City might loosen its tight grip on business incentives

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In recent months, the Colorado Springs City Council has approved tax rebates for Agilent, Atmel, Bal Seal and Wal-Mart. Together, the incentives equal millions in sales-and-use tax rebates for the companies as they consider increasing their local presence.

But the city’s never had a strategic, written approach to incentives. Instead, leaders have judged every deal on its own merits. Other cities list detailed incentive packages available at the local, state and federal levels. The lack of cohesion has kept the Springs at a disadvantage.

But could tough economic times signal a philosophical change in Colorado Springs? Could its new economic development strategy include new packages, new deals — other than just sales-tax rebates?

Maybe.

“It’s still a work in progress,” said city economic developer Bob Cope. “We’re going to have a detailed, written, strategic plan in the near future.”

Under current city policy, every incentives package is judged by its overall economic effect on the entire community, as well as a tax rebate’s impact on the city’s bottom line. That won’t change, Cope said.

What will be different is that the city will be open to more creative ideas and more partnerships, he said. The plan is under development, but there’s no timeline for when it will be released.

“We were waiting for the Chamber and EDC merger,” he said. “That was an important step. Now that’s complete, we’ll meet with them and make sure we’re all on the same page. I don’t think it will be long now.”

Getting on the same page might not be easy in a city like Colorado Springs, where traditional cash incentives were long considered unnecessary. Some leaders still hold that opinion.

“We don’t have to build spec buildings like they do in Huntsville, Ala.,” said Councilor Tim Leigh. “Where would you rather live? Huntsville or Colorado Springs? We have the mountains; we have clean air; we have first-source water, hundreds of trails and inexpensive utilities. It’s a no-brainer. Huntsville does those things because they have to do them.”

Instead of incentives, Leigh believes removing barriers to business — creating a “business friendly” environment — will both attract and retain companies. He points to American Furniture Warehouse, which had trouble with roads when expanding on Powers Boulevard a few years ago. AFW contacted the city, and Leigh said officials made sure the problem was resolved within 24 hours — and before owner Jake Jabs lost his real-estate deal.

But the Springs has to compete globally in a tight economic environment. And Joe Raso, new president of the merged Greater Colorado Springs Chamber and EDC, says the city is behind in competing for both business and workforce talent.

“Some cities, like Iowa City, have been working hard for years to attract business,” Raso said at a business breakfast this week. “They’ve had to get in there because they didn’t have a choice. Colorado is a little behind because they haven’t had to fight so hard.”

Natural beauty and cheap utilities aside, Raso said he had no definite philosophical bent about offering incentives. Instead, he said he’ll meet with city officials to gauge the community’s view about offering different packages to companies, and develop a plan from there.

“I haven’t done that yet,” he said. “We’re getting there; but I just don’t have a plan yet because we need to talk as a community. They are a useful tool, but it’s not productive to speculate on whether they’ll be useful here.”

Despite signals that the city is looking into expanding its incentive packages, or at least getting them in writing, there will continue to be strict guidelines.

No matter how creative the incentive, companies will have to perform to receive their breaks from the city. Any incentive must pose “zero risk” to Colorado Springs.

“If they don’t perform, there’s no benefit,” Cope said. “That’s one of the guidelines we’ll be following.”

But those guidelines won’t rule out public-private partnerships like the one that found a new building for the Space Foundation. El Pomar Foundation worked with the Economic Development Corp. to find a location and to pay for it. In exchange, the Space Foundation agreed to hire new workers and to keep its lucrative annual Space Symposium at The Broadmoor.

Still, the city won’t be ponying up any cash or donating any land or buildings.

“We won’t do that — but if a developer wanted to go forward and offer a building, we’d support that any way we could,” Cope said.

However, some don’t believe that creating incentives also creates enough loyalty for a company to stay in the Springs for the long term.

“If you hand them cash, or build them a building, they’re not going to stay,” Leigh said. “They’ll just move on to the next city, offering them the next deal.”

Business development and jobs have lagged in Colorado Springs throughout the 2000s — that much is clear, no matter what incentives philosophy the city pursues for future growth. But Cope is hopeful.

“Jobs were always a priority before,” he said. “We’ve always been business friendly. But it’s a bigger priority now — it’s even greater.”