The Boulder City Council will decide Thursday whether to place a measure on the November ballot to create a downtown development authority. The proposed authority would use future tax revenue growth to spur investment downtown, leaving less available in the near term for other city needs.
The proposal has split councilmembers. Proponents see it as a needed tool to address stagnant sales tax revenue in the downtown core. Skeptics worry about making a financial commitment amid economic uncertainty and prioritizing downtown when the city faces other pressing needs.
The council began exploring the authority after making economic vitality a top priority at its 2024 council retreat. The proposal comes as sales tax revenue has remained flat for years, contributing to a projected $6.5 million hole in the city’s 2027 budget.
How the DDA would work, and who pays for it
To create a downtown development authority, or DDA, council must first refer a measure to the ballot. It then needs approval from businesses, registered voters and lessees within the district boundaries. The proposed district would include much of downtown around Pearl Street, as well as University Hill.
If approved, the district would be governed by a board of five to 11 directors, as set by Colorado law. The directors, who would oversee investments in the district, would be appointed by the mayor and confirmed by councilmembers.
The authority would use tax increment financing to capture a portion of future revenue growth and funnel it toward projects meant to attract visitors and increase spending. City officials and councilmembers said the money could pay for a “refresh” of the Pearl Street Mall, permanent public restrooms, event infrastructure and an expanded downtown ambassador program.
Tax increment financing is controversial because it temporarily diverts new revenue that might otherwise fund services across the city. Under the proposal, every city fund that relies on sales taxes could receive less revenue growth. This could affect general city services, recreation centers, open space, transportation, and arts and culture.
The mechanism works by setting a tax revenue “base year,” which city officials said would fall in late 2026 or early 2027. The base would reflect sales tax revenue from the previous 12 months. Its timing could significantly affect how much money the authority receives. Sales tax collections above that baseline would flow to the downtown authority for several years. The lower the baseline, the more future revenue the authority could capture and the less that would be available to other city funds.
For example, if the base year is established after Sundance’s 2027 debut, more of the festival’s additional sales tax revenue would remain with the city instead of flowing to the DDA.
A similar mechanism would apply to property tax revenue. Boulder County, the Boulder Valley School District and the Boulder Library District would continue to receive all the property tax revenue generated from the established baseline year. But half of the growth in property tax revenue within the district would go to the downtown authority instead of those taxing entities.
Over the first six years, the district is projected to capture between $3.5 million and $11.5 million in sales tax revenue, plus about $3.2 million in property tax revenue, according to city estimates. That is money that could instead support services like open space and transportation, or go to Boulder County, BVSD and the library district.
The authority would be in place for 30 years. It would keep the full sales tax increment during its first five years before sharing a portion with the city beginning in year six.
City projections assume the authority’s investments would stimulate development and increase property values, eventually generating more tax revenue for the authority, the city and other local governments than they would receive without it. Whether that happens would depend on the investments producing the projected economic growth.
“The projections demonstrate that even a 1% annual increase in long-term growth changes the trajectory for our community, with benefits for the DDA, the city, Boulder County, BVSD and the Library District,” proponents wrote in a recent opinion piece. The authors included the Boulder Chamber, Downtown Boulder Partnership and Create Boulder, along with several restaurant owners. “We believe the cost of doing nothing deserves just as much consideration as the cost of taking action.”
The Board of County Commissioners has not taken a formal position on the measure, according to a spokesperson. Neither has the Boulder Valley School District, a spokesperson said.
Boulder Library District Board of Trustees President Sylvia Wirba said in a letter to the council last week that the city has pursued the DDA without consulting the district, despite the Main Library’s central role downtown. Wirba asked the council to guarantee the library a share of the tax increment revenue and a seat on the board overseeing the district.
“If the DDA succeeds in increasing visitation and activity downtown, the [library district] may experience higher operating, maintenance, security, and facility costs without a corresponding source of revenue to offset those impacts,” Wirba wrote.
