Bonds can be issued next month to raise up to $33 million for the new Summit House atop Pikes Peak, the Colorado Springs City Council unanimously agreed Tuesday.
Pikes Peak America’s Mountain, a city enterprise, can issue the bonds at an interest rate of no more than 5.25 percent a year, Chief Financial Officer Charae McDaniel told the council.
Construction on the $55 million, 38,000-square-foot Summit House began in June and is expected to be completed in the fall of 2020. The old Summit House will stay open till then. The new center will have an updated kitchen and dining facilities, better retail space and an educational area on the significance, history and geology of Pikes Peak.
The bonds essentially serve as a mortgage for the Summit House, Councilman Don Knight said. They are sold and paid back over time.
Knight said he hopes that most or all of the bonds will be sold by the end of the year.
Payments on the bonds over the next three decades will come from the enterprise, McDaniel said.
“In their net operating revenue, after we pay operating expenses, they still have the ability to cover it by more than twice the amount that’s going to be needed,” she said.
If the enterprise couldn’t make a payment, the city would use from its Lodgers and Auto Rental Tax.
Councilman Bill Murray recoiled at that idea, though, asking that additional projects don’t follow suit.
“Here we are backstopping one, and the next thing we hear, we’re backstopping the Olympic Museum. And the next time, we’re backstopping the soccer stadium, the hockey stadium,” Murray said. “I want some assurances … that this doesn’t become the go-to as far as backstopping these particular bonds. And when things do go south at any given time, we’re yanking money from all these other things.”
But the Summit House, unlike Murray’s other examples, will belong to the city, Council President Pro Tem Jill Gaebler said. So having LART money as a backup makes more sense than it might for other projects that got a one-time city payment. Such an act wouldn’t necessarily set a precedent, Gaebler said.
Knight said he’s comfortable with LART funds as an emergency reserve for the bond payments.
Still more money is needed for the work.
The Summit House got a $13.5 million appropriation from the enterprise’s reserves in April. That money was raised through toll fees and concession sales.
Donations are expected to cover the remaining funding gap. McDaniel said $10 million in donations is expected to be raised.