A major tourism projection for an Olympic museum in Colorado Springs has been revised significantly downward, meaning the city's City for Champions proposal for state sales tax money isn't exactly what it was cracked up to be.
Originally, the city said the four projects — the museum, a downtown ballpark/events center, an Air Force Academy visitors center and a sports medicine center at the University of Colorado at Colorado Springs — would generate $201.7 million in new state revenue over 30 years.
Today's estimate is $173.2 million. That's because whereas the city originally projected that 82 percent of the museum's 350,000 annual visitors would be new out-of-staters, an updated filing puts the figure at only 60 percent. The change stems from "discussions with representatives of BarrieProjects, the authors of the Museum feasibility study," the filing states.
This is important, because the city's original application stated the city would borrow money — with a total payback cost of $167.9 million, including interest — against expected new state revenue. The city's revision means there's only a $5.3 million difference between what it expects to take in, and what it will have to pay out.
And that gives former City Councilor Randy Purvis, who served for 20 years over parts of four decades, a bit of heartburn.
"I would say in any economy you'd want a cushion larger than that," he says, "simply because you can estimate those numbers all you want, but if you're wrong by estimating [revenue] too high, then you're in a lot of trouble. If the city runs short [of money], the bondholders take it in the shorts, and the city gets a black eye. Or, the city comes up with the money from somewhere."
The revised revenue projection is cited in the city's 13-page response to questions from the state Office of Economic Development and International Trade regarding "key missing/incomplete parts" of the city's July 8 application.
With the city's July 17 submittal, the state now will refer the city's Regional Tourism Act proposal to an outside financial consultant for analysis. Those findings will be considered by the Economic Development Commission; a decision is expected by December.
On July 11, the state wrote to local tourism and city officials, asking for:
• data demonstrating that without state money, the projects don't provide a reasonable rate of return and cannot be built;
• more information on net new economic development activity and tourists drawn to the attractions;
• financial analyses showing development, construction and operating costs; a 10-year cash flow for each project; use of construction financing; and a list of public financing sources. While most of this information had been provided for the museum project, it wasn't for the other three, the state noted.
None of the 10-year cash flow tables the city submitted in response are being released. As State Economic Development Office official Kathy Green explains via email, "Colorado Springs designated the tables confidential as they contain proprietary business information of the Air Force Academy and UCCS that were supplied to Colorado Springs confidentially for purposes of the application. Likewise, financial information about the operations of the Stadium, including potential ticket price information, is proprietary."
Purvis, an attorney, says he understands the ticket-price argument, but he's at a loss about what kind of business information a federal agency (the academy) and a state agency (UCCS) are trying to protect. "I would never apply 'proprietary' to a government entity," he says.
Regardless, the public still doesn't know what assumptions have been made to back up the city's estimates. For example, what kind of deal has been worked out with the Sky Sox? Will they use the stadium at no charge? Will the Urban Renewal Authority expand the Southwest Downtown Urban Renewal Area's borders to assure more tax money is available for tax-increment financing? (This is when property and/or sales tax revenues are set aside for development.)
Speaking to that last question, URA official Jim Rees writes in an email, "If the City is successful in obtaining a grant, the CSURA Board will need to consider revisions to the Southwest Downtown Urban Renewal Plan in order to accommodate the proposed downtown projects." Such a change, subject to Council approval, would take four to five months, he adds.
The city says all four venues will be built between 2014 and 2016, and its latest filing predicts all will make money. The stadium would net $1.9 million its first year, though that would decline to $960,713 by the tenth year. The Olympic museum would show a net operating surplus of $696,655 the first year, growing to $1.4 million by Year 10. The UCCS center would net $585,230 the first year but would see an increase to $929,161 in the 10th year.
Operating surplus isn't provided for the academy visitors center, because it will be run by a federal agency. Any revenues from gift shop sales will go to the academy's athletic department, the filing says.
City officials emphasize in their latest filing that the projects can't be built without the state funding $82 million. Donors would chip in $61.5 million, and $74 million would be "public sector funding." Of that, $24 million would come from the URA, $40 million from "local bonds" that aren't further defined, and $10 million from federal tax credits given for investment in low-income communities.
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