SUBJECT:
Title
A Resolution of the Town Council of the Town of Erie Approving a Conditional Tax Increment Revenue Agreement for the Erie Town Center Urban Renewal Plan
Body
DEPARTMENT: Economic Development/TOEURA
Department
PRESENTER(S): Julian Jacquin, Director of Economic Development & TOEURA
Malcolm Fleming, Town Manager, TOEURA Executive Director
First Name Last Name, Title
TIME ESTIMATE: 30 minutes
only required for non-consent items
FISCAL SUMMARY:
Net positive over time based on the premise that “but for” the sharing of TIF through the URA new development will not happen as quickly as desired. See more details below.
POLICY ISSUES:
The policy issue is whether to share a portion of the Town’s property tax and sales tax increment (TIF) to be generated by development in the proposed Erie Town Center Plan Area boundary. The TIF will be used to remediate blighting conditions to facilitate the development of the Town-owned property by Evergreen Devco in the Erie Town Center Planned Development (PD). Staff anticipate that remediating the blighting conditions (conditions created by historical mining activity in the area, rerouting the irrigation ditch, extending off-site utilities 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 it 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:
As explained in the previous Town Center Overview agenda item #25-114, the Town-owned Town Center site has historic undermining and other blighting factors that make development of the site more expensive. Without additional financing assistance to address these factors, development on the site is not likely to happen in the near future and this central location in Town will not live up to the community vision captured in the Town Center PD and Development Guide. To help achieve that vision, staff started pursuing formation of a new Urban Renewal Area covering the Town-owned site.
On Dec. 5, Town staff provided mailed notice to the impacted taxing entities within the proposed Erie Town Center Urban Renewal Plan Area (URA) boundary, including the Town, Boulder County, St. Vrain Valley School District, Mountain View Fire Protection District, High Plains Library District, Northern Colorado Water, and the Mile High Flood District. Per Colorado Urban Renewal Law, this 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 Town Council adopt the new Plan Area.
Town staff then presented three draft planning documents for the Erie Town Center Plan Area to the TOEURA Board of Commissioners on Dec. 10, including a Conditions Survey, Plan Document and 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 Plan Area.
The proposed Erie Town Center Plan Area includes one 19.41-acre parcel within the Town of Erie, located at the northwest corner of Erie Parkway and E. County Line Rd. In total, the Plan Document assumes that development of this area will include 117 multi-family residential units, and 100,000 sq. ft. of commercial space (consisting of a 23,000 sq. ft. specialty grocer, 42,000 sq. ft. of retail/restaurant space, and a 34,500 sq. ft. hotel). These uses will support and stimulate development for the entire Town Center and serve the broader Erie community at the center of Town. Approval of the Erie Town Center Plan will allow TOEURA to use tax increment financing (TIF) to remediate blighting conditions (described in more detail in the Town center Overview) to facilitate in the development of this key focus area in the Erie Town Center PD.
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 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 Impact Report provided by the Town’s hired consultant, Pioneer Development Company (PDC), includes TIF projections for property tax and sales tax increment to be generated in this area, based on the development program provided by Evergreen.
The Town’s property tax mill levy (13.381 mills in 2024) includes three sub-components: general operations, bond redemption and capital expenditure. The TIF projections provided by PDC show the Town’s General Fund mill levy (7.288 mills) could generate up to $1,577,000 in property tax increment over 25 years in the 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 $22 million in sales tax increment to the Plan Area.
Town staff recommends the Town share its unrestricted “general fund” mill levy and 1.75% (or ½) of the Town’s 3.5% municipal sales tax with TOEURA for the 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 1.75% in municipal sales tax to support the cost of public services in this area. This could generate up to $1,577,000 in property tax increment, and $11 million in sales tax increment, for the Plan Area.
COUNCIL PRIORITY(S) ADDRESSED:
ü Attractive Community Amenities
ü Prosperous Economy
ü Well-Maintained Transportation Infrastructure
ü Effective Governance
ü Fiscally Responsible
ATTACHMENT(S):
1. Resolution 25-044
2. TIF Agreement
3. Erie Town Center URA Impact Report
4. Staff Presentation