Tuesday, July 14, 2009

Is The Junction Project Driving Emerald City Into Bankruptcy?

The Godfrey Administration goes to the RDA Taxing Entity Committee seeking major "concessions," i.e., a bailout

We'll shine the spotlight this morning on a fascinating document which we received this morning from one of our alert Weber County Forum readers. Over the past few years we've complained about the the millions of taxpayer dollars which have been expended since 2005 to service the Ogden Junction's back-breaking bond debt, notwithstanding Godfrey's earlier promises that the taxpayers would "never be on the hook." We've regularly expressed our strong concerns that this bond debt was driving our city into insolvency. From our own reading of this document, it appears that those oft-stated concerns have indeed been squarely on the mark. Check out this document, which amounts to an explicit admission on the part of Godfrey administration officials that we've been right all along:
OGDEN CITY REDEVELOPMENT AGENCY TAXING ENTITY COMMITTEE MEETING MINUTES - June 25, 2009 – 4:08 p.m.
The Taxing Entity Committee (TEC) is the representative body, by the way, of the various taxing entities, from the State School Board to our Weber County Government, who share in the property taxes which flow from projects such as The Junction. This is also the entity which ultimately decides how tax increment dollars are divvied up.

What appears to be happening here folks, is that the Godfrey administration is admitting (behind the scenes, so far) that The Junction has become the unsustainable financial albatross which many of us predicted it would be. This document now reveals that the administration is going back to the TEC, seeking concessions (an extension) which would enable Ogden City to continue exploiting 100% of the project's tax increment until the year 2026.

Among other things revealed by the above-linked meeting minutes is that the Godfrey administration is also proposing "mitigation payments," (i.e., "payoffs") to the other taxing entities, in order to persuade these agencies (who depend on Junction tax revenue) to go along. This, of course, is the "debt upon debt" to which Assistant CE&D Director Mr. McConkie refers in the meeting minutes... which could come at a high price, possibly in the millions of dollars.

What's also obvious from a reading of these minutes is that this concept went off "like a lead balloon" in the June 25, 2009 TEC meeting, as the committee voted 7-1 to table the proposal and look for other alternatives. Nevertheless, with the 2009 municipal election fast approaching, in which Boss Godfrey's questionable financial acumen already presents a major hurdle for candidates on the "Godfrey Ticket," this latest development will be quite interesting to watch.

And one more thing. Old
cowboy wisdom axiom: "If you find yourself in a hole, the first thing to do is stop diggin'."

Who will be the first to comment?

46 comments:

TLJ said...

WTF!!! -- Wasn't little mattie raised in Harrisville??? -- you would think he learned during that time that you DONT count the chickens that aren't hatched yet.


What's done is done ... let's hope this doesn't happen with the stooopid ginormous water towers he needs for the condos that aren't there yet

quick, someone show me the way to the Screaming Room!!!

TLJ

TLJ said...

And what boggles the mind even more is the sheeple he's got roped into counting those same sterile eggs as chickens, and counting the eggs they'll produce and so on ....


screamingroomscreamingroom

monotreme said...

But...but...he assured me personally in October 2007, in a phone conversation, that the Junction would "never fail".

I was promised. He can't have told me an untruth, can he? It's not possible.

TLJ said...

Most integrity of anyone in the room, my ass!

TLJ

OgdenLover said...

A plea to anyone from the Standard Examiner who reads this:
This needs to be explained in the SE so that the average citizen can understand what's happened and what will be the consequences for all of us.

After a strong editorial endorsing the MWC, the SE has been remarkably quiet about the goings-on at City Hall.

TLJ said...

how 'bout everyone who reads the TEC document on this forum : email it to Schwebke ...

TLJ

OgdenLover said...

Rudi, your headline was far too generous. We know the Junction is bankrupting Ogden.

Mono,
"Community and Economic Development Director Waterfall explained those projections were based on
income; heretofore, there has been no income from The Junction and there is not anticipated to be any in
the near future."


Could someone please explain what the Ogden School District has to do with this? I have trouble understanding that.

Bryce Carl said...

People, read your Property Tax Notices and you should be able to figure out where both your tax dollars and the TIF goe and how, therefore, you are effected.

