Eagle Town Council approves ballot measure on authorization of $27M in bonds for downtown development
The bonds are to be paid back over 20 years
A measure will be added to the November ballot asking Eagle voters to give the town’s Downtown Development Authority the power to borrow up to $27 million dollars in tax increment financing bonds for small business grants and other improvements to the downtown area.
The ballot measure, which was unanimously approved by the Eagle Town Council on Tuesday, would authorize the Downtown Development Authority to incur up to $27 million in debt, which would be paid back through the increasingly popular public financing method called TIF.
The TIF bonds would allow the town, specifically the Downtown Development Authority, to get up-front funding for improvements to the downtown area, which would then be paid back over a period of 20 years using the future anticipated increase in tax revenue generated by said improvements.
The measure would “[leverage] future revenue for upfront benefit and positive feedback, stimulating further private investment and higher future valuations,” according to a town staff memo on the resolution.
Put most simply, the money will be borrowed to fund things like new developments, small business grants and other improvements to the downtown area, and that debt will be paid back with the increase in tax revenue that those improvements will generate.
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“Whether it’s sales tax or property tax … if your tax collections are $100 a day and the next year you increase that to $200, that tax increment financing, that revenue stream … supports the bond that you’ve gone into debt for,” Eagle Town Manager Brandy Reitter said Tuesday.
The approval of a ballot measure in last year’s election created a downtown development district in Eagle, which covers the town’s main streets between U.S. Highway 6 and Fifth Street, and established the Downtown Development Authority Board as the district’s decision-making body.
The 2020 ballot initiative also approved the use of this TIF model to fund the Downtown Development Authority, which was created to power the revitalization of downtown Eagle.
The Downtown Development Authority must now come back before the voters this election to get approval for the issuance of up to $27 million in bonds, which would be paid back using the anticipated increase in tax revenue over 20 years at a 6% rate, leading to the total repayment cost of $47,079,661, according to the staff memo.
“To give the DDA the fiscal tools to deploy TIF financing at the scale needed to make a meaningful impact, and to speed up the efficacy of fiscal investment, the DDA must go to the voters of the district to authorize debt,” staff wrote in the memo.
The $27 million figure was reached after the Downtown Development Authority Board commissioned a study by King and Associates, a business management consultant, to look into the redevelopment projects currently approved or proposed within the district to project future funds that could be generated through TIF. The study showed a projected TIF funding stream of $27,490,392.
This projection did not include potential revenue generated by key parcels of land located just outside of the downtown district’s boundaries on Grand Avenue. Plans are in the works to redevelop these parcels, meaning they would generate more tax revenue if they were to be added to the downtown TIF district.
The study projected that the district would generate $110,897 in TIF funds in the first year alone.
Another study conducted by the Downtown Colorado Inc. surveyed similar downtown development authorities and found that most of them operated with “no less than $30 million in authorized debt capacity,” according to the memo.
These two studies have led the Downtown Development Authority to ask for a debt threshold of $27 million. While the town does not have any immediate projects that require funding, the debt authorization would “allow for the Downtown Development Authority to act as an intermediary for grants, short-term loans and other small business incentives that would otherwise not be possible without going into debt,” according to the memo.
“This $27 million is a max, it’s more of the ceiling. The Downtown Development Authority, … they’ve been working on their work plan, we’ve approved it, and so this just helps bring some money to the table for those projects,” Reitter said.
The question of whether to approve this debt authorization will appear on the Nov. 2 ballot only for the same group of eligible voters who voted to create the downtown district last year. Qualifying voters must be property owners along Capitol and Broadway streets, which amounted to just 95 people in last year’s election.
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