5 Common Issues Cities Face & How to Tackle Them: Funding

9 Dec

Downtown Colorado, Inc. (DCI) has partnered with the Department of Local Affairs (DOLA) and teams of volunteer professionals to conduct technical assistance visits to communities across the state since 2005. Large and small, suburban and rural, resort or college town, we see the same five issues surfacing time and again. Do any of these issues sound familiar to you?

  • Communications: Miscommunication or a lack of communications between the local government and business, residents, and other entities (e.g., libraries, museums, hospitals).
  • Downtown Management: Difficulty accessing local resources to synchronize initiatives for maximum impact.
  • Mobility: How to link resources/attractions for an enhanced pedestrian environment with coordinated signage, parking, and way-finding.
  • Business Retention, Expansion, and Attraction: Developing an ongoing business support program to serve as ambassadors to link businesses to training, information, and assistance.
  • Financing: Identifying mechanisms for generating funds to focus on downtown whether locally generated through a business improvement district or downtown development authority, or identifying sources for grants and other externally generated support.

In this final installment of our five-part series, we address funding strategies to examine, as well as actual funding recommendations from a recent technical assistance visit.


Given the economic climate and changes that we have been experiencing, a dedicated funding stream for your downtown commercial district is imperative. This allows your downtown to continue to function as an economic driver, drawing traffic to the district and keeping your sales tax at a sustainable level despite changes to the economy. A dedicated funding stream ensures communities can continue to maintain a level of service to support commercial districts that will continue to encourage people to shop there.

Think about it…do you want to shop in an area that looks run down? Or do you get out of your car when you see a shopping district that has a welcoming ambience with clean sidewalks, good street lights, helpful information kiosks, and a pleasant pedestrian experience? Yes, these things do matter! A charming and hospitable shopping district with promotions and events provides an experience and ambience for shoppers, which is something that they cannot find on the internet or in a big-box store.

Additionally, a dedicated funding stream can support an organization to serve as an ambassador to downtown businesses to maintain the level of communication, marketing, and provide other support. It is so important to have two-way communication and consistent messages as you cannot help your downtown businesses if you do not even know how they are doing.

A grant can be helpful for a one-time or short-term project; however, for long-term sustainability and a continuous funding stream, communities might consider the creation of some form of a development and improvement district. Colorado allows commercial and business areas in traditional downtowns the ability to create several types of public entities to help the city, property owners and tenants organize to implement revitalization strategies.

Questions to consider:

  • Is there an entity that currently dedicates resources to the commercial district’s health and vitality? Is downtown their sole mission? In many communities we visit the downtown is an afterthought, not the main focus of any one organization. Dedicating a funding stream, organizational structure, and resources specifically to downtown and the commercial district is the only way to ensure it gets the full attention it needs.
  • What kind of downtown improvements are you looking to fund? If your goal is to focus on a one-time project such as repairing a crumbling façade on a historic building, perhaps you want to apply for a grant from the Colorado State Historical Fund. If you hope to improve public facilities or implement a streetscape upgrade, you probably want to explore a special district funding mechanism. (See below for details.)
  • Which group will take the lead in monitoring success of commercial district? Will this be a group from the private sector or the public sector? Filling vacancies in storefronts, attracting residents, and attracting new customers are more easily accomplished if a district is able to highlight what differentiates it from the hundreds of other districts that exist in the region. If you do not monitor and report on the district’s achievements, you have no way to demonstrate why your district is fabulous.  When looking at the different funding structures, consider which issues you are facing and which group is in the best position to be take the lead on making decisions for the district.


Development and Improvement Districts

Business improvement districts (BIDs) are often used to improve existing commercial centers and to develop a new area. In Colorado a BID is commonly organized in order to build or repair streetscape, improve landscape, provide street furniture and planters, transit and lighting. Less common reasons include marketing, parking, maintenance, event management and sanitation.

Downtown development authorities (DDAs) are most often formed when redevelopment is needed in a downtown area. Typical reasons for the creation of a DDA in Colorado include improvement of public facilities, shopping and restaurants, streets, sidewalks curbs and gutters, lighting, and landscape and general beautification as well as mitigation of blight. Colorado law provides for the creation of a downtown development authority to halt or prevent deterioration of property values or structures in central business districts, or to halt or prevent the growth of blighted areas within these business districts. The DDA also is granted the power to develop or redevelop these areas.

