Thought I would start a new thread on this because some of the others are getting very long.
The challenge I want to pose is this:
If someone thinks that a decision that is being made, or that was made in the past, is a bad one – he or she suggests a viable alternative rather than merely hyper-analyzing the situation.
If it is a past decision, talk about how you would “fix” it given current conditions. If it is a decision that is currently in the works, make alternate, realistic suggestions.
I think we all know that every decision made in a political arena has risks and benefits. The best decisions are made by putting the relevant information related to those risks and benefits on the table and taking the road with the greatest potential to minimize the risks while maximizing the benefits.
There is always some element of forecasting/prediction/uncertainty that is undertaken with some level of pessimism/optimism. Many of our differences seem to lie in where we fall on the pessimism/optimism spectrum. Interesting how we all seem to think that our view is "realism."
Of course, there are still political and philosophical differences that may lead us down different paths (e.g., different personal values about affordable housing), but those don’t have to interfere with working together and accepting others’ ideas when they are good ones.
Where do you want to start?
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29 comments:
Okay, I'm game: I don't understand why tracking separate special purpose funds is a burden on the City of Lafayette. Item R on this week's council agenda proposes to roll all those funds into the General Fund.
My impulse is that the only function of this "consolidation" action is to completely lose accountability for those funds between the time of collection and spending.
There has already been a significant amount of redirection of those funds in past actions, which accounts for the low balance on some. But there is still room for another $1M at least, at the very least, to be collected from PRAD. And that fund, as an example, also collects from commercial development, which wasn't part of the consolidation rationale. Consolidating PRAD alone will possibly dilute parks and recreation funding over the course of the next few years to the tune of one or two major capital projects in the parks and rec system, that may now get spread over General Fund budget in ways that don't serve PRAD purposes.
Again, is there any reason why maintaining these separate accounts is a burden on the City (except to possibly add some discipline to budgeting)?
I wasn't on council then, but purchasing the Old Albertsons has proved to be a boat anchor to the city. It is carried on the books as part of the fund balance, but I doubt in the final outcome we will get anywhere near the appraised amount as part of the redevelopment process.
The second was the location for the Simpson Mine park. Between the cost of the land (purchased based on what the owner thought he could get if he had a duplex on it even though there was only a cinder block shack there) and the cost to close the street next to it this is by far the most expensive park in the city for its size. The total cost of this park is what staff is estimating as the cost for building a 3 acre park on the old Albertsons parking lot. I voted against it because I felt due diligence had not been done by the previous director of Parks & Recreation, as there were many available plots of land in old town that were blown off.
Abiding by the spirit of the topic, I should say that the viable alternative I'd like to see discussed on Item R is to do nothing. If Item R does pass as a concept, the next thing that will happen is an ordinance that goes through the Code and strips out all the provisions about maintaining and limiting expenditures from all these special funds.
The only way I see to fix the problems that Frank is talking about above is not to repeat the same mistake twice.
And opinions have definitely varied on how many alternatives there were for a park to serve parkless areas of Old Town. I don't know the answer to that myself, since all the diligence was performed outside of open session, but I do not have any issues with the end product at Simpson Mine Park.
Should the City build a park at Countryside Village before there is any new development to serve? I'd say bond money would be far better spent enabling the redevelopment project in other ways, like pledging some funds to extend South Boulder Road to Broomfield, to change the economics of that corridor and relieve some pressure on Highway 7. During some discussion of road funding in the last couple years, the City Administrator pointed out the importance of leverage where cities have managed to expedite road projects.
Funding speculative projects and deferred maintenance doesn't really get the city ahead... I haven't really spent the time to know what, if anything, the City should be looking at to invest in with a bond issue, but I do share some concern that the spending precedents in the City for capital projects don't necessarily justify a debt riding on future revenues.
Frank hit the nail when he said that buying Albertsons has not panned out. No more money should be tossed at the site on a wing and a prayer. Viable alternatives to the council sanctioned redevelopment plan should be sought out and welcomed. Ditch the plan if it opens the doors to broader redevelopment interest.
Number two is the lack of long range planning that went into the road configuration at 287 and Baseline. Businesses at the four corners should be easily accessible to patrons traveling in any of the four directions without dangerous U turns. I don't know what the fix is but looking at future development in a larger context would help to prevent recurrence.
