Closer look at City for Champions, Part 2: Funding in Colorado Springs has some 'what ifs'

By Rich Laden Updated: February 17, 2014 at 7:10 am • Published: February 17, 2014 | 7:05 am 0

Sunday's Gazette took an initial look at some key questions surrounding the City for Champions proposal for four tourism projects: a downtown stadium and event center, a downtown Olympic museum, a new Air Force Academy visitors center, and a sports medicine and performance center at the University of Colorado at Colorado Springs.

The initiative has ignited community debate, with critics questioning its viability, and supporters touting its potential to boost the economy and create jobs.

Check out Sunday's story here.

Monday's questions look at what has happened elsewhere and some of the "what ifs" that are being asked about the projects.

Question: Where have projects similar to City for Champions done well, and where have they struggled?

Answer: Many cities attempt major public improvements or tourism-related projects, with varying degrees of success and failure. Generally speaking, Oklahoma City, Okla., Omaha, Neb., and Denver are examples of cities that have enjoyed success. In part, this happened when they parlayed private investments on the part of major employers to go with several big-ticket, taxpayer-supported initiatives - hundreds of millions of public dollars spent on downtown stadiums, civic arenas, museums and other attractions. Officials in those municipalities have credited such projects with drawing tourists and infusing life into their economies. However, every city has its unique urban and economic characteristics and what works in one community doesn't guarantee success in another. Case in point: Fresno, Calif., and Reno, Nev., built downtown minor-league baseball stadiums with hopes that they'd inject life into their urban cores. But attendance at Fresno's stadium - competing with other venues and tourist attractions - has withered and the city's downtown hasn't seen the spin-off development it expected. Reno's stadium, meanwhile, has had financial problems.

Q. Have the Colorado Springs City Council and El Paso County Commission signed off on the use of their future sales tax dollars, as envisioned under the preliminary financial plan?

A. No; those decisions likely are months down the road, but loom as major hurdles for City for Champions, since those revenues would pay for a little more than half of the sports and event center cost. The City Council also likely would have to amend a current urban renewal plan for southwest downtown, or create a new one for the area, which would put the Urban Renewal Authority in a position to issue bonds for its portion of City for Champions.

Q. What happens if the council or county commission reject their roles in the funding plan?

A. Bob Cope of the city's Economic Vitality Division said he wouldn't speculate on what would happen next. But El Paso County Commissioner Amy Lathen said a lack of funding obviously would make it tougher to build the sports and event center.

Q. Would the city or county use general fund revenues to offset a shortfall in sales tax revenue?

A. Bonds would be backed only by revenues from the venues themselves, and bondholders would have to deal with any shortfall, City for Champions supporters reiterated. Nothing in the preliminary financial plan contemplates the use of city or county general funds to support the projects, Cope said.

Q. City for Champions backers say the venues would operate on their own, each run by independent entities. But what if the venues operate in the red? Will the city or county have to make up that shortfall?

A. That's not part of the preliminary financial plan, Cope said. El Paso County Administrator Jeff Greene, meanwhile, said the state's tax limitation law prevents the elected officials from committing future county commissions and city councils to such a funding requirement.

"There is no additional subsidy that would come from the general fund revenues," Greene said, "nor has there been a request (from supporters) for additional subsidies with general fund revenues."

Q. What about using general obligation bonds to build the venues instead of revenue bonds?

A. City Council President Keith King, a former state senator, says he supports general obligation bonds because they'd be backed by a broader array of revenue sources. As a result, investors would have less risk and they'd agree to accept a much lower interest rate on the bonds - slashing tens of millions of dollars in interest payments over 30 years.

Using general obligation bonds hasn't been considered, Cope said. If another financing plan were used, it would have its own "trade-offs and risks and rewards" that would need to be vetted.

Q. Does the City for Champions financing plan or the overall concept require a public vote?

A. Not as proposed.

The plan designates the Colorado Springs Urban Renewal Authority as the financing entity; the Colorado Economic Development Commission signed off on that designation when it approved $120.5 million in state funding in December. Supporters envision that intergovernmental agreements would be enacted among the city, county and the Urban Renewal Authority; the authority would issue bonds and use the state, city and county TIF revenues to repay them. The authority's ability to issue bonds doesn't require a public vote.

But a general obligation bond issue, such as the one proposed by King, would need a vote.

Some City Council members - including critic Joel Miller, Andy Pico and Don Knight - have said there should be a public vote on City for Champions, although it's not yet clear what might go on the ballot. Lathen said it's premature to talk about a vote; there's much more analysis needed of the financing plan.

"To go out and ask the public to vote on the concept without the fundamentals, without more due diligence with the finances, I think would be irresponsible," Lathen said. "It doesn't mean that we're saying we're not going to ask the people. We don't have enough information yet, and it's not fair to the process to have this discussion about this kind of vague vote when we don't even have a question to ask."

