ITEM 1 - CALL TO ORDER

Mayor Burkholder called the meeting to order at 7:00 p.m. in the Council Chambers of the Lakewood Civic Center South, 480 South Allison Parkway, Lakewood, Colorado.

ITEM 2 - ROLL CALL

Members present: Mayor Steve Burkholder, presiding
Tom Booher
Ray Elliott
Jackie Herbst
Debbie Koop
Barbara Martin
Bob Murphy
Jean Saum
Mike Stevens
Cheryl Wise

Absent: Carol Kesselman

Others in attendance: Mike Rock, City Manager
Charlie Keichenmeister, City Attorney
Frank Gray, Director of Community Planning &
Development

Full and timely notice of this City Council meeting had been given and a quorum was
present.

ITEM 3 - PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was recited.

ITEM 4 - PUBLIC HEARING - RESOLUTION 2002-12 APPROVING THE SERVICE
PLAN FOR VANCE STREET METROPOLITAN DISTRICT NO. 1

ITEM 5 - PUBLIC HEARING - RESOLUTION 2002-13 APPROVING THE SERVICE PLAN FOR VANCE STREET METROPOLITAN DISTRICT NO. 2

Mayor Burkholder opened a public hearing for both Resolution 2002-12 and Resolution 2002-13.

The City Clerk read Item 4 and Item 5 into the record.

City Manager Mike Rock stated that the City of Lakewood identified the Colfax and Wadsworth area as an urban renewal area. A redeveloper was selected to work with the City and a tentative development plan was negotiated. City Council rezoned the property to accommodate the redevelopment of the site. Council is now being asked to authorize the creation of two special districts, one of which would be the entity that would issue the financing and the debt and the other district is the one that would construct, operate, and maintain the improvements necessary to service the area. There are only two time frames per year in which special districts can be created, one in May and one in November. May 7th is the election date for these districts. Approval would be for skeleton district plans and include only the lots or properties controlled currently by Goldberg Associates.

At a later date, the District would be expanded to include additional properties as they are acquired, all within the urban renewal development area. It is not possible to negotiate and execute a lease with Wal-Mart or any other tenant unless the developer, Goldberg Properties, can demonstrate that they have the necessary financing mechanisms in order to implement the terms of the lease. It will be necessary for the District to come back to the City Council before any debt can be issued. The debt that would be issued is only against the property included in the project area. There would not be any debt that the District could issue against the City as a whole. If Council approves the creation of the district, it then goes to District Court and onto an election on May 7th.

Mr. Rock introduced Attorney Charlie Keichenmeister from Gorsuch Kirgis, Frank Gray from Community Planning and Development, Mark Goldberg and Lou Delaney from Goldberg Associates, and Darlene Cisneros, a representative from Mark Goldberg's law firm, who would be available to answer any questions after the public testimony.

Public Comment

Edie Bryan - 1661 S. Kendall Street - Lakewood, Colorado
Ms. Bryan thanked the Mayor and City Council for televising the study session on Belmar Park.

Mayor Burkholder explained that the special meeting is televised; however, the study session regarding Belmar Park would be held immediately after the special meeting in the Cabinet Room. The study session would not be televised.

Dorothy Wisecarver - 8655 Meadowlark Drive - Lakewood, Colorado
Ms. Wisecarver asked what portion of the special district taxes, such as R-l School and West Metro Fire, would be kept at a certain level for a number of years and what portion above that would go to the urban renewal.

Mayor Burkholder stated that that information would be made public. He stated there was no plan at this point in the game of waiving any taxes at Colfax and Wadsworth. The City did waive 1% of the taxes at the Villa Italia Area. No plan has been brought to the table yet regarding this area. In regards to the other districts, the process will be very public. The financing of the Villa was made very public.

(Ms. Wisecarver spoke from the audience and was inaudible on the recorded audio
tape.)

Mayor Burkholder stated that the figures would be brought forward and made extremely public on this. He stated the reality is there has to be some creative financing in these areas because infill will not happen unless we do something to bring the developer into some of the other areas of the City.

Councilman Elliott stated that he wanted to make sure everyone was aware that the plans being looked at tonight are just a framework. He stated it was similar to what the Council went through with the Belmar project. Metro Districts were set up, but the financing pieces were not in place at that point in time. Subsequently, a financing plan came back to City Council which was voted on. He stated that Council looks at a number of different things. Council ended up waiving a portion of the sales tax and a public improvement fee was instated. There was tax increment financing relating to the property tax where there was a base that was set when those metro districts went into effect. That base was then set and anything above and beyond that potentially goes back in to help pay for the improvements that are being taken over by the property owner. The other piece is the outlying areas, where Council capped the amount of property tax increase to a certain dollar amount. Council does not know all the specifics yet. Colfax and Wadsworth may be different than the Villa. When those things come forward, people will be invited back to the table to ask those questions. Study sessions were held and there was a lot of detail. A lot of questions were asked by the entire Council over those financing issues. That is a very important component for the public to understand what we are committing to as a community. Councilman Elliot stated that when talking to people in his ward, everyone is excited about it, but it also comes with a price tag that we have to pay as well.

