HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/27/2008 - URBAN RENEWAL AUTHORITY (URA) COUNTY FISCAL IMPACT DATE: May 27, 2008 WORK SESSION ITEM
STAFF: Ken Waido FORT COLLINS CITY COUNCIL
Christina Vincent
SUBJECT FOR DISCUSSION
Urban Renewal Authority (URA) County Fiscal Impact Model, Expansion of the North College
Avenue Urban Renewal Plan Boundary and Tax Increment Sharing with Larimer County.
EXECUTIVE SUMMARY
The City Council, sitting as the Fort Collins Urban Renewal Authority Board of Commissioners,
will review a fiscal impact model designed to calculate the financial impacts to Larimer County of
development within the City limits for an area proposed to be added into an Urban Renewal Plan
(URP) area. The model provides data for the area both with and without a URP to measure the
impacts of placing the area into a URP on County costs to provide services. The URA Board will
also be asked to provide direction to staff regarding a proposed expansion of the North College URP
area and whether or not increased property tax increment collected from the area should be shared
with the County.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does the Urban Renewal Authority Board of Commissioners(City Council)have questions
on any aspects of the URA County Fiscal Impact Model?
2. Can staff proceed with an expansion to the eastern boundary of the North College Urban
Renewal Plan area? If so:
a. The Existing Conditions Study will need to be updated.
b. City Council will need to declare the area"blighted"according to the criteria in the
State's URA laws.
3. Does the URA Board want to share tax increment generated by redevelopment in the
expansion area with Larimer County? If so,can staff proceed with commencing negotiations
for an Intergovernmental Agreement with the County for consideration by the URA Board?
BACKGROUND
URA County Fiscal Impact Model
Section 31-25-107(3.5)of the Colorado Revised Statutes requires the City submit a proposed Urban
Renewal Plan (URP) to the County Commissioners and include information describing the fiscal
impacts to the County. In early 2007, the City submitted a fiscal impact report for a proposed
boundary amendment to the North College Avenue URP to Latimer County for its review. The
May 27, 2008 Page 2
proposed boundary amendment area was expected to develop with predominantly residential land
uses. The County expressed concerns with the URA capturing all of the tax increment because of
the impact residential development has on County finances to provide services and facilities. Other
governmental taxing entities (e.g., the School District) did not express any concerns. The County
did not express concerns when the initial boundary for the North College Avenue URP was
established or the boundary for the Foothills Mall URP because those areas were devoted to
predominantly commercial land uses.
As a result of the County's concerns with the expansion area,City and County staff agreed to jointly
hire a consultant (BBC Research& Consulting from Denver)to:
"Develop a fiscal impact model to analyze land use scenarios for URA areas which
would compare and contrast the net impact on County finances of new development
within the City both with and without an URP area."
County expenditures from the General Fund,the Road and Bridge Fund,and the Health and Human
Services Fund are included in the model to measure the fiscal impacts from residents within the City
limits who use County services and facilities. Cost for services provided mainly to County residents
outside of the City limits (e.g., Sheriffs Department) are not included in the model. A copy of a
summary report on the model from BBC is attached.
The fiscal impact model results are anticipated to be used to form the basis for the URA and the
County to negotiate a sharing of tax increment generated by development within a URP area.
Expansion of the North College Urban Renewal Plan Area
Staff is seeking direction from the URA Board (City Council)to proceed with an expansion of the
North College Avenue URP boundary to include approximately 340 acres which would extend the
URP's eastern boundary from Redwood Street to about one-half mile east of Lemay Avenue
(Attachment 1). The process to approve the expansion will require the following steps:
1. The North College Corridor Existing Conditions Survey will need to be updated.
2. The Planning and Zoning Board will need to determine the expansion area conforms to the
redevelopment policies in City Plan.
3. All property taxing entities (e.g.,the County, School District, etc.) will need to be notified
and allowed to comment.
4. The Council will need to declare the area"blighted" according to the criteria in the State's
URA laws.
The following table summarizes the development potential of the expansion area:
May 27, 2008 Page 3
Percent Development
Category Size Total Potential
Total Area 340 acres 100% LMN District
Arterial Streets 37 acres 11%
Open Space, Drainage, etc. 22 acres 10%
Non-Residential Development 51 acres 15% 348,500 s.f. @ .25 FAR
Residential Development 218 acres 64% 1,090 units @ 5 du/ac
Fiscal Impacts on County Revenues and Costs
Staff used the fiscal impact model to compare and contrast the net impact on County finances from
new development within the boundary expansion area both with and without a URP area. Based on
the development assumptions presented above,the fiscal impact to the County is summarized in the
following table:
Without an URA Plan Area: - $2,277,658 (- $2.3 million) over 25 years
With an URA Plan Area: - $6,858,088 (- $6.9 million) over 25 years
Essentially,the model indicates that development within the proposed North College Avenue URP
boundary expansion area will have a negative fiscal impact on the County, whether the area is
included within the URP boundary or not. The model specifically indicates that,without including
the area in the URP, the net fiscal impact on the County will be - $2,277,658 (- $2.3 million) over
25 years. The model indicates that, by including the area in the URP, the net fiscal impact to the
County is - $6,858,088 (- $6.9 million). Thus, the net negative effect of including the area within
the URP would be about- $4.6 million over 25 years.
Tax Increment(TI) Benefit to the URA
Based on the assumptions used by staff,the total TI expected to be generated by development within
the proposed expansion area is estimated at$33,469,623,or about$33.5 million over 25 years. The
average annual increment increase is estimated at$132,291. By the time buildout is achieved(year
25), the annual TI will be about$2.9 million.
The County's portion of the$33.5 million is estimated to be approximately$8.6 million.(about 26%
of the total). The County's portion of the average annual increment increase would be$34,197. By
the time buildout is achieved (year 25), the County's portion of the annual TI would be about
$752,000.
Tax Increment Sharing Options
A URA is not required by State Urban Renewal Laws to share the tax increment generated by
development in any URP area with any of the other property taxing entities(e.g.,the County,School
District,etc.).Therefore,staff is seeking direction from the URA Board regarding the sharing of tax
increment with the County. For the purposes of the work session,staff has two options for the URA
Board's consideration:
May 27, 2008 Page 4
• Option 1: No Sharing of Tax Increment
• Option 2: Some Sharing of Tax Increment
OPTION 1: NO SHARING OF TAX INCREMENT
Under this option,the URA would keep all of the Tax Increment(TI) generated from development
in the expansion area.
Staff has included this option at the request of the North College Urban Renewal Plan Citizen
Advisory Group(CAG). The CAG would like the URA(City Council)to consider this option based
on several factors and reasons. The CAG is reluctant for the URA to share TI with the County
because of the following:
• the County's failure to financially contribute to the $10 million costs for the Dry Creek
drainage improvements that not only eliminated the floodplain through the North College
Corridor but also benefitted many properties north of the City in the County;
• the capital costs of improving infrastructure in the expansion area (e.g., LemayNine
intersection estimated to be$26.4 million)which will also greatly benefit County residents;
and
• the timing delay of expanding the eastern boundary of the North College Avenue URP until
after the establishment of the Timnath and Loveland URPs which raised the County's
financial concerns about URPs.
Staff s major concern with the URA retaining all of the TI from the expansion area is the effect it
may have on the State legislature as it considers amendments to the URA laws in the future. Over
the past several years there have been attempts to weaken the capabilities of URAs partly because
of actions by URAs in neighboring communities that declared farmland"blighted"due to the lack
of infrastructure, etc. Staff believes that, by not sharing any of the TI from the expansion area,
Larimer County would become a major champion at the State legislature for changes to the URA
laws.
OPTION 2: SOME SHARING OF TAX INCREMENT
There are a variety of options the URA Board can consider regarding the sharing of TI with the
County. Each option can be based on two primary factors:
1. the amount(percentage) of TI the URA is willing to share with the County, and
2. the schedule (starting date) for sharing the TI.
As indicated earlier, development in the expansion area without a URP is estimated to have a
negative fiscal impact on the County of approximately- $2.3 million over 25 years. The loss of tax
increment to the County of the North College Avenue URP expansion area is estimated at an
additional - $4.6 million.
May 27, 2008 Page 6
Any increment sharing amount and schedule would need to be negotiated with the County. Of
course,the negative aspect of sharing any of the TI is that it reduces the amount of TI the URA can
use for public improvements and the elimination of"blight" in the expansion area.
Presented below are some examples of TI sharing scenarios. These are not presented as either-or-
choices for the URA Board, but rather are examples of how some TI sharing options could be
developed.
