Several residents have asked us to begin a discussion that might create more transparency around the Cities creation of its 63-20 corporation. This issue has been simmering for many months. The community would like to hear from City Administrator Jack Lewis about the history of the project and its current status.
DEFINITION: “The use of nonprofit corporations (sometimes referred to as “63-20 Corporations”) in structuring public/private infrastructure financings has recently attracted a great deal of attention. Its use is being promoted as a way to preserve the ability for a project to be financed with tax-exempt bonds, while maintaining for both the public and private participants most of the benefits of private development.” -more information.
The Mountain Mail article on march 1st “NRC land will be tax exempt if built by 63-20″ shows a complete lack of professionalism and knowledge by our city officials.
I take issue on several points;
-Mayor Chuck Rose said “The job of a private developer is to make money. Ours (in council) is to provide services for the greater good. Hopefully this project will benefit the whole county.” How does taking work away from local and private businesses benefit the whole county, Salida’s job market is tough, I see only a loss of jobs?
-The Mountain Mail estimated that the property tax for the new building would be around $39,342 annually if built by the private sector. Jack Lewis quoted “Personally, I haven’t calculated (property tax), so I really don’t know if (the number) is accurate. I’ve heard $41,000 thrown around, but I don’t know.” The arrogance of this statement is unbelievable! Do our officials not even care to look in to all the possible ramifications of their decisions? How much of this annual tax alone goes to our school system? $20,000-27,000.
-”Based upon value of jobs in this town and the business that will come with (the resource center), my opinion is that it will far exceed property tax revenue,” Lewis said. Are we to weigh all the benefits Lewis claims for this Resource Center purely on opinion? Have there been any case studies? Is their any numbers to show if this plan is feasible?
-I find the fact that Jack Lewis is a Salida administrator and 63-20 board president a conflict of interest. Former Chaffee County Commissioner Tim Glenn, and City Community Development Director Dara MacDonald are also directors for the 63-20 Salida Natural Resource Development Corp.
-I would like to know how the 63-20 will acquire the Vandameer property owned by the city of Salida.
-Salida Mayor Chuck Rose said whether the resource center will be “worth it” in sales tax revenue “will be up to the citizens to decide” from economic results if the complex is built. He said at this point, economic benefits of the center are “imponderable” and won’t be known until the project is complete and functioning.” A 3 million dollar project and they consider the potential benefits imponderable? As I understand this statement by the Mayor they have no idea if this project will work out, and after it is all built, its up to us citizens to decide if it was worth it?
Something doesn’t pass the taste test with these quotes:
“Lewis said a 63-20 corporation is not subject to the Taxpayer Bill of Rights, electoral approval or a bidding process for contractors”.
Councilman Steven Stewart said, “The 63-20 operates much like a private company, with obvious tax advantages, which makes the playing field not quite fair, but I think the game is totally different.”
Stewart said, “A 63-20 corporation is a fairly new idea. It’s a quasi public/private agency.”
“After the corporation was created, Salida City Council members had no future say in management or decisions of the corporation”
Yerkey added, “The 63-20 is owner, developer and entity that turned in the bid.”
The private corporation will borrow money to construct the building and infrastructure. Leases with the outdoor entities will go toward repayment of loans.
“Ultimately the project is funded by federal dollars,” Stewart said.
Huh ?
While the Complete NRC Feasibility Report is interesting, it is 5 years old, and many of the assumptions made have not been born out.
We did glean this nugget from it:
Non-Profit Selection
The NCR working group will need to conduct a National search for non-profit developers. The desirable candidates would have a proven track record with build-to suit institutional facilities, experience with operating facilities, and strong relationships with lending institutions.
Rates and terms of financing will depend on the selected organization’s
previous development experience and credit rating.
This was a misquote taken completely out of context by the Mountain Mail : “The 63-20 operates much like a private company, with obvious tax advantages, which makes the playing field not quite fair, but I think the game is totally different.”
