Rob Douglas: Yampa Street deal unfair to citizens

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Rob Douglas

Rob Douglas' column appears Fridays in the Steamboat Today. He can be reached at rdouglas@SteamboatToday.com.

Find more columns by Douglas here.

As Interim City Manager Deb Hinsvark, Public Safety Director Joel Rae and a majority of the Steamboat Springs City Council work at breakneck speed to consummate a real estate windfall to Big Agnes, Honey Stinger and BAP — while spending upward of $10 million from its reserve fund to build new police and fire facilities — city property owners may be unaware that Hinsvark and the council soon will hit them with a new tax (they’ll call it a fee) to pay for approximately $10 million in storm water infrastructure improvements.

Yes, you read that correctly.

City reserve funds that could be used to pay for storm water infrastructure improvements — now mandated because the city crossed the 10,000 population threshold in the last census — instead will be used to pay for new police and fire facilities while property owners will be taxed to pay for the storm water improvements. This new tax will be in addition to the increased water and sewer rates that recently went into effect.

Compounding this transgression, the council members who support this trade-off seemingly think it’s more important to use city funds to benefit Big Agnes — with an amount that easily could approach $2 million — than it is to hold down taxes for the 11,000 city residents who paid the taxes that helped build the city’s reserve fund in the first place.

In addition to the fact that the Big Agnes deal reeks of crony capitalism in the same way the Iron Horse deal that continues to hobble Steamboat reeked of crony socialism, it’s unconscionable to spend millions of dollars — which painstakingly were accumulated under the proffered rationale of having funds for infrastructure “needs” — on extravagant new police headquarters when those funds could be used to prevent the need for property owners to pay for storm water infrastructure.

In support of this error in judgment, Hinsvark and Rae repeatedly cite a 2002 study that concluded the police department “needed twice the amount of space that it has in the Yampa building in order to function effectively.” Are the residents of Steamboat supposed to think that for the last decade the police department was not effective? If anything, given how effectively and professionally our police perform, that oft-trumpeted report proves the opposite of what Hinsvark and Rae wish. Clearly, the existing police facility could be expanded and remodeled to provide additional space for a fraction of the cost of the current proposal to build a massive public safety campus on the western side of the city.

But that wouldn’t fit with the “vision” that some have for Yampa Street. Of course, some of the same folks behind that vision have interests in other projects around the ’Boat that are sitting dormant because of the still-depressed real estate market. Perhaps the council should wait until those moth-balled projects come to life before entertaining the notion of risking scarce public funds on deals designed to benefit a tiny fraction of the citizenry — especially when those funds could be used to hold down the tax burden on residents.

The council should remember that they are elected, first and foremost, to keep city government in check and to act as fiduciaries on behalf of the all the residents of Steamboat, not to be rubberstamps that succumb to the private arm-twisting sessions that Hinsvark and Rae held with council members.

Given the council’s fiscal responsibility, coupled with the harsh reality that we continue to live in uncertain economic times, the council should spend city funds in a manner that respects the fact that the citizens who bear the burden of paying the taxes that feed the city’s coffers continue to be under financial assault from many directions.

To spend $10 million from the city’s reserve fund for new police and fire facilities — only to turn around in the near future and tell property owners they must cough up a similar amount for storm water infrastructure — is irresponsible and unfair to the hard-working residents of Steamboat.

To reach Rob Douglas, email rdouglas@SteamboatToday.com.

Comments

cindy constantine 1 year, 5 months ago

Good of you to bring this to the public's attention. However there is a bigger picture to be considered. A high % of locals still depend on the tourist economy for their living and future growth is in the summer business. Folks do not seem to come when there is limited snow to ski on but lack of water in the summer does not seem to deter the summer tourists. Will an improved Yampa Street just be one more nice amenity for the tourists? Will the locals enjoy a revitalized Yampa Street with sidewalks and street lights? Do we want to continue to make it hard for growing local businesses to expand here by not offering some type of incentive? BAP has indicated they will hire 15 more people as their business has grown. As you know, Rob, there are many ways to structure a real estate deal. If BAP is getting a discount on the building now, perhaps the City can ask for 20% to 30% of the net proceeds when BAP sells the building down the road. Granted that may be 10 to 20 years, but cities all over the country are giving all sorts of incentives to companies to move and grow in their towns. Do we want to lose BAP and perhaps other businesses because incentives are much more attractive elsewhere? The issue is not as simple as you have made it in this article and Council is charged with all considerations.

