Moss Rock Hotel Tax Increment Financing, explained by mayor
Lyons created the Lyons Urban Renewal Authority (LURA) in 2015. The goal of an urban renewal plan is to revitalize an area which requires additional intervention in order to remedy blight, restore economic vitality and improve safety. Colorado has empowered local authorities with certain tools, including tax increment financing (TIF), to offset costs and encourage investment by the private sector in urban renewal areas. Without urban renewal, developers lack incentive to tackle the challenges associated with infill redevelopment or environmentally complicated sites, and would instead have an incentive to continue to direct growth to the fringes of communities, where development is cheaper and easier, which would add to the problem of sprawl. The LURA is a tool to assist with the restoration and redevelopment of specified areas determined to meet the State Statutes for blight. The LURA promotes projects that supply public benefit, provide quality sustainable places, create jobs, promote public art, offer affordable housing and raise the standard of development within the Town of Lyons.
The LURA has a Chair (me, the Mayor) and a Board. The Board is composed of the members of the Board of Trustees, a member from the Lyons Fire Protection District, a member from the Library District, a member from the St. Vrain Valley School District, and an at-large member. LURA meetings are always open to the public and generally occur on the third Thursday of every month. Meeting notices, agendas, and minutes are posted on the Town website.
The primary implementation strategy of the LURA is to provide selected developers with
the financial assistance necessary to allow the redevelopment project to succeed in the marketplace. When the LURA partners with a private developer and provides
assistance to help finance redevelopment of a blighted property in Lyons, the main tool it uses
is called tax increment financing (TIF.)
TIF is a mechanism to capture the net new or incremental property taxes that are created when a vacant or underutilized property is redeveloped and uses those revenues to help finance the project. A redevelopment agreement between the LURA and the developer is negotiated that lays out the specifics for which developer-incurred qualified expenses will be eligible for reimbursement as well as the total amount of increment that will be paid. TIF can be collected and disbursed as reimbursement for allowable expenses for a maximum of 25 years or the remaining life of the Plan area.
Moss Rock Development approached the LURA about utilizing Tax Increment Financing, and the LURA agreed. Under the agreement terms, the LURA will reimburse Moss Rock up to $3.38M of the property tax increases that result from the hotel being built, over the course of 14 years. This reimbursement comes from the difference between the “base” property taxes—what the property is assessed at now—and the increased value of the property after the hotel is built, as expressed in projected increased property tax.
It is important to note that one of the questions the LURA asks itself is the “but for” question: that is, “But for tax increment financing, could this project proceed?” If the answer is no, the project qualifies for TIF. That is the conclusion the LURA Board came to regarding this proposal.
It is also important to note that this financing is not being paid for by taxpayers; without this project, the property values would not increase, so nor would the assessed property taxes. It is also important to note that many other streams of revenue will flow into the town as the result of this project, including one-time use taxes for construction materials, significantly increased sales taxes, a recently increased occupancy tax, and a boon to local business sales.
If you are interested in learning more about how the LURA operates, please feel free to visit the town website or attend our meetings!
……………………Hollie Rogin, Town of Lyons Mayor, 5/23
Thank you, Mayor Rogin, for the explanation. What is missing from the narrative is why Moss Rock didn’t come to the LURA early on in the development process 2 years ago. Why I believe they are now engaging LURA is because of the cost of financing, which has gone up dramatically (think the difference between a mortgage 2 years ago and now). The increase is also why I believe they sought a partnership with Marriott; the cost of money and the increased cost of commodities. Mayor Robin makes a good point – the rooms tax and sales tax generated from this hotel will benefit Lyons, as well as all downtown businesses with increased business.