In 2019, City Council voted to extend its first and largest direct subsidy to a corporation when it approved $16.2 million in sales tax breaks over 25 years for Scheels All Sports, a retailer that built a superstore on the city’s north side.
The North Dakota-based company’s store, scheduled to open March 27, represents an $84-million investment in land, the building, furniture and equipment. It’s also forecast to bring in $53 million in net new city tax revenue over 25 years beyond the subsidy and create 400 jobs with an average annual salary of $46,250.
Not everyone supported the incentive. Councilors Andy Pico, who’s since resigned to take a state House seat, and Bill Murray voiced concern that the unprecedented benefit would place competitors at a disadvantage to Scheels, which has a track record of exacting tax benefits from cities where they build mega-outlets that feature Ferris wheels and aquariums.
Bob Cope, the city’s economic development officer, acknowledged the incentive’s approval would pave the way for similar requests from retailers and hotels for new construction or expansions.
So far, that hasn’t happened, but then, the city has been struggling to survive in a business climate restricted by the COVID-19 pandemic.
In the recent past, the city has given much smaller sales tax breaks to an engineering and equipment manufacturer, an orthopedic medical device manufacturer and a communications technology company. Usually the incentives hinge on job creation or generation of tax revenue.
But the jobs don’t always stick around. The most famous example of this was a $200,000 incentive in 2005 given to tool maker Western Forge. It closed its Springs operation in early 2020 and laid off more than 160 workers.
Cope says the city doesn’t have a slush fund to offer large cash rewards to companies that move here or expand. But it can waive sales and use tax, taxes paid on materials purchased elsewhere but used here, which can be as good as cash.
We asked City Council candidates, who are vying for six district seats on the nine-member panel in the April 6 election, to explain their positions on incentives the city has given to lure business and industry.
Dave Geislinger, Richard Skorman, Yolanda Avila and Mike O’Malley are defending their seats against challengers.
Mike Seeger — “Luring businesses and industry allows the City to further acquire revenue that does not involve raising taxes for taxpayers. This can also lead to an increase in available jobs in the community, as well as attract talented individuals that help to further diversify and add to our great community. A potential negative effect may be increasing the burden on current infrastructure; however, if we as a City continue to invest in new and innovative infrastructure, this problem can be overcome.”
Jim Mason — “As a Commissioner on the Colorado Springs Urban Renewal Authority Board, in some instances, I have had the opportunity to hear and understand the analyses behind such decisions. I think the work the city has undertaken to attract businesses and industries that possess sound economic value to our economic portfolio is insightful and prudent. The near-term investment is in the best interest of us citizens. These businesses provide jobs, services and products, and long-term funding streams through taxation.”
Dave Donelson — “The devil is often in the details. Sometimes incentives make sense, because the economic benefit of the business locating in Colorado Springs will, perhaps even soon, make up for the incentive we provided to the business. However, if we make the incentives too generous we will have done our citizens a disservice.”
Glenn Carlson — “While I get frustrated with certain incentives to large or strategic employers, I understand its place. Colorado Springs must compete for these businesses the same as we would compete for a customer if we were a business. In addition, many employers can simply choose to move just outside city limits or choose another nearby town.... I believe I can do a great job being a cheerleader for COS and make a great case in other areas to incentivize employers.”
David Noblitt — “When government picks the winners and losers, those that pay and those that don’t pay, somebody’s going to have to pick up the tab. My guess would be it’ll end up being the middle class. That is not a sustainable way to equitably support a community that needs to grow for everybody’s best interest. We are a destination, we need to start acting like it, and remember that we do NOT need to pay people to come to our party.”
Jay Inman — “We must provide business incentives, because that brings jobs, profit, innovation, and imagination to our city. That said, it is critical we open up, leaving masks and social distancing to individual choices. Out of 650,000 local and small businesses in the state of Colorado pre-Covid, 40% have now closed their doors permanently.... What we are doing now, requiring masks and restricting restaurants and small businesses, is ludicrous.”