Scenario #1 —Sharing$4.6 million with the County
If the URA were to provide 60% of the expected County tax increment starting in year I I and
continuing until year 25, the County would receive a total of about $4.6 million over that 15 year
period(years 11 to 25). The URA would receive about$28.9 million. Again,the net fiscal impact
to the County of the North College Avenue URP expansion area is estimated at-$4.6 million,so this
scenario would make the County"whole" in terms of the URP's impact on County finances.
Scenario #2 - "Partial"Sharing of Tax Increment
A smaller percentage of TI to be shared could be negotiated with the County. The percentage could
be any percentage (e.g., 10%, 20%....50%) and could include a flat rate percentage or a graduated
scale where the percentage of sharing changes at different preset time-frames.
The table below presents examples of flat rate of sharing based on the assumption that TI starts to
be collected in year 4. The figures represent to total amount of TI after 25 years to both the County
and the URA.
Share Percentage County Share URA Share
10% $865,190 $32,604,433
25% $2,162,974 $31,306,649
50% $4 325 949 $29 143 674
The percentages of sharing the tax increment in the table below are based on similar percentages and
time-frames contained in an Intergovernmental Agreement (IGA) between the County and the
Timnath Development Authority.
Years Share Percentage
0 - 5 0%
6 - 10 15%
11-15 30%
16 - 20 45%
21 - 25 60%
Based on the percentage figures in the table above, the total amount of tax increment to be shared
with the County is estimated at $3.9 million, or about 85% of the $4.6 million. The URA would
retain about$29.6 million.
May 27, 2008 Page 6
The attached Staff Report provides greater detail of the information presented in the previous
sections.
ATTACHMENTS
1. 2008 North College Avenue URP expansion area map.
2. Staff Report.
3. BBC Report.
4. Powerpoint presentation.
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ATTACHMENT
STAFF REPORT
URA COUNTY FISCAL IMPACT MODEL
NORTH COLLEGE URBAN RENEWAL PLAN BOUNDARY EXPANSION
TAX INCREMENT SHARING OPTIONS
BACKGROUND:
Colorado's Urban Renewal Law allows a city to form a legal, political body called an
Urban Renewal Authority (URA) and adopt Urban Renewal Plans (URPs) to prevent and
eliminate conditions related to certain"blight factors." URPs are then implemented by
the URA.
In 1982, the Fort Collins City Council created an Urban Renewal Authority and
designated itself as the governing board as allowed by law. The boundaries of the Fort
Collins URA are the City limits.
In June of 2004, the North Fort Collins Business Association (NFCBA) asked the City to
recognize the North College Avenue Corridor as an urban renewal plan area. On
December 21, 2004, the City Council unanimously adopted two resolutions related to the
North College Avenue Urban Renewal Plan. The first resolution, Resolution 2004-151,
adopted the North College Avenue Existing Conditions Study (a.k.a. `Blight Study") and
made findings determining the North College Corridor to be a blighted area and
appropriate for inclusion in an URP. The second resolution, Resolution 2004-152 made
findings and approved the Urban Renewal Plan for the North College corridor area. The
long term vision for redevelopment of the area is contained in the North College Corridor
Plan and City Plan, the City's Comprehensive Plan.
Tax Increment Financing
The North College Avenue Urban Renewal Plan is more of a financing mechanism than
policy plan per se. The main function of the North College URP is to authorize tax
increment financing (TIF). TIF uses increments of increasing property tax revenues (and
possibly sales tax) generated by redevelopment projects to pay off debt (loans, bonds, or
contractual obligations) incurred by the URA in financing public improvements. In other
words, the theory is that tax revenues generated by redevelopment projects are captured
by the URA and used to help make the projects feasible in the first place by"investing"
in public improvements and eliminating"blight." TIF is authorized for a period of 25
years after adoption of an URP. After 25 years, all taxes revert back to the original
taxing entities (the County, School District, etc.) TIF is a matter of allocating tax
revenues that are already collected. There is no new tax or an increase in tax rate.
Collection of property tax increments commences upon adoption of the URP. The
property tax increment must be spent in the North College area. The intent of the
Council in authorizing the use of TIF was to consider its use on a project-by-project
basis, although it is expected that TIF may be used to fund public improvements on an
area-wide basis as well.
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State URA Legislation —Impacts on County Revenues
Section 31-25-107(3.5) of the Colorado Revised Statutes requires the City submit a
proposed URP to the County Commissioners and include information concerning the
impact of the URP as follows:
1. The estimated duration of time to complete the urban renewal project.
2. The estimated annual property tax increment to be generated by the urban renewal
project and the portion of such property tax increment to be allocated during this
time period to fund the urban renewal project.
3. Any other estimated impacts of the urban renewal project on County services or
revenues.
When initially proposed in 2004,the City submitted the North College Avenue URP to
Larimer County for their review. Because the North College Avenue URP's boundary
included predominantly non-residential property, the County expressed no concerns with
the URA capturing all of the tax increment, since non-residential development has very
little impact, as compared to residential development, on County finances to provide
services and facilities.
North College Avenue Urban Renewal Plan Boundary Expansion History
2004
The question as to the appropriate location for the eastern boundary of the North College
Avenue URP area was one that surfaced even before the City Council considered
adopting the URP in December of 2004. The initial Existing Conditions Study area
boundary was primarily based on the boundary of the North College Avenue Corridor
Plan, a subarea plan element of City Plan. The study area boundary was designed to
identify the area that best met the criteria in the State's urban renewal law requirement
that the City Council declare the area"blighted" and in need of redevelopment activity,
which the URA is designed to help foster.
The initial proposed boundary for the North College Avenue URP did not extend east of
Redwood Street. The North College Urban Renewal Plan Citizens Advisory Group
(CAG) working with the City on the URP asked if the boundary could be extended east to
Lemay Avenue, generally between Conifer Street and Vine Drive, and perhaps south of
Vine to Lincoln Avenue. The CAG's purpose of extending the boundary was to include
additional vacant/undeveloped property that would be a source for additional tax
increment to be used to fund improvements in the North College corridor. Including
undeveloped/vacant land within the URP's boundary would provide the greatest potential
for a high property tax increment since the relatively low tax generation from such
property would increase the most through development activity.
At that time, staff responded that the boundary could be extended, but there would be
several issues and potential implications in doing so. Staff estimated it would take three
2
to four months to complete a revision to the Existing Conditions Study,to provide the
proper notifications to other taxing entities and governments, and to process the boundary
amendment through the Planning and Zoning Board.
The City Council considered two options for the potential boundary expansion. One
option was to adopt the North College Avenue URP with the initial boundary,then do a
boundary amendment at a later time. The second option would be to expand the scope of
the Existing Conditions Study to identify items that would be used to address the criteria
in the State's urban renewal law to determine if the area contained blighting influences in
need of correction via an URP. Also, the property owners of the area would need to be
notified and brought up to speed on all the reasoning, purpose, potential actions, benefits,
and liabilities of being included in the URP boundary.
Staff noted that the expanded boundary would open the North College Avenue URP to
other capital improvement needs, e.g., the Lemay Avenue Bypass around Andersonville.
So, while an expanded boundary would include vacant and undeveloped property that
could be a source for additional tax increment, it would also bring other capital projects
which could compete for funding with those closer to North College Avenue.
Council decided to delay the boundary expansion until after adoption of the North
College Avenue URP.
2005
In January 2005, staff immediately began to process an amendment the boundary of the
North College Avenue URP area extending the boundary from Redwood Street to Lemay
Avenue. The total area of the proposed expansion encompassed 137 acres, of which 24
acres were developed, and 113 acres were undeveloped. Of the undeveloped acres, 99
were zoned in the L-M-N, Low Density Mixed-Use Neighborhood District and 14 were
zoned in the I, Industrial, District.
Colorado Revised Statutes 31-25-107 (2), required the City Council to formally submit
the amended North College Avenue URP to the Planning and Zoning Board for its review
and recommendation as to the amended URP's conformity with City Plan, the City's
Comprehensive Plan. After completing an analysis of the proposed amendment area,
staff forwarded a recommendation to the Planning and Zoning Board that the Board in
turn forward a recommendation to the Council that the amended URP did not conform to
the policies of City Plan. The reasons for staff s recommendation included the following:
1. The current boundaries of the North College Avenue URP implements boundaries
identified in the North College Avenue Corridor Plan and the expansion area is
not a"Targeted Redevelopment Area" in City Plan; i.e., the proposed expansion
is a significant deviation from those approved boundaries.
2. Existing blight in the proposed expansion area is not extraordinary as to
necessitate the assistance of the URA.
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3. A portion of the expansion area along Vine Drive is the subject of interest for
development/redevelopment as a complementary addition to the downtown scene.
