Retail developments that rely on tax-increment financing should place greater emphasis on attracting local businesses as tenants, according to a new report by a public policy group affiliated with the Denver Area Labor Federation.
The Front Range Economic Strategy Center called on the Denver Urban Renewal Authority to focus on smaller, neighborhood-oriented projects that are more likely to attract such tenants.
Tax-increment financing allows developers to pay for a portion of their projects with future tax revenues they will generate. Such subsidies in Denver add up to almost $30 million a year.
The report raised some valid points but overlooked several smaller projects that are almost entirely local retailers, said the renewal authority’s executive director, Tracy Huggins.
The report examined three of the largest tax-funded retail projects in the city – Quebec Square at Stapleton, the Denver Pavilions downtown, and Broadway Marketplace at South Broadway and Alameda Avenue. Less than 5 percent of the combined space in the three projects is occupied by local businesses, according to the report.
Study co-author Chris Nevitt cited studies indicating money spent with local retailers is more likely to stay in the community because those retailers tend to do business with local suppliers and be more involved in local programs.
Developers said they strive to achieve a balance between local and national tenants.
“A project of this magnitude has to have national and regional draw,” said Pavilions general manager Karen Mulville. While local businesses help a project distinguish itself from competitors, such companies can be harder to sign because they are often not as well-financed, she said.
Demand from the surrounding neighborhood influenced Stapleton’s decision to bring in national retailers like Home Depot and Wal-Mart, said Tom Gleason, a spokesman for Stapleton redeveloper Forest City. At Stapleton, tax funding is being used only to fund infrastructure improvements.
The Economic Strategy Center’s decision to concentrate on the three largest projects resulted in the exclusion of several projects where almost all of the space is devoted to local tenants, Huggins said. As an example, she cited Mercantile Square in Lower Downtown. The building’s three retail tenants are the Tattered Cover Book Store, Dixons and Wines Off Wynkoop – all locally based.
The Economic Strategy Center recommended that DURA concentrate on smaller pro jects and consider setting goals for the inclusion of local businesses. Huggins, however, does not believe DURA should place such demands on developers.
The group also recommended that DURA make its processes more transparent and re- examine the returns it negotiates with developers.
Staff writer Kristi Arellano can be reached at 303-820-1902 or karellano@denverpost.com.
