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Reader: The Cog, Manitou and future inflation




The owner of The Broadmoor and the Cog Railway has closed the railway for two years due to necessary repairs as the tracks and railway cars will have to be replaced. Cog officials approached Manitou in May and told us that they wanted Manitou to help pay some of their costs, which they estimated to be anywhere between $70 to $90 million. They told us that they needed a quick agreement and resolution of the City Council to have Manitou rebate back to the Cog essentially any amusement taxes that we receive over a cap of $500,000 a year (which is what Manitou collected in 2017 from the Cog sales). They built in a very modest inflation rate but, essentially, the deal was that Manitou would give back to the Cog anything over $500,000. In return, Manitou would receive $500,000 in 2018 and $500,000 in 2019, while the Cog was closed to make up for that lost revenue. Also, the Cog would collaborate and, perhaps, spend up to $500,000 in trying to solve the parking problems of Manitou, including work at the city-owned Hiawatha Gardens. Also in return, Manitou would give up imposing a use tax on the equipment that the Cog was purchasing and transporting into Manitou, which could run as much as a $1 million, and Manitou would also waive any new water tap fees.

We all love the Cog and want it to stay. Cog officials presented Manitou with an agreement for 50 years which is a heck of a long time and we, and many others, thought that was too long. But if it has to be for 50 years, then there needs to be the ability for the parties to adjust how much money is rebated to The Broadmoor. For the foreseeable near future, a cap of $500,000 is probably OK. But what if ticket prices rise in accordance with inflation? For example, a Breckenridge adult lift ticket in 1968 (50 years ago) cost $7. In 2018, it costs over $100. Who would have dreamed that prices can go up so much? Yet it does happen. As noted above, the Cog inserted a small inflation factor into the 50-year projection but it's not enough. We believe that the agreement has to have a written mechanism built in for a revision to occur every five years based on the economic conditions at that time.

— Marcy and Howard Morrison

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