Greeley city council votes to allow the DoubleTree Hilton to defer tax payments

By Kelly Ragan

On Tuesday, the Greeley city council unanimously agreed to let the DoubleTree Hilton at Lincoln Park defer tax payments for 2021. Councilmember Michael Fitzsimmons recused himself. 

In April, the council allowed the hotel, struggling because of the coronavirus, to defer its 2020 payments. That means the hotel will defer more than $400,000 for this year and next. 

The payment stems from a tax increment financing agreement the city made with hotel developers in 2016. The city fronted some cash to pay for some of the hotel’s construction. 

The original agreement stipulated that hotel developers would pay the city back a total of about $3.8 million by 2033. Ben Snow, Greeley’s Economic Health and Housing director, said in an interview with the NoCo Optimist that the hotel isn’t off the hook for those payments. 

By 2033, the hotel will still have paid a total of $3.8 million. The payments deferred in 2020 and 2021 will be rolled into additional payments going forward.

The move comes as hotels across the country continue to struggle because of COVID-19. In August, the American Hotel & Lodging Association reported that consumer travel was at an all-time low, with 33% of Americans saying they traveled overnight for leisure since March. 

About 38% said they planned to travel for leisure or vacation by the end of the year – compared to the 70% of Americans who usually take a vacation in a given year. 

“The city and the county have both tried to be as flexible as we can be,” Snow said. “The hotel isn’t a unique situation. We’ve done the Greeley Area Recovery Fund, now we’re doing the Weld County Business Recovery Program. We’re trying to help where it makes sense to do so without compromising the services the city provides.” 

The city isn’t relying on the hotel’s tax increment financing dollars to support city services, Snow said. 

Other repayment sources (think sales and lodger’s tax) will also fall short of what was originally projected. 

That’s in line with other businesses in the city. 

What is tax increment financing? 

City-approved districts, like Greeley’s own Downtown Development Authority, use tax increment financing as a tool to encourage development and redevelopment in areas where it might not happen on its own. 

The idea is to encourage developers to invest in areas and projects that will ultimately benefit the community. Developers get a break on the taxes they would normally  pay up front and pay them back as the value of the property increases. It essentially allows developers to pay for other costs as well as make a little money off the property before they are hit with a big tax bill. 

“One could argue that the capital investment would never happen, so you’d have slum and blight conditions that don’t do any good for anyone,” Snow said. “You’d have no new taxes generated, buildings get run down, that’s what happens when there’s no investment.”  

The Doubletree, for example, brings in additional sales taxes, lodging taxes and property taxes that wouldn’t exist if the developer had not been incentivized to build there. 

According to the city, allowing the deferment won’t burden the city any more than the losses expected from other businesses around town. 

“In fact,” according to city documents, the deferment “may allow the hotel a measure of stability during these uncertain economic times.” 

Taxes in the time of the Rona 

This isn’t the first time local government agencies have worked with businesses and people with their tax bills since the beginning of the pandemic. 

In June, Weld County Commissioners voted to temporarily defer delinquent interest payments on property taxes. 

In a previous interview with the NoCo Optimist, Barbara Kirkmeyer said the idea wasn’t to give people a way out of paying the taxes they owe, but it could give people a break during a difficult time. 

In a news release in June, Commissioner Kevin Ross said the move might help some businesses continue to prioritize paying staff or taking care of other necessary expenses without working about a late penalty.

“As a small business owner myself, I know that would be very helpful given the state’s current circumstances,” Ross said in the release.

The deadline to file federal and state income taxes this year was also extended from the usual April 15th to July 15th this year.