News for the Hospitality Executive
|By Rich Laden, The Gazette, Colorado Springs, Colo.
Knight Ridder/Tribune Business News
Nov. 13, 2003 - Local taxpayers, visitors, and downtown businesses and shoppers would ante up nearly $168 million during 23 years to build a downtown convention center and hotel under a funding plan assembled by the project's backers. The plan calls for the bulk of that money -- about $139 million -- to come from a variety of sources.
Those include city and county sales taxes; an additional fee on room stays at the convention center hotel; and a portion of city parking, lodging and general fund revenue.
An existing downtown taxing district would kick in $28.8 million.
No city or county taxes would increase, but city parking rates would go up under the plan. Some city money earmarked for tourism and parking purposes, as well as money the city pays to retailers who collect its sales tax, would be diverted to the convention center and hotel construction under the plan.
The money would repay a bond issued by a City Council-created nonprofit entity, which would own and operate the complex. The bond issue would pay for a 155,000-square-foot convention center and 400-room hotel, which are envisioned for an area southwest of Colorado and Cascade avenues. The area was designated by the City Council in 2001 for redevelopment.
The money would buy insurance to guarantee repayment of the debt and establish reserve funds to cover construction and operating shortfalls, among other uses.
In return, however, project backers -- downtown business people, civic leaders and developers -- say that after 50 years of operation, their funding plan would net the city about $381.7 million in income from the convention center and hotel.
A previous study by a hospitality industry consultant estimates the project would generate $33.1 million in economic activity and nearly 500 jobs during its first year -- growing to $87 million and 1,200 jobs by its fifth year.
The funding plan will be formally presented to the Colorado Springs City Council and El Paso County commissioners early next year. Project backers, however, have launched informal, one-on-one talks with city and county officials.
Before the plan is presented to the local governments, backers hope to line up support from the boards of the Colorado Springs Convention and Visitors Bureau, the Greater Downtown Business Improvement District and the Greater Colorado Springs Chamber of Commerce.
Home builder and developer Jeff Smith, whose Springs-based Classic Cos. is partnering with another firm to redevelop southwest downtown and who is a convention center proponent, says the plan rewards the community with overwhelming economic benefits in exchange for its financial contributions.
Still, for city and county officials, financial and political considerations will be huge.
In a community where local governments are cash poor, elected officials must decide if the project's economic benefits are strong enough.
Likewise, because the public has rejected ballot measures supporting convention centers, elected officials must consider the public's reluctance to spend public money on such projects.
"I think it's fair to say we don't really know (what will happen)," said Chuck Miller, a retired city government executive and consultant to the Colorado Springs Urban Renewal Authority, of the City Council's reaction.
"If you're a business person, it's a great investment if it performs like it's supposed to. On the other hand, they (city officials) have all the problems with their budget, the perception of the public. Given that, I really don't know what they will do. It's a real enigma for them."
Colorado Springs Mayor Lionel Rivera hasn't seen the plan. He said, however, he doesn't oppose the downtown special taxing district's financial support. Nor, Rivera said, would he oppose a special fee on guests who stay at the proposed hotel because it amounts to a user-pay concept.
But parking revenue should be limited to parking-related projects, Rivera said, adding he opposes using the city's vendor fee for a convention center. That's the money -- about $2 million annually -- the city pays to retailers for collecting sales tax revenue on the city's behalf.
Councilman Larry Small, who has met with convention center supporters, hasn't ruled out city support.
First, however, Small wants to know more about the legalities and liabilities of a public improvement corporation, which the council would create to own the convention center-hotel.
Like Rivera, Small doubts the city should divert vendorfee money to a convention center project. Even if local businesses don't object to using the money in that fashion, taxpayers should have first claim to that money, he said.
County Administrator Terry Harris said he and county commissioners must know much more, but based on estimates he's seen, the plan sounds good.
The county would get back about three times the amount of money it invests in the form of higher sales and property tax revenue generated by the project, he said.
"If it's all a good assumption, and if it indeed delivers that kind of money, it's a good business decision (for the county)," Harris said.
A convention center has been a goal of downtown business people and civic leaders for decades.
-- Since the 1970s, city voters have rejected three ballot measures that would have financed a convention center. One that would have paid for a downtown civic arena was rejected in 1989.
-- An early 1990s downtown improvement plan called for a center on the southwest side.
-- In early 2000, downtown business people, developers and civic leaders revived convention center talks. Since then they've discussed the project's feasibility, where to build it and funding options.
-- The city of Colorado Springs chipped in $50,000 in taxpayer money this year to hire HVS International, a New York-based hospitality consultant. HVS generally concluded a downtown convention center would be successful and generate millions in economic activity.
Supporters of a downtown Colorado Springs convention center-hotel propose a complex funding plan to pay for a 155,000-square-foot center and 400-room hotel.
A nonprofit public improvement corporation would issue bonds for the project. Funding sources to repay those bonds would include:
-- Colorado Springs' 2.5 percent sales tax and El Paso County's 1 percent sales tax, levied on operations of the proposed hotel.
-- A portion of existing city lodging and auto rental tax revenue, along with revenue from the city's 2 percent lodging tax levied on the new hotel.
-- A new 3 percent occupancy fee on rooms at the new convention center-hotel.
-- Contributions from the Greater Downtown Business Improvement District, a special taxing district covering about 35 blocks.
-- An unspecified increase in city parking rates.
-- Money from the city's vendors fee, which it pays to retailers for their collection of the city sales tax.
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(c) 2003, The Gazette, Colorado Springs, Colo. Distributed by Knight Ridder/Tribune Business News.