Dorothy Littrell said...

The truth has surfaced! I give the highest credit to Weber County Forum for this information.

These minutes show the financial mess that Mayor Godfrey and Ogden's RDA Agency have put Ogden into.

This development was inevitable from the onstart and crystalizes my opposition to all Redevelopment Agencies. They are all formed legally but operate as a division of government that citizens cannot by law do anything about. They incur debt that we never get to vote on but that we eventually have to pay.

My political fight against Mayor Godfrey and Ogden City government for the last 5 years has been because of Ogden City's determination to create such debt that there is no way we can ever pay our way out. It is a version of our U.S. government but on a much smaller scale.

Mayor Godfrey's projections on the downtown old Mall site known as the Junction are not being met as some of us predicted from the beginning.-

Ogden is most probably facing bankruptcy over the Junction...if not now, in future months.

I hope enough Ogden taxpayers come to realize it before our City election that is coming up so that we will gather some opposition to Mayor Godfrey and his ilk.

This financial bind explains why the Mayor is trying to get rid of the Marshall White Center expenses and also our golf courses...however, he continues to push for his gondola and similar expensive dreams.

Living in East County said...

Correct, Mr. Carl. I live in the unincorporated part of Weber County; and I'll be writing to our Weber County Commissioners to firmly oppose Godfrey's newest proposed bailout.

I'd suggest other Weber County residents do the same.

Let Godfrey's Junction fail of its own weight.

People outside of Ogden city shouldn't be forced to carry the weight for Godfrey's dumb decisions (and Ogden City voters' dumb decisions).

If the Junction project bond goes into default, so what?

Dan S. said...

The Utah law on RDA's and tax-increment financing is here.

As I understand it, the additional property tax (over and above some pre-Junction baseline) generated by privately owned properties in the Junction goes to the RDA, rather than to the usual taxing entities (city, county, school district, sewer district, etc.). The RDA has pledged this revenue toward paying off the bonds that funded the Salomon Center. But apparently this diversion of incremental tax revenue to the RDA is scheduled to expire before the bonds are paid off. Sounds like someone screwed up pretty bad.

OgdenLover said...

If the Junction (and its Gold's Gym)go belly-up, the MWC swimmers will have nowhere to go?

Old Timer said...

"Sounds like someone screwed up pretty bad" sums up Mayor Matthew Godfrey's entire administration history very succinctly for me....

BJ said...

Jest cogitating but I wwonder if this is why Mr. David Harmer decided to leave his post as the head of the RDA before this hits the fan???????

Dan S. said...

I'm doing a bit of research on the county's web site to find out the tax status of the various Junction parcels. It's absolutely fascinating.

The Megaplex building is not reflected at all in the county records; the land under it is still recorded as being owned by the RDA.

Same for the new Wells Fargo building, except that the land under it is valued at only $299.

Same for the rest of the parcels that Boyer is developing, including the restaurants, etc.

Of course the Salomon Center is owned by the RDA so no property taxes there. Ditto for the parking garage and the vacant parcel where the Midtown Hotel was proposed.

All seems to be in order with the PRI building; paid $208,000 in taxes for 2008.

The Treehouse Children's Museum apparently doesn't have to pay taxes.

The owner of the still-not-quite-finished Earnshaw Building owes over $27,000 in delinquent property taxes for 2007 and 2008.

The Ashton Square property is platted into 64 condos, even though nothing has been built there yet. Taxes on the land seem to be paid.

Dan S. said...

So can anyone out there explain why the Megaplex, new Wells Fargo building, Sonora Grill, and Iggy's aren't on the tax rolls? I'm at a loss here.

reality check said...

"no matt" must find it ironic that the only building at the Junction that's paying taxes is the one owned by the LDS Church.

reality check said...

Wasn't smartgrowthogden started by Mike Vause, a Mormon? Not sure if he has any tattoos.

OgdenLover said...

From the Ogden City official blog:
Re: Mt. Ogden Golf Course
The current situation is not acceptable. This year’s subsidy was well over $300,000 [actually much of that is an accounting slight of hand - OL] and it is simply unjust for the taxpayers to be footing that kind of a bill for golf, especially in this kind of an economic climate when those monies can be used for other basic needs. This $300,000 would equal seven new officers for public safety; instead it is currently spent on the golf course.

