The city of Colorado Springs allotted $3.5 million from the American Rescue Plan Act (ARPA) money to the Olympic & Paralympic Museum and Hall of Fame on June 23, two weeks after City Council heard a briefing about ARPA spending that didn’t mention the museum’s direct request to Mayor John Suthers.
But apparently, Suthers doesn’t need Council approval to allocate the money, and two briefings — June 10 and July 12 — served as a courtesy more than a pitch to win Council’s nod.
The allocation represents more than a third of the $9 million Suthers plans to spend on “business development/economic recovery” from the city’s total ARPA allotment of $76 million.
Despite never being briefed on the museum’s request, including the reasons why it needs the money, a majority of Council members expressed support for Suthers’ spending plan on July 12.
In addition, the mayor has already committed spending $2.2 million for “premium pay” for city sworn personnel — police and firefighters — and another $7.18 million on a mid-year compensation increase for city personnel who saw salaries frozen during the COVID-19 pandemic. About $280,000 has been set aside to fund the overhaul of City Council Chambers at City Hall.
The museum needs the money to stay afloat after opening a year ago amid the COVID-19 pandemic and seeing low attendance numbers.
“When we opened in 2020, we were at attendance levels of 20 percent — 25 percent of the expectation,” the museum’s spokesperson Peter Maiurro says in an email.
The museum was projected to tally roughly 960 visitors per day under a pro forma released in 2013 when the city sought state sales tax rebates to partially fund the museum and other City for Champions tourist venues.
But Councilor Bill Murray predicts the city’s contribution via ARPA is only a “down payment” and that the museum will need more public funding in the future.
In a May 20, 2021, letter to Suthers obtained by the Indy via an open records request, the museum’s acting CEO Phil Lane, a local businessman, noted “substantial losses incurred by the Museum due to COVID-19 during its initial year of operation.” Lane included “associated expenses and losses” in attachments to the letter, but the city denied access, citing trade secrets and proprietary information.
Emails between the museum and city officials obtained by the Indy show the museum limited its capacity to 10 percent last November due to the pandemic. That would be roughly 100 people per day.
In 2013, the state granted the city $120.5 million in state sales tax rebates to fund the museum, a sports medicine center at UCCS, a visitors center at the Air Force Academy and a Downtown stadium, which grew into two projects — Weidner Field for the Switchbacks soccer club and the Robson Arena hockey venue at Colorado College. Collectively, the projects are dubbed City for Champions.
In its 2013 application for the $120.5 million in Regional Tourism Act (RTA) money, the city projected annual visitors at 350,000, a figure seen as too optimistic by some, including a third-party consultant hired by the state to analyze the application.
The museum, whose price tag grew from an original estimate of $45 million to $90 million, opened in July 2020, despite the pandemic having impeded normal operations across the spectrum of businesses, from hotels to restaurants to offices.
The inflation of the construction price, Maiurro says, stemmed from “several intentional and strategic decisions [by the USOPM’s board] to increase the budget of the museum project to ensure an exceptional guest experience.
“We remain committed to providing that exceptional guest experience and believe that, as we continue to emerge from the challenges of the pandemic, the USOPM will be on a sustainable and successful path very soon. The board is committed to a break-even budget for 2022,” he tells the Indy via email.
But with attendance of roughly 190 to 240 per day after it opened, the pandemic crippled the museum in its first year. Email traffic obtained by the Indy shows museum officials first started to explore the possibility of obtaining a cut of federal COVID relief dollars last summer.
“There is no pro forma in the world that could have anticipated the impact of a global pandemic on the opening of a new attraction like the USOPM,” Maiurro says.
“Knowing that part of our overall goal is to be one of the premier museum destinations in the world, with exceptional and unique interactive experiences as a core component of our destination, we naturally had to pivot to ensure the health/safety of our guests and team.”
The museum focused on making the visitor experience safe in 2020 with measures that added to operational costs, he says.
The virus also hindered the museum’s ability draw the original capacity planned for the 2020 tourism season, “so we are working to recoup revenue that was not realized during that time,” he says.
With the city’s allocation of federal money, however, the museum can safely operate during the 2021 season, “which we are treating as our year 1.”
Maiurro says recent attendance numbers, which he did not further connect to a time frame, have recovered to where the museum “can accommodate more than 1,000 guests per day and in the past several weeks, we have come close to this daily attendance several times.”
He says comprehensive attendance data will be shared later this year.
Asked about rumors the museum board had contemplated filing for bankruptcy, Maiurro denied such a radical step will happen.
