A state panel on Thursday threatened to pull funding for the planned Historic Arkansas Riverwalk of Pueblo expansion -- and some of its members roughed up a visiting delegation from Pueblo and the Professional Bull Riders in the process.

The governor-appointed state Economic Development Commission, meeting Thursday in Denver, delayed giving the final go-ahead for the project, saying it wants a tougher lease in place governing the use of one of the projects, the planned PBR-anchored sports training center.

The panel, which oversees the tourism enhancement grants awarded by the state to Pueblo and four other cities, did not detail the specific changes it seeks to require.

Pueblo leaders at the meeting, joined by a group of local civic, business and elected leaders, defended the lease agreement and questioned why the panel would want to jeopardize the expansion over the issue.

The basic lease terms call for Pueblo to construct and retain ownership of the building for the sports training center while PBR would develop and operate the facility in exchange for paying a start-up lease rate of $1,500 month in rent, to be renegotiated every five years, city leaders said.

PBR CEO Sean Gleason, at the meeting to brief the panel on plans for the site, said PBR might be willing to take part in additional limited lease negotiations but that the company also might pull its proposal for a PBR-anchored global sports training center.

"We've got a significant opportunity to bring a business to Pueblo that does not exist," Gleason told the panel. But if the challenges to bring the project get "too burdensome, I'm not interested," he said.

The meeting ended with the state panel calling for an executive session to further discuss the issue and determine the lease changes it might demand. Separately, the state Office of Economic Development, the administrative arm of the commission, disclosed it had recently sent a letter to Pueblo to suspend work on the project until the lease dispute is resolved.

Throughout the meeting, some commission members made comments that went beyond the issue of the lease agreement and seemed to indicate they question the merits of the overall expansion project and Pueblo's oversight of the project.

One commission member asked why Pueblo would ever approve such a lease deal.

Others said the state panel's intention was to try to protect Pueblo.

Members also questioned Gleason directly about PBR's operations, viability, future plans and long-term commitment to Pueblo. The questioning stopped when others advised the group to limit their comments to the lease agreement and direct questions to the leaders from Pueblo, which is the contracted partner with the state on the project.

Rod Slyhoff, president of the Greater Pueblo Chamber of Commerce, challenged any criticism of Pueblo and also the suggestion that the city might be putting state tax dollars at any more risk than any other economic development spending in the state.

"In Pueblo, we're a community where our citizens have taxed themselves for 30 years to do economic development. .?.?. We certainly understand using taxpayer dollars in a way that benefits them," Slyhoff said.

After the meeting Slyhoff said he still is optimistic an agreement will be reached.

"All in all we didn't get the green light but we felt like it was a very positive meeting and we had a good dialogue with the (state) staff and the board members."

The standoff over the lease agreement is the latest in a long-running series of disputes pitting Pueblo against some members of the commission and the staff of the Office of Economic Development.

When the funding was first awarded in 2012, a previous director of the Office of Economic Development fought approval of the Pueblo project but was overruled by the then-members of the commission,.

Seventeen months ago, a subsequent director called for a halt to the project over the agency's alleged claim that wording of the funding agreement could allow Pueblo to keep potentially hundreds of millions of state sales tax dollars unrelated to the project, a claim Pueblo rejected. The state and Pueblo agreed to renegotiate the financial language to specify more clearly the funding amount and the commission approved the project to go forward.

Pueblo is ready to move forward with projects in the first phase of the expansion, city leaders say.

The first phase includes the addition of the PBR-anchored training center and an exhibit hall onto the Pueblo Convention Center and the construction of a nearby parking garage to provide more public parking for Riverwalk visitors. The first phase also includes the construction of the Gateway Plaza outdoor event venue.

Later phases include an aquatics center and a boathouse/visitors center.

A planned tax revenue bond issue -- the final financing piece needed for the first phase -- and a selection of a design-build contractor for the convention centers additions and parking garage that were set to take place in coming weeks will now be put on hold because of the Office of Economic Development's demand for work to be temporarily suspended. the city says.

ddarrow@chieftain.com