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John St Pierre 1 year, 5 months ago

Great insight !!!!
How many other ticking timebombs are there??? Last year during the council elections..every candidate promised fiscal reaponsbilty. Maybe the Pilot should reprint some of their interviews/comments....

Yampa Street should have a "wish list" of desirable developments but it should be up to private enterprise to make it happen..... putting in street lights is not that a big expense... nor would repaving it.... but for government to pick winners and loosers is not right.... Walgreens was put thru the wringer and then some.. and they paid the freight all the way without a penny from the city..... because Walgreens believed they would make it back. Thats how the system is suppose to work.

Just a side note... Frisco, Silverthorne & Breckenridge (and by the way our local State Police) all keep their police cars outside and they are 3,000+ feet higher in elevation than we are..... and their activitie have not been compromised in the least...why is that such a big issue here?????

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Steve Lewis 1 year, 5 months ago

Rob, thanks for great column.

Cindy, I don't understand why everything revolves around BAP, easily the smallest piece of the mix. And why this damned rush?

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Scott Wedel 1 year, 5 months ago

I think there is no way that SB residents agree to a property tax.

SB government gets tons of money from the sales tax paid mostly by nonresidents. Since there is so much money and the tax burden on residents is comparatively light then as long as essential services are being met then few care where the rest of the money is spent.

As seen from the 2009 budget where revenues declined 19% and the budget cuts were barely noticeable for most, the SB budget has plenty of discretionary spending.

The people that should be objecting to this are local nonprofits and other recipients of SB city funding because that is what is going to end up being cut.

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Steve Lewis 1 year, 5 months ago

How is it citizen bystanders keep finding such large holes in City presentations downtown?

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Scott Wedel 1 year, 5 months ago

Cindy, If BAP wants to leave then it will leave. The property sales says city could recoup costs if BAP leaves in a few years. But BAP could still be bought out or even move and just keep enough here to meet the contractual requirements to then sell for full market price.

As Scott Ford has pointed out numerous times, competing with other cities to offer the most subsidies is not good policy. It costs too much for too little benefit. Biggest problem is that the company tends to always be looking for better deals from someplace else. Nor is there any great trend that the company being attracted will be that successful.

There are reasons for BAP to locate in SB. Having SB as headquarters associates them with a healthy active city. BAP is not going to move to Biloxi.

Regardless, we should not financially cripple ourselves and thus make it harder for every other local business in an expensive attempt to retain BAP.

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Scott Wedel 1 year, 5 months ago

How is it citizen bystanders keep finding such large holes in City presentations downtown?

Because city staff presentations are not unbiased analysis, but marketing.

Anyone that reads the city presentation would see this is not a plan, but a promise on how it could be done if everything worked perfectly.

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John St Pierre 1 year, 5 months ago

"Citizen Bystanders"???? they are the ones who pay the tab... whom city governement is SUPPOSE to serve and serve at its whim.....

Government is not backroom deals or insider deals

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cindy constantine 1 year, 5 months ago

We will just have to agree to disagree. Lets face it, Ski Town USA may not be long for this world if we put our heads in the sand and do not try and be forward thinking about our community. There finally has been some acknowledgement that the residents pay the highest % of sales tax and if we are not somewhat friendly to business then we will continue to have businesses and people move out of town thereby reducing the tax revenues even further. Maybe the BAP deal is not pressing--only Bill Gamble knows that. But with TIC leaving a big hole not to mention 29 acres of fully developed land behind who do you think will take their space. Has anyone from the Chamber, City met with TIC to put together a joint marketing plan to bring in new companies? Or will that property sit vacant? The year will pass quickly and it certainly would be nice to have some idea by working with the owners now. Lets ween ourselves from the ski business while being perceived as a business friendly community. I bet Durango would love to have BAP move to their community.

