HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 12/05/2006 - RESOLUTION 2006-123 APPROVING THE COUNTY ASSESSOR' ITEM NUMBER: 20
AGENDA ITEM SUMMARY DATE: December5, 2006
FORT COLLINS CITY COUNCIL STAFF: Joe Frank
Chuck Seest
SUBJECT
Resolution 2006-123 Approving the County Assessor's Current Methodology for Calculating Tax
Increment.
RECOMMENDATION
Staff recommends adoption of the Resolution.
FINANCIAL IMPACT
Staff estimates,that,under the proposed methodology to be used by the County Assessor,the North
College Urban Renewal Plan Area will generate a total tax increment of$25-30 million over the
lifetime of the plan area. Starting in 2007, the tax increment collected by the URA is estimated to
total approximately$172,000.
Staff also estimates the additional tax increment that the City would have otherwise collected during
the 25 year lifecycle of the North College Urban Renewal Plan Area would amount to $660,000.
This "investment"however will be recovered by the increased property taxes the City will collect
during the first 4 years after the North College Urban Renewal Plan Area sunsets. It should also be
noted that any net new sales taxes resulting from additional retail activity within the North College
Urban Renewal Plan Area will also generate new revenue for the City.
EXECUTIVE SUMMARY
Adoption of this Resolution formally recognizes the methodology being applied by the Larimer
County Assessor's Office to the North College Urban Renewal Plan Area.
BACKGROUND
Through action of City Council,the City of Fort Collins established a URA North College Plan Area
in 2004. The purpose of the URA is to plan and implement improvements within its boundaries.
The following excerpt from the North College Avenue Urban Renewal Plan provide some context
relevant to this resolution:
December 5, 2006 -2- Item No. 20
Preface and Intent of the Urban Renewal Plan:
The driving interest in the establishment of this Plan is to begin offering tax
increment financing as a tool to stimulate and leverage both public and private sector
development (including redevelopment), to help eliminate blight and prevent the
spread of blight. It is the intent of this Plan for any development projects and other
implementation actions to be done in a responsive manner, with full consideration
for interests and concerns of property owners in the area.
Change in Larimer County Assessor's Methodology
Since the North College Avenue Urban Renewal Plan Area was created, the Latimer County
Assessor's Office has changed the methodology used to calculate the amount of tax revenue for
entities funded by tax increment financing. When a general reassessment of taxable property occurs,
the Assessor has decided to allocate to the URA tax increment a portion of any increase in the land
valuation of the property in the URA, as well as the total value of any improvements that have been
constructed in the URA since the last reassessment. This methodology has been approved by the
County Attorney and will be applied to the North College URA.
This methodology will apportion any change in valuation that occurs between reassessments to two
categories:reappraisal and redevelopment. The change in valuation attributed to reappraisal will
be shared between the increment and the base. The change in valuation attributed to redevelopment
will be assigned exclusively to the increment's valuation. Staff has attached a letter received from
the County Assessor that explains this change in methodology.
In view of all this, City staff has prepared a 25 year projection of the tax increment to be generated
within the North College Plan Area. In addition, staff has included graphs reflecting the impact to
the City, Larimer County and the Poudre School District over the same time frame. (See attached
charts and graphs).
On November 9,2006, staff reviewed the new methodology with the URA's North College Citizen
Advisory Group(CAG). Although no formal recommendation was made,the group was supported
of and encouraged by the Assessor's Office new methodology for calculating TIF for the North
College URA Plan area
Staff Recommendation
Staff recommends adoption of the Resolution,approving the Latimer County Assessor's Office new
methodology for calculating the tax increment for the North College Urban Renewal Plan Area.
ATTACHMENTS
1. Chart 1 -North College Urban Renewal Plan Area Projected Tax Increment.
2. Chart 2 -North College URA Plan Area Assessed Value of Base and Tax Increment.
3. Chart 3-North College URA Plan Area Breakout Between Redevelopment and Reappraisal.
4. Chart 4 - Impact on City Property Tax.
5. Chart 5 - Impact on County Property Tax.
6. Chart 6 - Impact on Poudre School District Property Tax.
North College Urban Renewal Plan Area Projected Tax Increment CHART 1
2500
ASSUMPTIONS for PROJECTION :
1 . 3% Growth in Reappraisal Year for Plan Area and NJ
5% Growth County-wide,
2000 2 , Non -residential Development:
Major: King Soopers (2009) $7 . 5 Million
Other: $500 ,000 per year for 2007 thru 2011
Increase by $250 ,000 at 5 Yr increments .
