By Joshua Cooperman

On April 19, the citizens of Louisville will vote whether or not to approve Redtail Ridge, a commercial-industrial development planned for the southeast corner of Louisville. Will Redtail Ridge be a boon or an economic meltdown? Based on available information, Redtail Ridge would provide meager economic benefits to Louisville.

What economic information about Redtail Ridge do we have? The developer commissioned a market analysis and City staff conducted a tax analysis.

Fiscal analysis predicts Redtail Ridge’s monetary impact on Louisville. City staff analyzed three scenarios: 100%, 80% and 40% construction, all assumed to occur over 20 years. The financial analysis estimates the average annual financial impact of these scenarios (revenues minus expenses) at approximately $2.1, 1.2, and $0.45 million. For context, $1.2 million represents a 2.4% increase in city revenue in 2021. Louisville’s overall plan requires developments to be at least tax-neutral. Based on these numbers, Redtail Ridge would have a positive, albeit small, tax impact. But let me continue my examination.

Which of the scenarios provides the most reliable prediction? According to market analysis, Colorado Technology Center is about 95% complete after 37 years, Centennial Valley Business Park is about 80% complete after 25 years, Lafayette Technology Center is about 75% complete after 26 years . years, Westmoor Technology Park is around 65% built after 23 years, and Interlocken is around 85% built after 35 years. These data indicate that the 40% construction scenario is pessimistic and the 80% construction scenario is optimistic. Therefore, one should expect an average annual tax impact of less than $1 million.

Based on this historical data, the market analysis concludes that demand will eventually exist for office, industrial and retail space in Redtail Ridge. This analysis assumes that demand will return to pre-pandemic levels in a few years, ignoring trends towards the expansion of hybrid work-from-home and telecommuting policies. This analysis predicts a lag in demand for new office space as pandemic-induced vacancies decline. These post-pandemic trends — reflected in the fact that the developer has only one confirmed tenant for Redtail Ridge — reinforce the likelihood of more phased construction.

Does the budget analysis not take into account factors likely to significantly affect its forecasts? To answer this question, I recently spoke to City staff. The planned combination of office, industrial and commercial space limits the tax impact: only the increase in the proportion of commercial space would generate significantly more income. There are at least five factors that would lessen the tax impact.

— First, contrary to the recommendation of City staff, City Council approved an as-yet-undefined prorated cost-sharing arrangement for two infrastructure improvement projects identified in the developer’s traffic study: widening 96th street north of Dillon Road to Highway 42 and improve Northwest Parkway. Highway 36 interchange. Widening 96th Street would cost a few million dollars; replacing the 96th Street Railroad and overpasses would cost approximately $100 million. The cost to the City of improving this interchange is difficult to estimate.

— Second, the City would likely build a police annex to the planned fire station on 88th Street. Given that the City built its police station for about $3 million in 2003, this addition today would cost at least a few million dollars.

—Third, the city would likely need to expand its service facilities along 104th Street. Considering the City built this facility for $14.5 million in 2015, expanding it would cost at least a few million dollars today.

— Fourth, as part of its economic vitality program, the City regularly offers economic incentives, partly in the form of tax refunds, to businesses that set up or expand in Louisville. The city may well extend these incentives to businesses locating in Redtail Ridge.

— Fifth, the tax analysis does not take into account the move of the Adventist Hospital from Avista to Redtail Ridge. Given the hospital’s non-profit status, the city would not receive tax revenue from this part of Redtail Ridge.

Given these factors, we should expect the average annual budget impact to be even lower below $1 million, potentially in the red. Does this meager tax advantage justify the development of Redtail Ridge? I do not think so. The city’s financial situation is already exceptionally strong, with revenues increasing by around 200% in the decade since StorageTek closed.

Joshua Cooperman lives in Louisville.