We can follow the misguided path that has led state officials to purchase the Stanley Hotel for a cool $475 million plus interest, and we want to put up some serious roadblocks to make sure future public officials don’t follow.
Colorado’s government should not be in the hotel and hospitality business.
Just like how our government shouldn’t be in the business of underwriting film festivals with millions of dollars in taxpayer money.
But here we are, in need of a drastic course correction.
The Stanley Hotel is uniquely Coloradan. Separate plans are underway to use state-tax dollars to build a Stanley Film Center to honor horror films like The Shining, which made the Estes Park Hotel far more than a historic lodging option for those headed to Rocky Mountain National Park.
The Sundance Film Festival will bring millions of dollars in revenue to the Boulder-area as 60,000 affluent tourists descend on the town for one of the world’s pre-eminent independent film screenings.
And yet, we can confidently say that these two deals – purchasing The Stanley and giving tax credits to Sundance – stretch the state’s mission of economic development and historic preservation too far.
We can see the writing on the wall with The Stanley Hotel. Originally the deal was slightly different but still concerning.
Arizona’s Community Finance Corporation was to act as a middleman – a pass-through if you will — that would oversee the purchase and updating of the facility. According to the nonprofit’s website it exists solely to facilitate these type of government : “The governmental entity typically takes possession of the completed facility when construction is complete and begins paying base rent equivalent to the debt service. In most cases, the project financing is paid back over time through lease payments and ownership of the project transfers to the governmental entity for a nominal cost when the debt is retired.”
But the middleman was cut out of the deal – perhaps for the better — and now Colorado will purchase the hotel through its own subsidiary. Our eyebrows are raised.
The executive director of the Colorado Educational and Cultural Facilities Authority was optimistic that not only could they pay off the debt but that there would be a share of profits remaining after the fact to help fund CEFCA’s main mission of helping other Colorado cultural and educational facilities with needed bonds and loans.
We see a vast difference between CECFA taking on the risk of issuing bonds to private schools and charter schools to build or upgrade their campuses, and taking on the risk of operating a hospitality business through a subsidiary. And where does this slippery slope end. Will the authority now rescue the Brown Palace in downtown Denver from its financial turmoil? And what if the Broadmoor in Colorado Springs suffers a devastating loss of business due to some unforeseen event?
Colorado should be investing in our history, heritage, and culture. But passing legislation specifically so CECFA can overstep its original intent of helping to finance independent projects feels like a risky precedent to set.
As does the precedent that would be set by House Bill 1005, a narrowly written tax credit that would only ever be available to the owners of the Sundance Film Festival should they decide to bring their 11 day event to someplace in Colorado. The tax credit would be fully refundable – meaning Sundance wouldn’t have to actually have any Colorado tax liability to get the cash – and would be worth $34 million over 10 years. In tax year 2027, the festival operators would get a $4 million check as long as they had 100,000 in-person ticket sales.
The bill is exactly the kind of economic development arms race that Utah and Colorado should not engage in. If Utah is able to keep Sundance, Colorado should be happy for our neighbors. If Sundance comes to Colorado, we should be thrilled at the opportunity, not wondering for a decade whether they would have come without the bag of cash.
It’s not too late for Colorado lawmakers to correct course and kill House Bill 1005, and we’ll just have to wait and see if getting into the hospitality business in Estes Park is as bad of an idea as we suspect it is.
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