The Manitou Springs City Council voted Tuesday night to accept the terms of a settlement with the company that owns the Pikes Peak Cog Railway.

The mood was celebratory, with council members lauding the terms of the preliminary deal.

“I think this might be the single most important thing that I do for the city of Manitou Springs,” said councilwoman Gloria Latimer.

The city and the Manitou & Pikes Peak Railway Co. have been in legal negotiations for more than a year. The company’s suit claims that Manitou Springs was required to reimburse the cog railway for all excise taxes collected over $500,000 for 50 years. Excise tax is a tax on ticket sales, and the cog railway is one of the city’s largest revenue generators in that category.

The reimbursement agreement came in exchange for payments to the city totaling $1.25 million while the railway was closed for reconstruction. In its filings, Manitou Springs maintained the reimbursements did not need to be made in any particular year. Recent years’ budgets have not included the reimbursement.

The railway is owned by Denver-based Anschutz Corp., whose Clarity Media Group owns The Gazette.

The settlement includes a one-time payment of $3.2 million from the city to the company, to be paid within two weeks of the council’s approval of the terms. If executed, the settlement dissolves the rest of the excise tax agreement.

“My granddaughter would have been 52 years old when this agreement sunsetted,” said councilwoman Judith Chandler.

The settlement payment will come out of the city’s reserve fund. City staff estimated in a memo that Manitou Springs would have about $3.8 million left in reserve funds at the end of 2026.