What are public improvement fees found on receipts at local businesses, restaurants?

What are public improvement fees found on receipts at local businesses, restaurants?
Posted at 5:23 PM, Jul 08, 2021
and last updated 2021-07-09 08:20:59-04

COLORADO SPRINGS — If you've shopped at a business in Colorado Springs or enjoyed a meal at a local restaurant, you may have noticed a public improvement fee on the bottom of your receipt. But what are public improvement fees for and why are you paying for them?

Public improvement fees, also known as PIF's, are an extra charge when making a purchase. It's not a tax, it's not something voters vote on, and the City of Colorado Springs does not impose the fees. Instead, it's a fee set by the developer or landlord of the property, which the businesses sit on. The developer then collects the funds from it.

The fees are in different communities in the southern, eastern, and northern parts of the city. For example, businesses off of Interquest Pkwy or in the Northgate area are where customers will likely see a fee.

Beasts & Brews, a business in Northgate, is among the many restaurants across town where customers will see the charge.

"A few people that aren't from around here ask about it sometimes. It's not very often, but people look at it and say, 'What's this down here?' And you have to look at it and go into a kind of a long explanation as to why they're being charged an additional one percent," said Tim Peterson, who owns Beasts & Brews.

When he opened his business in 2019, Peterson said he was required to impose a 1% PIF by the developer of the property, and post a notice about it at the register where customers pay.

"There are two reasons for it. Hopefully, customers can read it and answer their questions about it. Or it's to notify them ahead of time that they are going to be charged this before they actually start purchasing anything," said Peterson.

Charae McDaniel, the chief financial officer for the City of Colorado Springs says PIF's are set at anywhere from .5% to 2% of the total sales cost.

"It's commonly used to fund improvements on the property, for example, sidewalks, lighting, parking lots, or it can also be used as a revenue stream for bond repayment," said McDaniel. "The trends that we're seeing, (PIF's) are more so with newer developments, so the developments that are occurring in the last five to ten years are the ones that have them more."

McDaniel said developers can also impose PIF's on an existing development but as the city continues to grow, they're being found more often.

"There have been a lot more of them, but we don't know how many there are because its not at all regulated by government, and it's not a governmental fee," said McDaniel.

For example, if a PIF is set at 1% and you have a $50 bill to pay, you'll be paying 50 cents for the improvement fee.

Meanwhile, Peterson says he had to sign an agreement with the property developer that his business sits on, when he opened his business back in 2019. He also mentioned every month he calculates how much money he received in improvement fees and has to send that information and numbers to the developer.