Updated: August 17, 2014 at 8:58 am
The $100,000 "success fee" coming to Attorney Jason Dunn, who handled the city's application for Regional Tourism Act incentives, isn't as nefarious as it sounds.
Dunn, with the Denver firm Brownstein Hyatt Farber Schreck, will be paid a total of $175,000, including the success fee, for nearly two years of work on the City for Champions application and subsequent negotiations over the final contract.
"Really what that was, was Jason Dunn willing to participate in the risk," said Bob Cope, Colorado Springs' project manager on the deal. "He's put much more time into this project than the fees that he has already been paid ... and being able to put some of that cost on the back end was helpful."
But the plan for Dunn's fee hit a snag Thursday when the Colorado Economic Development Commission rebuffed precedent and told Colorado Springs it likely won't be able to use state incentives money to pay for Dunn's bonus or $275,000 in other costs incurred during the application process.
In the grand scheme of the proposed $250 million City for Champions project, Dunn's fee is chump change.
But it was a snag in Thursday's negotiations of a final contract with Colorado Springs to make available $120.5 million in state sales tax dollars for the City for Champions project, which includes construction of an Olympic museum, sports arena and event center, sports medicine complex and visitor center at the U.S. Air Force Academy.
"Really, in the scope of things as far as continuing negotiations on the resolution, it is really one of the more minor points," Cope said. "We would like to see it clarified."
The clarification is needed because when both the cities of Pueblo and Aurora were awarded Regional Toursim Act dollars in 2011 their contracts included "costs incurred by the applicant in preparing and submitting its application to the commission."
Cope said Colorado Springs based the structure of its agreement with Dunn in part on that precedent, assuming his $100,000 "success fee" would be paid for with Regional Tourism Act dollars.
Dunn also was the attorney helping Pueblo with their successful application in 2011. He received a $117,000 "success fee," which the City of Pueblo was able to bill to Regional Tourism Act dollars once the state sales tax increment revenue started coming into the city.
Dunn played a role in drafting the Regional Tourism Act when lawmakers considered the new incentive tool in 2009 and ultimately made it law.
According to Pueblo's Urban Renewal Authority, the cost as of April 30, 2014, for applying for and receiving RTA incentives has been about $330,000, including Dunn's "success fee." The costs are ongoing as Pueblo continues to work to get the project off the ground. Pueblo has been reimbursed for all but about $82,000 of those costs.
In Colorado Springs, the tab is about $375,000 over a shorter period of time, but the project is larger.
Cope said the remaining $275,000 has been covered by a $75,000 expenditure approved by the Colorado Springs City Council, $75,000 from El Paso County and the rest by private donors.
He said the only remaining outlier is Dunn's success fee.
Economic Development Commission board member Denise Brown said Thursday she was opposed to allowing Colorado Springs and future projects use Regional Tourism Act dollars to pay for costs associated with applying for the incentives.
"It leaves open financial risk for the project and for the state funds that are being put into it to have this undefined liability at the beginning of the project," Brown said. "I can't think of any program publicly funded that retroactively reimburses costs for a successful application. It just isn't in the DNA of this type of a decision."
The final decision on whether or not Colorado Springs will be reimbursed for application costs will likely come Sept. 11 when the Economic Development Commission again considers a final resolution authorizing the City for Champions project.
Contact Megan Schrader: 636-0644