2023 Leg Session, Centerra, Larimer County, Loveland, Sherrie Peif, Taxes

Effort underway for food tax repeal, voter approval for urban renewal on Loveland ballot

LOVELAND — A group of Loveland residents who for months have tried to stop an urban renewal authority (URA) project from breaking ground on the southeast side of town are slightly more than 3,100 signatures away from their latest attempt to do so.

Two petitions that would change the Loveland City Charter — one that would remove a 3 percent sales tax on food and one that would require voter approval for future urban renewal projects — are in circulation. Petitioners have until August 9 to collect the signatures of 3,126 registered voters to place the items on the November ballot.

Opponents say the charter changes are being sought because supporters lost a fight to stop a large development in the city using tax increment financing (TIF) as the funding mechanism.

“It’s a punitive measure this group is trying to do because we passed the South Centerra Piece,” said Loveland City Councilman and Loveland Urban Renewal Authority Chairman Dana Foley. “They’ve said, ‘If you don’t need our taxes, if you can give up 1.75 percent of our sales taxes, then why not give up 3 percent on food.”

Foley was referring to the agreement that city officials reached with the developers of a new multi-use urban renewal project known as Centerra South that will be located just south of the existing Centerra development at the northeast corner of the intersection of US Hwy 34 and Interstate 25 in Loveland, a city of about 80,000 people, 50 miles north of Denver.

In that agreement, Loveland City Council agreed to subsidize the project with tax dollars by forgoing collection of 1.75 percent of its overall 3 percent city sales taxes on anything sold within the development for a 25-year period to offset the infrastructure costs required by the development.

That is important because the anchor retailer for the new development is Whole Foods, which would provide the bulk of taxes to the developer in the way of food taxes.

Foley said he is not opposed to ending sales tax on food, but he doesn’t believe this is the right way. He’d rather find a way that the loss of revenue has the least amount of impact on the city’s budget.

“I’m all for a reduction of food tax,” Foley said. “But I’m for doing it where we take the time to study it and look at the ways we can make it happen over time or through a step process and look at areas where we can do it as an overall benefit to the community.”

The urban renewal fight

The Centerra South project was the impetus behind a bill this past legislative session — Senate Bill 23-273, which would have effectively killed the taxpayer-subsidized development based on changes to a 2010 bill that prohibited the inclusion of farmland in URAs.

URAs were originally designed to convert “blighted” (or rundown) properties into new development to stimulate the economy and improve the property and financed with TIF, which work by freezing the current level of tax revenue being collected within an area to create a base. Once a plan is in effect, any revenue generated over that base goes to the developer to fund improvements such as water, sewer and roads in predetermined areas.

These freezes affect all taxing entities within the URA, such as counties, cities, schools, and special taxing districts (fire, libraries, water, etc.) so that there is no “growth” in revenue from increased property values. In many cases that leads to other taxes needing to be increased, such as mill levy overrides for school and fire districts or sales taxes for cities and counties.

Supporters said that over the years, the inclusion of agricultural land into URAs became a concern for many, which led to the passage of the 2010 effort. They say the developers, Chad and Troy McWhinney used a loophole to bypass the 2010 bill and SB 273 would close that loophole.

They nearly won. Despite the bill passing in both the House and the Senate, Gov. Jared Polis vetoed the effort amid tremendous pressure from developers, Loveland City Council, and the Republican caucuses from both the House and the Senate.

Foley said that those supporting the two ballot initiatives believe, if passed, the project will once again be dead because the tax increment finance mechanism used to fund the project will suffer without the 1.75 percent the city has agreed to forgo from all sales taxes.

Foley said that is simply wrong, pointing out that the loss of 3 percent sales tax on food amounts to $9 million a year of current revenue, or 9 percent of the city’s budget overall, but the 1.75 percent is on future revenue from the development that won’t even kick in for 3-4 years. By that time, sales taxes deferred from the original Centerra project will be expired.

“The old URA sunsets in 2029,” Foley said. “All that revenue will come back into the system.”

But losing $9 million now, Foley said will be devastating to city services.

The tax on food

Those behind the ballot measures say the city is trying to “scare off” petition signers by threatening to cut jobs and services.

“We’ve had several people stop and say they are going to lose their jobs if the food tax passes, and I think that’s bogus,” Bob Massaro told the Loveland Reporter Herald.

Foley didn’t deny that is a possibility.

“How do you cut $9 million from your general fund?” Foley said. “You have a choice. That big of a (loss) will cut services and personnel from the city. There is just no way around that.”

But in an email response to a citizen carrying one of the petitions, Loveland Mayor Jacki Marsh disagreed with Foley.

Marsh said she believes the repeal of the food tax would be an economic boost for the city and help people experiencing food insecurity. She also said that with the looming increase in property taxes, Loveland expects to see an increase of $3.5 – $4  million in new revenue, offsetting the food tax loss.

“At this point in time, I would say that we are all guessing,” Marsh said. “But predicting that money would simply vanish is disingenuous or short-sighted, in my opinion.”

Colorado cities where local food taxes have successfully been repealed include Lakewood and Littleton in the Denver-metro area.  In Lakewood, the city council in 2009 repealed an existing food tax rather than sending a citizen-initiated petition to voters, while Littleton’s food tax was repealed via citizens’ initiative at the ballot box.

A neighboring city to the east, Greeley, also has a 3 percent food tax. However, voters there have an opportunity every five years to repeal that tax, which to date they have not done. Additionally, unlike Loveland, which deposits the food tax money into the general fund and can be spent on anything, Greeley’s food tax is earmarked for capital improvements within the city. Also unlike Loveland, Greeley offers a rebate program of $100 per year to low-income families who qualify.

Marsh said in her email that removing the sales tax on food for home consumption is the moral thing to do anytime, but especially now.

“I believe the high cost of living in Northern Colorado is making it increasingly challenging for many of our residents,” Marsh said.


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