Funding redevelopment in areas that are in disrepair, environmentally contaminated, or have outdated infrastructure can be difficult. Businesses often can’t or won’t take on the risk, and cost of redeveloping an area in decay because it is easier and less expensive to build elsewhere.
If left to atrophy these areas attract crime creating bigger public crises. Public intervention is often the only way to activate and revitalize such sites.
Urban Renewal Authorities, like AURA, utilize Tax Increment Financing (TIF) to help fund redevelopment in these areas.
TIF works by dividing the tax stream of a redevelopment area. The first stream is the tax base. The base is the tax revenue the district currently generates.
The second stream is the TIF. TIF is the new tax revenue created above and beyond the base because of redevelopment.
TIF does not create new taxes. Also, schools, fire departments, RTD, and other government entities continue to receive their tax revenue from the tax base during the redevelopment period.
As an urban renewal area brings in stores and services new sales and property tax revenue is created. This new tax revenue is the TIF that can be used to fund environmental cleanup and establish new infrastructure or incentives which create the opportunity for new residential and commercial development.
TIF can only be used toward redevelopment for up to 25 years. The newly generated tax revenue goes to the city and other government entities. TIF is win/win because it creates redevelopment in rundown areas and creates new long-term tax revenues that cities, schools, and fire departments can use.
If the area weren’t redeveloped cities would never enjoy the new tax revenue. So AURA creates new revenue out of blighted real estate sites that can continue to help a community grow into the future meeting residents’ needs and wants.
An excellent example of this type of redevelopment in Arvada is the site once home to the Colorado State Home and Training School, also known as Ridge Home. Ridge Home was founded in 1909 and grew to a campus of more than 50 buildings on 68 acres. The institution was abandoned abruptly in 1992 due to budget constraints. The facility closed so quickly that beds, medical equipment, toys, and classroom materials were left behind.
The vacant buildings posed many difficulties to redevelopment due to expensive environmental abatement needs. The high costs to remove asbestos and other environmental contaminants, and expensive new infrastructure requirements, made it untenable for private developers to tackle the project. AURA stepped in to help create and fund a path forward using TIF to remove the unsafe, crumbling buildings that were a magnet for crime.
Today the site is home to the Arvada Ridge Marketplace and Super Target and two different residential developments. These developments wouldn’t have been possible if it weren’t for tools like TIF.
