Joe Kracum, base area redevelopment coordinator, stands in December at the promenade at the base of the Steamboat Ski Area. Base area improvement leaders face a difficult choice this spring on how best to use limited construction funding.

Photo by John F. Russell

Joe Kracum, base area redevelopment coordinator, stands in December at the promenade at the base of the Steamboat Ski Area. Base area improvement leaders face a difficult choice this spring on how best to use limited construction funding.

Base area bonds delayed in Steamboat

Final stage of base area improvements confront conservative lenders

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— Faced with a tighter lending market, city officials and members of the Urban Renewal Authority Advisory Committee have agreed to delay issuing bonded indebtedness needed to cover the third and final year of building the promenade and daylighting Burgess Creek at the base of the ski area.

Construction will continue this summer, but city officials and community leaders planning the project are likely to be confronted with a difficult set of decisions this spring. If they know there’s a strong likelihood they won’t be able to finish the project by fall 2011, what portion of the work will leave the community with a desirable product until the third phase of the work can be completed?

Base Area Redevelopment Coordinator Joe Kracum told the Steamboat Springs City Council on Tuesday night that the group is determined to fully complete whatever construction it tackles this summer to leave the public with an attractive, usable facility. He added that he would ask contractors to bid for the entire two-year project so costs are fixed in case other funding options become available.

The contract documents reflect that it’s likely only the first summer of work will be funded and that prospective contractors will be made aware of that.

Kracum recently told URAAC members that early construction estimates are $9 million and that there may be a total of $4.6 million available with only $3.6 million of that available for actual construction.

“We could build half of the promenade and daylight half of the creek this summer, or we could build all of one or the other,” URAAC Co-Chairman David Baldinger Jr. said. “In this cycle, to get everything we ever wanted could cost us another year or two.”

Kracum told the council that a likely scenario would be to build the promenade from the east side of Slopeside Grill, continuing past Torian Plum Plaza to a sweeping curve that would flow down the hill until it reached the area in front of Sheraton Steamboat Resort. Work needed to daylight the creek that far also is possible. A series of ponds planned along the creek already are designed to have take-out valves that would return the stream flow to its culvert in winter, Kracum said. That would create a natural spot to suspend the daylighting of the creek in the next construction phase.

Baldinger said he remained optimistic that URAAC could obtain another advance from the city and keep the project going.

“It was kind of a shock, but I think we’re already over it and have a game plan. We’re going to plan really conservatively,” he said.

City Manager Jon Roberts said the city would have to conduct a risk analysis in the same way that banks do and consider among other things the limits an advance would impose on its ability to borrow money for other needs before extending further funds from its reserves.

The city, acting as the Steamboat Springs Redevelop­ment Authority, can capture property tax revenues attributable to growth in property valuations within a boundary line near the base of the ski area to fund public improvements meant to stimulate further investment by the private sector. The method of raising funds is called tax increment financing.

The SSRA has issued a series of bonds backed by the property tax revenues to borrow the money to build the improvements. Previous bonded indebtedness of $9 million built a pair of traffic roundabouts at the base area as well as other improvements.

A second round of $16.5 million helped URAAC, the citizens committee reporting to the SSRA, to do extensive infrastructure and planning work last summer, including a new water diversion facility preparatory to bring Burgess Creek out of an old culvert where it crosses the lowest ski trails. Of the $16.5 million, $8.5 million was used to pay off the original bonds, and $2.6 million was used to repay an advance from city reserves needed to keep the project going. Last summer’s work cost about $5 million. A large stone seating area and fireplace pit representing the beginnings of attractive new pedestrian areas also were built last summer.

Roberts said Thursday that the city and URAAC members had planned conservatively on an upcoming bond issue to fund the next two years of construction on public improvements at the base of the ski area. They understood that variables in the financial markets could affect the redevelopment authority’s ability to leverage debt and performed a risk analysis, and they expected to borrow another $9 million.

They worked with an expert consultant who helped them plan for the likelihood that the overall assessed valuation of private property at the base of the ski area could reduce their ability to borrow.

But the conservative outlook of banks has made officials rethink going forward this year with borrowing the money needed for the full two years of construction remaining.

Initially, Steamboat officials were working with Wells Fargo Bank and U.S. Bank on lines of credit that would funnel money from bond proceeds into the SSRA’s accounts.

