The Manitou Springs City Council gave a unanimous preliminary vote of approval Tuesday night for a deal that would enable the rebuilding of the historic Pikes Peak Cog Railway and keep its train cars chugging up and down Pikes Peak for decades to come.
Another vote still must be taken on the agreement with Oklahoma Publishing Co., parent company of The Broadmoor hotel and the Cog Railway.
Under the pact, the city would give the ownership group two tax breaks, incentives it says it needs to invest $75 million to $95 million to rebuild the railway.
In March, Broadmoor President and CEO Jack Damioli announced that the aging railway had "run its useful life," and a study would weigh whether it should be refurbished or permanently closed. The analysis found that nearly $100 million likely would be needed to restore the system, rebuilding the track and expanding, remodeling or even demolishing the railway's Manitou depot.
Manitou Springs officials have grappled to address a $500,000 annual tax revenue loss expected to result from the railway's closure.
"If we do this project, it's going to be a good thing for the Cog, it's going to be a good thing for Manitou, and we all prosper. If we don't do it, it's going to have the opposite effect," Gary Pierson, president and CEO of Oklahoma Publishing, told council members at a special meeting Tuesday night. "There can't be winners and losers here. We both have to succeed in this, because there's too much time, effort, money and history at stake."
The council voted unanimously, with Councilman Nancy Fortuin absent, to OK the agreement. A second vote giving final approval is expected June 26 after a public hearing.
Work on the Cog could begin in August with a partial reopening in May 2020, in time for the debut later that year of the $50 million Summit House that would greet Cog riders atop Pikes Peak.
But Oklahoma Publishing also has to work with contractors in Switzerland and Germany to ensure that they can supply the project materials at the cost they've projected.
"We have to get the contracts in place before we can say, 'Yes, we're going to do this,'" Pierson said. "It's kind of like building a house. You can have architectural plans, you can have a builder lined up, but at the end of the day you've got to be able to sign a contract that everybody can live with. And we've got to do that with people literally all over the globe."
New steel tariffs set by the Trump administration could spike costs of the project or even kill it, Pierson has said.
If it does proceed, the project will be unique in North America - and possibly the world - and would draw intrigued visitors and national media attention, Pierson has said.
For 126 years, the railway ran a scenic, 8.9-mile trip from a depot on Manitou Springs' western edge to the summit. City officials estimate 300,000 people annually have taken the ride in recent years.
Per the agreement, Oklahoma Publishing would pay Manitou Springs $1 million from 2018 to 2019 to make up for the tax revenue shortage from the closure.
Until the system reopens, city officials say, Manitou Springs could lose $600,000 in tax revenuea year - $500,000 in amusement taxes levied on Cog ticket sales and $100,000 in sales tax from Cog patrons who eat, shop and stay in the town.
Manitou Springs also would cap its amusement tax at $500,000 for the Cog and any other business, allowing the company to keep any revenue above that cap. The cap would increase by at least 1.5 percent every four years and would remain in place 50 years.
An amendment to the proposal, aproved by the council Tuesday, would allow the city to increase that rate to 2.5 percent in certain years over the half-century period.
The city also would waive its use tax for equipment and machinery related to the railway's rebuilding. That will cost the city $900,000 to $1.1 million, officials say.
Under the arrangement, the architecture and appearance of the historic railway and its depots and other structures would remain the same.
The Cog also would decommission four of eight train cars, refurbish the other four, and buy three new, 240-seat cars and a snowplow, hoping to operate the railway year-round, Pierson has said.
Manitou Springs would work with the company to reduce traffic on Ruxton Avenue, which leads to the depot, and at Hiawatha Gardens, where a free shuttle picks up passengers from a free parking lot before carting them to the base of the mountain.
"As I'm seeing this, it's a broad partnership over a lot of years with unlimited potential," Manitou Springs Mayor Ken Jaray said. "I'm quite comfortable that we will have a positive outcome for Hiawatha Gardens and other projects as we move through."
Hiawatha Gardens could get a parking structure, other increased parking capacity and a city museum with decommissioned train cars and rail-related items donated by the Cog. Jaray has said he envisions Hiawatha Gardens as a "transportation hub" where visitors park and get on a scooter, bike, Segway or bus to explore the city.
At Councilman Bob Todd's request, the council will hold a work session before June 26 to discuss details of the deal. Todd said he's 100 percent on board but wants the council to take a closer look at the pact before the final vote.
"This is probably the most important agreement that this council will negotiate," he said.
Terry Haas, one owner of TAT Enterprises, which operates several Manitou Springs gift shops, said he was pleased with the council's initial decision. He said his retailers have seen less business since the Cog closed.
"We really welcome the Cog to come back online as soon as possible," Haas said.
Several other residents expressed support, too, at a public meeting Monday night.
Manitou Springs has approved a separate agreement that will make up for the projected $500,000 revenue shortfall, even if the Cog revival doesn't occur.
On a 4-3 vote June 5, the council OK'd an agreement with the Manitou Springs Urban Renewal Authority that will let the city keep nearly $2 million in tax revenues through the first half of 2019 that otherwise would have gone to the authority, Jaray said Monday. Council members Jay Rohrer, Susan Wolbrueck and Gary Smith cast the dissenting votes, he said.
If the Cog deal goes through, the city still will retain that revenue and use it for improvements, possibly to Hiawatha Gardens, he said.
The URA, which has enough reserves to pay its expenses through next June without that city revenue, was established in 2006 to set aside some property and sales tax revenue to subsidize development and improvements along Manitou Avenue, from U.S. 24 to the city's eastern boundary.
Oklahoma Publishing and The Broadmoor are owned by the Denver-based Anschutz Corp., whose Clarity Media Group owns The Gazette.