Silverthorne looks to boost local businesses
November 5, 2017
A town-sponsored program that rewards local businesses with sales tax rebates resurfaced Oct. 25 in two separate agenda items before Silverthorne Town Council, each illustrating just how far the program's come since first helping tempt Target to town over a decade ago.
It was only by coincidence council members gave the Enhanced Sales Tax Incentive Program, better known as ESTIP, a hearty round of cheers in extending the length of one local brewery's deal while welcoming another to the party.
First up was The Bakers' Brewery, carved out of the footprint of an old Village Inn overlooking Interstate 70. The owner was seeking a 12-month extension on the already agreed-upon $225,000 rebate over a seven-year period. The deal includes the installation a new grain silo at the brewery, among other improvements.
"This is a little unique for Bakers' Brewery," said Mark Leidal, assistant town manager, as he walked council through Bakers' revised proposal.
Bakers' original agreement from February 2014 would have expired at the end of the coming February, and a letter from brewery president and brewmaster Cory Forster included in the application lays out Bakers' need for more time.
"We are writing to request, yes another, extension of our ESTIP contract's Silo Requirement," the letter reads. "We have been trying to dial in all of the details of a Re-Fi on our property since early May and are still doing our due diligence in order to achieve the best deal, and thus chances of long-term success."
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Foster concluded by saying the brewery hopes to have its new silo by "early summer… ?" and thanked the town "for ALL of (its) support!!! Cheers!!!"
HAPPY TO HELP ANGRY JAMES
Up next on the agenda was Angry James Brewing Co., a new brewery that's about ready to open at 421 Adams Ave. and coming at an opportune place and time with Silverthorne focusing on major development projects in the downtown core.
Through ESTIP, the new kid on the block was looking for a rebate of $50,000 over seven years for, well, being here and bringing new jobs to the area.
Like Bakers', Angry James has already benefited from the town's small business grants program, which has awarded grants to 33 local small businesses for 38 projects since 2012, and the grants stand in addition to the town's sales tax rebates.
The proprietors of the new brewery, Darcy Bender and AJ Brinckerhoff, recently got the parking lot paved and are doing much of the interior work themselves, town officials said, adding that Angry James hopes to be tapping kegs in December.
The way Leidal describes ESTIP, if the rebates help Bakers' expand or Angry James open, those developments could drive heightened traffic to Silverthorne, raise sales individually and across the community, and grow the local job market, all of which generate additional tax revenue for Silverthorne.
"I certainly appreciate having Bakers' Brewery as an in-town business and anything we can do — without going out of the normal realm of our responsibility — I think we should do to help them make it here," Camp said before voting at the Oct. 25 council meeting.
"Well, I agree," Mayor Bruce Butler added. "We are here to try and offer the best assistance we can for a town business. I hope they can be as successful as they can possibly be. With that said, do we have a motion?"
Two votes later, it was twice unanimous.
FINDING THE TARGET
Silverthorne didn't want just any big-box store, when council backed now-assistant town manager Mark Leidal's idea for a new program of sales-tax rebates in 2001; they wanted Target.
Town manager Ryan Hyland, who held Leidal's current role at the time before being promoted, remembers the development well, and as things turned out, ESTIP would be exactly the ammunition, along with Leidal's existing contacts at Target, that he needed to lure the retail giant here.
He and Hyland both remember the first time ESTIP returned sales taxes generated by a business back to that business fondly.
"It was pretty smart in hindsight," Hyland said, "because (Target) has been a great asset for us, not just in Silverthorne, but the whole region, I think. It's really helped the whole county to have that here."
Through the rebate program, Target got $2.3 million back in sales tax rebates. For the money, Silverthorne got public infrastructure put in place and about $1 million worth of enhanced architecture that "you don't normally see on a Target," Hyland said, explaining that the town was wanted a store that looked like it should be in the mountains.
