Wednesday, November 6, 2019

City proposes incentive for company it will not name

Posted By on Wed, Nov 6, 2019 at 3:32 PM

click to enlarge BY PAM ZUBECK
  • By Pam Zubeck
Welcome to the stealthy world of economic development incentives where deals are made without the public knowing who's getting the city's money.

For a mere $14,310 in sales and use tax breaks, the city of Colorado Springs hopes to reap a tax benefit of $1.25 million over four years from a company whose identity it's keeping secret.

Given the code name Project Beach, the company is described in agenda materials for City Council's Nov. 7 meeting as "a rapidly growing communications technology company that makes it easy for businesses to build relationships with customers through videos in email, text, and social media."

The city goes on to say Project Beach operates in 40 countries and sends more than 126 million minutes of video through its products annually.

When asked for more information, city spokesperson Kim Melchor told us by email, "Project Beach is confidential at this time. We will be glad to obtain and provide additional information once this is no longer a confidential project. Currently all of the information is included with the City Council Agenda Item."

Even Council is being kept in the dark. We asked Councilor Andy Pico about Project Beach, and he says via email, "... code names are used for potential projects that are in consideration and not firm. So in order to protect confidentiality of potential companies before they make decision and public disclosure, they are code named. And no, I do not know who it is."

Regardless, Mayor John Suthers wants Council to approve rebates on sales tax and use tax related to expanding the company's headquarters from 18,700 to 28,700 square feet, which the city says would total $14,310.

That expansion will bring new employees, but how many isn't clear. The agenda backup says Project Beach employs 121 people company-wide and plans to hire an additional 186 in the next four years. Of those 40 would be relocated here.

"With creation of these new full-time jobs, Project Beach desires to invest in business personal property, including communications equipment, and construction materials for its facilities expansion," the agenda materials say.

According to the Dec. 20, 2018, meeting minutes of the Colorado Economic Development Commission, the state granted an incentive of $293,660 to "Project Beach," or $1,372 for each of 214 new full-time equivalent jobs the employer plans to create over a five-year period.

That presentation stated that Project Beach needed to "nearly triple" its workforce by adding 250 jobs by the end of 2024.

"This incentive is contingent upon the creation of up to 214 net new full-time jobs at a minimum average annual wage of $48,100, 100% of El Paso County’s AAW [average annual wage], in support of this project," the minutes say.

Pico didn't know whether the state incentive was directed at the same company, but the city's economic development official Bob Cope attended that meeting.

The city's agenda materials assert that Project Beach's 186 new hires will be paid an average of  $82,642 a year.

It's doubtful Council will approve the incentive on Nov. 7, because the briefing takes place during a work session, which traditionally does not include official votes.
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