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Scott Wedel 1 year, 5 months ago

Cindy, TIC had already left and is down to 100 some employees which is far below it's peak employment. And yet that did not crater the local economy. Construction jobs are also still way down.

So why has SB sales tax numbers largely recovered? Where is the economic strength despite these weaknesses?

It is so-called location neutral workers and businesses that like the chance to live in a nice place like SB. Things like no property taxes help. For many such people/businesses, a relatively remote place like SB is seen as a good thing since we don't get buried by tourists on the weekends like cities along I70. A city government financially crippling itself for one company and to prettify a street does not.

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Neil O'Keeffe 1 year, 5 months ago

For what it's worth, I have heard from reliable sources in the industry that Big Agnes has been for sale for at least the past 12 months and although various parties have shown interest, all have agreed that the asking price is too high given their current revenues. If they were to be sold it is very possible they would not remain in Steamboat given the larger buyer would most likely be looking to expand their existing product line/market and already have the resources necessary to absorb the business minus the local employee base. Has this been taken into consideration by the city, what are they doing to protect against this possibility and what would be the viability of BAP-Honey Stinger in that space without Big Agnes? Just Wandering!

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Scott Wedel 1 year, 5 months ago

Neil, Well, the city appears to need a public safety building. Maybe it could be converted into a fire station. People love fire stations and it would be a great addition to a pedestrian district. :)

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Steve Lewis 1 year, 5 months ago

Thanks Scott. you said it very well. Our strong suit is being an awesome town, and valley. I have held remoteness as a weakness. You are right. It is a strength too.

Many years back a pal, being from England, prompted a global comparison and we wondered what percent of the world's population might even imagine the richness of this Routt life. We were dishwashers by night, and by day we believed ourselves among the wealthiest souls on the planet.

In my opinion the $$ invested in Emerald Mountain is 100x more economically valuable than $$ inducements to any corporation. Be a great place to live and take care of the basics.

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Scott Wedel 1 year, 5 months ago

Steve, I think the key is to remember this is a resort area. Which is more than just tourism because resort areas also attract residents that can live anywhere.

I think our resort economy has been gradually shifting towards residents and away from tourism. When this was a almost purely tourism economy some 20 years ago then all sorts of businesses closed this time of year. Now, very few close for the mud seasons. I'd guess this can be confirmed in looking at sales tax receipts month by month. I'd expect that April and October sales tax numbers are much better now than they were 20 years ago.

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cindy constantine 1 year, 5 months ago

Steve, You cannot have it both ways. Emerald Mountain was purchased with taxpayer $$ generated mostly by locals that pay for goods in this town. Year around, good jobs are still hard to come by so losing companines like TIC and perhaps BAP down the road are not good things. I would like to see some taxpayer $$ going to keep good companies (like the deal we did with Smart Wool) and perhaps incentivizing others to come here so we can continue to generate sales tax $$ by having year around good jobs.

Scott, TIC still has an impact as their training center has brought in 100's of employees from around the country during 2012. These employees stay in our hotels, eat at our restaurants and shop downtown. I had some of those trainees in my shop last week spending money. Not to mention the charitable donations that TIC has also made this year and may make next year as well.

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mark hartless 1 year, 5 months ago

Do any of you folks think it would be right for the City of Steamboat Springs to buy shares in Apple Computer Co.?? Wouldn't such an investment be more likely to exceed the ROI of many/most of the suggestions you folks regularly submit here on this blog?

There are also some pretty safe Muni-bonds currently returning more than the City of Steamboat Springs is paying in interest on some of its flop investments. So, instead of re-paying that money, shouldn't the City just buy Muni-Bonds instead?

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Scott Wedel 1 year, 5 months ago

Mark, I'll pseudo agree with you while saying city should not buy Apple regardless. I'd suggest that if City cannot expect a ROI better than buying Apple then City should not spend that money and return it to the taxpayers so they can buy Apple.

