Less of a commitment from the state means Pueblo’s convention center expansion could be facing scale backs with the new finance deal
Pueblo’s troubled Regional Tourism Act project, which the state halted funding on early this year, has finally been given the go ahead with a financing agreement Pueblo Urban Renewal Authority Executive Director Jerry Pacheco calls fair, though it means less payback than the city had hoped for and possible consequences for the project.
In the new agreement, the state says they won’t spend more than $35.7 million on the project, which consists of the convention center expansion, Professional Bull Riders University and waterpark. Pueblo was counting on nearly $44 million over the course of 39 years when the Colorado Office of Economic Development and International Trade gave a thumbs up on the project in 2012.
Pueblo City Council approved the proposal at the March 28 meeting.
“It would have been nice to have more (money),” Pacheco said. “But this was a negotiated agreement that had to work through a series of lawyers. I think the settlement is fair. We were finally able to come to a number we can all live with.”
While the negotiations have stalled progress on the project’s timeline, Pacheco said the new deal won’t have a significant impact on the final product.
“For all intents and purposes it (the new agreement) does not change the relationship we have with the city,” Pacheco told PULP in an interview. Now, Pueblo will receive 24.7 percent of the state sales tax revenue collected with the RTA zone until April 2022. After, the city will receive 3.3 percent until the $37.5 million is met or the 50 years has expired.
For nearly 3.5 years Pueblo planned RTA on assumption they would receive full $44 million. But in August, OEDIT revealed that a third-party analyst was wrong in its funding formula and if continued, the state would pay upwards of $550 million over 50 years to Pueblo for the project.
OEDIT was expecting to pay the city of Pueblo around $200,000 or so each year. That complicated matters as a $14.1 million loan from the half-cent sales tax fund made the project possible when the city was unable to find a developer for the project. That’s when PURA stepped in to facilitate.
PURA planned to pay the city back the $14.1 million plus interest within a decade, but an annual $200,000 payment made the 10-year timeline nearly impossible. OEDIT hinted early on in the negotiations that they were willing to keep the payments larger short term so that the loan could be repaid.
“For all intents and purposes it (the new agreement) does not change the relationship we have with the city.” – PURA Executive Director Jerry Pacheco
The final agreement meets those needs, according to OEDIT and Pacheco. The 24.7 percent of state sales tax revenue collected is expected to help with the loan payback. After 2022, the city will receive just 3.3 percent.
“This deal is on par with the loan repayment,” Pacheco said. “As the project goes on and we reach new phases there will need to be other investments made.”
Available land around the Riverwalk has seen little interest from developers in the past with the exception of the PBR building, which was in part reclaimed by the city, but Pacheco says that the recession was mostly to blame and developers “are now more interested and PURA has been chasing leads.”
Pueblo City Councilmember Steve Nawrocki told the PULP that the first phase of the RTA project is accounted for, but the next two phases might be scaled back because the state has promised $8.3 million less than the city expected. Phase one includes the PBR University and convention center expansion. Nawrocki couldn’t name a specific instance in which the RTA project might be scaled back in, but PURA would have to make those decisions in the future.
The state also worried that the RTA project was not ‘unique or extraordinary,’ which are two requirements written into the act. That resulted in the state stalling the project all together until the city could prove its project met the state’s standards.
PBR reaffirmed its commitment to the project, as it was deemed the unique piece of the puzzle. Other RTA projects have similarities to Pueblo’s project with convention center-type meeting spaces and water parks.
“We recently received the attached commitment letter from the City of Pueblo,” OEDIT Executive Director Fiona Arnold said in a statement. “We are delighted to see that Professional Bull Riders has reaffirmed their commitment to the Pueblo Professional Bull Riders University and Heritage of Heroism Regional Tourism Act project.”
In a straightforward letter to the city of Pueblo, PRB’s CEO Sean Gleason said PBR commits to having an active role in planning and constructing the expansion that will include the company’s training facility. Gleason also said PBR would aim to use the facility year round, but commit to using the space at least 40 days per year.
The state did not require a contractual agreement from PBR, but added that they feel confident about PBR’s letter of intent.