Steamboat Springs Officials could be forced to make some tough decisions about public improvements at the base of the Steamboat Ski Area if a budget shortfall revealed Friday is not corrected in the weeks and months ahead.
At a meeting of the city's Urban Redevelopment Area Advisory Committee, or URAAC, interim Finance Director Bob Litzau provided a report of estimated revenues and expenditures through 2019. The report shows $3.8 million available to the Steamboat Springs Redevelopment Authority this year. But subtract many costs - most notably, the $2.5 million construction cost for a proposed roundabout at Mount Werner Circle and AprÃs Ski Way - and the report shows only $150,000 being allocated this year for the planning of URAAC's most anticipated projects: a promenade wrapping around the immediate ski base and the daylighting of Burgess Creek. The report shows a fund balance of $346,844 at the end of the year.
The public improvement projects, which include enhancements to Ski Time Square Drive completed last year, are paid for by money generated by the redevelopment authority, which was created in 2005. Within its base area boundaries, the authority receives property and sales taxes over a base amount established that year. URAAC is an advisory body to the Steamboat Springs City Council for decisions regarding the redevelopment authority.
The redevelopment authority is encountering the budget problems despite the fact that it generated almost $350,000 more than was expected in 2007. While tax revenues are rising, the costs of intended projects are rising faster.
Redevelopment Coordinator Joe Kracum said $150,000 would not be enough to design the promenade and daylighting of the creek. He said the cost would be more in the neighborhood of $750,000 to $1 million.
"We have a minor cash flow problem," URAAC member Bill Jameson said.
Chuck Porter, URAAC member and general manager of the Sheraton Steamboat Resort, said he is more willing to delay the roundabout project - scheduled to break ground April 7 - than let anything stand in the way of the promenade.
Financial maneuvering, however, may prevent an either-or decision.
URAAC member Jack Ferguson suggested borrowing money from the city, but Litzau said he is not comfortable recommending that City Council do that, given the meager state of the city's reserves. As of Friday morning, Litzau said, the city's available reserves totaled $3.1 million.
"You'd be asking for one third of the city's available reserves," Litzau said.
A rescheduling of the redevelopment authority's next bond issue, however, could cure the problem. The authority plans to bond for just more than $18 million in 2009, but Litzau has already investigated issuing the bonds in 2008, instead, to take advantage of economic conditions. Fears of a recession have led the Federal Reserve to cut interest rates 2.25 percent since September. Further weakening economic data has some economists and analysts expecting even further cuts at the Fed's March meeting.
"I think it's an opportunity that's almost too good to pass up if we can make it work," said Litzau.
If the redevelopment authority decides to bond this year, Litzau said he would be more comfortable recommending an advance from the city's available reserves.
After the meeting Friday, Kracum acknowledged the challenges, but said he is confident the budgetary issues can be fixed. He also noted the importance of continuing the redevelopment authority's momentum and not delaying construction.
"I think we need to do both" the roundabout and the design work, Kracum said. "I really do. There are concerns. There are always concerns. But we'll get through them. There's good momentum right now. Call it a gut feeling. It just feels right. We're going to make it happen."