Creating a downtown development authority would also affect the city’s off-street parking assets, including its garages, which would be transferred to the district. City officials estimated those assets could generate about $44 million in revenue over six years, though nearly all of it would be needed to maintain parking operations.
Democracy concerns
Another point of contention involves how the authority would be set up and governed.
If councilmembers approve the ballot measure, an estimated 2,500 qualified electors would decide whether to create the authority. Eligible voters would include property owners, registered voters who live within the district and businesses that lease space there.
Under state law, a single property owner may cast multiple votes if they own businesses with different names. But someone who is a resident, a property owner and a business lessee within the district receives only one vote if all those roles are tied to the same registered voter, according to Brad Segal, president and founding partner of Progressive Urban Management Associates, a firm the city hired to advise it on the proposal.
The structure of the election is set by state law. But critics say a relatively small group of voters would make a decision affecting the city’s finances for decades, while residents elsewhere in Boulder would have no vote despite having approved some of the affected taxes.
“A property owner who holds downtown real estate through multiple LLCs can get a ballot for each one, even living outside the country, while the 98% of Boulder residents whose citywide tax dollars are actually being redirected get no vote at all,” the Boulder Progressives wrote in a recent email urging residents to oppose the DDA.
Councilmembers appear divided
The measure has split the council, with several members saying in the week before the vote that they had not made up their minds.
Councilmember Nicole Speer said she wants to be more cautious about a 30-year commitment like a downtown development authority, particularly given the uncertain economic climate. She said she would prefer to wait a year.
“I am just not confident that the times we are in this year are conducive to setting this or the city up for success,” she said. “People don’t have enough money to pay for food that’s in their own kitchens, let alone the food that’s in somebody else’s kitchen,” she added, referring to restaurant spending.
Councilmember Taishya Adams said she’s getting more information about how much local tax dollars have already been invested in downtown. She said she is concerned that the ballot measure would be decided only by those inside the proposed district, leaving out city taxpayers whose money has already gone into downtown.
“I’m also concerned by creating pathways where corporations have more authority than people,” she said.
Councilmember Ryan Schuchard said he planned to wait until the meeting to decide.
“We need to transform Boulder’s commercial vacancies into sources of value for our community,” he said in a text message. “I support us being creative about exploring how to do that. My mind is on trying to really understand the problem and what evidence says will make a difference.”
Councilmember Tina Marquis also said she is still looking into it and could not yet share a position.
Mayor Pro Tem Tara Winer said she is torn about whether to support the measure, even though she believes it could be a valuable economic development tool.
“We haven’t brought the community along with us,” she said. “I don’t like voting on something when most of the community is against it.”
Councilmember Rob Kaplan said he is leaning toward referring the measure to the ballot but still has questions about the concentration of property ownership downtown, future revenue and cost-sharing arrangements, and how the city’s choice of a baseline year would interact with the Sundance Film Festival and the Tulagi music festival.
“I do think this is a potentially good tool,” Kaplan said. “It’s not without risk.”
Councilmember Matt Benjamin, who supports referring the measure to the ballot, said it may not solve all the city’s economic challenges, but the council needs to bring every possible solution to bear to “right the ship.” He described it as a “flywheel” that would generate economic growth.
“We don’t get any benefits by doing nothing,” he said.
Mayor Aaron Brockett said he supported sending the measure to the November ballot but wanted more time to work out the details of the DDA’s plan of development and an intergovernmental agreement, which would form the authority’s structural and legal backbone. He said the city should ensure that the transfer of parking assets supports its transportation goals and that future sales tax growth is shared with other city funds.
“I want to make it clear I’m not just a blank check supporter,” Brockett said. “But I would like to see it move forward in ways that prevent possible negative outcomes.”
A public hearing and vote on whether to refer the proposal to the November ballot is scheduled for Thursday, Aug. 6, as part of a broader package of potential ballot measures before the council.
