You might say developers are trying to do the impossible in building the city's largest shopping mall — 2.8-million-square-foot Copper Ridge at Northgate — in a down economy.
But by promising to link Powers Boulevard to Interstate 25, they've sweetened the pot for buy-in. It worked with Colorado Springs City Council, which approved giving 320 acres of raw land the "blighted" label normally reserved for depressed slums. That coup enables developers to use millions in city tax dollars, plus county property tax money (even without county approval — a quirk in urban-renewal laws).
But promising the Powers extension might not be enough to rope in additional sales tax dollars from El Paso County, whose leaders are asking sticky questions before a Feb. 17 vote.
The land, southeast of I-25 and North Gate Road, is being developed by Gary Erickson and his partner, Kevin Hawkins, as an upscale shopping mecca to be anchored by a store such as Nordstrom's. Erickson didn't return a phone call seeking comment.
"There's a lot of pressure for the county to come to the table," Commissioner Sallie Clark says. "They say if we don't participate, it won't happen. I don't want to be the wet blanket and say we're not in favor of economic development. But I don't want to pick winners and losers. If there wasn't a road project involved, we wouldn't even be at the table."
Last May, Council unanimously approved the project and labeled it an urban-renewal area, just before a state law took effect prohibiting raw land from being so designated.
The urban-renewal tag allows Erickson and Hawkins to use sales and property tax money that would have gone to the city's general fund to extend Powers by roughly 4 miles, from Colorado Highway 83 to Interstate 25, by 2013. The plan, they told Council, is to issue bonds against future revenues, which would mean the "developer is at risk, not taxpayers," according to Council minutes.
Jennifer Crowley, manager of Shops at Briargate, said during the Council meeting in May that her site could lose tenants, as could nearby Chapel Hills Mall, because "tenants love to cluster to businesses that have a high attraction rate," according to meeting minutes. Also opposed was the city's Urban Renewal Authority, which feared the University Village development on North Nevada Avenue could suffer. The authority issued $55 million in bonds in 2008 to fund University Village's infrastructure.
"We're always concerned about University Village," Urban Renewal Authority official Jim Rees says. "It's doing very well, but it's not producing where we thought it would be at this point. We thought it would be built out by 2010. Obviously, it hasn't done that yet."
Tax revenue from the center — which has a Costco, Kohl's and Lowe's — has fallen so short of expectations that the Authority has dipped into bond reserves to make debt payments.
Clark worries about Copper Ridge stealing stores from University Village or other existing shopping centers. Here's why: The county is being asked to funnel half of its sales tax revenues from Copper Ridge to a new metro district set up by developers, which would issue bonds to be repaid with the city and county tax money.
If Copper Ridge attracts all new stores and all new shoppers, no problem. But if Copper Ridge lures existing shops and shoppers, county tax revenues won't increase — and yet the county will still have to give the metro district half the sales tax revenue it gets from Copper Ridge.
"Now it's taking away from the base," Clark says. "Is getting that [I-25] connection done worth the risk of losing sales tax?"
Clark also remembers ill-fated deals the city has made with developers for infrastructure, such as the original Woodmen Road and Academy Boulevard overpass, which didn't happen. Adding to her angst is the county's projected $6 million revenue shortfall in 2014 due to falling property values.
What Clark calls a "huge stumbling block" for county approval is a state law that bars the county from using general fund money for roads. County Attorney Bill Louis says he could argue that the Copper Ridge deal might violate the letter of the law but not the spirit of the law, and therefore would be legal. (That strategy could be challenged in court.) The important thing, Louis says, is to make sure any agreement stipulates general fund money must go to Powers.
For now, a majority of commissioners echo Clark's concerns without saying how they'll vote.
Dennis Hisey says the city and developer have data showing a net gain to the county, but the county isn't satisfied.
"We are doing our own due diligence and will evaluate those numbers when they are available," he says in an e-mail. "Several questions have to be answered."
Says Commission Chair Amy Lathen, "These are valid concerns which must not be taken lightly and will have long lasting ramifications." The road extension is a big motivator, she says, but it may not be enough.
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