“A Bold Move”: Lakewood Uses Economic Fund for Safety

At the April 10, 2023 Lakewood City Council meeting, Lakewood has taken the unprecedented step of authorizing money from the Economic Development Fund to demolish and remove a vacant building at 995 Sheridan Blvd for non-economic reasons. The building, the old Holiday Plaza shopping center, has been deemed a public safety concern. By paying for the demolition and removal of this building, Lakewood will gain an estimated 18-24 months of time that the community will not have to deal with the eyesore and associated criminal complaints. The money for the loan will come from the Economic Development Fund, which is restricted by code for the purpose of promoting economic development within the City, but in this case will be used for public safety. The property is intended for mixed-use development.

Residents of the area spoke overwhelmingly in favor of this proposal. Although the city had previously granted the property a blight status to facilitate redevelopment, that development has been slow to occur. The property has been mostly vacant for over 10 years and the number of service calls has grown to almost 130 a year.

The new owners of the property have plans for demolition and removal. However, the typical construction loan is tied to building permits and permits take a long time to obtain. That’s why vacant buildings are left standing until new building permits, and the associated construction loans, are obtained.

That timing may change now that Lakewood has devised this method of using the Economic Development Fund to cover public safety.  Lakewood Mayor Adam Paul calls it “a bold move”, explaining that the fund cannot be used directly to help the homeless but this is another way to serve the community.

In fact, using the fund itself is the bold move. According to Lakewood Municipal Code, L.M.C. 3.26.030, “The purpose of said fund shall be to provide funds from the city to further the economic development goals of the city by providing financial assistance to projects attracting enterprises that City Council determines will further the accomplishment of the city’s economic goals.”

Traditionally, the fund has been held to the expressly stated restrictions by sponsoring economic projects to cause revitalization.  In this loan agreement for 995 Sheridan, no new projects attracting enterprises will be funded. A new interpretation focuses not on the economic development, but on the results.

Economic authority derived from city’s police power – no direct economic authority granted to the city

All economic goals must be “in furtherance of the public health, safety and welfare”, as stated in policing powers for the city, under which the economic development fund was created. By focusing on the ends instead of the means, there seems to be no limit as to what the fund can be used for, and in fact, that question was not discussed, although some kind of “restriction” was universally acknowledged.

Will there be any restrictions to future fund use? Can any loan be made in the name of public safety?

No one on Council or staff made the argument that this loan agreement would have economic benefits, per se. The benefits presented focused on public safety.

Mayor Pro Tem Wendi Strom summarized the discussion by saying “I know it is no guarantee we are going to get our money back” but this will “increase public safety”.

This loan is a pilot project. Using the Economic Development Fund for public safety will allow many future projects throughout the city. Measures of success/failure of the project were not presented. However, by using the economic development fund for public safety directly, Lakewood is providing a measure of the success/failure of the fund for attracting businesses, by showing there may better ways to spend the money or perhaps that the fund is overfunded for its purposes.

The loan agreement was approved 8-3, with nays being Council Members Janssen, Olver, and Springsteen.