Colorado Springs a reluctant player in the incentives game

Fifteen or 20 years ago, employers who brought jobs to Colorado Springs or expanded operations here might have received personal property tax rebates and job training funds totaling thousands of dollars as incentives.

But when City Council members hold a special meeting today to consider an incentives package to keep the U.S. Olympic Committee's headquarters in the Springs, they are expected to provide the organization with offices in a new downtown building at the nominal fee of $1 a year.

At the end of a 25-year deal with the city and a local developer, the USOC would own the building.

That's not all. Other incentives to keep the USOC in the Springs include a major face-lift of the USOC's Olympic Training Center in the Springs, new offices for several Olympicrelated amateur sports groups and a skybridge to connect USOC offices to a parking garage.

The total package, with about half funded by the city and most of the rest by real estate company Land-Co Equity Partners, is worth about $53 million.

Assuming the City Council approves the incentives package at today's meeting, the USOC is expected to accept the deal and announce during an afternoon news conference that it's staying.

"If somebody had told me two years ago that this was the deal we'd offer, I would have never believed them," said City Councilwoman Margaret Radford.

But, she added, "It's what we need to do."

Supporters of the USOC package say the loss of major industries and the need to recruit and retain jobs in the face of competition from other governments has forced the Springs and the business community to ratchet up their use of incentives in recent years.

"I think we have no choice," said Mike Kazmierski, president of the Colorado Springs Economic Development Corp. "If we as a community want quality jobs, and quality jobs drive our economy and our quality of life, we've got to invest a little bit in attracting and retaining those kinds of jobs. We are behind many other communities in the country when it comes to ‘incentivizing' companies to make their final decisions."

Prior to the past few years, many local politicians and business leaders frowned on using big wads of cash as business incentives. The area's natural beauty, quality of life, a highly educated work force, cheap utility rates and low taxes should be incentive enough, they said.

Those days appear to be gone:

- In late 2005, city and economic development officials provided $200,000 to toolmaker Western Forge to keep the company from closing its operation and helping it to add 150 jobs.

- Last year, a $300,000-ayear city incentives package lured Frontier Airlines' maintenance hangar to the Colorado Springs Airport, netting 225 jobs and a $38 million annual boost to the local economy.

- The city's Urban Renewal Authority will make $50 million in improvements along North Nevada Avenue to pave the way for a retail complex and a UCCS research and development center. Costco Wholesale Club and others are coming to the site, in part, because of the upgrades.

The city's USOC package has its roots in the USOC's decision to consider moving its headquarters out of the Springs, where it's been since 1978.

The USOC occupies about 35,000 square feet of aging offices on 34 acres at Boulder Street and Union Boulevard, the site of an old air force base. A training center for Olympic athletes, one of three in the nation, covers most of the property. The training center came to town in 1977.

In October, the USOC said it would evaluate proposals from other cities and consider moving its headquarters. In February, USOC board chairman Peter Ueberroth said the organization had "six viable locations" and had whittled its list to three. The Springs was one, he said, while news reports said the other two were in Chicago.

At stake for the Springs is keeping an organization that's one of the city's few corporate headquarters. The USOC oversees the nation's Olympic movement, boasts international prestige, and has 330 local employees and an annual economic impact of about $316 million, said Springs economist Dave Bamberger.

That kind of economic activity, along with the potential for the Springs to market itself as the home of the Olympic movement, makes the USOC worth fighting for, said Fred Crowley, a senior economist at the University of Colorado at Colorado Springs.

"There's only one Olympic center and one Olympic Committee," he said. "Every city in the country would love to host it."

There also are the 50 national governing bodies that oversee Olympic sports - and which might leave town if the USOC bolts, Kazmierski said.

Also, the USOC boosts the area's retail and tourism industries, councilwoman Radford said.

In the 1980s, 36 states offered everything from free electricity to new roads to lure General Motors' Saturn plant, which Tennessee snagged.

Six years ago, a Portland, Ore., suburb gave more than $17 million in property tax breaks to a chipmaker.

"We used to have to compete on an international basis," Crowley said, as steel manufacturers, computer chipmakers and other employers moved thousands of jobs overseas. Now, he said, "Domestic cities are competing with each other for what's left over." Incentives are part of the arsenal.

But the USOC package and other employer incentives put the Springs on a slippery slope, said Greg LeRoy, an incentives critic and author of "The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation."

Too many cities allow themselves to be held hostage to corporate interests - overbidding in their quest to land jobs, making backroom deals without public input and never knowing for sure if employers would have left town had they not received incentives, he said. Even so, he said, cities and states are expected to offer incentives and ask few questions.

"The trophy, PR (public relations) nature of a deal in this strata, these deals tend to take on a logic of their own that defies gravity," LeRoy said of the USOC package. "It's exactly these kinds of deals for which cities and states are prone to overspending."

He likens the process to "unilateral disarmament." When it comes to the USOC, he said, Colorado Springs appears ready to become a willing prisoner.

"What politician in his or her right mind wouldn't want to have a photo op, shaking Ueberroth's hand, announcing a 25-year deal?" LeRoy said.

"That's an enormous amount of political capital. And that's the reality of how these things play out."