SUBJECT:
Title
A Resolution of the Town Council of the Town of Erie Approving a Conditional Tax Increment Revenue Agreement for the Erie Gateway Phase 1 Urban Renewal Plan
Body
DEPARTMENT: Economic Development/TOEURA
Department
PRESENTER(S): Julian Jacquin, Economic Development Director
Malcolm Fleming, Town Manager, TOEURA Executive Director
First Name Last Name, Title
TIME ESTIMATE: 20 minutes
only required for non-consent items
FISCAL SUMMARY: N/A
POLICY ISSUES:
The policy issue is whether to share a portion of the Town’s property tax and sales tax increment (TIF) we expect to be generated by future development in the proposed Phase 1 Plan Area boundary. The TIF will be used to remediate blighting conditions and extend necessary infrastructure to facilitate the development of this key focus area in the I-25 Erie Gateway development corridor. Sharing revenue for this purpose will reduce the future revenue available to the Town for other purposes during the 25-year period the URA is active. We anticipate that remediating the blighting conditions (conditions created by historical mining activity in the area, lack of utilities, challenging topography and other conditions) will stimulate development to happen earlier than would otherwise occur. This action makes sense on the premise that “but for” the sharing of TIF through the URA the new development will not happen as quickly as desired, and that sharing TIF will generate property and sales tax revenue that eventually offsets the TIF revenue shared with the URA and after that if will generate more positive economic activity than would otherwise occur.
STAFF RECOMMENDATION:
Recommendation
Approve the Tax Increment Revenue Agreement.
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
On Feb. 26, Town staff provided mailed notice to the impacted taxing entities within the proposed Phase 1 Urban Renewal Plan Area (URA) boundary, including the Town, Weld County, St. Vrain Valley School District, Mountain View Fire Protection District, Frederick-Firestone Fire District, High Plains Library District, Northern Colorado Water, the Summerfield Metropolitan Districts, and the North Station Metropolitan Districts. Per Colorado Urban Renewal Law, this mailed notice initiated a 120-day negotiation period for the Town of Erie Urban Renewal Authority (TOEURA) to agree upon tax increment revenue sharing with each entity, prior to holding public hearings and requesting the Town Council to adopt the new Plan Area.
Town staff then presented three draft planning documents for the Phase 1 Plan Area to the TOEURA Board of Commissioners on March 12, including a Conditions Survey, Plan Document and Financial Impact Report. TOEURA supported staff’s recommended boundary and strategy and began negotiating with each taxing entity thereafter. All entities have been responsive and open to negotiation for certain revenue sharing to support the Phase 1 Plan Area.
The proposed Phase 1 Plan Area encompasses 1,100 acres and 536 parcels within the Town of Erie, generally located south of Highway 52, north of WCR-10, west of I-25, and east of WCR-5. Included within the boundary is the new proposed Summerfield development (2,200 residential units and 28 acres of commercial uses, by CDG and Toll Brothers), the westernmost portion of the new proposed North Station development (by CDG), and remaining parcels north of WCR-12 generally referred to as the “Rieder” properties. In total, the Phase 1 Plan Document assumes that development of this area will include 3,003 new residential units and 682,439 sq. ft. of new commercial space, to be absorbed over 25 years. This boundary has been strategically drawn to include parcels that need, or will attract, new investment, reinvestment, or development, along with public rights-of-way that may benefit from urban renewal treatment. If approved, Phase 1 will allow TOEURA to use tax increment financing (TIF) to remediate blighting conditions, and extend necessary infrastructure, to facilitate in the development of this key focus area along the I-25 Erie Gateway development corridor.
The Town is one of the impacted taxing entities and must consider any pledged portion of the Town’s property tax it wishes to share with the Phase 1 Plan Area boundary. Unique to the Town, TOEURA is also allowed to capture a portion of the Town’s sales tax rate (currently 3.5%) to further contribute additional revenue towards the URA’s costs. The Financial Impact Report provided by the Town’s hired consultant, Pioneer Development Company (PDC), includes potential TIF projections for property tax and sales tax increment to be generated in this area, based on the development program for the Summerfield and North Station areas, and comprehensive plan designations for the remaining parcels (the “Rieder” property).
As with St. Vrain Valley School District, the Town’s property tax mill levy (13.381 mills in 2024) includes four sub-components: unrestricted general fund, trails acquisition (TNACC), community center bond, and public safety building. The TIF projections provided by PDC show that the Town’s “general fund” mill levy (7.288 mills) could generate up to $23 million in property tax increment over 25 years in the Phase 1 Plan Area. Additionally, the Town’s municipal sales tax may also be pledged to support TIF costs, subject to a revenue sharing agreement executed between the Town and TOEURA. If the Town shared its full 3.5% sales tax, development could generate up to $67 million in sales tax increment to the Phase 1 Plan Area.
Town staff recommends the Town share its unrestricted “general fund” mill levy and 1% of the Town’s 3.5% municipal sales tax with TOEURA for the Phase 1 Plan Area. The Town’s other bonded mill levies would be remitted back to the Town to continue making debt payments, and the Town would continue receiving the remaining 2.5% in municipal sales tax to support the cost of public services in this area. This could generate up to $23 million in property tax increment, and $19 million in sales tax increment, for the Phase 1 Plan Area.
The TIF Agreement attached for the Town’s consideration includes three primary components:
• Agreement to share the Town’s unrestricted general fund mill levy, and 1% of the Town’s sales tax rate, with TOEURA for the Phase 1 Plan Area.
• Consent for inclusion of Agricultural Land within the Phase 1 Plan, required by state statute.
• Agreement that any property tax increment to be generated by new oil and gas well sites developed within the Phase 1 Plan Area boundary after the adoption of the Plan will not be captured as TIF increment and will instead be remitted back to the taxing districts. This last component is included in the TIF sharing agreements with all taxing jurisdictions at the request of Weld County.
Additional information is included in the Staff Presentation, and will be discussed by Town staff, at the May 28 Town Council meeting.
COUNCIL PRIORITY(S) ADDRESSED:
ü Attractive Community Amenities
ü Prosperous Economy
ü Well-Maintained Transportation Infrastructure
ü Safe and Healthy Community
ü Effective Governance
ü Fiscally Responsible
ATTACHMENT(S):
1. Resolution 24-078
2. TIF Agreement
3. Erie Gateway Phase 1 Impact Report
4. Staff Presentation