Sunday, July 19, 2009

Troubles At The Ogden Junction Money Pit

A harsh reminder of broken Boss Godfrey promises

It was early last week that we broke the news that the Godfrey Administration explicitly admits that the Junction Money Pit is driving Ogden City into the municipal government poorhouse. And lo and behold, six days later, the Standard-Examiner finally gets around to reporting this blockbuster story this morning. Check out Scott Schwebke's full morning writeup here:
Ogden's Junction's money pinch?
What's immediately obvious is that there are a couple of typos in the Std-Ex headline, by the way, and the the original headline should have read more like our own WCF headline above.

Try as the Administration might, it's impossible to put lipstick on this pig. In simple point of fact, the big spenders of the Godfrey administration wildly overestimated the revenues which would be derived from this boondoggle project from the outset; and Ogden taxpayers have been paying the price for Godfrey's blunder, to the tune of $800 thousand or so per year since 2005.

In its current posture, the administration is desperately trying to buy time, hoping that with a refinancing of the tax increment structure to the year 2026, the project can recover when the economy some day returns to "normal." With respect to that, we'll predict that U.S. credit markets will never return to the go-go times of the early and mid-2000's, a period of economic recklessness unprecedented since the 1920's.

But even assuming that the economy will improve to a point where the Godfrey administration might realistically be able to put this project back on its feet, at least relatively speaking, CED Deputy Director Richard McConkie spells out this less than encouraging "best case scenario":
Extending the project area until 2026 could generate through tax increment, assuming the economy rebounds in a reasonable time, about 60 percent of the revenue required for The Junction's bond debt, McConkie said. The balance of the revenue needed for the debt would come from lease revenues at The Junction and BDO, he added.
That's right, gentle readers. Even assuming under an "optimistic scenario" that Godfrey can con the Taxing Entity Committee into giving Ogden City an additional 12-year cushion, and that the economy recovers to the point where significant tax and/or lease revenues start flowing from The Junction, the taxpayers of Ogden will still be covering the tab for up to 40% of of the Junction bond debt into the year 2026 with BDO revenue, in addition to the millions we've picked up already.

And remember, gentle readers... Godfrey promised (scout's honor) that the Ogden taxpayers would "NEVER be on the hook."

So much for Godfrey promises.

Have at it, O Gentle Ones.

24 comments:

Dan S. said...

You lost me, Rudi. It says the other 40% will come from lease revenues. How does that end up on the backs of the taxpayers?

RudiZink said...

BDO revenue is taxpayer money, Dan. It was pledged as additional security only. It's nuanced, but BDO revenue wasn't supposed to be a primary source of funds for the bond payments.

Dan S. said...

Rudi,

Ok, I was thinking about lease revenues from the Junction, not BDO--but I see it's both. I wonder what the breakdown is now, and what it will be ten years from now.

George K said...

Rudi,

You point out that “In simple point of fact, the big spenders of the Godfrey administration wildly overestimated the revenues which would be derived from this boondoggle project from the outset;”
I hope everyone has noticed with ALL of Godfrey’s proposed projects the cost is way low and the benefit and income to the city are doubled what they actually are. And of course, they all come with the promise that the Ogden taxpayers will never have to pay anything for the project. Most of them come with “But the city will have provide a million dollars to show ‘good faith’ in the project before any other investors will put up any money.” B.S.! How stupid does Godfrey and his minion, John Patterson, think people of Ogden are?!

On Godfrey’s velodrome, when questioned, he replied that the city would be required to pay much more than $1 million. Ciy Council, don’t let him do it! Just as the Junction has proven to be a big drain on available citiy funds, so will this scheme for a velodome cost Ogden taxpayers.

Another simple project that the Godfrey administration really screwed up on is the “Information Booth” by the FrontRunner. They went so far over budget, just like the Junction!

People are moving OUT of Ogden faster than they are moving in except for the Hispanics, because of the high taxes, and the Mayor’s crazy projects.

Godfrey is a terrible financial manager! Look at how he has bungled the Marshall White Center! The City was paying less than $350,000. annually to manage the Center. Now in the contract with OWCAP, he has said that they will receive $30,000. monthly to pay for programs and the wages of employees, plus thecity will pay any maintenance item costing $10,000. or more. Any third grade student can easily figure out that the Marshall White Center is costing the city more now than before. The city makes $30,000. monthly payments to OWCAP. Over a year that totals $360,000. alone – not counting the large maintenance projects.

