Mayor Steve Bach’s City for Champions proposal didn’t impress Economic and Planning Systems, the third-party analyst hired by the Colorado Economic Development Commission to evaluate the city’s request for state tax increment funding.
EPS found that visitor estimates by the city were overly optimistic; financial data was skimpy, insufficient and/or inaccurate; and cost and revenue estimates for all four projects were speculative and unsubstantiated.
EPS didn’t mince words. Notwithstanding the report’s polite bureaucratese, there was no attempt to soften the blow.
The city asked for $82 million in TIF funding. EPS reduced the figure to $31.4 million, but made it clear that none of the projects appeared to be eligible for Regional Tourism Act funding unless local private and public funding first could be secured and committed, sites acquired, and precise cost and revenue estimates provided.
Refusing even to consider the proposed UCCS Sports Medicine Center, the analysts noted that “EPS’ review of the Application indicates that this project component is not defined clearly enough or far enough along in the development process to be evaluated for an RTA funding request.”
Estimating that the three remaining projects would only draw 214,000 net new visitors annually, as opposed to the city’s estimate of 521,000, EPS declared that the city could qualify for at most $31.4 million in TIF funding, more than 60 percent less than the City for Champions request. The analysis was forwarded to city officials on Oct. 28 and was released to the public late Friday, Nov. 1.
The city has until Friday, Nov. 8, to respond to the report. The city will also make a presentation to the Colorado Economic Development Commission on Dec. 4. The commission will decide the fate of this City for Champions proposal on Dec. 16. Doug Price, CEO of the Colorado Springs Convention and Visitors Bureau and a spokesman for City for Champions, told The Gazette in a story published Monday that he was confident the city would be able to make all needed revisions.
It’s not clear whether the city can, at this late date, change its application so that it conforms to RTA criteria. To go forward with the proposal as originally conceived may require that sites be acquired for both the Baseball Stadium and the Olympic Museum, that the UCCS and Air Force Academy Visitor Center projects be better defined, that the sources of approximately $150 million in public and private funds be identified and that final designs, construction costs and credible revenue estimates be available for all projects.
Clearly not impressed by the structure of the application, the consultants wrote:
“As noted throughout this report, there are major deficiencies in the information provided in the Application … RTA funding is intended to act as gap financing for projects in which there is a financial hurdle that is impeding development; it is not intended to function as a grant program. In order to demonstrate financial need, it needs to be shown that the financing gap is the only impediment to a project moving forward. As described in the 2013 Application Guidelines, this criteria therefore requires an Applicant to also demonstrate some degree of ‘project readiness’ so that there is an assurance that any State funding that is committed will go to a project that is defined and approved based on the Application and does not substantially change after funding is granted.
“As described in more detail in this Report, none of the four project components have met either the financial need or development readiness criteria. No firm funding commitments, letters of interest, letters of intent, or other evidence, have been provided by the Applicant. The funding and financing plan described in the Application only notes ‘high levels of interest’ from potential project funders. In addition, the Applicant does not own or have an option or contract to purchase or otherwise acquire the land needed for the Museum or Stadium. For the USAFA project, it is EPS’ opinion that additional clarification is needed on the need for any permits or other approvals from the Federal Government or Air Force Academy, since the Visitors Center would be on Federal Government property.
“The Applicant is also requesting RTA funding for 30 to 45 percent of the project costs for each individual Project component, and 37 percent of the total cost of the four Project components. It is EPS’ opinion that the Applicant is treating the funding as grant funding that can be used with more flexibility than gap financing.”
EPS also poked holes in city methodologies, noting that “the average length of stay included in these estimates is 4.5 nights, (implying that) visitors to Colorado Springs RTA venues will only visit Colorado Springs; their trip will not include stops at any attractions outside Colorado Springs and that 100 percent of these per trip expenditures are made within Colorado Springs.”
The consultants gave the Olympic museum a nod of approval, but stressed that project documentation is weak.
“Of the four projects proposed in the City for Champions Project,” the analysts wrote, ”the U.S. Olympic Museum has, in our judgment, the best potential to draw new visitors to Colorado. With the backing of the USOC as planned, this could be a unique attraction in Colorado. However, the Applicant has not demonstrated that the project’s development program and financing is sufficiently defined to allow it to be built as proposed with RTA funds.
“The project financing plan is in fact backwards. RTA funds are assumed to provide the initial 45 percent of project cost and that other public, private, and philanthropic funds will be raised to fill the financing gap.”
EPS saved the worst for last. Decrying the absence of information needed to complete its analysis, the consultants were particularly disturbed by the city’s unsupported assertions that each project would produce positive net operating income, amounting in aggregate to $6.2 million. Noting that “museums, stadiums, and visitor centers do not typically generate positive operating cash flow and often rely on operating subsidies from non-profit or local government partners to fill any operating funding gaps,” EPS wondered why this net operating income wasn’t applied toward any project financing.
It may be possible to refocus the proposal, however. One person who has been close to the process believes that the city should concentrate on the two downtown projects, which together would be eligible for $24.6 million in RTA funding. The Olympic museum would likely attract substantial private funding, while the baseball stadium and infrastructure improvements throughout southwest downtown could be funded through the creation of a comprehensive downtown area Urban Renewal District. Such a “super-district” would replace all of the existing downtown URAs.
City Councilor Jill Gaebler, while acknowledging that the report revealed many shortcomings in the original proposal, nevertheless remains optimistic.
“(The report) can be a great tool for those who created the proposal to make it better,” she said. “We should consider it a positive thing that gave us a lot of feedback, so that both the state and our citizens can better understand the proposal.”
Dick Celeste, who has spearheaded the Olympic Museum project, was even more sanguine.
“They (EPS) are just doing their job,” he said. “It’s an important step in the process. We look forward to moving it down the field.”
Asked whether museum backers had secured a specific site for the facility, or whether any private or foundation donors could be identified in the near future, Celeste was noncommittal.
“We’re moving in the right direction,” he said.