"That was the introduction of ESTIP to the community," he concluded, and for an encore, Lowe's got a $1.9 million package through council in 2010.
That might sound like a large number, Hyland said, but for that money, the town got roads, traffic signals and other expensive but necessary infrastructure built by the developer and ready to go "on day one."
"They put it in, and we paid a portion of that back over time," he said. "So in that particular case, it really was a no-interest loan to get public infrastructure in place."
"That one was a win-win-win," Leidal added. "The public gets new infrastructure, the developer gets paid back over time, and the town gets additional sales tax."
Landing the Target and Lowe's stores continues to pay dividends today, but an added bonus was that, in offering those incentive packages to the big-box stores, the town started down a road that would put the same kinds of rebates in the hands of much smaller endeavors, albeit at proportionately reduced amounts.
Council accomplished this by rewriting town code in January 2012 to radically lower the threshold for triggering sales tax rebates. Prior to the revision, a business had to generate at least $893,00 in new sales-tax receipts. Now, that's cut down to $178,000.
"It opened the door," Hyland said, highlighting a massive expansion of the program that saw ESTIP go from two businesses over its first 10 years to eight within the next five years.
To date, ESTIP has benefited businesses of all shapes and sizes to the tune of more than $4 million. So far, council-approved rebates have gone to Which Wich (2013), Murdoch's (2014), Bakers' Brewery (2014), Starbucks (2015), Hampton Inn and Suites (2015), Sauce on the Blue (2016) and now Angry James, in addition to the first ones with Lowe's and Target.
The returns range in size from Target's $2.3 million package to more modest agreements like Murdoch's $613,000 deal, down to the $8,700 plan for Which Wich.
"So that gives you an order of magnitude," Leidal said. "Yes, we've done $2.3 million deals all the way down to $8,700 deals."
The rebates can never exceed the sales taxes collected by business that gets them, and all packages must be council-approved.
"From the town's perspective, council can say 'yes' or 'no' to any one of these, but we certainly see it as being a valuable tool to help large and small businesses decided to make the investment in Silverthorne," Leidal said.
TIP OF THE ESTIP
Silverthorne's sales tax rebate program wasn't unheard of at the time it was created, nor is it uncommon today. Rather, it's modeled after many others in use across the country, including one from Parker, where Leidal worked and used the rebate program in the 1990s before moving up here.
Generally speaking, the rebates involve a municipality refunding a portion of sales taxes generated by a retail business over a certain period of time, often because that business is adding jobs, growing tax revenue or planning something that's expected to positively impact the locale.
In rebating new taxes, the governmental body that offers the discount doesn't necessarily see it as a loss because the incentives are designed to help create new taxes that otherwise never would have gone on the books. Furthermore, once the clock runs out on the rebate packages, the town pockets the full tax.
Silverthorne has taken its program further than others by helping businesses small and large, especially if it means reclaiming an old, vacant building, putting in infrastructure, making exterior improves beyond what town code requires or filling an existing gap in the local economy. And that's what the program allows the town to do — chase the type of businesses or business projects that council wants here.
In what would turn out to be an unintended complement, at the same time Leidal was chasing down Silverthorne's Target store with the town's first ESTIP agreement, town council was leveraging its position through that rebate package to ensure Target exceeded the building standards, which at the time were much looser than they are today.
"Target originally came to town with a very standard, plain looking box," Leidal recalled, explaining that council wanted "a mountain-looking Target," and put roughtly $1 million in Targer's ESTIP agreement for visual enhancements to the building.
Fast-forward to today, and some of the agreements that came out of those negotiations have been codified into town code, both Leidal and Hyland said.
In fact, Hyland sees the results driving down the Blue River Parkway every time he passes two across-the-street auto parts stores, neither of which ever directly benefited from ESTIP but were affected by it nonetheless.
"If you Google 'Auto Zone' and look at all of the buildings that come up, this one is the best you've ever seen probably," Hyland said. "That's because we got those design standards in place (with Target)."
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