Since the city just finished the budget process, and the employees wages were not increased, and some positions were not funded, I believe it is time that the citizens protest to the Mayor by writing letters-to-the-editor, calling his office, attending and making comments of protest at Council and RDA meetings about his neglect to necessary infrastrucure problems such as streets and sidewalks. The streets of Ogden are very unpleasant to drive. As citizens of Ogden, we need to demand financial responsibility of the Mayor and that he provide the services to the citizens that governments are supposed to provide. He needs to fulfill his responsibilities as outlined by city ordinances and forget his ego building projects that most of us don’t give a damn about having because we can’t afford to use them! Or we demand that the city be administered by a city manager under the watchful eye of the council.

It is time that the citizens of Ogden take control of their “out-of-control” Mayor!

George W. Bush said...

Matty, you're doing a heck of a job.

Brett said...

George W. Bush,

Why don't you say it like it is -- he's doing the job in a hell of a way! (Not meant to be complimentary)

Curmudgeon said...

George K:

One correction: I think the $30K monthly subsidies the city is to pay to the leaseholder on the MWC only continue, under the contract, for six months, not for the full 12. If so, that'd make the total for that particular expenditure in this fiscal year $180K not $360K.

Dan S. said...

Curm: I think the whole contract gets renegotiated after the first 6 months. If OWCAP can raise some grant money, the city's payments may decrease. Wanna place a bet?

old timer said...

I find it incredible in talking to a council member to learn that the Ogden City council still does not know the total cost of the Junction nor do they know the loss in City funds from operating the Junction each month.

Absolutely incredible that no one in City government is doing their job.

More incredible is that Ogden residents are so complacent that it is obvious that no one gives a damn or they would be picketing City Hall for some answers..

Curmudgeon said...

Dan:

No bet.

PPK said...

I'm sorry if this is repetitive from other posts, I'm very confused.
I read about tax revenues, and leases and the Boyer Co and the City splitting some revenue from leases, etc.
I pay taxes, yearly, on my home in Ogden. Alot.
I would assume that every building or business sitting on a parcel of land in Ogden is responsible to do the same. So I would guess that even if the property is leased, whoever the "landlord" is, or owner of the parcel of land the Junk-shun is sitting on, they are paying the city property taxes, yes? Or ... No???
If it's a city lease to say...a bank down there, or a restaurant, then the thought would be the bank or restaurant pays rent to the city...who in turn puts that money back into "the city" via yearly "property taxes".
I feel like I am talking in circles here, hence, my confusion.
So IF the above is somehow true, how does the city actually make any money on "property taxes" from the "Junction" land if everyone there is leasing?
It would seem to me that a city would make a lot more revenue annually from property taxes being paid by any given business on that land than just a rent payment.
But that's just my confusion kicking in. At my age, that happens.
Anyone, please clarify for me?

OgdenLover said...

Old timer,
There are three problems:
1. There is no (legal) way to remove Godfrey from office short of having him convicted of a felony, as I understand it.
2. The Mayor and his staff are full-time employees while the Council members have full-time real jobs outside of City government. If there were honest communication between City Hall and the Council that would not be a problem, however that is definitely not the case. Their time and resources are limited.
3. For the most part, the Std Examiner has served a less-than-critical role where the Administration is concerned. Their slant on the Junction's financial disaster is a perfect example. Voters tend to be apathetic when their major source of news tells them that this and other affronts to honest government are just minor bumps in the road.

Danny said...

On the whole we can thank the SE for picking this story up from the WCF.

We can also thank them for soliciting alternative viewpoints.

But we have to note the story as written relied on administration information and quotes something like 10 to 1 over opposing views. Littrell and Yorganson were both given little more than blip quotes, and each was introduced derisively as a long time opponent of Godfrey's.

In effect, the article was written by the administration with a few minor mentions along the lines of "as expected, they usual naysayers had something to say about all of this."

Then there was Belnap's quote that having to had over city real estate to the school district to cover lost tax revenue was a win for the taxpayers. A mind boggling quote that was left unanswered.

It was nice the story was covered, but it was very weak and biased.

blackrulon said...

A few questions and concerns> What will happen if the junction goes bankrupt? Will the citizens of Ogden be liable for the unpaid debt? What would happen if Ogden city just walked away from the junction, similar to what the mayor once suggested to do with Mount Ogden golf course? Why are there suggestions to build a new school we we have several that are now vacant. Who is responsible for attracting business to the junction, the Boyer corporation or the cities business branch?

Curmudgeon said...

In Re: Danny and OL's comments on the SE coverage of The Junction money pit:

1. Alleged bias as reflected in the amount of time given to administration spokesmen. Well, the story was the city's presentation to the RDA funding board asking for a bailout. And so, seems to me the core of the story had to be about what the city was asking, and why. That necessarily involved describing the scope of the problem, which in large part the story did. I don't see much bias there.

