by Charles C. Bonniwell
The Colorado Regional Tourism Act (RTA) was sold to the towns and communities across Colorado as a way to boost tourism throughout the state. It was touted as matching up well with Governor John Hickenlooper’s so-called “Bottom Up Economic Plan” highlighted in his tour across Colorado just after being elected governor.
But small towns and counties are now wondering if they have been hoodwinked into paying hundreds of thousands of dollars in costs from struggling budgets to pursue RTA applications when there was never a chance of approval. Hickenlooper appointee Ken Lund is coming under increasing fire as the man behind the scenes fixing the process in favor of the proposed already heavily tax-subsidized Gaylord Entertainment convention complex in Aurora.
The controversy over the RTA and the battle royal at the State Legislature by the small government entities against entrenched interests, has resulted in bruising legislative losses by the popular governor that have largely escaped notice by the mainstream press. The conflict could result in a rift between the Hickenlooper administration and various small communities that feel they have been cheated by the RTA process.
The RTA was originally approved by the state legislature in 2009 providing rebates to qualifying entities of a portion of the state sales tax to be used by them to obtain bonds for infrastructure and project construction costs. In theory the rebate would not cost the state anything as the approved projects would be bringing in new tourist dollars that would not otherwise exist.
The 2009 legislation was considered the brainchild of the highly connected law firm of Brownstein, Hyatt, Farber, Schreck LLP and members of the business group Colorado Concern. It was considered a thinly veiled attempt to direct funds to Aurora for a NASCAR track proposed by Colorado Concern member Steve Schuck.
But the NASCAR track fell through and by 2011 the only applicant for the tax rebates was the city of Pueblo. Governor Hickenlooper indicated he wanted to open the process up so that two projects a year could be approved for three years. It is unclear what, if anything, was promised to the city of Pueblo, but having the highly politically connected Brownstein law firm as its counsel raised questions in this regard. The Colorado Legislature approved a bill to amend the RTA in line with the governor’s wishes.
The Hickenlooper administration strongly encouraged local governments across the state to apply to the Colorado Economic Development Commission (EDC) for approval of tourism-related projects under the RTA assuring them that a fair and open process would be undertaken. While it was originally anticipated that 20 or more applications would be submitted, in the end only six applications were received.
Limited Number Of Applicants
The limited number of applications was due in part to the enormous time and cost that was required of an applicant which was difficult for small governmental entities to commit to in tough economic times. In addition there was the lingering fear by some that the process was going to be rigged in favor of Gaylord, notwithstanding assurances by the Hickenlooper administration to the contrary.
Not only did the applicants have to hire expensive economic consultants to prove the economic viability of their projects but each applicant also had to pay more than $23,000 to the state for the state’s analyst, Economic & Planning Systems, Inc. (EPS), to review their applications and another $8,500 each for any amendments they might submit. In the end each application cost well over $100,000 dollars in time and out of pocket costs. For cities like Aurora the cost was not large, but to small cities, the money had to be taken from other badly-needed city priorities.
Originally Denver and Aurora submitted a joint RTA application to move the National Western Stock Show to Aurora and build a 1,500-room hotel and convention complex in Aurora for Gaylord Entertainment. Gaylord had already gotten the city of Aurora to agree to rebate to them 100 percent of the sales, lodging and property taxes related to the proposed convention center worth $200 to $300 million and they were seeking another $150 million as part of the RTA application. The raid on the public treasury by Gaylord Entertainment was considered obscene by some commentators.
Outrage by the Denver City Council, led by Councilman Charlie Brown, at the moving of the National Western Stock Show out of Denver, forced new Mayor Michael Hancock to withdraw Denver’s participation from the RTA application, leaving Aurora and five other applicants to compete.
The other applicants were Douglas County for a prehistoric archaeological museum and sports complex; Estes Park to redevelop and renovate the historic Elkhorn Lodge and build a 50-acre, year-round adventure park; Glendale for an outdoor Riverwalk entertainment complex; Pueblo, for a downtown area that would include a bull riding training center and expanded convention center; and Montrose County, which was proposing 141 different tourism and commercial projects.
Suspicions were raised when the original applicant meeting was moved to the Brownstein firm’s offices where the only representative for both Gaylord/Aurora and Pueblo was the Brownstein firm itself. The word on the street was that Gaylord Entertainment was taking Pueblo under its wing and the only two applicants that would get RTA approvals would be Gaylord and Pueblo and the rest of the so-called process was going to be a sham.
The byzantine nature of the process under the RTA only heightened the suspicions. As stated in The Denver Post on February 11, 2012, many people including the applicants were “scratching their heads as they seek to understand how the selection process will work” as the “legislation allowing for RTA funding did not specify a process for awarding it.”
The applicants were told that they would be submitting their applications to the EDC for approval which is composed of nine prominent Coloradans, including former Denver Mayor Wellington Webb and noted Colorado businessman Dick Robinson, as well as Rockies’ owner Dick Monfort. Strangely Al White, director of the Colorado Tourism Office, has no role relating to the Colorado Tourism Act.
