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180+ Acres of USAF Academy Annexed to Provide Taxpayer Revenue for Private Development

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​On March 12th 2019, Colorado Springs City Council approved the annexation of 183 acres of Air Force Academy Property near the AFA’s North gate. That means they extended City boundaries and increased the area for which the City is responsible to provide services. When approving the annexation of the property, City Council members knew very well that the property would later be presented (and approved on Jul 9, 2019) as an area of deep “urban blight.” Let that sink in:

1) The City is growing its boundaries beyond its burgeoning existing boundaries it is clearly unable to maintain;
2) Not only is the City adding square mileage to the boundaries for which it is responsible to provide services, but it is purposefully annexing an area it considers to be “blighted.”

Why?, One may ask.
The answer lies in the repeated and unvaried trend of Colorado Springs City government to favor developers and contractors over other taxpayers and citizens. Once the 183 acres of USAFA land became included in City limits, the City, County and other taxing entities may begin collecting sales and property taxes. One who agrees with the City Council’s and the County Commission's repeated calls for higher taxes to be able to care for our streets, parks, stormwater infrastructure and public safety, might be tempted to give an uninformed “nod” of approval of the concept of widening the tax base of our local governments. Such “nodders” would be deceived into thinking the taxes collected would end up in the City, County or School District 20 coffers to supplement the road tax increase revenue and the stormwater “fees” recently passed as well at the TOPs (trails, Open Space and Parks) tax and PSST (Public Safety Sales Tax) and other tax increases approved by citizens in the last decades. These assumptions would be WRONG. No, these newly collected City and County sales, property and lodging taxes collected in the Air Force Academy prairies designated by City Council as an “urban blight area” will not end up in City or County coffers. Because the City Council has determined that 57 acres (the portion developers are developing) of the 183 acres of completely undeveloped prairie are “blighted,” state law provisions go into effect that allow the City and County sales and property taxes to be collected like they are anywhere in the City, but then be diverted away from the general fund goals of streets, stormwater, parks and public safety in favor of providing direct taxpayer subsidies of developers who build on the “blighted property.” The County Commission, who sought and obtained approval for hundreds of millions in continued higher taxes for public safety also unanimously signed off on providing millions collected as County sales tax for this private development.

So these new taxes to be collected in the “urban renewal area” deceitfully classified as “blighted” will bypass what citizens usually expect taxes to be used for in order to provide an anticipated 30.5 million subsidy to the developers of a new tourist attraction at the AF Academy and associated restaurants, hotels and businesses. For 25 years, these taxes will provide almost ZERO benefit to the City or County’s coffers and nearly 100% of those taxes—$37 million in City and County taxes—will be provided as a big fat crony-capitalist gift to developers.

What’s important to understand is that this new, taxpayer-subsidized development of retail, hotels and restaurants will compete directly with businesses outside this specially designated "crony capitalism" zone. So taxes that may have been collected by a business outside of the zone will no longer be collected because consumers will generally take their dollars to the “bright shiny,” tax-subsidized businesses instead. Those businesses outside the government-picked winner district who collect taxes to be used for the City’s general upkeep will be negatively impacted by the government providing a taxpayer check to help the competition. Customers diverted away from traditional business will pay taxes at the new “bright and shiny” development and that collected tax money will be purposefully diverted away from the benefit of maintaining the City (and County and Academy School District 20) in favor of assisting the developer to build his new, bright, and shiny development. Here’s a link to an explanation of how the scheme works in simplified terms: http://www.informcos.com/tifgeninfo.html

