Following the $77 million money trail
Some officials are now suggesting that the Louisville Revitalization Commission isn't looking for $77 million, only $42 million. It doesn't make a lot of difference to most citizens—they're uncomfortable giving unelected officials $1,000 of taxpayer money, let alone millions. But we want to make sure it's public officials who are confused or worse about the numbers and not us.

The background. Whenever an urban renewal authority ("URA") wants to divert property tax revenue from the county (through tax-increment financing), it must submit to the county an urban renewal impact report. Among other things, the report must identify how the diversion of revenue will affect the county's ability to provide services to its residents, including residents inside the urban renewal district.

In June 2006, the LRC through its consultant, Leland Consulting, submitted just such a report to Boulder County. In it, the LRC said its proposed, suspiciously expanded urban renewal district "would generate approximately $42.1 million in incremental property tax revenues" (emphasis by the LRC) over a 25-year period. It also said the district "would generate approximately $35.4 million in incremental sales tax revenue" (emphasis by the LRC) over the same 25-year period. This is one of the sources for the $77 million we've been discussing.

At the October 3 City Council meeting, when Council member Sheri Marsella appeared to question the wisdom of permitting the LRC to divert sales-tax revenues going to the City and suggested that the LRC was not seeking a sales-tax TIF (which would divert sales tax dollars from the City). Mayor Sisk said the LRC had put both property- and sales-tax TIFs on the table. LRC consultant and Leland principal Anne Ricker downplayed the LRC's ambitions over sales-tax TIFs, saying whether sales-tax TIF revenues were taken  by the LRC "would depend on the type of projects" while noting that "the impact report based on the plan requires a certain amount of property tax and sales tax." (Our italics.)

Since then, Mayor Sisk at the October 18 Town Meeting and LRC Chairman Sisk at the October 31 LRC meeting said the City would not be deprived of any sales tax dollars and that all sales tax dollars generated in the district would be kept by the City. When he said this at the October 31 LRC meeting, none of the officials present, including the other four LRC members and Leland principal Anne Ricker, corrected him. Their silence at the public meeting suggested they agreed.

So, which is it? The LRC wants only property tax TIF revenues of $42.1 million over 25 years? Or the LRC wants both property- and sales-tax TIF revenues of $77 million over 25 years?

What does the law say? A URA has nothing to do unless it has an urban renewal plan. It can't divert property or sales tax dollars—can't get TIFs—from any taxing authority (city, county, etc.) unless the proposed plan for diversion is in the plan. No plan is effective unless the governing body of the URA's municipality approves it.

If the plan contains a TIF provision and the city approves the plan, the URA is authorized to collect TIF financing. Upon authorization, the incremental property tax revenues, or property-tax TIF, is diverted from all taxing authorities that receive property tax revenues (county, city, school district and other districts) and is "paid into a special fund of the [URA]." Treatment of incremental sales tax revenues is the same—it goes into the URA's special fund. When these revenues are deposited, they are to be used by the URA to pay the principal, interest or premiums due on bonds the URA has issued, loans the URA has taken, or other debt of the URA.

The only difference in the treatment of property-tax TIF revenues and sales-tax TIF revenues is this: If there is sales-tax TIF revenue that is not used or committed for payment of bond or other debt of the URA, these "excess" sales-tax TIF revenues are to be "paid into the funds of the municipality."

What do the LRC and City officials say? To the extent any LRC and City officials suggest the LRC has forsworn or is disinterested in or doesn't plan to use sales-tax TIF revenues, they are quite simply wrong, if not deliberately misleading. The LRC and City officials have made it quite clear publicly and repeatedly that the LRC wants to use sales-tax TIF revenues generated in the district.
  • The Boulder County Impact Report. As we pointed out above, the report specifically includes a discussion of how much money the district will generate in sales-tax TIF revenues—namely, $35.4 million.

  • The Leland memo to LRC members. On August 11, Leland's Ms. Ricker sent the LRC members a memo attempting point-by-point to rebut Boulder County's response to the impact report. The County's response noted that Louisville (our italics)
    would receive, conservatively, $35.4 million in additional incremental sales tax over the 25-year TIF period. All of this additional sales tax increment is presumed to flow into the City's general fund and no portion of the city's sales tax increment is planned to be used for infrastructure and/or development or redevelopment incentives in the [district].

    Here is what Ms. Ricker said (our italics and boldface, her underscoring):

    The County's statement that incremental sales tax revenue will flow into the City's general fund is incorrect. On the contrary, the [urban renewal] Plan is designed so that all incremental sales tax revenues would go to the Louisville Revitalization Commission and be available for redevelopment incentives within the Urban Renewal [District].

    This memo is the most damning proof that the LRC fully intends to use all sales-tax TIF revenues generated in the district, since that's what she said as the LRC's consultant.

    Additionally, it proves either flip-flopping or disingenuousness by Ms. Ricker at the October 3 Council meeting. That's when, asked whether the LRC would be diverting municipal sales tax revenues generated in the district, she said the answer would "depend on the type of projects" in the district and noted that the impact report would require a "certain amount of...sales tax." In fact, however, she had stated unequivocally less than 2 months earlier that the LRC intended to seize "all incremental sales tax revenues." (Our italics, her underscoring.)

  • The LRC's proposed urban renewal plan. This plan is up for approval at the November 8 Council meeting. Here's what it says about whether the LRC wants sales-tax TIF revenues (our italics):
    The Urban Renewal Plan contemplates that a primary method of financing this project to be the use of municipal sales and property tax increments as authorized by the [urban renewal laws].

  • Council member Don Brown. Council member Brown is a supporter of the LRC. At the October 3 Council meeting, he argued in favor of giving unelected officials authority over tens of millions of taxpayer dollars; he opposed having the Council take over the powers of the LRC, including the power to control the fate of the tens of millions of dollars. He did not question the wisdom of the plan or the proposed district's suspiciously expanded boundaries.

    In an October 20 email to all LRC and Council members, Council member Brown made it clear he believes the LRC wants all sales-tax TIF revenues generated in the district. In fact, he said that for purposes of "political[] expedien[cy]" the sales-tax TIF should be scaled back    . He suggested that the LRC should receive sales-tax TIF only from retail stores in the "Hwy 42 corridor, the Safeway Shopping Center and the King Soopers shopping center [sic]."

There is no question the LRC plans to reserve for itself and use all available sales-tax and property-tax TIF revenues.

To the extent LRC and Council members suggest that not all sales-tax TIF revenues necessarily would go to the LRC since "excess" sales-tax TIF revenues—i.e., revenues not used to pay LRC debts—would be returned to the city, it is a distinction with little difference. Under the urban renewal laws, a URA is entitled to take on whatever debt it believes is needed to implement the plan and it is free to pledge TIF revenues to secure the debt. The City has no control over that. Does anyone believe that once the LRC gets started spending tax dollars and incurring debt, there will be any "excess" sales-tax TIF revenues to pay to the City? There are bargain-price oceanfront homes in Colorado for those who believe.
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