I gave the example of a 6320 competing with a private developer to build for a for-profit entity. A Target Store was my example. What I said, in that context, was that I don’t believe the 6320 competing with a private developer would be fair. I went on to explain that what the 6320 is doing with the NRC is completely different because the 6320 and the NRC are not just about constructing a building to lease to a federal agency, but it is a vision for a center with multiple natural resource management, research and educational institutions – it is not just a building.
My comment about funding was that the NRC will be financed by revenues obtained from the agencies that lease space in it (a Federal agency is the anchor tenant). Salida taxpayers will not be paying for the NRC.
And why can’t you state your name? We’re all friends here.
Mr. Stewart,
We can completely understand being taken out of context by a newspaper.
We don’t have a problem with the 63-20 concept as much as the track record of the chosen Salida Natural Resource Development Corp.
The NCR working group said itself that it “need to conduct a National search for non-profit developers. The desirable candidates would have a proven track record with build-to suit institutional facilities, experience with operating facilities, and strong relationships with lending institutions”.
Did that happen ?
The other issue’ s being Mr Lewis, an un-elected public official ‘volunteering’ to help chair the corporation, the corporation not being subject to the Taxpayer Bill of Rights, electoral approval or a bidding process for contractors, which makes the playing field not quite fair, and Mr. Lewis and his cavalier attitude towards others.
So, with “the Salida City Council members having no future say in management or decisions of the corporation”, what is to keep Mr. Lewis from not following through with the wishes of the City Council ?
So are we reading something into it that is not there or are these valid concerns ?
As a public official anyone with an interest knows my name and has the ability to contact me via the the Salida City website’s published email address or phone number. When I make a comment or vote to break a tie people know where I stand. Allow me to thank those that make their views known on the Citizen. Given the paucity of media and the low level of citizen involvement in our valley any citizen feedback is helpful.
I will admit that I have difficulty giving much credence to the anonymous comment. I wonder what it means that people are unwilling to attach their name to their criticism?
I have learned that it is very difficult to be adequately informed regarding city business. I am engaged with what is going on in Salida on a daily basis and still have a tough time keeping up. I am learning to accept that the average citizen has little understanding as to what is going on and why certain decisions are made. If you have a concern call your Mayor or City Council representative and ask for an explanation. Then offer your opinion and solution.
I am further baffled that these well meaning citizens are willing to make strong statements from the safety of their electronic devices without the guts to attribute it. Giving the finger from the safety of your moving car seems similar in intention.
Step up. Run for office. There will be 4 openings on the Council next November. See if you can do better.
Chuck Rose
Mayor
Hey Mayor,
Thanks for chiming in. Was it difficult to write 6 paragraphs and not answer a single question ?
My problem with the 63-20 is not with the concept of a 63-20 but with who is running it.
The NCR working group itself said:
“Need to conduct a National search for non-profit developers. The desirable candidates would have a proven track record with build-to suit institutional facilities, experience with operating facilities, and strong relationships with lending institutions”.
Was a National search conducted for a non – profit developer ?
Sincerely,
Michael Brown
Salida, CO.
The past two newspaper articles regarding the SNRDC did little to answer questions about how the tax payers are impacted by this quasi-governmental, land-lease project for the USFS. Councilman Yerkey said “the 63-20 (SNRDC) is the owner, developer, and entity that turned in the bid.” How did the SNRDC become the owner? As far as I know the City cannot transfer ownership (sale or give away) without public discourse and consent. Also, the USFS Solicitation required that each bidder provide evidence that the bidding entity was the owner or had control of the real property. Why hasn’t the City of Salida shared that documentation with the public.
