The Colorado Economic Development Commission called Colorado Springs officials to task Thursday for standing by a financial firm that commissioners say tried to overcharge the city.
The Colorado Springs Urban Renewal Authority is raising $30 million in a debt offering toward $73 million needed to build the , the signature piece of the
The EDC approved for the project in December 2013 but cried foul when Colorado Springs awarded the contract to raise outside money for the museum without a competitive bid.
“We were surprised they were awarded the contract,” said Fiona Arnold, the state’s economic development chief, of the authority’s decision to retain George K. Baum & Co., a municipal bond underwriting firm.
Commissioners branded the process as opaque and asked for a competitive bid so taxpayers get the best deal possible.
The Colorado Springs authority put out a request for proposals in March and posted information about the process online to improve transparency.
In the bidding, Baum offered to take 30 percent less than its initial request, even though the amount of money to be raised increased from $20 million to $30 million.
The authority still selected Baum because of the firm’s knowledge of the project and its high score on an evaluation from an independent financial adviser, said authority executive director Jim Rees.
That didn’t sit well with EDC chairman J.J. Ament, a veteran investment banker, who questioned why the city would stick with a firm that tried to overcharge it on the first go-round.
Ament questioned a $200,000 fee that Baum wanted to charge to the Colorado Springs authority if it didn’t win the bid, something he called highly unusual.
Rees said the fee was for work the firm had already done and that the city was able to negotiate it away.
Adding to the commission’s suspicions was a penalty Baum had recently received for trying to”fleece” a client, Ament said.
to settle allegations that it overcharged an unnamed Colorado school district four times the customary fee.
Rees said the authority didn’t consider that settlement when selecting the winning bidder. He said Baum’s bid was in the middle on cost but that the firm had the deepest knowledge of the project.
Baum in Denver didn’t immediately respond to a request for comment.
The CSURA board will vote next week on the recommendation to award Baum the contract. The authority hopes to complete its debt offering by the end of June.
In other business,the commission approved $6.9 million in job growth incentive tax credits to three companies.
• ZingFit, a New York startup that provides technology for the fitness industry, could receive $2.81 million if it decides to locate 156 workers in Boulder.
• A California software company codenamed “Project Corona” received approval for $2.96 million linked to the potential relocation of 193 jobs paying an average annual wage of $64,480 to Denver.
• A third company based in the Denver metro area, using the codename Project Watch could receive $1.16 million if it adds 82 jobs in an expansion in Arapahoe County rather than in Connecticut.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or @aldosvaldi
