There’s more than one way to skin an economic cat. Some ways, we must assume, are better than others.
As I mentioned yesterday in Part Four of this editorial series, we have a serious economic crisis unfolding here in Pagosa Springs — and it has very little relationship to ‘a lack of jobs.’ As a Town Council member suggested to me recently, the problem isn’t a lack of jobs; it’s a lack of jobs that pay more than minimum wage; a lack of affordable housing; and as a result, a lack of qualified people willing to give an honest day’s work.
The unemployment rate in Archuleta County was at 3.1 percent this past April, according to the US Bureau of Labor Statistics. That might strike the uninformed observer as ‘positive news.’ But economists often claim that a ‘healthy’ unemployment rate — a rate at which employers are able to attract qualified employees, for example, and where qualified employees can leave unsatisfying situations and find a better job — is around 5 percent. Historically, the US economy has generally maintained an unemployment rate of around 5 percent, even during recessions. The United States has never experienced zero unemployment, (and would never want to, for many reasons.) The lowest unemployment rate recorded was 2.5 percent in 1953, when the national economy overheated during the Korean War. When this bubble burst, it kicked off the recession of 1953.
Here in Pagosa, it would appear that we currently have an unhealthy employment picture, as we ourselves approach 2.5 percent. (We actually hit 2.7 percent last May.)
It would also appear that, at some point in the next few weeks or months, the Pagosa Springs Town Council will be asked to make a decision about the establishment of an ‘Urban Renewal Authority.’ This new layer of government bureaucracy, as currently proposed, would potentially funnel tax subsidies towards a particular development project on 27 acres of vacant land adjacent to the Springs Resort.
The proposal fascinates me for a couple of reasons.
Back in 2016, we published a series of Daily Post articles about a proposal to establish a ‘Downtown Development Authority.’ A small group of downtown business owners and employees had spent about three years researching ways to improve the vitality of our historic business district, and they presented a proposal to Town Council for a tax-funded “DDA” district that looked like this:
What we are looking at, in the map above — in the green area — is the core downtown business district, located mainly along Highway 160 and Lewis Street. Also included are the three major hotel properties along Hot Springs Boulevard.
The general idea behind the DDA was to provide funding for the district through “Tax Increment Financing.” A “TIF” directs the “increase” in tax collections within the district to the Authority itself, to be used for the general benefit of the properties within the district. If there is no natural (or voter-approved) increase in tax collections within the district, then the district doesn’t get any money. If there’s a wonderful (or even slight) increase in tax collections within the district, the district benefits from the increased amount, while the “base amount” of taxes still continues to flow, as before, to the municipality as a whole.
Everyone ends up a winner, so to speak.
During their three years of planning for a DDA, however, this small business group apparently forgot to get buy-in from the rest of the businesses in the proposed district, and when the proposal finally came up for a Council vote, the testimony at the public hearing was overwhelmingly negative. One of the numerous downtown business owners who spoke out against the DDA was Peter Dach, owner of the classic Pagosa Bar.
“With all this going on, I haven’t heard anything about the commitment that the Town would make, or the County, to improve the downtown. I look up and down the [main commercial block] and what do I see? A couple of real estate offices, a couple of bars, some second hand stores, a jewelry store… If you place an additional tax on us, how much will we have to put in, to do something… without the Town’s commitment? Are you going to match the funds?
“If you’re putting it up for a vote, most of the voters will probably not be property owners. They will be tenants. I’m not even sure — I’m a property owner, but I don’t live in the Town limits — if I have the right to vote? I really think this needs some more looking into. The ideas here are good… but are they sound ideas… for our downtown… without a commitment for the County and the Town?”
When the Council voted that night on the DDA proposal, the count was four against, and two in favor.
One thing I found very strange about the proposal, however. The funding for the district would have come from “tax increments”. An ideal way to insure increasing taxes would be to include, within the district, some vacant property that would be developed in near future. . The increased taxes from that development would therefore benefit the entire downtown.
There is, indeed, a 27-acre vacant parcel just south of the Springs Resort, ripe for development. A portion of that vacant property is shown here, in pink:
If this property had been included in the DDA boundaries, and if the Town Council had approved the plan, we might have had a tax authority with some honest-to-goodness potential for economic improvement. But the DDA organizers left that particular vacant property out, when they drew their district boundaries. I’ve been told that that the owners of that vacant property — the Springs Partners — were opposed to inclusion in the DDA.
Three years alter, we have a rather different proposal coming before the Town Council. The Springs Partners are now proposing an Urban Renewal Authority (URA) which would be funded (so it appears) by “Tax Increment Financing” — but in this case, all of the revenue generated would flow to the vacant 27-acres. In this case, it would apparently be all of the properties included in the 2016 DDA proposal that would be excluded.
Our historic downtown core would not benefit directly from the URA. Only the partners involved in the Springs Partners development would directly benefit. Or so it would seem…
Bill Hudson began sharing his opinions in the Pagosa Daily Post in 2004 and can’t seem to break the habit. He claims that, in Pagosa Springs, opinions are like pickup trucks: everybody has one.