Councilman Stewart stated that “Full cost of the building is not being borne by Salida residents.” He didn’t say that none of the cost would be borne by residents. So how much of the cost will be shouldered by the taxpayers? Based on the amount of rent the SNRDC would charge and statements in the City’s 2006 feasibility study suggests that the cost of basic infrastructure will be paid for by other than the SNRDC (i.e. Taxpayer?). This includes sewer, water, and gas that has to be extended just to reach the building site. What about access. I talked to CDOT, Region 5, yesterday and learned that there have been NO applications or permits issued for access from Hwy 50 between Hwy 291 and CR 105 (Cleora). The City’s feasibility study stated that any CODT approval would likely require turn lanes, a traffic light and a turnoff onto a City street. In order to avoid this expensive prospect, the City’s only other choice for access is from CR 105. Take a drive down that road; its narrow, its rough and it won’t accommodate an increase in traffic! But, according the the City web site, they expect an increase in traffic volume to the new USFS building of 16,000 to 80,000 vehicles/year!! When, exactly, did our elected officials intend to inform us that CR 105 is going to need a major (expensive) revamping in order to fulfill their “dream”? What about traffic on Hwy 50; big beautiful NR Center in sight, but where’s the access? East bound Hwy 50 traffic will have to drive a full mile around to get to it or add a significant traffic increase to the Hwy 50/Hwy291/CR105 triple intersection. That too would require a traffic light in the very near future. The State, CDOT, Chaffee County and the City of Salida are all experiencing a serious decline in revenue and can’t even keep up with maintenance on the current infrastructure. Who is going to pay for the necessary infrastructure to support this facility? Our elected officials have a duty to inform the public about the details of their plan and address these and other issues regarding the NRC with clear and concise answers, now. Instead we are told to wait and see if the NRC will be worth it, and since the benefits are “imponderable” and won’t be known until the project is complete and functioning we should just sit back quietly and wait and see.
If you go to salidacitizen.com you can read the City’s 2006 Feasibility Study. The study addresses only positive financial impacts that will be generated, without consideration of the overall impacts. The study does not project the difference in sales tax (from construction and other sources) between new privately built facilities and the City’s NRC. Only a fraction of their projected sales tax revenue could be considered over and above that which would be generated by private business; and their study does not even address the fact that private business would be paying property tax, sewer and water tap fees, building dept. fees, access fees, sign permit fees, development fees, etc. all of which the City and County have the power to waive for the SNRDC (and the feasibility study suggested that they do just that). Without a doubt, the school district, fire district, library, hospital district and conservation district will lose money! If the City of Salida had not entered the bidding, a private builder would be constructing a facility this summer with property taxes being generated by 2012. Jack Lewis described that property tax as money the county never had and reasoned that its not a loss of revenue. What kind of math is that? The school district alone stands to lose $27,335 (based on a $3M evaluation) the first year and escalating as the property value increases with build out and time. The sales tax that the City professes to generate will go into the City, County and State coffers, not the school district’s. Only a small portion of the State sales tax will trickle down form the State’s General Fund to the Salida School District (zip for the library, fire district, etc.). How many people have to stay an extra day, paying 3% state sales tax, to generate enough “trickle down” school funding to equal $27,000!! Maybe the City plans to create a PILT (payment in lieu of taxes) for the school district, library etc. and just forgot to tell us about it or maybe they just neglected to “ponder” this negative impact to the community.
Councilman Moore stated that the City, competing with the community, was logical given the vision of the council. I don’t see the logic, especially when the School District is the entity that is experiencing the most pressing financial crisis. I don’t see the logic given that by the time the other 6 government agencies have the funding to solicit a new facility, the ten year USFS lease may have expired and not been renewed. I don’t see the logic in saddling the local tax payers, during a major recession, with any costs to support this project when private business is ready and able to accomplish the task with no cost the the citizens while at the same time, generating sales tax revenue PLUS significant property taxes (for 50 years or more), development fees, utility fees, construction jobs, maintenance jobs, etc. And yes, that business will profit, and expand and create more jobs.
