Agriculture lands spared ‘blight’ label

After June 1, most Colorado agricultural lands may no longer be considered “blighted” areas in need of tax increment financing for development.

House Bill 1107, sponsored by state Rep. Randy Fischer, D-Fort Collins, was adopted by strong bipartisan votes in both the House and Senate. The bill was awaiting the signature of Gov. Bill Ritter on April 5.

Randy Fischer, D-Fort Collins

The so-called “blight” bill aims to curb the efforts of developers and cities to declare agricultural land on the outskirts of communities blighted and therefore eligible to be included in urban renewal zones. The property tax increase on that land is then used by project developers to help fund infrastructure improvements.

Fischer said the tactic has been used in places that he believes did not meet the definition of blight. As a result, tax money has funded development projects instead of schools, county services, special taxing districts and other entities.

Jay Hardy, vice president and general manager of Centerra

The bill passed with a 59-5 vote in the House and 31-2 in the Senate, despite opposition from several business groups, including the Denver Metro Chamber, Colorado Concern and the Colorado Competitive Council. The council wrote in a March 23 letter to legislative leaders that the measure would be bad for the state’s economy.

“With the enactment of this bill, Colorado will effectively eliminate 12 to 15 percent of the total number of jobs we could gain in one year,” the letter states. “Additionally, this legislation could lead to sprawl, as future developments would be forced to bypass open agricultural land.”

On the other hand, Fischer notes that the bill had the support of the Colorado chapter of the American Planning Association, Colorado Farm Bureau, Rocky Mountain Farmers Union, the Colorado Environmental Coalition, the Colorado Special District Association, the Colorado Firechiefs Association, Colorado Counties Inc. and the Colorado Municipal League.

Fischer said the bill is a “modest” attempt to rein in abuses of the blight designation.

“This bill really is a very modest and reasonable set of restrictions on including ag land within an urban renewal area,” he said. “It essentially says ag land is not blight, which has been used by municipalities to incorporate land into a URA.”

The blight designation was originally intended to revitalize slums and other already developed areas.

Fischer cited the proposed Horizon Uptown project in Aurora, which has designated about 500 acres of ag land at the southwest corner of Interstate 70 and E-470 as blighted. The plan is to convert the area into a retail, office and residential development that would realize $90 million in tax increment financing over the URA’s 25-year life.

“People have said that’s one of the most prime development areas in the Front Range,” Fischer said. “That’s the kind of thing I’m hoping to see stopped by this bill. Development ends up getting a subsidy with other people’s tax dollars.”

Some exceptions allowed

The bill does make exceptions to allow some ag land to be included in an urban renewal area, including land designated a brownfield site by the Environmental Protection Agency or if at least two-thirds of the land is contiguous with urban-level development and at least one-half of that development is itself a slum or blighted.

The bill also contains a provision that land may be included in the urban renewal area if “each public body that levies an ad valorem property tax on the agricultural land agrees in writing to the inclusion of the agricultural land within the urban renewal area.”

Fischer said the issue was a matter of statewide concern because such projects can divert tax money from schools, which the state has an obligation to backfill.

“We’ve seen a number of instances along the Front Range corridor where people go out to the interstate, declare a URA, declare ag land as blighted and essentially siphon away tax dollars,” he said.

Fischer said he decided to carry the bill after watching McWhinney and the city of Loveland agree to form a URA six years ago for the future development of Centerra, at the intersection of U.S. Highway 34 and Interstate 25.

“The high cost of providing infrastructure out there was the reason for doing it,” he said. “I’m not sure that project would have been feasible without the huge subsidy they got from the blight designation.”

But Jay Hardy, vice president and general manager of Centerra, said the 2004 agreement was based on achieving three major goals: to increase sales taxes to the city, to provide jobs and to make regional public improvements.

Hardy said in Centerra’s case the blight designation proved to be a boon to the region, with 12 percent of all of Loveland’s city sales tax generated at Centerra, more than 7,400 jobs created and $30 million in regional improvements, including interchange improvements at US 34 and Crossroads Boulevard – two of the three major I-25 intersections in the area.

Centerra had full support

Hardy said the Centerra agreement had the full support of all the deal’s players.

“I think it’s really important to note that this can often end up siphoning revenues from schools and the county,” he said. “But unlike many URAs, we had full school district support, the county was in full support and so was the city. They were all in support of the program.”

Hardy said he understands the intent of Fischer’s bill and that designation of ag land as blighted does have the potential to be misused. But that wasn’t the case with Centerra, he insists.

“We have two of three major interchange improvements being done through the URA,” he said. “I think there’s a tremendous amount of good that’s come from it.”

Fischer said he rejects criticism that the bill will result in the loss of jobs. “I think we’ve put conditions in the bill that still allow ag land to receive tax increment financing. If all the districts agree, you could still incorporate ag land within a URA.”

And he also rejects the sprawl criticism leveled at the bill. “I think just the opposite is true,” he said. “The hope is it will facilitate more infill and redevelopment because ag land will no longer be attractive out on the edge of cities.”

Fischer also defends his bill against those who say it could devalue ag land by removing it from URA consideration. “It could still be sold for development,” he said. “Location and proximity to schools and infrastructure will still be the No. 1 thing that interests developers, and when cities grow in an orderly fashion, these lands will continue to be a good source of income for their owners.”