March 1, 1996

Springs eco-devo puts Fort Collins to shame

Christopher Wood

Rockwell International Corp. recently announced its intention to build a new $2 billion semiconductor facility in Colorado Springs. This brings a sharp contrast to the jobs-creation problem faced by Northern Colorado.
The Loveland expansion of Colorado Memory Systems, now a division of Hewlett-Packard Co., may be the most notable achievement in base-jobs creation for the tri-city region during the entire decade of the R90s.Colorado Springs’ economic-development community rallied to overcome recent Department of Defense cutbacks. It succeeded in recruiting a company that creates technology for the future. Their new base jobs will bring direct payroll dollars as well as create innumerable spinoff businesses. The economic energy within El Paso County burns brightly.
Some of the Springs’ tools attracting Rockwell included:

  • Location in the El Paso County Enterprise Zone.
  • Favorable local tax structure.
  • A growing engineering school at the local University of Colorado campus.
    The combination of enterprise-zone tax credits and a favorable tax package closed the $2 billion investment. Remarkably, their local governments were willing to work together and to forego immediate and short-term tax rewards, trading them to promote long-term economic stability.
    While Colorado Springs worked to bring a new business to sustain its economic future, the Fort Collins City Council has debated endlessly on how to strangle local jobs creation. Estimates show that local Springs governments will collect less than $1 million in sales and use taxes from Rockwell’s equipment investment. If the same facility were to locate in Fort Collins, the current local 3 percent tax structure would mean $60 million in sales and use taxes for the same equipment investment of $2 billion. Such substantial tax differences kind of bring a new ring to “Pikes Peak or Bust.”
    Even now, with the current proposal of reducing its use taxes by $200,000 on the first $50 million of equipment purchases, some will say that Poudre Riverville is giving away the farm. However, even with this modest concession, the City still wants to collect its $1.3 million in use taxes on that $50 million purchase.
    Of course, that limited concession is available only to businesses already in town for more than three years. Next, to be eligible, the business cannot grow its employment base by more than 10 percent. Further, the initial definition of manufacturing is so restrictive, it will scarcely apply to manufacturing companies intending to function in the worldwide economy of the next century.
    Collins’ Council apparently intends to play double jeopardy with business and economic expansion — first, by asking business to play roulette with a complex and unpredictable planning and zoning process. Then, if the business is successful with the P & Z maze, the City will take away any use-tax concession when the business becomes so successful that “too many” jobs are created.
    The message to business at least in Fort Collins is becoming clear: Creation of new jobs will be severely penalized.
    Unfortunately, the action of the Fort Collins City Council to restrict future business expansion is a reality. Unless this trend is stopped, Northern Colorado’s future economic vitality is at risk of becoming “or bust!”
    Former Fort Collins mayor John Knezovich is a certified public accountant.

    • Rockwell International Corp. recently announced its intention to build a new $2 billion semiconductor facility in Colorado Springs. This brings a sharp contrast to the jobs-creation problem faced by Northern Colorado.
    The Loveland expansion of Colorado Memory Systems, now a division of Hewlett-Packard Co., may be the most notable achievement in base-jobs creation for the tri-city region during the entire decade of the R90s.Colorado Springs’ economic-development community rallied to overcome recent Department of Defense cutbacks. It succeeded in recruiting a company that creates technology for the future. Their new base jobs will bring direct payroll dollars as well…

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