Castle Rock’s economic leaders hope the town agrees with them when it comes to an urban renewal authority.
The Castle Rock Economic Development Council, with the help of town staff, has invested months of research into a URA to trigger economic growth.
The research was launched after the town lost a number of potential new businesses because of the shortage of commercial and retail space in Castle Rock, said Frank Gray, president of the EDC.
“We have a very low vacancy rate in Castle Rock and no blocks of contiguous space available,” Gray said. “There’s no room for growth or expansion. We needed to solve the short- and long-term space issues.”
While the economic development council considered a number of options, the URA emerged as the front-runner, with a solution that opens the door for property owners to tap into financing secured by the potential increase in property value.
To justify the establishment of an authority — which would encompass all of Castle Rock — the town must meet one of the state’s 11 factors for blight, according to a report from the consulting firm Ricker/Cunningham, which conducted a blight analysis for the town.
In Castle Rock’s case, the town meets nine of the statutory factors for blight, Ricker/Cunningham reports. The factors range from environmental contamination of buildings or property to unusual topography or inadequate public improvements.
Once an authority is established, it opens the door for property owners to apply for consideration to declare a property blighted and establish an urban renewal area — or boundary — on the property. To establish an urban renewal area within the authority, the proposed area must meet four of the state’s blight factors.
The application for an urban renewal area must be accompanied by an urban renewal plan, an agreement unique to each area that could contain provisions for tax increment financing. Tax increment financing dedicates the future increase in property taxes to the authority, which has the ability to apply for bond financing to make improvements on the property.
The typical urban renewal area is one where there is a development challenge that prevents the private sector from developing the property, said Mark Stevens, town manager.
As an example, the economic development council points to a parcel in Castle Rock with commercial potential that sits on an old landfill. The cost of mitigating the environmental issues created by the landfill is prohibitive to private development, effectively rendering the property undevelopable, Gray said.
If the property could qualify as an urban renewal area, TIF money could unlock the economic development potential on the property, he said.
While a TIF should be considered as the last piece of the puzzle, the tool is pivotal to triggering the growth potential that sits stagnant in such properties, Stevens said. To qualify for an urban renewal area, the potential increase in property value must be sufficient to support a bond issuance and the developer must demonstrate the area is needed.
“If we don’t do something, the value of the property won’t increase,” Stevens said. “People argue that we should wait out (the real estate market), but we have properties in Castle Rock that sat vacant in the best real estate boom in the history of Colorado. There’s a problem to be solved.”
Among the issues debated with establishment of an authority is the dedication of future property tax growth to the authority, at the expense of other taxing entities such as the school district, the library district and the county.
While the Douglas County school and library districts support the tool as a method for economic growth, each district would consider any urban renewal area on a case-by-case basis.
“The only issue we have is that I hope it won’t be used for residential development,” said Jamie LaRue, executive director of the Douglas County Library District. “I am confident we will be able to negotiate in good faith to say you don’t want people to come into an area and deprive them of library services.”
Town council will consider adopting a resolution to create an urban renewal authority in Castle Rock at its regularly scheduled council meeting at 6 p.m. May 7 in council chambers at town hall, 100 N. Wilcox Street. The meeting is open to the public, which can weigh in on the matter during the public comment period of the hearing.
For more information about the framework of an urban renewal authority, area and plan, visit the town’s website at crgov.com/URA.
Urban renewal in Castle Rock
• Urban renewal authority: Provides the ability for property owners within the authority — which would encompass all of Castle Rock — to apply for consideration to establish an urban renewal area.
• URA board: Comprised of town councilmembers who, acting as the authority board, would consider each application individually. Final approval of any application rests with councilmembers, acting as town council.
• Urban renewal area: Identifies a boundary within the authority that contains four of 11 blight factors. Consideration as an area must be triggered by a private property owner or owners.
• Urban renewal plan: An agreement tied to the urban renewal area to outline the area’s blight factors, the development plan and any tax increment financing agreement.
• Tax increment financing: Dedicates the future property tax growth on the property to the authority for the purpose of financing improvements on the property. To qualify for a TIF, the potential increase in property taxes must be sufficient to support a bond issuance.
Source: The Castle Rock Economic Development Council, the Town of Castle Rock.