Encouraging Standard-Examiner story this morning, reporting boom times at Business Depot Ogden, the former Defense Depot Ogden, (the U.S. Army logistical supply and administrative support facility closed down by the Army in 1997, and transferred to Ogden City for use as a commercial business park in 2003.) We incorporate Jeff Demoss's lead paragraphs below:
OGDEN — The conversion of the city’s former Army depot into a top-notch industrial park has been so successful that managers at Business Depot Ogden say it’s time for a new traffic light at its main entrance. “We’re just seeing a lot more traffic these days, and it’s only going to grow,” said Steve Waldrip, project manager for The Boyer Co., which manages the park and splits leasing revenue evenly with the city. New traffic lights are likely not coming anytime soon, transportation officials say, but it’s hard not to notice all the new buildings and activity that continue to transform the 1,120-acre park into one of Northern Utah’s largest centers of employment. Since its conversion to private, commercial use began in 2000, BDO has become a thriving center of industry. It now has 80 tenants employing a combined 3,400 workers, who build everything from nutritional supplements to jet engines to kitchen sinks.Former Mayor Glen Mecham showed great foresight in commencing the process of obtaining this sprawling property for the benefit of the taxpayers of Ogden City; and in the interim since its acquisition, and under the competent management of the Boyer Company, the BDO project has prospered, as this morning's Std-Ex story reports.
“It’s amazing to think we have tripled the number of employees since the Army depot closed,” Waldrip said.
Much like the trees planted along its major roads, growth at the park has been steady and noticeable, and progress continues despite a general slowing in the overall economy. With 1 million new square feet of space scheduled for completion this year, “this will be our best year ever,” Waldrip said.
Unfortunately, competence isn't a trait universal to all players involved with the BDO project. As our regular readers are aware, our current mayor, Boss Godfrey, couldn't keep his mitts off BDO revenue, and pledged it as collateral for Ogden's Junction Project in 2005.
As a result, BDO revenues, which had been originally earmarked for projects such as Ogden City water infrastructure, have been frittered away (and will continue to be squandered) as Boss Godfrey scrambles to cover revenue shortages involving his "brainchild," the ill-conceived and financially-floundering Junction project.
For news about the latest insult to the taxpayers of Ogden City, be sure to read this morning's Kristen Moulton story, which reports the most recent administration plan to tap the ever-deepening BDO revenue till. We incorporate the "money quote" below:
On Tuesday, the City Council will be asked to tap into the flush coffers of Business Depot Ogden to help cover $819,000 more of The Junction's debt payments.Ogden City political wonks will recall Godfrey's 2005 promise, respecting the Junction Project: "The taxpayers will never be on the hook."
Already, the city was using $750,000 in BDO funds to pay mall debt
this year.
Food for thought as Godfrey advances ideas for new "can't miss" projects, wethinks.
And what thinks our gentle readers about all this?
19 comments:
Do lease payments of $695K a year cover the debit service the city is on the hook for Soloman Center? Stuart Reid says he won't break ground on his corner acre for condos for 18-24 months. Another weed patch in Ogden is the norm for these property holders. I hope they are paying taxes on the value of the purchased price and not on the value of vacant land.
Much of interest. The Salomon Center beat its first year revenue projections by 10%. But the rest of the Junction project is way behind schedule, not fully leased, and they're having trouble lining up business for the retail spaces. One restaurant, announced as coming with some fanfare last year, has apparently decided not to come after all. Boyer has leased only half the retail space in the building it built. The business downturn has banks and other lenders going skittish about loans, which is why Mr. Reid doesn't anticipate breaking ground on his 60 unit condo project for two years or so. Other projects on hold for lack of finances as well, it seems. And the city will have to pony up, shortly, $819,000 in BDO revenues to pay interest on the construction bonds.
The Bush Recession is taking it's toll on Ogden, it seems.
Rudi:
You wrote: Ogden City political wonks will recall Godfrey's 2005 promise, respecting the Junction Project: "The taxpayers will never be on the hook."Food for thought as Godfrey advances ideas for new "can't miss" projects....
Exactly. This doesn't mean, though, that all proposals are necessarily poor ones, or that none should be funded. It does mean that every proposal must be thoroughly vetted so that the council can make informed decisions as to what represents a good investment for the city to make in its future, and what does not.