“Based on recent attendance numbers, events we have hosted, events booked and requests in the pipeline, we are busy and will remain so for the foreseeable future,” he says. “We continue to fund-raise and build the operating endowment simultaneously to running the day-to-day operations of the Museum. With all of these factors in place, the USOPM leadership team and the Board of Directors remain very optimistic about the future and the USOPM’s impact on the state’s tourism economy.”
He further says the museum has submitted no other requests to the city or to El Paso County, which inked a “sponsorship” deal with the museum recently valued at $500,000.
According to the ARPA agreement between the city and the museum, the city “shall reimburse eligible expenses based on supporting documentation, including, but not limited to, payroll reports, invoices, and copies of checks.”
The agreement further limits spending to rent, mortgage payments, utilities costs, payroll, costs to retain employees, accounts payable, marketing and “other operating costs.”
The museum also is required to provide a monthly accounting of funds spent and provide documentation to the city. On or before Dec. 31, 2024, the museum must account for all expenditures funded with ARPA money and cooperate with the city in auditing the spending, if required.
City Chief Financial Officer Charae McDaniel says via email City Council “does not specifically approve the line item expenditures — that is an Administrative function.” But Council will appropriate this fall for the total amount of funding the city receives from ARPA, including additional amounts awarded to the Colorado Springs Airport, Mountain Metropolitan Transit and Community Development.
But Murray predicts the museum’s $3.5 million is merely the first allotment. “I think it’s going to be much higher. I think this is going to be a down payment,” he tells the Indy, noting he’s looking forward to seeing audit results.
He also notes, “It’s unfair and unfortunate we’re being held accountable when the mayor clearly has total discretion [for spending]. People think we control the pocketbook but that’s only through the annual budget. Don’t come to me and say I was a participant when I didn’t have any say about how it was allocated.”
At a July 12 briefing to Council, McDaniel said the city and ARPA money recipients must submit to the “rigors” required of accepting and spending federal dollars. “There are strict guidelines the city has to comply with and anyone we provide funding for has to comply with the same requirements,” she said.
The city has to report both annually and quarterly, she said. “So it’s not free money. It’s pretty stringent. We get reports from the agencies we grant money to. This money can get audited by [the U.S.] Treasury, and city or Treasury can audit any agency that gets funds. The city has to do risk assessment for potential for noncompliance. We have an agreement, have monitoring visits, ongoing sub-recipient performance and financial reporting from them. We rely heavily on those sub-recipients for compliance.”
The ARPA money, she said, is aimed at helping localities recover from the pandemic; projects the city selected would benefit the entire community and advance economic recovery. Some were chosen because they have no other funding source.
Included in the mayor’s package:
• $2.5 million for capital improvements to City Auditorium, though a newly formed local nonprofit, the Community Cultural Collective, has proposed acquiring the facility and overhauling it as an arts and performance venue.
• $26.9 million on water, sewer and other infrastructure, including $6.6 million to replace irrigation systems at Patty Jewett Golf Course ($3.8 million) and Valley Hi Golf Course ($2.8 million), and $3.96 million on replacing sprinkler systems at the city’s cemeteries. In addition, $8.3 million would build a stormwater drainage system on North Nevada Avenue to encourage economic development.
• $1.8 million for upgrades at three community centers — Meadows Park, Hillside and Westside. Westside, which comprises several buildings covering a city block, would get $1.375 million for a new door system, roof replacement and gutters on all buildings, new HVAC systems, and “stabilization and modification to address safety issues for long-term accessibility for utilities.” The set-aside could make it easier for the city to find an operator, due to a significant reduction in the amount of capital improvements that would be needed.
• Up to $5 million for qualified housing projects, which could include a family shelter and permanent supportive affordable housing on 3.7 acres at the north end of Dorchester Park on South Nevada. The city is working with other partners on the project, which would be located near a Peak Vista Community Health Centers clinic on the northwest corner of Tejon and Las Vegas streets. The Dorr family that donated the parkland to the city in the late 1800s has been involved in the discussion, the city says.
Council members named a smattering of pet projects they’d like to see funded with the ARPA money. Those included restoration of a World War I and World War II monument in Memorial Park, supporting a construction trades school run by the Housing & Building Association of Colorado Springs, installing Panorama Park security cameras, adding Crisis Response Teams to the fire and police departments, and offering to help expand the clinic at the Humane Society of the Pikes Peak Region.
The ARPA money has to be obligated by the end of 2024 and spent by the end of 2026.