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The developers' toolbox 

Downtown developers have long had some financial tools at their disposal, but when voters approved the Downtown Development Authority in 2006, they created a powerful package of incentives for change.

The DDA is funded through tax-increment financing (see below) and a 5-mill tax levy within the district. At the start of this year, the DDA formed and began offering financial assistance for projects in the area, filling out a toolbox for development that's fairly robust, even if it's dwarfed by those of other cities.

Here are some notable components:

The hammer
The DDA's tax-increment financing could produce up to $90 million for downtown development over the next 30 years.

Here's how: Imagine that today, a city block generates $10,000 of property tax annually. As inflation and improvements occur, taxes paid by this block's property owners should increase over time.

Under the DDA's tax-increment financing agreement, government entities would agree to collect no more than $10,000 from that city block every year for the next three decades, no matter how that property changes and the actual tax rises.

So if the area is improved, and property taxes therefore go up, the extra tax money goes to the DDA, which then uses it to make deals with developers to pay for public improvements on a development, like a streetscape or a utilities upgrade. Excess cash may be used to improve other areas within the TIF boundaries.

Developers pay all the up-front costs. But they recoup some costs later as the added tax money rolls in.

The city's urban-renewal areas, including four downtown urban-renewal areas (see "Pockets of renewal"), use TIF revenues as well. But the Urban Renewal Authority uses the money differently. It estimates how much tax money an area will generate, takes out bonds and offers developers money up-front for public improvements.

Tax-increment financing remains a controversial topic nationally, with some commenting that the deals have been too widely applied in some cities, that they amount to taxpayer subsidies given to rich private developers, and that TIF-empowered developers often drive out low-income business owners and homeowners in order to clear property for their developments.

The glue
Remind us: Why does a city need coding and zoning?

"You don't want a pig farm next to your house," says Bill Healy, the city's director of planning and community development.

Ah, yes.

But, Healy explains, zoning in the past failed to recognize that certain things like lofts and coffee shops just go well together. Zoning in the past created areas that were just for residential, or just for retail.

That's no good in a downtown, so City Planning is working on changing the rules to accommodate more mixed-use projects. In its soon-to-be-completed master plan, which merges the Imagine Downtown plan with the 1992 Downtown Action Plan, form-based coding will appear in the core of downtown.

This focuses on making a pedestrian-friendly environment, encouraging things like big windows that engage passers-by, awnings and benches along the sidewalk.

Another change: Under form-based code, an expanded downtown core will have no height restrictions on buildings. However, height restrictions outside the core will help ease buildings into traditional neighborhoods.

City Planning also will likely use coding to preserve or create specific character for downtown streets, and to preserve views from important public spaces, as recommended in the Imagine Downtown plan.

Matches
This year, the DDA has made available challenge grants which match private funds with DDA funds of up to $50,000 for projects and events that benefit the public or the look of downtown.

Paintbrushes For over a decade, many downtown business and property owners have voluntarily paid the Greater Downtown Colorado Springs Business Improvement District tax. It's put toward maintaining streetscapes, marketing and other efforts to create a more attractive downtown.

Then there's your meter money at work: The Parking System Enterprise uses its budget to build parking structures, maintain parking spaces and make streetscape improvements in the downtown and Old Colorado City areas. The enterprise currently is in the middle of a multimillion-dollar, multi-year capital improvement project. Downtown in 2008, the enterprise will fund new medians on Nevada Avenue, between Colorado Avenue and Boulder Street.

Other tools
The downtown area has long been a part of an enterprise zone. That means special tax incentives are offered to businesses that locate or expand downtown.

In addition, business owners and developers can explore many other programs and grants, including federal grants.

Take, for instance, the new special district LandCo's got in the works: It will include five of LandCo's downtown properties, including Stratton Pointe, at Colorado and Tejon. After City Council gives its final approval, the district will have the right to issue millions in bonds (cheaper than bank loans) for public improvements that would be repaid through the district's property taxes.

J. Adrian Stanley

  • With the Downtown Development Authority, voters created a powerful package for change.

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