This trend is killing Colorado Springs. The “blight” statute was put in place to deal with true urban blight situations where dilapidated buildings, fire risk, crime, rodent infestation are a direct threat to public safety. Instead, in Colorado Springs, the law is a tool for developers to gain taxpayer subsidies anywhere they see opportunity for new development and the ability to obtain other private property through the threat or use of eminent domain by the City. Instead of providing the up-front costs that competing developers outside the “blighted” zones must provide themselves, they seek taxpayers’ help to build these new profit centers. Colorado Springs has 13 of these so-called “blighted” areas and in each of them the assessor and the businesses there collect  taxes that benefit only that development and not the City’s general fund that pays for police, firefighters, parks, roads and stormwater. Most recently, the City approved the commitment of over $50 million to be collected as City taxes in Southwest Downtown to be DIVERTED from City coffers to subsidize private development in the area. City Council also passed new laws that allows them to simply “exempt” favored government-picked winners from collecting sales taxes just…because. They did so for a new department store in a favored developer’s development in northern Colorado Springs. See details of that giveaway here: http://www.informcos.com/scheelshandout.html The new retail outlet will still collect the same sales tax rate as other stores in the City, but gets to keep the $16 million with a nudge and a wink to give them a hand in competing with other retail outlets. Supporters of such a scheme (largely developers, the contractors they use and the businesses who benefit from the reduced infrastructure costs inside the crony capitalism districts), will be quick to state that the taxes collected, although they admittedly bypass the City coffers, can only be used for a “public improvements.” (see explanation here: http://www.informcos.com/fallacy4.html ) That’s what the law says. However, look closely what those “public improvements” are. At this link, you will see what the City taxes will fund in previous such areas and that they are not things the City would otherwise be paying for. In any other developments, the developer and the businesses therein must take on the entrepreneurial risk and upfront investment to pay for these “public improvements” without taxpayer assistance. There is only one of these zones that collects taxes for what most would consider a “public improvement.” Polaris Point’s sales tax collections are stipulated to only be used for the purpose of completing Powers Blvd to I-25—a priority flagged for a decade by local governments across the front range. This is in stark contrast to other projects’ “public improvements” that are simply developer costs.

This “blight” scheme and new “sales tax waiver” scheme violate free market principles (government favors a government-picked winner), violates the role of government in subsidizing private, for-profit development at the cost of foregoing and diverting tax dollars that could otherwise be applied to roads, stormwater, parks and public safety. In every case, proponents knowingly deceive taxpayers by stating “no taxpayer dollars are being used” and that any diversion of City or County taxes is only for “public purposes.”

Here is a table of the votes that annexed the area and approved the collected taxes to bypass City and County coffers in order to provide a very large and generous, politician-approved, taxpayer-provided handout to developers. In the table are email addresses of these politicians.
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Please provide them with feedback on their votes (good or bad). Don’t like the votes? Consider supporting a principled replacement at the next City Council or County Commission election or even running yourself. This is the only way this institutional corruption stops and our City and County will become a bastion of the free market, accountable government and prosperity that can only come about with adherence to the role of government and commitment to principles.

Background on the AFA visitors center:
In 2013, the City submitted its application for State taxpayer dollars for four “new” tourist attractions (this is material for dozens of other stories of corruption). One of the attractions on the application was a new Air Force Academy visitors’ center. In the application, the cost of the new facility was presented as $20.5 million. (note: the new bigger and better facility has ballooned to over $60 million). The City’s application stated in a matter-of-fact manner that the AFA’s endowment would foot the bill of $16.5 million and the state money being sought was just enough to get the remaining dollars. As a councilmember, I contacted the USAFA endowment president to ask whether the commitment of $16.5 million was something he was standing by. He was not. However, he was unwilling to be quoted on record citing “political sensitivity” in calling out the falsification of the application to the State. The AFA superintendent’s office also stood by the City’s falsification of the application. The director of AFA alumni affairs was adamant that it wasn’t a lie. This director of AFA alumni affairs was formerly the president and CEO of the Chamber of Commerce which backed the entire City for Champions application. It is also important to recount, that—of the four “C4C” projects—the USAFA visitors center was frequently touted as one that would require zero local taxpayer dollars.

The AFA Endowment was established to raise money to enhance the cadet experience and assist in the Academy’s mission of “building leaders of character.” Knowing the Endowment would likely not be able to raise funds from USAFA alumni for a tourist attraction (despite having no problem going on record for providing most of the visitor center cash), City for Champions advocates panicked at the upcoming expiration of State taxpayer funds (projects must be completed by December of 2023) for the project and sought a new and “creative” vehicle for paying for the new center and its surrounding development.
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That’s when this new perverse scheme was born and embraced and put into motion by local politicians to bilk taxpayers for the bill. ​
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