Recreation Center Bond Vote Dropped from Council Calendar

When sorrows come,
they come not single spies,
but in battalions.
-William Shakespeare
(Hamlet-Act IV - Scene V)

I confess I'd lost count, but thanks to John Wright, we learn from this morning's Standard-Examiner page C-1 headline story that the Ogden Recreation Center vote, most recently continued to Tuesday, August 23, 2005, has been again delayed -- now for the ninth time. This time the City Council has taken it off-calendar completely, rather than setting it for some fixed future date. This decision was apparently made last Thursday.

According to this John Wright story, Another problem has cropped up. Although we were earlier informed that the city had obtained a bank letter of credit, to comply with state law, and to permit bond interest payments to be made during the construction phase of the project, somebody wasn't being entirely forthright about it, evidently. It now appears that the RDA still hasn't come to terms with the "bridge" lender, Zions Bank. Until that happens, there is no letter of credit, people.

To further complicate matters, the R&O Construction bid apparently expires on September 1, 2005. After that date, all bets are off, and the project contractor will have no legal obligation to perform at the original contract price. This is certainly not encouraging, inasmuch as we learn, according to Mr. Wright's story, that project costs increased $2.3 million last month alone, due to the late-discovered oil contamination delay. This "environmental" problem, incidentally, has also apparently not been yet resolved.

You can read Mr. Wright's entire story here.

As most of our gentle readers are aware, I've come out in favor of proceeding with this project, which I've viewed as a simple arms-length transaction between ready, willing and able lessors and lessees. I've always believed, however, that it would be the lenders in this transaction who would ultimately determine the feasibility of this project, through operation of mechanism of the free market.

It appears to me that this is what is actually happening here, and that the degree of caution now being demonstrated by the lenders and bond underwriter evidences reluctance, which is not encouraging for proponents of this project. It's difficult to put a positive spin on this latest development.

Mr. Wright's article mentions the increasing cost of concrete as being a primary factor in increasing materials cost, and I'll briefly comment on that. The problem with concrete is that it's heavy and bulky, and that it's transported to the construction sites in heavy trucks, truckload by truckload. The factor that accounts for the increased cost of concrete is not the cost of the material itself, but the cost of fuel that powers the trucks. Anyone who purchases gasoline at the pump is painfully aware of what's happening with fuel prices. Fuel price is such a cost "wildcard" that many cement contractors around the country build in a delivery surcharge, to "hedge" against sudden fuel price increases. You can expect some serious inflation in the original construction price, I think, if the city and the construction lender wind up back at the bargaining table, upon expiration of the existing contract bid.

Comments, anyone?