Dave Geislinger — “While it is regrettable that cities, counties and states are being leveraged and positioned to compete against one another for business and industrial development, this is an issue that needs to be addressed nationally. In the meantime, it is naïve to think we will grow and develop in sustainable, healthy and prosperous ways if we tie our hands in this process while other jurisdictions remain free to ‘outbid’ us. If incentives make sense for our community..., I support using them.”
Randy Helms — “Before granting incentives we must determine what the city will gain and what the economic impact of new jobs and sales tax revenue will be. According to the research and interviews I have done, the City can offer low corporate tax rates, a Foreign Trade Zone, and training programs. The state and county can offer additional incentives.... All parties play a role in the solution.”
Arthur Glynn — “I don’t like large financial incentive packages to attract businesses. I would rather focus on other incentives like access to our great community, but our peer city competitors compete with us by using large fiscal incentives. However, if we are willing to use tax increment financing, then we should be willing to provide tax incentives to attract businesses. This will need to be on a case by case basis in a comparison of cost versus value.”
Henry McCall — “The city has given few incentives to lure businesses and industry here.”
Olivia Lupia — “Incentives offered by the city consist of sales tax reduction on machinery and equipment, business property tax phase outs, and the use of private activity bonds. I have no problem with the offer of these incentives as the jobs created by encouraging new industry and business growth will more than compensate for these temporary reductions in tax revenue....”
Richard Skorman — “Cash incentives are the best tool, which by the way, many of our competitors like Albuquerque, Huntsville, Salt Lake and Phoenix use liberally. Many have large pots of money to seduce. We don’t. So what we can do is offer sales tax, property tax or tax increment rebates when we are assured of getting much more tax revenue back in return. I am also a fan of only giving those tax incentives to companies who pay good wages, provide long-term business growth and are willing to invest or give back to our city.”
Regina English — “I am for what benefits the growth of the city, along with a strong agreement with one of the conditions stated being that hiring local must happen to keep taxpayer dollars here within our city and with any agreement we would have to be receiving a return on investment that will benefit the city as a whole or whatever district the businesses and industries will be coming to.”
Yolanda Avila — “I generally support the use of incentives and investments, but I am concerned about their inequitable distribution. When we provide incentives to lure a national company to Northeast Colorado Springs, we call it an investment. When we propose incentives to help Southeast Colorado Springs, it is considered charity. There is a socioeconomic disparity at play that has to stop.”
Mary Elizabeth Fabian — “As a small business owner, I could only wish to obtain these kinds of incentives. However, in offering them, the city is creating needed jobs in the short term which helps our long term economy and community’s overall health. I think encouraging companies to stay past their incentive period would be a good solution.”
Justin Hermes — We must be willing to play ball and attract more industry here to Colorado Springs. Incentives traditionally are viewed as a bad thing but in the case of convincing Southwest Airlines to come to Colorado Springs it was crucial. Using a portion of the LART [Lodgers and Automobile Rental Tax] to remodel the terminal at the airport was proper use of the taxpayer’s money. If these incentives are properly allocated and are helping provide jobs and push our economy forward, I’m all for it!”
Karlie Van Arnam — “...The city’s incentive programs should reflect the goal of attracting and expanding business in the most distressed areas in the city which provide jobs that can be filled by the current local under- and unemployed workforce. Creating jobs that are not being filled by locals requires new people to move to the area. This can exacerbate the housing shortage and drive up cost of living which may result in stagnant or reduced job growth for existing businesses....”
Matt Zelenok — “Economic development is a crucial function of city government and we must do everything possible to incentivize businesses and industry to base operations in Colorado Springs. The city must have a comprehensive and long-term plan when providing incentives, to prevent certain companies from taking advantage of incentives but only intend to have a short-term presence.”
Nancy Henjum — “Incentives are an important part of the package for any business interested in Colorado Springs, but they are not the linchpin. What also makes our community attractive for business is our quality of life, our people, and our setting, which long-term investment can significantly improve. Sound development focuses on retaining existing companies and encouraging start-ups with a pro-innovation regulatory environment.”
Candidates Mike O’Malley and Garfield Johnson did not respond to the Indy’s questionnaire.