Wednesday, February 27, 2019

City Council gives $40 million in tax breaks in hopes of gaining $4 billion in economic impact

Posted By on Wed, Feb 27, 2019 at 9:28 AM

click to enlarge This map shows the two tracts City Council intends to annex into the city limits. - COURTESY CITY OF COLORADO SPRINGS
  • Courtesy City of Colorado Springs
  • This map shows the two tracts City Council intends to annex into the city limits.
In a series of votes on Feb. 26, Colorado Springs City Council set in motion development in the north end of the city that officials say will bring a total of more than $4 billion in economic impact in the next 25 years.

But in doing so, the Council also assigned at least $40 million tax dollars over those 25 years to help those developments along.

The first is a visitors center at the Air Force Academy that's part of the City for Champions — four venues designed to attract out-of-state visitors and subsidized by the use of state sales tax revenue. (The other venues are a sports medicine center at the University of Colorado at Colorado Springs, the Olympic Museum under construction downtown, a downtown stadium and a hockey arena at Colorado College. All the venues have been pledged $120.5 million in state sales tax over 30 years.)

Council postponed until March 12 votes on resolutions annexing the roughly 180 acres at the North Gate Boulevard entrance to the Academy to accommodate the development of the visitors center, hotels, office space, restaurants and the like. (Some paperwork wasn't completed to enable a vote on Feb. 26.)

But Council adopted ordinances in favor of the annexation, which paves the way for subsequent votes to make the mega development happen, which city economic development officer Bob Cope says will bring $2.6 billion in economic activity, including 1,700 construction jobs and 1,100 permanent jobs.

The 537,000-square-foot complex known as True North Commons is being developed by Blue & Silver Development Partners, formed in November 2017 by Dan Schnepf, and Schnepf's firm, Matrix Design Group.

While a few citizens expressed concern about the development encroaching on nearby Monument Creek and other environmental issues, Academy officials and others advocated for the development. Developers hope to issue bonds in the second quarter of 2019.

Although not yet approved, the True North Commons project will require an infusion of $23 million over 25 years in public money via tax increment financing (TIF) collected through the urban renewal mechanism. The TIF allows tax revenue created by the development to be pumped into public infrastructure.

Councilors Bill Murray and Yolanda Avila expressed reservations, however. Murray said the Council votes were premature before everything is known, while Avila, who represents the city's southeast sector, noted the city appears to be doing "back bends, somersaults and back flips to make this happen."

"Southeast Colorado Springs has not had one urban renewal project, ever," she noted. "And we have been screaming out for that. We have an affordable housing [shortage] situation here. We’re leaving out communities. Residents in my district will not have transportation to the [Academy] visitors center. It’s not going to be open to them. It’s not affordable. I want to really look at what our whole city needs. I want us to have a visitors center, but not at this cost where the city has to do anything."

But Cope said, "There is only one Air Force Academy, and there will be only one Air Force Academy visitors center, so this is truly unique and extraordinary."

Additional Council votes on the project will take place March 12.

See the Power Point presentation:

The second vote approved $16.2 million in city sales tax revenues over 25 years to Scheels All Sports, which plans to build a 220,000-square-foot store in Interquest Marketplace, also in the north end of the city, on land now owned by Nor'wood Development Group, the region's biggest developer. Councilors Murray and Andy Pico dissented, expressing concern the deal gives Scheels an unfair advantage over competitors and will cannibalize existing retailers' business.

The subsidy comes in the form of a Credit Public Improvement Fee that Scheels will be entitled to keep. The city also agreed to waive half of the city's 2 percent sales tax for 25 years. The deal relies on adoption of a new ordinance to enable such an incentive, never before bestowed by the city on a retailer.

The new mechanism can be used for other existing retailer and hotel expansion projects, as well as new construction.

The city contends Scheels will bring $1.5 billion in economic impact and $53 million in net new city tax revenue over 25 years, and 440 jobs with an average salary of $46,250.

In an email to Council, former Councilor Joel Miller (transparency note: father of Indy reporter Faith Miller), who served from from 2013 to 2015, had this to say, in part:
Exempting businesses from sales tax in City Code is a new chapter of Corporate Welfare and these special deals are unsustainable and an affront on the free market. What does this do to retailers at the Chapel Hills Mall? Sears has just closed and now you’re voting to accelerate the demise of other businesses nearby by drawing customers away from them through special treatment.

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