That area may be a better fit as an addition to the Downtown Development
Authority (DDA)than the North College Corridor.
4. The residential focus of the LMN zone raises an issue because Colorado's Urban
Renewal Laws specifically mention certain conditions that must be met(e.g.
shortage of sound housing; conditions of disease and crime) and it is difficult to
argue that the expansion area exhibits these conditions.
5. The expansion area has significant improvement needs which could dilute the
resources/focus needed for the North College Corridor.
On March 17, 2005, the Planning and Zoning Board conducted a public hearing, and
voted unanimously to recommend to City Council that the proposed boundary
amendment to the North College Avenue URP was not in conformance with City Plan.
The main basis for the Board's unfavorable recommendation was that the expansion is
not regarded as a"Targeted Redevelopment Area" in City Plan nor is the area identified
for redevelopment in the North College Avenue Corridor Plan.
Timnath and Loveland URAs
The Town of Timnath and the City of Loveland subsequently approved URP areas within
their jurisdictions that incorporated significant amounts of vacant/undeveloped land,
including areas zoned for residential development, and pushed the envelope on defining
farm land "blighted" according to the State's Urban Renewal Laws. The CAG again
urged the City to consider an expansion to the North College Avenue URP area boundary
so the City could remain "competitive" from an urban renewal perspective with Timnath
and Loveland.
2007
On March 14, 2007, the City Council adopted an update to the North College Corridor
Plan and an amendment to the "Targeted Redevelopment Areas"map contained in City
Plan which included an area east of Redwood Street and north of Vine Drive. The
update to the North College Corridor Plan also contained an implementation action to
"Revisit Expansion of the Urban Renewal Plan Area." The implementation action noted
that the proposed expansion area is integrated with the North College Corridor by the
Vine Drive realignment, and the URA could assist in the needed infrastructure
improvements for development purposes.
Staff processed a proposed North College Avenue URP boundary amendment and
increased the size of the amendment from the initial 137 acres to 217 acres in order to
incorporate areas further to the east of Lemay Avenue to include the realigned Lemay
Avenue Bypass. The 217 acre area included 32 acres for arterial street R-O-W dedication
(Lemay Avenue Bypass), 22 acres of green/open space, drainage, etc. (Dry Creek), and
163 acres of undeveloped land in the LMN District. Of the area zoned LMN, 131 acres
were expected to develop residentially and produce a minimum of 655 housing units, and
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32 acres were expected to develop with non-residential uses which would generate about
217,800 square feet of commercial uses.
Staff recommend that the Planning and Zoning Board in turn forward a recommendation
to the City Council that the amended URP's boundary expansion conformed with the
policies of City Plan. The justification for staff s changed recommendation was that
since the North College Avenue URP derives its policy guidance from City Plan and the
North College Corridor Plan, the proposed amendment to the URP is entirely consistent
with the "Targeted Redevelopment Areas"map in City Plan and is, thus, in conformance
with City Plan.
On February 15, 2007, the Planning and Zoning Board conducted a public hearing on the
proposed amendment to North College Avenue URP boundary and voted unanimously (6-
0, one seat vacant)to recommend to the City Council approval to both the proposed
Urban Renewal Plan boundary, plus an amendment to the "Targeted Redevelopment
Areas" map in City Plan. The Board's vote extended the eastern boundary of the
"Targeted Redevelopment Areas"map a little further to the east of the proposed
realignment of Lemay Avenue as initially presented by staff.
Staff, as required by State law, submitted the proposed boundary amendment to the North
College Avenue URP to Larimer County for their review. This time, however, because
the URP's boundary amendment included predominantly residential property, the County
expressed concerns with the URA capturing all of the tax increment because of the
impact residential development has on County finances to provide services and facilities.
Consultant Services - BBC Project
City staff met with County staff to discuss the County's financial concerns with the
URA's capture of all of the tax increment from the proposed boundary amendment area
to the North College Avenue URP. After some discussion, an agreement was reached to
jointly hire a consultant to assist the City and County in finding a solution to the County's
financial concerns. BBC Research & Consulting from Denver, experts in fiscal impact
analysis and establishment of impact fees, was selected to provide the consulting
services. The project was jointly managed by City and County staff. In addition to
producing a report, BBC's task was to:
• Develop a fiscal impact model based on City and County staff input to analyze
land use scenarios for proposed URA areas which would compare and contrast the
net impact on County finances of new development within the City both with and
without an URP area.
The fiscal impact model results were anticipated to be used to form the basis for the URA
and the County to negotiate a sharing of tax increment generated by development within
an URP area. The model was developed to be used by the City and County to assess the
County fiscal impacts of boundary expansions or new URP areas within the City. The
model is also transportable and can be used by the County to analyze the formation and
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expansion of URPs in other incorporated areas of Larimer County. BBC used County
cost data derived from an analysis of the County's 2007 budget and information gleaned
from interviews with County elected officials and department heads. Only revenues and
costs relating to growth in incorporated areas of the County were considered in the
analysis because URPs are exclusively used within municipalities.
The fiscal impact model estimates current marginal costs and marginal revenues for all
County General Fund, Road and Bridge Fund and Health and Human Services Fund
departments. Cost for services provided mainly to County residents outside of the City
limits (e.g., Sheriff's Department) are not included in the model. Other funds are likely to
have minimal impacts due to their small size (e.g., Public Trustee Fund, etc.) or a cost
recovery philosophy that ensures that they will break even(e.g., Solid Waste Fund, etc.).
After estimating marginal costs and revenues,the model applies them to projected new
development on a per unit or per square foot basis, and compares them to estimate net
new revenues.
Development Assumptions for the Fiscal Impact Model
Two pieces of information are required in the model about a projected development in
order to calculate its likely fiscal impact:
(1) the development schedule for each projected residential unit type or
commercial land use, and
(2) the property value of each unit type or land use.
The model can assess up to nine land use types: four types of residential units,
neighborhood retail, regional retail and office, industrial and institutional space. Unit or
square foot values must be available for each type of development. Typically, a developer
can provide this information as part of the entitlement process. If not, rules of thumb are
available from respected sources such as the Urban Land Institute. The following table
summarizes the flexibility of development assumptions that can be entered into the
model:
Development Assumptions
• The model can assess up to nine land use types:
— Four types of residential units
— Neighborhood retail
— Regional retail
— Office
— Industrial
— Institutional
• Unit or square foot values for each type of development can be entered.
• Different development time-frames for each use can be entered.
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North College Avenue Urban Renewal Plan Boundary Amendment Development
Assumptions
City staff has completed an analysis of the development potential of the proposed 340
acre area to be included in the North College Avenue URP boundary amendment(see
attached map). The land use information/data is not based solely on just applying some
expected development ratios to zoned property in the area. Rather, real market
development potential from a recent Conceptual Review submitted by a developer for a
major portion of the boundary amendment area has been used. The results are
summarized in the table below:
Percent Development
Category Size Total Potential
Total Area 340 acres 100% LMN District
Arterial Streets 37 acres 11%
Open Space, Drainage, etc. 22 acres 10%
Non-Residential Development 51 acres 15% 348,500 s.f. .25 FAR
Residential Development 218 acres 64% 1,090 units @ 5 du/ac
The expected development time-frames for each use was put at 25 years through a
straight-line projection, with no development expected for the first 3 years.
The Residential Value of the 1,090 dwelling units was estimated to be a total of
$261,600,000, assuming an average value of$240,000 per unit.
The annual Tax Increment to be generated by residential development was estimated to
be $1.82 million at buildout (after 25 years).
The Non-Residential Value of the 348,500 square feet was estimated to be a total of
$43,500,000, assuming an average value of$125 per square foot.
The annual Tax Increment to be generated by non-residential development was estimated
to be $1.1 million at buildout.
Fiscal Impacts on County Revenues and Costs
Again, the fiscal impact model was designed to compare and contrast the net impact on
County finances from new development within the City both with and without an URP
area. Based on the development assumptions presented above, the fiscal impact to the
County is summarized in the following table:
Without an URA Plan Area: - $2,277,658 - $2.3 million
With an URA Plan Area: - $6,858,088 - $6.9 million
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Essentially, the model indicates that development within the proposed North College
Avenue URP boundary amendment area will have a negative fiscal impact on the County,
whether the area is included with the URP area boundary or not. This is consistent with
other nationally known study results regarding the fiscal impact of predominantly
residential development on the costs of local governmental services and facilities. Stated
another way, residential development does not"pay its own way" in terms of taxes paid
and services provided.
