Next legislative session there might be a bill Democrats and Republicans can agree on — at least those not in thrall to the Colorado Municipal League.
House Majority Leader Dickey Lee Hullinghorst, D-Boulder, is working with other lawmakers and groups representing the counties and special districts to put more limits on TIFs, or tax increment financing.
It’s more of a power struggle among governments than the overhaul needed, but it might be a start.
TIFs are an increasingly popular form of crony capitalism, a way for city governments to pick winners and losers among those trying to start businesses or keep them going. They enable developers to use prospective property and sales tax revenues to finance immediate improvements.
Theoretically, the completed projects will not only produce more sales taxes but increase the value of surrounding real estate and thus the taxes paid on it.
It’s city councils, doubling as — or at least dominating — urban renewal authorities, who determine what developers get how much in the way of future tax revenues.
This makes counties and special districts unhappy, since they are forced to surrender future property tax revenues without having a say in the TIF awards.
“We’re looking at giving county commissioners a little more control over their own property taxes,” said John “Chip” Taylor, executive director of the Colorado Counties Inc., the trade association.
It’s too soon to tell what exactly will be in the bill, but all involved claim it will not affect deals already done, such as the Foothills Mall.
The courts have been no help to counties. The only county lawsuit against a TIF was thrown out by the judge on grounds the county didn’t even have standing to sue, Taylor said.
The counties and special districts are trying to reach a compromise with the municipal league, a strong defender of TIFs, said Taylor, “but it feels like we’re going down the road of agreeing to disagree.”
Taking county taxes away from TIFs “makes urban renewal authorities, developers and the municipal league crazy,” he said. They complain that it’s hard enough already to put a project together, and getting approvals of other governments might make the deal impossible.
Counties are authorized to file an impact statement on pending TIFs, said Gini Pingenot, CCI’s policy supervisor But urban renewal authorities “are not compelled to do anything with the information.”
An ideal bill would give counties and special districts the power to determine how much, if any, future property tax revenue they would give up in a TIF, according to Pingenot.
“We’re not interested in killing urban renewal authorities,” she said. “We just want a seat at the table. The cities hold all the cards and we don’t have any.” After all, she said, counties have to inspect the restaurants in the projects and maintain the roads leading to them, and need money for that.
Developers and cities insist that TIFs work because the sales and property tax revenues used to finance projects wouldn’t exist at all if the project wasn’t built.
Hullinghorst dismisses this argument. All across the state there are shopping centers built with TIFs “across the street” from centers built without them, she said, and both are competitive.
She made a further point. TIF bonds are typically paid off in 25 years. But just as local governments are about to start keeping the taxes from the project, “you’re about ready to tear it down and build another one. So you never get any of the tax increment.”
Urban renewal authorities have to find “blight” to justify the property condemnation often needed to put a project together, and to issue the low-interest bonds. Past legislatures have tried to restrict the definition of “blight” in order to stop the abuse, but it hasn’t worked. Courts have ruled that it’s a political decision and “blight’ is whatever an urban renewal authority says it is.
If a TIF bill does get introduced next session, at least it won’t be a strictly partisan issue, like school finance, election reform or gun control. Republicans with a libertarian bent often agree with some Democrats that TIFs should be limited or abolished, just as many from both parties strongly believe in them.
As Hullinghorst noted, Boulder County is run by Democratic commissioners and Larimer by Republican ones, and they agree a change is needed.
But even modest change in TIFs will be hard to implement. Officeholders, state and local, like to be in the position of picking winners and losers in the economy, because the winners are happy to reward them with, at the very least, campaign contributions.
Longtime Rocky Mountain News political columnist Peter Blake now writes Thursdays for CompleteColorado.com. Contact him at firstname.lastname@example.org You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.CompleteColorado.com