The banks don’t actually loan the money, city Finance Director Deb Hinsvark said.

“They stand between us and the bond holders to guarantee the funds will be available,” Hinsvark said.

However, Wells Fargo drop­ped out of the discussions, and the U.S. Bank raised the threshold of the amount of funds the city would have to leverage in order to generate the revenues it sought.

The bank told the city it would have to borrow an additional 30 percent beyond what it had planned, and that amount would be set aside and held by the bank until it decided whether to release the monies for construction in summer 2011.

“The banks want to put a clamp on your money,” Hinsvark said.

Roberts said he told URAAC members he preferred to wait on borrowing the money to fund the third and final year of construction in 2011 in case lending terms loosen up.

“Why borrow the money and pay the interest on it if the bank reserves the right not to release it for the third year” of construction? he asked.

Comments

Scott Wedel 4 years, 6 months ago

These guys have been facing funding issues for over 2 years. While they tell us everything is fine and just want to borrow from the city's reserves, the fact that neither banks or municipal bond issuers want to touch this debt offering should tell us the severe risks involved with loaning them money.

These same city officials and their experts thought they could place a bond offering at record low rates only to be wrong and then were so happy that two banks were going to loan the money only to be wrong again.

Makes me wonder how well their predictions for SB 700 will compare with reality.

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greenwash 4 years, 6 months ago

Surprised?.....Im not....first problem a realtor is heading the committee,second problem,Mostly realtors are on committee......When are we going to learn,?

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homegrown 4 years, 6 months ago

What I get from the article is that these guys are going to do their best in a bad economy to not leave a project completely undone. What they have been doing is great I see people around the three fires up here all the time. Both of you are nothing but complainers. All you ever do is whine about everything. There's enough negativity in the world without you two. I would really appreciate you allowing for better forums by staying off. All you do with your negativity is drive people away. If you don't like what's happening with the 700, use our democracy and vote your opinion and let other people form their opinions through facts and (especially greenwash) not childish name calling. If you don't like the parks and rec department then don't play in the parks. We live in a beautiful place with tons of great amenities and all you two do is complain. I for one have had enough. If you have actually ever made a positive comment about our community why don't you link me up to it because I sure can't find any. Thanks, Bryan Ayer longtime local and positive thinker.

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jk 4 years, 6 months ago

I'm trying to figure out the benefit gained by spending millions of dollars "daylighting" Burgess Creek?? First off this is basically a seasonal creek that slows to a trickle by late summer. Are we going to stock fish for angling in these holding ponds, will our dogs be allowed off leash to play fetch, or will they just turn into mosquito breeding grounds for the summer concert series?? It seems like this money could be spent in several different ways that would be more beneficial to the base area's allure.

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Scott Wedel 4 years, 6 months ago

Well, if the City had listened to the complainers then it would have saved millions on Iron Horse.

There is a Feb 2008 article mentioning the troubles URAAC was having in borrowing money. If you are someone that wants the amenities then it should disturb you that after two years they still haven't figured this out.

I think there is a good chance they will not be able to borrow from the City's reserves this year. URAAC is already getting no sales tax revenues because that has fallen below the threshold. Projecting their property tax revenue is going to be hard because they currently are using valuations from the boom and no one knows yet what the valuations are going to be next time. When Highmark is running ads for an absolute auction AND listing minimum bids at 1/3 of previous comparable sales price, then predicting future valuations of base area properties becomes speculative. Clocktower condos also appear to be headed towards foreclosures. And the recent buyers at One Steamboat and such could protest their valuations saying the values reflect 2007 values when the binding sales contracts were written and not 2009/10 values. So no one right now knows the URAAC's 2011 and beyond revenues.

And right now the City with reduced reserves and flat to down sales tax revenues, is in no position to be borrowing against it's reserves.

Seems to me that the URAAC needs to get some better experts and figure out their financial situation. They really hurt themselves by not getting it resolved over the past two years.

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greenwash 4 years, 6 months ago

Homegrown......Im laughing....Part of blogging is to get you riled so I guess its working.

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homegrown 4 years, 6 months ago

greenwash, you definetly pull at my strings sometimes, just try to give some positive comments once in awhile. Positivity goes a long way towards discussing negativity.

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