BIDLACK | Public-private partnerships pose tough choices for local government

Author: Hal Bidlack - November 23, 2018 - Updated: November 23, 2018

Hal Bidlack
Hal Bidlack

Today is Black Friday, an invented marketing tool that encourages us to shake off our turkey and dressing stupor and to head to the mall, the shops, main street, and, if you had that extra piece of pie, the computer, to start our holiday shopping. And if you are like me (Ed: Hal, very few readers are like you), you will end today having made a few purchases, eaten a few leftovers, and ruminating about the Cog Railroad (Ed: See? Told ya).

I suspect you’ve noticed that Colorado has some really cool mountains. Really, they are quite large and quite lovely. And if you’ve spent time in Colorado Springs, you likely have noticed that magnificent peak west of town, named Pike’s Peak. In previous summers you may have noticed, if you looked very carefully, small train cars slowly making their way up the slope to the summit. Those train cars are, or were, the Cog Railroad. In the century-plus, countless folks have used America’s highest railroad to see resplendent views and to eat hot donuts.

But all that changed last year, when it was announced by the Cog Railway folks that the trains would not open for the 2018 season, nor for any future season, until major repairs were carried out. And with that announcement, the summer travel plans of quite a few folks changed and the economic outlook for Manitou Springs, Colorado Springs, and a chunk of Colorado dimmed a bit.

A story earlier this week in the Colorado Springs Gazette by Rachel Riley updated us on the situation. It seems the city leaders in Manitou voted, for a second time, to pass a revised deal with the Cog Railway company to fund upwards of $100 million to fix up the train, the track, and other infrastructure. The owners, Riley reports, Oklahoma Publishing, will decide very soon if they will take the deal and start the repairs.

In this revised deal, Manitou Springs offers up a complicated series of tax benefits to the owners in exchange for an investment and a commitment to reopen the railway. Riley notes that the new deal still carries a significant risk of the city losing out on more than $500,000 per annum in tax revenue. But, without the railroad, would those monies be raised at all? Therein lies the rub.

How much money, usually in the form of tax breaks, should cities give to private ventures to support those companies building stuff in the community? I confess, I’m conflicted. On the surface, it seems like a win-win, wherein cities get cool new attractions while the companies get badly needed resources to fund the construction thereof.

There are smart, caring people who argue that such companies, like the Cog Railway people for example, will build anyway, and there is not need for such tax breaks. There are other nice and caring people who argue the opposite – that in today’s competitive economy, without incentives, companies will move elsewhere. That latter argument is less compelling in this case, given the paucity of giant mountains right outside communities, but you take my point.

Last April I wrote on the mixed blessing that the new Amazon HQ would be to Colorado, should we “win” the contest to locate the new business here. When it was recently announced that Virginia and New York would split the new HQ, I confess to being a bit relieved, as the new jobs would be nice, but would not be without cost.

I’ve long been wary of cities giving huge tax benefits to get new sports stadiums constructed. A number of stories have been written about the decidedly mixed blessings associated with such public expenditures. And, I’m a hypocrite, because I’m a huge Bronco’s fan, and I’d hate it if they moved away. That said, a Brookings study showed the new stadium in Denver cost taxpayers at least $54 million, part of the $3.7 billion some 36 new sports arenas cost taxpayers.

So, is Manitou Springs doing the right thing by giving the Oklahoma Publishing company, which also owns the Broadmoor Hotel, the Gazette and Colorado Politics, major tax breaks to get the cog rebuilt? I don’t know. It feels like the right thing, but the truth is, we won’t know for many years. Hopefully, the additional tax revenue generated by the throngs of tourists heading up the mountain will pay for everything, but maybe they won’t. These are tough calls, and I appreciate the hard work of the Manitou Springs city leaders. I hope they are right.

And Go Broncos.

Hal Bidlack

Hal Bidlack

Hal Bidlack is a retired professor of political science and a retired Air Force lieutenant colonel who taught more than 17 years at the U.S. Air Force Academy in Colorado Springs.