Editor’s note: This is the first of a three-part series on the city’s Regional Tourism Act project application for state sales-tax funds. The next two installments will analyze the four projects, two at a time.
By John Hazlehurst and Amy Gillentine
Supporters and planners of the City for Champions proposal believe its four major projects — an Olympic museum, a downtown stadium, an Air Force Academy visitors center and a UCCS medical facility — are an easy sell to an often-skeptical population.
“The vast, vast majority (of Colorado Springs residents) are supportive,” said Bob Cope, who has shepherded the City for Champions project since its inception last fall. “I’m surprised that there’s any opposition.”
Cope, principal analyst in the city’s economic vitality division, is no stranger to large-scale redevelopment deals. Gary Erickson’s Copper Ridge development on the city’s north edge was made possible by an ingenious partnership among the developer, the city and the Urban Renewal Authority. Cope also worked with developer Kevin Kratt, Colorado Springs Utilities, Urban Renewal and the city on University Village Colorado, transforming a blighted stretch of North Nevada Avenue into a major retail center.
The city’s new project looks even more far-reaching and complicated. Supporters already are meeting with local leaders and civic groups, answering questions and cultivating positive interest.
In June, Colorado Springs submitted the City for Champions proposal to the Colorado Economic Development Commission, requesting funds through the Regional Tourism Act. The act authorizes municipalities to use state sales-tax increment funding to finance certain visitor-related projects, if approved. Only two such proposals may be funded annually, and all must undergo rigorous third-party analysis.
State requirements demand that:
• The projects are of an extraordinary and unique nature;
• They are anticipated to result in a substantial increase in out-of-state tourism;
• They generate a significant portion of their sales-tax revenue from transactions with nonresidents of the regional tourism zone.
The local government must provide reliable economic data demonstrating that without RTA help, the project is not reasonably anticipated to be developed within the foreseeable future.
“We thought about applying last summer, when Aurora and Pueblo were successful,” said Cope, “But we needed projects.”
It wasn’t until fall that Cope and the city quietly zeroed in on candidates. Other projects were considered, including a new Pikes Peak summit house, a children’s museum and a science museum, but failed to make the cut.
“They didn’t generate enough (increased) out-of-state visitation,” said Cope.
From there, the project went forward, still secretly. According to Cope, the city didn’t want to warn potential competitors, and wasn’t sure what projects would make the final cut until days before the application was due.
“We didn’t know if all four of them would meet the requirements from the state,” he said. “We had to have our consultants run the numbers. And we didn’t want the boards of directors for these groups to read about the projects before they had a chance to sign off on them. Really, they all signed off just days before the application was due.”
As it turned out, Colorado Springs was the only applicant for state funds this year, producing a book illustrated with photographs and architectural renditions.
In the next two issues, the Business Journal will analyze the four components of the deal, two at a time, looking at them as serious business opportunities. What works? What doesn’t work? What information do we have? What additional information do we need?
Supporters emphasize the projects are a single proposal. The state won’t break off three and only approve one, Cope says. They’ll be considered as a group.
“This is not piecemeal,” Cope said. “These projects were designed to feed on each other, to produce an overall economic effect. The state might consider cutting the money they’ll give us, and then we’ll have to make decisions. But until December, when they decide, these are a single project.”
Before the projects can go forward with location, design and construction, all need financing. Each has a different financial structure, but all depend upon funds yet to be committed. There’s plenty of time to raise the money, since the state’s financial commitment, if made, is good for five years.
But the proposal can’t happen without that infusion, Cope says. Of the overall $218.5 million cost, state tax financing could provide $82.1 million. Private funding would account for $61.5 million, with $73.6 million from “public sector funding.”
The state decision will come after an independent third-party analyst’s report, due in December. Then the city will make a formal presentation to the state Economic Development Commission, which also will allow public input before making its decision.
Three of the four local entities rely heavily on private fundraising: $32.6 million for the Olympic museum, $17.5 million for the UCCS sports medicine center and $11.3 million for the AFA visitor center. That fundraising would start after state funding is committed.
“Without the state money, in this current budget environment, there’s no way we can do this,” said David Cannon, AFA director of communication. “Congress would never approve it.”
But many AFA alumni and supporters might — and that’s where the campaign would start. Subsequent articles in this series will analyze potential sources of funding.
Public funding can be structured in different ways.
“I anticipate that the Urban Renewal Authority will take a look at the Southwest Downtown Urban Renewal Area,” said Cope.
Designated as an urban renewal area 10 years ago, it has seen no development since. Creating a new URA would enable the Urban Renewal Authority to issue 25-year bonds that would support part of the needed $51 million for infrastructure improvements. Utilities would pitch in $4 million for utility upgrades, and the Parking Enterprise might contribute to the construction of a 1,500-vehicle parking garage.
That leaves about $40 million, all earmarked for the downtown stadium. Mayor Steve Bach has stated publicly that he won’t dodge a public vote on the financing.
“If city tax funds are involved, I won’t use COPs (certificates of participation)” Bach said. “The people of Colorado Springs will decide.”
It seems unlikely that the administration would go to voters soon. One option, Cope said, would be to wait until after state approval, after private donors make major commitments, and the Urban Renewal Authority sets its strategy. With all the pieces in place, the city could then fold stadium funding into a city-wide infrastructure bond issue.
The path to such a happy outcome might be treacherous. Project supporters have to address concerns about the projects, the secrecy and the financing obstacles.
Cope isn’t daunted.
“I’m committed,” he says. “I’ll talk this up to anyone who will listen. Serious people are backing this. This is a real game-changer for the city, for economic development, for downtown. This is going to change things.”