Sporting goods giant Scheels All Sports cleared its first hurdle Tuesday to get $16.2 million in tax incentives to build a massive retail store on Colorado Springs’ far north side.

The company’s plans got that boost when the City Council voted 7-2 to create a financial incentive tool to woo businesses to the city. The ordinance was needed for the council to offer Scheels the incentives package at its meeting Feb. 26.

That package would reduce the city’s sales tax rate from 2 percent to 1 percent at the store site at the InterQuest Marketplace northeast of Interstate 25 and InterQuest Parkway. 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.

It is all essential to ensure that Scheels — whose estimated economic impact could total $1.5 billion over 25 years — doesn’t open in a nearby town, several council members said.

“What I don’t want to see is everyone going to Monument,” Councilman Don Knight said. “This is really an issue of bringing in the tax money here.”

Colorado Springs poised to give $16 million-plus incentive to outdoor retailer Scheels

The 220,000-square-foot store would be the company’s second in Colorado. It likely would include Scheels’ trademark indoor Ferris wheel and a massive aquarium, along with apparel, sporting goods, fitness equipment and camping and hiking gear.

Scheels plans to spend $84 million building its store, creating 145 construction jobs, city officials said. Once open, the store would employ 400 people.

It is expected to generate $60 million in annual sales. 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 general fund to help pay for basic services, said Bob Cope, the city’s economic development officer.

Councilman Bill Murray railed against the proposal, citing fears that the ensuing incentives for Scheels would drain sales from other sporting good stores already in the city. He was joined in opposition by Councilman Andy Pico.

“This is cannibalizing what we already sell and get tax dollars on,” Murray said. “It’s fancier, it’s newer, it’s prettier. But it doesn’t even need this incentivization to cut into area that has the demographics to make them incredibly profitable.”

But Jeff Greene, the mayor’s chief of staff, said the incentives are needed to keep the city competitive.

Cope said the retailer would attract shoppers to Colorado Springs from across the region.

“This is planned to serve all of southern Colorado,” he said.

Public safety net reporter

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