Road-funding question threatens Copper Ridge plans

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The fate of the proposed Copper Ridge shopping center in northern Colorado Springs will in part hinge on how El Paso County Commissioners interpret the state Constitution.

County Attorney Bill Louis is working with the developer, Northgate Properties owner Gary Erickson, on a proposal that would allocate future sales tax revenue from the shopping center to pay for the extension of Powers Boulevard.

Completion of the road will provide access to the center and is critical to the success of the project. However, a statute under Article X of the Colorado Constitution “prohibits the transfer of county general fund money for expenditures on roads and bridges.”

County general fund money is gathered from sales taxes to pay for items such as libraries, courthouses, airports, the district attorney’s office, fire protection and other general welfare services.

Funding for roads is traditionally accumulated through property taxes.

Commissioners will vote on whether to move forward with the plan in February.

“I recognize the merits of the project and see the potential (cost-savings) in having the developer pay for road improvements, but is it legal for us to do this?” asked Commissioner Sallie Clark.

The Colorado Department of Transportation would typically be on the hook for the road improvements, but budget cuts at the state level have put the project on indefinite hold.

“We certainly want road improvements, but we have an obligation to ensure the legality,” Clark said. “(My decision) will be based on the facts in front of me and I’m not sure where those will fall. My current interpretation is that we shouldn’t move money from the general fund to the roads and bridges fund.”

The proposed development has already been approved by the Colorado Springs City Council, but the city is not bound by the same set of laws that apply to the county.

“We get our power from the state, unlike Colorado Springs, which is a chartered city,” said Commissioner Dennis Hisey, who will also vote on the proposal. “The state has a specific rule against sharing sales tax revenue, and that is a potential deal-breaker because we can’t violate that law. Our legal staff will have to show us where that line is that we can’t cross. For some commissioners it may be a hang-up.”

Louis will present both sides of the article to the commissioners, and he seems optimistic that the statute won’t be the sole deciding factor if the project is voted down.

“I can argue it both ways, and my job will be to present those choices to commissioners,” Louis said. “If the commissioners choose to enter into an agreement with the developer, my opinion is that we can defend that agreement.”

In an ironic twist, the statute in question was provoked by a 1982 lawsuit the city of Colorado Springs brought against the Board of County Commissioners — a complete reversal in positions as it relates to Copper Ridge.

In that lawsuit, it was determined that the county was redirecting tax dollars owed to the city in order to pay for county expenses on roads and bridges. Louis said that, in his view, the spirit of that ruling does not apply to Copper Ridge.

“Copper Ridge is about providing an economic incentive for a new shopping center in exchange for road improvements,” he said. “That (case) was about El Paso County shoring up its financial situation at the expense of Colorado Springs. The first reading of the statute says that you can’t make this (Copper Ridge) arrangement, but when you know the purposes for which the language was designed, it frames the issue differently.”

The difference now is that the city is already on board with the project, and by completing the Powers Boulevard extension, taxpayers will get something concrete in exchange for the sales tax revenue.

Still, it’s possible that despite the unique nature of the project, approval of the plan by the County Commission could result in legal action.

“Our community is full of people who closely watch the actions of government,” Louis said. “Thank goodness for that, that’s what makes American democracy great. But it’s possible that a court could find the arrangement to be unlawful if someone were to bring it up.”

The statute is not the only hurdle the developer will face in front of the commissioners next month.

Even if the commission is convinced of the project’s legality, the developer will still have to sell the commissioners on the financial merits of the shopping center. Erickson has said Nordstrom is a potential anchor tenant, although the company has denied these reports.

“We’re looking for unique tenant commitments,” Hisey said. “Why would we want to break ground on a retail space that’s more of the same?”

And Clark will need to be convinced that the retail center won’t cannibalize existing businesses.

“If a shop that’s already in Colorado Springs moves to Copper Ridge, that’s a wash,” she said. “Is it going to be able to stand on its own? Or will it erode a commercial base that’s already having difficulties? We’ll have to take a look at the cost-benefit of the project, and whether it will increase sales taxes overall.”

In addition, the developer will be under close scrutiny to ensure that sales tax dollars are used exclusively on the Powers Boulevard connection.

“(The developer) has demonstrated how they’ll do this, but we’ll want something signed,” Hisey said.

The two sides will also have to validate the integrity of a bond issuance in the weeks ahead. The initial funds for the road’s construction would be fronted by $80 million to $100 million in municipal bonds that mature over the next 20 to 25 years.

Still, the project will have at least one supporter on the board of commissioners. Colorado Springs City Councilman Darryl Glenn voted in favor of the initiative when it was in front of the city council last year. He’s leaving that post to assume a seat as a county commissioner next week.

Glenn will have to align his next vote in accordance with the state’s parameters, but he sounded hopeful this week that something could be negotiated.

“If we can work with a developer to bring a high-end retailer to the area, and correct a transportation deficiency in the region, the project holds a lot of benefit from that perspective,” he said.

This is not Copper Ridge’s first brush with controversy. The proposed 2.8-million-square-foot development southeast of I-25 and Northgate Boulevard had to fight for urban renewal designation in early 2010.

While the city council ultimately blessed the project with the designation, the Urban Renewal Authority was strongly opposed. Urban renewal designation is typically reserved for blighted inner-city areas, and Copper Ridge will be located in a fast-growing part of town that is mostly suburban.

Despite the myriad legal, financial and development firms working on the proposal, the Copper Ridge picture remains muddy in the run-up to the vote.

The five county commissioners, two of whom will be newly seated, will have to analyze a mountain of technical data in the midst of what is sure to be a heated debate.

Heisy said there are arguments for and against almost every aspect of the project, and Clark agrees.

“It’s a delicate situation. I haven’t made any final decisions, but it’s a lot of moving parts,” she said. “We have to do our due diligence to make sure the best interests of the public are served, and we have to live with the fact that it’s either within our authority or it isn’t.”