To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Robert J. Slentz, Town Attorney
Title
Ordinance Amending Chapter 3.04 of the Castle Rock Municipal Code Concerning the Town’s Sales Tax by Providing for a Sales Tax Credit Against Certain Public Improvement Fees Paid at Miller’s Landing [Northwest corner of Plum Creek and I-25] (Second Reading)
Body
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Executive Summary
The Ordinance was approved on First Reading February 21, 2017 by a vote of 4-1.
This Ordinance establishes a mechanism for 2.4% of the Town’s 4% municipal sales tax generated within the proposed Miller’s Landing development to be dedicated to the repayment of bonds to be issued by the Miller’s Landing Business Improvement District (“BID”) as provided in the Public Finance Agreement (“PFA”) concurrently before Town Council. This financial arrangement will take effect only in the event the conditions in the PFA are met by the Developer and the BID. The net effect of this financial arrangement is that on each dollar of taxable sales, the project will retain 2.4 cents and the Town will collect approximately 1.6 cents.
Discussion
The use of a Public Improvement Fee (“PIF”) as an economic development tool has become common in the State. This Ordinance authorizes a 2.4% credit against the Town’s sales tax to accommodate the imposition of an equivalent 2.4% Public Improvement Fee (“Credit PIF”). A nearly identical mechanism was utilized by the Town at the Promenade at Castle Rock, albeit at a different cost sharing ratio. The Credit PIF, together with the property tax increment captured through the Urban Renewal Authority and the 50 mill property tax imposed through the BID will be used to support issuance of BID bonds to fund construction of the necessary public improvements for the project. The Credit PIF will terminate on the earliest to occur of the following: (i) an aggregate of $56 million in Credit PIF has been generated, (ii) all BID bonds have been paid, or (iii) December 31, 2042.
The Credit PIF will be collected and paid over to the District on all taxable sales other than sales from -any grocery store of greater than 27,000 square feet or any large retailer currently in business in the Town. The latter is to minimize “cannibalization” of existing sales tax revenue; the former to discourage relocation of the existing Safeway center or the location of a competitive grocer which may undercut the viability of Safeway in its current location. The Safeway center is a major source of the sales tax increment generated by the Downtown Development Authority. That said, there is no prohibition on a grocery store location at Miller’s Landing, simply that there is no Credit PIF on sales from that store. It should be noted that a similar disincentive in the Promenade Public Finance Agreement did not deter the King Soopers relocation.
Staff Recommendation
Staff recommends approval of the Ordinance as presented on second reading.
Proposed Motion
“I move to approve Ordinance No. 2017-003, as introduced by title on second and final reading.”
Attachments
Attachment A: Ordinance