MANITOU SPRINGS, Colo. (KOAA) — Manitou Springs has chosen to fund wildfire mitigation over reimbursing the Manitou and Pikes Peak Cog Railway. It’s the second year in a row the city has chosen not to pay the railway, after the two sides signed off on a tax reimbursement agreement.
The Manitou and Pikes Peak Cog Railway sued the City of Manitou Springs earlier this year, after the city opted to withhold funds at the end of 2024.
That money was marked as “unassigned” within the city’s general fund.
The conflict stems from a 2018 agreement where the Cog Railway paid the city $1.25 million between 2018 and 2020 to offset revenue losses during mandatory repairs that forced a closure of the tourist attraction in 2017.
In exchange, the city agreed to reimburse the railway with excess excise tax revenue from ticket sales and admission fees for the next 50 years.
At Thursday's council meeting, the city approved its 2026 budget and allocated $690,000 in excess excise tax revenue to wildfire mitigation instead of reimbursing the railway.
"It's an essential duty of the city to address and provide to the best of our capacity, public safety," says John Graham, Mayor of Manitou Springs.
The original agreement established base excise tax amounts ranging from $500,000 to $750,000 that the city could retain over the 50-year period. The base excise tax amount represents what the city is allowed to keep for spending.
For 2025, the agreed-upon base was approximately $515,000. With total excise tax revenue reaching about $1.2 million this year, the remaining $690,000 was to be reimbursed to the Cog Railway under the original terms.
Mayor Graham questions the original deal.
“I’m not sure that more than half the city's excise tax revenue should go to a private business,” he tells News5. "I think the city has a strong and justifiable argument for what we're doing. There was no provision put in to come back to the table and renegotiate things according to need or according to reality.”
The city argues it isn't obligated to appropriate funds in any particular year, while the Cog Railway maintains payments must be consecutive.
In its complaint, the railway stated that “Between 2021 and 2024, the city appropriated funds as required, but on December 3, 2024, the City abruptly reversed course and decided to not appropriate 2025 funds to pay MPPR (Manitou and Pikes Peak Railway) for excess excise tax collected in 2024."
The city counters that it was "pressured and induced to enter into the Tax Incentive Program Agreement with MPPR under duress and based upon threats by MPPR to cease operations if it did not receive a public subsidy."
A council member expressed concern about the budget implications.
"I'm concerned there's no place else in the budget I can see where we could take that money from other than from the COG reimbursement," they said.
The Manitou and Pikes Peak Cog Railway generates substantial revenue for the town, making this dispute particularly significant for both parties.
"It's in the Cog's interest, too, to have a town here," says Graham.
He maintains that public safety is imperative. A wildfire, he says, could risk destruction to both the city and the Cog Railway.
The Cog Railway did not respond to requests for comment.
A status conference court date is scheduled for December 18.
When asked, Mayor Graham neither confirmed nor denied whether the city seeks to break from the agreement entirely, indicating that the determination could depend on the litigation outcome.
