CAÑON CITY — The threat of a lawsuit and a handful of Arkansas River rafting business owners angry over a new tax derailed a recent Cañon City council discussion about the latest plan to pay for operations of a new community swimming pool.
The legal questions piled up during two hours of often contentious debate punctuated by a few calls for unity in finding a solution. In the end, the meeting held Wednesday ended with a promise of a roundtable discussion sometime after council members get answers to the legal questions, which are expected early this week.
After hearing for months that local voters would not support a property or sales tax increase of any size to fund pool operations, the Cañon City Area Recreation and Park District, the city and the school district settled on asking voters to approve a 2.25% excise tax on amusements and attractions in the city. The question to enact that tax, which would raise no more than $675,000 annually, is approved and on its way to the November ballot.
And a preliminary site design for the $25 million pool, which would be paid for with a city sales tax increase approved last year by voters, was unveiled last week. In the same election, voters rejected a request for a four mill increase to property taxes to pay for operating the pool, leaving the rec district with money to build a pool but nothing to operate it.
The last step was to approve an ordinance on how the excise tax would be used if it is approved by voters. The meeting Wednesday was supposed to involve discussing a draft and providing direction to the city attorney on details.
But before it convened, council members were faced with letters and letter to citizens from Royal Gorge Route Railroad owner Mark Greksa published as a full-page advertisement in the Cañon City Daily Record.
In it, he said the railroad would be exempt from the tax under federal law and promised a “costly legal fight.” He also said that if the tax is passed, the railroad would end its support to the community, including college scholarships, support for the recreation district and event sponsorships.
His attorney repeated the threat of a lawsuit at the meeting Wednesday and was met with an angry retort from Mayor Preston Troutman.
Tension at the meeting rose as Andy Neinas, owner of Echo Canyon River Expeditions, lambasted the city for a lack of transparency and failing to inform rafting companies directly about the proposed tax.
“I do not want to be here today,” he said angrily. “I do not want to do what I’m about to do. Until now I have supported the pool, and I agree we need amenities like this in our community. But the city of Cañon City and the recreation district have forced me to be here today and you are forcing me to wear a black hat.
“This is about the Royal Gorge Route Railroad plain and simple. The city and the rec district are offering the commercial river outfitters as a sacrificial lamb to serve as a smoke screen when it comes to taxing the train.”
At issue was which businesses would be required to collect the excise tax ($2.25 on a $100 activity ticket), how it would be enforced with private tour companies or guides, whether enough would be collected if train tickets were exempt and how the Royal Gorge Bridge and Park, which is owned by the city but not in the city limits, could be included.
Defining amusements, attractions
The ballot question says the tax will be collected on “amusement and scenic rides, recreational excursions, and attractions.” Council members said constituents asked if that would include activities such as golfing or bowling.
Soon, council members realized they would need to fine tune the definitions as the intent was to tax tourism-related activities.
The draft ordinance says it would apply to activities “located, operated or commenced” within the city limits. For example, if a rafting company is located outside the city, as most are, but brings its rafts into city limits, as they often do, they would add the tax to the customer fees.
Ty Seufer, who owns Royal Gorge Rafting and zipline, noted that he’d have to add the tax to rafters’ bills but not to those using the zipline. And why not include the Royal Gorge Bridge and Park since it’s owned by the city?
“It’s muddy and it’s not fair,” he told the city council.
Neinas said in the competitive rafting business the extra fee could send customers west to raft in Chaffee County.
During a back-and-forth with Councilman Gerald Meloni about fees charged by various river outfitters, Neinas said Chaffee County already has more operators on the lower price end.
There are about 45 outfitters on the Arkansas River, he said, and their services are not all the same so there are price differences. Some customers just go with the lowest cost.
Meloni suggested that if customers are choosing based on services and reputations, they likely aren’t going to quibble over the small fee the tax would add.
“There’s so many towns in Colorado that collect an amusement excise tax,” he said. “This isn’t something new that we came up with.
“The anxiety and anger in here is blowing my mind.”
Other council members pointed out that when they talk about raising the sales tax they don’t reach out to individual business owners and asked why the outfitters hadn’t come forward with ideas during the months the city and rec district looked for new ways to fund pool operations.
The outfitters and Greksa said they support the pool and some contributed to campaigns for the pool, but no one asked for their input, even as the city considered levying a tax on their businesses.
“If they had gotten us together, we’d have figured this out in a heartbeat,” Greksa said in a phone interview. He didn’t attend the recent meeting because he was out of the country with family on a trip “planned long before any of this came up,” but watched it via Zoom in the middle of the night.
He said the city has long wanted to tax the train, even though he says it is illegal to do so under federal law. This attempt to circumvent those laws will fail, he said, and it will end up hurting other businesses, causing more division and likely leaving the city without a pool.
In an interview, City Administrator Ryan Stevens said, “I think we recognize that there’s federal exemptions but we don’t believe the train falls into those exemptions.” He declined to say more because the legal discussion was held in executive session.
In addressing one of the complaints from Greksa and others, Stevens said during the meeting that the city is trying to figure out a way to add the tax at the Royal Gorge Bridge and Park. That could include annexation or working some type of fee into a new contract with the operator. The city recently solicited proposals to run the park as the current contract expires in October 2026.
Council members said the park should be included and promised to make that happen.
No resolution
Although Councilwoman Amy Schmisseur said she was willing to stay until midnight to hash out some solutions, the council ultimately decided it needed to have more legal advice before continuing.
Regardless, there was little they could do to change the ballot question, which was due to the county on Friday.
Greksa vowed to campaign against the tax if the city continues to pursue it.
He said he offered in July, when he learned about the tax proposal, to help start a nonprofit that could accept funds for pool operations. The railroad would make a long-term commitment to donate $100,000 annually, he said in the interview.
“We have an opportunity right now to end this, and they’ll have something that’s successful,” he said. “Between the bridge, us and others who could donate — then you have people working collaboratively.”
But the offer goes away if they pursue the tax, because then there would be a legal battle, he said.
Council members were troubled by the anger directed at them over the tax, noting that none of the businesses collect sales tax because they are considered services.
And the council was left watching a rapidly ticking clock on whether the pool would be built.
“If this doesn’t work this fall we aren’t going to have a community pool,” Councilwoman Emily Tracy said.
Kyle Horne, executive director of the recreation district, said in an interview that if a sustainable operational funding stream isn’t secured this year, the delay might make it impossible to build the pool. He said they need about $500,000 annually along with what is raised by user fees and concessions.
“If we don’t start construction early next year, I don’t know if we’d have enough for the project,” he said, based on the sales tax voters approved for pool construction.
He also said he wasn’t sure the community could sustain a nonprofit that would have to raise $400,000 annually to add to the railroad donation without hurting other nonprofits. He said he learned of that idea Aug. 29.
“It’s a great idea, I just don’t know if it’s possible,” he said, noting that the decision on how to proceed is up to the city council.
Despite the glum mood as Wednesday’s meeting ended, there seemed to be a willingness to collaborate.
“There’s so many good people in this room and this is just such a contentious issue,” said Chris Moffett, president of the nonprofit Royal Gorge RIO, which advocates for river conservation, safety and recreation. “Let’s just figure this out, please, as a community.”