I'm pleased to let you know 13.6 acres of commercial property on Highway 7 was approved by the the Board of Trustees on Tuesday evening. This site in Vista Ridge is located at the northwest comer of State Highway 7 and Mountain View Boulevard and consists of 6 commercial lots, and one tract for private road access.
The developer told the Board the first businesses have signed leases for the anticipated November 2007 opening. According to the developers Walgreens has also entered into an agreement build on an adjoining lot.
I also can confirm the major grocer interested in building a store at Bonanza and Highway 7 is continuing discussions with the developer who owns the land at this intersection. Both projects will help meet our adopted town economic goals while providing needed services to Erie and Broomfield residents.
Saturday, May 12, 2007
One Step For Capitalism, One Giant Leap For Erie
From Erie Mayor Andrew Moore: The First Commercial Development on Hwy 7 Approved
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All this commercial retail development is quite predictable to those who pay attention. The Larkridge Mall on I-25 and Hwy 7 in Thornton is growing by leaps and bounds. There is a Northland Ridge (?) restaurant park being built on the NW corner of the same intersection. Now we are witnessing the retail target area concenpt of building retail every 5 miles or so. Retailers are targeting the Erie, Vista Ridge, Anthem Colorado market, drawing buyers away from Lafayette going east (sound familiar).
The issue of immediate concern is the discussion of the proposed bond issue. primarily for road repair, to be funded by project retail sales and use tax revenue. If it is put on the ballot and voters approve it, the decision as to the amount to be bonded for the next ten years from 2008 will be decided next year. The amount on the table NOW would require the city to come up with an additional $300,000 per year starting whenever the rebonding would start.
When I asked the question if the loss of retail sales tax to the east was considered in the 10 year revenue forecast, I got no answer. Voters will be told rebonding will not increase taxes. But will they be told that there is a risk to city services if the revenue projections are low since $1.1M will need to be paid each year for ten years?
I have proposed a more realistic and less risky scenario to the city staff. It was not accepted as of now. But the important decision will take place if the voters decide to approve the rebonding and the bonding amount is set by the new council after the election.
My message to the city government is that they need do a better job of projecting revenues or it's their compensation and staff levels at risk. Maybe that will work. At least the city administrator told the council at the last workshop that downsizing is a possibility.
What to worry? YTD city revenues are down YTY. But I'm told it is not a problem. Oh well.
Kerry, what is the "more realistic and less risky" bond scenario you proposed? For my edification, is it possible that the voters could approve the bond as proposed and then the City Council would determine not to issue any bonds?
The City's revenue projections rely on the existence of a Target store that has only been reviewed as a sketch plan, so I agree that this alone is a significant risk factor. Since the City offered Target a giant incentive package, though, I'm wondering how much revenue the City is actually counting on getting from Target for the first few years. As I recall the City was foregoing over $4 million in potential revenue from that proposed shopping center. This would already be discounted from the revenue projections, wouldn't it?
For those who missed it, I believe the City Administrator said that the City may need to look at focusing on "quality" of services in the future, as a kind way of bringing up the topic of downsizing. The explanation was that there are underutilized people on the City payroll because the City cannot afford the capital costs to employ them as their positions might intend. I have no idea where this payroll problem exists within City departments, or its extent, but it seems to me that this is a potentially serious structural problem with the City budget that will not be solved just because the City meets its revenue projections.
The development of competing commercial outlets in Erie has just begun. And Broomfield has yet to put in anything on its three corners at I-25 or along Highway 7.
We need to do something about funding for streets and other essential repairs. The question, given the risks and uncertainty of City revenues, is whether the easiest thing is also the best thing.
Alex raises some good points.
Yes, the voters could approve rebonding and the council could decide not to do it or rebond at a lower amount. There are two requests being drafted, one for roads and one for the Rec Center. If one or both are approved, the city and council would be prudent to hold off until March of the following year to that the actual results of 2007 are determined.
I have a list of 15 assumptions made in the financial projects. Keep in mind the whole 10 year projection is based off of the 2007 revenue budge. Right now we're behind on that.
The numbers we were provided listed no assumptions. Target alone could generate several more questions since there are two retail developments. if and when, and revenue projections. Yes, there is a Target et al EDA but no way to tell how that was baked into the city forecast accept for date of opening - which no one knows right now. The Target EDA gives the city money upfront each year before there is tax sharing with Target. (Gee, this is better than the Wal-Mart deal which I opposed. Why was this one different? Not done with motions.)
As to under utilized employees, if that is the case, the restructuring or downsizing should have begun or should begin now. Why would idle staff be allowed when cost of living raises to productive employees were cut? Rebonding should not be a condition to fix that. But staff increases are built into the projection. So how this all washes is a puzzle to me.
The rebonding commits the city for 10 years. So a lot can happen in 10 years. Walgreens, Safeways, King Soopers, Wal-Marts, Chilis, etc. can pop up in two or three years and Alberstons can close in 90 days.
OK. My proposal. The city rebond for 10 years at the amount the current payment of $800,000 would allow us to borrow for roads. That's the current payment made yearly now. The finance department can figure out the amount and payment restructuring. That would tell us what we could borrow for road repair.
