In May, the Colorado legislature approved a bill amending the state’s Urban Renewal Law, C.R.S. § 31-25-101 et seq., to place new limitations on urban renewal authorities.  The bill provides counties and other taxing authorities, such as school districts and special districts, with enhanced power in urban renewal and associated tax-increment financing (TIF) decisions by Colorado cities and towns.  Many municipal leaders, landowners, developers and others who benefit from TIF—which serves as an important public financing tool for the provision of new public infrastructure associated with private development projects—opposed the bill on the prediction that it will curtail municipalities’ future ability to utilize TIF.  Governor Hickenlooper, who vetoed similar urban renewal legislation last year, signed this year’s legislation into law.

The bill, HB 15-1348, changes the Urban Renewal Law in the following ways:

  • The bill increases the number of commissioners required on an urban renewal authority from the current law’s requirement of an odd number between 5 and 11. Under the bill, an urban renewal authority must have 13 commissioners, three of which must represent county, special district, and school district taxing authorities.  Under the present Urban Renewal Law, municipalities appoint all members of an urban renewal authority.
  • The bill requires excess collections of TIF revenues, i.e. revenues collected in excess of bond obligations, from property taxes to be repaid to local taxing authorities on a pro rata basis according to each taxing authority’s mill levy. The current Urban Renewal Law requires excess collections to be repaid into the funds of local taxing authorities, but does not provide any specific allocation requirement.
  • The bill provides that any taxing jurisdictions which contribute upfront costs toward an urban renewal project, in the 12-month period prior to the approval of the urban renewal plan, may be reimbursed from TIF revenues associated with the urban renewal project. The current Urban Renewal Law is silent on this matter.
  • The bill establishes a mandatory notification and negotiation process between municipalities or urban renewal authorities and other local taxing entities—such as counties or special districts—affected by a TIF plan to establish by intergovernmental agreement the types of tax revenues, and limits on such tax revenues, of each taxing authority that will be subject to a TIF plan. The bill provides a 120-day period in which such an agreement must be reached prior to adoption of a TIF plan, after which a third-party mediator is appointed to allocate revenues.  Under current law, urban renewal authorities are not required to negotiate with other taxing authorities to share portions of TIF revenue.

Because these changes would complicate the approval of new TIF plans by municipalities, the bill is expected to reduce cities’ and towns’ appetite for future urban renewal projects, with an associated impact on private developers who rely on TIF to finance public infrastructure associated with development projects in urban renewal areas.

Another bill introduced this year in the Senate, SB 15-284, which would require approval by voters in a municipality to approve TIF revenues where an urban renewal area contains agricultural land, was not passed by the Senate in the recently-ended session.