Councilwoman Wise thanked Mrs. Wisecarver for raising the questions. Councilwoman Wise stated that this is the third of three major projects that the City is undertaking and it is very easy to confuse the details from one project to the next. It serves us well, as we sit up here, if we do listen to the citizens as you ask for those clarifications. This is just the skeleton plan and although some questions cannot be addressed at this time, Council will be sure to answer them at a later date.
Mayor Burkholder stated that the City would be very transparent on the entire process. The Council can't give you an answer on the Vance Street Metropolitan District tonight. We were very open on the Villa, very open on Colorado Mills, and will continue to be a very public process.

Mayor Burkholder closed the public hearing.

Councilman Murphy asked Mr. Rock to elaborate on the May 7th election.

Mr. Rock stated that the election is just for the property owners, which in this case would be property controlled by Goldberg Associates. The only properties affected by the creation of the districts are properties currently owned or controlled by Goldberg Properties. It is not a citywide election.

Councilman Murphy stated that if Council created the proposed special districts it would only affect the properties that Mr. Goldberg controlled. He stated the boundaries appeared to be small and asked what the procedure was for expanding the boundaries.

Mr. Rock stated that the district as created is allowed to add properties as they are acquired within the overall confines of the original project area. They will not have to come back to City Council to add property, but they will have to come back to Council before any debt is incurred.

Councilman Murphy asked if the same mechanism allows them to extend the special district to boundaries that may be acquired in the future that are outside of the boundaries.

Attorney Charlie Keichenmeister stated the service plans could include other properties outside of the boundaries at will. They do not have to come back to City Council to do that. The Service Plans expressly limit their ability to include property to that area, they cannot go outside the confines of the development without express consent of City Council.

Councilman Stevens stated that this is a framework plan and Council is not dealing with any of the finances involved. He asked what the usual term was for suspending or waiving down the property tax, realizing none of the financing scenarios were in place at this time.

Mike Rock stated that it normally would not exceed 25 years, but in each case it is negotiated separately. Since the property values on the site have declined, and the revenues have declined, the benefit to all entities is that including the property in an urban renewal area arrests the decline. You stop the decline and you are then able to maintain at least those revenues, and depending on whatever financing plan the City eventually adopts, you may or may not have a portion of the upside as new value is created. That's the whole concept of urban renewal. He stated that property taxes are not waived, but sales tax can be waived.

Frank Gray, Director of Community Planning and Development, stated that when the urban renewal plan is adopted, by law, the base is frozen. The Tax Assessor has given us a figure of what that base is. As the increment increases, the Treasurer and the Assessor report what that is to the City. He stated it can only be collected it if there is a debt to be paid off as a result of either a financial agreement or debt incurred to put together the urban renewal area or something similar. Every quarter, the Assessor and the Treasurer will report back what the original increment base was and what the incremental increase or decrease to that base is and that's a report we get on a quarterly basis and have gotten ever since the urban renewal area was created.

Councilman Elliott stated that this is a skeleton plan and asked if there was a time frame when the public and Council could expect the financing package to be brought to Council.

Mike Rock stated that the expectation is to have it before Council within six months. There is a provision in the creation of the districts that if firm financial plans are not generated by 2004, the district is dissolved. These projects are complicated and time consuming and a plan can't really be brought forward until a lease is in place. That lease will dictate what public improvements are required, the time frame in which they are required, what the building will look like, and what space it will consume. Everyone is motivated to get the plan to Council as soon as possible, but there are a number of factors outside of the City and developer's control that will dictate when that can be done.

Councilman Elliott asked that when the financing did take place and when the debt is paid off, would it either reduce or totally eliminate, at that point, any waiving of property taxes or sales tax or public improvement fees.

Mike Rock stated that is what is anticipated. However, the agreement has not been negotiated and the public improvements will be expensive. The City would structure the agreement in such a way to maximize the return to the community and limit the payback period.

Councilwoman Martin asked for clarification regarding the map of the project and if it shows the properties currently owned by Goldberg.

Frank Gray stated that the outlined area shows the properties currently owned by Goldberg. The boundary of the district would expand as additional properties are acquired by the developer.

