Our View: Press ‘pause’ on base area

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Editorial Board, April 2010 to Aug. 8, 2010

  • Suzanne Schlicht, publisher
  • Brent Boyer, editor
  • Blythe Terrell, city editor
  • Tom Ross, reporter
  • Towny Anderson, community representative
  • Tatiana Achcar, community representative

Contact the editorial board at (970) 871-4221 or editor@steamboatpilot.com. Would you like to be a member of the board? Fill out a letter of interest now.

— The Steamboat Springs City Council should resist the temptation Tuesday to approve $2.2 million in base area promenade work until the city’s ability to access additional funds and generate enough tax incremental financing to pay off the debt becomes clear.

Of course, that’s not the message the council is getting from the Urban Redevelopment Area Advisory Committee, which last week voted unanimously to recommend spending about $2.2 million on earthwork, utilities, a temporary gravel trail, snowmelt mains and other items that would prepare the base area for the eventual completion of a public promenade and the daylighting of Burgess Creek.

Significantly, the $2.2 million would provide few, if any, public amenities other than the gravel trail. And the remainder of the work to complete the promenade would be contingent upon financing that is anything but assured. Although URAAC members and the city’s finance director are confident revenue streams from the base area are sufficient to move forward soon with the remainder of the promenade work, we’re inclined to press the pause button until such revenue streams become abundantly clear. Simply put, this is not the time to live beyond the city’s means or to take unnecessary financial risk.

But that is what URAAC is asking the city to do because the Steamboat Springs Redevelopment Authority is faced with a situation where it is living beyond its means. Ironically, the intent of urban renewal authorities is to encourage reinvestment in blighted areas. As applied to this ski area, however, the baseline for the tax increment financing was set when property values were going up, not when they were at a low point. The economic recession coupled with the demolition of income-producing properties has created the present situation. The Steamboat Springs Redevelopment Authority was set up to stand on its own — with its own source of revenues. The city has had to exert discipline in this economic slowdown. The URAAC and Redevelopment Authority should do the same.

We don’t doubt the significance of the public-private partnership at the base area, and we’ve all seen benefits from the Urban Renewal Authority — most notably in the form of improved wayfinding and significantly improved traffic flow through the addition of two roundabouts. Further, we continue to think the promenade project and the daylighting of Burgess Creek eventually will be a key upgrade to the base of the ski area.

A good deal of money has been spent on the design work for the promenade project, and it’s turnkey as soon as the funding is available. But given the recent issue with U.S. Bank about a notice of default on the $17.5 million base area loan and the bank’s refusal to free up more than half of the $5 million allocated for base area work this year, it’s hard to understand the urgency to move forward with a portion of the work and no guarantees on when the remainder could be completed.

If private interests at the base area are so adamant about the promenade work beginning immediately, perhaps they can front the necessary funds to be paid back later through base area tax revenues. Until that time, it remains inappropriate for the city to put itself at financial risk or provide additional funding for a project that, though important, is unlikely to generate any near-term development or economic growth at the base of Mount Werner.

Comments

blue_spruce 3 years, 11 months ago

you guys make a lot of sense...man i hate to hear it though. i guess at this point its a question of whether or not we EVER expect to move forward with ski time square. if the answer is yes, then why not start now, instead of next year? we are still presuming that steamboat will eventually be able to recover to some degree from the market downturn, right? it seems wise to nurture our primary economic driver here in routt county - skiing and all the related businesses. if we give up on this, man we are really in trouble! lets not forget we have some of the best skiing on the planet!!

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steamboatsprings 3 years, 11 months ago

Several new financial options came to light this week, The City's new Finance chief is doing a great job evaluating the situation and I am confident that the council will make an informed decision. I am thankful we have such a competent council to get us through these challenging times.

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John Fielding 3 years, 11 months ago

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I agree with spruce and ss. I think the Pilot is being a little timid here.

We have dedicated professionals seeking financial options that will protect the best interest of the community. We have plan in place for improvements that that will strengthen our main resource. We have a depressed local economy, particularly in construction, that will assure the funds will command great value and provide needed local stimulus.

The one unanswered question I have is whether there are provisions in the financial plans that provide for extensions and modifications of the bond issue that assure the payments will ultimately be made from the intended source, that is a fraction of the property tax of the improvement area.

If such safeguards exist we should certainly move full speed ahead. If not we should still proceed but not extend the entire financing until such provisions have been implemented.

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Scott Wedel 3 years, 11 months ago

Well, I think it makes little sense to proceed with the $2.5M infrastructure projects. If the money is there then do the $4.5M that gives public benefit. If the money is not there then no point in doing the $2.5M projects this year.

The big question is whether the money is there. Since the City has been negotiating with the bank for nearly six months and did not get enough money to pay for the planned construction then it would appear that the money is not there at this time.