Mayor Rose stated that “… our idea is more than an office building…”. I beg to differ on that assessment. The USFS Solicitation had very specific requirements that had to be met by all bidders. Those requirements included open office space outfitted with government supplied modular office partitions (i.e. just another office) with 640 square feet (sf) of public entry area which included bathrooms, vending machine space and a map sales area. The building will have to be LEED certified with a minimum of a Silver Certificate and with plenty of natural lighting and “western” architecture (more that just an office building). The Solicitation also laid our clear rules about the amount of rent that could be applied to any common areas within the building. The “more that just an office building” that the City is talking about (see salida.com) is in a 6,000 sf common area, to be shared by all of the desired government entities on the wish list, with meeting rooms and an interpretive center. This is ten times more space than the USFS Solicitation calls for or will be willing to pay for! So who pays for the additional 5,360 sf until some unknown future time when other entities might (or might not) move in and pay rent on that space? Even the degree to which the USFS would utilize this common area is in question because new federal regulations, and Solicitation parameters, require that all spaces other than public bathroom, map sales, and vending machine have to be behind electronically secured doorways. There is even a requirement for a security guard’s office between the public space and the USFS offices and 2 required conference rooms. All possible future federal agency tenants will have the same requirements. Who is going to use this space enough to justify the expense (and the logic in competing against private enterprise for something “better than just an office building”)?
When Tim Glenn and other county officials conceived the idea of a collective of government agency, natural resource center, and initiated a feasibility study in 2006, the economic climate was significantly better than it is now. At that time, various grants and moneys were much more easier to acquire. The original feasibility study also stated that it would be advisable for the County/City to enter into a partnership with these various government agencies and work together to bring it to fruition. However, such a partnership is illegal per federal and state statues. The only way for the City to circumvent the requirement for “fair and open bidding” is to enlist the help of a Senator or Congressman and seek a congressional waiver of the acquisition statutes. Unfortunately for these early “dreamers”, before this could be accomplished, the USFS put out a Solicitation. At this point in time, especially considering the current economy and forecasts, the City should have shelved their “dream.” Instead the City rushed to create a non profit (even though the feasibility study called for careful selection of a non profit with a proven track record) and make promises in their bid that may not set well with the public. The public, myself included, should have been keeping a more watchful eye on the actions of the City Council. The City Council, most definitely, should have been completely open and transparent about the details of the disposition of the land and the degree to which the tax payers will have to invest in this project, as well as, provide a comprehensive explanation of the benefits based on all impacts to the community, not just a select few.
The SNRDC has not received the award for the construction of this facility and won’t receive one until the Government Accounting Office has processed my protest. That decision may not be handed down until April or May. NOW is the time for citizens to voice their opinions, pro or con. NOW is the time for full disclosure and public discourse with the City. If a Contract is signed, the citizens will have very little recourse but to take a “wait and see” attitude. Make your comments and ask questions here, or at salida.com , speak to your councilmen, write an editorial, or attend a City or County meeting.
Michael Brown,
Give me a call and we can sit down and answer your questions. My number is 719 221 9511.
Thanks,
Chuck Rose
Harder-Diesslin Development Group, LLC) has made lemonade from the lemons dealt us in this bid for the Forest Service Building construction/leaseback. We’re not bitter nor angry. An accurate description would be saddened. It’s tragic that our own municipal government, with our tax dollars and their tax-exempt status, is in competition with the private citizens it is sworn and paid to serve. I think this is the result of good intentions yielding disastrous results due to a poorly informed City Council. Imponderable!
I was hired in fall 2009 by the City of Salida to generate a feasibility study to determine the viability of the NRC being built on the Vandaveer property acquired by the City. In roughly two months the answer seemed clear that such a project would make sense and was certainly viable.
In fairness to all, the City of Salida issued a Solicitation of Interest to developers to determine who would best represent them in the quest to win the Forest Service Solicitation to build their new Salida headquarters. This would serve as the ‘anchor tenant’ in the NRC concept of having multiple Federal, State and local agencies occupy the same campus. Certainly a good idea by any measure.
