City Council is debating how best to ensure a vote of the people on the City for Champions (C4C) Stadium and Event Center. The option I am sponsoring was recently accused by another publication’s editorial as being “crotchety.” I contend it is the best way to close the C4C business case.
C4C has three projects — UCCS, Air Force Academy and Olympic Museum — that do not require city tax dollars, so their business cases are already closed. C4C also includes upgrading our downtown infrastructure to include a parking garage ($29.5M), utility upgrades ($4M) and a pedestrian bridge ($14M).
My proposed ordinance does not require a vote of the people for any of these initiatives. My ordinance is intentionally limited in scope to the “funding or financing” of “any building or combination of buildings planned or built as sport venues to host outdoor or indoor sporting events, meetings and/or functions, with spectator capacity over 2,500 people.”
[pullquote] If plausible solutions are identified for each challenge, perceived barriers are removed.[/pullquote]The editorial was wrong when it stated: “If a private investor wants to build a stadium downtown, she would have to beg the public if it required involvement of the city’s parking enterprise, Colorado Springs Utilities, the Urban Renewal Authority, the Business Improvement District, etc.”
When seeking outside capital to close a business case, the first step is to earn the trust of potential investors.
Since that was not done with C4C, we are now in a situation where potential investors (citizens of Colorado Springs) are just the opposite: extremely skeptical of the concept and anybody behind it, including their elected officials — Mayor and Council.
My ordinance seeks to regain that trust by offering the people a vote if ANY city tax dollars are used for funding or financing a stadium and/or event center, associated with C4C or not.
If we try, as others propose, to insert caveats of only sales tax, only General Fund revenue or only if built for C4C, citizens will see this as trying to insert loopholes. We will not gain back our investors’ confidence and the business case fails to close.
The second step in closing the business case is identifying the right funding source.
Asking voters to divert revenue from filling potholes to funding a stadium will fail every time. So we must decide whose profit and loss (P&L) department does C4C fall under.
The C4C application anticipates 1.2 million new visitors a year to visit the four C4C venues. The P&L department for attracting these visitors is the Colorado Springs Convention and Visitors Bureau, which receives two-thirds of the city’s Lodgers and Automobile Rental Tax (LART) revenue.
Using LART revenue to fund the Stadium and Event Center closes the business case, financially and with the voters.
LART revenue has been steady at approximately $4 million/year for 10 years. As of Sept. 30, it was up 15.1 percent over last year.
By pledging LART revenue, we should be able to find bonding for the city’s share at 4 percent, hopefully lower. But 4 percent interest on $32.5 million at 30 years yields an annual principal/interest payment of $1.3 million — a 1:3 loan payment to current income ratio.
Assuming that each of the 1.2 million new City for Champions visitors a year stays only one night in a hotel and shares a room with another visitor, the increase in LART revenue is still $1.2 million a year (2 percent on a $100/night room).
Combining this with out-of-state visitors’ automobile rentals yields more than enough increase in LART revenue to cover the bond payments.
Thus, the business case closes financially.
For closing the business case, we would now be asking voters for permission to pay for a City for Champions venue using C4C tourism revenue instead of infrastructure, stormwater, public safety or parks dollars. The probability of winning goes from the bottom bracket to the top, and again the business case closes.
In summary, we can close the C4C business case in two easy steps.
First, we regain our investors’ trust by offering an unconditional vote, with no caveats, if any city tax dollars are to be used on the Stadium and Event Center.
Second, we assign funding to the P&L department responsible for ensuring C4C succeeds.
Who would not vote YES if we ask for C4C tourism dollars to pay for a C4C tourism venue?
Don Knight has represented District 1 on the Colorado Springs City Council since 2013.