In what leaders hope to be the start of a movement, nearly 61 percent of voters in the city of Estes Park, Colorado decided to abolish the city’s urban-renewal district. The measure, which was put on the ballot through an initiative petition, also requires voter approval before the city creates another one.
Supporters of the urban-renewal district made the usual
claim that tax-increment financing doesn’t cost anything. In fact, it takes money that would otherwise go to schools and other urban services and puts it in a slush fund for city officials to use to benefit favored developers.
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The city made every effort to keep the measure from passing, including scheduling it during a time when many voters were out of town and it would be a single-issue election, thus depressing voter turnout. Despite this, voter turnout exceeded 60 percent.
After the election, the Mayor Bill Pinkham announced that the city may challenge the vote in court. However, he later backed away, perhaps because he couldn’t find any legal grounds to contest it.
The problem with tax-increment financing is that it is just complicated enough that it is easy to confuse people about it. This makes it hard for critics in major cities such as Denver or Portland to gather enough signatures to put a similar measure on the ballot in their cities. But if some more smaller cities pass such measures, it may inspire similar campaigns in the big cities.
This is good to hear. We have a TIF in Tucson for downtown revitalization. The TIF district though extends down the main street (Broadway) five miles west of downtown. It was delineated so because that’s where the money is. It had nothing to do with future impacts downtown revitalization would have on that district. Madness.
This makes it hard for critics in major cities such as Denver or Portland to gather enough signatures to put a similar measure on the ballot in their cities. But if some more smaller cities pass such measures, it may inspire similar campaigns in the big cities.
Well, an expected outcome from not having incentives would be that either development is more expensive in that place, increasing costs for everyone, or development goes elsewhere, decreasing revenue for everyone and allowing for the possibility of raising taxes.
Ah, well.
The days are over for the free market fairies gliding along and waving their wands to magically make development appear. Maybe finally the true costs of development are starting to appear and not be hidden by Chinese bookkeeping.
DS
I haven’t beet to Estes Park in maybe 15 years but… Does it seem weird to anyone else that Estes Park would have an Urban-Renewal District?
Dan,
The days are over for the free market fairies gliding along and waving their wands to magically make development appear. Maybe finally the true costs of development are starting to appear and not be hidden by Chinese bookkeeping.
For as long as governments are throwing money out on the sidewalk, one has to expect developers to pick it up. This is not the “free market fairy” or any of your snarky euphemisms but quite the opposite: government spending distorting the market’s pricing mechanisms.
Now that less of this is occurring, development must more often be budgeted according to a more realistic model. Of course, right as we’re about to wean both developers and planners off the subsidy smack, someone somewhere takes a hit, passing a nice corrupt subsidy package. A huge run of development chases down the “free” money, and the course toward stability is thwarted.
Heck, I even have anecdata: it happened only a few miles from my home. The nearby City of Mesa offered a huge tax break package to lure a Bass Pro Shop to the new Riverview commercial development. Bass Pro Shop is perfectly capable of building and profiting without a lengthy sales tax waiver. The City should have offered nothing. If the shop goes elsewhere, it goes elsewhere. The location was prime, and some other greedy capitalist corporation would have moved in on it with their own retail offering, providing the city with the same sales tax dollars that Bass Pro Shop is currently pocketing instead of paying. (Setting aside for now the basic argument about when and whether sales taxes are justified in and of themselves.) The tertiary effect on nearby businesses by another tenant would probably be no different, or to the extent that it was different, would not be worth the cost of the sales tax waiver by comparison.
Remove the distortion of subsidization from the price mechanism altogether and stability will follow. Not immediately, but in due course. You have always known this, but you evade, because this principle runs counter to your meal ticket.
I haven’t beet to Estes Park in maybe 15 years but… Does it seem weird to anyone else that Estes Park would have an Urban-Renewal District?
No.
Many of the buildings are old, the sidewalks are chipped, some want wider sidewalks, the cost of materials and labor up ther is high. If you want improvements in Colo you have to do it one way or t’other. This state is weird like that and in denial about financing stuff.
DS
I haven’t beet to Estes Park in maybe 15 years but… Does it seem weird to anyone else that Estes Park would have an Urban-Renewal District?
Yes, Estes Park is certainly not a poor city. It should not have to resort to this kind of chicanery in order to provide things like sidewalks, though I suspect its plans for the use of an urban renewal district are probably much more expansive.
“not a poor city” and ‘having enought money to keep up’ are two separate and different things.
When we go thru there we certainly don’t think it is glittering and polished.
DS
Ah.
I think I know where Randal got his information about this small town and a tax.
Nonetheless, what Randal failed to tell you (shocking, surely) is not that the tax itself was thought as being like, bad. It was how the TIF was used (or, as it was not used as intended).
Had it actually been spent as the voters asked for, there’d be no “th’ andee tax mooovemint votin'” sentiment tried to be whipped up here.
DS
@Dan, I hope that this indeed helps make the cost of development and maintaining it more obvious to people. But I think it’s wrong to imply that somehow TIF is a good tool, it just gets “misused”. Politicians simply can’t be trusted with these sort of tools. It’s like giving children matches. It’s bound to get out of control sooner than later.
IIRC @2005 the State of Utah passed some legislation that was a major revamp of their equivalent to TIFs. Why did they do it? They realized it wasn’t doing any good. FOr example, cities were just using TIFs to shift retail around into their borders. By the time they had covered the costs of TIFs themselves, the retail business had evolved and its needs had changed. So they’d move on to a new TIF driven site 3 miles away in a different city.
Where I grew up, I watched what was at the time a wealthy and extremely fast growing suburb use TIFs to ensure specific retailers came to their city and to reject other projects based with similar categories get rejected. As if from a tax revenue and livability perspective it mattered that they had Home Depot today instead of Lowes in 2 years. But the politicians loved it since they could say “you’ve got Home Depot because of me”. Never mind that they it’d be 12 years before the city broke even on the venture.
Letting politicians have TIFs is about as smart as going on vacation for a couple weeks and leaving your teenager behind and giving them keys to the liquor cabinet.
Use the Hasty Generalization Fallacy much? Presume all voters don’t watch their electeds much?
DS
@Dan, I’m not what that means. If voters did watch their elected officials much & this sort of an issue mattered it wouldn’t be happening. But it is happening; it isn’t an issue to those who do vote. I’m not saying TIFs are always wrong. I’m just saying that in the long run, given the nature of politics, more often than not TIFs are used for political gains. Those political gains don’t often align themselves with what’s good for the community in the long run.
Your argument that Letting politicians have TIFs is about as smart as [x] is based on a few anecdotes and the example in the post, with the implication being the practice is so rampant everywhere that it is a travesty. This is a hasty generalization.
If voters aren’t holding their feet to the fire, as parents aren’t holding teengers’ bongs to the fire, whose fault is it to not anticipate human nature? The planning profession is against TIFs for greenfields (IIRC there is a formal statement by APA against it) and it is an enticement for development within borders, like tax abatement and all the other stuff politicians and lawyers use. I have argued against their overuse in this state, to the face of developers with electeds in the room.
Of course developers are going to ask for a TIF. Why wouldn’t they?
DS