Urban Renewal Authority How they can be used to improve a - - PDF document

8/5/2019 1

August 5, 2019

Presented by Robert Smith

Urban Renewal Authority –

How they can be used to improve a community

Presented by Carolynne White

Urban Renewal in Colorado

August 5, 2019

8/5/2019 2 URA – How they can be used to improve communities

Council has some interest in exploring the formation of a new Urban Renewal Area within Lakewood.

The approval of such areas would be a decision of the Lakewood City Council.

Lakewood Redevelopment Authority (LRA)

• versees &

manages our 4 existing URAs.

The approval of an Urban Renewal/ Redevelopment Plan for any new area would be a decision of the City Council and likely the LRA Board as well.

The LRA Board would need to expand, by several seats, before it could consider an Urban Renewal/ Redevelopment Plan for a new area.

Some Framing Comments

There are many acronyms & words of jargon used in Urban Renewal discussions.

Don’t be shy about asking for clarification

• n terminology.

Though we’ll use the term “blight”… it has specific meaning with regard to URA.

Blight will possibly have a different meaning in the context of the Growth Ordinance.

Urban Renewal Authorities (like the LRA) have different powers than do City Councils.

URA – How they can be used to improve communities Some Framing Comments

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We All See Things Differently

A Typical Shopping Center

A Shopping Center as seen by a

MAJOR TENANT

A Shopping Center as seen by a

Developer

A Shopping Center as seen by the

CITY

Perspectives

 Increased/more sophisticated public demand for infrastructure and services  Changes in tax policy  more public improvements financed by private developers  Cities (and citizens) want development to pay its own way  Result  More public/private partnerships, lines blurred

Public v. Private

8/5/2019 4

Money Doesn’t Grow On Trees

1958 1ST Enacted in Colorado July 15, 1949 Federal Housing Act (63 Stat. 413) Intended primarily to enable Colorado to receive federal funds designated for slum clearance and housing construction 1970s & early 80s TIF provisions added when federal funds began to dry up

…the prevention and elimination of slums and blight is a matter of public policy and statewide concern in order that the

state and its municipalities shall not continue to be endangered by areas which are focal centers

• f disease, promote juvenile

delinquency, and consume an excessive proportion of its revenues because of the extra services required for police, fire, accident, hospitalization, and

• ther forms of public

protection, services, and facilities

1958: Urban Renewal Law enacted 1999: HB 99-1326 – 4 blight factors 2004:

• ne bill passed, two others

introduced -- HB 04-1203 (eminent domain) 2005:

• ne bill passed, two others

introduced -- HB 05-224 County impact report 2006: (three bills passed; numerous

• thers introduced)

HB 06-1375 tax increment task force HB 06-1411 higher burden for eminent domain HB 06-154 Clarify eminent domain laws 2007: (one bill passed; one other introduced) -- SB 07-157 -- notice

• f commissioning of blight study

Improving Since the 1950s

History Philosophy Changes History Philosophy Changes

8/5/2019 5

1958 1ST Enacted in Colorado July 15, 1949 Federal Housing Act (63 Stat. 413) Intended primarily to enable Colorado to receive federal funds designated for slum clearance and housing construction 1970s & early 80s TIF provisions added when federal funds began to dry up

…the prevention and elimination of slums and blight is a matter of public policy and statewide concern in order that the

state and its municipalities shall not continue to be endangered by areas which are focal centers

• f disease, promote juvenile

delinquency, and consume an excessive proportion of its revenues because of the extra services required for police, fire, accident, hospitalization, and

• ther forms of public

protection, services, and facilities

2008: two bills -- HB 08-1349 - county treasurer offset; SB 08-154 – may include unincorporated territory with consent of county 2009: four bills introduced; none passed 2010: HB 10-1107 – “ag” land bill; “TIF Reform” bill not introduced 2011 & 2012: “transparency” bills; not passed 2014: HB 14-1375 – “seat at the table” plus formula for county revenue sharing – vetoed by Governor 2015: HB 15-1348

Improving Since the 1950s

History Philosophy Changes Statutory Authorization

Purpose: eliminate slum and blight

C.R.S. §31-25-101 et seq.

Not:

 job creation  economic development  increase tax revenue

8/5/2019 6

Statutory Authorization

But The elimination

• f slum

and blight

C.R.S. §31-25-101 et seq.

almost always results in  job creation  economic development  increase tax revenue

Jobs

Econ Dev Tax

Revenue URA Success Stories Colfax Corridor & Alameda Corridor

8/5/2019 7 The Conditions Survey Sometimes Called the “Blight Study” Statutory Blighting Conditions

 Deteriorated or deteriorating structures  Defective or inadequate street layout  Faulty lot layout in relation to size, adequacy, accessibility, or usefulness  Unsanitary or unsafe conditions  Deterioration of site or other improvements  Unusual topography or inadequate public improvements or utilities  Defective or unusual conditions of title rendering the title non-marketable  Conditions that endanger life or property by fire or other causes  Buildings that are unsafe or unhealthy for people to live or work  Environmental contamination of buildings or property  Existence of health, safety, or welfare factors requiring high levels of municipal services or substantial underutilization or vacancy of buildings, sites, or improvements

Not All Conditions Need Be Present

8/5/2019 8 Study Area Scope | Properties Included | Fictional Example

Boundaries of Urban Renewal Area must be drawn “as narrowly as possible” to achieve the goals of the Colorado Urban Renewal Law

Property Values

What happens to the value of a property if it is designated within an Urban Renewal Area?

 No studies have shown reduction  Some studies have shown increase

Designation of blight indicates intention of governing body to target investment to that area; increases market perception of value

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Congratulations, You Have Blight

Photo Credit: Mark Heller

Adoption of Urban Renewal Plan

 Blight Study/Conditions Survey

• 11 categories of blight

 Appointment of new Board Members  Negotiation with Taxing Entities  Public Hearing – Planning Commission  Public Hearing – City Council  Adoption of Urban Renewal Plan

• Defined plan area boundaries
• Sets goals
• Authorizes TIF and/or eminent domain

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Timelines

Public Hearing

+ 30 days – County impact report & copy

• f plan under

prior law (original statute) + 90 days – deadline for mediator “findings

• f fact”

(HB 15-1348) + 120 days – maximum negotiation period (HB 15-1348) + 90 days – minimum notice to counties (HB 15-1348)

1 Million 2 Million 4 Million 6 Million 8 Million 10 Million 12 Million 14 Million 16 Million 18 Million 0 1 2 3 4 5 6 7 8 9 101112 13 141516 1718192021 22 2324 2526

TIF = Tax Increment Financing

Base & Increment

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Tax Increment Financing

URA receives a share of District property & sales tax revenues URA makes the catalyst investment in a building or project That project results in an increment in property and/or sales taxes

How TIF Works

Blighted Property After Redevelopment

TIF District is created Tax base is established Increased taxable value Captured taxable value Regular tax levies

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Why Use Increment & TIF

NEW TAX

 Increment is NOT a new tax

$

 Extraordinary public improvement requirements may be needed  Increment does NOT increase tax rates on existing property owners

RATE

INCREASE

 Increment does NOT require that property owners outside of urban renewal area contribute to project

TAX

OUTSIDE

URA

 Increment captures the additional value created by private investment to put back into the project

$$

$$$ $$$

 Growth pays its own way

Absent the investment by the Urban Renewal Authority, development may not happen.

Without development, tax revenues stagnate or decline.

With URA investment, development occurs, and sales and property tax revenues increase

Incremental increase available for URA to reinvest in the district to remedy blight.