And an enormous thump on the head to the school boards of years past who ignored obvious attrition issues that were going on in Lafayette. No more heads in the sand.
It is simplistic to jump to the conclusion that buying the Old Albertsons building was a mistake.
At the time, the new Safeway was going up in Erie on 287 and a King Soopers was being built just south of the NW Parkway on 287. In the end, the Waneka Marketplace was built with the new Albertsons and the Summit Marketplace with the King Soopers soon followed. City retail sales tax revenue is UP and many folks west of 287 now shop at the new KS rather than the closer one in Louisville. Black Diamond and other retail shopping areas on 287 followed. So the city admin would argue the Albertsons deal started all this.
Recently Albertsons closed may of its older stores in Colorado. If the old Albertsons had stayed, it could have been on the chopping block as well. Since the city does not set goals and objectives on such a deal, there is no way to measure success or failure. There is also no way to verify if the Albertsons deal could have been done any other way.
However, the way the deal was done is suspect. First it financially crippled the S. Boulder Road part of the Urban Renewel District. Also some incremental revenue of the Waneka Marketplace could have been put back into the reserve fund, paying back a major portion of the $1.2M taken out of it to buy the old building. Were these options ever explored? They should have been. The crippling of the URD was certainly known at the time to the staff. And if the $1.2M would have been considered partially as a loan to atone for the lousy collateral of the empty building, the result would have been a lot more tolerable, with some money now available to repair the roads.
The city argues it thought it could sell the old building quickly. The real estate fliers do exist. Didn't happen.
It is interesting that there are no answers to my questions about last week's Item R. Are we trying to spend more money from Lafayette's General Fund? What's the motivation? What happens to the transferred funds, are they permanently encumbered?
Kerry, you say that it is simplistic to "jump to conclusions" by calling the purchase of the old Albertson's a mistake. We cannot call purchase of the old Albertson's a mistake despite years of data? I believe Dreamer is pointing out the futility of owning the parcel if the City cannot enable any special development plan. We have yet to see the City's RFP results, but, when we do, it will indicate if there is a market for what the City wants to do with the parcel. The cost for the City to push its own plan into being is likely to be very high in my current estimation.
I agree that there is good indication that Albertson's new location might have depended on financial assistance from the City; however, purchasing large real estate assets was not the only option. I agree that some additional financial protection could have been provided for the City when it acquired the old Albertson's property.
Again, Item R has no effect on how the money is spent from those funds with limitations. I also suggested a call to the acting finance director.
As I understand it, to spend money from the various projects fund, it had to be transfered into the General Fund first. Or vice versus. If one looks at the city budget and monthly actuals, there are transfers going in and out from everywhere. Some departments are funded from splits of a bunch of funds. So the finance department wanted to reduce many of these duplicate accounting entries to make life easier. That's all.
As for the Old Albertsons building. If the $1.2M 'albatross" helped create sales tax revenue from the new Albertsons that not only gave the city a good return on the investment (more than 4% per year) and eventually also replaced the $1.2M principal used to buy it, it would be worth it. In fact, if the numbers were worked initially and showed this, the old building could be demolished and the city could still be ahead after a number of years. But without the modeling being done (which is finance 101 in the real world, who knows?)
Yes, the real data exists to figure this out. The former finance director resisted every attempt to do this kind of work. He didn't want to show that the $1.2M was not being replaced in the reserves and all the new sales tax was all going into the General Fund. A financial shell game, legal of course. (I was a civilian at the time. But now I know what was done.)
A liquid asset, $1.2M in cash, was being replaced by a piece of unwanted real estate being carried on the books with a value of $1.2M.
Of course, if the city can get its $1.2M out of the old building, the results are all positive. The only damage would be and still is financially to the Urban Renewal District.
If one waits until these types of "deals" gets before the council, it is hard to educate council members as to what is going on and whether it is good or not. Especially when the staff recommends it and they don't explain what is going on. The $9M bond proposal was dead on arrival at that workshop because I had challenged it the day before.
So now the question still remains, how to get the roads fixed?
Sorry, I have no intention of calling City staff to bug them when I can ask a member of the council to explain an item they just voted on. A clear answer out of the council means there is probably a good understanding of the impacts of a resolution, the lack of a clear answer says otherwise.
My experience with the state budget gave me pause when I looked at Item R. During the heyday of the budget crisis, the infamous TABOR ratchet would cause cash funds, with limited purposes, to displace General Fund revenues. While that was not going to be the problem in Lafayette, I was concerned that the requirement of a GF Reserve in Lafayette might have a parallel type of effect, where special purpose funds get encumbered in the reserve and cannot be used for their intended purposes. If the Reserve is not a serious encumberance on funds, just an accounting practice, then I really have no cause for concern.
Well... except that no matter how you slice it, it looks like Lafayette will be going upside down on its budget sooner or later if we try to get back up to speed on streets, etc. You ask where the money is going to come from for roads. My one lingering concern is that Item R changes the balance sheet in a way that might allow that question to be pushed off into the future, even if it is only for another year, when it is really a pressing issue now.
As far as the Albertson's purchase goes, the analysis is in your home court. If everything is fine and well when the real estate asset is liquidated, when does that become an appropriate course of action? $1.2M could be used for roads at the moment, but that doesn't seem to be an option... I am also still open to the idea that the City can enhance the value of that asset. Hard data on that should be coming in soon, with the City's RFP. What's the word?
Finally, Kerry, help me out with this one: What is the financial damage to the URD that you keep mentioning?
The council just passed a resolution to change the emergency reserve requirment from a percentage based calculation to a flat amount, $4,000,000. So R has no effect on it. I proposed the change months ago at a meeting with the city administrator because of some uncertainty in last year's financial picture and the effect of the adding the ambulance service. Capping the reserve has freed up some $270,000, which was discussed during the city admin's staff report. No action taken on it. He did not propose any of it go to road repair. He did suggest that the council consider restoring some $70,000 to 2007 defunded projects. (One has to have a wry sense of humor to discuss borrowing $9M at the same meeting that a supposed $270,000 surplus is being discussed.)
When the second Urban Renewal District (URD) area was formed along S. Boulder Road, a base level for retail sales tax revenue was set. If revenue grows above the base in the following years, it goes into the Urban Renewal Fund for use, not the city's General Fund. When the base level was set back in 2001, it included the revenue from the original Albertsons. So when Albertsons moved out to the new location outside the URD, the actual revenue in that area dropped way below the base. This meant that any revenue growth in the remaining businesses (i.e. Wal-Mart, fast foods, Tings, et al) would never flow to the Urban Renewal fund. Today, no sales tax revenue in that area which still produces the highest amount to the city, flows to the Urban Renewal fund. The only sales tax revenue that goes to the fund now is from businesses on Public Road, which is not a lot above the base set in 1999.
Now odds are that the original Albertsons would have moved, left town, or been recently closed. The new one kept the revenue coming and any incremental business it does flows to the General Fund, not Urban Renewal.
So now with all the hype about redeveloping the WM/Old Albertsons area which would take at least $6M of city money, there isn't enough city money, even if the urban renewal money was bonded out. Of course, during all the consultant workshops, this wasn't pointed out.
Once again, the real work is done behind the scenes, not making motions. Not only is the $1.2M tied up in overvalued real estate, the deal hurt urban renewal.
I have been able to find no documentation that all of this was discussed and understood when that deal was made. To say it was not is to suggest our former finance director wasn't doing his job.
The bid deadline was yesterday. No word as of this writing. The RFP was to redevelop the WM building, not the old Albertsons building (if my memory is working this a.m.)
The bidders conference did not go well.
Kerry- "The bidders conference did not go well." Can you elaborate on this? Should we expect that no one wants to redevelop this site? Is the price too low? Expectations too high? We live in an area where new trumps old and developers are hungry to put a fresh face on anything, be it an open prairie or an existing structure. How can we not find someone willing to do something here?
If you can't dazzle them with brilliance, baffle them with B.....!
Cyclorado, the Lafayette News reported the bidders conference lasted 20 minutes with few questions asked (four I think).
A few weeks ago I accidentally met someone who attended the conference and he said there was little interest expressed. So now we will see.
As for Councillor Phillips response, if you readers agree with him, let me know and you folks can have the blog to yourselves. Since he is the Chairman of the Urban Renewal Board...
"Ignorance is bliss......."
Can we assume that last post was Councilor Bensman?
I appreciate the financial insights, but I am also trying to pick them apart and see if there are really any conclusions to be drawn. Now that he's gone, we're getting a lot of criticism of the past finance director particularly. I'm not sure what to make of that, or any of Councilor Bensman's analysis. On the one hand, it seems the City's "liquid" asset is not a problem. On the other hand, it's a financial dead end. So I'm still asking, what is the appropriate course of action?
I'm not sure Cyclorado's questions are getting a straight answer, and they deserve it. The raw truth is likely (1) the existing development configuration is a significant constraint on the feasibility of future development of the empty Countryside big boxes, and (2) South Boulder Road has really paled in comparison to greenfields around the City as a location for development. I continue to wonder if pushing South Boulder Road extension with a little financial muscle (on top of setting the goal in the abstract) might not be the way to go, to shift momentum in that corridor. But, like Cyclorado, now that the City should be preparing a summary of the RFP results I'm looking for the basic analysis on why we aren't getting anywhere on the redevelopment plan.
In other words, how do we apply some forward thinking to the problem? There is value in hashing over the details of where things might have gone wrong before, but what are we going to do about it?
Kerry, aren't there carrying costs the city has to honor as long as it owns the Albertsons building? I imagine it is not just the one time expense of purchasing the building we are talking about but ongoing maintenance and etc. Also lost opportunity with the $1.2 million tied up in real estate that could have been put to work earning money or stimulating revenue production elsewhere in the city. Difficult to calculate outside abstract scenarios
Since I was the only council person who showed up at the bidders meeting, perhaps a first hand narration is in order. Considering the room was full, I would interpret that as a lack of interest. Few questions were asked not because of lack of interest but because no one wanted their competitors to have any idea of what they were thinking. In fact many of the bidders met privately with staff to get their questions answered. That said, what we are asking for is out of the "box". Developers have their formulas that include parking ratios. Council clearly indicated it did not want to replace one large parking lot with another. Realistically this development may take time. After the county builds their building and the road system is in place this will become a less risky proposition. Seminars I have attended on this type of urban renewal are all pretty consistent on their advice. Create the vision, but don't expect it to happen overnight and be prepared for it to evolve over time.
Sorry, that anonymous post was mine.
The Old Albertsons building has some tenants right now. I would guess the rent covers most of the carrying costs. If the $1.2M was instead in the bank, the city would have generated around 4% a year. Over 4 years, some $250,000 to $300,000 in interest.
There is a simple rule one usually encounters - "He who has the gold makes the rules." The feedback I was given by an attendee of the bidders conference is "You have to be kidding." So now we'll see what the results from the RFP are.
The city's vision of the redevelopment requires it to invest $6M in infrastructure. There is no $6M. When the city crippled the Urban Renewal Fund, it made it extremely difficult to bond for that amount today.
It also does not deal with the numerous pads that are owned by existing businesses at present. Two sit right in the middle of the proposed park.
Also Wal-Mart can sell its building to just about anybody who is in compliance with all the regs that surround such a building.
The county is on hold with its building until the Wal-Mart building is sold and they know who the new owners will be. When Kmart went out of business in Louisville, the result was a Hobby Lobby and a Big Lots.
There could also be pressure to "donate" the old Albertsons building if anyone is interested in developing it.
Bottomline, the city's economic center has moved out to 287 and Baseline. Unless some developer comes riding in on a white horse with a ton of money and the city can meet their requirements, the vision will remain just that, a vision. In the computer industry we had a saying: "It always works well on Powerpoint."
Developers who invest want a return on their investment. They have to see a profit at the end of the road, rewarding them for the risks they take. Just the way it is.
To Alex's question, what do we do about redeveloping the site? I don't know. We paid consultants $35,000 to come up with an answer. I believed they flunked. So do we try again or see what the market forces generate?
As for my criticism of the former finance director, that is not new. The previous council pushed hard on the finance department. The results were a more profitable golf course (which was being driven out of business by finance) and a Rec Center less reliant on subsidies. It took three years for the staff to provide a financial impact statement on ordinances and resolutions it proposed. And finally at the workshop on the $9M was the council actually presented with a forward looking financial statement. There is a lot more but its history now.
This financial stuff may seem trite. But it drives the city's ability to provide services. Even urban redevelopment. Decisions made years ago are now driving the present. There are always difficult tradeoffs to deal with. But they should be on the table for discussion and debate. Maybe that will happen now.
Amen, that made perfect sense.
But this is discussion and debate, and where is it getting the City? If you want me to agree, Kerry, that City finance is important, I'm already there. But it's a small concession when the only thing we seem to do with it is figure out where things got crossed years ago, while seeming to ratify the same decisions and relying on the same articles of faith as we look forward.
The City in fact paid probably twice the $35,000 budget to produce the redevelopment plan. And it seems we are gearing up for the new RFP data to show that no one is biting on implementing the redevelopment plan. You'll have to excuse the Dr. Suess analogy (I do read this one quite a bit), but remember the story about the Zax, who sit there arguing about who's going to budge, for all eternity, while the world goes on around them? I agree that the center of commerce has moved to Baseline and 287, but so what?
To me, the only actions that make sense with the old Albertson's given the financial analysis are to sell the asset or do something to change the dynamics of the entire South Boulder Road corridor. Maybe that involves dumping $6M into the site, or a road to the east, or whatever, to make it take off, I don't know (we're already rationalizing writing off the original purchase price, so what's the price of poker if the City is going to get into the real estate business?) Or do we model what it will look like when I can still use the empty parking lot to teach my kids to drive on it in 15 years?
Frank, I thought I knew where you stood when you opened on this thread calling the old Albertsons a financial anchor. Now I'm not so sure. Are anchors a good thing?
Alex, this thread has certainly evolved from its original intent! At this point berating past actions serves no purpose. I was not optimistic that a developer was going to swoop up the property quickly. The importance of creating the plan was establishing the long term vision. This helps to protect you from the pressure to develop based on whoever is interested and whatever they want to do. It was also important to get done before Walmart sold its old building, to prevent "step down" uses like a matress factory or a Big Lots. I agree that some critical components are not yet on the drawing board, like the extension of South Boulder to the east. With the County building we have a 'people' anchor, and the park and road infrastructure the first necessary step to provide a framework for further development. Now that we have the vision it is time to start tackling the obstacles instead of rehashing the past and wallowing in gloom and doom.
Is Alex wallowing in doom and gloom or is that just more Kerry bashing?
How did the city do with the RFPs? Was there any interest from the development community? And why was just the Walmart building put out for bid? I don't understand the strategy.
Dream- From what I've gathered from my questions, it sounds like the WM building will be the only unoccupied building after the super center opens. I'm not sure I have a clear understanding of what is happening here either.
Would someone be kind enough to make a bulleted timeline of events for this site? I know there is a nice sketch plan for the entire site, but there are many public and private owners that have to get together on the final plan (City, private, County). There are also businesses trying to function in the old buildings. Can someone simplify what is going on at this time? What building is up for development? How does this fit into the sketch plan? Is it phase 1? or are developers bidding on the whole site? Thanks!
Me, Kerry bashing? What in the world would ever give you that idea?
The County owns the land behind the Sonic. In discussions with the city the plan is for them to trade part of that land for the Old Albertson's where they will build their new building. (this has not been formally agreed to by either the county or the city, but the county has been very supportive of our planning process). All of the side stores attached to that building will remain as is, as will the liquor and the auto parts store. Walmart owns its building, and wants to sell it. They agreed to delay putting it on the market for a while until the city completed its renewal plan so that any potential buyer would know what the expectations are for the area. Since the plan has been adopted they have started to market the property. The city has started looking at ideas on how to fund the park portion of the plan. Staff floated the idea of including the cost as part of a bond offering (which also included money for road repairs and some other capital items) secured by future sales tax revenue. Based on council's reaction at the workshop on this I doubt that funding the park that way will happen. I am unaware of any bidders on any of the properties in question.
Zero takers on the RFP? That should translate into zero dollars spent implementing a plan that, at least at this time, is not stimulating interest from developers.
Why is the city snubbing "step down" uses like Hobby Lobby? What's wrong with having a craft store or a Marshalls type store fill the Walmart and Albertsons?
Clean your glasses Dreamer. If you look back at my post I said Big Lots and a Matress factory. Did not say anything about Hobby Lobby or Marshalls.
I think we need a clarification of what a "step down" use is, since, from your post, Frank, it is this category that apparently defines what the City is trying to avoid. A Hobby Lobby and a Marshalls would be okay to replace old Albertsons and WalMart, but not Big Lots and Matress Factory?
I also have to admit that I am honestly as unclear as ever about what the City is bidding out in the now-overdue RFP. Is it true that just the WalMart site was let, or was the RFP for both big box lots? What's the strategy?
And in terms of "viable alternatives," the topic of this thread after all, I have to presume that the City did not engage in the RFP process just to prove that no short term action is possible. Surely, if the results of the RFP process were not positive, there must be some plan to either make the redevelopment plan more viable or look at some alternatives, right?
Alex, I am surprised you don't understand the 'step down' concept with your experience on the PC, but okay... When a strip mall is built new, the small retail typically fits or complements the anchor. If the anchor is a grocery store, then you usually see a liquor store, a hair salon, a coffee shop, a fast sandwich place, etc. When the large anchor leaves, you don't just lose the anchor, you usually lose the small retail that was matched to it. If you are lucky you replace it with a comparable anchor. If not, the property erodes and the rental rate drops attracting discount retail. This is usually a continuing downward spiral and ends in ..... Surprise, urban renewal! As for the RFP, the true measure of its success is if the Walmart sells and to whom. Since we own the Old Albertsons and are working with the county to swop properties etc. there is really nothing from the city that is on the block as part of this idea. Timing is an issue here. The county wants to build its new building and may decide not to wait for the old Walmart to sell. If so, either they will build on their original property or we will go through with the swop as planned. If the old Walmart sells and the new owner decides he/she does not want to go along with our plan then that would be the point that we would look at new alternatives. The point of the process we went through was an attempt to attract developers by showing them our vision and taking some of the uncertainty out of the process.
Just to be clear, I am not a big fan of the idea of Countryside Village getting by on life support when there are better options. I particularly believe Lafayette needs to establish a model for true mixed use, and few locations make as much intuitive sense as this location. So my questions are not based on any assumption about what we should do with the site. I'm not greatly enthused about, as you say, Frank, "step down" recycling of the big box spaces.
I am, however, interested in something that is a viable alternative. And I'm not sure I understand the logic in thumbing our nose at the way the market might react to this property in a "step down" scenario. Without doing something to alter the way the market looks at the property, we are talking about either high risk or big investment from the City. Or did the RFP results show that the City has changed the way developers look at the property?
At the very least, I need to understand how building a park before anything else goes in will drive the market. There is a certain logic to it, but I'm not sure it is the type of logic that lures private developers. Public spaces are great, and they should be part of the design almost anyplace to some extent, but I don't think it is the make-it-or-break-it factor at BelMar or any of the other precedents we were told to look at.
So, yes, I understand the concepts behind the real estate cycle, including anchors and step down uses in commercial developments, but I'm not sure I understand how they are being applied in the analysis at hand. Specifically, if there is a reason to chastise Dreamer for not distinguishing between two flavors of second tier commercial tenants, I'm unaware of the significance of that distinction myself.
There are still many unanswered questions here. I guess we've confirmed that the RFP was for WalMart's property only... Were there any proposals?
I thought Frank's comment stating that the RFP was "important to get done before Walmart sold its old building, to prevent "step down" uses like a matress factory or a Big Lots" meant that Lafayette was not interested in any of the typical "step down" uses, not just mattress factory or a Big Lots. I stand corrected. But I still don't understand why the city would take this position.
I think the idea, at least from some points of view, and from the work the council did with consultants on the redevelopment plan, was to return this area to a more pedestrian, scaled-down, mixed use development that would be more compatible and integrated with Old Town.
The idea was that rather than replace one big/medium box with another, we would create somewhat of an "urban village" that would increase the livability of the core of the city.
We knew starting out that this wasn't traditional, quick, or without risk and I still believe that it is worthwhile to be patient with the process so that ultimately we will get something better than we would have if we rushed to fill the empty Wal-mart with the first willing occupant.
The outcome of the RFP will, of course, influence the next decision, but I think we are taking some calculated, yet worthwhile, risks that have great potential to rivitalize our downtown.
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