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Getting the 411 on C4C 

What you need to know, but may have missed, about the Springs' big-deal tourism proposal

You'd have to turn back the clock five years to find a local issue as controversial as the City for Champions tourism project.

In 2007, City Council imposed stormwater fees without a vote of the people, triggering a long-festering debate that led to a 2009 voter initiative to end the fees. The city has been scrambling ever since to address its drainage woes.

Also in 2009, the Council caused more rancor by agreeing to spend $31.5 million in tax money to keep the U.S. Olympic Committee's headquarters in Colorado Springs, again without a vote of the people.

Now, debate has focused on City for Champions, a package of four tourism projects that promoters call a "game-changer" but that opponents say carries risk that taxpayers shouldn't take. Issues range from a perceived lack of transparency in conceiving the projects to whether voters will have a say in using local tax money to build one of the attractions, a downtown events stadium.

City for Champions was unveiled July 1 by Mayor Steve Bach and other community leaders at a news conference. There had been no public meetings about the venture before that.

On Dec. 16, the state Economic Development Commission awarded the city's plan up to $120.5 million in state sales tax rebates for 30 years under the Regional Tourism Act, which aims to draw more out-of-state visitors.

Over the months, the proposal has gained support from some elected officials and citizens. But opposition remains, and it's largely focused on the Colorado Sports & Events Center — the downtown stadium.

No polls have been done to measure citizen support of C4C. Several Council members say the best yardstick would be an election in which voters would either approve or reject local public funding for the stadium, even though organizers could set up the financing mechanism so that such an election isn't legally necessary.

Here's what we know so far about City for Champions.

1. Why is there debate about this?

The main point of contention is the downtown stadium, which is the only one of the four components that will require local tax money. First envisioned as a new home for the Colorado Springs Sky Sox Triple A baseball team, the stadium plan was dramatically changed last fall after public outcry over moving the team from Security Service Field at Barnes Road and Tutt Blvd.

The stadium, whose price grew from $60.6 million when first proposed to $92.7 million in the city's revised application, was recrafted as a soccer and multi-use facility.

Bach has said the projects were conceived by several community leaders, including Bill Hybl, CEO of the influential El Pomar Foundation; Philip Anschutz, billionaire owner of The Broadmoor resort and entertainment magnate; Doug Price, Convention and Visitors Bureau executive; Dick Celeste, former Ohio governor and president of Colorado College; Pam Shockley-Zalabak, UCCS chancellor; and former Air Force Academy superintendent retired Lt. Gen. Mike Gould; with support from Scott Blackmun, CEO of the USOC.

Like the public at large, City Council was left out of the equation, except for being asked to spend $75,000 to fund the application process.

Another sticking point for Council is that the mayor largely has authority over the entire project through his powers to appoint a majority to a regional tourism advisory board and the Colorado Springs Urban Renewal Authority, through which all tax money for the projects will flow.

2. Will City for Champions help the local economy?

That's a chief argument made by promoters, who contend the venues will enhance the region's appeal and capitalize on local features, such as the academy and USOC's headquarters and training center. The museum, they say, "represents an unparalleled opportunity" to align the city with the internationally known Olympic brand. They also say the projects will bring much-needed work, both temporary construction and permanent jobs.

The city has used several different jobs figures, ranging from 754 to 2,250 permanent jobs, and from 310 to 2,200 construction jobs, with the changes not fully explained. Economic & Planning Systems, Inc., an independent consultant hired by the state, analyzed the city's application and set the jobs figure at 486 permanent jobs directly associated with the venues, plus 381 spinoff jobs; those 867 jobs would each pay an average of $41,200 annually, EPS said. EPS also predicted 1,872 construction jobs but didn't give a per-job annual pay figure.

Advocates predict hundreds more jobs will be created when other businesses spring up as a result of the tourism venues. "At build-out, Southwest Downtown and CityGate [two urban renewal areas in the lower downtown area] will comprise 4 million square feet with over $1.1 billion in private investment and $270 million in public investment, creating 8,500 permanent jobs and generating $350 million in annual income," the city's original EDC application states.

