Junction 101

A crash course in geography and economics for Ogden taxpayers

By Dan Schroeder

As every reader of Weber County Forum knows, there are few projects in Ogden that are as important or as controversial as The Junction. But this reader, at least, has gotten through the last four years without ever actually understanding the complexities of this project. Motivated by the administration’s recent request for a 12-year extension on its entitlement to Junction tax revenues (and by a lull in the summer when I had few other responsibilities), I set out last week to remedy this situation. This article summarizes what I’ve learned.

The Lay of the Land

The Junction occupies the former Ogden City Mall site, taking up two square blocks (about 20 acres) of downtown. Here’s a graphic from the Ogden City web site, showing a simulated aerial view facing west, which I’ve labeled with the names of the major Junction components:

When the Ogden City Redevelopment Agency (RDA) bought the old mall site, it acquired the entire two blocks with the exception of the Episcopal Church. The RDA still owns most of the site, but not all. At the south end, the RDA traded some additional land to the church in exchange for a parcel across 24th Street. At the north end, the RDA granted one parcel to the Treehouse Museum and sold three parcels for commercial development. Those three parcels are now occupied by the Ensign Plaza building, the Earnshaw building, and the vacant land that was intended for the Ashton Square condominiums. (The privately owned parcels are tinted yellow in the graphic.)

The RDA continues to own the parking garage, the Salomon Center, and the vacant land that was intended for the Midtown Hotel (these properties are tinted green in the graphic). However, the Salomon Center is leased to Health & Fitness L.C., an entity set up by Gold’s Gym and Fat Cats.

The rest of the land at the Junction is also still owned by the RDA, but is under long-term lease to the Boyer Company, which built the Megaplex Theater, the Wells Fargo office building, and the various restaurants, retail space, and apartments. (These properties are tinted blue in the graphic.)

The Debt

To finance its Junction-related expenses, the RDA has issued three different sets of bonds, referred to as Series A, B, and C. (For details, see pages 63-64 of the city's 2008 Comprehensive Annual Financial Report.)

The Series A bonds, totaling $7.3 million, were used to help finance the construction of the Salomon Center. The payments on these bonds are about $550,000 per year, and are coming from tax increment revenue from 10 other redevelopment districts throughout the city.

The Series B bonds, totaling $8.9 million, were also used to finance the construction of the Salomon Center. The payments on these bonds are about $590,000 per year, and are coming from the lease payments that Health & Fitness L.C. pays to the RDA.

The Series C bonds, totaling $22.4 million, were issued to consolidate the rest of the city’s Junction-related debt: $6 million to purchase the mall site, $4 million for demolition, $5 million to settle with Woodbury Corp. for its interest in the mall’s tax-increment revenue, and the rest for streets, sidewalks, utilities, and miscellaneous expenses including legal fees. The payments on these bonds are about $1.9 million per year, and are coming from a combination of tax increment revenue (from the mall redevelopment district itself and from the American Can RDA district) and lease revenues from Business Depot Ogden (BDO). If/when Boyer’s Junction developments ever make a profit, the city’s share of that profit will also be applied to paying off these bonds.

All three sets of bonds were issued in 2005 and will mature in 2025-31. Of the total original debt of $38.6 million, the remaining unpaid principal is approximately $36 million.

Incidentally, this bonded debt doesn’t account for all of the city’s investment in the Junction. The city also used various one-time allocations to pay for miscellaneous expenses, cost overruns, and repairs.

The Revenue

As mentioned above, the city (RDA) has two types of revenue to pay off this debt: tax increment and lease revenue. Each of these requires some explanation.

Tax increment financing is the whole premise of the RDA. When a redevelopment district is created, any additional property taxes from new development in the district go to the RDA for a certain period of time. Normally this revenue is used to pay off a portion of the debt from that development. Under some circumstances, however, tax increment revenue can be moved from one redevelopment district to another. In Ogden, tax increment revenue is now flowing from 10 other redevelopment districts to the Junction. Tax increment financing is controversial because it deprives all the taxing entities (school district, city, county, etc.) of the property tax they would normally collect from the new development. Proponents argue, however, that without tax increment financing, much of the new development would never take place at all.

When the city owns a piece of property, it can receive additional income from leasing that property. The city (RDA) leases the Salomon Center directly to its tenant, and began receiving lease payments in July 2007. The RDA also leases 6.3 acres of Junction property to Boyer, under an agreement whereby Boyer pays the RDA 50% of its net profit (if any) on this property. The city has a similar arrangement with Boyer for BDO, which is now returning about $3 million annually to the city.

The Junction’s retail properties, including restaurants and entertainment, also generate some sales tax revenue. The city’s share of this tax is 1% of sales, and this revenue goes into the city’s general fund (not to the RDA).

The Problem

The revenue streams to pay off the Series A and B bonds seem to be coming through, at least for now. In particular, there is no sign that the Salomon Center tenant might walk away and default on the lease, leaving the city responsible for the Series B bond payments.

The problem is with the Series C bonds. The tax increment revenue from the Junction (including the block west of Grant between 22nd and 23rd Streets, which is part of the old mall redevelopment district) seems to be covering only about half of the $1.9 million annual payment. Most of the difference is being made up by BDO lease revenue, which the city would prefer to spend on other projects.

But in just five years, the situation may become much worse. That’s when the time limit on collecting tax increment from the mall redevelopment district runs out. For the next 12 years after that, the entire $1.9 million annual payment on the Series C bonds would have to come from BDO and/or other sources.

One of those other sources was supposed to be lease revenue on Boyer’s Junction developments. But with so much of its office, retail, and residential space still unleased, Boyer has yet to make a profit. Ogden Community and Economic Development Director Scott Waterfall has stated that he doesn’t anticipate receiving any income from Boyer in the near future.

In an upcoming article I will show in more detail how the Junction’s tax increment and lease revenues have fallen short of what we were promised. I’ll also describe the administration’s proposal to obtain additional revenue by extending the collection of tax increment on the mall district for an additional 12 years.

Meanwhile, the floor is open for comments.

1/17/12 Ogden City Council/RDA Agenda Heads-Up

Several interesting items which ought to be of particular interest to our Weber County Forum readers

Here's a quick heads up concerning tonight's Ogden City Council/RDA action, wherein the various agendas contain at least a few items which ought to be of particular interest to our Weber County Forum readers:

1) Joint Study Session (5:30 p.m.). Of particular interest to our WCF readers may be one item on the agenda, the proposed vacation of a public easement/right of way along a portion of Buchanan Avenue between 28th and 29th Street. What's interesting about this otherwise seemingly routine agenda item is that although the planning commission has already reviewed and recommended Council approval with its own 5-2 vote, a very familiar face on the Ogden political scene, Chris Peterson, formally opposed this measure when it was before the planning commission, so its possible that Peterson and/or his representatives may appear at tonight's meeting, to renew his opposition during tonight's Council discussion:

• 01/17 Ogden City Council Joint Study Session

Peterson's objection centers on the fact that abandonment of the public easement would reduce public parking opportunity near the 29th street trailhead; and as one gentle reader remarked in a private conversation on this topic a few days ago, "Of course he's already using the parking area for his commercial via ferrata business, but in addition one has to wonder about the newly fenced adjacent property and the new switchbacking clearcuts he's made up the northwest face of Malan's Peak."