The more I think about the Mayor's assurances that the city would not be on the hook for The Junction construction bonds, the more it seems to me there are only two ways to explain those assurances. (a) He knew there was a risk involved --- all such investments involve risks, as the Mayor himself informed us when he spoke in favor of Val Southwick's getting off without jail time --- but he decided to pretend there wasn't so the Council would do what he wanted them to do. Or (b) he truly believed there was no risk involved, in which case he was incompetent regarding management of the city's money.
Hmmmmm.... yet another instance where the Mayor's best defense against his being dishonest is to plead incompetence.
Tribune Reader SkierJim7 "nailed it" in his comment beneath the Trib article:
"Another stellar example of why local governments should not be involved with commercial business."
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So The Junction's income is 10% over predictions. Would it be too much to give the actual numbers and refer back to who/when the prediction was made?
I don't understand how Junction income is 10% over projections. Are we talking about income to the city? That is static. It is set in stone as lease revenue, a flat lease, mind you, without income percentages like most malls get. The city's revenue will only grow when leasable space that is controlled by the city is leased.
The pulse of the Junction is hopelessly slow so far this summer. I had anticipated steady crowds for the flowrider when school let out, that has not materialized. Even on Friday and Saturday it was a ghost town there. The iFly is best rolled up and sold to takers. The arcade is also dead as well as the bowling alley. Just how did most of this equipment get chosen as part of a high adventure destination.
This morning Mt Ogden GC parking lot was full. The Salomon will stand empty as it is CLOSED on Sundays. Godfrey wants to examine the GC for options and his baby is bolted shut when tourists come knockin'. What an ass.
OL & Tec:
If you carefully read Kristen's article, you'll note that it's tthe Junction Project as a whole which has suffered revenue shortfalls, notwithstanding the Salomon Center's tenants' having purportedly remained current in their lease obligations. From the SLTrib article:
"The Salomon Center, with simulated sky diving, a climbing wall, a wave pool, Gold's Gym and Fat Cats bowling/arcade, was even more successful than expected in its first year, said partner Gary Nielsen. The center exceeded its revenue prediction by 10 percent, he said. The operators paid the city all the lease money owed - $695,000, said city finance manager John Arrington.
Unfortunately, lease revenue from the rest of the mall has fallen short, he said [Emphasis added}.
It's the failure of the "Junction Project" in its entirety to meet Godfrey's highly optimistic revenue projections that once again requires the council to dip, once again, into the BDO revenue stream.
Godfrey expected the whole project to fall together as if by magic; and that simply ain't happening.
Rudi:
You wrote: Godfrey expected the whole project to fall together as if by magic....
Again, exactly. I'd be a lot less critical of the Mayor's behavior in re: the Junction had he "sold" the project to the Council and the general public as an investment that had the potential for great benefit, but which also involved some not trivial risks, but one that, on balance, he thought should be approved. But instead, he touted it as a sure thing, can't miss, only-a-dolt-couldn't-see-it dead certain success. I remember how he trivialized those who opposed and their concerns.
Which touches, I think, a major, if not the major, fault in his governing style and practice: his brass-bound arrogance. His absolute certainty that he has The Light, The Truth, and The Way on whatever project is being put forward, and only the irrationally negative, the habitual "naysayers" could possibly raise questions, and the questions they raise could not possibly be legitimate ones.
That attitude cuts any executive officer off from differing opinions, other points of view, and the kind of serious questioning of proposals that ought to take place before the executive embraces them. [Can we all say, together now, "President George Bush?"]
A good Mayor, Governor, President encourages questions, has his staff supplied with both those who think a glass is half empty and those who think the same glass is half full. A good executive demands that his staff tear into proposals, especially ones they are disposed to like, hammer and tongs to expose any weaknesses before it's too late.
But that's not, evidently, how our Mayor conducts the public's business. He prefers to move in secret, to squelch questions and criticism, and once he's become enthralled with a proposal [The Junction, the Peterson Proposal, the flatland Gondola, the Ice Tower, etc.], criticism becomes, by definition, illegitimate. And so proposals do not get the scrutiny they need at City Hall.
ogdenlover,
Rudi's clarification notwithstanding, you make an excellent point. Anyone can put on a happy face and say that they're doing 10% better than they expected, when there's no record to show what they actually expected. Nielsen's claim therefore means absolutely nothing. However, he made his lease payments for the first year and that means something. Let's hope he can keep it up for another 19 years.
