Small business is in my blood. My mother started a bookstore in her 20s and kept it going through the Great Depression, World War II and the challenges and opportunities of postwar Colorado Springs.
My father was an independent investment broker whose once-thriving business shrank dramatically in the 1930s. He relocated from the ground floor of the Mining Exchange building to a shared office on the fourth floor, and continued the business on a reduced scale. Between the two of them, they built a nice life for themselves and their two kids.
They were upright, honest people. They paid their taxes, and I’m sure that it never occurred to them to ask city officials to rebate taxes or fees for any reason.
Their world has vanished. Small business owners now have to compete with online leviathans like Amazon and brick-and-mortar behemoths like SCHEELS. That’s OK — no business owner likes competition, but it’s a fact of business life as long as it’s reasonably fair and equitable.
The SCHEELS subsidy deal the Colorado Springs City Council just approved on second reading doesn’t pass the smell test. Here are a few sentences taken verbatim from the Credit Improvement Fee agreement. Read ’em and weep.
“The Parties acknowledge that the Project constitutes an Infill Development within the meaning of the City’s comprehensive plan ‘Plan COS.’ In addition to the creation of new jobs, the construction of the project will also generate and contribute new sales and property taxes for the city and other taxing bodies. The city therefore finds that the Project benefits the public health, safety and welfare by facilitating construction of necessary public improvements and furthering the City’s overall economic development goals.”
No reasonable person would argue that new retail or commercial construction in the hottest area of America’s most desirable city, a location many miles from any blighted neighborhood or aging infrastructure, can somehow constitute infill development “within the meaning of the city’s comprehensive plan.”
But this agreement wasn’t penned by reasonable people, but by skilled attorneys employed by the three parties involved: the city, SCHEELS and Interquest North Business Improvement District. It’s an unexceptional example of the way things are done nowadays, as large businesses demand incentives before they commit to enter a new market.
In this case, the incentive is relatively small — just the replacement of half of the city’s base sales tax with a 1 percent public improvement fee, which SCHEELS will collect and retain.
Such deals aren’t uncommon. Local governments only have one infallible bargaining chip when trying to attract development — the power to tax. Colorado permits (even encourages) developers to create special metropolitan districts that issue bonds to fund roads, water, sewer, parks and other infrastructure in new developments. Such districts tax future homeowners to pay off the bonds, making these heavily taxed new residents understandably reluctant to support raising city, county or school property taxes. Colorado is home to hundreds of such districts that collectively rake in hundreds of millions in annual property tax payments.
So why don’t developers fund their own infrastructure? Because the laws give them tools to pass on such costs, and they’re not stupid.
Yet there are instances when local governments ought to offer such support. Consider the tax abatement that Perry Sanders negotiated at the bottom of the Great Recession in 2010, when he transformed the derelict Mining Exchange Building into a four-star boutique hotel. That project arguably helped spark our present downtown boom.
But in life, someone has to pay the bills. Despite the cheery eco-devo predictions offered by SCHEELS in support of its subsidy, such largesse is not without cost. Small businesses will pay full rate, as they always have. They’ll get fawning lip service from their elected representatives, a bewildering tangle of rules and regulations with which they must comply and tax bills that must be paid… or else!
Of our nine councilmembers, only Bill Murray and Andy Pico opposed the deal. Their seven colleagues cheerfully gulped down the SCHEELS Kool-Aid, signing on to a 25-year, $16 million tax incentive.
So let me, once again, suggest that council throw a tiny bone to small business. Choose a month, declare a small business tax holiday, and let ’er rip! Interested? I’ll put together an economic impact statement, condense it into a forgettable PowerPoint presentation, and give you a palatable excuse to support the small business community.
As Spike Lee might put it: Do the right thing!