Littleton’s Rumor Guard is False

I know this stuff makes your eyes glaze over – mine used to do the same but I stuck with it.  I have met with County officials and State officials in an effort to understand the urban renewal law (31.25.101).  Hopefully you will take the time to read and understand this post because Urban Renewal and TIF impacts the City, our schools and parks, and the County for 25 years by taking tax dollars from them.  But, if you can’t stick with it – I put the Bottom Line up front for you.

For those that like to get to the bottom-line first………….

Bottom Line: Littleton has four urban renewal areas that were approved by a majority of city council. Each plan included the provision for both property and sales tax TIF for 25 years. That means that urban renewal will reap the increment of all sales tax and property taxes for the next 25 years unless the council does something to correct the situation.

Dividing the property taxes is the responsibility of the County and dividing the sales tax is the responsibility of our city government.

The increment being diverted from LPS for 2015 is $169,330 for the first year and the increment will continue to move upwards. This money cannot be refunded to LPS because the law states that the money in the “special fund” can only be used to pay principal, premiums, and interest on debt incurred to finance projects. (Can also be used to pay for county infrastructure in addition to the debt.) The only debt that LIFT has is to the taxpayers of Littleton. Littleton property tax increment and possible sales tax increment that should be in our General Fund  will be deposited into LIFT’s special fund to pay back their debt to Littleton with those same tax dollars!

Want more detail, please read on.

The City of Littleton has something called “Rumor Guard” on their website. When it comes to urban renewal the city is not the place to go to look for the truth and real understanding of the urban renewal law. In April 2014 Michael Penny and I met. He was not aware that the tax increment financing (TIF) commenced with the approval of the urban renewal plans. Once I convinced him he was wrong he said he would have to go and talk to the County. I replied that the County can’t do anything but follow the law which states that the increment, when collected, has to be deposited into the special fund of the urban renewal authority to pay the premium, principal or interest on debt incurred in the development of an urban renewal project or additional county infrastructure.

Penny does not understand that the language in the urban renewal plans does not trump the state law.  The urban renewal law is a matter of statewide concern and home rule cannot trump the law. And, the law states that the TIF effective date is the date the plan is approved.

So, Rumor Guard to Truth Squad!

Q: Is the city taking all of the tax increment for the next 25 years which is being generated from the other taxing districts (such as Arapahoe County, South Suburban Parks and Recreation, and Littleton Public Schools) within the 4 urban renewal plan boundaries?
A: Rumor: The city is a partner in development with the other taxing entities within Littleton. The city’s partners primarily include Arapahoe County, the Littleton Public School District (LPS), South Suburban Parks and Recreation District (SSPR) and the Urban Drainage and Flood Control District

Truth: To characterize urban renewal tax increment financing (TIF) as a partnership with the other taxing entities is misleading. The urban renewal law allows the urban renewal authority, LIFT in Littleton, to take tax dollars intended to go to the other taxing entities that include Littleton Public Schools, South Suburban, Arapahoe County, Urban Drainage and the City of Littleton. The taxing entities do not have a choice in the matter – the urban renewal law gives LIFT the police powers to enforce the law.

Rumor: The city council has set policies that the city will not take any revenue away from our taxing partners without their consent. Before the city can use any partner revenues, our taxing partners must first be in the full support and approve of the time frame and the amount of their revenue proposed to be used for the development.

Truth: The city council passed Resolution 88 stating their desire not to take tax dollars from the other taxing entities but their resolution does not override the language of the state law. The law states that TIF goes into effect the day the plan is approved if the plan contains the provision for property tax, sales tax, or both. The bottom line is there are four urban renewal areas in Littleton and all have been TIFed for both property and sales tax for 25 years. It is not what the council intended to do but it is what they did do.  (31.25.107(9)(a).  The “Rumor Guard” states that “before the city can use any partner revenues.”  This is another misleading statement – it is not the city that will be using the tax increment but LIFT, our urban renewal authority.  

Rumor: The city (in partnership with LIFT, the city’s urban renewal authority) is putting intergovernmental agreements in place with SSPR and LPS which provide for the legal mechanism for the city to return any revenues collected back to SSPR and LPS. We are currently in negotiations with the county to return any county tax increment revenue back to the county. Simply said — the city is not desirous of keeping any of the increment.

Truth: The city is not the entity to negotiate with the other taxing entities. LIFT is a separate body politic from the council and the council cannot negotiate on their behalf. This subject has not been discussed at any of the LIFT meetings to date.

Once the TIF has been approved the county has the responsibility to “divide” the taxes and deposit the TIF increment into the “special fund” of the authority upon the collection of the taxes. Furthermore, the law states very clearly that the increment in the special fund can only be spent on the payment of premium, principal and interest on debt incurred developing a project. There is one other approved expenditure in the law – additional county infrastructure.   (31-25.107(9)(a)(II).

 There has not been any agreement made with South Suburban or LPS to refund the full amount of TIF and the County has said no.

The city has the same obligation to deposit sales tax increment, upon collection, into the special fund of LIFT. (31.25.107(9)(a)

Restated: The city is a partner in development with the other taxing entities within Littleton. The council has made policy statements that we are not taking any revenue away from our taxing partners until a development occurs and then, and only then, with their full support and approval; i.e., it would very likely not be 100 percent of the increment and be nowhere near a 25-year span.

Restated:   The city manager and the majority of council did not understand the urban renewal law and the implications of including TIF in the plans they approved.

Mike Kerrigan, at the Department of Property Taxation, states it thus:

“The division does not agree that the provisions of a plan {(31.25.107(8)} prevail over the statutory provisions of 31.25.107(9).” 

The Assessor’s Research Library (ARL) instructs the county assessor to the timing of TIF. It states that the “base value is based on the effective date of the approval of the plan containing the TIF provision…the effective date of the approval of such plan establishes the beginning of the 25 year period.” In other words, if a plan includes the TIF provision the 25-year period starts the day the plan is approved.  The base for sales tax increment has yet to be determined by Littleton.

 

 

 

 

 

 

 

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