The model specifically indicates that without including the area is an URP, the net fiscal
impact on the County will be - $2,277,658 (- $2.3 million) or with an URP - $6,858,088
(- $6.9 million). Thus, the net negative effect of including the area within the URP would
be about - $4.6 million over 25 years.
Tax Increment Benefit to the URA
Base on the assumptions used by staff, the total TI expected to be generated by
development within the proposed expansion area is estimated at $33,469,623, or about
$33.5 million over 25 years. The average annual increment increase is estimated at
$132,291. The following table presents the estimated annual tax increment and the total
increment collected by the URA for 5-year periods of the 25 year duration period with
the assumption that the URA will not start collecting the increment until year 3.
By Year: Annual Increment will be: Total Increment Collected will be:
5 $264,582 $396,873
10 $926,037 $3,307,275
15 $1,587,492 $6,614,550
20 $2,248,947 $10,536,375
25 $2,910,402 $33,469,623
To put the projected total TI estimated to be generated by development in the expansion
area into some perspective, the following table lists just two major infrastructure costs
that can be associated with development within the expansion area. Typically, such
development would be required to, at least,pay for a portion of the costs. The cost of the
Vine Drive realignment project listed below.
Capital Project Estimated Cost
Vine-Lemay Bypass Intersection Improvements $26.4 million
Vine Drive Realignment Redwood to Lema $4.5 million
Storm Water Improvements $6.1 million
Total $37.0 million
Thus,the infrastructure costs for the improving the two arterial streets and including
storm water improvement serving the expansion area are greater than the total estimated
tax increment to be generated by development within the expansion area. This just a
comparison and is not meant to imply that those capital costs are the sole responsibility of
the URA to cover through potential collection of the TI.
8
Sharing of Tax Increment Options with Larimer County
An URA is not required by State Urban Renewal Laws to share the tax increment
generated by development in any URP area with any of the other property taxing entities
or governments (e.g., the County, School District, etc.). Again, these funds go to the
URA and can used to help make the development projects feasible in the first place by
"investing" in public improvements and eliminating"blight."
As indicated, based on comments from Latimer County for the previous North College
Avenue URP proposed expansion, City and County staff would need to establish a
potential sharing agreement for presentation to the URA (City Council) and the County
Commissioners. Presented below are several options for the URA's consideration:
Option 1: No Sharing of Tax Increment from the URP Expansion Area
Under this option, the URA would keep all of the Tax Increment(TI). Staff has included
this option at the request of the North College URP Citizens Advisory Group (CAG).
The CAG would like the URA (City Council)to consider this option based on several
factors and reasons.
The first factor is the $10 million of capital costs covered entirely by the City in
elimination of the Dry Creek floodplain through the North College Corridor area. This
project was initially intended to be jointly funded by the City and County, but the County
backed out of participating financially. However, the drainage improvements not only
assisted in eliminating the floodplain through the North College Corridor, they also
benefited many properties north of the City in the County. The CAG believe the City
should receive some "credit" for those capital costs and that credit should be that the
URA retains all of the TI from the expansion area.
The next factor is the capital costs of improving infrastructure in the expansion area (e.g.,
LemayNine intersection estimated to be $26.4 million). Since a large percentage of the
traffic volume passing through the Vine-Lemay intersection is from County residents
who live north of the City and these County residential developments did not contribute
to the City's Street Oversizing Fee which is used to help pay for such needed arterial
street improvements, the CAG believes the County should have a financial obligation to
help contribute to funding the improvements and that financial commitment can be
covered by the URA retaining all of the tax increment from the expansion area.
The final reason from the CAG's perspective is timing. The CAG believes that if the
eastern boundary of the North College Avenue URP was established further east of
Redwood Street back in 2004, the County would not have raised the financial concerns
they are raising now. The CAG believes the County's financial concerns stem from the
establishment of the Timnath and Loveland URPs and the North College Avenue URP
expansion is now a concern.
9
Staff s major concern with the URA retaining all of the TI from the expansion area is the
effect it may have on the State legislature as it considers amendments to the URA laws in
the future. Over the past several years there have been attempts to weaken the
capabilities of URAs partly because of actions by URAs in neighboring communities that
declared farmland"blighted" due to the lack of infrastructure, etc. Staff believes that by
not sharing any of the TI from the expansion area Latimer County would become a major
champion at the State legislature for changes to the URA laws.
Option 2: Some Sharing of Tax Increment
There are a variety of options the URA Board can consider regarding the sharing of TI
with the County. Each option can be based on two primary factors:
1. the amount (percentage) of TI the URA is willing to share with the County, and
2. the schedule (starting date) for sharing the TI.
As indicated earlier, development in the expansion area without an URP is estimated to
have a negative fiscal impact on the County of approximately- $2.3 million over 25
years. The loss of tax increment to the County of the North College Avenue URP
expansion area is estimated at an additional - $4.6 million.
Any increment sharing amount and schedule would need to be negotiated with the
County. Of course, the negative aspect of sharing any of the TI is that it reduces the
amount of TI the URA can use for public improvements and the elimination of"blight"
in the expansion area.
Presented below are some examples of TI sharing scenarios. These are not presented as
either-or-choices for the URA Board, but rather are examples of how some TI sharing
options could be developed.
Scenario #I —Sharing$4.6 million with the County
For example, if the URA were to provide 60% of the expected County tax increment
starting in year I I and continuing until year 25, then the County would receive a total of
about $4.6 million over that 15 year period (years 11 to 25). The URA would receive
about $28.9 million. Again, the net fiscal impact to the County of the North College
Avenue URP expansion area is estimated at- $4.6 million, so this scenario would make
the County "whole" in terms of the URP's impact on County finances.
Scenario #2 - "Partial"Sharing of Tax Increment
For example, a smaller percentage of TI to be shared could be negotiated with the
County. The percentage could be any percentage (e.g., 10%, 20%,...50%) and could
include a flat rate percentage or a graduated scale where the percentage of sharing
changes at different preset time-frames.
10
The table below presents examples of flat rate of sharing based on the assumption that TI
starts to be collected in year 4. The figures represent to total amount of TI after 25 years
to both the County and the URA.
Share Percentage County Share URA Share
10% $865,190 $32,604,433
25% $2,162,974 $31,306,649
50% $4,325,949 $29,143,674
The percentages of sharing the tax increment in the table below are based on similar
percentages and time-frames contained in an Intergovernmental Agreement (IGA)
between the County and the Timnath Development Authority.
Years Share Percentage
0-5 0%
6— 10 15%
11-15 30%
16—20 45%
21 —25 60%
Based on the percentage figures in the table above, the total amount of tax increment to
be shared with the County is estimated at $3.9 million, or about 85% of the $4.6 million.
The URA would retain about$29.6 million.
11
ATTACHMENT 3
i
Rmmm &
CONSULTING
3773 Cherry Creek North Drive
Suite 850
Deriver, Colorado 80209-3868
303.321 .2547 fax 303.399.0448
www.bbcresearch.com
bbc@bbcresearch.com
November 30, 2007
Ms. Carol Block
Director
Latimer County Financial Services Division
2555 Mid Point Drive, Suite B
Fort Collins, Colorado 80525
Mr. Ken Waido
Chief Planner
City of Fort Collins Advance Planning Department
281 North College Avenue
Fort Collins, Colorado 80524
Re: FINAL NCURP Expansion County Fiscal Impact Report
Dear Ms. Block and Mr. Waido :
The City of Fort Collins (City) and Latimer County (County) engaged BBC Research & Consulting
(BBC) in June 2007 to develop a fiscal impact model analyzing the effects of a 217-acre expansion of
the North College Urban Renewal Plan (NCURP) on the County's finances. This report provides an
overview of model methodology and structure, and presents an analysis of the County fiscal impacts
of two development scenarios involving the extension of the NCURP.
Project Overview
BBC's task in performing this analysis was to develop a fiscal impact model that could be used by the
City and County to assess the County fiscal impacts of NCURP expansion, and furthermore, the
formation and expansion of other urban renewal authorities (URAs) in incorporated areas of Latimer
County. BBC used County cost data derived from analysis of the County's 2007 budget and
information gleaned from interviews with County elected officials and division heads . Only revenues
and costs relating to growth in incorporated areas of Larimer County are considered in this analysis
because URAs are exclusively used within municipalities.
This report describes the methodology used to develop the fiscal model and the technical details
involved in its operation. BBC evaluated varying development assumptions under two scenarios,
development with NCURP expansion and development without NCURP expansion, to isolate the
County fiscal impacts of the NCURP.