2. Alternative opinions: sorry, but I'm hard put to criticize the SE for identifying Rulon and Dorothy as long-time opponents/critics of the administration. They are. That's why the SE went to them for comment. The mayors critics, of which I am one, would be [justifiably] annoyed if the SE printed comments by Mr. Patterson and Mr. McConkie without identifying them as administration insiders. Long-time opponents of the Administration, when commenting on administration policy, should to be identified as such.

3. The story pointed out how BDO funds are being shunted to bond payments, [and so not going to other public purposes]. And it noted that the city's schools are losing about half a million a year because of the tax arrangements to finance the Junction. I'm not sure five years ago an SE story on this would have done all that. In any case, this time, it's there.

4. Neither the story, nor its headline, suggested to me that the SE was presenting all this as a "minor bump in the road." Seemed to me its prominent placement [lead story front page], and its headline, and its content, clearly painted the Junction's financial problem as serious and long term.

5. My major complaint about the story is that it did not provide sufficient historical context for the problem. I'd have included verbatim Hizzonah's assurances to the Council [two Council's ago] that making the City a guarantor of the bonds would not cost the city any money. The focus of the story is current and future [the city's appeal to the RDA funding board, the size of the problem, who is affected and how, opposition opinion, and possible consequences down the road] --- and that's proper. But [particularly with a Council election approaching], a little historic context would have improved the story and made it easier for readers not already familiar with the topic [e.g. new arrivals] to understand how we got where we are.

In any case, the SE has provided its readers a platter full of interesting information for the coming campaign. And it provided it in the lead story under a banner headline on the front page. That works for me.

On the Inside said...

PPK,
I’ll try to explain what is going on at the Junction, but it is confusing, also, to some of us on the inside.
As I understand, Boyer is responsible for bringing businesses and developers to the Junction. The agreement with Boyer states that revenues from leases will be split 50 – 50 with the City. Boyer is responsible for seeing that lease agreements for businesses in the Junction (not the Salomon Center) are paid and they collect the rent. No property tax will be collected by the County from the businesses now operating in the Junction until the phase that it is in is totally developed and the Weber County assessor places the Junction, Phase I on the County’s tax rolls. If it is placed on the tax rolls mid-year, Ogden will not receive any property tax that year. The assessments are computed from January to January.
You bring up an interesting point – are the Megaplex, Sonora Grill, Wells Fargo Bank, and other operating businesses NOT paying property tax because the Junction, Phase I is not on the County property tax rolls yet? If they are paying property tax on the land where their business is located, who is getting the property tax, or isn’t Boyer charged any property tax at all until Phase I is complete and placed on the tax rolls?
Someone who is better informed than I needs to answer the above questions.

Curmudgeon said...

On the Inside:

Damned interesting questions you and ppk are raising. This is the sort of thing an independent daily paper would set someone to digging at until the paper had the story straight and could report it clearly to readers.

old timer said...

Blackrulon --

It is impossible to abandon and walk away from the Junction. It is located on Ogden City land. That land is encumbered by the debt that is on the Junction.

It is also encumbered with several multimillion dollar mortgages which the Ogden City RDA has incurred on behalf of Ogden city taxpayers who are liable for that debt but which Ogden City taxpayers did not get to vote on.

Ogden also agreed to give away a percentage of the BDO revenues for future years coming in from activity generated by the property that the U.S. Defense dept. gave to us and was never intended to go to build the Junction.

The Standard Examiner received very valuable property in that BDO land gift by exchanging their property in downtown Ogden that was worth a few hundred thousand for property in BDO that is worth millions....which is why no one at the Standard Examiner in management will ever print anything negative about the Godfrey administration.

Said exchange took place in Mayor Godfrey's office one Friday morning without any publicity.

W said...

Matt, you should raise fees so your city can pay the fines that Chief Senator Greeiner for violating the Hatch Act... Not that he broke the law or anything like that!!! so he can keep his Senate Seat and Chief of Police position.

Tired of Leeches said...

It really isn't like Greiner needed the money. He's there to push Matty's ill-conceived legislation. He is receiving a paycheck from State Retirement because he retired as Ogden's Chief of Police, and six months later was hired as the Chief of Police and receives $108,000. annual salary from Ogden City, plus an expense account and Ogden City pays the premium on health insurance. I know that there is one other check that he receives, and I believe that is from the federal government because he was in the reserves. He should pay his own fine!

car alarm said...

i like the junction. it has nice apartments, and looks nice next to the temple.

CAPTAIN JORTS said...

KILL HIM

blackrulon said...

car alarm, do you live in a junction apartment or have you just visited on a tour,visit or inspection? Are the costs comparable to other residences. What special features, if any are offered. What is the occupancy rate?

Dan S. said...

I've been doing some digging into the Junction situation and will write up an article within a few days, trying to explain it all.

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