Pueblo is counting on $44 million in incentives under the state’s to fund a convention center expansion, improvements to its riverwalk and a new Professional Bull Riders University.
But those payouts were put into question this week after staff at the Colorado Office of Economic Development discovered a large error — one undiscovered for 3½ years — in the formula used to determine the payments.
“Our bottom line with COEDIT was that it was their mistake, not ours. Pueblo and its RTA project can’t be harmed because of a mistake made by the state,” said Jim Munch, executive director of the Historic Arkansas Riverwalk Project of Pueblo.
State economic development officials counter that they never gave Pueblo a hard sum of what incentives the RTA would provide. The number fluctuates, depending on how quickly consumer spending and tourist visits increase over time.
What the state did say was that Pueblo’s share of future state sales-tax revenues resulting from the new tourism projects, above a baseline, would be 24.7 percent. A third-party analyst had incorrectly calculated that percentage.
The calculation error was so large that it would have generated payouts far beyond what the program intended, said Fiona Arnold, who took over as the state’s economic development chief in January.
Arnold and her staff traveled to Pueblo on Thursday to explain the mistake and to ask that the agreement be revisited.
“It was a good and productive conversation, and they aren’t looking to take advantage of this crazy error,” she said.
But uncertainty remains about the final amount Pueblo can expect to receive. The state expects to let Pueblo know in the next few days the corrected percentage of sales tax the project can expect to claim.
“That number is very important to Pueblo, and we need to make sure we get it absolutely accurate,” Arnold said.
The agreement that Pueblo and the Colorado Economic Development Commission signed in 2012 contains a chart showing Pueblo’s financial projections of $43.99 million collected from the RTA over 39 years.
“We predicated all of our planning numbers based on the numbers the state had given us,” said Gary Trujillo, vice chairman of the Pueblo Urban Renewal Authority. “We are the only successful RTA project they have. Now they come and drop this bomb on us.”
Complicating matters, the Pueblo City Council in May approved $14.1 million to fund the convention center expansion, with repayment coming out of RTA funds over the next 10 years.
Unlike Aurora, which is backing the Gaylord Rockies Hotel, Pueblo is heavily reliant on state money and doesn’t have a private developer as a partner.
It still isn’t clear if Pueblo will merely have to give up a windfall it wasn’t expecting in the first place or if it will come up short of its projections.
Pueblo’s estimates showed the RTA paying $707,000 in the first three years, but actual collections came in closer to $1.9 million — money the state is allowing it to keep.
Pueblo’s financial projections rely on the 24.7 percent ratio in question to reach the $43.99 million figure. A smaller percentage, in theory, would make it harder to reach that total.
And if the shortfall is large, who is responsible for filling it?
“We are hoping it doesn’t result in a lower number. We will cross that bridge if we come to it,” Arnold said.
Pueblo City Council president Steve Nawrocki said he left Thursday’s meeting reassured that the state would work to make sure Pueblo had the money it needed.
“We weren’t looking for any more or any less,” he said.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or twitter.com/aldosvaldi
