Courtesy Air Force Academy
An artist's rendering of the Visitors Center project, looking west.
In a proposal to develop a new Air Force Academy Visitors Center and surrounding hotels, offices and retail space, a group of developers is asking for unprecedented public subsidy via the assignment of tax increment financing that would allot all the city's sales tax components to the project.
The proposal was outlined for City Council at its July 9 work session.
The developers, led by Dan Schnepf, who runs Matrix Design Group
, want to create a tiny business improvement district at 2435 Research Parkway, which later would be replaced by the 57 acres of Academy property where the development will take place.
They then want the city to annex the property into the city limits at some point, so that it could capture all the city tax money, along with Pikes Peak Regional Transportation Authority money and other taxes.
Developers want the city to sacrifice its sales tax money from the 2 percent sales tax rate, plus .62 percent roads tax, plus 4/10ths sales tax for public safety, plus the 1/10th trails, open space and parks tax.
All those taxes would be collected for some 25 years to fund the public infrastructure, and only after that would tax revenues generated by the project come to city coffers.
The project arises from the city's City for Champions
tourism venture, which will be partially funded with $120.5 million allotted from state sales tax revenues over 30 years for four projects. The Academy visitors center is one of those. The others include a downtown stadium, which is stalled
; a University of Colorado at Colorado Springs health medicine center, which is moving ahead, and the Olympic Museum and Hall of Fame, which is under construction at Vermijo Avenue and Sierra Madre Street.
But Councilor Don Knight was cool to the Academy proposal, saying, "You’re asking for 100 percent TIF on every tax that comes to the city. That’s a brand new precedent." He also noted that developers also want 100 percent of the 2 percent Lodgers and Automobile Rental Tax, along with the property taxes now collected by other taxing districts, including a school district and the Pikes Peak Library District, should the property, as developers wish, be declared an urban renewal area. (It's unclear how the City Council could deem the property blighted, however, as required for the URA designation.)
"Let’s say you get 1.5 percent [of city sales tax, rather than the 3.12 percent]," Knight said, "the same as the South Nevada [Avenue URA] project. Does that kill the project?"
City of Colorado Springs
This map shows the distance between the initial business improvement district and the Air Force Academy's Visitors Center business improvement district proposed for City Council approval.
Schnepf responded, "We’d have to go back to the drawing board.... The public revenue is as important as the private equity and debt. The only avenue for any change is to reduce the quality of the project itself."
Knight and others also expressed concern about the 60 mills in property taxing authority sought by the business improvement district — 10 mills for operations and maintenance and 50 mills for debt.
In any event, the proposal won accolades from Council President Richard Skorman.
"We’ve been asking hard questions here, and that’s our job," he said. "But in the process I hope we don’t lose how exciting this project is. I wanted to express appreciation for all this hard work and what this is going to give to our community. It’s a tremendous gift. I can’t think of anything more exciting than what you’re proposing. Don’t go away feeling discouraged at all."
Councilor Merv Bennett also expressed support, as did Councilor Jill Gaebler, with some trepidation.
"It’s a beautiful project," Gaebler said, "and I would love to have that in my community. I still would like to have more information. I feel like we are getting the cart before the horse. You keep talking about funding issues and the tools you will be using. Is there a way to have numbers attached to all this?" She also expressed confusion over how the annexation process would unfold.
City officials and developers assured her that more information is forthcoming.
Council is slated to approve the formation of the business improvement district on July 24, which will allow developers to hold an election on Nov. 6 to exempt revenues from the Taxpayer's Bill of Rights as well as elect board members.
So there's some time pressure on Council to approve the project. Another factor is that under the Regional Tourism Act
, the vehicle for the state money, it requires substantial progress be made within five years of the City for Champions approval, which occurred in December 2013.
However, city economic development officer Bob Cope said he's sure the state Economic Development Commission would allow the project to receive state sales tax money, even though ground has not been broken on the visitor's center.
Read the summary of the proposal provided by the city on the following page:
This is a request to create a new Blue and Silver Business Improvement District (“District”) to finance and maintain improvements within its boundaries to support the development of a 57-acre commercial mixed-use development located near the north entrance to the United States Air Force Academy (the “Project”), which is proposed to include a combination of visitor center, hotel, office, retail and open space uses. The ordinance also appoints the initial Board of Directors of the District. This item will be presented for action at the July 24th, 2018 City Council meeting.
The Project is located on property owned by the United States Air Force Academy (“USAFA”) that will be developed through a long term lease arrangement with the USAFA as part of the USAFA’s Enhanced Use Leasing Project.
The 57 acres underlying the Project (the “USAFA Property”) is not currently located within the boundaries of the City. As further described in the Operating Plan, the District will initially be formed on a smaller parcel of land located in the Briargate area within the City for the specific and sole purpose of allowing the District to hold a TABOR election in November of 2018.
It is proposed that, upon the annexation of the USAFA Property, the boundaries will be reconfigured to include that property including the planned new Air Force Academy visitor’s center to be located along North Gate Boulevard west of Interstate 25.
The creation of the Blue and Silver Business Improvement District to support financing the Project is proposed to occur in three steps:
Step 1: Create the temporary BID on an existing lot located at 2435 Research Parkway.
Step 2: Annex the land on which the Project will be developed.
Step 3: Transfer the BID from 2435 Research Parkway to the Project site
The creation of the temporary BID boundary now is necessary in order to accommodate the November 2018 mill levy election cycle. The BID cannot be created on the Project properties because they are not within the City. (Note: BIDs are a city construct and can only be created within incorporated cities.) Establishing the temporary BID boundary at a temporary location helps expedite the planning of the Project while the annexation of the Project properties - at the north entrance to USAFA - is processed, which will take approximately six months.
Following the annexation, the initially included property - at 2435 Research Blvd. - would be excluded from the BID and the Project area would be included. This anticipated future exclusion and inclusion will be subject to subsequent approval by City Council by ordinance.