Keeping, recruiting firms to city
Colorado Springs’ decade-long resistance to the national trend of offering big financial incentives to attract and retain companies officially ended Tuesday.
Five months after paying a company for the first time to stay in town, City Council members OK’d a policy that says such incentives are key to economic development. The resolution requires the council approve any major incentives. This would be done primarily through returning or discounting a company’s taxes.
The move came a day after Bank of America announced it will lay off 670 local employees, the largest mass job cut in the area in eight years. It is not clear, however, whether an incentive would have enticed the company to stay in the Springs.
It also follows by several months the Pro Rodeo Hall of Fame’s announcement that it plans to move from the Springs to New Mexico after getting an incentive package worth $17 million to relocate there.
The council voted unanimously Tuesday for the resolution and for a tax break for a technology company that announced this week it will bring to town up to 157 jobs. The company, dpiX LLC, makes a digitalized replacement for X-ray film.
“We want to be more aggressive in retaining jobs and getting new jobs and replacing those that we lose,” said city economic development manager Elena Nunez, who wrote the policy.
Council members voted in November to give tool manufacturer Western Forge $100,000 to expand locally rather than leave the city. Although the city had offered incentives such as business personal-property tax credit and rapid development review before, the money to Western Forge was the first cash payment it gave.
The second incentive came Tuesday, when the council agreed to refund 75 percent of dpiX’s utility bills over the next 10 years. This deal will save the company that is relocating from Palo Alto, Calif., $2.2 million, Nunez estimated.
Future deals could include similar incentives for firms that retain and attract primary employees, recapture money being spent outside Colorado Springs and move into redeveloping areas, among several criteria in the policy. All deals must have an analysis by the economic development department to prove they will benefit the city.
In the case of the dpiX agreement, Nunez predicted that over the next 10 years, the company would generate $4.7 million in sales tax and $488,000 in property tax. It also will generate almost $600,000 in new payments that Springs Utilities must make to the city because of increased business. That ratio of incentive to return will benefit the city greatly, Mayor Lionel Rivera said.
The plan has critics and opponents.
Dave Gardner, an activist critical of the city’s growth policies, said the council has fallen victim to false assumptions about the value of incentives. One is that a company that is willing to bolt another city for money wouldn’t turn around and leave the Springs if somewhere else offered it more cash.
Second is the false belief that the jobs these companies create will be filled by out-ofwork locals rather than workers moving here to fill them.
But Mike Kazmierski, president of the Greater Colorado Springs Economic Development Corp., said recently that such incentives are necessary at a time when other cities increasingly dole out cash in competition for new plants.
Kazmierski said other cities are offering far more money to get big plants to come to town, and similar offers are the only way the Pikes Peak region can compete.
For example, Pueblo has a half-cent sales tax for economic development and has used revenues to give millions of dollars in incentives. Officials there offered $3 million in 2003 to land an aircraft company that Colorado Springs also was courting.
