December 16, 2013 Updated: December 17, 2013 at 10:18 am
DENVER - The City of Colorado Springs got everything it asked for Monday when the Colorado Economic Development Commission awarded an estimated $120.5 million over the next 30 years to help finance City for Champions.
"This has meaning far beyond what we could possibly envision today," Colorado Springs Mayor Steve Bach said during a news conference later in the day at the University of Colorado at Colorado Springs, attended by dozens of City for Champions supporters. "I don't think that overstates our circumstance. What this will do for so many generations of people in this region and for all those will visit here. The jobs it will create, not only directly, but catalytically through this wonderful state of Colorado and the Pikes Peak region."
Bach urged the packed room to savor the moment and thanked supporters for staying the course, "despite the naysayers and those who don't want to see things different in this town."
To get the state tax increment financing - a percentage of the net new sales tax generated in a specified zone over the next 30 years - the city must break ground on four projects within five years and complete them within 10 years.
An Olympic museum in southwest downtown anchors the projects with an adjacent sports arena. The other two projects are a sports medicine clinic at UCCS and an Air Force Academy visitors center near Falcon Stadium.
Ken Lund, executive director of the Office of Economic Development and International Trade, recommended the commission approve the project for the state incentives under the Regional Tourism Act.
But he recommended the state use more conservative numbers to determine the amount of net new sales tax revenue the project should be eligible for over 30 years.
"I know there's a lot of debate about the number and this is very consistent with the process from last year," Lund said, referencing two RTA projects approved last year. "My job is to protect the state's resources as best I can."
Lund recommended the board adopt the numbers provided by a third-party analysis that said the project was worth about 6 percent of the net new state sales tax generated in a designated regional tourism zone that spans from the airport in the southeast to the Air Force Academy in the northwest. The analyst estimated about $867 million in tax increment would be generated, putting the city's payment over 30 years at about $53 million.
Instead, the board approved the city's projections, saying the development should receive 13 percent of a projected $921.2 million over 30 years, which would be closer to $120.5 million.
Commissioner J.J. Ament, an investment banker from Denver, said he wasn't concerned with the project getting too much funding from the state.
"I'm not as concerned about windfall or upsides since the money can only be used for the approved projects within the application itself," Ament said. "If there are quicker revenue growths because of this impact in the community, then they just pay their bonds off early. It's not like they can go out and spend the money on anything else."
Commissioner Noel Ginsburg was the lone vote against the higher funding level, although he supported the project overall.
"Some people would debate we don't have enough money in our higher education institutions, and that money won't be available," Ginsburg said, favoring the lower percentage.
Now the commission will hammer out a contract with the city over the RTA funds. Once that's signed, money will begin accruing in a fund that will be managed by the Colorado Springs Urban Renewal Authority and likely a board created specifically to oversee the projects.
Commissioner Chuck Murphy, who recused himself from voting because of a conflict of interest, called Monday's news "the biggest thing since the Air Force Academy."
"It's really, really huge. It's going to impact all of us and future generations," Murphy said.
There's a long road ahead for the projects, as additional money is needed.
Several non-profits have pledged financial support, and the county seems amicable to hashing out other funding mechanisms.
But it might be a tough sell in the city.
Colorado Springs City Council had hard feelings when Mayor Bach unveiled the City for Champions plan in June and had not consulted with the council or the public. The council refused to endorse the proposal and several council members have continually raised concerns about its economics.
The proposal, from the start, has included a public funding portion, but what that amount is or what form it would take is unclear. It could require a bond election.
City Council president Keith King said Monday that he did not believe the council, which has the power to put questions on the ballot, would try to block the issue from going to voters.
"We're not going to be obstructionists," he said. "If the people want to do it, either bond or TIF, that is their decision."
Local strategic and organizational development consultant Jason Hann said he felt sad at the Economic Development Commission's endorsement of the proposal despite an analysis that showed the city should receive a lower amount.
"It further shows that the level of corruption within that process is very prominent," he said. "Why take a third-party analysis, toss it out the window, and completely ignore the executive director's recommendation?"
Hann said social media surveys and feedback showed a majority of Colorado Springs residents did not favor the proposal and he worries that public input will be taken but ignored.
"I'm hoping there will be an outcry," he said. "And, I'm hoping City Council will listen."
It's expected that the city and the county will use both local sales tax and property tax to help fund the projects.
It is unknown how much that tax increment financing would be worth, but a document showing preliminary funding sources indicated the local tax increment financing could purchase $98 million in bonds.
Gazette reporters Monica Mendoza and Rich Laden contributed to this report.