The Post Editorial RTA exposes flaws of TIF

Colorado lawmakers have given away nearly a halfbillion dollars in expected state sales taxes over the next several decades based on less- thansound methods, according to an audit released this week of the state’s relatively short- lived Regional Tourism Act.

Consider us not surprised. We raised concerns in 2009, when lawmakers passed the act that allowed the state to give away future tax collections to private and public projects that attracted new tourists to the state.

The good news is that this highdollar experiment is over, and lawmakers seem very unlikely to revive the program. But there is more of a cautionary tale in this story than that of one ill- conceived tax giveaway scheme.

The Regional Tourism Act was based on the same flawed tax- incentive system that cities and counties across the state are still using: incentives known as tax- increment financing.

In such deals, developers are promised a portion of the future tax revenues generated by their development to help offset the costs of their project.

The fundamental flaw of all taxincrement financing deals is that they are based on the assumption that without the incentives, a project would never be developed. Sounds great, but for the fact there’s no proof to the contrary. It’s an assumption that we often think is closer to a lie.

The most frustrating part is that governments, whether at the state or local level, aren’t demanding financial information that could prove that these projects or others couldn’t produce benefits without the incentives.

As such, the lie is an easy one, and cities, counties and the state play along to the detriment of taxpayers.

The state’s audit of the tourism act should be a wake- up call to lawmakers who have the power to tamp down misuse of tax- increment financing in all forms.

The audit found that in all but one case the 11 members of the Economic Development Commission awarded applicants millions of dollars more than a third- party analyst determined was appropriate.

A convention center expansion and professional bull riding arena in Pueblo could receive up to $ 35.7 million in sales tax revenue, even though the third- party analyst recommended only $ 14.8 million.

Developers of a massive hotel and conference center that is under construction in Aurora were awarded $ 81.4 million. The gift was in line with the third- party consultant’s recommendation. However, the state failed to stipulate a cap on the award. Gaylord Rockies will keep 65.8 percent of the sales tax generated on its property for 30 years— regardless of how much the total amounts to.

In Colorado Springs, a privately run downtown Olympic museum, the Air Force Academy and the University of Colorado campus will all get a share of $ 120.5 million, although the third- party analyst felt the projects could justify only taking $ 53.1 million from an area encompassing almost the entire city.

A family resort and water park planned for northern Colorado received $ 86.1 million, although the analyst recommended only $ 61.6million.

And finally the DenverWestern Stock Show, the only truly public project, landed $ 121.5 million, although the analyst recommended only $ 81 million.

We welcome these developments to Colorado, but are dismayed they will receive tax dollars with meager justification for the level of investment from our limited statewide tax revenue. The members of The Denver Post’s editorial board are William Dean Singleton, chairman; Mac Tully, CEO and publisher; Chuck Plunkett, editor of the editorial pages; Megan Schrader, editorial writer; and Cohen Peart, opinion editor.