Scheels All Sports, the North Dakota retailer that plans a north-side Colorado Springs store the size of a Walmart Supercenter, would receive more than $16 million in incentives over 25 years under a proposal the City Council will consider next week.
Whether the retailer would build its store if the council rejects the financial package isn’t known; Scheels declined to comment, and city officials aren’t sure if the retailer would walk away.
“I can’t be certain that they would build it,” Bob Cope, the city’s economic development officer, said when asked what would happen if Scheels didn’t receive city help. “I would be 99 percent sure that they would build the store if they get the incentive.”
The proposal before the City Council no doubt will trigger a debate about incentives. Colorado Springs officials have used them over the years but usually with discretion and not without sometimes heated discussions about their potential for success, what the city would gain and whether incentives amount to a government subsidy.
The council will review the proposal at 1 p.m. Monday at its workshop session and could vote on it at its 1 p.m. Tuesday formal meeting. The council meets at City Hall, 107 N. Nevada Ave.
Scheels announced in October it would build a 220,000-square-foot store northeast of Interstate 25 and InterQuest Parkway in the 135-acre InterQuest Marketplace, which is home to the Great Wolf Lodge water park and resort, a theater complex, restaurants and stores. It would be Scheels’ second Colorado location; the retailer opened a 250,000-square-foot store in September 2017 in Johnstown, north of Denver.
Scheels sells apparel, sporting goods, fitness equipment and camping and hiking gear, among other merchandise.
But Scheels also brands itself as an experience — and one that draws customers from outlying areas. At the Johnstown store, shoppers can ride an indoor Ferris wheel, buy sandwiches, candy and fudge at one of the roughly 75 specialty shops and watch fish swim in a 16,000-gallon aquarium.
In a presentation the City Council will consider, Cope touts Scheels as an economic development winner for the city. According to his report, Scheels will:
• Invest $84 million on land, construction and furniture, fixtures and equipment for its store.
• Create 545 permanent jobs — 400 at the store paying an average annual salary of $46,500 and 145 more at nearby businesses with average pay of $42,118. Another 916 temporary construction-related jobs also would be created. The economic impact of all jobs would be $1.5 billion over 25 years.
• Generate $60 million annually in retail sales and $53 million in net new city tax revenue over 25 years.
• Draw 40 percent to 50 percent of its customers from outside the InterQuest area.
“It’s bringing in new sales tax revenue and not cannibalizing existing revenue,” Cope said.
To attract the retailer, the City Council is being asked to reduce the city’s sales tax rate on sales at the Scheels’ store from 2 percent to 1 percent over 25 years. Scheels then would enact a public improvement fee — essentially a private sales tax — of 1 percent and keep the estimated $16.2 million it would generate over that span, an average of $647,363 a year.
Scheels could use money from its public improvement fee to offset its $84 million investment, Cope said.
Scheels’ fee would be on top of one put into place and collected by Nor’wood Development Group, the Springs real estate company that developed InterQuest Marketplace. Nor’wood’s fee, essentially an added sales tax, pays for roads, sidewalks and other public improvements at the development.
Cope cited the economic impact of new jobs and sales tax revenue, and the need for the city to attract popular retailers as reasons for the incentive.
“If we don’t continue to add popular and unique retail venues, we’ll continue to lose sales to Castle Rock and to Park Meadows and the internet,” he said.
Among similar incentives it’s used over the years, the city provided a sales tax rebate to Lowe’s Home Improvement Warehouse to encourage the retailer to build a store near Academy Boulevard and Platte Avenue. The city also provided an incentive for the redevelopment of the downtown Mining Exchange Building into a boutique hotel.
Urban renewal districts on North and South Nevada Avenue, for example, were intended to relieve developers of paying the cost of public improvements while encouraging them to build in blighted areas. A north-side urban renewal district was put into place to generate money to pay for a Powers Boulevard extension through Polaris Pointe, which the shopping center’s developer sought to make his project viable and attract new retailers.
And yet, the Scheels’ incentive will go straight to the retailer, which also received financial help from Johnstown when it built its store there.
City Council President Richard Skorman, who operates a downtown restaurant, bookstore and toy shop, said the city needs to consider the concerns of the public and rival businesses. In this case, however, he indicated he’ll support the Scheels incentive; the retailer considered sites in Monument and Fountain before settling on InterQuest Marketplace, Skorman said.
“They’re so much more than just a big sporting goods store,” he said. “They have so much entertainment with what they do. … It’s almost like a mini mall. And it really is an attractive destination retailer. If other attractive destination retailers wanted to come to Colorado Springs, we would probably try to figure out something to help them as well.”