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Friday, August 3, 2018

Local Government

Mayor: No vote needed for stadium to use tax funds

Posted By Pam Zubeck on Fri, Aug 3, 2018 at 3:28 PM

Suthers Says Citizens Should Get a Vote_Medium from Colorado Springs Independent on Vimeo.

The announcement on July 25 that a new stadium and arena would be built in Colorado Springs using City for Champions money allotted from state sales tax increment money, via the Regional Tourism Act (RTA) caught the attention of Joel Miller.

Miller, a former City Councilor, opposes using local tax money for the tourism venture, and tried to make that an issue in the 2015 mayoral campaign in which he and two others were defeated by John Suthers.

At a mayoral forum sponsored by the Council of Neighbors and Organizations, Miller asked Suthers if he would support a vote of the people if local tax increment financing were proposed as a way to fund City for Champions, which includes the stadium (and now an arena) and three other projects — a sports medicine center at the University of Colorado at Colorado Springs, the Olympic Museum and a visitors center at the Air Force Academy.

Suthers replied, "Yes. If any city sales tax increment or other city tax increment is used, it should go to the voters."

Says Miller via email, "He said clearly on the campaign trail that voters should get a say."

But now, there appears to be no plan to submit the stadium project to voters for their approval, although it's a virtual certainty that city sales, and possibly property, taxes will be used through the Colorado Springs Urban Renewal Authority (URA) to fund infrastructure needs to accommodate the stadium project. For background on the project, go here.

That vehicle is called tax increment financing, or TIF, which is tax money collected beyond a base amount established prior to project construction that is generated due to that project. For example, if the city now collects $1 million a year in sales taxes from the area in which the project would be built, it would still collect that money in the future. But if tax revenue increases to, say, $5 million after the stadium is built, up to $4 million of that could be funneled to infrastructure necessary to accommodate the project. These could include streets, utility relocations, curb and gutter and the like.

The stadium property, called CityGate, is located south of Cimarron Street and between Sierra Madre and Sahwatch streets. Urban Renewal Authority executive Jariah Walker reports that the site is not yet included in an urban renewal area.

Noting the video of the forum, provided by Miller, the Independent asked the mayor for a comment.

In response, we got this rather evasive email message from communications director Jamie Fabos:

First, I think you know this, but just to be sure - RTA funding is state TIF, not City TIF.

Second, that question, in context, referred to economic development incentives that are sometimes directed to projects to encourage businesses to locate here, large stores to locate here, etc, and that are approved by Council. That is not the case here. There is no economic development incentive here over and above the existing URA considerations, which are the same that would be available to any developer or business that chose to build in this blighted area.

Finally, it’s worth noting that URA funds are not used for the projects themselves, but are dedicated to infrastructure and improvements surrounding these developments. This is nothing new, and the URA zones were drawn as long as 17 years ago – long before the State created City for Champions.

But none of these comments really answer the question we asked. Yes, the stadium is getting state RTA funds, but that has little to do with local TIF funds. And yes, we all understand that TIF funds go to public infrastructure, but that hasn't changed since the mayor made his comment back in 2015.

And her comments about the URA were simply confusing. The stadium site is located outside the current boundaries of the Southwest Downtown URA, according to Jariah Walker, URA executive director.

URAs exist for 25 years. It's likely the stadium developer will seek a URA designation for the area in question. It's common for the URA to issue bonds to be repaid with TIF money.

Which gets us back to our first question: Will the mayor request a public vote for local TIF funding of the stadium?

Upon receipt of Fabos' response, the Indy pressed for a clear answer to the vote question, saying:

To be clear, we need to know if the mayor will seek to have a vote of the people for “local tax increment financing” for the stadium/arena projects. This is what he said at the forum, that if “any city tax increment” is used, it should go to the voters. Will he stand by that comment and seek a vote of the people if city tax increment financing is used?

Fabos responded: "Already addressed in statement."

The Indy pressed further:

Your response did not address the question. The question is about the mayor’s statement that if local tax increment financing was used for the stadium, it would be put to a public vote. This is what he said at the mayor’s forum. Your statement doesn’t address whether the mayor wants to see a public vote on the tax increment financing of the stadium.

This money from the local tax increment is general fund money that, through the URA, would be diverted to public improvements for the project. Without URA TIF designation, that money would go straight into the city’s general fund.

It took a day, but Fabos responded with this:

What you are asking by suggesting a public vote, is for the mayor to redefine the URA boundaries to specifically exclude this project by vote. URA boundaries are not set by vote under state law, so the suggestion is impossible. What the mayor was stating in the debate was that he didn’t foresee providing economic incentives prospectively to fund the stadium. He did not mean to suggest that URA law would be overturned specifically for this project or that the public could extract portions of an existing URA zone by vote. This is supported by Section 7 of Resolution 10-15, which specifically excepts URA TIF from any requirement for a vote. The resolution is attached here.

So, basically, no, the mayor will not seek public approval.

The resolution to which she was referring: