Steamboat officials reach base area deal with bank
Agreement allows release of $2.5 million to start work as talks continue
May 6, 2010
If you go
What: Special meeting of the Steamboat Springs City Council, convening as the Steamboat Springs Redevelopment Authority
When: 5 p.m. today
Where: Centennial Hall, 124 10th St.
Contact: Call city offices at 970-879-2060 or visit http://steamboats… for more information.
Steamboat Springs — City officials reached a deal with U.S. Bank late Thursday that will allow the release of $2.5 million to immediately begin work at the base of Steamboat Ski Area, pending the deal's approval in a special meeting tonight.
City Manager Jon Roberts said the agreement would allow the city to release the funds for base area work — meaning construction of a public promenade and daylighting of Burgess Creek could begin in a matter of days — provided that the remainder of this year's funds, also about $2.5 million, be held in a construction account. That account was established when the city's $17.5 million redevelopment loan, in the form of bonds backed by U.S. Bank, was approved Dec. 22.
"It doesn't require us to restrict any funds; it doesn't require us to deposit any funds," Roberts said about the deal. "The entire agreement is half gets released and half gets held until we work out other financing alternatives."
The Steamboat Springs City Council, acting as the Steamboat Springs Redevelopment Authority, will meet at 5 p.m. today at Centennial Hall to act on the proposed deal.
Council approval would allow Duckels Construction to begin acting on the $4.5 million contract for this summer's work that the council awarded Duckels last month. The city has not signed the contract or released those funds because of ongoing negotiations with U.S. Bank.
Roberts said he was not sure whether the scope of construction this summer would change.
"As soon as we can get this deal approved, then we can authorize Duckels to begin work," Roberts said. "We need the City Council to approve the agreement, then we'll sit down with Duckels and explore how we move forward now with this new agreement with U.S. Bank."
City attorney Tony Lettunich called the agreement "a big breakthrough" in financing negotiations with U.S. Bank that accelerated April 19 when the bank sent a default notice to the city of Steamboat Springs. The notice said the Redevelopment Authority was in default on its $17.5 million loan for base area redevelopment work because of property tax rates that decreased without city documentation, and were not changed in the loan conditions, before the loan was approved Dec. 22.
The bank had required the city to provide $3.75 million within 30 days from the notice as additional security for the loan.
On Tuesday night, the City Council decided to postpone action on the notice until May 18. Several council members opposed the idea of using city reserves to provide the $3.75 million in additional loan security.
"On Tuesday night, the council did not accept the proposal of depositing additional funds or restricting additional funds, which was the request from U.S. Bank," Roberts said. "I think the city not accepting that proposal then resulted in U.S. Bank exploring other alternatives to deal with the project."
Roberts said the tone of negotiations changed Wednesday and Thursday.
"I think (U.S. Bank) moved in a direction that was more beneficial to the project," he said.
Roberts said the city would continue negotiating with U.S. Bank about the remainder of the funds and continue looking at other financial options.
Roberts and Lettunich acknowledged the hasty announcement of tonight's meeting. Lettunich said notice of the meeting was published Thursday afternoon at the downtown post office, in Centennial Hall on 10th Street and in City Market in Central Park Plaza. The Redevelopment Authority's bylaws allow for public notice of a meeting 24 hours before the meeting, he said. State open meetings laws allow for posting notice of a public meeting at least 24 hours beforehand.
Roberts said the intent of moving quickly was simply to help get the base area work under way.
"The interest is getting the project commenced as quickly as possible, to get as much work done as possible during this construction season," he said.
Roberts gave an audible sigh of relief Thursday when talking about the U.S. Bank agreement.
"It's been a wild rodeo," he said.