Enter Ken Lund
But the EDC itself comes under the umbrella of the Colorado Office of Economic Development and International Trade (OEDIT) headed by Ken Lund who was appointed by Governor Hickenlooper. Lund was the former managing partner of the law firm of Holme, Roberts and Owen, LLP and critics pointed out that he had no direct economic development experience to bring to the position.
Lund intimated that he and not the EDC was the real decision maker concerning which RTA projects would be approved. He declared, “I want to go through it very carefully. I want to hear from all the applicants and the public comments.” He declared that on May 11 he would “make his recommendation on which projects, if any qualify for funding.” Why the EDC needed his recommendation at all was unclear as the EDC would hear all of the evidence directly itself.
To the other four applicants proof of less than a transparent or fair process started to become obvious. The state analyst EPS declared that the small cities and counties had misinterpreted the law and the only projects or portions of projects that were directed to bringing in out-of-state tourists would be eligible. EPS noted it made its determination in consultation with the state. It was believed that Lund was the one directing or influencing the only “out of state” hypothesis.
The small cities and counties were never told ahead of time of this working hypothesis. They did not believe it was a coincidence that only two projects primarily targeted to out-of-state tourists were Gaylord Entertainment and Pueblo.
That interpretation appeared to directly contradict the RTA statute itself which clearly permitted different types of tourism dollars to apply.
Montrose was particularly incensed by the actions of OEDIT under Lund. The Watch newspaper reported that “frustration is mounting across the state as a regional tourism bill continues to be ‘misinterpreted’ by state agencies.” Richard Harding, on behalf of the group Montrose Citizens For Funding Our Future, stated that Lund’s OEDIT told them that the Montrose application called “Great Colorado Adventures,” which included 141 possible projects, should be retracted which Montrose adamantly refused to do.
State Representative Don Coram from the Montrose area declared that it was not the applicants who are at fault, but rather OEDIT that needed to follow the actual state statute.
EPS declared that Montrose’s plan would generate only 12 tourists a year for 30 years. The report outraged Representative Coram who stated, “How do they come up with a figure like that. More come here by taking a wrong turn on Highway 50. More would come if only one of those 141 projects happened — if none of those projects happened.”
In conclusion he stated, “In my opinion, the report from the third party analyst needs to be shredded.”
New Proposed Legislation —
HB 1056 — Defeated
Realizing that the RTA statute did not clearly comport with his “out-of-state tourists only” hypothesis, Lund sought to have the statute changed. House Bill 1056 was introduced, sponsored by Lakewood Democrat Representative Andy Kerr who acknowledged to the Pueblo Chieftain newspaper that he got his directions from the Hickenlooper administration. A spokesman for Governor Hickenlooper also confirmed that the governor was in support of HB 1056.
The bill would have changed the RTA in line with Lund’s hypothesis that only projects specifically directed to out-of-state tourism would be eligible for approval, i.e. Gaylord and Pueblo. Critics pointed out that Gaylord’s and Pueblo’s claims about bringing in new out-of state-tourists was, in whole or in part, subject to doubt.
The new proposed legislation also granted to the analyst EPS significant powers in derogation of the Commission itself. Since EPS was under Lund’s control it was deemed another effort by Lund to totally control the process in favor of Gaylord Entertainment.
Outraged that the time and money spent on their applications was being destroyed by backdoor legislation, Estes Park, Glendale, Montrose County and Douglas County sent representatives down to lobby against HB 1056. The odds of defeating a bill backed by a highly popular governor with Lund calling the shots behind the scenes were considered slim. At a hearing on February 14, Lund testified strongly endorsing the bill claiming he had personally listened to the original legislative sessions concerning the RTA (presumably on tape) in coming up with his out-of-state tourism only hypothesis. Douglas County and Glendale testified in contradiction of Lund.
Lund was apparently not very convincing before the legislative committee. Representative Bob Gardner of Colorado Springs declared, “What this bill would do is undervalue the driver of local and regional tourism as an economic impact.”
In a David versus Goliath type victory, the bill was defeated in the House Appropriations Committee delivering a stunning blow to the sitting governor and his OEDIT Executive Director Lund, who was reportedly livid at his legislative humiliation.
The small entities introduced their own legislation, Senate Bill 124, sponsored by State Senator Ted Harvey which would allow all six present projects to be considered this year and prevent OEDIT from accepting new applicants until the existing applications had been approved or denied. Lund believed that he had the bill defeated in a Senate committee, but State Senator Pat Steadman, in what some saw as an act of extraordinary political courage, bucked his party’s leadership and voted for SB 124 allowing it to pass by one vote. Before the full Senate, SB 124 passed by a wide margin, 26 to eight, and now is being considered by the House.
But despite the small towns’ and counties’ surprising victories at the Capitol the odds that their projects will be approved still appears small. Lund controls OEDIT and has declared that despite his extreme bias against all the projects other than Gaylord and Pueblo, he will make recommendations to the EDC on which projects to approve.
Some individuals are looking at whether state government ethics provisions prohibit a clearly biased and conflicted government employee like Lund from making recommendations to a commission seeking purported objective advice.
If at the end of this long and controversial process Gaylord and Pueblo are the only approved projects under RTA this year, critics assert that it will severely damage the reputations of Lund, OEDIT and EDC for years to come and bring into disrepute the governor’s “Bottom Up Economic Plan.”