2) Redevelopment Agency Special Meeting. During this meeting, which begins "immediately following the Council meeting that begins at 6:00 p.m.," the Ogden RDA Board will consideration the adoption of an "amended budget for the Ogden River Redevelopment Project Area as approved by the Taxing Entity Committee on November 10, 2011.":

• 01/17 City Council-RDA Special Session

We've already discussed this item on Weber County Forum, of course. As our regular readers will recall, this is the proposal Boss Godfrey sneaked past the Ogden RDA Taxing Entity Committee "in the dead of night," and which will extend the Ogden River Project Redevelopment Area tax increment period "through Tax Year 2027 (an Additional Eight (8) Years)" This amendment to the Ogden River Project Area tax increment amortization schedule, once approved, will reduce Ogden RDA taxing entity revenue, (including that of the cash-strapped Ogden School System) to a mere 28% of the tax money to which they would otherwise be entitled in the absence of this amendment, of course.

Although it's all signed, sealed and delivered, folks, we thought you'd want to know that tonight's the night it gets rubber-stamped.

Here's a quick side note to the above item, by the way, which our readers ought to consider in light of the Ogden School District's action in cavalierly giving up 72% of its River Project Area tax revenue until the year 2027. "Five schools in the Ogden School District are using approximately $7 million in federal grants to help bring them up to a higher level and keep them out of danger of being shut down because of poor performance," according to the S-E story below:

• Hoping to avoid closure, Ogden schools use federal grants

We're having some difficulty understanding the Ogden School Board's "thinkin'" in these tight financial times, we'll confess. Howbout you?

3) Redevelopment Agency Board Work Session: During this special meeting, which also begins "immediately following the City Council and Redevelopment Agency meetings that begins at 6:00 p.m.", the RDA Board will discuss a proposed purchase contract and development agreement for The Four Foods Group, LLC, in connection with the opening of a new Kneaders Bakery And Café at 1951 Washington Blvd.:

• 01/17 City Council-RDA Work Session

We'll volunteer that this has to be interpreted, at first glance, as very good news for the otherwise moribund River Project Development area, even at this early stage in this new proposed project, although we'll also welcome our Gentle Readers' own possibly contrarian takes on this subject.

That's it for now. We'll leave the lights on of course, for anyone who'd like to comment before, during or after tonight's meetings.

Update 1/18/12 6:42 a.m.: The Standard reports this morning that just as we predicted, "[t]he Ogden Redevelopment Agency board adopted a resolution Tuesday night that will extend the Ogden River Project tax increment collection period by eight years":

• Ogden stretches River Project tax deal

Hopefully in the days to come, we'll hear no further whining from the Ogden City School District about cash shortfalls.

Ogden Gaining Momentum on a Multi-million Dollar Redevelopment Project Downtown

There are "big doins' in Ogden, folks, as our Ogden City government prepares to get back into the urban redevelopment game. Here's the lead to the December 27 Standard-Examiner story:

OGDEN — The pieces are quickly falling into place for a new city redevelopment district that could result in more than $200 million worth of new construction in a six-block section of Ogden’s downtown.
Weber County and the Ogden City School District recently approved interlocal agreements with Ogden on the city’s proposed Continental Community Reinvestment Area.
The CRA, which is located in the approximate six-block area bounded by Wall Avenue and Washington Boulevard between 25th and 27th streets, aims to use certain tax incentives to help fund a bevy of redevelopment items: vacant building removal, the development of new housing units, public infrastructure improvements and the renovation of existing buildings.

Read up, Peeps:

• Ogden gaining momentum on a multi-million dollar redevelopment project downtown

Ogden City Council Executive Director Janene Eller-Smith said the council will likely take action the the plan and budget for the project in January.

Shades of an earlier era, when former Mayor Matthew "Boss" Godfrey went hog-wild picking winners and losers? We certainly hope not.

One thing's for sure. We'll be keeping a close eye on this story as it "develops."

Commrnts,anyone?

Important Ogden City Council Work Session Scheduled for This Evening

A funding request for demolition in the Ogden River Redevelopment Project Area (Leshemville) is on the agenda

As a followup to our earlier articles on the topic, we'll provide a heads up regarding this evening's Ogden City Council/RDA Joint Work Session, wherein, among other things, the council will discuss the funding request for demolition in the Ogden River Redevelopment Project Area (Leshemville). We accordingly incorporate the notice from the city website :

Notice is hereby given that the Ogden City Council and Redevelopment Agency Board will meet for a Joint Work Session on Tuesday, August 3, 2010 immediately following the Regular City Council meeting that begins at 6:00 p.m., in the Council Work Room, located on the third floor of the Municipal Building in Ogden City, Weber County, Utah. The purpose of the work session is to discuss the Funding Request for demolition in the Ogden River Redevelopment Project Area; Notice of Proposed Ordinance – East Central Neighborhood; RDA Board business and Council business.

Check out tonight's full council packet here, which includes relevant details concerning the Leshemville demolition matter:

• 08/03 City Council Work Session Packet

We'll note in passing that we're delighted to observe that the Council/RDA is following up on our earlier advice and moving forward on this important matter. Any readers who will be in attendance at tonight's meeting are of course invited to chime in with their own comments and observations about tonight's council discussion; and we'll leave our lower comments section open for that purpose. As a matter of fact, we'll be happy to entertain any relevant comments which our readers may see fit to lodge even prior to this event.

Update 8/4/10 7:30 a.m.: The Standard-Examiner provides a story this morning, reporting on last evening's council work session discussion:

• Burning 45 vacant homes still an option

Tuesday Night Ogden RDA Agenda Item: Ogden River Redevelopment Project Area Extension

We dunno why the Ogden RDA TEC committee "rolled over" again... maybe they were afraid that Godfrey would throw another of his "world famous" temper tantrums

To kick off this morning's Weber County Forum discussion, we'll dutifully highlight an important matter suddenly coming up, seemingly "out of the blue," on Tuesday night's 12/13 RDA/Council Study Session Agenda:

5. Reports from Administration:
b. Ogden River Redevelopment Project Area Extension. Proposed Resolution 2011-25 adopting an amended budget for the Ogden River Redevelopment Project Area as approved by the Taxing Entity Committee on November 10, 2011. (Set/not set public hearing for January 17, 2012 – voice vote)

There's an interesting notation buried in Tuesday night's RDA Board packet, revealing that the Godfrey administration has been "stealthily" working behind the scenes to make the RDA Board's scheduling of the proposed January 17, 2012 "public hearing" what will probably amount to a mere "formality":

November 10, 2011
The Taxing Entity Committee met on November 10, 2011. The TEC unanimously approved extension of the project area to 2027.

Thus the Godfrey administration has quietly succeeded in the veritable "dead of night" in persuading the RDA Taxing Entity Committee (TEC) to agree to recommend that the RDA Board extend the Ogden River Project Redevelopment Area tax increment period "through Tax Year 2027 (an Additional Eight (8) Years)"

Yesiree folks, in the waning days of the Godfrey administration, the Little Lord is tying up another "loose end." Just as in 2009, when this same committee voted to "bail out" the financially-floundering and taxpayer-burdensome Junction Project Money Pit, Boss Godfrey once again resorts to the same game plan and succeeds once again in getting the Ogden RDA TEC to meekly "roll over," thus depriving the taxing entities who depend on a reliable stream of tax revenue to defer collecting that revenue for another eight years... (thereby opening the door for yet another expensive round of Ogden RDA bond refinancing.)

