Sunday, November 30, 2014

Understanding urban renewal

Posted By on Sun, Nov 30, 2014 at 7:42 AM

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Urban renewal is a misunderstood and, on occasion, an inappropriately used mechanism for redevelopment. Many don't understand urban renewal at all, only a small portion of the population has a firm grasp of it.

Having previously served as the vice-chair of Colorado Springs' Urban Renewal Authority, I am not an expert, but I do know enough to call BS on falsely stated "facts" about what URA is and is not.

I want to present some of the basics so we can have a more intelligent discussion about urban renewal and the use of tax-increment financing (TIF) when discussing the City for Champions proposal and how it relates to the existing Southwest Downtown Urban Renewal District.

The purpose of TIF is to improve the economic state of a district by minimizing some of the cost and risk of a new development. The risk is reduced by selling bonds to pay for infrastructure and other improvements typically at the onset of a project that are later bought back through the tax increments created through adjacent new development.

Typically, from the release of the bonds, TIF has a duration of 20-25 years, however this clock can sometimes be reset or extended if the development is stalled with poor economic conditions, for example.

Breaking it down further, TIF is not a tax increase because TIF only exists if the improvements increase property value and therefore property tax. It’s common that the approval of an urban renewal district itself will increase the values due to the dedication by the municipality to make it happen.

Having said that, discussions of when and where to use tax increment financing really hedge on risk actualization according to what the improvement will be. The decision-makers regarding the creation of an urban renewal district should consider the following:

1. Will the improvement be successful enough to pay back the bonds in a timely manner?

2. Will the district use generate enough TIF to pay back the bonds and interest to construct the public improvement?

3. Will the proposed use outlast the lifetime of the urban renewal district of 25 years? Is the state of the land after 25 years
better than it was prior to urban renewal?

4. What are the hidden costs of the improvement? If it is infrastructure, what are the maintenance costs during the Urban Renewal timeline? What will the costs be to the city after the 25 years are up?

Successful urban renewal projects are those that garner enough tax increments to quickly pay back the bonds, redevelop a blighted area and continue to improve the overall area for several years beyond expiration of the finance period.

It’s too early to call any current urban renewal districts a failure, though I’ll say the North Nevada district is flirting with it even though it’s quite successful as a retail development. I believe that the failure for the North Nevada Urban Renewal District will come with the traffic planning for the project. We should look back to why it was decided to add an extra lane of traffic for this stretch of Nevada. This excess of roadway will continue to plague the project with maintenance costs beyond what even stores like Costco can support.

I believe that the southwest Downtown URA District is the ideal place for urban renewal. It’s certainly blighted and in desperate need of repair. I believe the planned Olympic museum and a highly programmed sports and events center (with shared parking) will be great assets to this area.

For those of you who personally know me, you may ask how I could possibly feel this way. As a stand-alone project, I agree with the general sentiment of our population that a downtown stadium would not be a successful project. Stadiums, isolated by parking lots and without a relationship to their surroundings inevitably fail, or require a major professional team to support the tab, and I too would be 100-percent against an isolated stadium. But it's the surrounding fabric of residential, retail, office, transit and pedestrian/bicycle infrastructure that will make the City for Champions proposal successful. The museum and the sports & events center are simply the chum to attract the sharks.

John Olson is a licensed landscape architect, residing in Colorado Springs. He serves as the Director of Planning and Landscape Architecture for EVstudio Planning & Civil Engineering. He is also a co-founder of Colorado Springs Urban Intervention, which implemented Better Block Pikes Peak in 2012, the recent Walkability Signage found in Downtown Colorado Springs, and perhaps most notably, Curbside Cuisine.

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