Tuesday, August 28, 2018

Cog Railway tax break should get voter scrutiny, Manitou Springs residents say

Posted By on Tue, Aug 28, 2018 at 3:46 PM

Editor's Note: This blog has been updated to correct the names of plaintiffs.

Two Manitou Springs residents have filed a lawsuit, contending the voters should be given a chance to approve or reject a plan to provide a tax break to the PIkes Peak Cog Railway.

John Shada and Brenda Gillen BobSchaeffer filed the suit, which hasn't yet been scheduled for a hearing.

For background on the City Council's deal with the Cog, check this out.

click to enlarge The PIkes Peak Cog Railway is out of service pending an overhaul. - COURTESY VISIT COS
  • Courtesy Visit COS
  • The PIkes Peak Cog Railway is out of service pending an overhaul.
Mayor Ken Jaray says he believes Council followed the city Charter and Colorado state law in rejecting a bid to circulate petitions to bring a measure to the ballot.

But he's also concerned about the implications of any maneuver that might make the Cog's owners rethink the deal. The Cog is owned by billionaire Philip Anschutz, who also owns the Broadmoor.

Jaray tells the Independent any delay could make it more difficult for the Cog to decide whether to proceed with repairing and refurbishing the 9-mile train from Manitou Springs to the summit of Pikes Peak, which they've estimated at up to $95 million.

The Independent's founder, John Weiss, who lives in Manitou, has been involved in raising questions of whether the deal might be tested with a vote of the people.

The lawsuit states that the city clerk's rejection of the ballot measure was incorrect, because it didn't propose municipal legislation; rather, the referendum would ask Council to reconsider the ordinance granting the Cog Railway the excise tax break and if Council didn't repeal the ordinance in its entirety, Council would have to refer it to a vote of the people.

The lawsuit, disputing the clerk's contention that the ordinance wasn't legislative, noted, "When a previous City Council initially passed the Amusement Tax in 1971, it was exercising its legislative or governmental function. Any amendment or change to that is also legislative or governmental. The City cannot make it administrative or proprietary by simply saying it’s so."

Here's a news release from those who filed the lawsuit:
Two local residents sued the City of Manitou Springs today claiming that their petition for a referendum on a recently adopted ordinance to provide subsidies to the Cog Railway for the next 50 years was illegally rejected. In their lawsuit, John Shada and Brenda Kay Gillen challenge the claim by the Manitou Springs City Clerk that the agreement is not subject to voter repeal because it is an “administrative” issue rather than “legislative.”

Shada, a former two-term Manitou City Councilor, helped lead the successful campaign to save Waldo Canyon. Gillen is a writer and editor active in environmental and affordable housing causes. They are represented by local attorney Howard Morrison, a 52-year resident of Manitou.

Shada explained, “The Cog Railway agreement will be the biggest issue to impact Manitou Springs in our lifetime. Any decision of this magnitude needs to be made by the voters of Manitou Springs.”

Shada and Gillen are seeking a Declaratory Judgement requiring the Manitou City Clerk to allow them to collect the 223 petition signatures from registered voters to force City Council to either void the ordinance or to put the ordinance on the ballot for a binding up-or-down vote.

The Court filing explains that the ordinance in question is indeed “legislative” because it amends the City’s Amusement Tax legislation enacted in 1971.

“We are in favor of the Cog Railway resuming operations,” Shada continued. “but we just believe that six people, in 2 weeks of public process, should not be making such a large financial concession. The ordinance is an unprecedented deal — it’s an enormous tax give-back to the Cog Railway spanning 50 years. We’ve seen estimates that this will cost our tax base upwards of $61.5 million.”

“This unprecedented deal provides an enormous long-term tax break to a private corporation owned by Phillip Anchutz, the richest man in Colorado. No financial need was ever documented,” said Shada. Mr. Anchutz, also owns the Broadmoor Hotel and the local daily newspaper the Gazette, was reported have a financial worth of $14 billion by Forbes in May 2018.
Here's a copy of the lawsuit, filed by Howard Morrison, husband of former Manitou Mayor Marcy Morrison, as provided by the plaintiffs:

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