Cities often say, “New development is necessary because we need the tax revenue.” But what if development actually gives away tax money already committed to schools, parks, drainage, and running the city and county?–for 25 years.
This is happening in Littleton right now. City Council (Brinkman, Beckman, Cernanec, and former member Stein) voted to give funds intended for community services instead to urban renewal. This is called Tax Increment Financing (TIF). Littleton has been “TIFfed”–close to being “stiffed”–by our own city government.
Do we really have so much money that we can simply give it away?
Here’s a concrete (pun intended) example:
–The thriving King Soopers store at Littleton Boulevard and S. Broadway showed its commitment to that location when it submitted its final remodeling plan to the city on August 7, 2013.
– Six weeks later, on Sept 17, 2013, King Soopers received from the city a six-year $500,000 tax incentive agreement to incentivize what they were already planning to do.
– King Soopers publicly announced that it would close that location for a year for remodeling, and did so in early January, 2014.
– When the remodel was nearly complete, on Dec 2, 2014 City Council voted to “blight” this King Soopers property.
At the same time, City Council approved a tax increment financing scheme to divert all property and sales tax “increment” from the North Broadway urban renewal area, which includes King Soopers. The property taxes that this store generates will now be diverted to the urban renewal authority (LIFT) for the next 25 years according to the North Broadway UR Plan. The sales tax increment is also at risk – for 25 years.
This means that this year alone Littleton schools, parks, and recreation will lose $238,268 in property taxes. Littleton Public Schools’ share of that loss is $151,171. Multiply these numbers by 25 years. Then add a whole lot more since we expect that property values and subsequent property taxes will increase over the years. And add to that the amount of sales tax that will be generated and at risk of being used to support development.
The exact amount of the tax give-away is impossible to calculate. But we know that it will be an extremely large amount of money that we tax payers paid intending to support Littleton services, not urban renewal.
This move is called tax increment financing (TIF) because the amount of money diverted to urban renewal is the difference (increment) between the tax generated before urban renewal and after urban renewal.
Since the King Soopers was closed for remodeling when City Council “blighted” the property, the store was collecting no sales tax and the property was assessed at a lower value. Therefore, the property taxes in excess of the base for 25 years will be sent to the urban renewal authority. The sales tax collected from King Soopers could also end up in the special fund for urban renewal.
As things are now, the diverted tax money leaves a hole in our city’s budget—money that could have been spent on providing services to Littleton citizens. It can only be spent to pay debt incurred on an urban renewal project. To date the only debt the urban renewal authority owes is to the citizens of Littleton for a $200,000 line of credit for pursuit of a project. It is in the form of a loan which City Council approved. The first year of the tax increment (see above) will cover their debt to Littleton. But what will they spend the next 24 years of increment on with no projects identified?
Above we referred to the urban renewal authority as LIFT. This stands for “Littleton Invests for Tomorrow,” a name which is quite deceptive. So far all LIFT has done is to “lift” money from the schools, parks, city taxpayers, the county and urban drainage. In fact the law is very specific that the debt of the urban renewal authority has nothing to do with the city of Littleton.
Question: Where will the money for schools, parks, recreation, drainage and running city and county government come from when our taxes are given away?
Answer: Some members of City Council say that they plan to ask us voters for an additional $70 million in taxes for infrastructure. Those are Brinkman, Beckman, and Cernanec, the same members who voted to give our tax money to urban renewal.
Question: Why should our tax money go to urban renewal?
Answer: We cannot get an answer to that, and we certainly have asked.
Suggested action: Email or phone City Council members to say that giving away your tax money is a bad idea, especially if they plan to ask for more taxes to replace it. Their contact information is at littletongov.org. Hint—if they respond, they might tell you, “Trust us—you just don’t understand.”
Want to know more? Come to a Community Conversation on March 10, 2016 at 7pm. It’s in the Connections Room at 6520 S Broadway–just a few doors south of the Solid Grounds coffee shop, and just south of Panama Drive. Mike Kerrigan and Curt Settles from the Department of Property Taxation will be there to discuss urban renewal and tax increment financing (TIF) in Littleton. They will be happy to respond to questions.