January 8, 2014 Dear Legislators: Tax Increment Financing (TIF) and Urban Renewal Authorities (URAs) are statutory tools designed for use by municipalities to foster redevelopment of extraordinary blight conditions that otherwise would not be ameliorated. Statutorily, when such conditions exist, the “increment” of increased property values (and property tax revenues) that result from the renewal project are diverted from taxing entities such as schools, counties, community colleges, community centered boards, hospital districts, fire protection districts, health districts and other special districts for a period of 25 years to pay for the improvements within the URA. During this entire time, these local government entities are required to meet the service demands in these developments without the additional revenue generated by their tax levy. As you can see on the enclosed bar graph and spreadsheet, the use of TIF has grown dramatically in recent years. While TIF revenue diversions did not create much of a problem in the past, the dramatic increase in their use since about 2002 is an unsustainable trend which must be addressed. The enclosed spreadsheet shows that in 2013 alone Colorado school districts lost over $81.4 million in property tax revenue (largely backfilled by the state general fund) and counties lost over $44.3 million. The total diversions from local tax revenues – including junior colleges and special districts - amounted to $171.6 million. While the state has historically absorbed the hit to school districts, the revenue diverted from counties and other special districts is not backfilled and services must be provided within existing budgets. At the same time, there is no opportunity for Boards of Commissioners to approve the use of county revenues or to demand accountability for how they are expended. CCI held a series of four meetings in 2013 in an effort to work with all the stakeholders in crafting a balanced and sustainable approach that would allow the use of TIF in URAs to continue and protect the accountability of every local government for the taxes it levies. The Colorado Municipal League (CML) was invited to all of these meetings to craft a solution that would work for us all. Unfortunately, CML only attended the first meeting. CCI continued, however, to explore solutions and ideas with a handful of cities interested in a dialog. Unfortunately, we were unable to reach agreement. At CCI’s request, Representative Dickie Lee Hullinghorst and Senator Morgan Carroll will be introducing a bill, along with bipartisan cosponsors, that will give counties and other affected entities a seat at the table and some say over the use of the property tax revenues they levy.

You may have heard that counties are attempting to "veto" URAs or "kill" TIF projects. Nothing could be further from the truth. A well-designed project which meets the needs of all service providers can be a great benefit to local economies, counties, and municipalities as well. In fact, counties have supported many such projects around the state. The problem is, county governments are not given a voice in these projects and they can be done without any other stakeholders at the table. That simply is not the way to design accountable, sustainable public policy for Colorado and our citizens. We can and should do better. We look forward to working with you to improve this process. As the bill is drafted, we and the sponsors will share more specific information with you. In the meantime, we wanted you to know this issue is a top concern for us and we are working on a balanced approach that will allow its proper use to be sustainable for the betterment of our state. If you have any questions at this time, please don't hesitate to contact us or your county commissioners. Sincerely,

Steve Johnson o) 970.498.7002 Larimer County Commissioner Tax and Finance Committee, Chair

Deb Gardner c) 303.579.1042 Boulder County Commissioner Tax and Finance Committee, Vice Chair

Millions of Dollars

Junior Colleges

School Districts

Special Districts

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Tax Year

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1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Counties

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$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

$200.0

Municipalities

Total TIF Revenue Diverted by Taxing Entity

Revenue Diverted to TIF's by Entity Budget Year Tax Year Municipalities 1989 1988 724,319 1990 1989 785,146 1991 1990 748,315 1992 1991 956,688 1993 1992 922,796 1994 1993 923,944 1995 1994 946,788 1996 1995 1,028,890 1997 1996 1,110,921 1998 1997 1,330,165 1999 1998 1,451,481 2000 1999 1,759,667 2001 2000 1,864,711 2002 2001 2,411,713 2003 2002 2,587,231 2004 2003 2,887,864 2005 2004 2,976,480 2006 2005 3,572,963 2007 2006 4,291,719 2008 2007 4,326,450 2009 2008 5,058,010 2010 2009 6,008,689 2011 2010 6,337,670 2012 2011 7,564,596 2013 2012 7,916,834

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Counties 8,381,459 10,301,638 2,237,054 2,707,509 2,606,702 2,622,920 2,814,373 3,546,745 4,361,659 5,208,663 6,026,106 7,933,690 10,063,152 13,443,273 11,684,261 19,585,848 18,952,244 20,161,824 21,690,136 29,224,182 31,541,509 34,975,560 39,452,648 39,976,216 44,321,765

Junior Colleges 15,477 13,583 15,654 14,939 14,432 13,671 21,965 34,117 35,073 39,238 43,152 46,237 20,557 20,989 25,775 30,166 19,049 51,425 116,090 210,672 301,036 479,536 731,323 697,820 986,783

School Districts 4,189,669 4,644,671 4,788,462 6,239,861 6,254,567 6,274,508 6,420,109 7,555,354 7,323,616 10,518,652 12,579,497 16,014,238 20,153,167 20,588,590 23,476,899 27,283,012 31,337,427 38,271,979 44,172,492 50,635,984 55,524,854 63,333,380 70,202,637 71,813,880 81,456,746

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Special Districts 473,545 473,503 472,323 607,243 571,441 509,927 518,030 624,888 879,897 1,065,116 1,050,909 1,605,766 2,250,067 2,601,942 3,359,542 2,555,366 3,754,433 10,684,708 8,953,711 22,618,454 25,803,011 19,323,760 36,533,817 34,712,255 36,981,475

Grand Total 13,784,469 16,218,542 8,261,807 10,526,240 10,369,938 10,344,969 10,721,265 12,789,993 13,711,165 18,161,834 21,151,144 27,359,598 34,351,655 39,066,507 41,133,708 52,342,255 57,039,633 72,742,899 79,224,149 107,015,742 118,228,425 124,120,925 153,258,091 154,764,765 171,663,600

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