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The indoor permanent ferris wheel at Scheels All Sports in Johnston is a way to attract shoppers. Thursday, November 8, 2018. (Photo by Jerilee Bennett, The Gazette)

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The Colorado Springs City Council is poised to approve a $16.2 million incentive for Scheels All Sports on Tuesday in exchange for a Scheels north-side store that city staffers say will create hundreds of jobs and generate more than $1 billion in economic benefits.

A majority of council members said they’ll support the incentive when they vote at Tuesday’s meeting.

“This is just too good to turn down,” Council President Richard Skorman said at Monday’s work session.

Councilman Bill Murray, however, questioned if Scheels will be the economic bonanza that city administrators say. He complained that the incentive would set a precedent and draw business from retailers who’ve operated for years without city financial help.

“That’s what I have trouble with,” Murray said. “What about Dick’s Sporting Goods, which is a direct competitor? Do we go back to Dick’s and offer them the same kind of resolution?”

Scheels, based in Fargo, N.D., has proposed a 220,000-square-foot store at the InterQuest Marketplace northeast of Interstate 25 and InterQuest Parkway. It would be the retailer’s second location in Colorado; a 250,000-square-foot Scheels opened in September 2017 in Johnstown, north of Denver.

The Scheels concept has been likened to an indoor amusement park and mini mall. The stores — about the size of a Walmart Supercenter — sell apparel, sporting goods, fitness equipment and camping and hiking gear. They also offer a series of family-friendly amenities, such as an indoor Ferris wheel, a 16,000-gallon aquarium and dozens of specialty shops selling food, candy and other items.

Scheels plans to invest $84 million to build its store and will hire 400 people and create another 145 temporary construction jobs, according to a presentation Monday by Bob Cope, the city’s economic development officer. Scheels’ estimated economic impact would total $1.5 billion over 25 years, he said.

Scheels will generate $60 million in annual sales, while the city would collect $30.9 million to $53.4 million in revenue over 25 years — $20.2 million of which would go to the city’s general fund to help pay for basic city services, Cope said.

To woo Scheels, city administrators have proposed reducing the city’s sales tax rate from 2 percent to 1 percent at the store site. Scheels then would be allowed to substitute a 1 percent public improvement fee — effectively a private sales tax — and keep the $16.2 million it would generate over 25 years, an average of about $647,000 a year.

The incentive’s pros and cons and Scheels’ touted impact generated a mini debate at Monday’s meeting, which likely will be repeated when the council meets at 1 p.m. Tuesday at City Hall, 107 N. Nevada Ave.

The council will hear from the public before it votes on an ordinance that would authorize a temporary reduction of the city sales tax and enactment of the public improvement fee.

Developers and employers in an infill area at the Interquest Marketplace could apply for the incentive and use the money to help finance their cost of public improvements that benefit the city. The money also could be used to offset their investment that leads to economic development benefits for the public.

In two weeks, the City Council is scheduled to give the ordinance a final OK while also approving an agreement with Scheels that spells out details of its project and the incentive it will receive.

Skorman was joined by council President Pro-tem Jill Gaebler and council members Yolanda Avila, Merv Bennett, David Geislinger and Don Knight in indicating support for the Scheels’ incentive. Murray and Coluncilman Andy Pico were the lone objectors. Councilman Tom Strand was absent Monday.

Murray said Scheels plans to locate in a commercial area “that’s exploding,” where retailers, restaurants, hotels and other businesses are flocking without city incentives. He called the proposal “fiscally irresponsible” and a “direct profit” for the retailer.

Pico said all businesses that locate near the Colorado Springs Airport, for example, can take advantage of an incentive created to encourage development there. The Scheels incentive, however, provides a benefit for one business that its competitors don’t receive.

But Scheels isn’t a typical sporting goods store and will draw customers from around the region, Gaebler said.

“If we don’t allow them to build in the city of Colorado Springs, they will build outside the city in the unincorporated area or one of our competing municipalities, and I don’t think that helps any of us,” she said.

“That will just drive people out of the city to do their shopping. We don’t want that.”

Jeff Greene, city chief of staff, said Scheels will help the city grow its sales tax base.

“Every day, we have to look at being creative, how we ensure that we have a sustainable tax base, how we preserve our tax base, but at the same time, how do we look at creating or expanding the tax base,” Greene said. “It’s not about taking revenues and picking winners and losers. What it’s about is how to grow the pie.”

Business writer, Colorado Springs Gazette

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