Citizens sue city over Pikes Peak Cog Railway tax break

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Snow still covered Pikes Peak in this June 2015 view at the summit.
Brian Schmidt
MANITOU SPRINGS, Colo. – Two Colorado residents have sued the City of Manitou Springs over a deal to give a significant tax break to the owners of the Pikes Peak Cog Railway in an effort to rebuild the iconic attraction, the Colorado Springs Independent reports.

John Shada and Bob Schaeffer filed the lawsuit in district court arguing that the city council should have asked the voters before offering the railroad’s owners a excise tax cap earlier this year. The city council previously rejected a citizen’s petition asking that the tax break be voted on by local residents.

“The Cog Railway agreement will be the biggest issue to impact Manitou Springs in our lifetime. Any decision of this magnitude needs to be made by the voters of Manitou Springs,” Shada says.

In June, the city council unanimously backed a plan to cap the the amount of excise tax the railroad pays to the city annually. The tax, which is applied to amusements and other entertainment services (such as Cog Railway tickets), could not exceed $500,000 for the first four years. After that, the tax could be increased by 1.5 percent every four years. The tax incentives would be in place for at least 50 years. The city also agreed to waive taxes on equipment and materials purchased for the railroad’s reconstruction.

Earlier this year, the company announced that the 8.9-mile rail line up Pikes Peak needed millions of dollars in upgrades in order to continue operating and that it would be shut down for at least three years, possibly even permanently. The owners have determined that it will cost anywhere from $80 million to $95 million to upgrade the track, facilities, and equipment. With the help of the city, the railroad hopes to resume operations in 2020.

A hearing for the lawsuit has not yet been scheduled. Manitou Springs Mayor Ken Jaray says he is concerned that a prolonged legal battle could make the owners of the railroad reconsider their plan to rebuild.

NEWSWIRETrains News Wire

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