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Town approves resolution
Monday, November 22, 2010

After calling a special meeting for Friday, July 10, the Pagosa Springs Town Council voted to approve a resolution and the first reading of an ordinance that will hopefully provide economic relief for town residents.

The resolution and ordinance, parts of an economic development plan identical to that passed by the Archuleta Board of County Commissioners on July 7, waives town impact fees, land use development and building fees, and provides sales tax rebates to developers and builders who purchase materials locally and hire local labor.

Council called the meeting to vote on the measures after discussing the economic development plan on Thursday, July 9.

Presenting before a packed audience on Thursday, Town Manager David Mitchem explained that the resolution and ordinance were the first steps towards a broader, more comprehensive economic development plan.

“We’re going to talk about a couple of incentives, today,” he said, “but that’s not sufficient. We need to talk about a portfolio of incentives.”

The plan presented by Mitchem was thin on details or ideas about how the town would boost tourism or help local area businesses; the only firm proposals offered in the plan were the building and development incentives that council approved at its special meeting.

Nonetheless, residents who addressed the council during the work session, spoke unanimously in favor of the plan.

“As president of the Home Builders Association,” said Bob Hart, “I’d like to thank David for his efforts. I think this is a very good start.”

Hart went on to add that the Town Tourism Committee was considering the proposal of other economic incentives for downtown businesses: providing sales tax incentives for merchants who stay open seven days a week and keep longer business hours.

Several other residents also spoke in support of the plan, including local Realtor Juli Morelock who said, “I’m in touch with a client who is ready to build a high-end home,” implying that the elimination of fees swayed the decision to build, adding, “The client wants whatever information is available,” regarding the town and county’s fee structure.

Council was clear that, once resolutions and ordinances had passed, it would do whatever was in its power to alert the public — in and out of Archuleta County — that “We’re open for business,” as Mitchem said.

Council member Shari Pierce asked, “How do we get the word out?”

Mitchem stated that word of incentives would be posted on the town’s Web site and staff would investigate any possible means of advertising that Pagosa Springs was “creating a pro-business environment.”

However, “a pro-business environment” was not clearly articulated in Mitchem’s plan except in how it related to providing incentives for further building and development. Although Mitchem’s presentation stated what needed to be done to further economic development in the Pagosa area, how the plan would specifically achieve those goals was missing.

When asked how building in an environment that has a record surplus of residential and commercial properties would benefit the local economy, council member Mark Weiler said, “It creates an internal velocity of money in the community which will increase the value of the initial infusion of cash by a factor of five to ten times.”

What Weiler proposed (with the phrase “internal velocity of money”) is the idea that cash infused into the local economy will potentially change hands many times, benefitting numerous businesses and residents as it circulates. Weiler might have slightly overstated the factor by which initial investment would increase, since Archuleta Economic Development Association (AEDA) Executive Director Bart Mitchell said in a later interview that, “The scenario would be, in the best case, a factor of three to five times.”

In fact, in order to achieve Weiler’s projection, $100 spent locally would have to change hands between five and ten times with none of that money leaving the county — a highly improbable scenario.

It was apparent that most residents attending the discussion were convinced by the logic of the plan, with local business owner Steve Van Horn saying, in regard to the question of how adding inventory to the current glutted home market will help improve the economy, “I’ve heard this come up before. What will fill the vacancies are the jobs created.”

“Our two largest industries (building and real estate) are being addressed by this plan,” Van Horn added.

Except, building and real estate are not the two largest industries in Archuleta County. According to a report recently released by Region 9 Economic Development District, construction accounted for 15 percent of employment in Archuleta county in 2007 — during a period when building and development were still strong in the area — and accounted for 15 percent of total income in the county.

That same study indicated that services accounted for 40 percent of jobs in the county (and 30 percent of all earnings), while wholesale and retail trade accounted for 15 percent of the jobs and 17 percent of total income. The study showed government (including the school district) employed 11 percent of job holders in the county while providing 18 percent of total earnings, closely edging out finance, insurance and real estate, which provided 11 percent of local jobs and 16 percent of total local income.

At the start of his presentation, Mitchem recognized the services and retail sectors of the economy, saying, “I believe we have two economies here in Pagosa Springs. Downtown, we have an economy that is tourist based while uptown, we have a suburban retail economy. We need to remember there is a distinction between the two. We’re hemorrhaging money out of the community and we need to stop that hemorrhaging.”

How that hemorrhaging would be mitigated was not addressed in the plan, however. Aside from proposing a 25-percent sales tax rebate on building materials purchased locally by builders and developers, the economic development plan contained no substantial incentives for reviving the retail and service sectors of the economy.

Still, with no dissent apparent on the council, Weiler was anxious to expedite the approval of the resolution and ordinance, asking the council if it could reconvene the next day to vote on both measures. Council, attempting to accommodate various schedules and meet Sunshine Law provisions, agreed to meet again the next day at 5 p.m.

At the Friday meeting, council heard several concerns regarding the measures to be put to a vote.

Pierce pointed out that language in the ordinance referenced sections of the Land Use and Development Code that were either wrong or nonexistent. Pierce also pointed out that the town “Collects impact fees for the school district and emergency dispatch. If we approve this, where will that leave them in collecting those fees?”

“If we elect to go forward,” Mitchem replied, “we would go to the school board and emergency dispatch and let them know what we’re doing.”

Yet, when the town intends to apprise the school district or emergency dispatch of its intentions remains unclear. No town staff or council member attended the meetings of the fire district board (the district administers emergency response) or the school board (see related story), both held Tuesday. Furthermore, although the town agreed to fund an intergovernmental agency (IGA) for the emergency response system to the tune of $50,000, the status of that IGA remains clouded as the town will no longer collect impact fees due to the fire district for the emergency response system.

Another concern, raised by Pagosa Area Water and Sanitation District (PAWSD) District Manager Carrie Weiss, involved the status of the Community Economic Roundtable (CER) and the monies that had been allocated to that project. The CER began meeting June of last year to develop an IGA between the various local organizations, such that all taxing entities within Archuleta County would work from a standardized formula for a “rational nexus” (i.e. the connection between the impact created and the resulting fee collected).

Weiss asked, “What about the Community Economic Roundtable? Is that a moot point? Is that going to be wasted money?”

Mitchem responded that, although results of the CER were due in less than a month, the findings of the study would not be relevant for the next 18 months and would, most likely, after that, require another study.

For his part, Weiler responded that PAWSD had funded its own studies and should look to its own finances and determine if the district could pay its own way. He also said, regarding the collection of fees for the fire and school districts, “We’re (the town) done doing the dirty work for other organizations.”

Again, the building and real estate community was well represented at the meeting, speaking in favor of the two measures before council. Van Horn spoke to the need to eliminate impact fees, saying, “Jobs is what is going to fill those vacant homes; jobs will fill those empty commercial spaces.”

“This is an experiment,” he added, “if this works, wonderful. If it doesn’t, we haven’t lost anything.”

At the end of the day, council seemed prepared to attempt that experiment. Weiler asked when the second reading of the ordinance could take place. He was reminded by Mitchem that statute requires 10 days before a second reading and that the August council meeting would be the most appropriate time to pass the ordinance.

By a unanimous vote, council approved the resolution and the first reading of the ordinance. Council will convene again at Town Hall on Tuesday, Aug. 4, at 5 p.m. for the second reading of the ordinance.

jim@pagosasun.com