Not wanting to thumb its nose at new customers, Colorado Springs Utilities Board will consider supplying power to a giant Walmart and Sam's Club coming to Fountain, outside Colorado Springs city limits.
It would be a first for Colorado Springs Utilities, which has a number of franchise agreements with neighboring towns that don't have their own utility service, but has never served individual projects that are not within the city limits or service area - especially if the project or development is in another utility's jurisdiction.
After annexing 100 acres north of Pikes Peak Community College off South Academy Boulevard, Fountain officials came to Colorado Springs, saying they would love for Colorado Springs Utilities to supply electricity to their newest cash cow - a planned 500,000 square-foot shopping center estimated to bring in $4.5 million in sales tax to Fountain city coffers in the first five years.
"We understand that this situation is extraordinary in that it is one community that has an electric utility requesting service from another community," Fountain city councilors wrote in a June 25 letter to the Colorado Springs Utilities Board.
Fountain could provide electricity to the development, said Dave Smedsrud, Fountain community services director and deputy city manager. But it would cost millions to run lines to the newly annexed land, and Fountain had not planned on extending service that far north. The annexation is described as a "flagpole" - meaning Fountain annexed one long strip of land to get to the 100 acre site miles away.
"It would be better for Colorado Springs to serve the area. It has the existing infrastructure in place," he said.
The deal would have to be approved by Colorado Springs City Council, which doubles as the board of directors for the publicly owned utilities. But Colorado Springs Utilities CEO Jerry Forte's opinion is likely to carry weight with the board, and he said he won't recommend approval unless the arrangement benefits Colorado Springs and Utilities.
For now, he's not sure. But he will meet with Fountain city officials and work up the numbers, Forte said.
The unusual request from Fountain will be carefully considered, said Utilities board chairman Keith King.
The Walmart and Sam's Club developer approached Colorado Springs in 2008 about annexing that land. But the deal fell apart when the developer asked for a Tax Increment Financing district and nearly all of the sales tax that would have been generated from the development, King said. Since then, the property changed hands and the new developer, St. Louis-based UTW Academy Development, went to Fountain with its annexation request, where it received a number of incentives, including a portion of the sales tax generated from the development.
King and other board members worry about setting a precedent of developers building outside Colorado Springs city limits and sending their sales tax revenue to other cities, but expecting Colorado Springs services.
"Should Colorado Springs now go and supply them electricity when they decided not be annexed in the city?" King said.
The flip side is that a supersized store and shopping center could need $1 million of electricity a year, King said - money that would go into Utilities' account.
And the Fountain request comes at a time when the utilities board is deciding what it can to do boost revenue. One question that has been posed is whether Utilities should sell gas or electric service to other cities along the Front Range to bring revenue to the city, said utilities board member Jill Gaebler. It's an idea she's willing to consider.
But she questions Fountain's plan. In Fountain's request to utilities, councilors wrote "Throughout our conversations with the developers, we have always recognized that the area being considered for annexation is within the Colorado Springs Utilities electric service territory and Fountain has no objection to (CSU) providing electric service to the property." However, when Fountain annexed the land, it automatically shifted into Fountain's service area.
"I feel they were short-sighted in not ensuring the agreements were finalized before they annexed," Gaebler said.
Smedsrud said Fountain approved the annexation with the understanding that the town would provide electrical power to the large commercial development. And if Utilities doesn't come through, that's what will happen.
"They will get power from the city of Fountain if that's what needs to be done," he said. "We are still hoping (Colorado Springs Utilities) will provide power to the project."
Should public utilities be used as an economic driver? Colorado Springs Utilities has formed an office of economic development, meant to help recruit big business here. Low utility rates are a factor in helping businesses look into relocation. A story Tuesday explores the possibilities.