Colorado Springs News, Sports & Business

City for Champions economic impact examined

by Rob Larimer rob.larimer@gazette.com - Published: January 19, 2014 0

The City for Champions proposal envisions four tourism-related projects that are the size and scope of nothing seen before in Colorado Springs, and it typifies what some economists and city planners say will be needed for successful economic development in the 21st century.

The project envisions the construction of a 10,000-seat stadium, a 3,000-seat indoor sports center, an Olympic museum in downtown Colorado Springs, an Air Force Academy visitors center and a sports medicine and performance center at the University of Colorado at Colorado Springs.

The projects are expected to cost $250 million. A state commission awarded $120.5 million in sales tax rebates over the next 30 years to help finance the City for Champions projects. The rest of the financing is expected to come from local government entities and private donors.

Sammis B. White, a professor from the University of Milwaukee's School of Architecture and Urban Planning, is co-author of the 2012 book "Financing Economic Development in the 21st Century," which explores how cities have developed new economic development techniques.

One of the financing methods studied in the book is the collaboration between the private and public sectors, as well as the ability to leverage tax revenue to advance an economy and create jobs.

That's partially what City for Champions seeks to do.

City for Champions is expected to create 5,100 jobs in the Pikes Peak region and have an overall economic impact to the local GDP of $6.5 billion during the next 30 years, according to projections from Colorado Springs-based Summit Economics and the city of Colorado Springs.

Before City for Champions projects can proceed, supporters must find other sources of financing to complement state funds. And money awarded by the state comes with stipulations. Among them, the projects must be started within five years and completed within a decade.

Supporters logged a financing victory Thursday when El Paso County commissioners awarded the project $37,500, which is in addition to $37,500 given to the project in October. That money was earmarked to help pay for the City for Champions application for state funding last year.

Supporters say that's money well-spent because it's an opportunity to diversify the city's military-dependent economy and bring Colorado Springs' unemployment rate in line with other Colorado cities.Gains expected

The initial phases of the project are expected to create 4,500 jobs in El Paso and Teller counties, generate $3.1 million a year in tax revenue and have a net annual economic benefit of nearly $129 million a year.

"To simply call it a tourism project really doesn't do it justice," said Tom Binnings, a senior partner with Summit Economics.

"You can't really even fathom the impact of what tourism does. It achieves several things, maybe most importantly it plants the seed for job creation. People will visit here because of it, yes, but companies and jobs will follow."

Several industries are expected to see immediate gains from the projects.

"Restaurants, hotels and other retail business are going to see a boost in activity, and we expect many jobs will be created in those industries, but many more on top of that when companies move here," Binnings said.

Project promoters believe an Olympic museum and downtown stadium will help foster the city's burgeoning sports economy and attract other sports-related businesses. In the same way, the UCCS sports medicine center could provide the skilled workforce that relocating medical companies seek.

Of the 5,100 projected jobs tied to the projects, 2,300 are likely to be created by the five years of construction associated with City for Champions. The remaining 2,800 jobs are expected to be regular, sustained direct and ancillary jobs the city can add to its annual employment totals.

If the 5,100 jobs were added to Colorado Springs today, it would bring the city's unemployment rate of 7.5 percent down to about 5.8 percent, according to calculations from Mike Anderson, a senior partner with Summit.

If only the 2,800 sustained jobs were added now, it would reduce the Springs' unemployment to about 6.5 percent, Anderson said.

That would put the city in line with the state average of 6.5 percent, the October rate recorded by the U.S. Bureau of Labor Statistics.

It would also bring Colorado Springs' unemployment rate closer to Denver's 6 percent and Fort Collins' 5.1 percent, also recorded in October.

'It can happen here, too'

Several cities across the country have built downtown stadiums and accompanying projects that have been met with economic development success. They include AT&T Field in Chattanooga, Tenn.; AutoZone Park in Memphis, Tenn.; Coca-Cola Park in Buffalo, N.Y.; and Regions Field in Birmingham, Ala.

One of the more successful projects is Oklahoma City's Metropolitan Area Projects or MAPS.

MAPS was a $350 million capital improvement project that included upgraded sports and recreation facilities, a redeveloped entertainment district and cultural and convention centers.

The plan was proposed in 1992 by then-mayor Ron Norick and the Greater Oklahoma City Chamber of Commerce after the city lost a contract to house a United Airlines maintenance facility to Indianapolis, according to the Greater Oklahoma City Chamber of Commerce.

The MAPS project was initially funded by a voter-approved five-year, 1-cent sales tax.

Over nine years, the city saw renovations to the Civic Center Music Hall and construction of the Chickasaw Bricktown Ballpark, a downtown canal, Ford Center and an indoor multipurpose sports arena, among other things.