L
1500 RESULTS in TIF : $31 . 6 Million Total , $ 1 .2 Million Average
0
0
w
0
0
0 1000
500
0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
As of November 29, 2006
North College URA Plan Area Assessed Value of Base and Tax Increment CHART 2
50000
Applying the Assumptions on CHART 1 to Plan Area :
45000 1 . Overall Assessed Value (AV) Grows from $ 19 . 3 M to $48 . 6M .
2 . As of 2021 , the Increment's AV is same as the Base AV.
40000 3 . At end of 25 years , Increment AV is $28 . 3 M and Base is $20 . 3 M .
35000
;n
cc 30000
0
0
0
rn 25000 z
0 20000
15000
10000
5000
0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
■ Assessed Value of Base ❑ Assessed Value of Increment
as of November 29 , 2006
North College URA Plan Area Breakout Between Redevelopment & Reappraisal CHART 3
50 , 000 �
Drivers of Growth In URA Plan Area :
45 , 000 1 . Redevelopment : $54 M in Actual Costs = $ 15 . 6 M (AV) .
Average $ 10 . 5 M/ yr over the life of URA Plan Area .
2 , Reappraisal : Increment assigned greater % .
40 , 000 Average $6 . 0 M/ yr over the life of URA Plan Area .
35 , 000
L
`—° 30 , 000
0
lit ,
0
w 25 , 000
N
0 20 , 000
L
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15 , 000 z
10 , 000
5 , 000
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
■ Base (PY Base + Reappraisal ) ❑ Increment (PY + Reappraisal ) ❑ Redevelopment (Cummulative)
as of November 29 , 2006
Impact on City Property Tax Chart 4
600
Annual Property Tax w/o URA : $ 190 - $253, 25 Year Total : 5 121
Annual Property Tax with URA: $ 190 - $ 198, 25 Year Total : 4 463
500
Cashflow Difference : 658
Cashflow Difference in Today's Dollars (5% Discount Rate) : 501
400 AFTER URA ENDS , the increased Cashflow over the Amt collected without
the URA during years 2030 - 2033 : 872
0 AFTER URA ENDS , Increased Cashflow over 4 YRs
o in Today's Dollars (5% Discount Rate) : 485
0 300
�a
0
M
~ 200
100
0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032
YEARS
■ Property Tax w/o URA ❑ Property Tax w/ URA
as of November 29 , 2006
Impact on County Property Tax Chart 5
1200
Annual Property Tax w/o URA : $436 - $583 , 25 Year Total : 11 781
Annual Property Tax with URA : $436 - $456, 25 Year Total : 10 269
1000
Cashflow Difference : 1 512
Cashflow Difference in Today's Dollars (5% Discount Rate) : 909
800 AFTER URA ENDS , the increased Cashflow over the Amt collected without
L the URA during years 2030 - 2033 : 1 852
o AFTER URA ENDS , Increased Cashflow over 4 YRs
o w in Today's Dollars (5% Discount Rate) : 813
0
w 600
�a
0
0
FEE
400
200
0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032
YEARS
■ Property Tax w/o URA ❑ Property Tax w/ URA
as of November 29 , 2006
Impact on Poudre School District Property Tax Chart 6
3000 - - -
Annual Property Tax w/o URA: $981 - $ 1312, 25 Year Total : 26 507
Annual Property Tax with URA: $981 - $ 1026, 25 Year Total : 23 105
2500
Cashflow Difference : 3 402
Cashflow Difference in Today's Dollars (5% Discount Rate) : 1 811
2000 AFTER URA ENDS , the increased Cashflow over the Amt collected without
the URA during years 2030 - 2033 : 4 174
0 AFTER URA ENDS , Increased Cashflow over 4 Years
o in Today's Dollars (5% Discount Rate) : 1 588
m 1500
�a
0
M
~ 1000
500
0
2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032
YEARS
■ Property Tax w/o URA ❑ Property Tax w/ URA
as of November 29 , 2006
RESOLUTION 2006-123
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROVING THE COUNTY ASSESSOR'S CURRENT METHODOLOGY
FOR CALCULATING TAX INCREMENT
WHEREAS, the Larimer County Assessor has proposed and presented to the City a new
methodology go for calculating tax increment in the context of urban renewals authorities; and
WHEREAS,the staffhas discussed the County's new methodology with the City Council and
has recommended that the City Council approve the new methodology as being in the best interest
of the City; and
WHEREAS, the City Council has determined that the County Assessor's current
methodology for calculating tax increment should be approved.