I have no confidence in the URAAC as being anything other than a promoter for the base area. That they failed to disclose to the public the effect of the school district mill levy rebate at the time (December), that they were having issues with US Bank (Jan), numerous times mentioning during the bid process that they had no issues with the money, and failed to timely mention the notice of default (gave interviews for article on base area projects without mentioning default notice so we had article on base project starting construction in 5 days despite having received a notice of default 10 days earlier) gives no reason for public trust in their handling of financial issues. And now they want money from the City reserves, money that might be real important in this environment for the City for the next few years. Do we really want to risk cutting essential services because URAAC was overly optimistic yet again?

The risk on the flip side that over the next 10 months they determine there is the money and so it can be done next summer is perfectly acceptable.

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Scott Wedel 3 years, 11 months ago

The city has to stand behind the URAAC so if the money is not there then it will have to come from the city's general fund.

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Steve Lewis 3 years, 11 months ago

I agree Scott. The URA is, without saying so, seeking the community's commitment on funding the future work as well. This is really, at a minimum, a $4.7 million question.

And hearing “some new financing options have come to light this week” from an anonymous source is hardly sufficient information to convince me. When, and only when, you have $4.7 million to spend, please proceed.

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Steve Lewis 3 years, 11 months ago

In my opinion, the new finance chief is NOT doing a good job of representing this issue to the community, or she would be answering the $4.7 million question.

I might expect the URA’s politics in understating what they are asking for. But getting the same representation from our finance director is disturbing. Who does she think she represents?

This reminds me our public works director, Philo Shelton, and his overly glossy representation of SB700's impacts completely which ignored the inconveniently unfinished, BUT REQUIRED, studies.

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Steve Lewis 3 years, 11 months ago

I have worked with and listened to city staff on a serious level for about a decade, during councils that leaned both left and right. But only in the past year have I witnessed such misleading inaccuracy from our department heads. Trust in one’s city government is a precious thing. What are you people thinking? Please tell those you serve THE WHOLE STORY.

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Scott Wedel 3 years, 11 months ago

Steve Lewis, With your knowledge of how City government works can you answer a few questions on the process?

1) When the school district adjusted the mill levy, would the city staff have realized that would impact the URAAC? If so, would they have informed the URAAC and City Council members?

2) City finance has said they were aware that US Bank had issues with the bond as early as Jan 4. Would city finance dept have informed the URAAC and City Council that there were issues with US Bank some time between Jan 4 and notice of default? Would they have described the cause of the dispute (that mill levy adjustment caused revenues to be less than as spelled out in the bond agreement)?

3) When the City received notice of default, would that have been mentioned to the URAAC? Can you give a good reason why URAAC would talk to Tom Ross, 10 days after receiving notice of default, and say that construction was starting in 4 days and say nothing about the default notice?

4) Do you think it was appropriate that the financial issues were disclosed to the public 6 months after the mill levy change, 5 months after US Bank and the City started negotiating and 13 days after receiving the notice of default?

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Steve Lewis 3 years, 11 months ago

I'm being too hard on the finance director. Perhaps she is making the $4.7 million dollar argument to council.

But when city staff is listing the options to be considered, as Jon Roberts did in the prior article, he should acknowledge the larger question, and include this option of no construction at all.

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exduffer 3 years, 11 months ago

Go ahead with the infrastucture while the going is cheap. Re-doing the sewer, electric, water and all the unseen benifits while prices are low is a very smart idea. Do you want another 'One Year Project" that turns into Lincoln. Remember it is what you do not see that bites you in the ass.

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blue_spruce 3 years, 11 months ago

i forget who said this on an earlier blog, but "if you don't build it, they won't come"....

how true. how much tax revenue do we stand to loose if we neglect the ski area? are we assuming that the having STS in its current form does NOT effect our guests' vacation experience?!? how many years will a family come back (on a vacation) to a base area that is not finished, and is clearly not being worked on? if we give up on this stuff, we are going to pay a heavy price down the line...maybe we need a "Save Ski Time Square" group...:-)

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Steve Lewis 3 years, 11 months ago

Duffer, The going next year will be just as cheap. And for a few years beyond. I do hope the promenade gets built, but its crazy to proceed without having the whole project financed. Particularly with upheavals, such as on the previous bond, a future possibility.

Blue, We already have a save ski time square group. Its called the URA. Hindsight is 20-20. Far better than this "save ski time square" group would have been a performance bond on Atira before they tore down... Ski Time Square.

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Steve Lewis 3 years, 11 months ago

Scott, In effect, your questions relate to the changing status of the bond already issued, and the public’s learning of that change via a letter of default. I think the deleveraging of banks has created some unprecedented, conservative bank behavior. Did the banks really care about bond security before the melt? Well now they do. In my opinion, yes, this and the mil change could have caught staff and the URA by surprise.

