The City of Montrose is taking its first steps toward determining whether a new Urban Renewal Authority could be created to encourage redevelopment in the city’s historic downtown district.

This week, the City Council approved a contract to retain legal counsel that will study whether a downtown URA is feasible and, if so, how it could be structured. Officials said the agreement is exploratory and will provide the framework for future decisions.

“We have been in discussions with several different groups who would like to redevelop the downtown adaptive reuse projects with our historic buildings and a lot of the costs that go into either demoing or rebuilding if they’re not historic or going in and doing necessary rehabilitation to those historic buildings,” City Manager Bill Bell told council members Tuesday evening.

Bell said the work with attorneys will help the city identify whether such a project can move forward and what geographic boundaries could be set.

“(This would allow us to) take the next steps to see what it would take to create a project area in our downtown. Probably establishing some kind of boundary that would be one block in either direction of Main Street and a certain direction east and west from the river. That would be kind of that central corridor downtown.”

Anthony Russo, who works in business development for the City, emphasized that the contract is simply the first step. “It’s the easiest thing right now, just to put a lawyer on retainer so we can start looking at what the steps look like if we decided to do a project number two,” Russo said. “It’ll be operated a little bit differently, but at this point we don’t have details until we talk to the lawyers and sit down.”

Lessons from Colorado Outdoors

Montrose already has experience with a URA. In 2017, the city established the Montrose Urban Renewal Authority, which encompasses about 160 acres along the Uncompahgre River northwest of downtown. The district was created to support the Colorado Outdoors development, a 164-acre mixed-use project that combines business, housing, recreation, and conservation.

Colorado Outdoors is anchored by Mayfly Outdoors, a fly-fishing equipment manufacturer that relocated its headquarters to the site. Plans call for more than 670,000 square feet of mixed-use space including offices, retail, hospitality, and residential development. About 41 acres of open space along the river were donated to the city as part of the project.

Mayfly Outdoors’ HQ at the Colorado Outdoors project, which is part of the Montrose Urban Renewal Authority.
(City of Montrose website)

The area was also designated a federal Opportunity Zone in 2017, making it eligible for special tax incentives that encourage private investment in economically distressed communities. That designation has drawn investors by allowing capital gains deferrals and other long-term tax benefits for funds committed to projects in the district.

Since its launch, Colorado Outdoors has seen significant public and private investment. The URA helped fund river restoration, multi-mile trail expansions, and infrastructure improvements such as roads, parking, and utilities. The project has leveraged millions in New Markets Tax Credit financing and state grants to support job creation and community amenities.

Recent plans within the Colorado Outdoors URA include a $35.5 million mixed-use development with market-rate housing and commercial space, as well as a Hampton hotel, both supported by MURA with infrastructure incentives.

The Colorado Outdoors project has so far shown how a URA can help catalyze redevelopment that might not happen otherwise.

How a URA works

Urban Renewal Authorities are government entities designed to encourage reinvestment in specific areas. They are typically funded through tax increment financing, or TIF.

Under TIF, property owners continue paying the same tax rate they always have—there are no new taxes created by forming a URA. What changes is where future increases in tax revenue go. A baseline is set using the existing property tax value at the time the URA is formed. That baseline continues flowing to schools, counties, and other taxing districts as before. But when property values in the URA district rise over time, the additional revenue—the “increment”—is captured by the URA. Those funds are then reinvested in the district, often to cover infrastructure, utilities, restoration, or to repay bonds issued for improvements.

“This will allow us to build a TIF and pay for it separately, which should be good,” Russo said. “It basically takes it off of the general fund.”

Russo also stressed that the program does not cost residents. “Nothing changes for the people in Montrose, it’s business as usual,” he said. “The only difference is the incentives that can be received to help restore and keep our historic downtown.”

Potential impact on downtown

If a downtown URA is created, Russo said, it could help fund improvements that make the area more attractive for business and investment. That could include assistance for rehabilitating historic buildings, upgrades to utilities, or public improvements like sidewalks and parking.

“Fingers crossed it all works out and then we have a good program down there,” Russo said. “We can see investment come through the door with some civic assistance.”

Bell said a URA could be particularly useful in offsetting costs for developers looking at adaptive reuse projects downtown. Such projects often involve high expenses tied to bringing older buildings up to code or restoring historic features. Capturing new tax revenue to support those improvements could help offset costs for private developers.

Next steps

Forming a new URA is a multi-step process. After legal review, the city would need to conduct a blight study, draw proposed boundaries and solicit public input before council could adopt a resolution creating the district..

“We’d want to talk to the public to make sure they know that this does not impact them negatively at all,” Russo said. “It incentivizes people to invest, and that’s it. There’s no cost to them.”

At this stage, no timeline has been set for when a downtown URA might come forward for a vote. The city’s contract with attorneys will define the scope of work and determine the feasibility of moving ahead.

Justin Tubbs is the Montrose Business Times editor. He can be reached by email at justin@montrosebusinesstimes.com or by phone at 970-765-0915 or mobile at 254-246-2260.