ATTACHMENT 3
FINAL REPORT Page 2
General Background
The fiscal impact model estimates current marginal costs and marginal revenues for all County
general fund, Road and Bridge fund and Health and Human Services fund' departments. Other
funds are likely to have minimal impacts due to their small size (public trustee fund, etc.) or a cost
recovery philosophy that ensures that they will break even (solid waste fund, etc.).
After estimating marginal costs and revenues, the model applies them to projected new development
on a per unit or per square foot basis, and compares them to estimate net new revenues. Exhibit I
below provides a basic outline of the methodology used in this model.
Exhibit 1 .
Basic Model Methodology
Projected new residential Current marginal costs and New County costs
units or commercial square revenues (per residential unit, and revenue
feet. X commercial or square foot) —
Source: BBC Research & ConsWting.
Identification of marginal costs . In order to calculate marginal costs and revenues, BBC
followed a two-step research approach.
■ Budget analysis. First, BBC conducted an in-depth analysis of the County's budget
to preliminarily identify costs and revenues that would change as the County grows.
BBC reviewed expenditure data in each department's budget and developed a draft
analysis of the likely marginal costs and revenues. Only costs and revenues that apply to
countywide services are considered in this analysis .
■ interviews. To augment the budget analysis, BBC then conducted interviews with
several elected officials and division representatives . These included administrators of
the following: District Attorney, County Sheriff, public works and health and human
services . These interviews explored which departmental costs and revenues would
change with new development, and what types of development would impact these
Costs and revenues.
After completion of these two steps, BBC prepared a draft model, which is the subject of this report.
Limitations. While it was carefully designed to estimate fiscal impacts, the model is subject to a
number of limitations. Marginal costs were developed through an analysis of the County's 2007
budget and interviews with County staff. Marginal revenues were developed through a close reading
of the 2007 budget as well as relevant state statutes. To the extent that actual revenues and
1 The "Health and Human Services Fund" is the combination of several County funds, including Human Services,
Community Corrections, Cooperative Extension, Health and Environment, Workforce Center and Health and Human
Services Director,
ATTACHMENT 3
FINAL REPORT Page 3
expenditures vary from the estimates provided by these data sources, the results of the model will vary
from reality. The model is designed to be an illustrative abstraction of reality, it is not anticipated
that the impacts estimated in the model will precisely mirror those that actually occur. The model is
designed to isolate the effects of URAs on Larimer County's fiscal position, but can also demonstrate
the county fiscal effects of residential and commercial development in incorporated areas of Larimer
County.
Development Assumptions
Two pieces of information are required about a projected development in order to calculate its likely
fiscal impact; (1) the development schedule for each projected residential unit type or commercial
land use, and (2) the property value of each unit type or land use. The model can assess up to nine
land use types : four types of residential units, neighborhood retail, regional retail and office,
industrial and institutional space. Unit or square foot values must be available for each type of
development. In our experience, the developer can typically provide this information as part of the
entitlement process. If not, rules of thumb are available from respected sources such as the Urban
Land Institute.
For the URA model, residential unit data is calculated by entering in the total acreage of a
development, accounting for space used for interior roads and open space and applying a density
factor (units/acre) to the developable acreage. Commercial space is entered directly in square footage .
The absorption schedule can be entered in two ways. If specific, year-by-year absorption schedules are
available, they can be entered manually. If not, the model will smooth development over a given
build-out period.
There is also a toggle switch provided to evaluate the effects of a URA overlay on development. If a
URA is evaluated, the model projects County fiscal impacts of development without associated
increases in property tax increment for a defined period of time. If no URA is selected, County fiscal
impacts are with property tax. The third option "Partial URA" is designed to project the impacts of a
hybrid URA arrangement where the County retains a user-defined percentage of property tax
revenue.
Exhibit 2 on the following page presents the data entry sheet that users will fill out, with a
hypothetical 6.5 unit per acre, $237,0002 per unit single-family development with 50, 000 square feet
of commercial retail space as an example. Throughout this section, this hypothetical development is
used for illustrative purposes.
As seen in the Exhibit, the model requires users to identify a number of facets of the proposed
development, including development types, development values and development schedules as well as
the inclusion of a URA overlay.
2 Median home value obtained from City of Fort Collins website: http://fcgov.com/business/demographics.php
ATTACHMENT 3
FINAL REPORT Page 4
Exhibit 2.
Data Entry Sheet
°ResldentG) >m, _ RLsstdenEla[ 2 REsFdentlgl3�.'. RIdentlAi Ell " Retn'�f'Ls.- '�(11fFie. (ihNlGNonal JndctiGwl_-
,.^.
Is absorption to be equally spaced (yfn)? y Y
What year Is absorption to begin? 2016 2018
How many years for full absorption? 15 2
Total units to be developed 1,027
Total square footage to be developed 50,000
Market value per unit or square foot ' 237,000 200
If absorption is irregular, enter annual rcrecast 2008 2009 2010 2011 2012 2013 2014 2015 2015
current single Family (units)
Current Multi Familylusts)
New Single Family (units)
New Multi-Farmly (units)
Regional Retail (square feet)
Local Retail (square feet)
Olilce (square reef)
instimtiunal (squarai
Industrial (square feet)
Assessment Ratio 0.0796 0.0796 0,0796 0.0795 11,29 0.29 0,29 0,29 0.29
General Fund Mill Levy 16.975 16.975 16.975 16.975 16.975 16,975 16.975 16.975 16.976
Road and Bridge Fund Mill Levy 1.912 1.912 1.912 1.912 1.912 1.912 1.912 1.912 1.912
Health & Human Services Fund Mill Levy 2.485 2,486 2.496 2.486 2.406 2.406 2.486 2.485 2.486
Evaluate URA Oveda)R R ❑-
If Partial then Enlor Percent of Increment Share 100%
Inflation Rare 2.5%
Source: BBC Research & Consulting.
Using the information provided in Exhibit 2, the model then develops a year-by-year cumulative
absorption schedule that will be used in the calculation of total costs and revenues . Exhibit 3 below
presents the absorption schedule for the hypothetical residential development outlined above.
Exhibit 3.
Absorption Schedule
�umula�ttV� AbsaFptlor�ScHc�lur2"� '�s�2Q1�,1�-��7b17,,, ��1��-?df9"R�?02d �2�}2t �ZOZZZ?0?�-r's�0?4 '�^--20?5
Residential (Units) 68 137 205 274 342 411 47g 548 616
Residential 2 (Units) -
Residential 3 (Units) - - - - - - - - - -
Residential 4 (Units) - - - - - - - - - -
Retail 1 (Scili 25,000 50,000 50,000 50,000 50,000 50,000 50,000
Retail 2 (Sclli -
Office (SgFt)
Institutional (SgFt)
industrial (SgFt) -
Source: BBC Research & Consulting.
Once property values and projected absorption have been defined as illustrated in Exhibits 2 and 3,
the model will calculate the impacts of a particular development based on a number of departmental
assumptions.
ATTACHMENT 3
FINAL REPORT Page 5
Departmental Expenditure Assumptions
Fiscal impacts of proposed developments are calculated by developing per unit and per square foot
revenue and expenditure amounts and applying them to a projected development schedule. Three
steps were involved in calculating expenditures caused by new development in Larimer County.
Step 1 . Estimating fixed and variable expenditures. For every department, budgeted 2007
expenditures were split between fixed and variable costs based on budget analysis, interviews with
department staff and past BBC experience. BBC staff interviewed representatives of selected County
service areas to estimate the proportion of costs in each of their budgets that were fixed and variable
with respect to new growth. In addition to interview responses, BBC depended on past experience
and comments and trends in the 2007 budget to estimate fixed and variable expenditures.
Representatives of the following service areas were interviewed: District Attorney, public works,
County Sheriff, health and human services. Fixed-variable cost allocations are the subject of
sensitivity analysis later on in the report.
Step 2. Estimating residential/commercial expenditures. A second step involved splitting
the total variable costs for each department into two groups: those sensitive to residential growth,
and those sensitive to commercial growth. As with Step 1 , these estimates were obtained through
interviews with department staff, an analysis of the budget book and BBC experience. For detentions
and District Attorney service areas, crime data from die Colorado Bureau of Investigations were
used.3 Various theories were used to estimate the departmental allocations, including calls for service
or "pure plays" (departments that are purely or primarily devoted to one land use type, such as social
services regards to residential development) . A weighted-average approach is used to allocate
residential and commercial costs for most general government functions.
Step 3. Per unit or per square foot allocation . After developing total variable residential and
commercial expenditures for each department, these totals were divided by the current total County
households or commercial square feet 4 These calculations generated current marginal costs per
residential unit and commercial square foot.
