Fire, vacancies cause decrease in downtown property tax base
GLENWOOD SPRINGS, Colo. A damaging fire and some commercial space vacancies caused a drop of more than $825,000 in the property tax valuation in downtown Glenwood Springs this year.The decrease and factors contributing to them have led city finance director Mike Harman to reduce by more than $5 million his estimate of the revenue that will be brought in by a 20-year tax that will be used to pay for improvements downtown.The assessed valuation downtown within the region that makes up the Downtown Development Authority fell from $46.67 million in 2005 to $45.84 million this year.Garfield County Assessor Shannon Hurst said she believes more than $400,000 of that decrease was a result of a fire in March at the Grand Avenue Mall. The fire caused extensive interior damage in the building, which was home to several businesses. Those businesses have either closed, moved elsewhere, or suspended operations in hopes of moving back into the mall after reconstruction is finished.Hurst said much of the rest of the drop in the tax base resulted from successful protests of valuations by property owners. She said it appears her office was assessing the price per square foot too high downtown. The valuations were based on conditions in 2003 and 2004, and didn’t reflect a recent trend of tenants moving to other places such as Glenwood Meadows and West Glenwood.Some of that migration has been retail, but a lot of the vacancies downtown have consisted of office space, Hurst said.The assessed valuation backslide comes as the city is finally able to start tapping what is called a tax increment financing tax to fund downtown improvements. Under the TIF tax, the city is able to capture all growth in the downtown property tax base over 20 years and use it to fund improvements within the DDA district. Garfield County and Colorado Mountain College had unsuccessfully sued the city over the plan, which will cost them tax revenues, but they lost in court last year and a judge recently signed an agreement to release nearly $600,000 in funds collected to date.Harman had projected that the TIF tax would bring in about $286,000 in property tax revenues next year, but has revised that projection to $178,745 based on the drop in the tax base. The tax is expected to generate just under $230,000 this year.Harman isn’t expecting continuing decreases in the downtown property tax base. However, he is rethinking his original projection that the property tax base would increase an average of 2 percent a year over 20 years, and now is forecasting average annual growth of 1 percent. He also has applied the same revision to his growth estimate for sales tax that is collected under the TIF program. And he has eliminated an assumption of $150,000 in new construction each year downtown.As a result, Harman now projects that the TIF tax will bring in $8.6 million over its 20-year length, compared to his past estimate of $13.7 million. About $2 million of that would come from sales tax revenues, and the rest from property taxes.Harman cites vacancy rates and the new commercial competition from places such as Glenwood Meadows for his more conservative projection, and worries that it still may be too optimistic.He also emphasizes that he has no way of knowing what assessed property values and sales tax revenues will do, and that he’s not an authority on the TIF tax and the complexities involved in projecting the revenues it will generate. He has recommended that the city hire a consultant to review his projections.Just what the tax might generate is likely to have a significant bearing on upcoming decisions facing the DDA board and City Council about how to spend the TIF tax. Harman said he began to worry when the DDA board began using his earlier projection in their discussions despite its tentative nature. He’s more worried now that the projection appears to be too optimistic.”They were banking their projects and stuff on a $13 million income coming in. I’m not comfortable with that. I don’t know if it’s going to be $13 million,” he said.The city is considering using TIF money for everything from beautification projects to creation of more parking downtown. Some downtown merchants long have hoped to see a parking garage built with the funds. A consultant recently estimated a three-story parking garage could cost more than $10 million, but that assumed the city would have to buy land rather than building on property it already owned.Contact Dennis Webb: firstname.lastname@example.org
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