Frankly, we don't know what's wrong with the members of the Taxing Entity Committee, whose primary ethical obligation ought to be the protection of the tax revenue streams of the entities whom they (theoretically, at least) are supposed to represent.

Maybe they were afraid that Godfrey would throw another of his "world famous" temper tantrums.

And while it is true that it'll be the Ogden RDA Board will have the final say on this, the proposed January 17, 2012 RDA "public hearing" will predictably be a "mere formality," as we said.

The floor's open, O Gentle Ones. Who will be the first to throw in their own 2¢?

Big Emerald City RDA Meeting Tomorrow (Tuesday) Night

Another long-time Ogden manufacturing business to be shown the door at taxpayer expense

By David S.

I note this from the council packet for tomorrow's Ogden Redevelopment Agency meeting:

• Redevelopment Agency Agenda Packet

The Administration is seeking authorization for the Executive Director of the Redevelopment Agency to purchase property located at 153 18th Street,commonly referred to as Ogden Chrome & Bumper.

Acquisition of the property is vital to the success of the (ever-languishing taxpayer sinkhole known as the) Ogden River Restoration Project and for future development along the river. The property is also located along Wall Avenue, which has been targeted for redevelopment.

Purchase price and relocation costs total $242,000 which will be drawn from FY2010 funds. (Pay no attention to this - - the mayor will claim it's not really real money.)

PURCHASE PRICE: $192,000, the MAI appraised value established by Free and Associates, on October 6, 2009. $50,000 relocation costs. Total $242,000.

(With no provision for environmental cleanup so the mayor can preserve his reputation for being cavalier and irresponsible.)

In addition to the current purchase, staff have obtained options to purchase the two other Ogden Chrome parcels located at 145 18th Street for $235,000, and at 1802 Wall Avenue for $175,000.

Options run through August 31, 2012. At a future date, the consideration of these acquisitions will be brought to the RDA Board.

It is proposed that the Board authorize and approve the Executive Director to execute and take all actions necessary to effectuate an Agreement of Purchase and Sale with MCK5 LLC regarding the purchase of the parcel of real property located at 153 18th Street, Ogden, Utah.

So in summary, another long-time Ogden manufacturing business will soon be shown the door at taxpayer expense, joining Big Bubba's, Superior Welding, Bloom's and many other functioning, taxpaying businesses driven out of town because they didn't fit the boutique image of Ogden's elites and their toady mayor. In their place will be more new Class A property with "Available" signs, and vacant lots filled with weeds, together with more debt, more money wasted.

I suppose we should be grateful that our mayor is at least creating so much downtown "open space".

Heaven help us when the bill for all this spending comes due.

Salt Lake Tribune: Former Nuisance Waterway Now a Prime Attraction in Ogden

A Weber County Forum  Tip O' The Hat this morning to Dan Schroeder, for once again setting the record straight

Turning to our back-burner Ogden City topical news queu on this, yet another uber-slow news day, the Salt Lake Tribune's Cathy McKitrick provides a little something for Ogden City residents to crow about as we stand mid-way through a long holiday weekend:

• Former nuisance waterway now a prime attraction in Ogden

In her possibly over-yeomanlike efforts to provide background to this story, Ms. McKitrick slips in this quote, from former Ogden City Mayor Boss Godfrey, who in truth, effectively paralyzed the economic health of the Ogden River project area with a heavy-handed Big Government-style "economic development" interference for many years:

Reached by phone Wednesday, Godfrey called the award "a great honor, especially from an organization that was so helpful in making it a reality."

"It was highly controversial at first," he said of the project he introduced a dozen years ago to redevelop several blocks around the Ogden River. "We never would have been able to clean up the river without cleaning up what was around it."

Fortunately SL Trib readers have sharp-eyed and alert Ogden City community activist Dan Schroeder to counteract the self-serving Boss Godfrey spin:

Controversial?

Yes, the redevelopment project on 60 acres surrounding the river was (and is) controversial. The city declared the area "blighted" and scheduled for demolition years before coming up with the money to actually carry out its intentions. The property owners naturally stopped maintaining their buildings, turning a marginally blighted area into a badly blighted one. Shady back-room deals with prospective developers and a continuing debt of several million dollars have added to the controversy.

But that's the redevelopment project--not the river restoration. The ex-mayor has it exactly backwards when he says that the former was necessary for the latter. In fact, most of the redevelopment project has still not happened, yet the river restoration is now complete. With hindsight, it would have made far more sense to carry out the river restoration before even attempting to begin any redevelopment.

There was also some controversy with the river restoration itself. Some of the money for it was illegally diverted from other projects without city council approval. Some of the contractors were hired without competitive bidding. These were unnecessary controversies, which a more grown-up mayor could easily have avoided. And finally, there's the fact that most of the cost of the restoration ultimately came from residents' utility bills, which are among the highest in the state. While I don't mind paying for projects like this, it would be wrong to spend that kind of money without a little controversy.

A Weber County Forum  Tip O' The Hat this morning to Dan Schroeder, for once again setting the record straight.

Standard-Examiner: Ogden City Property Confiscation Committee Declares Four-block Downtown Area Blighted

The sky's the limit when your City Council gambles with other peoples' money, we guess

Scott Schwebke reports this morning on the results of last night's Ogden City Property Confiscation Committee (RDA) Hearing, and reveals that Boss Godfrey-style right-wing crony socialism remains alive and well in Emerald City. Here's the gist:

OGDEN -- By a 5-2 vote, the city council, acting as the municipality's redevelopment agency board, agreed Tuesday night to declare a four-block area in the east-central section of the city as blighted.
City council members who voted against the designation were Susan Van Hooser and Amy Wicks.

Read the whole sad story here:

• Four-block Ogden area designated as blighted; redevelopment to renew downtown

Fasten your seatbelts and hold on tight to your wallets, folks, as our new council majority of five (Comrades Blair, Garner, Gochnour, Stephens and Stephenson) throw fiscal conservatism to the wind, pick up where the financially reckless 2004-05 Gang of Five Council left off, and embark upon yet another round of foolhardy, borrow-and-spend, tax increment-financed BIG SPENDING.

Sadly, eight short months since the taxpayers bailed out Boss Godfrey's money-losing, tax-increment financed Junction Project Scam, it's blatantly apparent that our dreamy and fleeceable City Council has learned absolutely nothing from the experience.

The sky's the limit when your City Council gambles with other peoples' money, we guess.

Update 4/14/01 12:26 p.m.: Per Dan S:

Meanwhile, a separate SE article provides more detail about what the city has in mind for part of this area: Redevelopment of four buildings on the 2300 block of Washington by an Virginia outfit called Octagon Capital Partners, and a parking garage behind these buildings. The parking garage would have 250 spaces and cost $4 million (i.e., $16,000 per space). It would be built by the city and financed by a 20-year bond, repaid through a special assessment district encompassing properties that would benefit from the parking garage. [2d link added by your Blogmeister]

Thusly, the Boss Godfrey plot sickens!