You are more concerned about who knew what and when. And was the public apprised of the bond problems right away. The first issue is one I will pass on. Its too speculative. But I am cynical enough to try and look up the membership of URAAC. No luck.

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Steve Lewis 3 years, 11 months ago

The latter issue - publicizing known issues with existing URA bonds. I agree with you. That info was withheld innapropiately. You’ve gleaned more than I knew, so I’ll just go with my own, much simpler view. From what I’ve read some on council knew of the URA bond’s default the day before council discussed re-awarding a URA contract. Certainly the ommission of the bond default information altered the council and public comments, and then council decisions made on that agenda item.

For a councilor to participate in a hearing that re-awards a contract while withholding that the bond under that contract is in default? Beats me. I guess they knew the contract wouldn't be signed? I'll chalk it up to bad judgment. Certainly the default was going to become public eventually.

What disappoints me the most is that it appears our city manager made exactly the same erroneous judgments as the politician.

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Scott Wedel 3 years, 11 months ago

Steve, Yes, I have huge problems with public officials keeping financing issues regarding $17.5M bond and $4.5M construction projects secret. That it was publicly released after being known internally for 5 months only on the day they release the agenda for the council's meeting the next day and the agenda item is to transfer millions from the city's reserve to cover construction scheduled to start the next day is as bad as it could be without being outright criminal.

The amount of the bond being $17.5M, and not more, based upon current revenues may have been influenced by conservatives banks and so on. But the amount of the bond is not the issue.

That US Bank had immediate issues with the bond should have been entirely predictable. It was given a risk profile and insured based upon a certain level of revenues that was included in the bond as a covenant. It freaks out bankers that the borrower signed a bond/loan when the facts in the bond are not true when it was signed. I'd expect US Bank had people thinking that SB had defrauded them by signing the bond that mentions the old mill levies AFTER the school district had lowered mill levies. There probably were discussions of whether US Bank should go to prosecutors to investigate charges of loan fraud.

It'd be like applying for a mortgage based upon your income and signing the mortgage which includes a section affirming that the application is still accurate after being laid off.

Anyone with financial common sense should be able to recognize that US Bank was going to have big issues with a bond with nonconforming covenants at the moment the bond was signed. Also, that US Bank would probably not cave and allow the URAAC to spend $4.5M this year without raising serious objections. So a notice of default just prior to approving construction was also entirely predictable.

So, if they had been open on these issues and kept the public informed then they would have had a better chance to resolve them much earlier.

The sequence of events suggests to me that URAAC lied to Tom Ross for his article the saturday article (prior to the city council meeting) on how construction was ready to begin Wednesday, the day after the meeting.

The sequence of events suggests to me that Cari was intentionally misleading with her comments suggesting that notice of default was first indication that US Bank had issues. I think she was also intentionally misleading in how she phrased that the city had legal advice that US Bank could not withhold some of the money (which is apparently literally true, they just have the possibility of demanding the entire $17.5M back and since the City caved, the city's legal advice was probably that US Bank could win that case so her comments were carefully parsed to be misleading and I don't think that someone as smart as Cari did that accidentally out of ignorance, but did it intentionally to get this project funded).

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Scott Wedel 3 years, 11 months ago

Apparently it is just me, but it really bothers me when local public officials lie about and intentionally mislead the public about multimillion dollar issues.

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Scott Wedel 3 years, 11 months ago

And we have gotten no answers as to what was really going inside city hall and the URAAC from Jan 4 when city finance director knew US Bank had issues to the Monday when it was made public.

If City Council and URAAC board members knew nothing of US Bank's concerns and the mill levy issue or that the City received the notice of default until it was made public then they and the public should be appalled at the level of secrecy kept by city staff.

If the City Council and URAAC had been informed of these issues then the public should be appalled at the level of secrecy kept by the City Council and URAAC.

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exduffer 3 years, 11 months ago

Just remember, you have to properly raise little politicians so they can grow up to be big ones.

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Steve Lewis 3 years, 11 months ago

Scott, If only URA was spelled BOCES, your work would have already been done for you.

Don't look for a response in here to affirm what is important and worthwhile. It just doesn't work that way. And if something really matters, consider a letter to the editor. I'm guessing 1 in 20 who read the paper do so online and actually read the online comments.

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pitpoodle 3 years, 11 months ago

steamboatsprings, Where have you been? This is not a competent council to be thankful for. Let's see, council agreed to SB 700 annexation agreement before having all the facts, voted to deny the people a vote on SB 700, agreed to give away our water so an out of town developer could profit, decided it was OK to demolish long, established business at the base area before knowing when construction would actually start - leaving us with an empty lot, didn't know or decided not to disclose the US Bank financial situation, among others. You should wish for another council to get us through these challenging times.

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