Councilwoman Martin asked if the school district had any say in the freezing of the property taxes when the urban renewal district was created.

Mike Rock stated that under Colorado law, when you create an urban renewal area, the property taxes generated above the base are available to the urban renewal authority to use without further action by any other governmental entity. However, they can't be utilized until a district or some mechanism is created and expense is incurred and then at that time, they can be used to pay back that expense. The whole concept of urban renewal is to take an area that is in decline, and for the benefit of all the governmental entities, somehow stop that decline. The expenses required to improve the property and the amount of revenue that otherwise would not have been generated, is available to help pay the cost of making the improvements necessary to improve the area. The benefits to all the entities is that decline of the property is stopped and that property base is frozen; therefore, even though the values have actually gone down since that time, once the property is improved and productive, there will be a point at which new revenue is generated. There is no reduction in revenue. It's an issue of whether new revenue is available.

Frank Gray stated that it is important to understand that state law requires that the urban renewal plan is reviewed and commented on by the school district. The school district reviewed and approved it and stated that it was something they felt was necessary for the community. It hasn't been done without their knowledge. It has been done in accordance with state law, and the state law requires that they do not have approval or disapproval authority, but they review and comment.

Councilman Stevens asked Frank Gray to explain why the legal descriptions are different for the two districts.

Charlie Keichenmeister stated there are two separate districts and they have two separate areas within their jurisdiction. District l is lot 9, the control district, and that may stay very small. District 2 is the financing district and that is likely to expand to include the rest of the development area. There was never any intent that they occupy the same area, it would be unusual for that to occur. They typically are organized to occupy different areas and have different boundaries.

Councilwoman Wise stated that these are skeleton plans for the creation of special districts. Once that district is formed, that district can hold an election of voters within the district. The voters within that district will only be comprised of the property owners within those defined boundaries. The district can prepare a ballot that the voters can vote on in the district. Those voters will vote on the ballot and the ballot may deal with approval of new taxes, approval of maximum authorization mill levies, and approval of initial property tax. She asked if the voters have voted to approve new taxes, who pays those taxes? The voters or the shoppers?

Charlie Keichenmeister - The property taxes will be paid by the owners of the property in the district, same as any other property taxes. The voter authorization to impose taxes only authorizes the district to do that from the voters. They need two authorizations, one from the voters and one from the City of Lakewood. They would have to come back to the City of Lakewood for approval. They need both approvals. This is a special district election that serves this area and they need to get their voter approval in May. They also need to come back to City Council to get service plan amendment approval to go ahead and move forward to levy the taxes in December, if they are going to do that.

Councilwoman Wise asked who would be left holding the bag if the development or special district did go bankrupt.

Charlie Keichenmeister stated that the property owners in the District would effectively have to pay the taxes to pay the debt. There are spin-off problems for the City of course, an economic development problem in the City, but the direct obligation to pay those taxes extends only to those property owners and there is no way that the City is liable for those taxes or is the City guaranteeing any of this debt.

Mayor Burkholder stated that it is very important to understand that there is no financial obligation to the City. There would be a spin-off effect, but if nothing is done, it will continue to go down. We can try to make it better by being a catalyst and the private sector will step in and the private properties will be improved. That's the idea that we're trying to bring forth this evening by setting up this plan.

Councilman Booher asked Mr. Rock for some clarification on the P.I.F. and some things he wanted resolution on prior to talking about the financing of the project. He stated that he has to balance the understanding that business development comes at a cost, and he respects Mr. Goldberg and what he is trying to accomplish there, and fulfilling his commitment and promises to his constituents that he would fight tax increases except as a last possible remedy. Councilman Booher stated that a PIF is simply raising taxes by a different method or a different name. He stated he has to ask himself if this is reasonable and appropriate, particularly given the fact that a couple of years ago the citizens of our community said very clearly that they did not want taxes raised. At a minimum, Council needs to consider if this is what people want and he suggested at this time, Council does not know.

Councilman Booher stated that at a minimum, given what the people have said, we have an extra burden of disclosure of what we have done and what we are going to do before we move ahead with any further projects. One solution is perhaps an article in the next Looking at Lakewood, a factual article that simply educates people about how we are conducting business. He stated he thinks a thorough discussion is needed of basically, a new system of raising taxes in Lakewood. He stated the Council has a responsibility of disclosure. As these projects open, he suggested having significant signs that tell people what kind of fees they are paying and how this is effecting the prices in and how the project is getting done. Councilman Booher stated not just tiny signs at the cash register, but some real disclosure and some real open communication. He asked Mr. Rock to address his opinions or facts regarding this.

