ERIE — The Erie Town Board appears poised to try revitalizing areas of town using Tax Increment Financing (TIF) and an Urban Renewal Authority (URA) plan that depends heavily on the same industry they are trying to drive out.
The plan, as currently written, comes at a large expense to Weld County and some special taxing districts, while allowing other taxing districts to retain 100 percent of any new tax revenue from oil and gas production within the URA.
The Town of Erie will hold a public hearing on July 31 to consider a URA along the Interstate 25 corridor. The plan would use TIF to develop and improve infrastructure for water, sewer, and roads that would then foster new growth and higher property tax revenues.
TIFs work by freezing the current amount of revenue being collected to create a base. Once a plan is in effect, any revenue generated over that base goes to the town to make improvements in predetermined areas.
Most of the area in question is within the Town of Erie already. The plan also includes some parts of unincorporated Weld County that Erie is asking to annex, which would be subject to the town’s moratorium on oil and gas drilling, and other areas that are in unincorporated Weld that will not be annexed.
The parts of the URA that are within unincorporated Weld (where oil and gas production will still be allowed, as Erie has placed a moratorium on area within its control) could produce a windfall of new revenue to the town because Erie officials have convinced some taxing districts to give up 100 percent of any increased revenue from oil and gas production.
“I thought there was a health, safety and welfare issue here,” Barbara Kirkmeyer, chairwoman of the Board of Weld County Commissioners, said. “Are you trying to protect the environment or develop the town of Erie?”
Including the unincorporated areas of Weld has caused the Board of Weld County Commissioners anxiety and kept them from coming to an agreement with the town, Kirkmeyer said. The two boards have met for three work sessions and still have not come to an agreement.
In fact, the issue has become so contentious between the two boards that it caused Kirkmeyer to resign from a position she held on the Erie Urban Renewal Authority Board because it was interfering with her duties as a commissioner, she said.
Urban renewal areas and TIFs are a tool that municipalities use for economic development. However, in order to place an area under an urban renewal plan, the area must meet certain “blight” criteria such as having deteriorating structures or site improvements, faulty street or lot layout, unsanitary or unsafe conditions, inadequate public facilities, and/or code violations, to name a few.
The area is divided into two parts, from Colo. 52 on the north to Weld County Road 12 on the south and Road 5 on the west to Road 7 on the east. Also, from about Puritan Way on the north to just south of Erie Parkway on the south and Road 7 on the west to I-25 on the east. The plan calls for the development of everything from residential to commercial, and mixed-use to community commercial.
Kirkmeyer said the county has entered into numerous intergovernmental agreements over the years with communities wanting to use TIF for urban renewal developments because it’s usually in the best interest of the county. But having to give up 100 percent of the increased revenue from oil and gas is a bad deal for Weld, as oil and gas development, which is taxed at much higher rates, contributes greatly to Weld’s coffers.
When the county and other special taxing districts enter into agreements, the taxing districts generally retain a portion of the increased revenue over the base, usually 50 percent. It’s an incentive to participate, Kirkmeyer said.
Without the URA and TIF, the area may not develop as planners prefer, and the districts might not see any increased revenue. A study of 235 Illinois municipalities showed that while the use of TIF doesn’t actually lead to new development, its use as a subsidy can influence the location of development that would have occurred elsewhere, at another time.
“Fifty percent of new taxes is better than 100 percent of no taxes,” Kirkmeyer said.
In this case, the special taxing districts will retain 50 percent of any increased property tax revenue from new development such as homes and businesses. However, all but Weld County have agreed to give up all their revenue from oil and gas, which is millions of dollars, that in most cases those districts will need to cope with the new growth.
The plan isn’t consistent in who wins and who loses, however. Taxing entities including the High Plains Library District, Mountain View Fire Rescue District, and the St. Vrain Valley School District have agreed to give up 100 percent of the future revenue from the increased oil and gas production — $7 million, $26 million, and $55 million, respectively. At the same time, several Erie Metro Districts, Northern Colorado Water District and Left Hand Water will retain 100 percent of the increase, contributing nothing to the URA.
Kirkmeyer said it makes sense that the water districts would not give up revenue because they need that revenue to develop the new growth that will come with the improvements. But she doesn’t understand why a metro district, which is allowed to tax its residents up to 50 mills, doesn’t have to contribute to maintain the main infrastructures needed to supply services to the residents or businesses in the district.
The school district’s share would be backfilled by the state under the school finance act. A 2017 Legislative Council Staff estimate puts state taxpayers’ TIF backfill obligation to local school districts at $57 million annually. But the same is not true for the library and fire districts and growth will cause a bigger strain on those districts.
It makes less sense, Kirkmeyer said, because oil and gas revenue would be there for those districts without the TIF, yet with the TIF in place, all the revenue will now go to the Town of Erie.
“The development on the surface isn’t going to do anything to improve the ability to develop oil and gas,” Kirkmeyer said. “In fact, it does the exact opposite.”
Complete Colorado was unable to reach anyone from the fire or library district for comment as of press time. The public hearing will be held at 6:30 p.m., July 30 at the Erie Town Hall, 645 Holbrook St. in Erie.