Mayor proposes wider uses for half-cent sales tax: economic catalyst, placemaking, and a 15% annual cap

Pueblo — Mayor Heather Graham on Monday presented a proposed amendment to the city’s criteria ordinance governing half-cent sales tax revenues, suggesting the city expand allowable uses beyond primary-job incentives to include economic catalyst projects, placemaking and measures to reduce economic leakage.

Graham said the proposed change would let the city support projects that drive new local spending and visitation — for example, site preparation for major retailers, tourism-related attractions such as an outdoor recreation facility, or infrastructure to activate commercial corridors. She said PEDCO and city leaders had discussed the changes and that the city’s current ballot language gives the council authority to set the criteria by ordinance.

The mayor’s working group proposed a guardrail: a 15% annual cap on how much of the unencumbered half-cent fund balance can be spent on the expanded categories in any single year. Using May 2025 figures, Graham said 15% of the unencumbered fund balance would have been roughly $9.4 million. The ordinance would preserve primary-job incentives while allowing council discretion to approve projects council judges to be high-impact.

Graham framed the change as a way to address stagnant growth and give the council more tools to attract projects such as destination tourism, place-making investments along the Pueblo Boulevard and other site-readiness work. She also described a recent audit of prior incentive contracts: some projects that received incentives later defaulted or left before fully meeting job or investment commitments. The administration has hired an auditor to review existing contracts and has changed contract language to favor reimbursement-based incentives rather than large upfront grants, Graham said.

Council members asked detailed questions about the proposal. Councilor Martinez asked whether the 15% cap is applied per project or per year; the mayor said the cap would be an aggregate annual limit. Several councilors asked for clear definitions of the new categories ("economic catalyst," "placemaking," "economic leakage") and how the city would prioritize candidates. The mayor said the ordinance language includes working definitions and that council would retain approval authority for any proposed use of funds.

Opposition and concern came from other councilors who urged caution. Councilor Flores and Council President Nayler stressed the importance of maintaining primary-job focus and argued the electorate should understand changes before a November vote. Several councilors warned that changing criteria ahead of the November ballot could complicate voter messaging; others said adopting the ordinance now makes the ballot clearer to voters.

Graham said PEDCO had not formally endorsed the proposed ordinance change; some board members were supportive and others preferred different options. Graham said the group decided to pursue a change to the criteria ordinance rather than alter ballot language because the criteria ordinance is easier to adjust and can be refined in future council action.

The mayor cited examples from other Colorado communities — Castle Rock and Grand Junction — that use economic incentives, land banking and investments in place-making, workforce partnerships with colleges and infrastructure upgrades to attract and retain businesses. She recommended city council consider the proposed ordinance and noted the administration is tightening contracting and auditing practices to limit write-offs from past incentive recapture problems.

No vote was taken on the ordinance in Monday’s meeting. The council asked staff to provide the mayor’s proposed language, definitions, and supporting materials for further review and public posting ahead of next meetings and the voter outreach timeline.

Speakers quoted and who spoke in the meeting are listed below.