Moving back to discussion of the Junction debt linked to in the main article above, Mr. McConkie explained there are three bonds in place with about $2 million in debt service on the $22.4 million bonds as discussed; and then there are two other bonds that were used to build the Solomon Center with annual debt service of $580,000 and $672,000.

That adds up to $3,252,000 in interest (if I am translating "debt service" correctly), without beginning to touch the principal. By the Mayor's calculation that is equivalent to 76 new public safety officers.

Keisha said...

The truth, finally!

Is there anyone left in Ogden who still believes that Godfrey is a financial genuius, or that his crooked ruse could go on forever?

Thanks, Rudi!

TLJ said...

Rudi, you took out 'no matt' posts, so it looks like I'm calling our friend Dan S. paranoid ...


TLJ

Danny said...

Ironically, the colossal stupidity and ineptitude of Godfrey and his followers will insure decades of debt and decline. In other words, the Ogden the Geigers complained so much about will be perpetuated for the rest of our lives, thanks to their vain, inept mayor-demigod.

What better way to preserve our quiet quality of life?

Matt, you may be a venal, corrupt, demonic elf, but it's all gonna be fine in the end.

Smell that clean air.

RudiZink said...

That's right, Jennifer. And now... thanks to your above comment... everyone who reads the comments on this thread will know exactly what happened.

Thanks!

[grin]

Danny said...

You know, it's amazing the range of people in this world.

Dan S. is curious, and he makes important connections about things.

Nobody at the SE seems to have either of those qualities, even when Dan S. and Rudi do the legwork.

The mayor's schemes at the JUNK-shun are falling apart to an even greater degree than the intelligent analysis on this blog predicted. Godfrey cronies pay no taxes, assuming they even own the property on which they sit (in fact the taxpayers own that too) reporting gold is sitting in their laps, and these bumps on a log wait for the next Godfrey press release to print as news.

How would it be, to be so dull and incurious, so lazy and unconcerned even with their own livelihood, as the people at the SE seem to be?

curious 1 said...

Maybe we can finally learn the real cost of the junction, the set for 20 year lease payments, if the city owns all of the gym equipment and the sweartheart deals made by the business development office.

Still upsets me that the taxpayers have paid over $300K to repair the flowrider which is a private business. Kiddylands never make any money and why have we let the leases go cheap on a new building.

With the county being stffed for taxes seems like they would want more of the action. Maybe the old abondoned Golds Gym on 25th will come back from the empty derilick it currently is. At least the taxes there are current.

Richard R. said...

Thanks, Weber County Forum, for scooping the Standard-Examiner, with the possibly most revealing story ever, with regard to the bumbling Godfrey Administration!

blackrulon said...

Ogden Lover, your post is correct. I asked the mayor, on his Ogden city Mayors blog a similar question. I asked how many police officers the junction subsidy would pay for? Elections are coming, lets restore to sanity to city government.

Monotreme said...

My favorite sentence:

"...heretofore, there has been no income from The Junction and there is not anticipated to be any in the near future." — Scott Waterfall

Yep, that Junction project is going great guns. Made it, Ma! Top o' the world!

Anonymous Employee said...

Richard McConkie, Deputy Community & Economic Development Director

"Mr. McConkie further discussed pending development and if a larger project were to come on
line, it would have brought substantial tax increment. He stated those types of projects were not unrealistic
two years ago, but now they are because it is a much different economic environment."

I'm sure we'll hear how the Velodrome and the golf course redo are different when they are brought up again though.

The city is so tight on money right now that all subscriptions to the Standard have been canceled except for the city recorder and city council office-sorry Fire Dept. next time we'll try to notify you before we cancel something.

drewmeister said...

Wow. Just wow.
Don't mind that man behind the curtain. It'll all be fine.

dReWmEiStEr said...

I second TLJ's suggestion about cc'ing the document to schwebke. Maybe if he gets three dozen copies the dumbfuck will finally decide to do something.

