Gov. Roy Romer cut a deal that could cost Colorado as much as $609 million from the state's general fund to land United Airlines' huge maintenance facility, he announced Thursday.
The governor said he will call a special session of the Legislature to approve the proposed agreement, which would bring 6,500 to 10,000 jobs to the state.After meeting with 50 business leaders from around the state Thursday, Romer announced he endorses a tax-incentive package that would land the $1 billion facility and, in effect, commit United to Denver's new airport.
The incentive package would rank as the largest ever offered to lure a private company to the state.
The project is important to Colorado's economic future and is unusual enough to warrant special consideration, the governor said.
"If you look at the long-term future of Colorado, this ought to be a part of it."
But House Speaker Chuck Berry disagreed. The Colorado Springs Republican said the Legislature probably would view Romer's package as "problematic."
The 30-year incentive package includes $2,000 per employee each year - in tax credits, cash payments or a combination of the two - for most of the jobs generated by the facility.
For example, if United's corporate tax payments fall short of $2,000 per employee, the state would pay United the balance. And if United has a money-losing year (as it did in 1990), the airline probably would pay no corporate taxes - and Colorado would have to pay United the full $2,000per employee from the general fund.
Because the facility will generate at least 6,500 jobs, the state estimates Colorado's minimum liability would be $427 million. The agreement would apply to a maximum of 10,000 new employees, leaving Colorado open to costs of $609 million over 30 years.
Romer stressed the state's liability in terms of "net present value" is $160 million to $201 million. Net present value factors in inflation and the money's ability to generate interest.
Other cities and states vying for the facility are offering packages that include cash with a present value of about $150 million, Romer said. He acknowledged the Colorado proposal would be a major one but said it had to be competitive.
"I wanted to reduce it more than I did," he said. "But the competition is fierce."
Romer said he also considered the extra cost of services associated with adding so many people to the state. He is waiting for final figures, but estimates it will cost about $1,100 to $1,600 per employee per year for services such as schools and roads.
"But this is a stimulator of a whole lot of economic growth," he added.
It also would virtually assure United's presence at the $2.1 billion airport, since United says it would put the facility there.
Berry hadn't seen Romer's proposal as of Thursday afternoon, but he said, "If it contemplates cash payments out of general funds . . . that's going to be a real problem getting the Legislature to support. And I think people would find it offensive."