City has big questions to answer before approving URA
The city of Steamboat Springs will be asked to approve an urban renewal authority on Tuesday, despite the questions that continue to swirl in the city, the Steamboat Springs School District and Routt County.
If passed, Tuesday’s resolution will create a financing district that could use a portion of property taxes collected from the base of the Steamboat Ski Area to do public improvement projects in the area. The Base Area Reinvestment Coalition, composed of a group of local businesspeople, is asking that the authority be approved before the first of the year, so $100,000 of incremental tax revenue — new tax revenue created by new development or redevelopment in the area — can be collected.
“It is not a new tax. It doesn’t hurt anyone,” said David Baldinger Jr., who is spearheading the effort to create the URA. “If we have any money in the future, we are just committing to reinvest those dollars in that area.”
But the three governmental agencies involved have concerns about the way the authori-
ty would be structured and its effects.
As proposed, the authority would take any new tax revenue from new development or redevelopment in the base area, which would otherwise go to the Steamboat Springs School District and Routt County.
School district officials are concerned that the loss of revenue could be harmful if the state decides to change the way it funds school districts.
When the Routt County commissioners heard the plan, they supported the concept but said they wanted to see a similar commitment of money from the city.
The overriding concern among the entities involved is the Dec. 21 deadline for approval.
“I am not against the authority. But I think the time table we set is not going to give us an adequate chance to respond to the various issues,” City Councilman Ken Brenner said.
On Tuesday, the city is scheduled to pass a resolution adopting the authority. On Thursday, the Steamboat Springs Planning Commission is set to review the URA Plan, which essentially is a charter for the authority. A blight study, which is needed under state law to form a URA, also is expected to be finished within the next two weeks.
Final approval of the URA is set for Dec. 21, when the council will review the blight study and will be asked to adopt the URA Plan.
Most city, school and county officials agree the base area needs improvements. Baldinger said it is not as easy to use as other base areas around the world. The URA could provide better pedestrian connections, sewer lines, easements and traffic turnarounds. The authority also could fund sidewalks, streetscapes, public art and escalators.
“The mountain area needs improvement. You look at almost everything up there, and it hasn’t really changed. Actually, the infrastructure hasn’t really changed in 20 years,” City Councilman Loui Antonucci said. “We need to revitalize that area. Part of that is going to be the public sector. Hopefully, that will encourage individual property owners to get on the band wagon and do some upgrades.”
The biggest question mark about the URA is how extensive an effect it would have on the Steamboat Springs School District.
“I will not support anything that harms the school district in any way. It is the real deal-breaker,” Brenner said.
The Base Area Reinvestment Coalition contends that school districts have not been harmed in other parts of the state where URAs were formed. The statewide school finance formula, which allots each district a certain dollar amount per pupil, creates an annual budget for each school district. Whatever the school districts cannot raise through taxes on locally assessed property values, the state backfills to meet the total amount.
Under the state finance formula, the state would cover the difference in the money that would be redirected from the school district to the URA, if it is approved.
School District Finance and Operations Director Dale Mellor thinks the URA would make the district more dependent on the backfill provision.
“We are exchanging property tax for unstable state funding,” Mellor said.
Unlike many other Colorado districts, the Steamboat Springs School District has a small portion of its budget, 2 percent, backfilled by the state.
“With the fiscal crisis in Colorado, there is a very realistic chance the school finance formula could be changed, and we could end up losing a lot of money,” Mellor said.
A change to the backfill provision in the next few years could require the district to cut educational programs, lay off teachers and increase class sizes.
The school district would like to see a hold-harmless provision included in the URA to allow the school district to collect its tax increments if the state’s financial formula changes. However, attorney Malcolm Murray, who has worked on other authorities in the state and was hired by the base-area coalition, said a hold-harmless provision would hurt the authority’s bonding potential.
If a hold-harmless provision is not feasible, the school district is asking that the city partner with it and use sales tax to backfill any shortfalls to the district.
Although school districts across the state asked tough questions about URAs, Baldinger said, not one opposed an authority that was created in their districts. Baldinger thinks the concerns raised by the local school district could be resolved with more communication among it, the city and county.
“I am very confident the URA and the tax-increment financing will not hurt the school district. If they would, BARC would have never made the proposal. It is that fundamental,” Baldinger said.
The commissioners supported the URA concept in June, but they still have concerns about the shape of the authority and how quickly the approval process is moving.
When the commissioners said they supported the plan, they did so with the caveat that the city make an equal contribution.
Commissioner Nancy Stahoviak said she thinks a city sales tax is needed.
“Most municipalities have a property tax, so they are contributing in some ways to this (authority). That isn’t the case with the city. Since they don’t have a property tax, we suggest the sales tax be part of the increment,” she said.
The council has yet to commit to any type of long-term funding. Brenner said he would like to see a three-pronged approach, with property tax coming from the county, sales tax coming from the city, and additional money coming from the business owners whom the improvements would directly benefit.
“It is not fair” for property taxes alone to fund the URA, Brenner said.
Baldinger said the coalition would be comfortable with the city using an incremental sales tax to fund the authority but said the city also could dedicate an annual amount of its budget for base area improvements.
Baldinger also did not outright dismiss the idea of forming a business improvement district.
“BARC is not opposed to any funding mechanism that would create base area improvements,” he said. “However, the organization of a business improvement district is not what is proposed.”
Another of the county’s concerns is the speed of the approval process. The commissioners have yet to receive a copy of the plan, though they are expected to forward comments about it to the city.
Stahoviak predicts Tuesday night’s vote on the resolution will be split — and she thinks such an important issue should have close to unanimous support.
“We feel it is an important enough issue that the city needs to take the time to do it right,” Stahoviak said.
Brenner said time is needed to work through the effects the URA would have on the school district and county, which have the most at stake if the URA is approved as proposed.
“Statutorily, we are not doing anything wrong. The courts have upheld that. But just because it is legal, it doesn’t make it right,” he said.
Baldinger said the past month might appear rushed, but the proposal has been in the development stages for almost a year. The idea arose last winter when a group of residents was riding up on the gondola and launched into a list of gripes about the sub-par base area, he said.
Starting in June, the group took the idea to the commissioners and then to community organizations. It presented the concept to the City Council in September.
Last month, Baldinger said if the city took the increase in property tax values from new development or redevelopment in 2004, it would bring in $100,000. That money could leverage a $1 million, 20-year bond. and the city could start seeing projects under way by 2006.
“The sooner you start, the better chance you have to bring in funds,” Baldinger said. “There are certain projects that you can drive around in your car and see that are coming out of the ground. That incremental (property tax) can be realized right away.”
Others also have mentioned that out-of-state developers have been watching the proposed URA and could be interested in investing money into redevelopment projects in the base area.
“They are waiting in the wings,” Baldinger said.
But Stahoviak thinks the authority is moving too fast. She would like to see what projects could be funded under the authority and how much they would cost before the council decides to set aside taxes.
“We don’t have a firm handle on the estimated costs of improvements. How can we set up what the tax increment is going to be to pay for those improvements?,” she said.
Baldinger said the list of priorities is already 80 percent complete in plans that the city has made in the last few years. And in November, the city approved another $50,000 study to identify what work is needed in the base area and how to finance those improvements.
The authority always can be resolved, and no money has to be spent if the council changes its mind, Antonucci said.
“The truth is, we can form an authority, and if it doesn’t work, we don’t have to even build anything,” Antonucci said. “If we capture the money and don’t spend it, then we don’t collect it.”
— To reach Christine Metz call 871-4229
or e-mail firstname.lastname@example.org
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