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Colorado Springs Scheels sporting goods store development back under scrutiny

COLORADO SPRINGS—The owners of the Interquest Marketplace development where Scheels All Sports is constructing its new store, who are also the Board of Directors of the Interquest North Business Improvement District (INBID), passed a resolution at a May 27 meeting purporting to approve actions taken to benefit Scheels by the board more than one year ago.

This retroactive approval raises questions about the operation of the INBID and whether the district board, which is comprised only of owners or employees of the developer, Nor’wood Limited, has been conducting business according to state law.

One concern, says Tim Leonard of Deepwater Point Company, who represents several business owners in the development, is the sale of 11 acres of land surrounding the new Scheels All Sports building by the developer to the INBID for one dollar a year ago on May 29, 2019.

“By selling the parking areas around the store itself to INBID, the developer has made that 11 acres tax exempt, which only benefits Scheels at the expense of all the other taxpaying businesses,” Leonard said. “Its being used for commercial purposes by Scheels, and the deed has covenants allowing Scheels to use and control it, but now that the INBID owns it, the other district taxpayers have lost that share of their tax base for paying the district’s debts. The city, and county, and school district lose out as well.”

Other property owners in the district have to pay property taxes on their parking lots. Leonard says this arrangement between the Interquest developer and INBID has County Assessor Steve Schleiker puzzled about the taxable status of publicly-owned property used exclusively for private commercial purposes.

As a public body, INBID must follow state law regarding notices of meetings, holding public hearings, and operating formally as any other public body must, including documenting its actions with formal votes on resolutions.

According to Leonard there is no record of the district board holding a public hearing or approving a resolution authorizing the purchase at the time.

The Scheels project has been under scrutiny since an attempt last year to exclude the Scheels store footprint from the district in order to free Scheels from having to pay the same property tax mill levies all the other owners in the district pay.

Complete Colorado reported on last year’s attempt, which would have saved Scheels’ nearly $200,000 in property taxes every year, according to its own projections.

In addition, Scheels received a $16 million tax rebate from the city as part of the deal to bring the chain to Colorado Springs.

In a promotional package presented to the city’s budget committee on May 27 of this year asking for approval of another $13.7 million bond issue, INBID claims that to induce Scheels to build here, in addition to the 1% sales tax rebate approved by the city council, “Exclusion from paying BID Mills,” a “Central Public Parking Area Built / Owned by BID,” a “Building pad conveyed to Scheels after 10 years of operations at no cost” and a “Tenant Improvement Allowance” were negotiated.

But Leonard says there is no record of public meetings or approval of resolutions by the INBID board for the purchase of the parking lot or for last year’s attempt to exclude the store footprint from the district.

“The developer, who also happens to make up the entire board of INBID, audaciously presumed that the city council would approve the exclusion of the building pad from the district and negotiated a deal as the developer that was never properly ratified by them as the INBID board,” Leonard told Complete Colorado. “They never represented the taxpaying businesses with this subsidy and now they are trying to absolve themselves for past indiscretions and deliver city council approval for another Scheels subsidy without taxpayer representation.”

Last year, the city council expressed concerns that the other taxpayers in the district had not been notified of the exclusion petition and delayed consideration of the petition, asking the developer to notify all property owners and reschedule the hearing. Interquest withdrew the petition before another meeting could be held.

“Excluding the Scheels building from the district means that the tax revenues that it should be paying towards the district’s bonded debt must be paid by the other businesses in the district,” said Leonard. “Combined with the fact that the developer and the district board are the same people, this amounts to taxation without representation for everyone else in the district.”

At last week’s meeting, the district board approved moving forward with the exclusion petition again, as well as approving moving forward with preparation of paperwork for a $13.7 million bond issue on top of $11 million of existing debt to the developer.

Bond documentation has not yet been released to the public although the Deepwater Point Company has made a request under the Colorado Open Records Act to view the bond documents the board approved at its meeting.

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