Every week brings a new debate over funding for the city's $250 million City for Champions initiative. Dominating those discussions are local sales tax revenues, envisioned as supplying more than $100 million of the cost.
But C4C backers also have written $10 million from the federal New Markets Tax Credit Program into the plan — despite that program being highly competitive. If it hasn't gotten much attention in C4C discussions, maybe that's because even the effort's point man doesn't seem overly optimistic.
"The New [Markets] Tax Credit program is extremely competitive with only about a 30% success rate," Bob Cope, city economic vitality officer and helmsman for C4C, acknowledges via email. That's why there's already a fall-back plan.
"If NMTC are not utilized," Cope says, "then one of the other funding sources, such as philanthropy, will have to increase to compensate."
No small thing, considering the C4C financing plan already is hoping to squeeze more than $48 million from private donations.
Not a sure thing
C4C, backed by Mayor Steve Bach and community leaders such as El Pomar Foundation, proposes a new Air Force Academy visitors center, a sports medicine center at the University of Colorado at Colorado Springs, and two downtown venues: a sports events center and an Olympic museum. In addition, C4C includes $51 million worth of downtown infrastructure, including a parking garage.
The most recent financial plan shows $48.2 million would come from donations; $100 million from local tax revenue; $47.5 million from state sales tax rebates; $29.5 million from city parking authority bonds; $15.3 million from UCCS clinic leases and revenues and higher education capital; and $10 million from NMTC tax credits.
Enacted by Congress in 2000, the tax credits program was designed to spur private investment in low-income and distressed areas, and to create jobs.
Through 2012, the most recent period for which figures are available, it has resulted in $36.5 billion invested in projects and more than 350,000 jobs created, a third of them full-time and the rest in construction, according to the Community Development Financial Institutions Fund, which administers the Treasury Department program.
It's attractive to private investors because they receive 39 percent of their investment back in tax credits over a seven-year period. Program benefits: job creation and stimulation of business, manufacturing, retail, alternative energy and community facilities.
But the program could be called a long shot, considering that in 2012, 314 applicants requested $21.9 billion, but only 85 applications totaling $3.5 billion were funded.
One of those that snagged funding is the Colorado Coalition for the Homeless' $35 million, 54,000-square-foot health center now under construction at 21st Street and Broadway in downtown Denver. Coalition president John Parvensky says the nonprofit felt lucky to land $4 million in tax credits in 2012, because it's "a very competitive process." He notes the Colorado Housing and Finance Authority has applied but been shot down twice.
"Those applying feel it's a roll of the dice," he says.
Parvensky describes the application process as "very, very complicated," and notes the coalition worked through another agency to access the tax credit funding, a common practice. It's so complicated that the Government Accountability Office has recommended that Congress convert part of the annual allocation to a grant program, according to Jim White, GAO's director for tax issues. A 2010 GAO study also found that some funding was being "drained away by middlemen," White says, such as accountants and lawyers.
But the NMTC program remains extremely popular. The Treasury Department reports that 310 applications totaling $25.8 billion are competing for $3.5 billion in the 2014 round.
Cope says tax-credit funding, if obtained, would be split equally between the downtown sports center and the museum. Both are envisioned for the Southwest Urban Renewal Area, seen as an economically depressed area — precisely what the tax credits target.
"The idea behind the program is to provide funding for projects that would not otherwise be economically justified," White says. Asked if a sports stadium and museum qualify for the program, White says, "This could be a luxury hotel being built by one of the hotel chains. That was part of the intent of the program, to stimulate economic development that otherwise would not have occurred, and there wasn't much in the design of this to restrict the type of development."
In fact, Cope says, consultants working for the C4C effort label the two downtown projects "very compelling ... due to strong economic impacts and job creation." The city's application for state money says the museum and sports center would generate 1,500 construction jobs and 391 permanent jobs, though the state's analyst has forecast about 10 percent fewer.
Regardless, Cope says C4C's financing plan is still "preliminary." If tax credits are part of the final plan, the city would hire a consulting firm to help it apply, he says.