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Delta's urban renewal: 'There is no Plan B'

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The clock is ticking. The Delta Urban Renewal Authority (DURA) has 120 days to reach agreement with the taxing entities it's asking to help fund a gateway project near the intersection of Highways 50 and 92. Half that time has elapsed, and there is no Plan B, city manager David Torgler emphasized during a meeting with taxing entities Monday.

With tax increment financing, the city would acquire land, make infrastructure improvements and provide access to property that would then be offered to a hotel developer. With improvements in place, there would be significantly less financial risk for the developer. While a hotel is not the only option for that parcel of land, the gateway project, with complementary river corridor improvements, was identified as the best opportunity for capturing lost revenue in an extensive feasibility study conducted in 2015. The study was completed by Better City, which sent three representatives to the question-and-answer session organized by the city. Based in Ogden, Utah, Better City works with communities to diversify their economy, attract private investment and create jobs.

Tax incentive financing requires the taxing entities to give up property tax they would have realized from increased value of the developed property, the additional sales tax generated through sales in the plan area, and the lodging tax that would be levied on the hotel rooms. The city points out that taxing entities are not giving up anything they have in hand, because without the development there is no tax increment.

The school district, library district, ambulance district and hospital district have agreed to give up all property taxes that would be generated through project development. The city does not have property tax, but would give up sales tax generated by the development. The county is asked to give up sales, property and lodging tax. Similar requests are being made of Tri-County Water Conservation District, Delta Mosquito Control District, Delta Fire Protection District #1 and the Colorado River Water Conservation District.

It's going to take participation from all the taxing entities to make the plan financially feasible, Torgler said, who reviewed the numbers previously shared with the taxing bodies. A financial analysis prepared by Better City places potential tax increment "revenue" at $220,462. Bond payments are estimated at $170,000, which leaves the margin bond firms are looking for.

"Without full participation, it's unlikely we can do this project," Torgler said.

Carolynne White, special counsel to DURA, explained that tax increment financing is a tool made available to urban renewal authorities to mitigate risk to bring in private investment. That initial investment often generates new net revenue that will pay down the debt over time, and also increase the total tax base for all tax entities with property/sales tax, she said.

"The tax increment is meant to be the minimum amount needed to leverage private investment," she emphasized.

But without funds to correct the deficiencies on the parcel of land in question, the cost of development would be "disproportionate" to the potential benefit, she said. "That was another reason tax increment was created, to level the playing field and make properties competitive with all other properties the developer could invest in."

Adam Hughes, a representative of Better City, discussed how strategic planning led to focus on a gateway project -- a mid-tier hotel -- that would capture tourist dollars that are being spent in Montrose and Grand Junction, while serving as a base camp for exploration of regional attractions. Hughes confirmed Better City has a hotel developer in mind -- specifically one with experience in western Colorado -- but declined to provide details due to the preliminary nature of discussions.

"The ultimate goal is much larger than just this one project," White said. "The ultimate goal is to attract investment and revitalize the entire area shown on the plan map, and we've identified this one project as being the catalyst to do that."

County commissioner Don Suppes pointed out that over 40 percent of the tax increment would come from county revenues, if funded at the 100 percent level. It's a question of balancing countywide needs with a City of Delta project with the potential to increase demand for county services.

On the flip side, the development could add jobs, capture tourism dollars that are going to Montrose and Grand Junction, and begin to turn the economy around.

"We can either sit back and do nothing and let Delta County be as Delta County has always been, or we can step up, we can give our support for this project in hopes this will become a catalyst to help engage the economy and provide some economic development, not only to the City of Delta and the project area, but to the entire county," said Jill Jurca, a school board member and the school district's representative on the DURA board. Library district representatives echoed her comments.

"It's important that there is a common understanding that the county has been at the table from the very beginning with the Better City project," county administrator Robbie LeValley said. "We're just asking some key questions. Just because there's questions doesn't mean there's not understanding, there's not support, there's not a willingness to dig deeper. Please don't take any of our questions as being that we're against the project, because the county has been at the table since the very beginning."

Negotiations between the city and the county are ongoing, and the city is waiting to hear back from the other taxing entities. If agreement is not reached within the 120-day window, the next step is arbitration.

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