Standard-Examiner: Mansions May Be Coming to Ogden's Riverside

Mayor Caldwell and the Ogden RDA: Clearly "on mission" with the primary Ogden RDA raison d'etre

Eye-opening morning story from the Standard-Examiner concerning the latest Mike Caldwell Administration/ Ogden Redevelopment Agency "tweak" to the still-struggling Ogden River Project:

OGDEN — Large mansion homes along the Ogden River? They could be coming, and the city says they would help clean up what has been one of the city’s rougher areas.
The city council last week approved a city real estate purchase of 4.16 acres at 1810 Gibson Ave. The Ogden City Redevelopment Agency bought the land from Richard L. Christiansen and paid $425,000 for it.
The parcel of land could be the starting point for a large residential development of about 10 acres along the northwestern end of the Ogden River.
As of now, the city is calling the development “Gibson Grove,” and it would feature town homes, condos and several “mansion homes” that would be tucked away at the end of a private road with immediate connection to the Ogden River Parkway.
The plan currently calls for 48 condos, 39 town homes and five mansions.

Read up, folks:

• Mansions may be coming to Ogden's riverside

And here's the kicker:

On the very site of what could eventually be Gibson Grove sits an abandoned building that provides shelter to transients. Ogden Police Officer Kevin Mann said he finds transients illegally camping out in the building on a weekly basis.
Brandon Cooper, deputy manager for Ogden’s economic development department, said the city is currently exploring options to raze the building.

"An abandoned building that provides shelter to transients?"  S-E reporter Mitch Shaw said a "real mouthful" there, wethinks.  In this connection, check out this illuminating video from and earlier S-E story on this Gibson Avenue topic:


Added Bonus:  From last week's RDA packet, we've gleaned this image, which preasumably provides a preview of what these proposed Gibson Grove "mansions" will look like, within walking distance of the newly remodeled Ogden LDS Temple:

While we suppose we could all quibble about the architectural aesthetics, we believe we can all agree that it's a heckuva lot better than the structure which is presently in place, right?
  

The primary raison d'etre for the Ogden Redevelopment Agency is to "encourage private investment in blighted areas of the community;" and Mayor Caldwell and the Ogden RDA are thus clearly "on mission" with this project, we believe. In contrast with certain other misguided Ogden RDA projects which have been clearly "off mission," Weber County Forum is delighted to give this project a giant "thumbs-up."

So what about it, O Gentle Ones? Is there anyone among our collection of Ogden political wonks who will argue that Ogden City ought not pursue this project at full throttle? 

Ogden Poised to Give Away Land Valued at $2.4 Million - UPDATED

River Project agreement on tomorrow’s city council agenda.

By Dan Schroeder

The Ogden City Council, acting as the Redevelopment Agency (RDA) Board, will decide tomorrow night whether to give 6.4 acres of land in the River Project area to SouthRiver LLC for a planned development of townhouses, apartments, and retail space.

The assessed value of the land is over $2.4 million, but SouthRiver would pay little or nothing for it. Instead, the RDA would receive tax increment on the development. Tax increment is the additional property tax generated by a new development, which in redevelopment districts, for a period of time, goes to the RDA rather than the usual taxing entities.

News reports in April had indicated that SouthRiver would pay the RDA $741,000 for the property, but that has apparently changed.

The terms of the SouthRiver agreement are described in tomorrow’s 293-page RDA agenda packet, a 62-megabyte download from the city council web site. I’ve removed the many pages of architectural drawings and geotechnical studies, and compressed the rest of the packet into a 3.4-megabyte file that you can download here.

Despite its tremendous length, the agenda packet contains no estimate of the amount of tax increment that the RDA will collect from the project. Tom Christopulos, Ogden’s Deputy Director of Community and Economic Development, said he couldn’t provide such an estimate but that a detailed consultant’s report on future tax increment for the entire River Project area would be released in a few weeks.

Based on the stated value and timing of the SouthRiver development, my own best estimate is that its tax increment generation will come to a little under $1 million by 2019, when tax increment collection is scheduled to expire.

As some of us anticipated, the city intends to ask for an extension of tax increment collection on the River Project redevelopment area past 2019. The documents in the agenda packet indicate that the extension would be for seven years, which I estimate would generate a little over $1 million of additional revenue from the SouthRiver project for the RDA. The extension would have to be approved by six out of eight members of the Taxing Entity Committee. The city, Weber County, and the Ogden School District each get two votes on the committee; the Utah Board of Education gets one vote; and the last vote represents the Weber Sewer District and other smaller taxing entities.

The SouthRiver development area is shown in the map below, along with the rest of “Phase 1” of the River Project. Current assessed values are indicated for all parcels (click to enlarge).

The townhouses would be in the yellow-shaded area along 20th and Grant, referred to in the agreement as Section 1. The apartments and retail would be in the orange-shaded area along the river, referred to as Section 2. The new Bingham Cyclery building is on the blue-shaded parcel, while America First Credit Union owns the pink-shaded parcel. The two unshaded parcels along Washington Blvd. are owned by the RDA but are not part of the proposed agreement. According to Christopulos, the hope is that these two parcels can be sold for approximately their assessed values in a few years after the economy improves. (Note that this map differs from an earlier version that I created on the basis of information that was apparently incorrect.)

The 69 townhouses in Section 1 would be built in four phases, with the property transferred to SouthRiver separately for each phase, contingent on 80% completion and occupancy of the prior phases. The schedule calls for construction to begin this summer and for the entire project to be completed by the end of 2014.

If the proposed tax increment extension is approved, SouthRiver would pay nothing for the 6.4 acres of vacant land. If the extension is not approved, the terms of the agreement require SouthRiver to pay Ogden $258,952 for the Section 2 property, but to be reimbursed for most or all of this expense from whatever tax increment is later collected on Section 2.

In addition, the agreement calls for the RDA to perform “soil mitigation activities” to remediate the inadequate soil compaction in the area. Christopulos indicated that the RDA would pay either the city or a contractor to do this work. There would also be an estimated $400,000 cost for materials and fuel, which could be paid by the RDA or by the city’s Capital Improvement Fund, according to Christopulos.

Meanwhile, the RDA owes approximately $3.7 million in debt associated with purchasing and clearing the land for this portion of the River Project. A bank loan with a balance of $1.7 million was recently repaid by borrowing the same amount from a city reserve fund, according to Christopulos. The RDA also owes $2 million to the city’s refuse fund for a loan made from the proceeds of the insurance settlement from the burning of the Shupe-Williams Building in 2006. Christopulos said that both of these loans are accruing interest and that the plan is to repay them using tax increment revenue, together with proceeds from the eventual sale of the two parcels along Washington Blvd.

If absolutely everything goes according to plan, including the SouthRiver development, the sale and development of the two additional parcels, the development of the America First Credit Union parcel, and the tax increment extension, then it appears to me that Phase 1 of the River Project might barely generate enough revenue for the RDA to pay off the existing debt. If even one of these stars fails to align, it will fall upon the next administration to deal with the budget shortfall.

Update 7/13/11 9:00 a.m.: The Salt Lake Tribune reports that the Council/RDA last night unequivocally voted to get moving on the SouthRiver LLC project, approving the proposed development agreement by a unanimous 7-0 vote:

• Ogden gives green light to river development

The Junction: What Next?

