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Mayor proposes wider half-cent sales-tax uses to speed development; council presses for safeguards
Summary
Mayor Graham proposed allowing the half-cent sales-tax fund to finance "placemaking," prevent economic leakage and back large sales-tax generators, offering 15% of the unencumbered balance in a year as an example; council members asked for stricter oversight, repayment guarantees and clearer metrics before final approval.
Mayor Graham on Feb. 17 asked Pueblo City Council to expand how the city's half-cent sales-tax economic-development fund may be used, proposing three new eligible categories: placemaking projects, actions to prevent economic leakage (land and infrastructure work to keep retail and large sales-tax generators in Pueblo), and support for "economic catalysts" that are not strictly primary-employer hires.
The mayor framed the change as a tool to speed infrastructure and recruit businesses stalled by permitting or utility delays. "The city would go in, we would pay for the infrastructure, and we would enter into agreements with each developer over 10 to 15 years," Graham told the council, saying the city would seek reimbursement or contractual payback rather than simple giveaways.
Why it matters: the half-cent fund currently limits incentives to primary-job creation; councilors and staff argued that the city has missed opportunities for sales-tax generators (retail, restaurants and tourist destinations) because projects needed upfront infrastructure that private developers were unwilling or unable to finance. Using the fund for land assembly, signalization, sidewalks or utility extensions could bring major chains and destination projects into Pueblo and keep local spend in the city.
Councilors sought clarity and guardrails. Graham presented an example cap of 15% of the unencumbered fund balance in one year (at the time of discussion staff used an illustrative unencumbered balance of about $62 million, making 15% roughly $9.4 million in that scenario). Several council members said the example should not be interpreted as an automatic allocation and pressed for stricter contract terms and oversight.
"I have a lot of problem with it. I think you're in the fiduciary lane of the council and you're the executive branch," Councelor Gomez said, urging caution and stricter repayment terms. "I'm very concerned about the difference between a retail job and a primary job," he added, noting retail generates sales tax but not the same wage or secondary-job outcomes primary employers deliver.
Staff described new internal controls. Graham and staff said the finance department now has a dedicated accountant to review agreements and collect repayments; moving forward mayoral staff proposed paying incentives on a reimbursable schedule tied to documented hires or milestones rather than upfront lump sums, and requiring collateral or enforceable development agreements when appropriate.
What comes next: The ordinance amendment had appeared on a prior first reading and was scheduled for final action on Feb. 23. Council members directed staff to return with clearer metrics for measuring outcomes, sample contract language (including collateral and clawback mechanics), and estimates for particular projects before adopting any broader spending authority.
Ending: Council did not adopt the ordinance at this work session; staff will bring follow-up materials and the item was scheduled for the Feb. 23 final-reading agenda.