Very sadly, propaganda and ugly politics played a heavy role in the decision by the Salida NRC Corp. to hire Buchanan Yoneshewski Group from Denver. We don’t question the qualifications of BY Group but we certainly question the use of an out of town firm for a local project when we have clearly demonstrated the ability to manage it locally at the same or less cost. HD Development then submitted our own response to the Solicitation from the NFS for bids. Without the advantage of tax-free property and muni-bond funding HD Development would have won this bid on a parcel much better suited for this project. I make that statement boldly though I couldn’t prove it without calling Federal employees to the witness stand under threat of perjury. Furthermore, the City should have put it’s Vandaveer land up for use by all potential suitors for this deal and let it be a private deal on land that would pay property taxes. A level playing field this was not.
It was always the intention of the City to circumvent the Federal Solicitation process and secure this project before it ever went to public bid. Much lobbying was done by our City and County officials from Denver to D.C. which was ultimately unsuccessful so the Salida NRC Corp (63-20 non profit) was formed to submit a bid like everyone else. Forest Service employees have admitted to me, on the phone, that the bid from a municipality, in competition with private industry, is clearly immoral, certainly unethical and something that was unprecedented but that the NFS had no guidelines that would prevent them from accepting their bid. You can’t legislate morality. To them it was unthinkable that such a thing was happening but, according to their rules, they must accept the lowest technically acceptable bid. When you’re not paying property taxes at roughly $40,000 per year and borrowing 100% of your funds from the municipal bond market at about 3% no private entity is going to beat you.
It’s interesting to note that, while the 63-20 Corp. enjoys autonomy from City Council and immunity from TABOR they nonetheless will bind our City financially with the bonds they will issue to pay for this project. If something goes wrong and project doesn’t go according to plan or the NFS doesn’t pay rent to the 63-20 Corp. who will pick up the tab? Correct; you and me. The 63-20 “loophole” was created so that municipalities could enter the development game in communities to develop ‘affordable housing’ where land prices and building costs were too high to make the project economically feasible for private enterprise. Sadly that loophole has been exploited in this case to enter the development game where the project was clearly feasible and profitable for private enterprise.
We’ve been told that ‘time will tell’ and we can decide later if this was a good idea. I really wish our Council had been better informed of the ramifications of this decision because I think they are collectively wise enough to know better than to bank a deal on the ‘wait and see’ and ‘hope it works’ approach without understanding the serious economic impact to our community. No one here is foolish enough to think that the BY Group won’t bring as many of their own Denver subcontractors as possible. There’s at least $350,000 of profit budgeted into this deal for them (feel free to open your books and prove me wrong – I did the numbers too) that will get spent in Denver. There’s $800,000 + escalations in tax revenue over the next 20 years that won’t be collected (at least $400,000 of which would have gone to our schools).
My prayer is that our City Council will more carefully consider the ramifications of their actions in the future and become more informed about the decisions they are making. I realize the 63-20 was approved at a public City Council meeting without public opposition. Like the Council themselves, no one understood what was really happening. If your Councilman still defends their decision to allow this NRC project to move forward then be sure to remember that next time you have the opportunity to vote for another one that will hopefully be more supportive of local business. Perhaps they will take the time to ponder the results of their actions.
Can you still get those “Buy Local” stickers at City Hall?
Walt Harder
ReMax Mountain River – Broker/Owner
HD Development LLC
walt@waltharder.com
cell: 719.221.5000
offc: 719.539.6060
http://www.salidacorealestate.com
Best Real Estate Search Engine Around!
If you’re lucky enough to live in the mountains, you’re lucky enough.
Chuck Rose,
Why cant the questions be answered directly and publicly on here?
Or can a public meeting be set up to address this alone?
I know you addressed this to Chuck, but I’d like suggest that a comment thread like this isn’t always an effective way to address complicated matters where people have lots of questions and emotions can be running hot. So I wouldn’t interpret a move to take the conversation offline negatively.
Participating in online discussions can be a fraught activity, so we very much appreciate everyone’s thoughtful and civil participation. This goes double for our elected officials.
A public meeting, as you suggest, is probably a much better venue to help people understand a relatively unconventional structure and process, or for an extended discussion on the topic.
Officials explain benefits, history of Salida NRC:
NRC discussion due: