Few Coloradans have any idea how much money is diverted away from counties, school districts and special districts and into the pockets of cities by Urban Renewal Area (URA) projects. Ask Colorado Counties Inc., which represents Colorado county commissioners, and they will give you an earful. In Larimer County ask about the Centerra project and some folks will become livid. I think if people knew the details in URAs, many would say URAs have become an example of dishonest government.
URAs had their birth in Federal law in the late 1940s. Their purpose was “… the elimination of substandard and other inadequate housing through the clearance of slum and blighted areas…”. At first it was a way to reap federal funds for local projects. By the 1970s, with federal funds running out, the Colorado legislature gave cities the tool of Tax Increment Financing (TIF). New, up-to-date, desirable neighborhoods generate much more property tax than do old, obsolete, unappealing neighborhoods. The difference between old and new property tax is the “increment” that could service bonds to pay to assemble properties, fix defects and upgrade the infrastructure required for new neighborhoods. Commercial properties are depreciated, so businesses have a financial tool to reinvent themselves. Owner occupied houses are not depreciated so TIF serves as a tool for reinvention.
Unfortunately, by the 1980s the last item on the URA list was housing. URAs had evolved into a tool for economic development. To satisfy the requirement “eliminate slum and blight” the “and” has been effectively changed to “or” and “blight”, being a subjective evaluation, can be anything a city says. Anything a city wants is “blighted”. This is a misuse of governmental prerogatives, sort of like that Denver suburb that was ticketing drivers with an item hooked on their rearview mirror for an “obstructed view”. Economic benefit usually comes as a side-effect of eliminating slum and blight but cannot be the primary factor. Today it is estimated that 90% of URAs are economic development projects. These are projects that do not eliminate substandard housing, but pretend in order to assume that label.
I was elected in 2013 to City Council voicing my opposition to what Westminster is doing with URAs. Previous Councils have cleverly used URAs and TIF to make the economic successes at the Walnut Creek URA and the North Huron URA, but no slum was eliminated. We are generating loads of money for our economic benefit, but our diversion of property tax leaves the counties and schools on the short end. We are ignoring the spirit and intent of the law. I don’t think this is honest government, but it gets worse.
Our currently planned URA shows how the process is being worked for all the wrong reasons. We are re-developing the old Westminster Mall. There were no slums at the old mall, no one lived there. City leaders have coveted the mall for many years. They envision a “New Downtown” densely packed with 5,000 people. The actions the City has taken shows that this vision for our New Downtown is more important than even economic development. Westminster was already comfortable in hiding a true motive of economic development behind the label of “blight” so it is just one more step to hide our vision of a New Downtown behind the label of “blight”.
For me, hiding behind a façade of “eliminating slum and blight” adds deception on top of dishonesty.
The deception extends into the property tax bills as well. The 2012 property tax bill for the Target at 144th and Huron lists Adams 12 schools as the recipient of about $230,000. However Adams 12 schools received less than $10,000 with the other $220,000 going to the North Huron URA and Westminster. Adams County loses big time and does not have backfill mechanisms that mitigate their losses. In URAs, this diversion of tax money continues for 25 years.
I am convinced that following the spirit, intent and letter of the law is the better way to run our City. Moreover, I know Westminster will prosper without incentivizing developers into building the “vision” of city leaders. I’m trying to persuade my colleagues to change course. The irony in this situation is that I am afraid that we are subsidizing the building of future slum and blight where there is no slum and blight today.
Bruce Baker is a Westminster City Council member.