An agreement between the city of Manitou Springs and the Manitou Urban Renewal Authority will result in a $1.8 million windfall for the city in the next 18 months.
At its June 5 meeting, Manitou’s City Council approved an agreement that will allow the city to retain tax increment funding it normally remits to the URA. The URA board anticipated that it would receive $1.2 million in TIF revenue this year, and $600,000 in the first six months of 2019.
The URA board agreed to forgo the funding at the city’s request.
“They came to us and asked us to consider this, because of the revenue shortfall from the closure of the (Pikes Peak) Cog Railway and falling sales taxes from that,” URA board chairwoman Ann Nichols said. “The board’s thought was that we had not identified projects we would use the money for through the first half of 2019, and the city needed the money.”
Nichols said Manitou’s URA still has about $3.1 million in its budget.
“We’ve identified uses for that,” Nichols said. “We expect to use the majority of it, but we would still end up with a fund balance of hundreds of thousands of dollars.”
Manitou’s City Council created the Urban Renewal Authority to encourage and promote redevelopment of the east end of Manitou Avenue — the gateway to the city, which is in need of revitalization. The URA board’s vision is to attract businesses that serve both residents and tourists and to help diversify the city’s economy.
The URA board’s responsibilities are to invest tax increment revenues within the corridor and work with property owners and developers toward revitalizing the area.
Tax increment financing subsidizes redevelopment, infrastructure and other community improvement projects by earmarking tax revenue from increases in assessed values within a TIF district such as the URA.
Until 2014, revenue was not sufficient to enable the URA to undertake major projects. The board was able to offer a few matching grants and assisted the owner of Adam’s Mountain Café in remodeling when the restaurant moved to its current location.
That situation changed with the advent of retail marijuana.
“This is a special pot of money that, if you’d told me it was going to be there a few years ago, I would have chuckled and said, ‘What a nice dream,’” URA board member and former mayor Marcy Morrison said in a February 2017 interview.
State law forbids Manitou Springs Finance Director Rebecca Davis from disclosing the amount of revenue produced by the marijuana stores because there are only two of them. But sales tax collection reports indicate that Emerald Fields and Maggie’s Farm have contributed substantially to Manitou city and URA budgets.
The sales tax reports Davis issues monthly place the two recreational marijuana stores in the “Other In-city” category, along with 25 other businesses that don’t fit into well-defined sectors such as gift shops, restaurants and lodging.
In 2017, the Other In-city category was by far the largest contributor to Manitou’s sales tax collections. For the year, those businesses posted $89.3 million in taxable sales, which generated almost $3.5 million in revenues under Manitou’s 3.9 percent sales tax.
By comparison, Manitou’s 70 gift and retail stores totaled $21.3 million in taxable sales and generated about $830,700 in sales taxes for 2017.
The URA receives about a third of the sales tax on marijuana sales, plus the TIF funding.
The increased funding enabled the URA to contribute $100,000 toward the operation of the shuttle service in Manitou last year, but its biggest expenditures have been to enhance the streetscape being constructed under the Westside Avenue Action Plan.
Among the WAAP projects the URA has financed are historic streetlights, a pedestrian bridge over Fountain Creek and sidewalk amenities.
The biggest chunk of the URA’s current budget will go to improve the Beckers Lane bridge, a city-owned structure that is a major feature of the urban renewal corridor.
“It’s going to be key to making the corridor attractive to development,” Nichols said. “We decided early this year that it was a high priority for us. At a minimum, it will need rehabilitation, and we may end up replacing it.”
The board budgeted $2 million for the project.
“We want to come up with options to make that intersection, and pedestrian access especially, safer and more appropriate,” Nichols said.
The URA budget also allocated about $250,000 for a pocket park or small entryway on land the WAAP project has acquired; $100,000 for undergrounding electric service; $60,000 for art pedestals; and $300,000 for Fountain Creek improvement projects.
There is enough money left so that “if there were a real redevelopment project that would create more incremental tax revenue, that would be developed from the budget,” Nichols said. “If we wanted to support more than that, or something occurs that we did not anticipate, we always have told council that we would come back to them.”
The URA has held a series of open houses and is actively looking for developers to propose projects but has seen little interest yet.
“The problem is that most of the individual properties are small and in multiple ownership,” Nichols said. “We are continuing to explore other ideas.”
A Pueblo entity, AAA Hotel Developers, has proposed building a three-story, 61-room Holiday Inn Express hotel on a vacant property at 114 Manitou Ave., between Mo’s Diner and the Days Inn.
“They have talked to us about it but haven’t indicated they need anything from us,” Nichols said.
Nichols thinks potential developers are waiting for the WAAP project’s completion.
“It’s our hope and expectation that once people can see that redeveloped corridor, that will be an incentive,” Nichols said. “We really don’t yet have a clear view of how nice that’s going to be, but it should come together within the next six months.”
The completed corridor will offer a “huge incentive to anyone with an interest in redevelopment,” she said. “What we keep hearing is that owners are looking for buyers, or would be if somebody was serious about it.”
Now that the Cog Railway has offered to give the city $1 million over the next 18 months to offset lost sales tax revenue, some people in Manitou are wondering whether the URA needs to give up its TIF money.
“At our last meeting, that question definitely came up,” Nichols said. “We didn’t get a clear answer.”
Manitou’s City Council has negotiated a tax incentive agreement with the railway that would allow it to invest nearly $100 million to rebuild and reopen the attraction, which has been closed since last fall.
The council approved the agreement on first reading June 12 and will take it up for a final reading on Tuesday, June 26.
Mayor Ken Jaray said he expects the URA agreement to stay in place. n CSBJ