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Steve Lewis 1 year, 5 months ago

Mark, We should pull up the City Charter which I believe, like others, will suggest a very different mission than profit taking. Yes, a municipality should be responsible to it's long term budgets and avoid the red ink. But second to that, it should be responsible for providing the infrastructure of roads, police, and other services/infrastructure falling between those two. Security and commerce. I don't extend "commerce" to mean subsidy of one job-creator business, but yes, further down the list it is a viable spend in my opinion.

Enjoying the thread.

Cindy I'm not sure what you mean, "have it both ways". Can you be specific?

Scott, some of your best writing, above. Rob, some of your best writing lately. Well done.

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Scott Wedel 1 year, 5 months ago

City government should not be viewed as a profit making enterprise. I think it could be viewed as a service provider to its residents. A service provider that is an efficient means of allowing efficient transportation on roads it creates and maintains. A service provider that is an efficient means of providing police and fire protection.

A service provider that provides a stable, consistent, desirable and predictable business environment for investors and management. And so measures like investing in infrastructure in a business district is accepted as being worth considering, but questions the wisdom of spending so much to help one business on a weakly documented theory that it will also help other businesses on one street.

This model of being a service provider suggests the importance of being disciplined and cautious to first avoid taking actions that will cause harm and to second, have strong reasons to believe a proposal's promise is the likely outcome while considering the likely side effects.

Business investors and management are making longer term plans and it is simply poisonous to the business environment for a local government to quickly change rules that affect businesses. That means no one has any idea of what is a good or a doomed business plan.

SB City is normally kind to businesses with notable exceptions of the affordable housing fiasco. SB has not been very disciplined on spending, but it lucky enough to have an abundance of revenues paid mostly by tourists.

I think Town of Yampa does a good job on providing the services possible given their limited resources and providing a stable and consistent business environment. Businesses are rarely in front of the Yampa Town Board appealing for rules changes or exceptions. Nor have businesses protested new ordinances warning of severe problems.

Town of Oak Creek has shown how an erratic government can discourage investors and businesses. The Town Board has a history of making major policy decisions with no warning and no input. From suddenly making property owners for tenant's unpaid electric bills (repealed after protests) to now taking more from the utilities than it collects in sales and property taxes combined. Or to last meeting's rejection of the mobile home parks request to opt out of Town trash service. The stated objective of requiring trash service is so that trash does not accumulate due to a lack of trash service. But now apparently the point of trash service is so that the Town can generate money for the general fund by charging management fees.

And so explains a building that had sold for $575K cannot not find a buyer at $159K because after paying for town operated monopoly utilities leaves too little profit margin for studio apartments for an investor to be able to make of a profit. And any profit that might exist today could easily be wiped out by some future erratic decision.

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Steve Lewis 1 year, 5 months ago

This Council packet is short enough to post:

AGENDA ITEM # 3. October 30, 2012 Information, possible motion concerning the Police/Fire Facility location. More direction toward the location of a fire and police station.

I. REQUEST OR ISSUE: Council has reviewed two possible locations for the Central Fire Station and Police Headquarters and has asked for more options. II. RECOMMENDED ACTION: If Council finds an alternative option presented tonight to be the desired location of either the Central Fire Station or the Police Headquarters, staff recommends direction in the form of a motion. III. FISCAL IMPACTS: Proposed Expenditure: Up to $10mm Funding Source: Unassigned Reserves 􏰃􏰁􏰀 IV. BACKGROUND INFORMATION: Council has asked staff to offer additional options for siting the new Central Fire Station and the Police Headquarters. Tonight, we will look at locations with direct access to Hwy 40. Additionally, we will show Council the designed impact on parking at Stockbridge, if one or both stations were placed on that site. V. LEGAL ISSUES: None. VI. CONFLICTS OR ENVIRONMENTAL ISSUES: None of which we are aware. VII. SUMMARY AND ALTERNATIVES: Council may choose sites tonight, ask for more discussion of selected sites or ask for new sites to consider.

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Scott Wedel 1 year, 5 months ago

So no reconsidering whether they still want to sell the current building?

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