The Ford Center eventually became the home of the Oklahoma City Thunder, the former Seattle Supersonics NBA team that moved to Oklahoma after projects were complete.

"MAPS radically changed everything for Oklahoma City," said Cynthia Reid, vice president of marketing and communications for the Greater Oklahoma City Chamber of Commerce.

"Before these projects were created, especially the sports facilities, Oklahoma City was becoming a no-name place with declining employment," she said. "Now we're adding hundreds of jobs every year and our downtown is just a cool place to hang out."

According to October figures from the Bureau of Labor Statistics, Oklahoma City had an unemployment rate of 5.3 percent - up from its 2013 low of 4.7 percent - in August.

Reid said she believes the MAPS project is directly responsible for the city's ability to compete for large companies, which it has attracted in recent years.

Reid also believes Oklahoma City's unemployment rate would be above 10 percent now if it weren't for MAPS.

Stephannie Finley, director of university advocacy and partnership for the University of Colorado at Colorado Springs, saw the success in Oklahoma City and came back to Colorado Springs with a vision of how it, too, could be transformed.

In 2011, when she was working as president of governmental affairs and public policy for the Greater Colorado Springs Chamber of Commerce, she was among several local leaders to visit Oklahoma City as part of the chamber's annual Regional Leaders' Trip, intended to tour cities that could be models for improvement.

"The trip to Oklahoma City was one of the most pivotal ones," Finley said. "It's when we really started to believe that if it can happen other places, it can happen here, too."

She said the trip to Oklahoma City and the trip to Portland, Ore., the following year gave birth to the notion that Colorado Springs could do more to leverage the city's Olympic presence and build a sports economy around it.

"People kept saying, 'What? Colorado Springs is so beautiful. You have natural outdoor setting and all that you need,'?" Finley said.

Subsequent discussions led the Economic Development Corp., which merged with the chamber to become the Colorado Springs Regional Business Alliance, to place greater emphasis on attracting and fostering sports-related businesses.

Business alliance President Joe Raso said because the sports economy is one of the alliance's key industries, the groundwork is laid to attract sports businesses once City for Champions projects become reality.

Looking to diversify economy

Binnings said building a sports economy is key because it will diversify Colorado Springs' economy, about 40 percent of which is dependent on the military presence.

Some of the city's biggest employers are defense contractors, including Raytheon, Lockheed Martin, Boeing, Northrop Grumman, the Harris Corp., ITT and L-3 Communications. The Space Foundation, a nonprofit international organization that supports the space industry, is also based in Colorado Springs.

While the defense industry has remained a job-creation constant for Colorado Springs, the city once saw the same kind of activity coming from the technology and manufacturing sectors, which have been steadily declining for the past decade.

Local employment in manufacturing and information technology declined by nearly 20,000 between 2001 and 2011, according to the U.S. Bureau of Labor Statistics. The number of education and government jobs grew by 24,000 during the same period.

Fort Collins has tech and manufacturing companies to thank for its robust economy. Several high-tech and manufacturing companies have announced expansions, and added to planned retail expansions, the city is poised to see 5,000 more jobs during the next five years.

Among the companies expanding are:

- Woodward, which will build its global headquarters on a site of a former 101-acre golf course. The renovation is expected to draw 1,700 workers during the next few years.

- OtterBox, the maker of cellphone and tablet cases. The company, a Fort Collins startup, recently announced plans to build a 54,000-square-foot, five-story building and add hundreds of employees.

- Avago Technologies Wireless Manufacturing plans a $19 million expansion of its campus and the construction of a 190,000-square-foot building adjacent to the 94-acre Hewlett-Packard campus.

"It's booming up here in Fort Collins, quite frankly," said Rocky Scott, who has worked as the Fort Collins-based director of corporate affairs for aerospace and energy giant Woodward for four years. Woodward has a presence in 14 nations.

Before Woodward, Scott worked with the Loveland-based real estate development company McWhinney. He was president and CEO of the Greater Colorado Springs Economic Development Corp. from 1989 to 2005.

He has seen firsthand the economic development efforts of the northern and southern parts of the Front Range.

"The activity we've seen up here in the last four or five years is incredible," Scott said. "We saw some great things when I was in Colorado Springs, but this is like nothing I've ever seen. The city has transformed itself into a hub for high-paying jobs, and not only that, just a cool place that has a lot to offer."

That's exactly the kind of success Binnings believes City for Champions could usher into Colorado Springs.

"Tourism unto itself doesn't have the same sex appeal that engineering and technology jobs have," he said. "But one of the key things it does is bring people from out of the state right into the community."

He also said investment into a community usually pays off.

"There's clear evidence that major investment into an area, not limited to downtown, that's consistent with market direction has substantial long-term benefits," he said.

"You begin to get this snowball effect. Things become a night and day difference."

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