Opportunity zones for Pikes Peak region met with optimism, disappointment, skepticism
Author: Conrad Swanson - April 12, 2018 - Updated: April 12, 2018
The U.S. Treasury Department certified seven opportunity zones in Colorado Springs and one in El Paso County this week, as part of a provision tucked into the tax bill passed by Congress late last year.
The zones are meant to attract private investment to areas lagging economically, but, once again, southeast Colorado Springs has been mostly passed over.
The city’s southeast includes the majority of census tracts suggested for the program, and city leaders have repeatedly said the area needs a spark to share in the economic boom being enjoyed by much of the rest of the city.
One county official involved in the process remains skeptical that the program will work, although city officials say they’re optimistic investment will follow, bringing jobs and higher property values and tax revenues for local governments.
The zones were established in low-income census tracts and allow investors to shelter some capital gains – profits from the sale of stocks, assets, real estate and more – from taxation for several years, said Bob Cope, the city’s economic development officer. That incentive is meant to draw investors to launch businesses, build housing options and more.
Only one of Colorado Springs’ seven opportunity zones is fully within the southeast quadrant. The area’s representative, Councilwoman Yolanda Avila, said she was disappointed by the final selections.
Avila said she expected at least three zones in her district and called the final selections a betrayal.
About 50 census tracts in the Pikes Peak region, which includes El Paso and Teller counties, qualified as potential opportunity zones, said DeAnne McCann, executive director of El Paso County Economic Development.
Representatives of Colorado Springs, El Paso County, the Chamber & EDC and the City of Fountain participated in submitting a list of 20 potential census tracts to the Colorado Office of Economic Development and International Trade, which pared it down and submitted the final tracts for certification. A dozen of the 20 were situated either fully or partially within Avila’s district.
But Jeff Kraft, OEDIT’s director of business funding and incentives, said his office relied heavily on input from local government in choosing 126 tracts from the more than 500 eligible in the state.
Avila expressed her displeasure to Kraft, but the zones can’t be altered now, he said.
“It was locally driven and, in the end, a local prioritization,” Kraft said.
Before the eight tracts in the region were finalized, Cope had a chance to offer additional input, Kraft said.
“The southeast was our number one focus and we wanted to put a lot of emphasis on it,” Cope said.
Though he suggested including more southeast tracts, Cope did not offer to swap any other tracts to make that move possible, Kraft said.
The one zone fully in the southeast is east of South Academy Boulevard and south of Airport Road. Part of a second tract, on the south border of Hancock Expressway, is partially included, though it extends into Fountain’s city limits.
The other zones selected encompass existing projects such as the National Cybersecurity Center, the Olympic Museum, the Catalyst Campus and the Colorado Springs Airport.
Another area in El Paso County, northeast of the intersection of North Powers Boulevard and Airport Road, was selected for its potential for new affordable housing projects, Cope said.
The final selections are the result of an ongoing culture in town, Avila said, noting that her district contains all nine of El Paso County’s census tracts in which minorities are the majority of the population.
That culture “is a way of not supporting my district,” she said. “Half (of the southeast) could have been an opportunity zone.”
Avila accused city and state officials of trying to placate her with “doublespeak.”
But Cope said it was important to spread the zones around town in an effort to balance different areas’ needs and available opportunities.
Despite the southeast’s preponderance among the city’s suggested tracts, Cope questioned whether the area has the greatest need.
Mayor John Suthers said he is satisfied with the seven zones the city got, considering that Gov. John Hickenlooper’s focus was on rural areas.
Existing opportunities in the newly certified zones are what the city needs to attract investment, Suthers said. The program is meant to give the areas a nudge in the right direction, rather than start a project from the ground up.
Cities are “going to have to present an opportunity that looks like an investment, rather than a philanthropic opportunity,” he said.
While McCann said she believes the zones are spread fairly throughout the region, the discussion might be moot because the program might not work. Similar programs in the past did little.
“The Clinton administration tried to push opportunity zones and they didn’t work then,” she said. “This is still a very, very nebulous program. Most high net worth individuals, I don’t know if they’ll invest.”