County takes Timnath to task over tax dispute

By Dan MacArthur
Fossil Creek Current

Larimer County is challenging Timnath's creation of an urban renewal authority as an illegal attempt to transfer the cost of the town's growth to all county taxpayers.

Timnath's designation of all land within its urban growth area as a URA, the county contends, is an abuse of its urban renewal authority and will "place upon all citizens the cost of new growth instead of growth paying its own way."

The suit, which seeks to void Timnath's designation of a URA beyond the "historic and developed area of the town," came as a surprise to town officials, who were not aware the lawsuit was in the works until is was filed on March 22.

"This is just shocking," said mayor Donna Benson. "We've been working pretty well with (the county) on some regional issues and nothing came up."

"I don't want anybody to take this personally," said commission chair Kathay Rennels.

While saying she regretted that the county had to take an adversarial approach, Rennels said the issue is a critical one requiring a court interpretation of which properties qualify for the "blight" designation required to create a URA.

At issue is Timnath's December approval of an urban renewal authority that included all the lands within the town's growth area--including more than three square miles of recently annexed farmlands.

The URA designation allows Timnath for 25 years to retain any additional property tax revenues generated as a result of the development or redevelopment of any properties within the URA. Without the URA, tax income would be shared with other government jurisdictions.

Timnath proposes to use such tax-increment financing, or TIF, for more than $70 million in capital improvements. Those projects include an estimated $21 million in drainage improvements and $4.4 million to replace the Harmony Road bridge over the Poudre River.

Benson said she finds the county's actions curiously inconsistent with the way it dealt with the 2003 creation of a 1,300-acre URA for Centerra project at Interstate 25 and Highway 34 in Loveland. Almost all that Centerra land, she said, also was undeveloped farmland.

Centerra was different, Rennels countered, because Loveland had already determined exactly how much TIF it would require to complete specific capital improvements. And she said the county was compelled to accept the Centerra URA regardless.

But county commissioners more than simply accepted Loveland's URA, Benson noted, saying that the county actually submitted a letter supporting its creation. The county's support, the letter stated, was based on its assessment that the resulting transportation improvements would offset the temporary loss of property tax revenue.

The county, however, holds that Timnath improperly included the undeveloped farmland in the URA to generate additional property tax revenues that rightly should be directed to the county to support its costs of providing services to all residents. The county does not challenge Timanth's ability to declare its current developed area as a URA.

"Use of a municipality's urban renewal authority and the accompanying tax-increment financing to pay for raw land new development is also contrary to the intent and purposes of the statutory urban renewal authority," the lawsuit contends, "because the cost of development is shifted from the developer and from the improved land to all the citizens and taxpayers of Larimer County through use of the TIF."

"Our tax dollars and our services are impacted by the dollars going to the Timnath developers," said Rennels. "Who stands up for the other people in the county who are paying for that?"

But Benson insisted that all the TIF money would be dedicated to public improvements. The developers, she pointed out, already contribute toward the cost of off-site impacts they create. The town collects impact fees of $2,000 per dwelling unit.

Designating undeveloped land as an urban renewal area, diverting property tax revenue from the new development, and freezing the tax base in the URA is a "gross misuse" of the town's urban renewal authority, according to the lawsuit. "If this scheme were followed by other municipalities, the diversion of tax revenue would be compounded with disastrous consequences to the county," it concludes. "This is not consistent with the legislative intent for urban renewal authorities."

"To us, it doesn't make any sense what they're saying," said Benson. "I think all we're doing is wasting taxpayers' money and attorneys' fees."

Timnath town attorney Kathy Haddock said case law during the last 25 years supports Timnath's actions. She said that she will file a motion for dismissal.