Agenda Date: 09/08/2026
Subject:
Title
Economic Development Incentive Strategies
Body
|
From: |
James L. Becklenberg, City Manager |
|
Prepared by: |
Rachel King, Economic Development Director |
|
Presentations: |
Rachel King, Economic Development Director |
PURPOSE:
To discuss economic development incentive strategies used by cities across large metro areas to attract and retain investment, with a focus on the range of incentive tools available. Also, this item reviews proposed clarifications to Littleton's current incentive policy, so that it functions as a flexible tool responsive to market needs rather than one that sets fixed parameters.
LONG-TERM OUTCOME(S) SERVED:
Vibrant Community with Rich Culture; Robust and Resilient Economy; High-Quality Governance
DISCUSSION:
Littleton's Landscape - Why Incentivizing Is Important
Cities in the 1st- and 2nd-ring suburbs of a large metro area compete for investment differently than either the core city or exurban, greenfield markets. Several pressures specific to this position shape the incentive conversation:
• Land scarcity and an infill/redevelopment-driven growth pattern, rather than greenfield development.
• Aging commercial corridors and first-generation retail or office stock that require repositioning to stay competitive.
• Fiscal exposure from property and sales tax base competition with neighboring suburbs.
• Regional labor and consumer markets shared with the core city that bleed out into the broader region - harder to differentiate borders and remain “unique,” with more risk of leakage.
Littleton-specific considerations
• Financial risk: the City relies heavily on sales tax - the most volatile municipal revenue source - as its primary base for the General Fund and the Capital Improvement Fund.
• Limited real property tax revenue is returned to the City from the county.
• Littleton does not have an Urban Renewal Authority, which addresses much more than “blight” in its historic, narrow connotation.
• Littleton's Downtown Development Authority is relatively new, with no recent downtown redevelopment projects and therefore limited TIF revenue.
• Littleton has not issued municipal bonds before.
Competition
• Cities across the metro area compete for similar projects, and each has developed incentive frameworks to be responsive and flexible to market demands.
• Littleton has unique amenities, but so do other cities, and Littleton carries additional constraints that projects must overcome.
• Cities with similar amenities, fewer constraints, and greater incentives will eventually “win out” on projects over the long term, putting more strain on the budget.
Landscape of Incentive Types
Reviewing incentive programs across the region surfaces a consistent set of mechanisms, which can be organized into five categories:
Tax-based tools
• Tax Increment Financing (TIF) via urban renewal authorities or downtown development authorities
• Public Improvement Fee (PIF) districts and Business Improvement Districts (BIDs)
• Sales or use tax rebates or reimbursement agreements, typically performance-based and project-specific
• Business personal property tax rebates
• Real property tax rebates
• Enterprise Zone tax credits
Direct financial assistance
• Cash incentive or performance agreements tied to job creation, wage thresholds, or capital investment
• Fee waivers or deferrals (building permit, plan review, tap fees)
• Land write-downs, land banking, or below-market land sales
Financing and gap tools
• Revolving loan funds and façade or tenant improvement grant programs
• Special districts (Metro Districts, General Improvement Districts) for infrastructure financing
• State and federal layering, including Opportunity Zones, historic tax credits, and CHFA/DOLA grant programs
• Municipal bonds for larger-scale projects and infrastructure financing
Process-based incentives
• Expedited or priority permitting review
• Pre-development technical assistance and site readiness support
• Zoning flexibility or planned unit development tools tied to a defined public benefit
Large-scale projects or mixed-use development
• Public-private partnerships - often involving a layering of several of the incentive types above
Cross-Cutting Themes from Peer Cities
Several patterns recur across the peer cities reviewed, independent of any single city's specific program design. First, no single “magic combination” of incentives exists - every city offers a different mix. Similarly, no peer city relies on a single tool. Each layers a few incentive types, often depending on project type and scale. This results in negotiated incentive deals for mixed-use developments or retailers looking different from small business support.
Additionally, several peer cities build negotiation flexibility and tiered approval thresholds directly into their policies rather than fixed formulas; others offer no detailed guidance on incentives at all and instead offer a collection of programs that support businesses or development in different ways. Cities often update their incentive policies periodically, where one exists, as market conditions and priorities shift. As an extension of this, to meet market needs, cities are becoming progressively more creative and diverse in how they incentivize deals and structure partnerships with developers. That said, a wide range of incentives has also been used historically across the region. Creativity is a trend, but not a replacement for the established toolkit.
Where Littleton's Current Policy Stands
Littleton's existing incentive policy has generally been applied with more flexibility than the document itself suggests. However, the current policy language reads as prescriptive - fixed incentive types with implied parameters - even though common practice has been more flexible.
This creates a practical risk: applicants and staff may treat the listed examples as the only available options, or as guaranteed terms, which narrows staff's negotiating position and slows deal structuring. Left uncorrected, this reduces the City's competitiveness against peer cities offering comparable amenities with fewer constraints and greater flexibility.
Proposed Policy Update
Staff proposes a clarifying update to the incentive policy. The core change is narrow and does not alter Council's role: it clarifies that the incentive types and parameters listed in the policy are illustrative, not exhaustive or fixed.
Specifically, staff proposes that the updated policy state that:
• The listed incentive types are examples of tools the City has used or may use - not a closed list
• The listed parameters (thresholds, percentages, caps) are reference points from past practice, not binding formulas
• Each proposal is evaluated on project-specific merits: public benefit, fiscal impact, market gap, and alignment with adopted plans
The changes provide staff a defensible basis to bring forward creative or blended incentive structures without a policy amendment for every new tool or project, that may be critical to securing a competitive project or deal to benefit the City. Conversely, what will not change is Council's approval authority, the existing public process and transparency requirements that’s associated with that authority, and any statutory constraints; i.e. the flexibility applies to tool selection and deal terms, not to oversight. A draft of the proposed amended policy is attached.
BACKGROUND:
Council has raised questions in recent project discussions about the degree of flexibility available under Littleton's current incentive policy - specifically, whether the incentive types and parameters listed in the policy represent the only tools and terms available to staff, or whether they are meant to be flexible. Staff's intent has been the latter; however, the current policy language does not make that clear, and this ambiguity has begun to affect how both applicants and staff approach deal structuring.
Prior Actions or Discussions
N/A
FISCAL IMPACTS:
N/A
STAFF RECOMMENDATION:
N/A
ALTERNATIVES:
N/A