TLJ said...

Watch this clip
, and sub in "Godfreyites" in for Bob's "Democrats"

More fuel to the fire said...

Just to add a little fuel to the fire, rumor has it that one of the tenants of the Soloman Center is about to be or is alreay being sued for copyright infringement. My sources are quite reliable since my sources are the one's about to or already have filed suit. They wouldn't go into much more detail other than to say legal action was on going.

Blaine Carl said...

BJ

Harmer WAS NOT head of the RDA. He was the Director of Economic Development, an appointed position. The "head" of the RDA is the Executive Director (the Mayor) and the Board is comprised of all members of the City Council.

Once upon a time, the Board had the power of the RDA via its vote. But the Ex. Dir., through some political moves at the Legislature, now has the decision making power similar to that of the Mayor.

Like somebody said, the Mayor seems to understand and play the political game a bit better than those on the Council or Board. He must rise earlier or was taught better than most of the Council members.

RudiZink said...

I do not believe your above statement is entirely true, Mr. Carl.

While the legislature did provide that a city mayor will be the "default" RDA Executive Director, it neither gave him a vote on board matters, nor did it give him the veto power.

Moreover, under current law, it's also arguable that a "default Director" such as Godfrey can still be removed by the Board "at will," according to the other provisions of law which still govern RDA Board operations.

ozboy said...

Mr. Monotreme

Great video clip, it reminded me very much of an Ogden story. Little Matt Godfrey finally got to the top of the world and it blew right up in his face! Gotta love it even though as a tax payer to Ogden I'm cryin in my beer.

B. Carl said...

Mr. Zink

I believe I used the word "SIMILAR," which is not an untruth and hardly prone to debate.

My preceeding and opening paragraph was clarification, for BJ, regarding Harmer's position (or lack of) within the RDA.

Casual Observer said...

So I’m trying to figure this out. The junction has $3.252 million a year in debt payments as pointed out by Ogden Lover (I concur with her math).

It collects $300 thousand per year from Fat Cats and the church pays $280 thousand per year in property tax. The BDO kicks in a cool one million per year that should have been used to fix our water and sewer system. So this like adds up to only 1.58 million per year of combined revenues. All the other RDA projects that have any positive revenue are sending all their money to the Junction (but last time I looked all the other RDA projects were generating far less than even a million dollars a year).

So best case the Junction annual short fall is $0.672 million per year and worst case is $1.0672 per year. Want to guess where that money is going to come from? (Hint, the General Fund)

Now correct me if I’m wrong but if the mayor gives the Taxing Entity the $300 thousand per year that is gets from Fat Cats each year (for 12 years or $3.6 million total dollars) as mitigation money (i.e. cheap bribe money and as so well stated in the report debt on debt), wont that then make the short fall greater by that same $300 thousand dollars per year? (Think General Fund again folks).

I thought the most telling line though was where “Mr. McConkie stated as part of the Junction project, underwriters did recognize there would be insufficient tax increment to collateralize these bonds (i.e. the revenues would not pay the annual debt); ultimately, the City’s General Fund in the form of lease revenues from the BDO underwrites this bond.” In other words the underwriters knew the project would not carry itself financially! And yet the mayor continued on with the deal knowing that it was going to be upside down from the start! And the underwriter (who obviously didn’t believe the mayors optimistic lease revenue projections) knew it would be upside down well beyond the start and possibly forever and that is why the asked for additional coverage from the General Fund in order to loan the money. It wasn’t just the collateral they were looking for; they were looking for the taxing ability to make the annual payments (just where we are now)!

McConkie now admits that the tax increment will never be enough to retire the debt. He and the rest of the BD gurus counted on the revenues produced (the one that are not there) from the businesses in the Junction that don’t exist to supplement the tax increments in order to meet the debt service. This is what is known leverage. What he’s not telling even the Taxing Entity is that as ever day does by the debt effectively get bigger by the unpaid balance (anyone heard of compounding). But you won’t see it on the debt instrument, you’ll see it in reduced city services and decaying infrastructure and ultimately in much higher taxes when someone finally comes in and cleans up after Godfrey.

