Friday, March 18, 2016

Economic Development

Lincoln County EDC Article for Limon Leader/Eastern Colorado Plainsman

Today’s topic:  Reducing infrastructure cost barriers to the economic development process.  What does this topic really address?  Simply put:  if a new business would like to expand or locate to a particular area, say in Lincoln County, one of the leading barriers to making their location feasible is the cost of utilities, streets, and access with automobile, rail, and pedestrian traffic.  Oftentimes this set of costs that we refer to as infrastructure, can amount to as much as 40 percent of the overall costs of setting up the new location.  The current costs of materials such as fiber Internet line, underground PVC piping for water and sewer, roadbed and asphalt material, and concrete for the curb and sidewalk portions are significantly higher than they were just 15 years ago.  These costs have increasingly become a bigger and bigger obstacle to the process of economic development.

What can our local county and its municipalities do to lower infrastructure costs?  Where none of us can reduce the actual costs of what I mentioned, there are some tools in today’s economic development realm that can help pay for the upfront costs that can be recovered over a 15 to 25 year timeline following the implementation of the improvements, providing there are active commercial participants in the improved area.  In short, a portion of the increased tax revenues experienced by increased property valuation and greater sales tax collections can go to retire the fronted costs for infrastructure if set up properly.

To highlight one particular mechanism that can pay back fronted costs, let’s take a brief look at Tax Increment Financing, or TIF.   This set up requires a vote of the citizens where the TIF is being created, and must be managed by an Urban Renewal Authority, or a Downtown Development Authority that is created by the municipality.  That authority then has representation from almost every other government and district entity affected by the TIF.  Finally, the TIF district must address blight mitigation as its leading purpose in the economic development effort.  With all that being said, utilizing tax mechanisms such as TIF are only the product of a great deal of planning and consensus of an entire community. 

There are other mechanisms such as General Improvement Districts, and Special Improvement Districts that accomplish similar outcomes, but follow unique guidelines and pathways for their adoption and execution.  Rest assured that our office is exploring all tools such as these to help lower those pesky infrastructure costs!  Thanks for tuning in.

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