NOW,THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS that the County's Assessor's proposed methodology for calculating tax increment, as set
forth in the letter of the County Assessor attached hereto and incorporated herein as Exhibit"A," is
herebyapproved b the City Council.
PP Y Y
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 5th
day of December, A.D. 2006.
Mayor
ATTEST:
City Clerk
EXHIBIT "A"
ANLARMTEyIRI LARRY G. JOHNSONCOUN LARIMER COUNTY ASSESSOR
A _'INN PO Box 1190,FORT COLLINS CO 80522-1190
&M TELEPHONE: 970-498-7050;FAX:970-498-7070
November 8, 2006
Charles M. Seest
Finance Director
City of Fort Collins
215 N. Mason Street—2nd Floor
Fort Collins, CO 80522-0580
Regarding: North College Urban Renewal Area
Dear Chuck,
The purpose of this letter is to explain how the County Assessor's Office intends to handle any
"proportionate adjustment"of tax revenues between the Fort Collins Urban Renewal Authority ("URA")
and other taxing entities under C.R.S. Section 31-25-107(9)(e).
This methodology has been approved by our county attorney and will be applied to the North College
URA.
This methodology will attribute any change in valuation that occurs between reassessments to two
categories: reappraisal and redevelopment. The change in valuation attributed to reappraisal will be
proportionately shared between the increment and the base. The change in valuation attributed to
redevelopment will be assigned exclusively to the increment's valuation.
In determining the portion of the change in valuation resulting from reappraisal to be allocated to the
base, the Assessor will apply a percentage that represents what the Assessor finds as a typical increase
due to market activity on a county-wide basis during the reappraisal timeframe. This increase will take
into account the market changes throughout all of Larimer County, which would include the tax
increment district's plan area, even though there may or may not be a strong correlation between the
market changes experienced by all parcels in Latimer County and the market changes experienced by
the specific parcels within the boundaries of the tax increment district. After this percentage has been
calculated, it will then be applied to the overall change in valuation experienced within the tax increment
district. For example, if the valuation of the base within the tax increment district is $20 million and the
overall change between the prior year and the current year's valuation is an increase of$1 million and
the market changes in Latimer County experienced a 10% increase, then the change in valuation
assigned to the base as 'a result of reappraisal would be 10% of the $1 million assuming no prior
increment. As a result, the base would increase from $20,000,000 to $20,100,000. This increase of
$100,000 is derived from the 10% increase applied to the $1 million overall valuation change in the tax
increment district. Any increase in value above the amount attributable to county-wide inflation will be
assigned to the increment. The portion of the change in valuation resulting from redevelopment will all
be allocated to the increment.
In summary, once the overall change in valuation is determined and the portion attributed to reappraisal
of the base has been calculated, the remaining change in valuation will all be allocated to the increment.
Using the example provided above, the remaining $900,000 of the overall change in the tax increment
district of$1 million would be assigned to the valuation of the increment.
It should be noted that the methodology outlined above will be utilized only in reassessment years (odd
numbered years) to determine what increase the tax entities included within the base (Poudre School
District, Larimer County, City of Fort Collins, etc.) will receive as compared to what portion of the
change in valuation is assigned to the increment of the specific tax district. In intervening years (even
numbered years), any and all changes in valuation will be assigned to the increment of the tax district.
It has been a pleasure meeting with you and working through this process. Please feel free to contact
our office in the future if you have any concerns or issues.
Sincerely,
Larry G. John
Larimer County Assessor