Manitou Springs involved in lawsuit over tax dispute with cog railway

A Tax Dispute Between Manitou Springs and Pikes Peak Cog Railway Reaches New Heights

A tax dispute between the City of Manitou Springs and the historic Pikes Peak Cog Railway has escalated dramatically, with the city alleging that it was misled into granting the railway significant tax breaks, and the railway claiming that the city is unfairly attempting to triple its tax rate as a form of punishment.

The Broadmoor Manitou and Pikes Peak Cog Railway, owned by the Anschutz Corp. and established in 1891, found itself embroiled in a disagreement with Manitou Springs stemming from 2017 when the railway temporarily closed for extensive repairs and renovations. A tax incentive agreement was negotiated between the city and the railway at that time.

As part of the 50-year agreement, the railway was required to make payments in lieu of taxes during its $97 million renovation from 2018 to 2021. In return, the city agreed to reimburse any annual amusement taxes exceeding $500,000 paid by the railway between 2021 and 2070, potentially saving the railway millions over five decades.

Manitou Springs claimed in a countersuit filed on Sept. 8 that it was coerced into entering the tax incentive agreement under pressure and threats from the railway, which allegedly implied that it would cease operations without a public subsidy.

The city also alleged that it was misled about ticket prices by the Anschutz Corp., stating that the actual ticket prices were significantly higher than initially indicated. This discrepancy led to the city having to reimburse a greater amount in taxes than anticipated.

In response, the Manitou Springs City Council decided not to send a reimbursement of 2024 taxes to the railway, prompting a legal battle between the two parties. The railway accused the city of bad faith retaliation and pursued legal action to seek reimbursement.

In August, the city council voted to let voters decide whether to increase the city’s amusement tax rate from 5% to 14%, a move that the railway argued would disproportionately affect its operations.

Both the Manitou and Pikes Peak Railway and the City of Manitou Springs are seeking resolution through an El Paso County jury, with a trial date yet to be scheduled.

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