Building a friendlier downtown: Downtown URA Q&A
Steamboat Springs — What is tax increment financing?
Tax increment financing takes a portion of sales and property tax revenue that are attributable to new development in an urban renewal area and redirects them to improvement projects. There is no new tax created, and the use of the tool does not cut into the base tax revenue of other taxing entities. Other taxing entities continue to receive additional property tax revenue attributable to things like inflation. If property values in the urban renewal area increase because of the improvements like sidewalks and lighting, the tax increment pays for those improvements..
What improvements are the city proposing?
A list accepted by the city council includes $10.3 million worth of projects. Highlights include the installation of a promenade on the riverside portion of Yampa, sidewalks on Oak, pedestrian lighting throughout downtown, raised intersections on Yampa, culvert and floodplain improvements at Butcherknife Creek, and two additional public restrooms.
How much would the improvements cost to maintain?
The city estimates its proposed improvements would cost $100,000 to $140,000 each year to maintain. The city currently spends $150,000 to $170,000 on downtown maintenance.
Why the URA talk now?
City staff and some members of the city council believe now is the most opportune time to use such a tax tool because there is the potential for new development and increased sales tax in the downtown area in the coming years. Tax increment financing is most effective when a baseline for the tax revenue is set before economic activity and new development ramp up in the urban renewal area. City staff also notes that interest rates and construction costs are lower now than they are expected to be in the coming years.
Isn’t it the responsibility of private property owners to install and maintain sidewalks in front of their property?
The city has for years required developers to pay for the installation of sidewalks in the downtown district when properties are redeveloped or constructed. The use of a URA could potentially change that policy and complete sidewalks before development is able to supply them. City staff argue the policy of waiting for development has taken too long and leaves too many holes in the downtown sidewalk system. However, some city council members have suggested they still want property owners to continue pitching in for the construction of sidewalks. In that case, a tool called a sidewalk assessment could be used. The city could force a property owner to install a sidewalk if it deems the lack of a sidewalk presents a safety hazard.
Where did the downtown URA idea originate?
Representatives from Mainstreet Steamboat Springs in 2006 asked the city council to explore a downtown urban renewal plan and tax increment financing. The city council discussed the idea back then, but did not proceed with it. Council members questioned the potential effect of a URA on the city’s finances and on other taxing entities. City staff revived the URA proposal after discussions with downtown stakeholders who have spent recent years working to revitalize downtown.
Why are the school district and the county opposed to this?
Members of the school board think the use of tax increment financing would make the district more dependent on the state for funding because a TIF would redirect some portion of additional property tax revenue from new development away from the district and toward improvement projects.
Routt County commissioners believe they will lose out on some increased property tax revenue from new development they feel they will get regardless of whether the city improves the infrastructure in downtown Steamboat.
Which council members want to pursue the URA and the TIF?
No official vote on adopting an urban renewal plan has been taken yet, but council members who support exploring the use of tax increment financing include Bart Kounovsky, Walter Magill, Tony Connell, Kenny Reisman and Scott Myller. Council member Scott Ford supported a motion to explore the use of a TIF, but only if the property tax component was removed. Sonja Macys and Ford ultimately want to continue exploring other possible funding sources for the downtown projects, and continue vetting the list of potential projects. The council will discuss the urban renewal plan again on April 28.
What are the boundaries of the downtown urban renewal area?
The area spans from Third to 13th Street and from the Yampa River to Oak Street. It also extends to the Fairview neighborhood via 13th Street.
How does council adopt a URA plan?
If council decides to move forward with a URA and TIF downtown, it must pass a motion announcing its intention and schedule a vote on it. The council must give the public at least a 30-day notice that it plans to vote on a URA proposal. Once approved, the URA plan goes into effect immediately. The council still has many details to work out in a URA plan, including if it would want to cap the amount of money going into the TIF. It also needs to decide if property tax revenue should be a component.
Who will decide which downtown projects get funded with a TIF?
The city council would serve as the redevelopment authority that has the final say over the annual budget from the TIF. When the city created an urban renewal area at the base of the Steamboat Ski Area, the council created an advisory committee to recommend annual funding allocations and projects. This citizen committee has for years vetted and prioritized major projects at the base area. It will be up to the city council whether to create a similar advisory committee to recommend downtown projects. Some community members have raised concerns about how much funding would go to each downtown street.
What’s all this talk about downtown being “blighted”?
For a city to use tax increment financing, the urban renewal area must first be deemed to be “blighted.” The word may conjure up images of abandoned buildings and slums, but in the context of urban renewal areas in Colorado, the word’s meaning is more complex and open to interpretation.
Under state law, blight is anything “that substantially impairs or arrests the sound growth of the municipality.” Poor pedestrian lighting, missing sidewalks and the presence of a flood zone are some of the things that helped downtown Steamboat Springs join Colorado’s long and growing list of blighted areas.
Some community members and city council members have questioned and criticized a consultant’s findings of blight downtown.
How does the downtown URA compare to the mountain URA?
The mountain urban renewal authority plan was adopted in 2005. While much of the projects in the base area have been paid for with property tax increment, the city is proposing that a downtown urban renewal plan be fueled primarily by sales tax increment. More than $21 million has been spent on improvement projects in the base area since the URA was established there.
Major projects include the construction of the promenade and the daylighting of Burgess Creek.
I have an opinion. How do I express it to the council?
Public comment will be accepted at the April 21 council meeting and any other meeting when the URA is discussed. Comments can be submitted to city staff and the council via the city’s website at http://www.steamboatsprings.net.
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