LANSING — The House Michigan Competitiveness Committee passed a bill Wednesday that would siphon $1.9 million a year in tax revenues that are earmarked for Cobo Center and shift that money to recreation projects in northern Michigan, including a ski jump in Ironwood that hasn’t been used for that purpose since 1994.
The shift is being pushed by a group of Upper Peninsula entrepreneurs and lawmakers who are hoping the money can be used to make improvements to the Copper Peak ski jump so it can become an attraction for world-class athletes and Olympians.
“When we look at economic development as a state, we need to look at the state as a whole. This bill is a great step in the right direction that economic development is happening all across the state,” said state Rep. Lee Chatfield, R-Levering. “If the residents of my district are going to pay some of these fees, they should receive some of the benefits.”
But Democrats, Cobo Center officials, and the county executives of Wayne, Oakland and Macomb counties oppose the bill, saying that any diversion of money from Cobo’s coffers could slow the convention center’s recovery, just as the facility is beginning to operate in the black.
Patrick Bero, the Detroit Regional Convention Facility Authority’s CEO, said bondholders purchased bonds for Cobo with the understanding that they were backed by three solid revenue sources: a hotel and motel tax on rooms in Wayne, Oakland and Macomb counties, a 4% excise tax on liquor sales across the state and $15 million in cigarette taxes collected from across the state. Any diversion of this money could impact Cobo negatively, he said.
The liquor tax is looked at as the security on the Cobo debt and is ultimately returned to the counties where the tax revenue is generated, with 1% added. If there is anything left over from the three sources of revenues after the annual debt service and operating expenses are paid, that excess goes into paying off the debt early
A disruption of that formula could cause the bonds used to complete a desperately needed rehabilitation of the convention center to be downgraded and the interest rates on those bonds to rise, Bero said, adding that he’s working with the Copper Peak boosters to come up with an alternative source of funds.
But the Copper Peak backers, who want to return the facility to the glory of ski jumping that ended in 1994, said $14 million in improvements is needed at the hill to attract what they hope will be thousands of tourists and millions more watching ski jumping competitions across the globe.
The $1.9 million annual shift of funds would go into a Northern Michigan Sports Commission that hasn’t been created yet, but would award grants to recreation projects across northern Michigan. The bulk of the first year’s tax shift would go to Copper Peak.
The ski jump hill has become a popular tourist attraction for people who want to pay $20 for one of the most spectacular views in the Midwest with views of Lake Superior and the Upper Peninsula, as well as the states of Minnesota and Wisconsin. But it’s a stomach-churning journey to get to the top, including an 800-foot chair lift ride to the base of the jump, an 18-story elevator ride to the main observation deck and then an eight-story climb up a metal-grate staircase to get to the ski jump starting platform and the 360-degree view.
The bill — HB 5134 — will not get a vote in the full House of Representatives this year. And it will face a challenge next year with both Republican and Democratic elected officials in Wayne, Oakland and Macomb counties opposed to the bills and urging state lawmakers from their counties to reject the plan.
IRONWOOD – On November 29, 2017, Copper Peak’s Fundraising Co-Chairs, Billy Demong and Bob Jacquart, along with Copper Peak’s Marketing Director, Kassi Huotari, traveled to Lansing, MI, to testify on behalf of the future of Copper Peak. The House Competitiveness Committee was briefed on Copper Peak, a man-made “ski flying” launch in the western Upper Peninsula, more specifically Ironwood, MI, that was built in 1970, closed in 1994 and is coming back through a locally-led initiative. Demong told lawmakers last month that Michigan is on the cusp of becoming an international destination for world-class athletes that will attract thousands of visitors to the Upper Peninsula and millions of viewers from around the world. “We are very focused on getting more Americans back on the (medal) podium by having the best training facility. That’s a huge competitive advantage,” he said.
To further Copper Peak’s endeavors, State Representative Beau LaFave, R-Iron Mountain, is sponsoring HB 5134, legislation that would steer money from the Convention Facility Development Fund to a new Northern Michigan Regional Tourism and Sports Fund.
“LaFave thinks the entire state should benefit more from taxes paid that now only support Cobo Center in Detroit. “I think this is an appropriate area to grab the funding because the entire state of Michigan is contributing to the liquor and cigarette tax, but the entire state is not getting the benefit of that,” he said during a hearing of the House Michigan Competitiveness Committee.