Tough decisions confront our community -- UPDATED

By Dan Schroeder

In two recent articles I’ve tried to provide an overview of Ogden’s Junction development and a detailed look at its revenue shortfalls. The most pressing problem is how to make the $1.9 million annual payments on the Junction’s “Series C” bonds over the next 17 years.

Revenue Sources

For the short term, most of this money can come from the tax increment revenue that the Ogden RDA receives from the mall redevelopment district (which includes the Junction plus the block west of Grant between 22nd and 23rd). This year the tax increment should be about $1.1 million, and over the next two or three years it should creep up a little higher, as more of the new buildings are completed and taxed at their full value.

A second source of revenue is tax increment from the American Can redevelopment district, north and west of the Junction. About 10% of the funds raised by the Series C bonds actually went toward the American Can parking garage, not to the Junction (as I should have mentioned in my earlier articles). In return, the American Can district is contributing $200,000 per year to the debt service.

A third revenue source is lease payments from Junction tenants to the Ogden City RDA. Most of the Salomon Center lease revenue is being used to pay off the Series B bonds, but there is about $100,000 per year left over that can be applied to the Series C bonds.

In addition, it was hoped that the Boyer Junction developments (Megaplex Theater, Wells Fargo building, restaurants, and smaller residential and commercial buildings) would be generating lease revenue by this time. But much of Boyer’s space is still vacant, so it isn’t yet making a profit or passing any income on to the RDA. City officials are now refusing to predict when this situation might change. Two years ago, however, they apparently projected that the city would receive over $300,000 annually from Boyer. It seems possible that this could still happen eventually, but not in the next few years.

The final source of funds is lease revenue from Business Depot Ogden. BDO currently provides the city with about $3 million per year, and a substantial portion of this money has gone toward the Junction bond payments during the construction phase.

The Short Term

For the next few years, however, it appears that the subsidy from BDO can decline dramatically: $1.1 million from mall district tax increment, plus $100,000 from the Salomon Center, plus $200,000 from the American Can district gives a total of $1.4 million, leaving only $500,000 needed from BDO to make the $1.9 million bond payment. And the mall district tax increment should soon climb to $1.2-1.3 million, allowing the BDO subsidy to decline further.

That’s the situation until 2015, when the mall district tax increment is scheduled to revert back to the taxing entities. Even in a best-case scenario (with $300,000 in Junction lease revenue from Boyer), the BDO subsidy would then have to climb back up to about $1.3 million. Whether the city can afford this would depend on what other uses it has in mind for the BDO lease revenue.

Long-Term Tax Revenue

Presumably there are other uses for the BDO funds, because the RDA is now asking the Taxing Entity Committee to extend the tax increment on the mall district through 2026, when the Series C bonds will be fully paid off. To understand the magnitude of this request, let’s make a few more projections.

By 2015, all of the existing Junction buildings should be completed and fully on the tax rolls. Even if we allow for a slight decline in the tax rate, the tax increment on the mall redevelopment district should be at least $1.25 million per year from 2015 through 2026. Barring some unexpected catastrophe, this is reasonable low-end estimate.

In a more optimistic scenario, the two vacant Junction parcels will be developed by 2015 and contributing additional tax. If the value per acre of these parcels is then comparable to the rest of the Junction, they could provide about a half million dollars of additional tax revenue, bringing the total annual tax increment to about $1.75 million. (Two years ago, city officials dreamed that these parcels would be developed to much higher values, resulting in a fantastic projection of over $3 million in tax revenue. I’ll ignore that projection in this reality-based article.)

So when the RDA asks the taxing entities to extend the collection of tax increment, it’s asking for about $1.25-1.75 million per year, over a period of 12 years.

The Taxing Entities

Now let’s look at where this money will go if the RDA’s request is declined. The answer is about the same for the Junction as for any other property in Ogden. Here’s the breakdown from my own recent property tax statement:

I’ve simplified this chart by combining taxing entities with similar purposes; for instance, “Schools” includes both the Ogden City School District and the Statewide School Basic Levy, while “Health & Safety” includes the Weber-Morgan Health Department, Paramedic Fund, 911 Service, and Mosquito Abatement.

Multiplying these percentages by the total projected tax increment of $1.25-1.75 million gives the following annual revenue to the taxing entities:

(Click the highlighted link for a more detailed version of the above table.)

If the tax increment is extended for 12 years, each of these entities will either have to do without this revenue (and thus provide a lower level of service) or make up the revenue by raising taxes on the rest of us.

Because the schools would take the biggest hit, the RDA is offering to pay them back $300,000 per year through so-called “mitigation payments”. As you can see, these payments would make up no more than half of the lost revenue to the schools. The RDA is also offering to sweeten the deal by handing some real estate over to the school district. There have been no reports of similar offers to the other taxing entities.

In order to extend its collection of tax increment, the RDA must convince six of the eight members of the Taxing Entity Committee (TEC) to vote for this proposal. The eight members include two from Ogden City (currently Council Chair Amy Wicks and CED Director Scott Waterfall), two from Weber County, two from the Ogden School District, one from the State Board of Education, and one from the Central Weber Sewer District (nominally representing most of the smaller taxing entities). The Ogden City representatives are being asked to relinquish general fund revenue in exchange for five times as much revenue going to the RDA. Everyone else is simply being asked to hand over their money to the RDA--although the school representatives are being offered part of their money back.

Why any of the TEC members (except those from Ogden City) would vote for such a deal--against their own best interest--is beyond me. The RDA could perhaps argue that it is morally entitled to the tax increment because without the new Junction developments, the revenue wouldn’t be there in the first place. But this argument should have been made before the buildings were financed, not after. Instead the city was promising, until just two years ago, that the Junction taxes would revert to the taxing entities in 2015.

So at this point, the RDA is effectively begging the taxing entities for a bailout. But assuming that the entities would even consider such a gift to charity, they should be asking how much the RDA truly needs.

Just how needy is the RDA?

Unfortunately, that question doesn’t have a simple answer.

One complication comes from differing attitudes toward the BDO lease revenue. On one hand, this is the revenue that formally underwrites the bonds, so perhaps it should be used to pay them off. On the other hand, anyone can think of other uses for that revenue.

Another complication comes from our uncertainty over the Junction’s future taxable value. Take the low and high estimates from the table above, subtract the $300,000 mitigation payment, then add back $300,000 from the American Can district and the left-over Salomon Center lease revenue. If you’re optimistic, add another $300,000 from Boyer lease revenue, and you end up with anywhere from $1.25 million to $2.05 million in revenue that the RDA can apply toward the $1.9 million annual payment on the Series C bonds. So there could be a shortfall of $650,000 that would have to come from BDO or somewhere else (still much less than what BDO paid in 2008), but there could also be a surplus of over $100,000, with no subsidy from BDO at all.

Given this wide range of uncertainty, a reasonable approach might be to wait and see how the Junction is doing in 2014 before promising any bailout. Indeed, the minutes of the June 25 TEC meeting show that one of the members asked why the RDA is in such a hurry to get the extension approved. And the RDA’s response was telling:

He [Richard McConkie] clarified for planning purposes, and for staff to have the ability to be able to negotiate on a future hotel or other major retail component, the tax increment plays an important part in sitting down with developers.