Steps 1 through 3 are illustrated in Exhibit 4 on the following page. Using the health and human
services "family" of funds as an example, the various allocations are demonstrated. The resulting
totals are then divided by the current residential units or commercial square feet in the County to
generate costs per unit or square foot.
As seen in Exhibit 4, health and human services expenditures are assumed to be 90 percent variable in
regards to new growth, with most of that variability due to residential development. This is based on
an interview with department staff and an indication that most of the department's time is currently
spent addressing residentially related needs — food stamps, employment placement, etc. The health
3 BBC used 2006 crime data by agency (http://cbi.state.co.us/dr/cic2k6/a=iiglist.asg) to derive residential/commercial
split.
4 BBC obtained current households from the State of Colorado, Department of Local Affairs, Demography Section and
current commercial space from the Latimer County Assessor.
ATTACHMENT 3
FINAL REPORT Page 6
and environment and community corrections departments are exceptions because they provide
services to both residential and commercial land uses.
Exhibit 4.
Health and Human Services Expenditure Allocations
L
Pite11 `" '1(a�1b1� .�5>� ,.P4 d!Eal Grlmeita
Bud eY au a F xed G sts Gost3 `R�sldWntl0i`COttimercial � 4
}�umxn servii;�s� g Am of EtxQd-, . Y nable � Q
�' ,"- r' -=. u.:cr- -^- ...� =m.= -.'' . , x :...-.�....�_: �«..., »:�.•�^s;-•-'.` .s.;.;:.�_. -.vim; .„,:.., c..�,... �: -�-- r,...
Cooperative Extension 524,749 10% 90% 52r475 4720274 100.0% 0.0% 472,274
Community Corrections 7,05B,745 10% 90% 705r875 6,352r871 40.0% 60.0% 20541 ,148 3r811r722
Health and Environment 8,42B,832 10% 90% 842r883 7,585r949 50.0% 50.096 3r7921974 3r792r974
Health and Human Services Director 18217,707 10% 90% 123r771 1 ,113t936 100.0% 0.0% 10113,936
Human Services 30r075,429 10% 90% 3,007,543 27,067r886 100.0% 0.0% 27,067,886
Workforce Center 5r742,650 1096 90% 574r265 5,168r385 100.0% 0.0% 51168,385
Total Expenditures 53r0681112
Total Residential Variable Costs 40rl56r604
Total Commercial Variable Costs 7,604r697
Total Fixed Costs 5,306,811
Total Residential Units 105r193
Total Commercial Square Feet 421544r698
Residential Per Unit Variable Expense $381 .74
Commercial Per s.E Variable Expense $0.18
Source: BBC Research Ar Consulting.
Road and bridge fund. In addition to examining all general fund departments, BBC modeled the
impacts of new development on the road and bridge fund. Based on interviews and past experience,
the road and bridge fund was found to be 90 percent variable, with variability due to increased traffic
on county roads. Additionally, road and bridge costs are divided equally between residential and
commercial land uses based on BBC's past experience and divisional interviews . As a result, BBC
calculated a per residential unit and commercial square foot charge for variable costs associated with
growth.
General fund. The third fund BBC examined was the general fund. About 90 percent of general
fund service expenditures were deemed variable, based on past experience and interviews. Most
general fund expenditures were allocated between residential and commercial land uses based on a
weighted average of the exogenously derived residential-commercial allocations of health and human
services, road and bridge and District Attorney and detentions, which were calculated based on
reported crime data.
Based on the calculations described above, general fund expenditures total $483 per residential unit
and $0. 60 per commercial square foot, road and bridge fund expenses total $86 per residential unit
and $0.21 per commercial square foot and health and human services costs total $418 per residential
unit and $0.09 per commercial square foot . Exhibit 5 on the following pages summarizes the results
of these calculations for all departments .
ATTACHMENT 3
FINAL REPORT Page 7
Exhibit S .
County Expenditure Summary
a.� . �^-x....`^�.. �` _ ^y._ . . . . .,,,,,,x�. z;.a;;,.. .^J�..c s.v�...�......•-s_._�a.,a.,...,f ,.y-s"--._ x ' - spa
n a a. y ..,.t17anahle E7CperTSeSBy' �.�
ty "rttent'� Tot C�Flxed.�Eo I'Vari$liile' �, .. $e�Ld�aCial Goinnt�CSl�i ~=
General Fund Expenditures
General Fund 84,652,594 8,4651259 76, 187,335 50,855,042 25,332,292
Expense Allocation (average percent) 66.7% 33.3%
Expense Per Unit or Square Foot $483.45 $0.60
Road and Bridge Expenditures
Road and Bridge 20,102,789 21010,279 181092,510 90046,255 91046,255
Expense Allocation (percent) 50.0% 50.0%
Expense Per Unit or Square Foot $86,00 $0.21
Health and Human Services Expenditures
Health & Human Services 53,068,112 52,475 472,274 43,968, 326 3,792,974
Expense Allocation (average percent) 100.0% 0.0%
Expense Per Unit or Square Foot $417.98 $0.09
Total Expenditures 157,823,495 10,5280013 94,752, 119 103,8690624 381171 ,522
Total per Unit Expenditures $ 987. 42 $0. 90
Source: BBC Research & Consulting.
Revenue Calculations
Revenues were calculated in a manner similar to expenditures, with per unit and per square foot
revenues estimated and then applied to the projected development schedule. The process used to
develop per unit or per square foot revenue amounts varied between property tax revenue and all
other revenue.
Property tax revenue . Per residential unit and per commercial square foot property tax revenues
were developed on a formula basis using the median Fort Collins $237,000 residential property value
and an average $200 per commercial square foots given in Exhibit 2. A per unit property tax revenue
amount was calculated by multiplying the projected valuation by the State of Colorado's property
assessment ratios and the County's mill levies of 16. 975 for the general fund, 1 .912 for the road and
bridge fund and 2.486 for the health and human services family of funds. This resulted in the per
unit property tax revenues presented in Exhibit 6 below.
51Per square foot commercial property value obtained from the Urban Land Institute's Dollars and Cents of Shopping
Centers.
ATTACHMENT 3
FINAL REPORT Page 8
Exhibit 6.
Property Tax Home Value (per unit) $237r000
Calculations Commercial Value (per SgFt) $200
Source: Assessment Ratio (Res) 7,96%
BBC Research & Consulting.
Assessment Ratio (Comm) 29.00°r6
General Fund Mill Levy 16.975
GF Prop Tax Revenue per Res. Unit $ 320
GF Prop Tax Revenue per Comm . SgFt $0a98
R& B Fund Mill Levy 1 ..912
R& B Prop Tax Revenue per Res. Unit $ 36
R& B Prop Tax Revenue per Comm . SqF $0, 11
H & HS Fund Mill Levy 2,486
H & HS Prop Tax Revenue per Res . Unit $47
H& HS Prop Tax Revenue per Comm . Sc $ 0. 14
Total Prop Tax Revenue per Res . Unit $403
Total Prop Tax Revenue per Comm . Sq $ 1 .23
Other general fund revenues. All other revenues were calculated in a fashion similar to
expenditures. Total "other revenues" were split among those that are faced and those that are
variable. Variable revenues were then split based on sensitivity to commercial or residential
development. Finally, variable residential and commercial revenues were divided by total residential
units or commercial square feet to estimate marginal revenues. Exhibit 7 illustrates this calculation.
Exhibit 7.
Other General Fund Revenue Calculations
,a8udgeC �.PtAiiq 9tskrli .._..Ebel 1(adatrle-''``' Y'"' Pct �'ResldentE"al £bs5itneYc184_
FIx4. .�AH;jbe - - 'ltpyp�,4e=pd4nue csttfa:ntla[ C6tultsarclal sVR" ~Mali
...«........w.n.Y-owe. ..w'.s.—.... ...«..........��.......e.a. ...TF
Intergovernmental Revenue $ 1 ,156,933 10% 90% $ 115,693 $ 1,041 ,240 solo% 20.0% E 832,992 f 208F248
Licenses and Permits 258,650 1056 90% 25,865 232,785 80.0% 20.0% 186,228 46,557
Charges for Service 10F307,466 10% 90% ir03OF747 9,276,719 80.0% 20.0% 71421,376 1,855,344
Interest Earnings 3r400,000 20% 80% 680,000 2,720r000 80.0% 20.0% 21176#000 544,000
Miscellaneous 3FS034072 20% 80% 700,614 2,8021458 80.0% 20.0% 2,241,966 560r492
Other Financing Sources 8,4472637 20% 80% 1 ,689,527 6/7582110 80.0% 20.0% Sr4060488 1,351 ,622
Total Revenue $92r118,580
Total Residential Variable Revenue $ 18,265,049
Total Commercial Variable Revenue 4,5660262
Total Fixed Revenue 412428447
Total Residential Units 1058193
Total Commercial Square Feet 42,544,698
Residential Per Unit Variable Revenue $ 173.63
Commercial Per SqF[ Variable Revenue $ 0.11
Source: BBC Research 13 Consulting.
