Local tax incentives for projects bear some scrutiny

Cross Currents: A column by Bill Christopher
Special to Colorado Community Media
Posted 8/9/21

There seems to be a growing breeze that hopefully will turn into a strong wind over state tax incentives given to businesses. According to the Washington Post, there is a growing interest in …

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Local tax incentives for projects bear some scrutiny

Posted

There seems to be a growing breeze that hopefully will turn into a strong wind over state tax incentives given to businesses.

According to the Washington Post, there is a growing interest in prohibiting state and city governments from using tax incentives to lure economic development. It is estimated that each year approximately $95 billion (yes that is with a B) is offered to businesses and developers. That is serious money and deserves more attention and deeper thought.

A couple of obvious, outlandish examples pertain to Amazon’s previous quest for a second headquarters and chipmaker Foxconn. New York and Virginia offered a combined $3.75 billion in incentives to seduce Amazon while the State of Wisconsin courted Foxconn with a $2.9 billion set of state tax credits in 2017. Boeing Aircraft received the richest tax break in history when the State of Washington gave away $8.7 billion.

This movement to cut “corporate welfare” has attracted noteworthy support on both sides of the political aisle. State legislators in 15 states (not Colorado) have introduced legislation that would block their governmental entities from offering tax incentives/subsidies.

Gaining momentum since 2019

Needless to say, this concept is in its early stages and it remains to be seen how many states will ultimately embrace it. The most obvious hurdle to overcome is the hesitancy of states enacting such laws is when not all states are on board in taking the same action. No one wants to put themselves at a disadvantage as long as incentives are the name of the game. The states of Hawaii, Florida, Massachusetts, Pennsylvania, Michigan, Utah, Alabama and Rhode Island are poised to act, but their legislation would not take effect on its own. It is dependent on other states enacting similar restrictions. It’s worth keeping an eye on this idea which gained momentum starting in 2019.

Focusing on the local government level

I believe there is merit in discussing this same concept at the local level. Too many times, developers or big businesses such as Wal-Mart, Costco, King Soopers and Target have pitted one municipality against another. Who will offer the biggest package of tax rebates, fee waivers, reduced land costs, etc.

Plus, in Westminster’s case, the city council’s sizeable incentive packages have been given to apartment developments, both subsidized and market-rate dwelling units. According to the Washington Post article, studies have confirmed that companies would make the same investment and expansion decisions without any tax breaks. Clearly, this is a conversation that needs to take place in all 50 states along with their municipalities.

The concept requires all players to be in agreement

When I was Westminster’s city manager, I certainly participated in the “incentives” game to help my city compete for jobs and tax base. If city governments are not of a mind to join forces and either do away with incentives or at least put a cap on them, then I would be the first to say “keep offering incentives, but at a justified, reasonable rate.”

You need a level playing field for the prohibition of incentives to work. It makes good sense if all players can come together. Some would argue that your city will lose the economic prospect if you don’t offer tax and fee incentives. That is not going to be a “black and white” situation every time. Sure, your city might lose some, but you are going to win some as well.

My point is to at least discuss with the voters and adjoining municipal governments. Try it, you might like it!

Westminster full of potential ballot issues

There could be a lot going to Westminster voters this November, including a sales tax increase for public safety (mainly for Fire Department expenditures) and $20 million in new debt, an extension of the existing ¼ of 1% Parks and Open Space sales and use tax to 2041 plus authorization to issue $15 million in new bonds and approval of the sale and taxing of marijuana are on the TABOR menu in Westminster. Council has until the end of August to take action on which of these will get the nod to go to the November ballot.

The city had a consulting firm conduct a poll on each of the possibilities. The Parks and Open Space tax extension and new debt came in fairly strong at 63% in support, 23% opposed and 14% undecided. Both the public safety tax increase/debt authorization and the marijuana sales/tax are right below the traditional 60% -plus rule-of-thumb to go to the ballot. I can’t see the council being comfortable in putting all three measures on the ballot.

What is especially puzzling to me is why they are in a rush for the extension of the Parks and Open Space tax to 2041. Currently, the voters have authorized the tax to the end of 2032. I am guessing staff wants to use the $15 million in a new bond authorization.

You will recall there is very little vacant land left in Westminster (less than one square mile) for open space purchases so the focus has to be elsewhere. Are they thinking of issuing debt for new sprinkler systems at city golf courses? Or would funds go toward a new recreation center in northern Westminster? Is that OK with the public? Let’s be transparent. We will have more to say once the city council has approved the necessary ballot language.

Northglenn embarks upon updating its comprehensive land plan

While the City of Westminster will soon wrap up their multi-faceted “Westminster Forward” effort - which includes the 2040 Comprehensive Land Use Plan- the City of Northglenn is just getting started on their land-use plan update.

Known as “Looking Up—A Vision for Northglenn’s Future,” staff has launched the process. The city is inviting all residents to get involved with the updating endeavor to reflect the community’s vision, values and goals for the future.

It has been 10 years since the last plan was adopted. With the Karl’s Dairy site now under construction, there is not much vacant land left for new development (15 acres). Re-development will be the main focus looking ahead.

Comprehensive land-use plans are the fundamental building block for municipalities to plan for the future. In turn, water planning and infrastructure plans are crafted based on the allowed land uses and densities. It will be interesting to see what emphasis Northglenn’s “Looking Up” process produces.

Still time to nominate people serving the community

The Westminster Legacy Foundation is anxious to receive your nomination of a deserving individual or group for the 2021 Community Service Awards event. This will be the fourth year to recognize folks who have given of their time and talent over the years to make Westminster a better place to call home.

There are seven categories again this year plus two COVID-19 Community Hero Awards. Given the demands caused by the pandemic and the wonderful response to help others, the Board of Directors has added COVID awards to this year’s slate.

Your nomination needs to be sent by August 16. Details about the October 28 Breakfast Awards event, category criteria, nomination form and more can be found on the Westyfoundation.org website.

Why not take some time and submit your nomination for a teacher, youth, community volunteer, non-profit organization or others today?

Bill Christopher is a former Westminster city manager and RTD board member. His opinions are not necessarily those of Colorado Community Media. You can contact him at bcjayhawk68@gmail.com.

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