Moreover, at an earlier point in the meeting, McConkie specifically stated that in order to lure a hotel developer to the RDA’s vacant Junction parcel, the city would probably have to build a $4-5 million parking garage.

So the reason this is coming up now is simple: The city wants to borrow another several million dollars, and it needs another guaranteed revenue source to underwrite that debt. Then the city can gamble the money on yet another speculative venture such as the much-rumored new hotel. Whether Ogden’s market is ready for a new hotel, which would compete with the Marriott, the Hampton, and the Ben Lomond, seems not to concern the city administration.

Instead of asking the TEC to further enable its gambling addiction, here’s a novel idea for the Ogden City RDA: Sell the vacant “hotel” parcel on the open market (it’s assessed at nearly $1 million), get it on the tax rolls, apply the proceeds to pay down a little of the existing debt, and let the market decide what should be built on that parcel of land--and when. With the Salomon Center and Deseret Books right across the street, any number of businesses should be able to thrive at that location if given the chance. And when the streetcar comes through in a few years, a parking garage will be superfluous.

Selling the vacant parcel may or may not be the RDA’s best option at this point. Perhaps there are other options that don’t require incurring even more public debt at the expense of our schools and other public services. At the very least, I hope more citizens will become aware of the uncertainties, the trade-offs, and the risks that accompany the decision our community is now facing.

Citizens, please weigh in with your opinions!

Update 8/7/09 12:55 p.m. MT: "I've just received word that the Taxing Entity Committee will meet again, to consider the RDA's proposal, on Wednesday, August 19th, at high noon." -Dan S.

Gleanings from Today’s City Council Agenda Packet

Hot Tub Hotel on Hold?

By Dan Schroeder

Once again I’d like to thank the Ogden City Council for its relatively new practice of putting its full agenda packets online for all to see. Here are a couple of items that I found noteworthy in the packet for tonight’s meeting.

1. Contribution Agreement – RDA Tax Increment Bonds. Continuation for consideration of a Contribution Agreement with the Redevelopment Agency for the purpose of issuing Tax Increment Bonds, Series 2010 to facilitate the financing of the acquisition and construction of a hotel at The Junction. (Remove from agenda)

This item, if I’m not mistaken, is the final step in approving the Kevin Garn Hot Tub Hotel. Although it seems clear that a majority of the council supports this project, it hit a snag when the bank refused to accept the financing terms for the proposed parking structure. Now, it would appear, there has been another snag that has forced the council to remove this item from tonight’s agenda. Will this be just a minor delay, or is the whole project in danger of falling through? Perhaps we’ll learn more tonight.

2. RDA Annual Report.

Tonight the council (acting as RDA Board) will formally receive the Redevelopment Agency’s Annual Report for fiscal year 2010. Although the event will be completely routine, this may be the first time that a copy of the Report has been posted on the city’s web site for all to see. For convenience, I’ve extracted the Report from the agenda packet and Rudi has posted it here (pdf, 3.7 MB). The Report is a fascinating document that gives a great overview of what the RDA does. From the map on Page 4 you can see that redevelopment districts cover nearly all of downtown Ogden—and this map doesn’t even show the new district along the east side of Washington Blvd., which was designated after FY 2010 ended last summer. Be sure to bookmark this Report and refer back to it, next time the RDA and tax-increment financing are in the news!

Ed. Note: We'll leave the lower comments section open for anyone who'd like to comment on this topic before, during or after tonight's council meeting.

Somethin' "Big" Shakin' with the Windsor Hotel Project

Strange last minute amendments added to tonight's council agenda
Interesting developments in Emerald City this morning, as we learn there have been some over night changes in tonight's city council agenda.

On Saturday we broke the news that the Historic 25th Street District rezoning proposal was back on calender, with councilman Stephens' motion for reconsideration. As of late yesterday afternoon, the situation had grown more complicated than that. A quick search of the Ogden City website reveals that two other council sessions have been added to tonight's council calender:

Special joint Council/RDA study session:

Notice is hereby given that the Ogden City Redevelopment Agency will meet in a joint study session with the City Council on Tuesday, October 14, 2008 at 5:30 p.m., in the Council Work Room, on the third floor of the Municipal Building, 2549 Washington Boulevard, in Ogden City, Weber County, Utah.
The purpose of the study session is to review agenda items for the Redevelopment Agency meeting and Special City Council Meeting, which begin at 6:00 p.m.; and to discuss Redevelopment Agency business and Council business.

RDA closed session:

3. Closed Executive Session. Consideration of adjourning into a Closed Executive Session pursuant to the provisions of Sections 52-4-205(1)(d) and (e) of the Open and Public Meetings Law for the purpose of discussing the purchase, sale, exchange or lease of real property. (Adjourn/not adjourn into Closed Session – roll call vote).

We link below the full text of Section 52-4-205:

Utah Code 52-4-205. Purposes of closed meetings.

We've been taking calls from various insider sources this morning reporting that there's been a new development in the Windsor Hotel saga, something involving a recent new action by Ogden Properties, Inc., (the project developer). As of now, none of our sources can or will say what's happening... other than "it's really big."

Lacking firm information, we'll launch into to our usual raw speculation as to the reason the RDA Board is planning a closed session, taking the language of Utah Code Section 52-4-205 into account.

1) Has the developer made demand of Ogden City to purchase the Windsor Hotel property, under terms of Boss Godfrey's badly-negotiated Ogden Properties/Ogden City development agreement?

2) Are threats of litigation involved?

Perhaps some of gentle readers can let us know what's going behind the Emerald City scenes with regard to this matter.

And don't forget, folks... The G-train and her motley band of real estate flippers will no doubt show up in force to badger and flog the council again tonight. Word also has it that State Historic Preservation Office Director Wilson Martin will also be in attendance. It should be a good show... something all of our gentle readers who are opposed to the greed-driven Manhattenization of Historic 25th Street ought to attend.

Don't get the cat get your tongues.

Update 10/14/08 11:27 a.m. MT: We've obtained the latest Utah Heritage Foundation opinion on this subject, in the form of a letter, directed to each of our Ogden City Council members:

Kirk Huffaker 10/13/08 letter

Just a little more grist for the discussion mill...

Meetings, Meetings, and More Meetings

Council Notes: 11.28.06

By Dian Woodhouse

Those who looked at the agendas in the Standard Examiner this past Sunday will have noted that most of the third column was occupied by Ogden City business. "Ogden Council/Redevelopment Agency, 5 PM work study session" was followed by "Ogden Redevelopment Agency 6 PM work session," which was followed by a 15 point Ogden City Council agenda, followed by a closed executive session. Following this, the Council would reconvene at a Special Redevelopment Agency meeting, one found out tonight, and the newspaper evidently combined the items in that agenda under the 5 PM work session in Sunday's agenda notices. All this not to commend the individuals involved, but instead to say that this is a back-breaking workload. And if I may, I will state as I have before that the RDA should not be made up of Council members, but instead be a separate body of people from the community. And the aforementioned workload is only one of the reasons why.