Council President Keith King has noted the cost of those jobs directly associated with the projects themselves — roughly $300,000 each — exceeds even the $278,000 per-job cost of President Obama's controversial American Recovery and Reinvestment Act of 2009.

Moreover, while some high-paying jobs might materialize, entertainment venues often bring low-paying jobs. The Broadmoor World Arena (formerly Colorado Springs World Arena), for example, reported on tax forms that it employed 303 people in 2012 with a total payroll of $2.1 million, or $6,900 per job.

3. Still, that's a lot of jobs, and we need more jobs. Could City for Champions jump-start local employment?

Absolutely, promoters say. They contend the projects will serve as a catalyst to put Colorado Springs on the map as a tourist destination and advance its reputation as a mecca for sports, health and education. Over a 30-year period, they say, the projects will generate more than $312 million in new local sales tax revenue.

Not only will local tax money be adequate to build the stadium, they say, but tax revenue generated by all four attractions will help fund stormwater systems, road improvements, police and firefighting, not to mention more employment opportunities as the attractions and spinoff businesses thrive.

4. So what's the holdup?

Detractors, and EPS, the state's third-party analyst, argue that these forecasts are overly sunny. They also worry about who will fund any deficits that might materialize if state and local tax money aren't enough to pay debt issued for the stadium.

The other projects aren't causing as much concern, because they won't rely on local tax money.

UCCS officials say its sports medicine center will be funded by lease payments from doctors and other providers who establish clinics at the center and patient fees. The U.S. Olympic Museum nonprofit agency says it will rely exclusively on state money and donations, and the Air Force Academy's visitor center will do the same.

The stadium needs about $52 million in local tax money, with the balance, about $40 million, coming from state sales tax rebates. Detractors argue that there are too many unknowns to support the stadium.

5. Such as?

Such as who will own it, and who will fund any deficits for debt issued to build it, not to mention whether 200 events per year, as stated in the city's original application for state money, and 469 events as stated in its revised application, can be booked to make the stadium financially viable.

6. Who are the possible owners?

For one, billionaire Philip Anschutz, who might be looking to expand his entertainment empire and whose foundation gave $75,000 to the application process. Anschutz owns The Broadmoor, which strongly supports C4C.

Or a nonprofit could form, such as the organization that runs the Broadmoor World Arena, which recently announced a booking deal with Anschutz's AEG entertainment company.

Or the city could retain ownership. In that case, any deficits would be taxpayers' responsibility — which leads some to ask: Why use tax money to build a facility for a private enterprise? (See No. 2, more jobs.)

As of press time, no owner had been identified.

Some Council members also aren't happy that the ownership decision could fall to the mayor alone.

The only absolute power Council has to stop the stadium lies with its authority to approve boundaries for an Urban Renewal Area for the downtown projects that would determine how much tax increment financing is available for the stadium. The URA would establish the area in which tax increment financing would be collected for the stadium, much like the state's tourism tax zone does for state tax rebates.

The current Southwest Downtown Urban Renewal Area boundaries encompass only 100 acres, and promoters say the area needs to be much larger to raise more TIF money. Also, that Urban Renewal Area was set up some 12 years ago and it lasts for only 25 years, meaning there are only 13 years left to collect the tax, if approved by Council. So if Council rejects new boundaries, it might kill TIF funding, which is essential to the stadium.

7. Excuse my ignorance, but tax increment what?

The idea is to divert to the stadium project a portion of the city's sales tax growth due to the C4C tourism projects. The state sales tax rebates are based on that concept. They would give the city 13 percent of all state sales tax revenue collected in the "tourism zone," or Urban Renewal Area, which covers most of the city, beyond the amount collected in baseline year 2013, plus a 1.5-percent growth factor.

