Residents of the northern Douglas County City of Castle Pines North, or Castle Pines as it's now known, voted on Tuesday to abolish the City's recently established urban renewal authority. The yes votes on Question 300 outnumbered the no votes by almost 2 to 1. In abolishing the City's urban renewal authority, residents decided not to grant City Council and the urban renewal authority - here one and the same body - the urban renewal powers granted to such authorities by Colorado's urban renewal laws (31-25-101, C.R.S.), including the ability to capture and direct to the construction of new public improvements incremental tax revenues created by virtue of new or redeveloped portions of the City. So, why did Castle Pines' residents reject the authority I've got some ideas, but first a little background on urban renewal.
Urban renewal laws have been on the books for more many years, and the authorities created under the laws have successfully implemented numerous urban renewal projects across Colorado. The Denver Urban Renewal Authority is just one such example. Urban renewal laws grant urban renewal authorities the power to issue bonds to pay for qualifying elements of an urban renewal project, which typically consists of public streets, drainage improvements, sewer lines and other public infrastructure, but in any event, improvements that are intended to eliminate blight. The urban renewal authority captures the incremental property and sales tax generated on redeveloped property (for a maximum period of 20 years), calculated as the difference of such taxes before and after developing the property.
Urban renewal projects are permitted, as an initial matter, only within areas where an urban renewal plan has been adopted by the municipality containing the urban renewal authority. To establish an urban renewal plan for a particular area, the municipality must first determine that the area is "blighted." It is this determination of "blight" where residents often run into issues.
I believe the residents of Castle Pines didn't like their community being labeled as blighted, as most people don't like to have their property labeled as blighted. Unfortunately, the urban renewal law requires a finding of "blight", based on a number of indicia as a prerequisite to establishing an urban renewal authority, notwithstanding that many of the indicia don't fall into the category of conditions most people associate with blight - like faulty lot layout, defective title conditions, unusual topography and inadequate street layout.
Also, I believe the residents of Castle Pines thought the incremental tax dollars captured by the urban renewal authority amounted to a tax increase. With or without an urban renewal authority, the incremental taxes generated by development are collected by the government. But, the rationale behind the urban renewal law is that such increment would not be available if the development did not occur. In other words, the development enabled by public financing of a portion of the public improvements would not have occurred, and therefore the increment would not be available, but for the urban renewal's ability to capture the increment. In sum, the urban renewal authority is not responsible for tax increases, it merely uses the increased taxes collected by virtue of development to encourage development.
Finally, I believe the residents may have thought "urban renewal" should be relegated exclusively to urban areas.
The real debate here should not be focused on whether a community contains indicia of blight or if the development is located in an urban area, but instead on specifically when and where it is appropriate to use tax increment financing to stimulate development, if at all. If the debate does not focus on these issues, the public will continue to get lost in the meaningless distinction between the practical and legal interpretations of "blight" and "urban" under the urban renewal law. Urban renewal laws could be easily reconstituted to address specifically when and where tax increment financing is appropriate, and I think they should be.