The Trojan Horse in all this is if the amount borrowed is too high the only way out is another bond restructuring, slashing the city budget, lowering the emergency reserve, or proposing a public safety tax.
Borrowing money on future projected increases in income is a giant mine field.
I thought it was 2 bond proposals, one for roads with other things tacked on and the second was to build a park next to Checker Auto Parts at the Walmart project.
Kerry is right that it was predictable that retail development would be drawn to the Highway 7 area. The area is booming.
The larger one is for much needed repairs to roads, city parking lots, and traffic signals. The other is for family changing facilities at the Recreation Center.
d-b,
Councilor Cameron is correct.
I did not want to weigh in on the Rec Center changing room since I know little about the need right now.
Also being the resident financial curmudgeon, I wanted to see if anyone besides me noticed that the first amount discussed for it was $210,000 on April 3 and now $560,000 a month later. (What's $350,000 plus interest among taxpayers anyway?) No one said a word. Neither includes interest costs of borrowing for ten years.
The previous council had passed an updated resolution limiting the subsidy to the Rec Center. After the May 1 workshop, I asked Finance how the $560,000 loan would affect that resolution. I was told the resolution only addressed the yearly operating subsidy, not the cost of repaying the current loan on the Rec Center (I guess around $500,000 per year).
Sorry, I never caught that. We weren't told that when we redrafted the subsidy resolution. Not in the 250 page city budget book. Neither is the resolution.
Anyone wonder why the Library gets the short end of the stick in the yearly budget?
That council was never told that and this council has never seen that resolution.
Oops. My apologies. The $560,000 was the combination of two line items in the April 3 discussion:
$ 210,000 – Family Changing Room at Recreation Center
$ 350,000 – Addition of pool office / space used for family changing room
Like I said. Don't know much about either. Have to see what the Rec Center Director says about it.
I was fascinated to see that such relatively small capital improvements - half a million dollars - would be considered worth bonding. I know it adds into the larger road amounts, but still, it seems like an involved credit-card style method of financing for two building renovations. I'm afraid it sets a low threshold standard for bond requests from various departments.
There are other ways to fund the $530,000 if those improvements are really needed. But it would be unpopular to some city gov folks and maybe even one advisory board. It would not involve General Fund money. And no approval by the voters.
When the previous council forced the remodeling of the Senior Center, we used another approach. That was done by a council motion.
There would be no borrowing and no interest.
Getting back to the alternate bonding proposal - the $800,000 annual payment schedule - does this really address the risk of uncertain revenues? Does it keep the City in the same risk category as it is in now, or does the additional debt still compound the pain if revenues fail to meet projections?
The Rec Center issue seems like financial small potatoes compared with the pace with which we're racing toward the easiest solution to chronically underfunded road maintenance. The problem of physically dangerous roads may go away, but the cost of assuming new long-term debt in uncetain revenue conditions should not be taken lightly.
Incidentally, how much revenue growth is anticipated from sources other than sales tax collections? Do anticipated increases in property tax offset some the risk?
The short answer is I don't know. That $800,000 is the most risk I think we should take right now.
At the first workshop the bonding number was $9M and after I sent in my list of concerns it dropped to $6.8M. (No motion required.)By mid-summer there will be some more info. When I query now, I'm told to wait til next month. This is my second "next month".
Also then one gets into the debate over assumptions and projections. Ten years is almost impossible but right now the key is the beginning year which is 2007 actual. In the spreadsheets we got, they did not include 2007 budget or current projections. How does one think about 10 year projections without knowing the base year results?
There are four major unknowns this year: city revenue, ambulance service costs, new PD station costs, and Super Wal-Mart.
In the private sector, I wouldn't be betting my job on this forecast right now.
P.S. There has been some downsizing in the past two years. The former Rec Center and Parks director was not replaced. Two incumbents were promoted. And neither has our former Finance Director. Savings of some $350,000 to $400,000 a year.
However this is deja vu. That $800,000 current payment a year is a major reason for tight budgets and no road repair money.
Thanks for clearing this up Chris and Kerry. I understand now that there will be one bond question for street reppairs and signals, and a separate bond question for a family change room at the rec center. Is there a third bond question for building a park at Checker Auto Parts or is that "on hold"?
That would be a separate item, and is on hold pending brainstorming of other funding options and the planning process for the entire area. The park is planned for the old Albertson's parking lot. The Checker store and all other pad buildings could possibly remain until a later phase of the project. The phasing plan provides some flexibility.
There is the sugar coated version and then the real story.
The $1M for that park was removed from the road bonding proposal because the city can't afford to repay that debt. (Remember my list of questionable assumptions in the financial forecast.) It is also in the Urban Renewal Area so to finance it the right way, Urban Renewal funding should be used. But the URA is not generating enough money to pay for it either. It's financial health was blasted when Albertsons moved out.
The pads like the liquor store and auto parts store are privately owned. So the ambiance of a park abutting these stores is also in question.
And since if one can judge from history, a park like would cost more like $2M.
All this has been pointed out time and again. Until someone buys the current W*M site, it's gridlock. The one "response" the city got on the RFP can simply be interpreted as "when you guys have enough money, call us."
The Great Park deja vu.
Was that your "real" or "sugar coated" version, Kerry?
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