V. Richard Haro/The Coloradoan ON THE ROAD: Traffic heads west on Highway 392 in Windsor.

When the economy was strong, cities were flush with money generated by growth.

When the economy tanked, cities dependent on growth saw revenue drop across the board.

Fort Collins' tax revenue fell more than $5 million short of projections last year.

The fallout resulted in wage and hiring freezes and cuts in some city services.

That's led some city officials to wonder aloud if Fort Collins' strict growth policies have been shortsighted.

With about 54 percent of the city's general fund coming from sales and use taxes fueled largely by growth, Fort Collins Mayor Ray Martinez repeatedly said "the city needs to take a sharp look at how it generates sales taxes."

Disincentives?

The city's tax revenue struggled in a down economy last year, but Loveland's sales and use tax proceeds rose nearly 6 percent, far outpacing expectations.

"Why is that?" Martinez asked.

Some say it is because the city has made it difficult for developers and businesses to operate in Fort Collins while Loveland has offered incentives to lure residential and commercial growth.

"It has become so expensive here and the process is so extensive and drawn out, it's just not economically feasible for small companies," said Larry Kendall, broker/manager of The Group Inc. real estate.

"If the goal as a city is we don't want more business growth, if we'd just as soon see them leave, that is being accomplished."

In 1997, The Group predicted sales and use taxes would drop and housing costs would rise sharply under the newly adopted City Plan, Kendall said.

"You can't rely just on residential growth," he said. "You have to have a commercial component, or else you can't have a viable city in terms of providing basic services."

In Fort Collins last year, revenue from building permits sank about $735,000 even though single-family permits had a record year.

Total construction value on permits dropped from $347.6 million in 2001 to $280.6 million last year.

In Berthoud, building permits and revenue dropped so sharply after a 5 percent growth cap passed in 2000 that the town added $38 to recent water bills to meet bond payments.

A group of Berthoud residents now wants voters to rescind the cap and allow for managed growth rather than restricted growth.

Quantity vs. quality

So, how can municipalities encourage growth while maintaining quality of life?

It's a precarious balance, said Berthoud Town Administrator Jim White.

"You have to have enough growth to be economically responsible and viable and at the same time not allow growth that is alarming to residents.

"It's a difficult balance to achieve. We're trying to get a level of understanding for all the parties involved so they can get to a place where most residents can live with the results," White said.

Growth and quality of life are not mutually exclusive, said Gene Vaughan, owner of Re/Max First Associates in Fort Collins.

"Quality of life starts with having a job, and having your kids be able to have a job and to live in an economically vibrant environment," he said.

"We have people who want all these things that they interpret to mean quality of life, like open space and a performing arts center, but they neglect to ask the question of who is going to pay for it?"

Ultimately, providing good jobs and a good tax base pays for the amenities that make up a good quality of life, Vaughan said.

Ramon Ajero, chairman of the Sierra Club's Poudre Canyon Group, challenges the notion that growth is inevitable.

"Our current thinking has become so focused on continued and endless growth that we rarely, if ever, consider there might be other paths toward achieving economic vitality."

The first step to finding the balance is clarifying goals regarding jobs and infrastructure, Ajero said.

There's a difference, he said, between providing jobs and infrastructure for current residents vs. providing jobs and infrastructure that primarily fuel future growth.

Fort Collins Deputy City Manager Diane Jones said striking the balance is a matter of trying to clearly understand and provide what people in the community want.

"What combination of services, what level of service and how it impacts their lives is up to them," she said. Those are decisions that need to be made locally.

"All of the elements come into play in terms of housing, jobs, the environment, quality of life and what we're trying to achieve," she said.

"They are intertwined in a tapestry that forms the community. It's up to the decision-makers how best to move toward that tapestry."

Jones advocates strong local planning to achieve the balance.

The Colorado Municipal League agrees that planning remains a sacrosanct responsibility for local officials.

Regional response needed?

But others are calling for state intervention, or at least regional planning to ensure well-planned growth in Northern Colorado.

Ajero said the over-reliance on sales tax revenue pits neighboring communities against each other as they compete for sales tax revenue-generating commercial sites.

"Annexation wars and races to the interstate don't make for good planning," Ajero said.

"It makes sense to explore revenue sharing and other approaches that could alleviate those pressures."

The communities already share the financial burdens of providing residential services and infrastructure, "we should explore ways to share the benefits as well."

Fort Collins developer Jay Stoner, however, believes the state needs a uniform growth management plan to keep municipalities from driving growth to neighboring towns and counties.

"Piecemeal regulations cause people to move somewhere else to get what they want for what they want to spend," said Stoner, developer of The Hill at Cobb Lake northeast of Fort Collins.

The city can manage its own growth, he said, but regulations here can send potential developers into Larimer County.

If Larimer County changes, people will go to Weld. "And, that causes sprawl," he said.

But growth has fallen off the state's radar, overtaken by more pressing economic concerns.

"Several years ago, the economy was on fire and the Legislature was preoccupied with growth management," said Sam Mamet, associate director and chief lobbyist of the Colorado Municipal League.

"Now, this Legislature is preoccupied with economic development because the economy is not on fire," he said.

That's the nature of Colorado's boom-and-bust heritage, "from the gold mining days until now," said Mamet.

But, just because growth is not high on the legislative agenda doesn't mean there is not a problem.

"Everyone was groaning about growth two years ago," said Stephan Weiler, assistant professor of economics at Colorado State University.

"Now they're saying it wouldn't be bad to have a little of that growth," he said.

The conversation needs to go beyond generating revenue and building permits, said Dave Theobald, research scientist with the Natural Resource Ecology Lab and assistant professor in the Natural Resource Recreation and Tourism Department at CSU.

"You have to ask does it cost more to provide services," to the new homes, Theobald said.

Common goals

Theobald advocates regional planning as the best answer right now.

He points to Boulder, which imposed a growth cap more than two decades ago as a courageous step in molding that city.

Its shortcoming, he said, was that the city's plan was not regional.

With the average price of a single-family home in Boulder in excess of $472,000 in 2001, Boulder has one of the slowest growth rates along the Front Range.

But, by the late '90s it also had the worst traffic because two-thirds of Boulder's workforce couldn't afford to live there and has to drive into the city to work, Kendall said.

Bill Neal, developer of Rigden Farms in Fort Collins, said the development industry is convinced that growth more than pays for itself in terms of the fee structure in Fort Collins.

Yet, there are people who are just beginning "to realize we are one region," Neal said.

Residents, he said, don't shop in their own neighborhoods anymore, they shop in communities," he said.

"The farther east you drive, the more house per square foot you will get for the price," Neal said.

Windsor, an area planning for 6 percent growth in the next few years, is banking on a new regional mall at the interchange of Colorado Highway 392 and Interstate 25 to help boost its sales tax revenue, like Loveland has done through its I-25/U.S. Highway 34 developments.

"One key element of development in Windsor is balancing growth with high quality development," said Town Administrator Ron Wensing.

"We have high standards which yields high property values and high quality development," he said.

The Northern Colorado Economic Development Corp. also is working with local communities to establish common goals, said Chief Executive Officer J.J. Johnston.

The process begins "with government actively working with the business community to talk about common goals in the community. Right at the top of the list is a sustainable economy and protecting the environment," he said.

Originally published Monday, February 10, 2003