ATTACHMENT 3
FINAL REPORT Page 9
Road and bridge fund. In addition to general fund "other revenues," similar revenue calculations
were performed for the road and bridge fund. These calculations used a methodology identical to
that found in the general fund calculations. Road and bridge fund per unit revenue amounts are
presented in Exhibit 8 .
Exhibit 8.
Road and Bridge Fund Revenue Calculations
S„ 4t. r�.....gttsa-�'"�'7`den�laT" .Co�ntertlaf
-fixed ,Njr r1ii btitfifexen4e_��TaF.CotBmaictlai
Intergovernmental Revenue S 6,911,61S 1096 90% S 691r162 $ 6,220,454 80.0% 20.0% S40976e363 S 1r244r091
Licenses and Permits 500 1096 90% 50 450 80.0% 20.0% 360 90
Charges for Services - 1096 90% - - 80.096 20.0% - -
Miscellaneous 26r500 2096 90% S,300 21 ,200 80.0% 20.0% 16,960 4r240
Other Financing Sources 3r636,233 2096 80% 7271247 2r9081986 80.0% 20.056 2,327r189 5812797
Total Revenue S 17r925r710
Total Residential Variable Revenue S 71320r872
Total Commercial Variable Revenue 1 r830r218
Total Fixed Revenue 11423r758
Total Residential Units 105,193
Total Commercial Square Feet 42r544r698
Residential Per Unit Variable Revenue $ 69.59
Commercial Per s.f- Variable Revenue $ 0.04
Source: BBC Research & Consulting.
Health and human services family of funds. Finally, similar revenue calculations were performed
for the health and human services family of funds. These calculations used a methodology identical
to that found in the road and bridge, and general fund calculations. Health and human services fund
per unit revenue amounts are presented in Exhibit 9.
Exhibit 9.
Health and Human Services Family of Funds Revenue Calculations
OthdPRl9enVe . .� „�„—a �Amofrn�� F1Xedv4=��a�ab[e jteverFu6-"'-" ''fCeveytge - -o�est'de d 1 ` or`i}sR4ic�al �Y12-""`" '''f,R
Intergovemmental Revenue $32,8S7,271� 10% 90% S 3r285rl27 3 29,566r144 100.096 0.0% S 2915664144 S -
ChargesforServices 6*1806732 10% 90% 618r073 Sr562,659 100.0% 0.0% 5,S62,659 -
LicensesandPermits 666,S95 10% 90% 66r660 599,936 100.0% 0.0% 599,936 -
Miscellaneous 555ro57 20% 00% 1110011 444,046 100.0% 0.0% 444,046 -
otherFinancingSources 2r066,236 20% 80% 413,247 1,652,989 100.0% 0.0% 1 ,652,989 -
Total Revenue S51r917r653
Total Residential Variable Revenue $37,825r773
Total Commercial Variable Revenue -
Total Fixed Revenue 4,494*118
Total Residential Units 10S,193
Total Commercial Square Feet 42r544,698
Residential Per Unit Variable Revenue S 359.59
Commercial Per s.f. Variable Revenue -
Source: BBC Research & Consulting.
Based on comments from county staff, specific revenue items were identified as less variable or less
dependent on growth. Those revenue line items, such as interest earnings, miscellaneous and other
fmancing sources are assigned a higher fixed portion (20 percent) .
ATTACHMENT 3
FINAL REPORT Page 10
Model Summary
The model's calculations of net impacts use the figures presented above. Marginal expenditures are
multiplied by development projections to generate total expenditure figures. Marginal revenues are
multiplied by those same projections to produce total revenue figures . In every year of the analysis,
these figures are then compared to estimate net annual and cumulative development impacts for each
fund.
BBC included an annual 2. 5 percent inflation factor to both revenues and expenditures. This rate was
calculated as the average annual inflation of the Denver MSA Consumer Price Index from 1996 to
2006.
To provide a comprehensive assessment of fiscal impacts, the model presents three perspectives on the
effects of a given development. First, annual impacts are calculated for residential portions of the
development, commercial portions and the development as a whole. Additionally, cumulative
impacts are presented in each year for each of these categories, as well as the net present value of
impacts over time. These calculations allow for the consideration of a development's impacts from a
number of points of view.
In addition, the model presents the effects of URAs on County finances by removing County
property tax revenue from model calculations. After City and County staff is trained on how to
operate and update the model, they could use it to analyze any number of development scenarios that
demonstrate the County fiscal impacts of development in incorporated areas around Larimer County
with or without the presence of a URA.
Scenario Analysis
To demonstrate the fiscal impacts of NCURP expansion on Latimer County, we have used the fiscal
impact model to analyze two development scenarios:
■ Scenario 1 — Development without NCURP expansion;
■ Scenario 2 — Development with NCURP expansion.
Both scenarios evaluate the development of a 217-acre area in Northern Fort Collins. Average home
values were obtained from the City of Fort Collins website ($237,000) , and the average value of
commercial square footage ($200) was obtained from the Urban Land Institute's Dollars and Cents of
Shopping Centers.
For each scenario, a range of results is displayed by varying density and County service cost
assumptions. Densities vary from 5 residential units per acre and 40,000 square feet of commercial
space to 8 residential units per acre and 60 ,000 square feet of commercial space. `Base Case" density
is 6.5 residential units per acre and 50,000 square feet of commercial space. County service costs
range from 80 percent variable costs to 100 percent variable costs in each of the scenarios. "Base
Case" County service costs are 90 percent variable with respect to growth.
ATTACHMENT 3
FINAL REPORT Page 11
The surpluses and deficits shown in the scenarios represent the total impact of development on the
general fund, road and bridge fund and health and human services family of funds on a 30-year
present value basis with a 4 percent discount rate. The discount is based on the County's historical
borrowing rate.
Scenario 1 . Scenario 1 shows the County fiscal impact of area development with no URA. The first
year in the study period is 2008, but no development is assumed to take place until 2016, due to the
transportation improvements necessary to provide adequate access to the area and the absence of a
funding mechanism to hasten road construction. Build out is assumed to take 15 years, occurring in
2031 . Exhibit 10 shows County fiscal impacts of Scenario 1 .
Exhibit 10.
Fiscal Model Low Density Base Case High L�enslty
Scenario Analysis: - -
Development with no URA High
Variability/ $(349)000) $(456,000) $(563,000)
Source: Low Fixed
BBC Research & Consulting.
Base Case $160 000 . . o. 00f $249 000
Low
Variability/ $671 ,000 $ 863,000 $ 1 . 1 million
High Fixed
Based on a 30-year analysis period, Exhibit 10 displays a range of potential County fiscal impacts
from a worst case of a $ 563,000 present value (PV) deficit to a best case of a $ 1 . 1 million PV surplus.
It is important to note that these figures represent the cumulative impact to the County over 25
years, not annual impacts .
ATTACHMENT 3
FINAL REPORT Page 12
Scenario 2. Scenario 2 shows the County fiscal impact of area development with an expansion of
the NCURP. The first year in the study period is 2008; development is assumed to start in 2012,
which is earlier than scenario 1 , because it is assumed that the NCURP will invest in transportation
improvements necessary in the area. Build out is assumed to take 19 years, occurring in 2031 . Exhibit
11 shows County fiscal impacts of Scenario 2 .
Exhibit 11 .
Fiscal Model Low Density Base Case - High Density
Scenario Analysis:
Development with URA High
Variability/ $(3 .4) million $(4.4) million $(5.4) million
Source: Low Fixed
BBC Research k Consulting
Base Case $ 2.8 millionC� r4iiliion-= $ 4.4 million
Low
Variability/ $ (2. 1 ) million $(2 .8) million $ (3.4) million
High Fixed
Based on a 30-year analysis period, Exhibit 11 displays a range of potential County fiscal impacts
from a worst case of a $5 .4 million present value (PV) deficit to a best case of a $2 . 1 million PV
deficit. Again, it is important to note that these figures represent the cumulative impact to the
County over 30 years, not annual impacts.
