Thursday, May 29, 2014

Standard-Examiner: City Incentives Sought for Kiesel Building

Big shot developer proposes $1.12 million taxpayer bailout

Troubling Standard-Examiner story brought to our attention by regular Weber County Forum contributor Smaatguy, who wryly remarks, "Good lard...the nonsense never ceases...". Here's the lede:
OGDEN — A development company wants to revitalize one of Ogden’s most historic downtown buildings, but before it does so, it wants the city to pony up more than a million dollars in incentives.
Salt Lake City-based Lotus Residential Partners wants to renovate the historic Kiesel Building in Ogden, located at 2411 Kiesel Ave.
The company plans to develop the building into an “’upscale urban-loft” style apartment complex, with approximately 50 separate apartments and 11,000 square feet of ground-level retail space. Lotus has developed several similar projects in the Salt Lake City area and this isn’t the first time the company is dealing in Ogden.
Read up folks:
This matter appeared on the Ogden City Council agenda on Tuesday, folks:
Down in the SE comments section, the ever sharp-eyed and alert comments board regular Bob Becker "nails it," wethink:
Isn't Godfrey Towers on the corner one block east still largely unleased, along with much of the ground level retail space at the Junction ? And more along Washington Blvd a block in each direction? Does that not at least suggest Ogden in that neighborhood is already significantly overbuilt in re: retail space given current economuc conditions? And the investors want the city to subdize more? What's that old adage about the first thing to do when you find yourself in a hole is to stop digging? [...]
Paragraph five, in which Lotus Residential Partners explains why it wants a taxpayer funded bailout of its investment in the Kiesel property is a real doozy. Let me attempt a plain English translation: (a) "Inflated aquisition costs" means, I suspect, "rats, we paid too much for the building." (b) "depressed rental rates" seems to mean "Ooops! We just noticed there's a glut of rental units hereabouts and so we're not going to be able to charge the rents we thought we could." (c) "A gap in revenues and expenses" presumably means something like "we're going to lose money on this deal unless we can convince the Council to pony up a seven figure publuc subsidy." That about it? Or close?
We'll be keeping an eagle eye on this story as it develops, of course.

As an added bonus, we provide below the email and telephone contact links of our Ogden City government elected officials, for the convenience of those gentle readers who'd like to throw in their own 2¢, concerning the "wisdom" of this proposed developer bailout:
Don't let the cat get your tongues, O Gentle Ones...


Bob Becker said...

My apologies for the typos in my comments quoted above from the Se. The Se's much ballyhood across-all-platforms site management software does not allow editing of comments, so typos cannot be corrected. (Its old comments software did permit correcting typos, and much else besides that is now not supported, raising the distinct possibility that the fast talking sharper who sold the Se suits on their clunky new software was Professor Harold Hill.)

blackrulon said...

It appears that the "invisible hand of the market place" is attempting to pick the pocket of Ogden taxpayers. Again.

Dan S. said...

I think it's important that the Kiesel building be preserved and renovated and, as soon as possible, occupied. I also understand that renovating old buildings is inherently expensive.

What I don't understand is where the subsidy is supposed to come from. Could someone please explain New Market Tax Credits in plain English? (I've read the council's agenda packet and it isn't helpful.) I do understand what tax increment financing is, but how about some details? Is it really just this one building whose tax increment would go into the subsidy, or is the city proposing to extend the tax increment collection on the entire 25th Street district of which it is a part? What time period are we talking about for the tax increment collection? (I can make some rough estimates based on reasonable assumptions, but I'd like to know what the city is actually proposing so I can decide whether its numbers are realistic.)

[Cross-posted on Se.]

blackrulon said...

Sure, its only $1.12 million dollars. Its not like that amount of money could help fund the delayed maintenance and repairs on the Golden Hours Center. A better question would be to find out the outcome of real return on all the years of sweetheart RDA deals as opposed to the promised return.

Dan S. said...

As far as I could tell from the materials that were presented to the council, the relocation of the Golden Hours center isn't saving the city any money; it's more or less a wash, financially.

It isn't clear, in any case, that the revenue sources they're looking at for the Kiesel building would be available for other purposes.

I've generally been a critic of tax increment financing because the city over-uses it and this takes revenue from the schools. But the Kiesel building may be an exception. It's very unlikely, I think, that it would be renovated (or replaced with anything approaching the same value) without some kind of subsidy. And it's in a location where Ogden desperately needs more density in order to make downtown viable over the long term.

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