Steamboat Springs From the collapse of municipal bond insurers to an unwillingness to take on new debt in a volatile economy, the city's urban renewal authority at the base of Steamboat Ski Area has struggled since early last year to secure the money needed for planned projects.
Now, the URA is faced with a better sort of problem: a bank offering two options for financing.
Ever since the Steamboat Springs City Council approved the issuance of $12.5 million in new debt for the URA earlier this year, the city has been trying to secure a letter of credit to back up a municipal bond. At a Thursday meeting of the Urban Redevelopment Area Advisory Committee, or URAAC, interim city Finance Director Bob Litzau said U.S. Bank has agreed to supply a letter of credit.
However, the bank also provided the city an alternative to the bond by offering to make the city a loan for the same $21.6 million sum. That number includes the new debt approved by council earlier this year and enough money to pay off the URA's existing bonds.
The URA uses bond revenues to construct public improvements at the base area. Within its boundaries, the authority receives property and sales tax increments to repay the debt. URAAC is an advisory body to the Steamboat Springs City Council for decisions regarding the renewal authority.
Under the bond scenario, the interest rate would vary but be capped at 4 percent. U.S. Bank is offering a fixed-rate loan of 3.59 percent. The bank loan also wouldn't carry a fee for the interest-rate cap and other costs associated with a bond. The city's bond consultant did a comparison showing that the two scenarios would cost exactly the same in five years - $6.6 million - if the interest rate on the bond averaged 1.35 percent. Both financing options would be re-evaluated after five years.
While the bank loan appears a better deal at first glance, Litzau said the difficulty in evaluating the proposals is that bond rates are currently very low. Litzau said they were at 0.3 percent Thursday. Litzau had sought direction on which way to go Thursday, but URAAC members including Steamboat Ski and Resort Corp. President Chris Diamond said the proposals deserve more analysis.
"The sooner we make this decision, the sooner we get the money," Litzau said.
The URA is operating on a $2.6 million loan from the city's general fund until the debt is issued. URAAC member Jon Wade noted that the difference between the two proposals is probably minimal and that in a worst-case scenario, the city would issue bonds that are capped at a 4 percent interest rate.
"This isn't a gamble by any means," Wade said. "We can't really get hurt."
URAAC will aim to make a recommendation on the proposals Oct. 10.
Redevelopment Coordinator Joe Kracum provided an update on this year's project: the construction of a Burgess Creek diversion structure and public plaza on the north side of the base area near Slopeside Grill.
Burgess Creek disappears beneath the lowest trails of the ski area there, and this summer's work is a precursor to plans to ultimately bring the creek back above ground, where it will flow beside a planned promenade along the immediate ski base.
Kracum said the project is within budget but five days off schedule because of unanticipated work added this summer. The diversion structure is 90 percent complete, an iconic rock feature is in place and a fire pit is taking form.
Also Thursday, Kracum told URAAC members that it is not feasible to power a snowmelt system for the promenade with ground-source heat pumps. URAAC members and other city officials had hoped that would be possible, to reduce the carbon footprint of such a large snowmelt system.
City Council already has directed that the tubing and other features of a snowmelt system be included in the construction of the promenade. URAAC members also directed Kracum to research the cost of putting in a gas-fired boiler system to power the system.
URAAC members also received design updates on the overall creek project and promenade. Designer Nicole Horst, of Wenk Associates, said Burgess Creek ultimately will flow through the base area in a variety of ways during the summer. It will vary in width from 3 to 20 feet and include boulder drops, pools and shallow, riffled sections that will shimmer in the sunlight.
"I like the variety of this," URAAC member Peter Patten said. "It's great."
Work on the promenade and creek begins in earnest next year. Kracum said he will need unimpeded access to the base area seven days a week in the spring and fall of 2010 and 2011 to pull the massive project off in time. He requested that no special events be scheduled at the base area except between July and Labor Day, when the construction schedule will be scaled back to five days a week.
"Next year there is no float in that schedule," Kracum said. "It's as tight as it can be."