Case Studies
Larimer County and Timnath. In 2005 , Larimer County sued the town of Timnath over the
inclusion of all land within the town's urban growth area in a URA. The area designated as a URA
includes all of the urbanized town and also large swathes of undeveloped farmland recently annexed
into the town. The two sides settled their differences by entering into an intergovernmental
agreement (IGA) that requires Timnath to agree to not increase the size of the URA with future
annexations, and also includes a revenue sharing agreement. Under the conditions of the revenue
sharing agreement, Timnath would rebate 15 percent of county revenues starting the sixth year after
the authority's creation. The rebates will increase in 15 percent increments every five years until
totaling 60 percent in the last five years of the authority's 25-year life.
Adams County and Thornton . In December 2005, Adams County and the city of Thornton
entered into an IGA that provides for property tax revenue sharing when Thornton's URAs include
agricultural land or greenfields. The IGA is applied to all new URAs and amendments of existing
URAs with more than 10 percent of total acreage designated as greenfield. The IGA calls for the city
and county to enter into negotiations to develop a property tax revenue sharing plan. The parties are
to develop good faith estimates of the cost of improvements that are to be paid for by TIF funds.
When the debt of the improvements is paid in full, the TIF property taxes associated with the Adams
County property tax will terminate. If, after 180 days, the parties fail to negotiate a mutually
acceptable revenue sharing plan, the IGA provides that Adams County is entitled to recover a
ATTACHMENT 3
FINAL REPORT Page 13
maximum of 25 percent of property tax revenue that is diverted to the URA after five years of the
date of URA formation or when the TIF revenue covers the annual debt service by 150 percent or
more, whichever occurs later.
Boulder County and Louisville. In December of 2006, Boulder County, the city of Louisville
and the Louisville Revitalization Commission entered into a tri-party IGA to establish a revenue
sharing plan involving the property tax increment generated by the Highway 42 Area Urban Renewal
Plan . The IGA provides for a rebate of $6. 15 million to be shared back to Boulder County over a 25-
year period. The rebate represents about 50 percent of the revenue that Boulder County would have
received from the redevelopment project without the URA.
We hope this analysis is useful as the City and County discuss the merits of expanding the NCURP.
Sincerely,
Tom Pippin
Managing Director
l
Adam Orens
Associate
Urban Renewal Authority
May 27 , 2008 Work Session
URA County Fiscal Impact Model
North College URP
Proposed Expansion Area
URA / County IGA
Tax Increment Sharing
May 27 , 2008 - URA Work Session
• Questions on the Fiscal Impact Model ?
• Can staff proceed with an expansion to the
eastern boundary of the North College URP
area ?
➢ Existing Conditions Survey will need to be updated
➢ Council will need to declare the area " blighted "
according to the criteria in the State's URA laws
• Does the URA Board want to share tax
increment from the URP expansion area with
Larimer County?
Fort Collins URA Plan Areas
• Existing URPs :
- North College Corridor (adopted in 2004)
- Foothills Mall (adopted in 2007)
Y
North College Avenue
Urban Renewal Plan Area
• General Boundaries :
- N : City Limits ( Eaton Ditch )
- E : Redwood Street
- S : Vine Drive
- W : '/2 mile west of College Avenue
North
College
Avenue
Urban
Renewal
Plan Area
IF
Y i
Previously Proposed
Boundary Expansions
• 2005 :
- Extend boundary east to Lemay Avenue .
• Withdrawn , P & Z Board determined the
expansion was not in conformance with the
redevelopment policies of City Plan.
• 2007 :
- Extend boundary to '/4 mile east of Lemay.
• Put on hold , the County raised concerns
regarding financial impacts on County
services . Y
State URA Legislation
• CRS Section 31 =25 = 1 07( 3 . 5) requires the City to
submit information concerning the impacts of
an URP to the County including :
1 . Estimated time to complete the URP .
2 . Estimated annual property tax increment to be
allocated to the URP .
3 . Estimated impacts on County services or revenues .
• Other governmental taxing entities (e . g . , the
School District) are also notified .
In the past, none have expressed any concerns .
fr_
Y
County Concerns
• Costs of providing services to URP areas that are
predominantly residential land uses .
• URA retaining all of the tax increment generated
by new development in the boundary expansion
area .
Consultant Services
• BBC Research & Consulting was hired jointly by
the City and County to :
- Develop a fiscal impact model to analyze land
use scenarios which would compare and
contrast the net impact on County finances of
new development within the City both with and
without an URP area .
Y
Fiscal Impact Model Results
• Results were to form the basis for the URA and
the County to negotiate a sharing of tax
increment generated by development within an
URP area .
County Expenditures
• Model calculates the fiscal impacts from residents within
the City using County services and facilities .
— General Fund
— Road and Bridge Fund
— Health and Human Services Fund
Model does not include the costs of services provided
primarily to non -City residents (e. g . , Sheriff's Dept. )
Y
Basic Model Methodology
• ENTER :
- Projected new development data
• Residential units and/or commercial s . f.
• MULTIPLIED BY :
- Current costs and revenues
• Per housing unit or commercial s .f.
• MODEL CALCULATES :
- New County costs and revenues
Development Assumptions
• The model can assess up to nine land use types :
— Four types of residential units
— Neighborhood retail
— Regional retail
— Office
— Industrial
— Institutional
• Unit or square foot values for each type of development can
be entered .
• Different development time-frames for each use can be
entered .
Y
Fiscal Impact Model Results
• Provides an analysis of financial impact with no
URA
- County receives their increases in property tax
revenues
• Provides an analysis of financial impact with a
URA
- URA retains the County' s tax increment
Model ProcessSteps
impactsCity enters development data into the model and the model
calculates the financial • the County,
City presents the impactdata • the County.
City • County staff would then establishpotential
sharing agreement forpresentation to the URA (City
Council ) and the County • •
cxvDrPodcaaaProposed Expansion 2008
15
North Colkrpa Urban Ronawal Plan
TT ProDosod Boundary E%panslon
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rt
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t I ' �� Ia010a CD UIII
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Cityof Port CoWne
8
Proposed Expansion 2008
• Extend the eastern boundary from Redwood
Street to about % mile east of Lemay Avenue .
- Area is larger than 2007 proposal in order to
include all of the parcel under single
ownership east of Lemay Avenue .
Y
Development Assumptions
Size Percent Development
Category Acres Total Potential
Total Area 340 100% LMN District
Arterial Streets 37 11 %
(Vine Drive & Lemay Avenue)
Open Space, Drainage, etc. 22 10%
(Dry Creek, etc.)
Non-Residential 51 15% 348,500 sf
Development @ .25 FAR
Residential 218 64% 1 ,090 units
Development @ 5 du/ac
Development Assumptions
• Unit or square foot values for each type of
development.
— $240 , 000 per unit for Residential units
— $ 125 per square foot for Non =Residential
.
Development Assumptions
• Different development time-frames for each use
can be entered .
— 25 Year buildout
— Straight- line development projection starting in
year 3
• 15 , 840 s .f. per year
• 50 units per year
1
Fiscal Impacts on the County
• Model ' s Purpose :
- Compare and contrast the net impact on
County finances of new development within
the City both with and without an URA area .
.
Fiscal Impacts on the County
• Without an URA Plan Area
- $25277 , 658 ( - $2 . 3 million ) over 25
years
• County property tax revenues will be $2 . 3 million
short of the costs to provide services to the
people living in the expansion area .
Fiscal Impacts on the County
• With an URA Plan Area
- $ 6 , 858 , 088 ( - $ 6 . 9 million ) over 25
years
• The net impact of the expansion area on County
revenues is - $4 . 6 million over 25 years
• $6 . 9 million - $2 . 3 million = $4. 6 million
Estimated Tax Increment to the
Urban Renewal Authority
• $ 33 . 5 million total tax increment
• Year 4 : Starts at $ 132 , 291 of TI
• Year 25 : Increases to $2 , 910 ,402 of TI
• Infrastructure Costs for Context
— $ 37 . 0 million
• $26 .4 million for Vine/Lemay intersection
• $ 4 . 5 million for Vine Drive realignment
• $ 6 . 1 million for storm water improvements
Tax Increment Sharing Options
• #1 : No Sharing of Tax Increment
URA keeps all of the Tax Increment
• #2 : Some Sharing of Tax Increment
Various options can be considered , two primary
factors :
• the amount ( percentage) of TI the URA is willing to
share with the County, and
• the schedule (starting date) for sharing the TI .
Amount and schedule to be negotiated
Y i
May 27 , 2008
URA Work Session
• Questions on the Fiscal Impact Model
• Can staff proceed with an expansion to the eastern
boundary of the North College URP area ?
➢ Existing Conditions Survey will need to be updated
➢ Council will need to declare the area " blighted "
according to the criteria in the State 's URA laws
• Does the URA Board want to share tax increment
from the URP expansion area with Larimer
County?