By Pam Zubeck, Colorado Springs Independent

On Feb. 11 city staff briefed Colorado Springs City Council on a proposal to grant Scheels All Sports, a mega sports store that will feature a Ferris wheel, the biggest tax incentive for a retailer in the city’s history.

The proposal called for giving Scheels $16.2 million over 25 years via reducing the city general fund sales tax by half, and allowing Scheels to collect 1 percent on sales for a Public Improvement Fee and pocket that money.

In that presentation, city Economic Development Officer Bob Cope noted Scheels, to be located in the Interquest Business Improvement District in north Colorado Springs, would bring the city $53 million in net new revenue over 25 years.

He also presented a slide that showed several economic data points, including that the retailer would rack up $60 million in estimated annual sales.

But now, it appears that Scheels may only bring in around $20 million in annual sales — one-third of the quote given to council — based on the retailer’s own estimates. Initially a higher estimate wowed council, making an incentive package look like a good deal. This lower estimate, however, comes at a time when the Scheels developer is looking to back out of an obligation that grows with its profits.

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On May 28, council learned that Nor’wood Development Group, which owns the land where Scheels will be built, requested that council exclude Scheels from the Interquest North Business Improvement District, which is controlled by Nor’wood through board seats.

Council wasn’t told, however, that at least two businesses located in the BID opposed the exclusion, because that would mean one less business to contribute toward paying the debt incurred to install public infrastructure, such as sidewalks. The BID is supported by a 51-mill property tax and by a Public Improvement Fee of 1.25 percent on sales.

Although council was slated to vote on the exclusion request on June 11, Nor’wood requested a delay until June 25.

In support of the exclusion, Nor’wood submitted several documents, among them this one-pager showing tax computations based on “Scheel’s [sic] Estimates.” (AV is assessed value; PIF is Public Improvement Fee charged by the BID, and Gross PPTx revenue is property tax revenue for the BID.)

When asked about the $20.4 million annual sales figure, Cope replied in an email that he’s “very comfortable” with the city’s $60 million estimate, and noted he hadn’t seen the BID document cited above until the Business Journal’s sister publication, the Colorado Springs Independent, provided it to him.

“It is my understanding that the $20.4 million annual sales projection was an extremely conservative estimate for the purposes of that particular document,” Cope said.

Nor’wood President Chris Jenkins had not responded to emails from the Independent requesting a response.

But based on Nor’wood’s computation, other members of the BID would lose out on $448,800 in revenue ($193,800 in property tax and $255,000 in PIF tax) each year to help pay off the BID’s $11.3 million debt.

If the PIF total is computed based on the $60 million figure, it would amount to $750,000, bringing the total not collected by the BID from Scheels to $943,800 a year if the retailer is excluded from the BID.

Murray, in an email, said the following:

“The city over estimates its value to the city and caveats it with the threat they would move to Fountain, and the developer underestimates in order to minimize its effect on the BID (which everyone else would be required to pay in the district). 
(1) the city’s estimates came directly from Scheels (this included over 50% out of area sales). 
(2) Jenkins’ figures are being used to sway Council, in favor, of a reduction in Scheels’ exposure to the Bid. 
(3) The Council’s conundrum is that we have no method of verifying any of these figures but can only trust those given by the various parties.
(4) It’s rare that we get to compare and contrast. In this case, they are asking for two separate incentive packages, which demonstrated the need to vary the figures to support each position.”
Scheels has yet to respond to a request to clarify the accuracy of the figures.