address “slums and blight” anywhere within the town limits, and can use Tax Increment Financing — or other types of financing — to address those areas, which might be as small as one single building or parcel. The individual projects are “URA projects.”
So the answer is, the URA encompassed the entire incorporated town. The Urban Renewal projects can be any size. And there can be any number of projects.
What types of tax revenue can be used to incentivize the proposed developer, who wants to “renew” an area of “slums or blight”?
Well, this discussion was a bit confusing, because the “Economic Impact” report delivered to the Town last month by Springs Resort expert Mike Anderson had stated:
It is important to note, in the consideration of a proposed urban renewal project, that the “base” sales, lodging, and property tax revenues continue to flow to the Town, County, and other relevant governmental entities during the tax increment financing period…
Sales and Lodging Tax Increment Revenues
The following table shows the total annual sales and lodging tax increment revenues generated in the urban renewal area from the Project. A total of almost $35.84 million in sales tax increment revenues, and a total of almost $18.85 million in lodging tax increment revenues, are projected to be generated over the urban renewal period, from 2020 to 2044.
But when the Town Council asked for clarification of the tax revenues last night, attorney Bob Cole told us that only “municipal” sales taxes can be accessed through a TIF scheme. Lodgers tax does not qualify for TIF incentives. County sales tax does not qualify for TIF incentives. But as we see in the chart above, finance expert Mike Anderson has included the County sales tax, the County Lodgers tax, and the Town Lodgers tax as revenue sources.
This issue gets even more sticky, because the Town of Pagosa Springs actually collects no “municipal sales tax” at all.
Zero.
We see this fact reflected on Mr. Anderson’s chart above. “Town – Share of County Sales Tax @ 2.00%”
Many years ago, the Town and County governments made an agreement that the Town would not establish a “municipal sales tax”, so long as the County was willing to share the County sales tax revenues 50/50 with the Town. This agreement made some kind of sense, because only about 15 percent of the community’s residents live within the Town limits, so we have an unusual situation where our County government functions, in some ways, more like a “municipal” government.
This sales tax agreement might mean that, legally, the Town has no sales tax at all to contribute to a TIF scheme. Mr. Anderson’s expert estimate of TIF revenues, in his chart shown above, might be projecting almost $55 million that isn’t legally available to for TIF financing.
There’s another issue that could be important in the progress of the “urban renewal” of downtown Pagosa Springs, however. The Council had plenty of ideas about directing portions of the TIF money off-site — to affordable housing, upgrades to the municipal water and sewer systems, and other important needs that might be generated by a luxury hotel development on 27 perpetually vacant acres.