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Pueblo RTA back on track, state commits $8.3 million less in deal

Illustration Riki Takaoka

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Pueblo RTA back on track, state commits $8.3 million less in 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.

Kara Mason is PULP's news editor. She is also the Society of Professional Journalists Colorado Pro Chapter president. Kara freelances for other regional publications, covering government, politics and the environment.

1 Comment
  • Greg Severance

    Hi Kara. It has been a long time. Two years plus after emailgate where the non-primary job PEDCo 14.1M loan had to be made or the project was dead. The sky was falling. If the loan was made the project would begin construction immediately the Rod led plea was made. A question never answered – What if PEDCo didn’t have a reserve to spare then? What was plan C? There are specific public and private projects here. Developers to pay for the private projects like a hotel, retail… Public sector to pay for projects like the training center, convention center expansion (what this entire project is all about), boathouse… Developers as your article states from Jerry had nothing to do with financing the public part of the project. Projected (wrongly) state receipts did. Read Chieftain in 2012, 13… It is now May 2017. So called grant awarded in 2012. It has now taken over 5 years for staff to now begin a scaled down first phase with $8.5M less from the state. Does anyone really believe this half a decade delay was the states fault? So many questions that should be asked here. How long will it take to pay off the PEDCo loan? Above the 14.1 in borrowed money, how much state money has been collected to date to spend on phase one? How much is the City (liable and the end of the day) on the hook for financing the first phase? What are the terms? Where is the loan coming from? Maybe the biggest question all good planners and projects must do – Begin with the end in mind. When will phase two begin? What projects and how much money will they cost factoring in the time value of money? Another PEDCo loan out of what might be a $100M reserve by then? Does anyone really believe that the private sector will build their $100M plus segments of the project? What happens if PBR pulls out of Pueblo in a few years to another venue like say Las Vegas? They have fulfilled their amended millions in 12 cent obligation. Less jobs and no restaurant on the HARP. The City will own the training center. Who maintains it for the whooping $1500/month rent PBR will pay.
    With this first phase completed a couple years from now IF financing comes through, does anyone really believe that Pueblo will become an “out-of-state” (that was the deal with the state) competitive tourist destination? No airport. A bull-riding training center (40 days) as the anchor? No swimming pool, parking garage, boat house, no improvements to the HARP (Never included in the grant)… for how long? But no worries City and PURA. If it doesn’t work no problem. Hey we tried. The “recession” caused us to fail again. No accountability. Just the emailgate four who dared to question, this project, its financing A to Z and the first ever non-primary job creating PEDCo use of 1/2 cent monies.
    On well, I read today that a 17 jobs package by 2019 for $250K incentive was announced. Is it just me or is it kind of embarrassing that the city and county elected officials and Pueblo leadership is called to a 17 job announcement? So the other emailgate issue – PEDCo buy jobs 1980 strategy? Score card – Express Scripts -300. Today plus 17. 2017 – (283). Anyone asking about the size of their reserve now? How many jobs created since 4 old non-establishment leaders dared to ask – Is there a better economic development plan out there? Should we at least have a healthy dialog on how the money is spent in the future? Nothing has changed. We tried…
    Greg

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