After making a few last-minute tweaks, Manitou Springs City Council approved a new tax incentive agreement with the owners of the cog railway. But that does not mean the process is finished.

The cog’s owners, The Oklahoma Publishing Co., must now decide whether to spend nearly $100 million to rebuild, renovate and upgrade the railway, which has been closed since fall 2017. And under the terms of the new agreement, both parties must sign it by Nov. 30.

The agreement replaces one that the council approved June 26. That agreement was first publicly proposed two weeks earlier, drawing criticism from citizens that the process was rushed and lacked public input. Citizens also objected to the 50-year term of the agreement and said it placed too great a burden on Manitou Springs’ taxpayers.

Since then, negotiations have continued between the cog’s owners, who also own The Broadmoor, and Manitou’s team.

Under the original agreement, the city would have rebated a portion of the city’s 5 percent excise tax on ticket sales and all of the 3.8 percent use tax on the improvements. The cog offered to pay Manitou Springs $500,000 this year and a similar amount in 2019 to compensate for loss of revenue during construction.

But the railway would have reaped all the benefits of potentially higher revenue from increasing ticket prices and/or higher ridership. Manitou’s merchants were not happy with the fact that the cog’s effective tax rate would have been 2.5 percent over the 50-year term of the agreement.

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The new agreement retains a cap on excise tax payments during the first 25 years of the agreement. After that, the cog would pay at least 3.8 percent on ticket sales and would remit the full 5 percent excise tax in any year in which ticket sales exceeded 375,000 — provisions intended to offset the effects of inflation and ridership growth. The cog also agreed to pay an additional $250,000 to the city in 2020, since the owners estimate the railway wouldn’t be able to reopen until spring 2021.

But the city’s negotiators were not successful in winning a $10 million limit on total rebates or a reduction of the 50-year term. Mayor Ken Jaray said Tuesday that the cog’s owners repeatedly refused to consider those provisions. 

A July 18 community meeting, hosted by The Pikes Peak Bulletin, the Business Journal’s sister publication, drew more than 150 people and launched a petition drive for a referendum on the issue. Manitou’s city clerk rejected the petition on grounds that the city charter does not permit referenda on contractual agreements.

That decision led to a lawsuit filed by two Manitou residents in the 4th Judicial District Court that seeks to reverse the clerk’s ruling. The case is still pending.

Manitou business owners have said they have already felt the loss of the cog. A report to the city by Summit Economics stated that, while the 50-year term is unusual, the city stands to lose an estimated $2.9 million in annual retail sales and could see a decrease in tourism if the 127-year-old railway does not reopen.

Opponents of the agreement reiterated their concerns at Tuesday’s council meeting.

“I would like to see this go to a public vote,” former Mayor Marcy Morrison told the council.

Resident Dale Latty urged councilors to try again to obtain a $10 million cap on the excise tax rebates.

“If the cog would agree, then you have … real partners,” Latty said. “If not, then you never really had a partner.”

Several business owners and cog employees asked council to support the agreement.

“Jobs are on the line,” said Douglass Edmundson, a fourth-generation Manitouan and proprietor of Keithley Pines Historic Cabins.  “I remember Manitou when there was practically nothing here. I don’t want to go back to those days.”

“It’s very important to consider the good relationship Manitou has had with the cog,” said Lance Wheatley, shop foreman at the railway. “I hope that with your decision, we can continue with that.”

Council approved the latest version of the agreement by a 5-2 vote, with Councilors Bob Todd and Becky Elder in opposition.

In separate votes, councilors rejected motions by Todd to add a $10 million rebate cap and to allow citizens to vote on the agreement.

“This has been interesting, challenging and a good process,” Jaray said. “Some of the terms of the agreement I would have liked to have changed. … That’s the nature of negotiations — you don’t always get what you want.”

Jaray added, “This is the best agreement we can get with the cog.”

Disclosure: The Business Journal’s owner, John Weiss, has been active in opposing the agreement.