Urban renewal authorities (URAs) are most often formed most when there is general deterioration, slums or deteriorating structures, or a need for a new street or lot layouts. The motivation is often the need for the correction of areas having an unusual topography or inadequate public improvements, as well as health, safety or welfare concerns such as unsafe or unsanitary conditions or environmental contamination. In Colorado, the need to control noise due to growth in the area is also not an uncommon reason for the formation. There must be a determined need for an urban renewal plan before it is adopted, and that determination or specific finding must be made by the applicable municipal governing body, e.g. a city council.

Although the above list details the most commonly known methods, these are not the only ways to manage a district. Other viable options include a community development corporation, which is a nonprofit, grassroots organization that focuses on revitalization and, as a nonprofit organization, can receive charitable and government funding or applying to become a Colorado Main Street, which provides a program framework for revitalizing traditional downtown districts within the context of historic preservation.

Below is a detailed recommendation from a recent DCI/DOLA technical assistance visit on identifying the best funding mechanism. (Note that identifying names have been removed.)

After a community vision has been formulated for the commercial district, consider/evaluate funding mechanisms to determine which resources are best suited to fund downtown improvements. Create a downtown improvement organization with a dedicated stream of funding. Review potential types of entities. The technical assistance team recommends that the town investigate and consider the applicability of a downtown development authority (“DDA”). An alternative would be a business improvement district (“BID”).

If selected, a DDA would be created by a city ordinance after an election where eligible voters within a defined area, such as the property owners bordering Main Street, vote to approve the DDA. The DDA would have the power to create and implement a “plan of development” that could include projects for infrastructure and capital improvements along the street and plans for business promotion activities as marketing and educational promotions. If approved by the voters in a TABOR election, the DDA’s funding could come from a property tax of up to 5 mills and tax increment financing from growth in the existing sales tax and/or property tax that is already collected in the area. The DDA Board of Directors would be appointed by the city. DDAs exist in downtown Fort Collins, Greeley, Longmont and Colorado Springs (among others).

The alternative, a BID would be started by a petition signed by the owners of taxable commercial property representing over 50% of the assessed value and 50% of the acreage along the corridor. The BID would be created after a public hearing and adoption of a city ordinance. After approval by the BID’s voters in a TABOR election, the BID could be empowered to collect property taxes and/or special assessments in the amounts that were approved in the election. The BID would have the power to fund public improvements, business promotions and marketing, security services, and a wide range of other business-related services. Annually an operating plan and budget would be proposed by the BID’s board of directors and approved by city council. Depending on the town’s preference, the BID’s board of directors can either be elected by the eligible voters in the BID or appointed by city council. BIDs exist in downtown Denver, Boulder, Colorado Springs, Black Hawk, and about 30 other locations in Colorado.

“Getting organized” is the single most important next step in implementing a plan to improve the competitive position of the Main Street corridor in the community. The issues on the corridor are bigger than a single business can handle, but there is strength in numbers and strength in working together. A dedicated association, organization, district, or authority can provide the structure for all of the recommendations in this report and give the corridor the same competitive advantage that is found in the management structure of single-owner shopping centers and large discount retailers.

Development and Improvement Districts Information & Assistance

DCI provides support to Development and Improvement Districts in Colorado through a variety of methods, including a monthly DIDs forum for members on the second Wednesday each month. For details, visit the website or contact DCI. Special districts information above comes from Downtown Redevelopment Funding Mechanisms, a Downtown Colorado, Inc. publication available to DCI members and available for purchase to non-members. Contact DCI for copy of publication.

Technical Assistance Training

We hope these questions and recommendations will get you thinking from a new perspective about approaching downtown management strategies for your community. For a detailed technical assistance visit that will address all of the specific issues your community is facing as well as provide an action plan to tackle them, visit our technical assistance information at www.downtowncoloradoinc.org to download an application or call DCI today at 303.282.0625.

Other helpful resources:

Progressive Urban Management Associates

Grimshaw & Harring, P.C.

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