Besides the $232 million capital improvement program budget that drives the majority of the infrastructure repair, maintenance and expansion in the City and County of Denver, City Council was set to approve budgets of more than $15 million for a dozen business improvement and nine local maintenance districts scattered across the city’s commercial areas.

Business improvement districts are formed by petitions signed by owners of at least 50 percent of the assessed valuation and at least 50 percent of the district’s land. The districts have been used to build and keep up public improvements in established commercial areas and to offer other business services. City Council sits as the ex-officio board of directors for the districts, but usually appoints a board of directors.

Michael Kerrigan, senior financial management analyst in the Denver Finance Department, recently told the Business, Arts, Workforce, & Aeronautical Services Committee that City Council must approve the annual operating plans and budgets for the 12 business improvement districts in Denver. First reading of those ordinances was scheduled for Monday, Nov. 14, with final reading and approval the following Monday, Nov. 21.

The city’s 12 business improvement districts are budgeting to spend $14.5 million in 2017, with most of that amount in the Cherry Creek North and Downtown Denver districts. Those two districts make up about 86 percent of all the districts budgeted expenses, Kerrigan said.

Most districts exempted from audits

The Cherry Creek North district is the only one with bonded debt, Kerrigan noted, and its bond debt service payments are current. In December 2015, the district refinanced its debt to a shorter maturity and lower interest rate to refund about $16.5 million in general obligation bonds. Kerrigan anticipated the district would have a balance of $15.7 million by the end of this year. Bonds are expected to be paid off in 2030, he added.

Some districts increased their mill levies as allowed to generate required revenue, he added, and a few districts had to dip into reserves to cover unexpected expenses.

Kerrigan noted the city recently dissolved the 9th Avenue district and added the Five Points district.

The city conducts financial reviews and audits of each district, including any bonded indebtedness. Positive results from unqualified audit opinions were received for the Cherry Creek North and Downtown Denver districts, Kerrigan said, with the first audit for the RiNo district – also recently formed – expected next year.

The other districts – Colfax, Old South Gaylord, Cherry Creek Subarea, West Colfax, Five Points, Federal Boulevard, Bluebird, Fax-Mayfair and Santa Fe- were exempted from audits required by the Colorado Department of Local Affairs. The department exempts entities with budgets under $750,000.

Districts hold budget hearings for first time

Last year, City Council indicated an interest in ensuring taxpayers had a chance to comment on district budgets before Council action, Kerrigan said. This year, city staff requested each district hold a public hearing before they submitted their budgets to the city by Sept. 30.

Councilwoman Debbie Ortega noted a few of those hearings would not be held before City Council acted on their budgets, but added “It’s great they’re all having those meetings.”

Kerrigan said the Old South Gaylord district had not yet provided all required information or held a hearing, but did not expect any issues as the adoption deadline approached.

“If you do not approve their budget for the coming year, they will just continue with their budget from this year, with a 10 percent reduction,” he stated.

JoAnn Weinstein from the city attorney’s office told the committee the City Council can amend the Old South Gaylord district budget later if the deadline is missed.

Council President Albus Brooks asked what the Cherry Creek Subarea budget of $34,000 might carry out and Kerrigan said trash removal and maintenance are usually the largest cost items, “But this district is almost doubling its budgeted amount to work on historical sites and more public events.”

Pedestrian Mall Districts similar but limited

Meanwhile, City Council will also consider budget approval for nine Pedestrian Mall Districts. Heather Burke, marketing and communications specialist for the Department of Public Works, wrote in an email that pedestrian mall districts were part of some older districts in Denver years ago, but are now included in a class called Local Maintenance Districts.

Such districts operate, maintain, repair and replace streetscape improvements. They are formed by petitions signed by property owners of at least 35 percent of the area’s property and approved by City Council, or approval from both Denver Public Works’ executive director and City Council in certain cases (no petition required).

The districts are West 38th Avenue Phase I, Expanded Greektown, Phase II West 38th Avenue, 32nd and Lowell, Broadway B, Phase II Broadway, Broadway Viaduct, 22nd Street and Park Avenue West and Consolidated Morrison Road.

Burke said property owners within these districts are assessed based on their front footage (the length of their property that runs along the street), which is then factored as a portion of all the front footage within the district.

“For instance, let’s say a district has an annual assessment of $50,000,” Burke wrote. “If the total front footage of the district is 1,000 feet and a resident’s front footage is 100 feet, then the assessment of the property would be 10 percent or $5,000.”

The 16th Street Mall was once a local maintenance district, she noted, but it is now part of the Downtown Denver Business Improvement District.

There are a few key distinctions between local maintenance and business improvement districts, Burke noted. Local maintenance districts can assess commercial and residential properties; business improvement districts can only tax commercial properties and not residential properties. Business improvement districts can do promotion and marketing but local maintenance districts cannot conduct those activities, she added.