Editorial comments aside, the Council meeting convened at 6 PM with all members present. Mark Johnson was sitting next to the Mayor and John Patterson was absent. The meeting began with Councilwoman Jeske reading a resolution honoring the Veterans of Foreign Wars, Post 1481. The list of why this organization should be honored was a lengthy one, and everyone, not just the Council, stood and applauded when the presentation was made.

Next, Bob Bushell accepted a Good Neighbor Award on behalf of Home Depot for the West Ogden Park renovation.

Then the minutes of the Closed Executive Session of October 24th, 2006, were approved on the basis of review by Councilwoman Van Hooser.

Next were three Common Consent Items: Appointments to the Ogden City Arts Committee, an appointment to the Weed and Seed steering committee, and an Honorary Street Name at BDO, such street to be designated "Andrews Way."

This last item was struck from the Common Consent items via a motion by Councilman Stephenson, who informed us that the street to be designated had changed somewhat from the original request, and that therefore this should not be approved at this time. The other two items, however, passed unanimously.

Members of the Ogden City Arts Advisory Board now are: Tami Crowley, Travis Pate, David Wolfgram, Kent Jorgenson, and Richard Scott, all reappointed, and new appointees are: Kate Bruce, Larry Wayne, and Margaret Favero.

Also approved was the appointment of Councilwoman Susan Van Hooser to the Weed and Seed steering committee.

Next were two public hearings, at which no one from the public spoke. The first dealt with moving $360,000 from the Capital Improvements Plan to the Junction Project. This was explained by John Arrington, who stated that this money was appropriated "from potential revenue that will come from BDO." This money was originally designated for CIP on 24th Street, but since that project is not on time, it was decided to instead use that money for The Junction. The street money for it will be used instead for streets in The Junction, as well as sidewalk and curb money with the exception of curb and sidewalk money for sites by schools.

One council member asked if what this did was eliminate the CIP project and put its money in the mall, and it was answered that yes, that was the case for this year. Understood was that next year the 24th Street project could be reinstated.

Proposed Ordinance 2006-73 to move this money to the Junction site was adopted unanimously.

The next public hearing dealt with the medical bonus for the employees outlined in last week's notes. Mr. Arrington noted here that the bonus will be distributed to the employees through the payroll department. Councilman Safsten asked if this were going to be an ongoing thing, and Mark Johnson responded that this was an option, that an agreement could be made with the insurance company to do this. It was also revealed that there were 88 employees who would not be eligible for this, as they had opted out of the insurance program, and there were also some new employees, in whose cases the bonus would be pro-rated.

Councilwoman Jeske stated that the deductible for a family might be too high, and was immediately contradicted by other council members who said that their personal deductibles were higher, that other family deductibles were higher, etc., etc.

Councilwoman Van Hooser requested that if this is indeed to be an ongoing program, the Council should be informed of what was to transpire with it in writing. "...maybe you didn't understand it," Mr. Arrington said, going on to say that the matter had indeed been previously discussed. At this point Chair Garcia stated that having something for the Council in writing, as Councilwoman Van Hooser had suggested, would be a good thing, and the vote began.

The motion to adopt Proposed Ordinance 2006-74 to amend the budget in order to make these medical bonus disbursements possible passed with Councilwoman Van Hooser and Councilman Stephens dissenting. Councilwoman Van Hooser made it clear that she was not "against" city employees, nor was she against giving them money. "I didn't like the way it came down," she said, "Going to the media first and not the Council." Councilman Stevens also made it clear that his vote was not "against" the city employees, but rather that an option had been available to have a portion of the insurance rebate ($150,000) go to the city and a portion ($157,000) go to the employees. Characterizing this option as "a win/win situation," he stated that there were many areas in which that money could have been used beneficially had the city obtained it.

Next, there was a presentation by Greg Montgomery regarding signs, always a hot issue in Ogden. Proposed Ordinance 2006-77, which passed unanimously and had no public comment, will amend Section 18 of the Ogden Municipal Code. "The city must follow state law," Councilman Safsten said, and hoped that "if we have new signs, they are more appropriately placed."

Next, under Administrative Reports, was some departmental reorganization. The background to this was presented as follows by Mr. Binford: In June of 2003, Engineering was moved from Public Works to Community and Economic Development. Building Services was then moved to Engineering. What Proposed Ordinances 2006-78 and 2006-79 will basically do is put things back to the way they were before June of 2003. The Ordinances will also eliminate two positions.

"It's the same people doing the same job reporting to a different person," Mr. Binford said. Also mentioned briefly was the fact that Mr. Harmer "is including the development community," meaning, one assumes, feedback from it, in this reorganization, in order, one assumes again, to ensure that it will be a satisfactory method for that community to work with the city.

"It's important to be always looking for ways to do things more efficiently," Councilman Stephenson said, and the motion to adopt both these ordinances passed unanimously.

The final item under Administrative Reports was Proposed Ordinance 2006-80, which revised fees for the Fire Department Reports that are sent to insurance companies. It will be $15 for a normal report and $25 for an investigative one, and it was mentioned that these fees had not been raised in thirteen years. The ordinance passed unanimously.

Under New Business, it was brought up that the Council might wish to consider canceling its regularly scheduled meeting which fell on December 26th, 2006. This the Council did, considering and canceling in record time.

There were no public comments, but there were some from Administration, Staff, and Council.

Mayor Godfrey addressed the mention of the perception that Ogden was a business unfriendly city. "We are not satisfied with the perceptions that are out there," he said, and went on to state that he did not wish people to think that Ogden was unfriendly to business. On the contrary, he wished Ogden to be a leader in facilitating businesses, and the reorganization of the departments mentioned above was a step in that direction.

Council Executive Director Bill Cook made mention of the passing of John Wolf, a former Ogden City Council Member.

Councilman Stephens spoke in favor of the reorganization, stating that it "shows we have an innovative city." He also wished to pay tribute to those who organized the Christmas Parade, stating that our ushering in of the holiday season was one of the top in the state.

Councilwoman Jeske agreed with this last, and also wished to commend the staff who put lights on the trees and made the municipal gardens look so beautiful.

The meeting then adjourned into Closed Executive Session.

Not having stayed through this to attend the subsequent Special RDA meeting, I shall post its salient agenda items here:

Mall Parking Structure Phase II. Proposed Resolution #2006-18 approving the Planning Commission recommendations for Phase II of the Ogden Entertainment Center Parking Structure. (...roll call vote.)

Mall Plaza Design. Resolution #2006-20 approving the design of the Ogden Entertainment Center Plaza. (...roll call vote.)

Public Hearing: Budget Opening for Mall Parking Structure and Plaza. Proposed Resolution 2006-17 amending the budget for the Fiscal Year July 1 2006 to June 20, 2007, by increasing the anticipated revenues and transfers for gross increases of $14,810,213.00 from sources as detailed in the body of this resolution, and increasing ther appropriations for a gross increase of $14,810,213.00 as detailed in the body of this resolution. (...roll call vote.)

Public Comments, etc.

Perhaps someone will write in and tell us how that went.

Update 11/29/06 9:55 a.m. MT: Scott Schwebke writes in with his 2¢.

A Reader's Open Letter to the Mayor and City Council

As you are probably aware, I've extended a continuing open invitation to readers to submit articles for publication in this space. One reader has taken me up on this at last, and I'm thus posting, for your information and discussion, the following open letter, together with the author's short introductory cover letter, which I received this morning via email.

