A legal battle is brewing between the Pikes Peak Cog Railway and the City of Manitou Springs.
The Broadmoor Hotel owns the train that runs from Manitou Springs to the top of Pikes Peak.
The railway recently filed a lawsuit accusing the city of withholding hundreds of thousands of dollars it owes the railroad.
KRCC’s Kendra Carr spoke with Journalist Heidi Beedle, who is covering the story for the Pikes Peak Bulletin.
This interview has been edited for length and clarity
KRCC’s Kendra Carr: What's the background for this lawsuit? Why does the railway believe that the city owes them money?
Pikes Peak Bulletin’s Heidi Beedle: This all goes back to a 2018 tax incentive program agreement. In 2017-2018, Manitou Springs was facing a budget crisis. They entered into this agreement, where the Cog Railway paid the city $1.25 million between 2018 and 2020. And then in exchange, the city agreed that it would thereafter annually reimburse excess excise tax above $500,000 to the Cog Railway. The lawsuit basically says that during their adoption of the budget this year, they neglected to include a payment of $638,536 for this excise tax reimbursement.
Carr: Some people originally thought that this agreement between the Broadmoor and the Cog and the City of Manitou Springs was a bad deal. Does that have any connection to what's happening now?
Beedle: Yeah, I mean, a lot of people have been outspoken in Manitou about the influence of the Cog Railway and its impact on the character of the town. Current Manitou Springs City Councilor John Shada filed a lawsuit in 2019 to try to stop this agreement from going through and it was ultimately unsuccessful.
Carr: There are also some concerns about recent changes with neighboring Colorado Springs legalizing the sale of recreational marijuana. What does marijuana have to do with all this?
Beedle: Manitou Springs' economy is dependent on the Cog Railway and tourism. The other piece of that is taxes from recreational marijuana in Manitou Springs. For a long time, Manitou Springs was one of the only municipalities in El Paso County that offered recreational or retail marijuana. These two recreational marijuana facilities brought in upwards of half of Manitou Springs' tax revenue.
With Colorado Springs legalizing, Manitou Springs is worried that this is going to cause a significant impact on that tax revenue base. The initial plan was to tentatively hold the money and then reassess later.
During a November 2024 meeting, City administrator Denise Howell said, “There's a lot of questions yet. I recommend that about March, hopefully March or April, we have a better sense of what's going to happen.”
So, they put it on hold and were going to come back to it. They hadn't by the time the Cog Railway filed their lawsuit.
Carr: The city is saying that they need that money for improvement projects. What are the improvement projects they need that money for?
Beedle: The main one is the Ruxton corridor renovation, which in Manitou Springs is the main road to access the Cog Railroad. It has a lot of aging water infrastructure, underground pipes and stuff that take utilities to the cities that are all on a very steep grade. Ruxton Avenue itself is a very narrow street. In addition, they have a lot of utility power lines that are above ground that could potentially pose a fire hazard.
So, ideally, they would close Ruxton for a period of time, tear everything up, and replace all of the old infrastructure. Bury those overhead power lines, widen things, add pedestrian sidewalks and improve safety and everything like that. Unfortunately, the budget isn't quite there.
There was another city council meeting last year where they were kind of discussing options and they could do one or the other. They could update the utilities, they could bury the power lines, but they couldn't do both and they couldn't do it for the entire stretch of Ruxton Avenue.
This project has been ongoing since at least 2021, since this tax excise agreement. That was part of the deal of: ‘Well, we'll give you this tax money and then you guys can fix up Ruxton and it's like a win-win situation.’ But there's been a lot of employee turnover in Manitou Springs.
A couple of weeks ago, they hired their third city engineer in three years. After the previous proposal by the last city engineer, council didn't pick any of the options, and the mayor asked him to go back to the drawing board. He resigned shortly afterward.
Carr: Do we know what happens next?
Beedle: The lawsuit will work its way through the courts and they can either settle or take it to court and we'll see what happens.