Interesting information.
Didnt the Godfrey Administration declare a short time ago that the BDO was not performing and generating revenue as projected?
Who's being sneaky? Or should I say, who's lying?
I find it difficult to believe that the Soloman center has beat revenue projections by 10%. Just because Gary Nelson says they have beat revenue projections means nothing. Nelson is as full of shit as his feasibility study was. It's like believing that crime in Ogden has gone down, but we see news stories everyday of shooting and stabbings. Remember, dickhead, I mean Godfrey, said that the tax payers wouldn't be on the hook, but they are, as is evidenced by the draws coming from BDO. Nelson is a lying POS just like his friend Godfrey and anything that comes out of his face needs to be taken with a grain of salt. All information that I have seen says that there is no one down at the Soloman center and how can you beat revenue projections by only being open 6 days?
By the way $696K per year does even come close to covering the debt service on a $20,000,000 facility. The monthly payment for $20,000,000 financed over 20 years at 5% is $131991.15 or $1,583,892 per year. Ogden city tax payers are subsidizing Fat Cats and Gold Gym with almost $890,000 per year. Strange how that's about the amount being taken from BDO. HMMMMMMMMMMM
Sick of the BS:
You asked how can you beat revenue projections by only being open 6 days?
Answer: easily, if your revenue projections are made on the assumption that you will only be open six days a week.
Sick of the BS, the way that Gary Nelson could say that they were 10% ahead of projections is because there were NO PROJECTIONS! Harmer and the A-Team, along with Boss Godfrey, were in such a damn hurry to get the wreck center on the books (like the phony ground-breaking ceremony) before new council members took office in 2006, that they goofed on several procedural matters, some have already come back to bite them. Why couldn't they produce a financial report on the Salamon Center for 18 months?! Incompetence and unethically handling of the whole process are key factors in the Godfrey administration of the Junction.
c:
I read the feasibility study that was done for the Soloman center provided and paid for by the tenants of the Soloman Center and can do simple math. In order for the Soloman center to reach their projections, some of their venues had to be open 8 days per week 28 hours per day. Last time I checked there were only 7 days in a week and only 24 hours per day, but in Matt Godfrey and Gary Nelson's world, that must not be the case. So obviously, they were projecting revenues based upon more than being open for 6 days. That is why I'm asking how they can be revenue projections by only being open 6 days. By the way, does any one have a copy of that feasibility study, the city seems to have lost their copy and I didn't bother keeping mine because it was so full of crap that it was making my house stink. I would like to get a copy of it if any one has access.
Sick:
You asked "By the way, does any one have a copy of that feasibility study". Exactly what I was going to ask. Be very interesting to see the projected revenues, and what those projections were based on. Let us know if a copy turns up.
Curm:
I will keep looking, but like I said I have had no luck. But I do clearly remember that the numbers on the flow rider and I fly, based on the pricing structure that was in the study required them to be open and full with paying customers 28 hours per day 8 days per week.
Sick:
OK. Let us know if it turns up. But your post just highlights what several others have noted: claiming the Saloman Center venues have exceeded revenue projections by ten percent [or any amount, really], is a statement of limited worth unless we know what the original revenue projections were, and who made them. Seems to me the people claiming it did better than expected in the first year would have something to gain, in terms of credibility, by making the original projections document public, que no? With nothing to check their claims against, they could claim nearly anything without fear of contradiction.
One other point: even granting [for the sake of argument] that the venues beat revenue projections by ten percent, that doesn't necessarily mean they were profitable. Usually start-up businesses don't reach profitability in the first year, nor are they projected to by the owners/developers. Reaching profitability in the second year is doing, on the whole, well. So the projects could be ahead of projections, and still not yet have reached profitability. That's not necessarily bad; in most cases it's expected. But I suspect many will read the "ahead of projections" claim as a claim of profitability, which is a very different thing.
[Note: Many of the Salomon Center venues are chain businesses and such may well reach profitability faster on average than true start-up from scratch businesses like the Sonora Grill. Chain businesses, for example, begin with an established customer base; true start-ups don't.]
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