City has one powerful weapon to enforce growth policy

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Confession: I watch a lot of TV sports. Observation: calm, cheerful, unworried coaches are about as common as short, fat models.

Coaches spend their time in stressful contemplation of the future, especially on game day. Pass complete or incomplete? We gave up a short-handed goal? We’re losing at home to the Chiefs?

But what coaches most fear is unrecognized change, an innovation in the game that catches them flat-footed. If they catch on too late, there’s not much they can do. The game passes them by, the losses pile up, and pretty soon the coach, his assistants, and his players are gone.

That’s why grim-faced coaches sleep badly, wake up early and never stop scowling.

Our august city officials might do well to imitate Bill Belichick or Tom Landry, because the city’s game plan needs serious revision.

Consider annexations and water policy.

Since 1989, when Colorado Springs annexed the 25,000-acre Banning-Lewis Ranch, city policy has been driven by the supposed fiscal benefits of such annexations.

Given that growth is inevitable in the Pikes Peak region, city officials believed that the city should both benefit from and exert some degree of control over regional expansion. Growth outside of city boundaries, it was believed, would indirectly strain city infrastructure and siphon off tax revenues.

The city had — and has — a single powerful weapon to enforce its policy:

Water.

Since the city’s birth 139 years ago, Colorado Springs taxpayers have funded an extensive system for transporting, storing, treating and delivering water to the city’s businesses and residents. The system’s infrastructure is worth billions, but the overall value of the system is immeasurable.

That’s because the era of building massive trans-mountain water delivery systems has passed. Even if there was available water on the western slope to transport to the Front Range, it’s doubtful that its promoters could overcome the myriad political, environmental and financial obstacles blocking any such endeavor.

That simple fact puts the city in the cat-bird seat. No large-scale residential development can easily be built in El Paso County without an assured water supply, and the only absolutely reliable, renewable, and sustainable water source is the city of Colorado Springs. It’s true that many thousands of homes and businesses in the county receive water from other sources, and it’s equally true that the well fields that supply such homes and businesses may have a limited lifespan.

If you want city water without the pain of annexation fuggediboutit, as Tony Soprano would say.

The city’s comprehensive plan assumes that “revenue generation (from annexed developments) will be sufficient to cover the implied service obligations generated by new growth.”

Earth to city: that may have been true in 1989, but the game has changed. TABOR and Gallagher have tilted the playing field. The city can no longer collect enough property or sales taxes to make annexations worthwhile. New development is at best revenue-neutral, and we’ve got plenty of undeveloped land within the city limits.

Other municipalities in Colorado have figured out that new development through annexation doesn’t pay.

Littleton, a Denver suburb, recently rejected a proposed annexation that would have increased the city’s population by 75 percent. The city’s analysis of the deal showed that tax revenues would increase by only 31 percent, not enough to offset the “implied service obligations” of the annexation.

Littleton Mayor Doug Clark said that the deal made no fiscal sense.

“They (the developers) are pretty desperate for water or they wouldn’t be doing this,” Clark said. “Anyone looking at this would say it is a stupid deal for Littleton.”

Note to city leaders: if you want the kind of cost-free revenue that development once brought to the city, you’d better adapt to the new reality and use the water weapon.

City council, you just handed the Cherokee Metropolitan District, which found itself without enough water to serve its 18,000 customers, a sweetheart deal. You agreed to hand over 500 acre-feet of water annually at a modest premium, and now they’re back in business.

That’s like a payday lender charging 2 percent annually, or like Bill Belichick suddenly losing his mind and releasing Tom Brady.

You should have heeded the wisdom of Cornelius Vanderbilt, and charged whatever the market will bear.

“You want our water? Fine, as long as your customers agree to pay city sales and property taxes, and receive no services other than water. That’s the deal — for you, and for any other user outside our service area. Sounds like a bad deal? Too bad — build your own multibillion-dollar water delivery system.”

Scowl, worry, drive a hard bargain and the ghost of Tom Landry will smile upon our sunny metropolis.

John Hazlehurst can be reached at john.hazlehurst@csbj.com or 719-227-5861.

One Response to City has one powerful weapon to enforce growth policy

  1. John,
    Having worked on the comprehensive plan, I’ll readily admit that it does not synch with reality and actually has not ever since TABOR reduced property taxes and eliminated capital improvements tax funding, curtailing two basic fiscal tools most communities utilize. Annexations became a search for the next sales tax shot, but that never covered full costs of growth. However, I think the key impediment to using water as a growth management tool is the confusion of goals between the general city and CSU, at least partly attributable to TABOR and CSU’s designation as an enterprise. Utilities has never been seen as a growth management tool, but as a business that looks for new customers and more revenue. With huge bills for SDS, it’s only logical to look at all of that urban density development in El Paso County, which many think was approved without adequate long-term water supply. City and CSU staff worked off and on for close to 10 years on ways to permit other parties to participate in SDS (with their own water) to reduce SDS costs for city residents, and also to capture some “fee” or sales tax equivalent, as you’ve suggested. The idea was always seen as problematic, although much effort went into its evaluation. The real issue is that the earlier sensible approach of confining urban development to municipalities that can actually provide urban services (our regional growth policy) was torpedoed by all of that county development, which began the deterioration of the sales tax advantage the city had, which has brought us to the present. Now we are experiencing duplication of service needs in the county as it has to provide some urban level services, which by the way city residents also have to pay for. I’m in agreement on the desirability of using water as a growth management tool, but there is a hell of a big train wreck out there, and a lot of local officials haven’t figured that out yet.

    Ira J Joseph
    April 9, 2010 at 10:37 am