Mike Rock stated that he was hesitant to answer under the premise that this is some sneaky way to raise taxes because he disagrees with that. He stated that he didn't want to answer the questions in such a way that he would be agreeing with that statement because he categorically disagreed that anyone on staff or City Council is trying any backdoor way of raising taxes. Tax revenues go to public entities. Public improvement fees do not go to the City of Lakewood. If the concept of taxes is money going to municipal government, public improvement fees don't go to municipal government. He stated he disagreed with the premise that this is some way to raise taxes, because the City is not getting the money.

Mr. Rock stated that the reality is that in each of the three projects; Colorado Mills, Belmar, and Colfax & Wadsworth, it is in fact the City that has solicited and asked a developer to come in and take a piece of property. In one case, it was not in the City, and would have been developed outside the City, and like Southwest Plaza, would have taken significant revenues out of the City and created service demands on the City, with no benefit to the public. In the case of Belmar and Colfax/Wadsworth, the City very specifically went out and asked people take a look at these two very difficult and expensive areas, in which the private sector over a period of ten years or more has been unwilling and unable to develop. He stated that in each case the City specifically went out and asked for redevelopment to occur after the private sector and the business community were unable or unwilling to redevelop the areas.

Mr. Rock stated that given the services that the public gets, whether its police, sidewalks, parks, or street sweeping, it is primarily paid for by sales tax and given that Lakewood has a very low per capita sales tax collection, which means that most people shop outside Lakewood, we have a vested interest in ensuring that the public still gets the services they want, need, and demand and we have two ways to pay for that, sales tax or property taxes. Given that the public is reluctant to see sales taxes raised, the only venue to pay for those services is to have increased sales activity in the community. That's the benefit of doing the redevelopment in each of these cases. Absent activity by the City, Colorado Mills and Denver West would either be in Golden or Jefferson County. It would be in the same physical location, it just wouldn't be within our boundaries. Villa would be empty and Colfax/Wadsworth would remain empty. That's pretty clear given the private sector has not been able to develop any of those sites.

Mr. Rock stated the need to look at the no action alternative and what will happen if the City does nothing. We'll have increased service costs in the absence of revenue. Mr. Rock stated that as far as putting up signs in the retail establishments, he was quite sure that the developers of Mills and elsewhere would not be willing to have a big sign at the entrance to the store saying here are your taxes. He stated that the City would not have the ability or any role in dictating to those private stores that they install big signs which would be detrimental to business. Mr. Rock stated that if all of Council wanted to meet with Greg Stevinson and Mills to discuss that, he would arrange the meeting. He stated he was sure that their opinions would be very clear and adamant on that. He stated that any delay in these projects means that the City needs to abandon these projects. He stated that the City could not ask Mr. Goldberg or Wal-Mart or anyone to wait for an indefinite period of time while the Council waits to try to gage whether they really want to stand the course the City has adopted.

Councilman Booher stated that what he is concerned about is public disclosure. It doesn't seem like the City is very willing to do that. He stated there are already projects in place that have these fees and the City is looking to do more projects without really informing the public and getting a response back. Councilman Booher stated that from what he read in the service plans, the public improvement fees will be going back into pay for all the improvements in the area, which is what the City would be doing in that instance.

Mike Rock stated there was nothing in any of the documents that create public improvement fees, only the City Council can do that. What the City is doing is creating two special districts. The creation of these districts does not authorize the levy of any public improvement fee. The public improvement fee is different than a property tax. The only taxes are revenues that these districts can authorize or implement are property taxes. They cannot implement a public improvement fee.

Councilman Booher stated that this is the beginning of that process. He asked if the PIF revenue falls under TABOR.

Mike Rock stated that the public improvement fee is a private fee, it is not a tax, and so it has nothing to do with Tabor. He stated that as far as the issue of disclosure, endless meetings have been held, City Council has had endless discussions, and a study session was specifically televised on the public finance agreement on Villa, for the express purpose of public information.

Councilman Booher stated that until it really happens, he's not sure the people really know how the City is going about these projects. He stated the people are excited about them and he is excited about them, but he is not sure they really understand that from henceforth, in order to do a project like this, there is going to be some percentile tacked on to everything that they purchased at that establishment. He stated that in simple terms, when a family or someone goes into Wal-Mart right now and makes a purchase, that if this project moves forward, they'll be going into the same Wal-Mart a mile away and they are going to pay a fee on top of what they would be paying now. He stated that more disclosure as the City moves along is needed. The citizens are going to come back and say that the City raised taxes and pretended not to.