As of December 13, 2017, HB 5134 has passed the House Competitiveness Committee and now will go to the Senate and House floors, respectively. After passing through the Senate and House floors, the bill will go off to the Governor for his final approval. This attempt at bringing ski jumping back to Copper Peak is the farthest this project has progressed in over 23 years.
Pictured above, left to right: Kassi Huotari, Billy Demong, State Representative Beau LaFave and Bob Jacquart at the House Competitiveness Committee Hearing late November in the Michigan State Capitol Building
LANSING — The imagery is majestic: a solitary ski jump rising more than 267 feet into the sky from the top of Chippewa Hill, sprouting from an Upper Peninsula forest, surrounded only by trees and a vibrant blue sky.
Even though it hasn’t been used for ski jumping competition since 1994, Copper Peak in Ironwood could be on the verge of becoming an international attraction for world-class athletes and aspiring Olympians.
But northern Michigan entrepreneurs and outdoor sports enthusiasts need some quick cash to make the dream a reality. So they’ve enlisted a couple of Upper Peninsula lawmakers to scour the state for some revenue. Their proposal: Tapping nearly $2 million a year in tax dollars that have been earmarked for Cobo Center in Detroit, 607 miles away from the ski jump.
“The international Olympic community is interested in Copper Peak,” said state Sen. Tom Casperson, R-Escanaba, who has sponsored the bill. “We think what we’re asking is reasonable and very fair and we have a project ready to go.”
Billy Demong, the first American to win a gold medal in Nordic skiing during the 2010 winter Olympics in Vancouver and the executive director of USA Nordic Sport, is helping to raise money for the Copper Peak project. He told lawmakers last month that Michigan is on the cusp of becoming an international destination for world-class athletes that will attract thousands of visitors to the Upper Peninsula and millions of viewers from around the world.
“We are very focused on getting more Americans back on the (medal) podium by having the best training facility. That’s a huge competitive advantage,” he said. “I want to spend more and more time in the Midwest, predominantly in Michigan.”
The message from officials at Cobo and the regional authority that runs the convention center is clear: Keep your mitts off our cash.
“It’s not the $1.9 million, it’s the precedent,” said Patrick Bero, CEO of the Detroit Regional Convention Center Authority.
The companies that purchased the bonds did so with the understanding they would only be used to pay for the rehabilitation of Cobo, Bero said, and those bonds are secured by taxes on hotels and motels in Wayne, Oakland and Macomb counties and taxes on liquor and cigarettes across the state. Any change to that could cause interest rates on the bonds to increase.
The county executives of Macomb, Oakland and Wayne — Mark Hackel, L. Brooks Patterson and Warren Evans — also have written lawmakers to say that any diversion of revenues from Cobo could put a halt to the positive progress the convention center has made since 2008, when there were only two major events at the facility.
Copper Peak
Some call it ski jumping. Some call it ski flying. And especially during Olympic competitions, millions can’t take their eyes away from the gravity defying men and women who launch themselves from a ski jump and fly hundreds of feet through the air before touching down on a landing hill. Stefan Kraft of Austria holds the current world record, jumping 253.5 meters — or 832 feet — in Norway in March.
At Copper Creek, located in the northwest corner of the Upper Peninsula with spectacular views of Lake Superior and the states of Wisconsin and Minnesota, the ski jump was built in 1969 with the hope of attracting local and international competitions. Between 1970 and 1994, only 10 ski jumping competitions were held there, however. Austrian ski jumpers Mathias Wallner and Werner Schuster hold the record for the longest jumps at Copper Peak when they both soared for 518 feet in January 1994.
But that was the last competition for Copper Peak. It has since become a popular tourist attraction for people who want to pay $20 for one of the most spectacular views in the Midwest. But it’s a stomach-churning journey to get to the top, including an 800-foot chair lift ride to the base of the jump, an 18-story elevator ride to the main observation deck and then an eight-story climb up a metal-grate staircase to get to the ski jump starting platform and the 360-degree view.
Now the Copper Peak Board of Directors wants to rehabilitate the ski jumping hill to its former glory. Its plans will cost $14 million and include leveling the hill a few feet to meet International Ski Federation guidelines, adding stands for coaches and judges, adding a plastic surface to the actual ski jump and landing hill so that athletes can train at Copper Peak in the summer and completing some other infrastructure improvements leading up to Chippewa Hill.
“We’ve got excellent support from the international ski jumping community,” said Charles Supercynski, president of the Copper Peak board. “We see it as a very important construction project that will enhance the area. This is huge for us. We only have 16,000 people in the county, so it would be enormous for us economically and for the state. It would shed the international spotlight on Michigan and on this community.”