This isn’t a case of a bad economy turning a good deal into a loser. It was a known fact by the underwriters, the business development department and the mayor before the papers were even signed. All knew that this deal was a long shot and would most likely never be able to carry itself without the ongoing contributions from the General Fund!

Casual Observer said...

One other observation in the report, Mr. McConkie informs the Taxing Entity that the City is still trying to find a hotel partner to build in the Junction but in order for the City to attract a developer that the City or the RDA will have to participate somehow in the project, likely to be in the form of a parking garage at a cost of $4 - $5 million dollars.

So let me get this straight, we going to buy our way out of a bad deal by spending more money?

Sounds like the same logic the mayor is using on the golf course. We have a (inflated) $300,000 annual budget deficit at the golf course so the only way to fix it is to spend $150 - $175 million dollars up there! By just shear dollar amounts this deal at the golf course could exceed the Junction by 4 times (and possibly by a much larger magnitude of dollar loses to the General Fund).

Where does the city find these BD guys!

disgusted said...

has anyone thoght what the effect another hotel might have on the other hotels in the city. hotels that are not full today. what finacial hit will the city take on the other hotels just to have the show the dollars in the junction project.

disgusted said...

lets try this again

has anyone thought what the effect another hotel might have on the other hotels in the city. hotels that are not full today.
what finacial hit is the city willing to take on the other hotels within the city just to have the dollars show up in the junction project. seems to be a net zero gain.

OgdenLover said...

But the existing hotels don't have a 2nd-story station for a gondola!

drewmeister said...

People, people.. You're forgetting, when the Mayor has spoken, the thinking has already been done. Don't worry and fret about all these little details - just trust in our city Administration. They know what's best for us. Only naysayers dwell on these sorts of things and fight the tireless efforts of the Mayor to improve our wonderful town. Sit back, relax, and have a tall glass of Noni Juice and let Godfrey's team take care of the details. That's what they're there for!

Monotreme said...

Someone tell me my math is wrong here.

From the 2007 brochure entitled "The Junction: A Good Investment for Ogden City" (someone's idea of a cruel joke, perhaps):

"At the height of its success, the Ogden City Mall was generating up to $1,554,000 in revenue for Ogden City."

From the June 25, 2007 TEC minutes:

three bonds, debt service amount
$2M (main, $22.4 bond)
$580K
$672K
total debt service $3,252,000.

Elsewhere, it's stated that the revenue from The Junction is about 23% of debt service. So I get 23% of $3.252M = $910,560.

So by building the Junction, we actually decreased our revenue by about 40% from (admittedly) the peak of the Ogden City Mall's success. Heck of a job, Mayor.

Further, the projected value of property at the Junction was to be $182M in 2010. According to the TEC minutes, current property value at the Junction is $60M. Missed that one by just a wee bit, we did.

demoqueen said...

OMFG!! When are the voters in Ogden going to wake up? Mini Mayor Man is bankrupting the city and leaving all of its' citizens as the fall guys. Is there no one that will stand up and stop this tyranny? Tax increments, concessions WTF! Property owners have thier property sold at sheriff's sale if they don't pay thier taxes. Banks foreclose on your homes if you don't make those payments, maybe taxpayers should force a sheriff's sale of the Junction for back taxes and unpaid loans. Maybe Ogden should have to liquidate thier assetts like the rest of us.

Dan S. said...

I've done a lot more research since my post of 1:24 pm on July 14. Here are a few important corrections; full details will appear in subsequent WCF articles.

Most importantly: The online county tax records are incomplete. They do not reflect taxes paid on property that is owned by the RDA but leased for commercial use. In fact, the Salomon Center and Boyer development tenants do pay property tax on their various buildings. The total property tax collected on the entire Junction project for 2008 was about $750,000.

In addition, the Junction redevelopment district includes the block west of Grant between 22nd and 23rd. Taxes on that block brought in another $160,000 in 2008.

OgdenLover: No, the $3.235 million in debt service is the entire annual payment, not just the interest. Of course, just as with your home mortgage, the first few years of payments go mostly to interest rather than to principal. But the principal does slowly go down, so over time the interest decreases and the same payment gets applied more and more to the principal.

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