Colorado Real Estate Journal - December 2, 2015
About 18 months ago, Gov. John Hickenlooper thought that the redevelopment of a site at West 38th Avenue and Wadsworth Boulevard was so important that he signed a bill at the Wheat Ridge site. The site, which the city has wanted to see redeveloped for decades, along with even much larger projects in the works in Wheat Ridge, is now in jeopardy. That is because on Nov. 3, voters in Wheat Ridge narrowly adopted Resolution 300, which requires voter approval for any tax-increment financing above $2.5 million. The ballot measure is extremely unusual in that it was made retroactive to March 1, 2015. If upheld following an expected court challenge, it would kill the $6.2 million TIF approved by the Wheat Ridge City Council last June. Wheat Ridge City Councilman Zachary Urban had this to say, in opposing the TIF vote in June: "We're giving an obscene amount of money on an outdated plan, and the whole process has been obscene, obfuscated and is now obsolete because it's taken so long to get to this point." In November, Urban said he could not speak to certain aspects of the ballot question on the advice of counsel. However, he said the city is taking steps to “reduce barriers for the development community seeking tax-increment financing for development projects in Wheat Ridge. “We are currently planning to make substantial modifications to each of the city of Wheat Ridge's five redevelopment area plans,” Urban explained. “We are seeking amendments to the plan areas to allow for the initiation of the collection of incremental revenues. We have just sent the proposed amendments to the Planning Commission for review. “It is my hope that by starting the TIF clocks in each of these plan areas, we can remove another hurdle from the development process. “The passage of 300 may mean developers seeking more than $2.5 million in tax-increment financing on a particular project or even a phase of a project may need to be more creative and flexible when developing in Wheat Ridge.” For example, developers could make a request for tax-increment financing of $2.4 million each. “Those projects would still require a vote of City Council, but not require a vote of the people,” Urban said. “For those projects seeking greater than $2.5 million, my experience with Wheat Ridge voters is that if you give them a fair offer and a smart proposal, the results will be favorable,” he said. The redevelopment plan for the site calls for a 40,000-squarefoot Neighborhood Market, which is the stand-alone grocery store concept by Walmart, another 40,000 sf of retail space and 37 housing units. The vote sparked the drive to place the measure on the ballot. Following the council vote, red anti-Walmart signs began popping up like dandelions throughout Wheat Ridge. Last month, 4,998 voted in favor of Resolution 300 and 4,633 voted no. The 365 vote margin in favor meant it passed with less than a 3 percentage point margin – 51.89 percent to 48.11 percent. Those in favor of Resolution 300 based it on these three bullet points, according to a group that organized to support it: • It gives our community, our citizens, the right to vote on urban renewal plans that contain (tax-increment financing greater than $2.5 million); • It promotes smart development by giving citizens a voice in the future of our community and its development; • And it provides accountability and transparency with regard to how our tax dollars are spent by an unelected board. Those who opposed it, including a number of prominent developers in Denver, had quite a different take. “The successful redevelopment of the old Stapleton airport would not have been possible without a reliable tax-increment financing component, said John Lehigh, president and chief operating officer of Forest City Stapleton. “We never would have risked investing in Belmar or the University Hospital site if we knew our TIF packages would be subject to voter approval,” said Mark G. Falcone, founder and chief operating officer of Continuum Partners. And Steve Shoflick, principal of Miller Real Estate Investments LLC, had this to say prior to the Nov. 3 vote: “We have been involved in many successful public-private partnerships across the metro area. In each instance, the use of tax-increment financing was a critical component required to bring the project to life. “Without the complete confidence that such financing would be approved, we could not have pursued those developments,” Shoflick said. “Requiring voter approval would have made the pursuit too risky.” Patrick Goff, city manager for Wheat Ridge, said a lawsuit opposing the retroactive nature of the ballot measure as unconstitutional likely will be filed prior to the Colorado Real Estate Journal deadline for this article. “It’s probably going to be filed any day,” he said in mid-November. In fact, there is also a question as to whether the entire resolution is constitutional, Goff said. But if it is upheld, the first thing it likely will do is “kill” the 38th and Wadsworth project, he said. The developer, Quadrant Properties, already has invested $600,000 to $700,000 into that development, Goff said. Stan Kroenke, the owner of the Pepsi Center, the Denver Nuggets and a Walmart heir, is one of the partners in the proposed project, Goff said. A much bigger deal is also in jeopardy. An unnamed developer plans to buy an 80-acre site at Interstate 70 and Highway 58, where Cabela’s was planning a 1 millionsf development a decade ago, before backing out of the deal when the economy softened. “Cabela’s was looking at $30 million or $50 million” in taxincrement financing, Goff said. The new development would likely have 500,000 sf to 600,000 sf of space, but still would call for many millions of dollars in taxincrement financing, resulting in a vote by Wheat Ridge residents, if the resolution is upheld in court. When Resolution 300 was adopted, the developer of the former Cabela’s site was incredulous, Goff said. A number of other projects on the drawing board also will likely be scrapped, Goff said, if the resolution doesn’t lose in court. Wheat Ridge may look like it is not “open for business” if Resolution 300 is upheld, he said. “That is one of my main concerns,” Goff said. “Wheat Ridge had that reputation for several decades. “We really worked hard over the past decade to change our image and that we were really open for business,” he said. “Now, Wheat Ridge is facing a big obstacle. Developers are not going to want to take a chance with us and will go elsewhere. That is what really scares me,” Goff said. Max Truax, the campaign manager for Forward Wheat Ridge, a group that opposed Resolution 300, said he thinks the vote narrowly passed because of a lot of misunderstandings. “I think part of is that a lot of people just saw it is an antiWalmart vote,” not realizing the impact would go far beyond a relatively small grocery store at Wadsworth and 38th, he said. However, if the measure stands, it sets a “dangerous” precedent, not only for Wheat Ridge, but also for the metro area. He pointed out that Littleton voters previously approved a similar measure. “I could see these types of votes spreading to bigger metropolitan areas, even Denver,” Truax said. Going forward, it will be important for other communities “to get out in front of” such citizen measures as early as possible, he said. “You really need to address the root causes for these types of measures and host town meetings to discuss them,” Truax said. “If you don’t get in front of it, is very easy to lose in the court of public opinion and lose at the ballot box.”