Mike Rock stated that the City certainly did not keep anything a secret and he was open to suggestions. He stated, however, that there had to be a consistent sense of purpose on these projects. Mr. Rock stated that he had not hesitated to tell the Council at every opportunity that in order to do these redevelopment projects, the City was going to have to deal with public improvement fees. It has not been a secret. He stated that the focus needs to be whether the City is going to do these projects or they are not going to do these projects. There are complex negotiations that are underway due to years of representation by the City and that the City was committed to redevelop this site. If, at this stage, the City is saying they are not really sure, then the City needs to start undoing the agreements that are being negotiated and start over. Given that K-Mart abandoned this site in 1991, we're ten years into this, so if we start over, we'll have a substantial delay.

Councilman Booher stated that what he is asking is that when reasonable people call up and say it walks like a duck, it quacks like a duck, yet you guys want to call it a horse, we need to just disclose and educate before we move forward. Before we get into the financing part, we need to do that.

Councilman Murphy stated that Councilman Booher made two implications that he resented. He stated that he understood Councilman Booher was new at this and he was willing to forgive him based on his newness and not understanding the intricacies of these deals. He stated that the City is not raising taxes and are doing nothing in the dark. The City has been more than open and more than public. In fact, the Mills project went to an election in 1994.

Councilman Booher stated that he was not asking for Councilman Murphy's forgiveness. He stated that the Council was not talking about the Mills project.

Mayor Burkholder stated that speaking out of turn would not be tolerated in the Council Chambers. He asked that Council members respect one another. He stated that there could be differences of opinions, but people are not going to interrupt one another. He told Councilman Booher that he had had the floor for a good time and it was time to let others speak.

Councilman Murphy stated that Council has been open and honest about every step in this process. There have been articles in Looking at Lakewood, articles in the Sentinel, numerous public hearings, both in study sessions and in City Council, as to how the City is going about these very complicated projects. He stated that he resented any implication that the City is doing otherwise.

Councilwoman Martin stated that when she was a freshman Councilor, there were a lot of questions that she asked because these issues are very complicated. She stated that as a senior member of the Council, she also resents the hint that Council hasn't been disclosing. She stated that maybe people are calling Councilman Booher and asking questions about things they aren't clear on and perhaps they are putting words into his mouth. She stated that she resented Councilman Booher's statement that they have not been open.

Mayor Burkholder told Councilman Booher that others would be allowed to speak and he could not interrupt them. He stated that tonight the Council is looking at adopting the service plans, which is the first step of the project. The reason Council is holding a special meeting is that there are windows of opportunities as to when the service plans can be passed. He stated that regarding the whole issue of disclosure, Council has

done a good job and tried to be open. He said there had been numerous meetings. It was announced in Looking at Lakewood. The program was televised regarding the financing of the Belmar Project and the voters voted in 1994. There has been openness. Mayor Burkholder stated that Mr. Rock answered, not once, not twice, but three times, a PIF is not the City of Lakewood, it is the property owner that is doing this, it is the developer that is doing this. He stated that, more importantly, the City said that the Villa Italia was going to break-even, and what the City is trying to do there is maintain the quality of life. The same issue is reflected at Colfax & Wadsworth. There is an area that is continually starting to deteriorate and unless a cornerstone project can be built at that corner that attracts private capital, the City is just going to be sitting there like a lot of other communities across the United States. These are unique ways the City is going about financing, but unless the City does these things, Lakewood is going to be passed over and there will be boarded up businesses throughout the City.

The other issue is it's a lot cheaper for a developer to go out and develop on the green fields at the edge of the community and build more and more sprawl and create more and more traffic problems within this metropolitan area than it is to come in and develop a brown field or a gray field such as Colfax and Wadsworth. We will accept the questions brought up and be sure they are answered again and again so people understand. He stated that tonight Council is looking at approval of a service plan.

Councilman Murphy called for the question.

Councilwoman Wise made a motion to suspend debate and call for the question. It was seconded by Ray Elliott. Vote: All Ayes. No Nays. The motion carried.

Councilwoman Wise made a motion to adopt Resolution No. 2002-12. It was seconded by Councilman Elliott. Vote: Nine Ayes. One Nay (Councilman Booher). The motion carried.

Councilwoman Wise made a motion to adopt Resolution No. 2002-13 It was seconded by Councilman Elliott. Vote: Nine Ayes. One Nay. (Councilman Booher). The motion carried.

ITEM 6 - ADJOURNMENT

Mayor Burkholder reminded everyone that the Council would convene in the Cabinet Room following the meeting for a study session regarding the Heritage Center.

Mayor Burkholder adjourned at the meeting at 8:00 p.m.

Submitted by

Margy Greer, City Clerk