2003 sales-tax results: Tale of four cities

Retail sales in Northern Colorado during 2003 were a tale of East and West.

East of Interstate 25, both Greeley and Windsor enjoyed hefty revenue increases. The two municipalities are in the midst of dramatic commercial development.

Greeley, for instance, prospered from 4.3 percent growth in retail sales, coupled with a hike in sales-tax rates from 3 percent to 3.3 percent.

West of the interstate, Loveland saw 2003 sales-tax revenues inch up approximately 2.9 percent — less than half the 7.6 percent jump in 2002 — while Fort Collins experienced a decline. That city’s sales-tax revenues dipped for the second year in a row, down 0.44 percent for 2003.

In Colorado, where municipalities are dependent on sales-tax revenues to shoulder the burden of ever more costly services, the only way to go is up.

Meanwhile, in Northern Colorado — a region of commuters where residents may live, work and shop in separate communities — municipal fortunes are tightly entwined.

Teetering sales-tax revenues are fueling a store-wars scenario. Last year, developers in three cities — Loveland, Windsor and Fort Collins ­ were racing to christen the area’s first upscale “lifestyle center” shopping mall. Windsor has since dropped out of the mall competition, but is being courted for a new Wal-Mart Supercenter.

Loveland finance director Mike Hart noted that his city, like most Colorado communities, is counting on sales-tax revenue. Managing this dependency requires multiyear financial planning in order to weather tough economic times by setting aside funding during better years.

Sales-tax revenues may decline but the cost of providing services does not, Hart said. “Our operating costs are not flexible from one year to the next, and our property-tax mill levy falls very short of producing the funding that we need to provide the basic service levels to the community,” he said.

Historically, Loveland saw sales-tax dollars traveling to shopping, dining and leisure opportunities elsewhere. But growth and commercial development has changed that.

Hart and other Loveland officials welcome their city’s shift from ?donor’ of regional sales-tax dollars to ?recipient.’

Hart said 2002 was a big year for Loveland because of the major new retail operations that came on line during that year. Sportsman’s Warehouse, Home Depot and a new Wal-Mart Supercenter opened in Loveland, sparking a revenue jump that helped the city navigate a tough 2003 economy.

The commercial coming of age that those store openings heralded in Loveland has translated into sales-tax slippage in neighboring Fort Collins.

Sales-tax revenues there took a downward turn after Sept. 11, 2001, and the slide continued into subsequent years, said Sherrie Temple, Fort Collins’ assistant finance director. That trend was a reflection of local, state and national economies, as well as Loveland’s growth.

“About two years ago, Loveland hit the 50,000 mark in population,” Temple said. “That drew the attention of chain stores and restaurants; the same chain stores and restaurants in many cases that had previously drawn Loveland residents to Fort Collins.”

Consultants for the city of Fort Collins have predicted that sales-tax collections will slip by somewhere between $2 million and $4 million annually if Loveland, not Fort Collins, is home to an upscale shopping mall.

Just what might happen if both cities ultimately land lifestyle centers is unclear.

Fort Collins isn’t waiting around to find out. The city greeted sales-tax revenue declines with cost-cutting measures, Temple said. “Employees have gone two years without raises. We have several frozen positions. ? We took a couple of big budget cuts last year trying to provide the same level of services.”

The city government also is considering an ordinance that would lower vendor compensation on sales-tax collection, Temple said. The additional money this will yield is earmarked for an economic health program.

“We’ve hired an economic adviser, and we also have a team of 17 citizens, the Economic Vitality and Sustainability Action Group.” That group is charged with devising an economic action plan for the city by June 30.

Temple said Fort Collins’ sales-tax revenues have been on the increase for about five months. “We have had modest increases, but increases just the same. We’re happy about that. We think we’re seeing somewhat of a trend upward.”

Media attention focused on the race to develop lifestyle centers in Northern Colorado has overshadowed other commercial development.

“We’ve got a lot of retail construction going on right now,” Temple said. Commercial development in Fort Collins includes a King Soopers grocery store on South College Avenue, an $82 million building at the Natural Resources Research Center complex near Colorado State University, and pockets of other smaller commercial construction activity.

Across I-25, meanwhile, booming retail development has driven sales-tax increases for both Windsor and Greeley. In Windsor, two major grocery chains had settled in by the end of 2003, drawing more local and regional shoppers, said Dean Moyer, Windsor finance director. The town will soon have two major pharmacy giants as well.

And there’s talk of a Wal-Mart store.

All that should mean that sales-tax collection history will likely repeat itself in Windsor. Sales-tax revenues there have increased every year since 1993, Moyer said.

Construction of more than 300,000 square feet of new retail space in Greeley helped fuel a sales-tax revenue increase there. Retail sales totals increased from $969 million in 2002 to more than $1 billion in 2003.

The city increased the sales tax rate from 3 percent to 3.3 percent on Jan. 1, 2003.

on Facebook on LinkedIn