Special election to be held for Downtown Development Authority in Avon Tuesday

A special election is taking place in Avon on Tuesday, Aug. 29 over the formation of a Downtown Development Authority, an organization that supports the productivity of the area it covers by collecting growth-based tax revenue through a system called Tax Increment Financing.

During the Avon Town Council meeting on June 27, the council approved the second reading of Ordinance 23-02 referring the establishment of a Downtown Development Authority for Avon to a special election to take place on Aug. 29, 2023. The proposed Downtown Development Authority will encompass the West Town Center, East Town Center, and valley floor of the Village (at Avon), covering 285.02 acres, or 5.3% of the total acreage of the town of Avon.

One of the main purposes for the creation of the Downtown Development Authority is to create funding for community housing in Avon. It is written into the ballot question that at least 50% of the tax increment financing revenue collected through the authority, if approved, will be designated for community housing. “This was approved by the council as a creative way to establish a new funding source to develop more community housing,” said Eric Heil, town manager for the town of Avon.

Avon has been in the process of creating new internal sources of funding for community housing for several years. In June 2020, the Avon Town Council amended the existing real estate transfer tax uses to include up to 10% allocated toward Avon’s Community Housing Fund. In November 2021, Avon residents voted in favor of a 2% short-term rental tax, with the funds also to go toward community housing initiatives. Council directed town of Avon staff to investigate the creation of a Downtown Development Authority about a year ago, according to Heil, and after extensive research by town staff, and approval by the town council, the proposal is in front of voters this week.

Tax Increment Financing

The Downtown Development Authority will utilize Tax Increment Financing, a financial tool that will enable the authority to capture the increment of any increase in property tax revenue within the established area to use for community housing, public infrastructure, facilities and amenities. The Downtown Development Authority can utilize this form of financing for 30 years, with the possibility of extending for two additional 10-year periods. 

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The amount of revenue generated by the Downtown Development Authority depends on the amount of new development that happens within the designated area. If very little development happens, little revenue would be generated. If a lot of development happens, taxes from the Downtown Development Authority could be a significant source of funding for community housing projects.

The captured property tax value means the increase will not go to any of the local governmental agencies that typically benefit from property taxes. Prior to presenting the proposal for the Downtown Development Authority special election to Avon Town Council, Heil did an analysis of what the impact would be on other taxing jurisdictions. “It’s a fairly small impact,” Heil said. As Tax Increment Financing is based on growth, it is also difficult to determine at this point the exact amount the Downtown Development Authority might collect would be, Heil explained. However, as one of the goals of the authority is to promote increased development within the area, every agency that collects property tax should benefit from the higher property taxes the increased development should promote when the Tax Increment Financing collection period is over.

Why now?

A town can only have one Downtown Development Authority, and establishing it now appealed to Avon staff and council members because of the current ratio of development to community housing. “We’re seeing interest in larger commercial projects that would generate a fairly significant increment, and we know that housing is a crisis, and so we’re looking for another source of revenue to help supplement our plans to develop housing,” Heil said.

New development projects that will provide community housing within the Downtown Development District area are already in the works. “We are working with the Vail Valley Foundation. The land that the town owns across the street from Piedmont apartments, we are looking at an early childhood education school that would have capacity for 180 students, and right now we’re looking at conceptual plans that would have 24 rental apartments and 24 for-sale condominiums, and the priority would be for employees of that early childhood education school and then Eagle County school districts employees,” Heil said.

The establishment of Avon’s Downtown Development Authority is subject to a special election. Only registered voters that are residents, property owners or business lessees within the boundaries of the Downtown Development Authority can vote. Voters can participate by mail ballot or by going in person to the Avon Town Hall on the day of the election, Tuesday, Aug. 29.