Prepared by Weld County Treasurer John Lefebvre Tax Increment Financing A Quick Overview

Prepared by Weld County Treasurer John Lefebvre Tax Increment Financing  TIF is a tool of local general governments to finance (re)development of blighted property for the purpose of economic revitalization

Prepared by Weld County Treasurer John Lefebvre Background  Problem  Urban flight left blighted areas in the inner city unable to compete with the urban edge communities  Slums are economically depressed (blighted) areas in inner cities that need revitalization

Prepared by Weld County Treasurer John Lefebvre Slums = Market Failure  Cheap and available supply of fuel and the auto lead to urban flight in the 1940s and 1950s  Owners allow their properties to fall into disrepair  Values spiral downward  Tax base erodes  Businesses flee

Prepared by Weld County Treasurer John Lefebvre Results  Government revenues fall  Social costs climb without offsetting revenue  High unemployment  Increased crime  Increased substance abuse

Prepared by Weld County Treasurer John Lefebvre Competing With The Urban Edge  Solution  State governments established Urban Renewal Authorities (URA) in the 1950s  Power given:  Declare blighted areas  Eminent domain  TIFs

Prepared by Weld County Treasurer John Lefebvre History  Began in CA in 1952  CO established parallel legislation in 1958  Heavily used since the 1970s nationwide

Prepared by Weld County Treasurer John Lefebvre How They Work  Declare blighted  Freeze the tax base  Split the revenue stream  Original underlying authority revenue remains frozen at the time of blight declaration for up to 25 years  Increment accrues to the URA

Prepared by Weld County Treasurer John Lefebvre

URA / Blight / TIF Solution  Urban Renewal Authorities  Eminent domain  Holdouts  Small parcels  TIFs  Finance redevelopment  Stop sprawl  Retain tax base  Level economic playing field with urban edge developments  Finance infrastructure improvements without a general tax increase  Development pays its own way

Prepared by Weld County Treasurer John Lefebvre TIFs = Financing Options  Finance infrastructure  Estimate future value  Bond for difference  Dollars today for dollars tomorrow  Improved community

Prepared by Weld County Treasurer John Lefebvre General TIF Problems  Result in market distortion  Traditional tax base shifts from underlying authorities to the city  Job quality  No accountability

Prepared by Weld County Treasurer John Lefebvre New URA / TIF Problems  Eminent domain is abused  Taking land from one private party to benefit another private party  High jacks the tax base  TIFs misapplied  Used on the urban edge rather than competing with it

Prepared by Weld County Treasurer John Lefebvre What is Blight?  Lack of infrastructure  Incorrectly configured infrastructure  Site or other improvement deterioration  Faulty lot layout  Unsanitary or unsafe conditions  Unusual topography  Defective or unusual conditions impairing economic growth

Prepared by Weld County Treasurer John Lefebvre Colorado Community Revitalization Association  TIF:  Prevents leakage of sales tax dollars to outside communities  Retains revenue for government services  Contains costs for providing government services by reusing in-fill locations;  In-fill development carries a significantly lower public cost compared to edge, or sprawl, development

Prepared by Weld County Treasurer John Lefebvre Colorado Community Revitalization Association  Revitalizing in-fill locations:  Reduces pressure on urban edges  Preserves open space & agricultural land  Retains Colorado’s character and quality of life

Prepared by Weld County Treasurer John Lefebvre Subjectivity = Blight Anything

Prepared by Weld County Treasurer John Lefebvre TIFs on the Urban Edge  Meant for development to pay its own way without a general tax increase  Yet overuse leads to a general tax increase  Meant to limit sprawl  Subsidizes sprawl  Leads to newly blighted areas from overbuilding

Prepared by Weld County Treasurer John Lefebvre WinnersLosers  Developers get subsidized  City gets new infrastructure  Citizens have:  higher property values  New jobs  No new general taxes  Local shopping  All other county residents  County government  Competing communities  Truly blighted areas in cities  All state residents  State legislature has to find the money to backfill schools

Prepared by Weld County Treasurer John Lefebvre Irony  Meant for development to pay its own way without a general tax increase  Yet overuse leads to a general tax increase  Meant to limit sprawl  Subsidizes sprawl  Leads to newly blighted areas from overbuilding

Prepared by Weld County Treasurer John Lefebvre Questions