Title
Temporary Reduction in Mill Levy
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Summary and Background Information:
The developer of Nexus (DIA Tech Center) has prospective land purchasers who will not close without a reduction in the property tax rate. Therefore, the developer requests that the ECAGID temporarily lower its mill levy for five years.
The developer said that the property tax rate is a significant factor in the due diligence being done by the prospective property purchasers. To quote him, the “…40 acre prospect will not build the 675,000 square feet of space without a mill reduction. Compared to other projects, the Nexus location is not as proven as the I-25, I-70 or Boulder Turnpike, but the (vertical) developer is building good product and the land cost is less so if they can keep the rate competitive the project will be a success.” The infrastructure needed for the other prospects is reliant on 40-acre prospect closing on the land purchase.
The developer has a hotel under contract and letters of intent with two property purchasers. One is for a 40-acre development where the vertical developer proposes to build two front office/rear warehouse spec 115,000 square foot buildings. In the rear of those is proposed a 445,000 square foot cross-dock distribution facility. Below is an example elevation of the two 115,000 sq. ft. buildings proposed by the prospect for the first phase at Nexus.
The 38-acre site is for a build to lease 500,000 square foot industrial building for a Fortune 100 company.
The 2018 revenue impact of lowering the mill levy from 27 down to 10 is minimal, only $2,898.25. In 2019, when the McLane facility hits the tax rolls, then the impact is more significant. But, the ECAGID has no debt and the temporarily reduced mill levy will easily cover the administrative expenses for the district. The DIATC Metro District will also reduce its mill levy. It cannot reduce it as much since it will be issuing bonds to build the infrastructure needed for the project and to repay the ECAGID’s loan made for the earlier phase of infrastructure.
The choices for the Board include:
- Do nothing and leave mill levy at 27 mills
- “Plough new legal ground” by providing incentives
- Temporarily reduce the mill levy
The staff recommendation is to temporarily reduce the mill levy to ten mills each year for 2018, 2019, and 2020. In 2021 and 2022 reduce the mill levy to 15 mills. The reason for 15 mills in these two years is to build a reserve in anticipation of issuing bonds in 2023 for infrastructure. Then in 2023 go back to the full 27 mills.
Staff Responsible (Department Head): Roger Tinklenberg, Deputy City Manager
Staff Member Presenting: Roger Tinklenberg, Deputy City Manager
Financial Impact: $2,898.25 in 2018
Funding Source: ECAGID
Staff Recommendation: I move to direct staff to prepare the mill levy certification showing 10 mills in 2018.
Suggested Motion: Move to prepare the mill levy certification showing 10 mills in 2018.