Steamboat City Council confident in $21 million refinancing for base area
Hermacinski: "I’m a curmudgeon on this normally, but I’m ready to go for it."
August 12, 2010
(Times are according to Urban Renewal Area Advisory Committee estimates)
1 p.m. Administrative items
1:10 p.m. Discussion of funding and budget for future work on public promenade and daylighting Burgess Creek (10 minutes); update of construction process (10 minutes)
1:30 p.m. Discussion of needed ventilation improvements for Torian Plum Plaza parking garage and possible sources of needed additional funding (40 minutes)
2:10 p.m. Miscellaneous items (10 minutes)
If you go
What: Meeting of the Urban Renewal Area Advisory Committee
When: 1 p.m. Friday
Where: Centennial Hall, 124 10th St.
Call: Base area redevelopment coordinator Joe Kracum at 970-871-7077 for more information about construction at the base of Steamboat Ski Area.
Steamboat Springs — If the base area sees sharper-than-expected drops in property values and no new construction in the next 19 years, Steamboat Springs could be on the hook for more than $2 million throughout the next two decades, according to the proposed $21 million refinancing package for redevelopment work.
That's the worst-case scenario of the refinancing plan for which the Steamboat Springs City Council expressed unanimous support Aug. 3.
The new $21 million package would pay off the city's $17.5 million base area loan and enable completion next summer of work at the base of Steamboat Ski Area.
That work includes a public promenade, the daylighting of Burgess Creek, public walkway improvements and underground utility upgrades. City finance staff will prepare the documents for final approval next month.
"I'm a curmudgeon on this normally, but I'm ready to go for it," City Council President Cari Hermacinski said last week about the new deal.
City Manager Jon Roberts and interim Finance Director Debra Hinsvark said the $21 million would come through the Steamboat Springs Redevelopment Authority's — effectively, the City Council's — sale of fixed-rate municipal bonds that would be paid off with base area tax revenues and backed by the city's "moral obligation." That means if base area revenues do not meet the debt requirements, the city would have to pay the difference out of its general fund reserves.
According to the city's risk analysis, if assessed property values at the base area drop 30 percent by 2012 — 2011 is a valuation year — and there's no new construction through 2029, the city would be on the hook for only about $11,000, total, through 2029. But if assessed values drop 35 percent by 2012, drop another 5 percent by 2014 and there's no new construction for two decades, the city's obligation for the redevelopment debt would reach a total of nearly $2.2 million by 2029.
Hinsvark said the city's general fund reserves ended 2009 at just about $15 million, more than $9 million of which she described as "totally undesignated." She noted that should the city's obligation kick in, the Redevelopment Authority would pay back the city's contributions through future base area revenues.
Roberts said the City Council's other option, keeping the redevelopment funding at $17.5 million, would have been a safer choice.
"There's more cushion protecting the city if you go with the smaller issuance," Roberts said earlier this month. "However, the projections show there is coverage even with the larger issuance."
He added that changing the loan from variable rates to a fixed rate adds security for the city, and refinancing at $17.5 million likely would have extended base area work throughout the next several summers.
"The daylighting of Burgess Creek would definitely not get done unless we have the additional financing," Hinsvark said.
Base area redevelopment coordinator Joe Kracum said although the new financing plan would not drastically change base area construction plans for the rest of this summer, it would enable completion of the current slate of high-profile redevelopment projects next year. Some final landscaping items could stretch into spring 2012, he said.
Remaining work for this year includes completion of "98 percent of the utilities," Kracum said, and grading of the hillside leading from Torian Plum Plaza to the Sheraton Steamboat Resort and Gondola Square.
The Urban Renewal Area Advisory Committee meets at 1 p.m. Friday in Centennial Hall to discuss base area funding, financing and construction plans.
"This is a project that the community has wanted for many years and has put a lot of effort into," Kracum said. "I'm really happy for the community and the base area that their wonderful piece is going to get done now."