Frequently asked questions
- What is an urban renewal authority?
- What does it mean to have my neighborhood, property or business in an urban renewal area?
- How does a blight determination affect my property?
- Why are incentives needed?
- How does tax increment financing work?
- Will tax increment financing raise my taxes?
- What is the impact of TIF on local government budgets?
An Urban Renewal Authority (URA) is a public redevelopment organization authorized under state law to carry out urban renewal projects. Only one URA may operate in a municipality, although a URA may carry out multiple projects in areas that qualify for urban renewal treatment. URAs have access to a set of tools not available to municipal governments to encourage and incentivize redevelopment.
More than 60 cities and towns across Colorado take advantage of urban renewal programs. Communities from the Western Slope to the Front Range use URAs to facilitate housing development, improve infrastructure systems, and revitalize the character of their mixed-use and commercial districts.
Having a property or business located within an urban renewal area does not require a property owner to do anything. Redevelopment is not forced on any unwilling property owner, but designation of an urban renewal area often stimulates interest in the area and results in improved conditions through infrastructure improvements and other public activity.
In fact, properties within urban renewal areas tend to see their value increase as the private and public sector work together to revitalize that neighborhood. Urban renewal areas are viewed as valuable by the development community because of the availability of financial incentives. By setting up an urban renewal area, the community makes a statement that it is targeting investment and redevelopment towards that area of the community
Blight is a legal term that allows for the use of urban renewal activities but does not speak to the conditions of individual properties. The Colorado Urban Renewal Act defines blight as conditions that exist in rural and urban communities across Colorado. Some areas deemed blighted may have well-maintained homes and businesses adjacent to deteriorating structures and outdated infrastructure. It is important to note that having property located within an urban renewal area does not constitute it as blighted.
When development projects with public benefits – such as affordable housing – are too costly to build, an Urban Renewal Authority can provide financing tools to make the project happen. The rising costs of land, labor and housing prevent some desirable real estate and business investment in certain areas of Durango from happening. Development obstacles such as environmental contamination or inadequate infrastructure pose additional barriers to redevelopment. In most cases, the private sector alone cannot overcome these challenges.
Additionally, when a development agreement is negotiated, the public sector becomes a partner in shaping the redevelopment. This allows the community to require certain things of the development in order to achieve the community’s vision for the area. Public spaces, more modern infrastructure, new recreational amenities, and transportation improvements are all examples of things that can be included in redevelopment negotiations. Public-private partnerships and creative financing tools implemented through the URA are necessary to facilitate redevelopment that achieves Durango’s shared vision for the future.
Urban renewal projects often lead to an increase in property values and business activity, which in turn causes a rise in property, sales and other taxes collected by local governments. The increased tax revenue created by the redevelopment is known as the “increment” and can be allocated to the URA for redevelopment purposes. The revenue that was being generated prior to redevelopment – known as the “base” – continues to flow to the applicable taxing entities. The property tax base is adjusted every two years to account for inflation and other factors. URAs can collect TIF in a redevelopment district for up to 25 years and revenue collected can only be spent within that district on activities that are allowed in the urban renewal plan. Once the TIF district has concluded, the new tax revenue generated from redevelopment flows back to the applicable taxing entities, often resulting in a major boon for local government coffers.
No! URAs do not have the power to raise, lower, or assess taxes. URAs – through TIF – are able to collect the increased tax revenue which is generated from redevelopment activity. While there is not a rise in the tax rate, increased property values and new business activity lead to increased tax revenue.
Local governments are often positively impacted by new redevelopment supported by TIF. Local taxing entities are not negatively impacted by TIF projects because they continue to collect all the tax revenue they were previously collecting. Following the agreed-upon TIF period, all of the additional revenue generated by redevelopment activities flows to local taxing entities. It’s important to remember that these projects – and thus the increased tax revenue – would not occur but for the URA’s involvement.
City officials and community leaders in La Plata County have put together a detailed organizational framework for the Durango Renewal Partnership with an overarching plan for guiding reinvestment and redevelopment. Please view the Durango Renewal Partnership Formation Plan and Supporting Documents (PDF). The report includes: (1) an overview of Urban Renewal Authorities with FAQs; (2) an initial vision, mission statement, and priorities for the organization; (3) a list of potential activities that the URA could undertake; (4) letters and resolutions of support from partner agencies and community organizations; and (5) drafts of all of the required legal documents to establish the Durango Renewal Partnership.