Q. Is a tax increase part of the financing plan?

A. Supporters say there are no plans to seek a tax hike. If one were sought, it would require a public vote, under the state's tax-limitation law.

Q. Why does there seem to be such a divide between supporters and critics of City for Champions?

A. Welcome to Colorado Springs and the Pikes Peak region. In general, the area can be described as a politically, fiscally and socially conservative community. As such, it has had a history of viewing major public policy initiatives put forth by elected officials, business people and civic leaders with suspicion - particularly if such proposals rely on public money. Over the years, elected officials and business and civic leaders have come up with several proposals they say would expand the economy, create jobs and the like. On the one hand, residents have supported several taxpayer supported, quality-of-life initiatives. Yet, they've rejected proposals they feel are vague and fail to show what they'll get for their money. What's more, when it comes to spending taxpayer dollars, members of the public have demonstrated they'll get behind what former Gazette columnist Barry Noreen would call essential, meat-and-potato projects. But, as Noreen said, they'll reject French pastry - things they consider frivolous.

City voters rejected downtown convention center proposals three times in the 1970s and a downtown municipal arena in 1989. After a revived convention center proposal flopped in 2004, Colorado Springs voters the next year overwhelmingly passed a City Charter amendment that bars the city from planning or building a convention center without first getting the public's OK. And in 2009, voters deep-sixed a plan to spend about $50 million over 15 years on economic development efforts.

And yet, over the last 25 years, voters also have supported a new airport, a tax for open space acquisitions, a capital improvements bond issue, public safety tax hikes for both the city and county and a tax increase for road projects.

City for Champions supporters say they've come up with what Mayor Steve Bach has called a game-changer for the local economy - tourism projects that will attract thousands, add jobs, spur spin-off development and boost the local economy. Yet, judging from critical letters to the editor and social media comments, it's safe to say that some members of the public don't think they have enough information and are leery of spending public money on the proposal - something that some no doubt view as French pastry.

Q. Who will oversee funding decisions related to the venues?

A. That's another point of contention.

As part of its approval of the $120.5 million, the Economic Development Commission agreed with City for Champions proponents that a Regional Tourism Advisory Board should be created to oversee funding allocation decisions among the four venues.

Mayor Bach has proposed the board be composed of the mayor (himself or his successor), the chairperson of the El Paso County Commission and the City Council president. Each of the four venues would have a representative on the board, as well. And, Bach said, there should be several community members who might have expertise in financial matters or other areas.

However, the City Council has asked the City Attorney's office to provide a legal opinion on who should appoint the members. Meanwhile, King said in an interview last week that the advisory board should be just that - an advisory panel, but not a decision-making entity. Instead, he believes the city and county - via an intergovernmental agreement - should create a governance board that would oversee the key financing decisions related to the four venues.

Q. Who will be responsible for the construction and operation of the four venues?

A. As spelled out in the EDC's approval of state funding, the city of Colorado Springs, via the Urban Renewal Authority, would partner with a nonprofit corporation to build and run the museum (a nonprofit has been established to raise money for the project) and a still-to-be established stadium authority to build and operate the sports and event center. The city, via the Urban Renewal Authority, also would partner with UCCS and the academy on the construction and operation of their projects.

Q. How many jobs would be created as a result of City for Champions?

A. Based on projections by Summit Economics of Colorado Springs, supporters say nearly 5,100 jobs would be created - 2,215 construction jobs and 2,865 permanent jobs.

Q. What types of permanent jobs would the community see?

A. According to Summit, 480 jobs would be directly associated with the venues; 1,690 jobs would be added primarily in tourism-related industries, including lodging, entertainment, restaurants and retail; and 695 spin-off jobs would be created in industries servicing the venues, the tourism industry and their employees. Those spin-off jobs would run the gamut across the economy, Summit says - such as banking, automotive, housing, medical, insurance, utilities and government, and include positions from entry-level jobs to management.

Some skeptics have questioned if the permanent jobs would be lower-paid, service-sector positions - "peanut and popcorn" jobs, as one attendee called them at a City for Champions forum last month.

A wage analysis must be completed, Cope said. For now, he expects the jobs would pay a range of salaries, and believes all of them would be critical for the economy - including the temporary and permanent positions.

"The permanent jobs, those are still going to run the spectrum," Cope said. "There's going to be managerial and professional jobs throughout. So we would expect to have a range of salaries, from six figures and yes, all the way down to some of the lower paying retail jobs."

Q. What happens if private donations fall short of the $48.2 million?

A. Other funding sources would be sought, Cope said.

Q. What are some of the next key steps?

A. The city must submit a phasing plan to the Office of Economic Development and International Trade by March 16; that office oversees the state's Regional Tourism Act program. By April 16, details of the Economic Development Commission's approval for funding will be put together in contract form between the city and the Office of Economic Development and International Trade.

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Contact Rich Laden: 636-0228

Twitter @richladen

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