Steamboat base area group optimistic about summer work

Committee supports partial construction plan as city prepares financial options

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— Construction plans and fin­­ancing options are taking shape for this summer’s redevelopment work at the base of Steamboat Ski Area.

But that shape has some fuzzy edges.

The committee guiding redevelopment at the base of Steam­boat Ski Area supported a partial plan Thursday for this summer’s work. The Urban Redevelopment Area Advisory Committee voted unanimously to recommend about $2.2 million in spending on earthwork, utilities, a temporary gravel trail, snowmelt mains and other items that would provide few public amenities but would set the stage for future, more aesthetically appealing work when funding is available.

That availability could occur later this summer, or sooner, or not at all, depending on Steam­boat Springs City Council action scheduled for Tuesday night. The City Council acts as the Steamboat Springs Redevelopment Authority, which administers the base area redevelopment.

City Council voted last week to release $2.5 million in funding for base area work this summer. That vote followed lengthy city negotiations with U.S. Bank, which issued the city a default notice in April on its $17.5 million redevelopment loan. Last week, the bank removed the default conditions and agreed to the immediate use of $2.5 million, provided that the remainder of this year’s funds, also about $2.5 million, be held in a construction account.

In the wake of that agreement, the city is continuing negotiations with U.S. Bank and exploring other financial options that could allow completion of the full $4.5 million base area project planned for this year.

That project includes partial construction of a public promenade, the daylighting of Burgess Creek and installation of numerous amenities such as seating areas, stone walls and fire features.

Few of those amenities are in the plan URAAC approved Thursday. The committee considered, but declined to support, a nearly $2.5 million plan that includes more public features and visual appeal. That plan would create a more finished product that could suffice for a few years if funding stalls, but it also would require the removal of some of the work — and additional costs — to go back and complete the project in future years.

The committee supported the $2.2 million plan because it would have no such additional costs and would set the stage for continued work when funding allows.

“There’s not much, if we stop at this point, of what you see on the surface,” redevelopment coordinator Joe Kracum said. “But all the hard work is done.”

URAAC co-chairman David Baldinger Jr. said supporting the $2.2 million plan would “send a strong message” to City Council that URAAC is confident in base area revenue streams and ready to move forward with the full $4.5 million project this year.

City Finance Director Debra Hinsvark showed the committee revenue and debt projections through 2029, in various financing scenarios. All scenarios assumed a 30 percent drop in base area property values in 2012, three additional 5 percent drops, no new construction, no sales tax revenues and no economic recovery.

In two of the four scenarios presented, base area revenues were greater than debt payments in every year through 2029. In a projection that assumes new construction, including the completion of Ski Time Square and Thunderhead Lodge in 2019, revenues are about $1 million greater than debt payments every year from 2020 to 2029, varying somewhat in each financing scenario.

“The numbers really do prove out that financing is capable in the current market,” Hinsvark said. “The market is the market, and you can’t predict it … (but) if we were in the market today with one of these transactions, we would be fine.”

Hinsvark plans to present the numbers to City Council on Tuesday.

City Manager Jon Roberts said City Council’s options include everything from postponing any base area work beyond the $2.5 million allocated for this year, to allowing Duckels Construction to immediately proceed with the full $4.5 million project this summer. Hinsvark said the city could transfer funds from reserves to fulfill that contract, then repay the funds when a new financing plan is in place.

“Whatever (council members) choose to do, we’re happy to do it and move forward as quickly as possible,” she said.

Comments

Scott Wedel 4 years, 7 months ago

Statements like "“send a strong message” to City Council that URAAC is confident in base area revenue streams and ready to move forward with the full $4.5 million project this year." can have pretty serious budget consequences.

It appears that 2 out of 4 budget scenarios have sufficient revenues every year and so those are the budget scenarios that are considered. How about some discussion of the 2 of 4 budget scenarios that are not so rosy?

It was not that long ago that we had financial projections showing that Iron Horse was going to be a great deal. Or that the Yampa Valley Housing Authority was flush with cash and the downturn caught them by complete surprise.

And we still have not heard why the public was not told that there were issues with US Bank's financing back in January and yet both the URAAC and City proceeded as if there were no issues. Did the finance dept forget to mention this issue to the URAAC and City? Were both notified and fail to comprehend the significance of US Bank's issues? I note that we were told that they had legal advice that US Bank had to release the entire $17.5M, but the City quickly caved and is now happy to put $2.5M into an account where it will not be spent.

I am deeply concerned that everyone is so committed to doing this that they are going to claim there are no risks, but then there will be some miscalculation resulting, during tough times, in hundreds of thousands of dollars a year from the City's general fund to cover the lack of URAAC revenue.

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ybul 4 years, 7 months ago

In two of the last paragraphs, one states that all scenarios considered no new construction and the next states that one shows a million dollar surplus over debt payments when Ski Time Square and thurderhead are rebuilt.

Another question I would have is what is the interest rate of the bonds in the scenarios. I believe that they were floating rates after five years from a discussion over a year ago, just after the URA was wondering if they were going to make debt service payments.

I agree with Scotts comment about everyone is so set on seeing this thing completed and yet may fail to realize the additional risks that are associated with real estate values continuing to plunge (they have already lost 30%, in many cases, and are still falling, yet the tax bills have not seen the decrease yet).

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Alan Geye 4 years, 7 months ago

Couple of observations about the above comments:

  1. Yes, general property values have gone down, and may go down further, but that generally will have little effect on what taxes we pay because tax RATES generally get adjusted upward to arrive at the required tax revenue to support budgeted spending.

  2. I've not seen and am not familiar with the Finance Director's projections, but if the LONG TERM financing is tied to floating interest rates, and we are currently enjoying abnormally low market interest rates, the Finance Director should be queried extensively about the potential material negative impact of probable higher interest rates in future years on those projections and how those risks are being mitigated.

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Steve Lewis 4 years, 7 months ago

Economic optimism is great. Hey, if I was URAAC I'd probably spend your money to prep my front yard too.

The story wraps an array of hopeful outcomes around the worst case outcome. But in there is a whopper: “$2.2 million in spending… that would provide few public amenities but would set the stage for future… work when funding is available.” “That (future funding) availability could occur… not at all…”

In any economy, spending $2.2 million on prep work that may never see fruition is awful fiscal policy. But in THIS economy, spending $2.2 million today on prep work that might see fruition in even 5 years is awful fiscal policy. Wait for certain results before you spend the taxpayers' money. And spend it in a timely manner, not years in advance.

Pick the option that wasn't even mentioned: No construction this summer.

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