For the last several months, an ambitious framework for partial public financing of some big — but as yet undefined — tourism projects has moved toward approval in the state legislature.
The financing vehicle detailed in Senate Bill 173 contains some worthy public safeguards, but also concentrates an enormous amount of power in a nine-member economic development commission controlled by the governor and legislature.
We’re not prepared to oppose the bill. But it strikes us that public commitments of the magnitude contemplated by this bill — for private projects, after all — ought to be subject to a broader approval process.
Word around the Capitol is that the bill paves the way for public financing of a facility jointly used by NASCAR and the National Western Stock Show, and improvements for Winter Olympics venues if Colorado were to get the Games.
Specifically, SB 173 would give local governments the ability to apply to use a portion of state sales tax revenue from a specific zone to help finance the construction of regional tourism projects that attract out-of-state visitors.
We’re talking about potentially $50 million a year in sales tax revenue dedicated to paying off bonds that could run as long as 30 years.
The governments would create regional authorities that would rely on tax-increment financing, or TIF, to spur development.
Generally speaking, TIF works like this: You designate a zone where the project will go and assess current tax collections, setting a base number.
The assumption is that additional tax revenues beyond the base are attributable to the development, and can be used to pay off debt incurred to build it.
The bill contemplates capturing only a portion of revenue above the base, an admission that the development zone would have experienced revenue increases even without the tourism project. That, we think, is a reasonable protection for taxpayers.
The measure also requires detailed economic analysis of how the project might increase obligations for nearby school districts and other governments, and how it might require road and other infrastructure improvements, another laudable measure.
Jason Dunn, a lawyer lobbying for the bill who in the past has counted International Speedway Corp. among his clients, said the bill precludes government from condemning property for the projects, which we think is an important protection as well.
At the end of the day, however, much of the discretion as to whether a project is approved rests with a nine-member commission that has five members appointed by the governor and the other four by the legislature.
Yes, there are public hearing requirements and application standards written into law. But such significant public commitments beg for a broader range of consent before such lasting arrangements are undertaken.
