Steamboat base area property values uncertain
Projections aplenty for property worth after redevelopment work
May 9, 2010
Steamboat Springs — Future base area property values appear to be as uncertain as the future of the city's base area redevelopment loan.
Those are two huge variables for Steamboat Springs.
After a tumultuous week for the city's finance department, which reached a deal late Thursday with U.S. Bank after an April 19 default notice that rocked Steamboat's plans for summer construction at the base of Steamboat Ski Area, many questions remain about the redevelopment's financing and future. Negotiations involving the city's $17.5 million loan are continuing. A crucial, related question is what impact upcoming base area property valuations will have on tax revenues that support redevelopment work and the loan itself.
Answers to that question vary as widely as spring weather in Steamboat.
Increments of property tax revenues within the base area's urban renewal authority fund base area redevelopment. Those revenues can fluctuate according to property valuations. Routt County Assessor Mike Kerrigan, who is leaving that post June 1, said 2010 is "an intervening year," when property valuations change only for unusual conditions, such as new construction. That situation applies to base area properties including Edgemont and Trailhead Lodge at Wildhorse Meadows, he said.
For example, Kerrigan said Edgemont was valued in 2009 at a lower percentage of completed construction than it will be valued at this year. Another factor, he said, is valuation protests filed in 2009 that are pending. Several such protests involving base area properties have passed through his office and the second tier of Routt County's Board of Equalization, which consists of Routt County's three commissioners. Those protests are pending action in a higher, third-tier court, Kerrigan said.
If the appeals are decided before August, he continued, "there could be a noticeable valuation adjustment downwards, if we adjust or are required to adjust some valuations on those properties."
Properties at Edgemont and Wildhorse Meadows also fall into that category, Kerrigan said.
"There's a significant amount of them, and they have significant value," Kerrigan said about base area properties with pending appeals. "Some of the high-profile, high-value cases that are in that URA, the values have not been determined yet by a higher-level court. … That throws a big kind of monkey wrench into the whole thing."
David Baldinger Jr., Steamboat Village Brokers principal and co-chairman of the Urban Renewal Area Advisory Committee, countered that in his view, the construction of high-end properties such as Edgemont and Trailhead Lodge will raise base area property values, not lower them, when county properties are assessed in 2011, a valuation year.
"How would that not be an increase (in value)?" he said. "These new projects make a huge difference."
Furthermore, Baldinger said, URAAC made conservative assumptions in its redevelopment financing scenarios. Those assumptions include all properties winning their valuation appeals and no new construction — not ever, he said, not even a new Ski Time Square.
"That's not in the model, for banking purposes," he said.
But Kerrigan said that regardless of what is happening at the ski base, decreased assessed values countywide in 2011 could affect future URA revenues.
"A receding tide, you know, lowers all boats," Kerrigan said. "Values countywide are not what they were two years ago. They've depreciated. … It just means that there's not going to be as much tax base there."
Steamboat Springs City Council President Cari Hermacinski has expressed concern about the effects of decreased valuations. She said last week that redevelopment work planned for this summer and beyond, including construction of a public promenade and daylighting Burgess Creek, might not even have the expected economic impact.
"I don't necessarily believe constructing the promenade would jump-start the (revenues) up there," she said.
"This is a sustainable, 25-year funding (mechanism) that will spin off money every single year, in all scenarios," he said about the URA. "The public is going to see a finished promenade that is amazing. It's really going to be dramatic."