Promoters of C4C want to do the same thing with local sales tax revenue — both city and county sales taxes — using 13 percent of tax revenues that rise beyond existing levels.

Some critics are concerned a greater percentage of the tax could be assigned to the stadium project without public input.

8. What if the tax increment doesn't bring in enough money?

That question lies at the heart of opposition from Council and citizens.

Given that the tourism tax zone is so large, there's a good chance that adequate funds will be raised. But if revenues fall short, promoters haven't identified a back-up plan, except to say taxpayers won't be on the hook. The bondholders, they say, would take the loss, as they have on defaulted Urban Renewal bonds that funded development of University Village on North Nevada Avenue.

The city's financial pro forma for the stadium said it would host 469 indoor and outdoor events per year but notes, "Even with additional revenues from events such as club members, sponsors, and naming rights, these facilities will not generate sufficient cash flow to service debt."

The Broadmoor World Arena, which also runs the Pikes Peak Center and Ice Hall, ran operating deficits in 2009, 2010, 2011 and 2012 totaling roughly $6.7 million, according to tax records.

9. Is there any way of knowing whether the stadium is financially viable?

Not with certainty.

City and county officials have hired a consultant to conduct a financial analysis of the local TIF contribution at a cost of $45,000. But nobody can predict an economic downturn decades into the future, so there's a degree of risk involved, and that uncertainty gives some Council members heartburn.

That's also why some want voters to weigh in. Although the Urban Renewal Authority can issue bonds without voter approval, bonds issued by the city that are repaid with general fund revenues, or taxes, and OK'd by voters would likely carry a significantly lower interest rate than URA bonds. A few percentage points could save roughly $130 million to $140 million, Council President Keith King has said, thereby giving the stadium a lower debt payment and a better chance of success.

The mayor has said he wouldn't support using general fund revenues without approval from voters, but he hasn't said the same about URA debt, which doesn't require voter approval.

Then there's the question of the Taxpayer's Bill of Rights requirement to refund tax money collected above certain caps. TABOR would apply to a general-fund debt, but not to the URA debt. So it's likely that a ballot question involving general fund tax money would ask voters to exempt all the revenue from TABOR limits, meaning the city wouldn't have to return any excess revenue to citizens.

The city's April 1 report to the state says backers are pursuing "a more enhanced plan of finance" for the stadium, which could include private investment. It adds the project's financing plan might take 24 months to put together.

10. Given all the haggling, why not just drop the stadium project?

That's certainly allowed. Not all projects have to be completed, but if one is abandoned, the city forfeits the state tax money assigned to that project.

Supporters don't want to give up on the stadium because they see it as "Olympicized" by the museum, thereby making the museum and stadium a package deal for tourists, especially if national governing bodies of the Olympic movement book dozens of competitions there as envisioned by proponents.

The city is expected to start receiving state tax money late this year. If a project hasn't made substantial progress within five years, then only that one project would be subject to revocation of the state money assigned to that project, according to the city's resolution pending approval by the EDC. The resolution outlines these allotments of the state money: Olympic museum, 42 percent; stadium, 33 percent; UCCS sports medicine center, 14 percent, and academy visitors center, 11 percent.

In addition, of the 75 percent allotted to the two downtown venues, up to 25 percent of that money can be used for infrastructure, including a parking garage, iconic pedestrian bridge, roads and installation of utilities.

On April 10, the Economic Development Commission approved the city's milestone report. Approval of its resolution — a contract of sorts that sets out how the city will move forward with the C4C plan — is pending. When it's approved, probably in mid-May, the city is on the hook to build the projects.

Meantime, in response to criticism about a lack of transparency in putting the C4C package together, backers have started hosting one public meeting a month, usually the third Tuesday, at the Regional Building Center, 2880 International Circle.

zubeck@csindy.com

Project snapshots

— Compiled by Pam Zubeck

  • What you need to know, but may have missed, about the Springs' big-deal tourism proposal

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