Robert Jacquart, a U.P. businessman best known for his ownership of the company that makes Stormy Kromer hats, is all in on the project.
“I saw a vision that I would get a call some day from the governor thanking me for what I’m doing for our state,” he told lawmakers. “This is the most-watched sport in Europe in the winter. And if there are business executives watching ski jumping and seeing that Michigan is involved, somebody is going to call and say I want to do business in Michigan. Every ounce of me as a businessman believes that.”
The tax shift
The plan would be to shift $1.9 million a year from revenues earmarked for Cobo into a fund that hasn’t been created yet, but would benefit northern Michigan recreation projects. The bulk of the money, at least in the first year, would go to Copper Peak.
“We’re still struggling in the Upper Peninsula and we’re trying to shape ourselves so we can be a part of the state’s recovery as well,” Casperson said. “We try to promote things that make sense for northern Michigan.”
State Rep. Beau LaFave, R-Iron Mountain, who sponsored the House version of the bill, thinks the entire state should benefit more from the taxes paid — liquor and cigarette taxes as well as the hotel/motel tax paid in Wayne, Oakland and Macomb counties — that now support Cobo.
“I think this is an appropriate area to grab the funding because the entire state of Michigan is contributing to the liquor and cigarette tax, but the entire state is not getting the benefit of that,” he said during a hearing of the House Michigan Competitiveness Committee. “I live 500 miles away from the Cobo Center. I’ve been there once, and it’s a beautiful facility, but the vast majority of us have never been to Cobo.”
The funding for Cobo is split into three pots of revenue: the 1.5% tax in Oakland and Macomb and 3% in Detroit on motel and hotel bills; the 4% excise tax on liquor, and a $15 million transfer from the state’s Health and Safety Fund, which is derived from cigarette taxes. The formula was confirmed in legislation passed in 2008 to help save Cobo by transferring control of the center from the city of Detroit to a regional authority.
To get the necessary support for the bill in 2008, the counties outside of Wayne, Oakland and Macomb had to be promised that they would get their liquor taxes back every year plus a 1% premium. The hotel tax and a portion of the liquor and cigarette taxes are used annually to pay off Cobo’s debt. Another $6 million is used to help pay for operating the facility. The third obligation is to distribute the liquor tax, plus 1%, back to the county where it originated. If there is any excess after those three obligations are paid, it goes into retiring the facility’s debt early.
That excess — roughly $14 million last year — is what the Copper Peak boosters want to tap.
Cobo had been struggling during the recession and in danger of losing its premier event of the year — the North American International Auto Show. The convention center embarked on a nearly $300 million renovation to upgrade the facility and attract the conventions, trade shows and meetings that would put the facility among the top-rated convention centers in the nation.
“The counties do get their liquor tax back already and then some,” Bero said. “Any excess revenues we get is to take care of the debt,” which lowers the facility’s interest costs in the long run.
Since the renovation, Cobo has gradually recovered, and for the first time in more than a decade, it will be operating in the black this fiscal year, Bero said.
“It’s critical for us to maintain the resources we need to operate,” he said. “And our draft numbers suggest that events here generate almost $2.5 billion in economic impact for the state, so there is a tremendous return on investment.”
Bero believes that the Copper Peak project is valuable and wants to help its backers find an alternate source of funding for the project.
“We’re working with them and sharing some ideas,” he said. “But we also have to make sure this facility is an economic engine that is viable and when you divert the money into something else, that’s not good for Michigan taxpayers.”
Casperson and LaFave disagree, but it’s unlikely that the House and Senate will vote on the bill before the Legislature breaks for the holidays on Thursday. They don’t return for session until Jan. 11.
The Senate Commerce Committee has passed out Casperson’s version of the bill — SB 523 — which is awaiting consideration in the full Senate. The House version of the bill — HB 5134 — has not received a vote yet in committee.
Contact Kathleen Gray: 313-223-4430, kgray99@freepress.com or on Twitter @michpoligal
REVENUE STREAMS FOR COBO CENTER IN 2016
$24.8 million from hotel/motel tax in Wayne, Oakland and Macomb counties.
$52.2 million from a 4% excise tax on liquor. The vast majority of this is returned to the counties where the tax originates.
$15 million from the state Health and Safety Fund, which is derived from taxes on cigarettes.
View the article on The Detroit Free Press website here.