If Not “But for” the URA

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 Bonding

• Public or Private Placement
• Interest and issuance costs

 Reimbursement Agreement

• Easiest to administer
• Requires well-capitalized developer partner

 Other Methods

• Cash fund, land value discounts, loan guarantees,

community land trusts, etc.

TIF = TAX INCREMENT FINANCING

Using Tax Increment Financing

The But For Analysis

How do you know a project is appropriate for support through tax increment?  Urban Renewal Plan already adopted/in place  Proposed project consistent with plan goals  Project would not occur absent tax increment support (“but for”) Note: Urban Renewal statute does not require that improvements be public in

• rder to receive tax increment,
• nly that they remedy blight

TIF = TAX INCREMENT FINANCING

Tools for Applying TIF

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TIF = TAX INCREMENT FINANCING

Tools for Applying TIF

The Gap Analysis

What are the total project costs and the developer’s anticipated returns?  If anticipated returns are significantly lower than market expectations, project will likely not occur.  Can/should public participation be used to close the gap for the project?  Does the project include extraordinary costs acting as a barrier to market participation?

• Demolition of existing structures

(eg: CU Health Center – 9th & Colo Blvd.)

• Landfill/contamination

(eg: Castle Rock, Gates)

• Oversized or regional infrastructure

Policy & Governance Considerations

 100%? 50%? Some other number? How to decide?  No statutory requirement.  Some authorities adopt across-the-board policies;

• thers address case-by-case

 Is the answer different in an area-wide plan than in a project-specific plan?  What is the minimum amount of incremental tax revenues necessary to insure that the project will

• ccur?

 Unlike a private investment, the goal of urban renewal is not to generate increased tax revenue or returns for the public “investors;” rather the goal is to eliminate

• blight. Governmental entities can choose to invest at a

“loss” or break even, to achieve important policy goals.

?

How much tax increment should be contributed to a project?

8/5/2019 15

URA Policies

 Intergovernmental Agreements (IGAs)  Tax Increment Reimbursement Agreements/Public Finance Agreements w/ Property Owner/Developer

• list of approved “Eligible Improvements”
• process for URA verification

 Adoption of bylaws not expressly required, but worth considering  Adoption of other policies or form documents

• Grant Guidelines
• Public Art
• Grant Agreement Template
• TIF Agreement Template
• Relocation Policies

Policy & Governance Considerations

What is “Public”?

STATUTORY AUTHORITY

IRS REGULATIONS POLITICAL WILL

8/5/2019 16 Some Phases Moving Forward Phase 1

Outline a potential new urban renewal area Informal

• utreach to a

large number

• f property
• wners,

including those with key interests in the area Outreach to other taxing entities Potentially identify some terms for future Intergovernmental Agreements (IGAs) Outreach to internal departments including Legal and Finance Determine what impacts, in addition to expanding the number of Board Members, will be part of adding a new URA

Phase 1A

Continued Compliance with Colorado H.B. 15-1348 Urban Redevelopment Act with the seating of at least 3 New LRA Board Members

8/5/2019 17 Some Phases Moving Forward

Phase 2

Authorize the engagement of an independent consultant to conduct a formal Conditions Survey

• f the potential new urban renewal area

Phase 3

Issue written notification of the impending Conditions Survey to all property owners within the Study Area

Phase 4

Engagement of a consultant to conduct a formal Conditions Survey & develop a draft plan and impact report of the area

Some Phases Moving Forward

Phase 5

Consultant works on Conditions Survey Continue to communicate with property

• wners

Continue to communicate with other taxing entities

Phase 6

Consultants complete and then present Conditions Survey

Phase 7

If the formation of a URA is warranted, then hold a Public Hearing at which Council will consider forming a new URA

8/5/2019 18 Some Phases Moving Forward

Phase 8

Analysis and preparation of Urban Renewal Planning Documents – TIF & Impacts

Phase 9

Plan presentation, consideration & possible adoption at Public Hearing  Lakewood City Council  Lakewood Reinvestment Authority (LRA)

Discussion

&

Questions