I'll also mention in passing, that by the posting of this letter, I'm not necessarily endorsing its contents. My object, in originally creating this electronic gathering-place, was to provide an open forum for the discussion of any and all issues of concern to the citizens of Weber County. The Rec Center is certainly one of those. This open letter is by far the most articulate statement that I've heard to date arguing against the rec center project. The article belongs here, especially in a context where the information contained herein has been effectively censored and blacked-out by the local outlet for the corporo-fascist neocon media moguls in Sanduskey. This place is all about free speech, folks! What little of it is left in modern AmeriKa, still exists here.

Read the letter. Then post your comments.

-----------------------------------
To: Weber County Forum:

I have been trying to get Don Porter [Standard-Examiner editorial page editor -ed.] to tell the truth re the proposed bonding for Ogden's sports complex.

These are the facts I tried to point out to the Mayor and Council from their own literature..And to Don Porter. They don't want to know the facts.

You have my permission to post this on your blog site.

Dorothy Littrell

-----------------------------------

Dorothy E. Littrell
Certified Public Accountant
228 West 3275 North
Ogden, Utah 84414
801-782-5906
d.littrell@comcast.net

May 31, 2005

Mayor and City Council Members:

I have been asked to look at the High Adventure Recreation Center Taxable Variable Rate Demand Bonds proposal for $8.9MM from Northland Securities, the $7.5MM Letter of Credit proposal from Wells Fargo and other documents pertaining to the Center as they affect Ogden residents and also Weber County residents such as myself.

I have spent many hours this past week reading everything available you have furnished the public and also going online to obtain financial information on the principals of Golds Gym and Fat Cats since your information did not provide that.

I have several concerns pertaining to financing and issuance of the proposed bonds. The following costs to Ogden City need to be itemized and taken into consideration in taking on this project:

1.) Variable rate of interest is to be reset weekly at current market rates for 20 years and to be paid monthly. Bonds are to be secured by a first mortgage lien against the property and leasehold improvements on the $8.9MM issue as well as the leasing revenues plus a direct pay letter of credit. Variable rates over a 20-year period can be very risky.
2.) Interest rate of Prime plus 7% in the event of default or a liquidity draw on the Wells Fargo Letter of Credit on the $7.5MM Tax Increment Revenue Bonds for 13 years can be very risky.
3.) Underwriter's fee is 1% of bond amount at closing plus .02 % annually of principal amount outstanding for a period of 20 years on $8.9MM offering.
4.) To get a bond rating of A or better in order to sell the $8.9MM bonds there will have to be another Letter of Credit from a financial institution.
5.) A Letter of Credit fee is 1% of the principal amount outstanding of the guarantee as of April 1 and is collected on that anniversary date.
6.) 1% of $7.5MM is $75,000. plus 1% of $8.9MM is $89,000. for letters of credit fees the first year of $164,000. In addition to the annual Letter of Credit fee there is a charge for figuring interest which is estimated to be $275.00 per month.
7.) There are the charges for a MIA appraisal compliant with FIRREA and USPAP; charges for a Phase I Environmental Report on the property; surveys, title review and lender's title insurance, UCC lien and other searches, customary insurance, legal fees incurred by lender regarding searches, etc. which can be very expensive.
8.) Attached is a December 13, 2004 MEMORANDUM from Deputy Director McConkie listing all Ogden City RDA projects and debt on each project. I am having difficulty identifying that list to the 10 identified redevelopment areas pledged to Wells Fargo for collateral on the $7.5MM Letter of Credit. Please explain why the two do not agree.
9.) Who is going to repay the $10,462,085 due Ogden City for Mall Redevelopment due 12/26/11?
10.) The December 13, 2004 MEMORANDUM list of RDA debt totals $49,276,790 with $20,265,839 due Ogden City, so I am assuming the difference of $29,010,951 is outstanding RDA debt on Ogden City's 10 RDA redevelopment areas which will be pledged as collateral for the $7.5MM Letter of Credit. So am I to understand that tax increment collected must first go to pay this RDA debt of $29,010,951 before any goes to pay Wells Fargo?

I have additional questions regarding the prospective tenant, Health & Fitness Holding, LC whose principals are Gary Nielsen, Sean Collins and Dave Rutter.

Landlord, Ogden City, is providing $11,928,740 for tenant's use to construct improvements plus $4,375,000. to purchase specialized equipment plus $2,450,000 for a SkyVenture vertical wind tunnel for total funds provided of $16,303,740 or more.

Documents provided do not name the person or persons designated as (landlord) Ogden City's representative for construction oversight nor are maximum fees set forth for Design Phase Compensation nor Design Phase Fee.

Guarantors are named as:
Total Fitness Center, Inc. LLC and DSI Enterprises, Inc. with no information as to their ability to guarantee. Public internet access provides information on Dun and Bradstreet and Smart Business Reports that indicates their financial capability is suspect.

Fat Cats-Provo had Tax Lien Filings in 2004 with Utah County Recorder for Federal Tax of $6,868. and with Utah County District for State Tax in the amount of $5,565. In 2003 the State Tax Lien amount was $6,387 and $1,141.

Fat Cats-Salt Lake City shows sales of $1,352,000. for 2004 with high credit risk of delinquent payments.

Why is there no security deposit on a project of this magnitude? Why is there to be no recording of this lease?

Why is Ogden City charging tenant 8% on past due rent when they are paying Wells Fargo Prime plus 7% on delinquent amounts?

The information furnished for SkyVenture, LLC shows a purchase by Ogden City of the equipment for $2,450,000. It also calls for minimum royalty payments of 5% of gross revenue or an annual minimum license of $25,000. to SkyVenture by Health & Fitness Holding, LC. Does this accrue to Ogden City as the owner of the equipment in the event Health & Fitness does not perform?

Ogden City's publication of the Mall Recreation Center Work Session dated May 17, 2005 of the Master ProForma Recreation Center Estimated Annual Income and Expenses begs the question of how this venture is expected to survive and justify Ogden City's investment of $16,303,740. I have attached that one-page calculation for your inspection.

Ogden City is going to have additional security expenses to patrol the parking lots and the improved properties which they have ignored in their projections of costs for the City.

Based on the financial information available about the High Adventure Recreation Center, my professional opinion has to be that this is a no-win adventure for all parties concerned including Health & Fitness Holding, LC with the Underwriters and Wells Fargo Bank being the only winners.

Signed:_________________________________
Dorothy E. Littrell, CPA

---------------------------------------

(I attended last night's City Council session, by the way, during which Council Vice-chair Jorgenson announced to the few citizens in attendance that Council voting on the Recreation Center bonding has now been re-calendered from June 21 to June 28.)

More Evidence of a Small-business Unfriendly Emerald City Administration

Boss Godfrey sticks it to another non-FOM* again

By Michael Moyal

My partner and I are concerned that selective discrimination and arbitrary enforcement pertaining to the Ogden City ordinances have been used against us for the sole purpose of removing our land use rights, our right to conduct a legitimate business in the City of Ogden, and have seriously infringed on our Civil Rights as American Residents and Citizens.

The property at issue is the Ogden River Inn and vacant restaurant building. On November 6th, 2006 we purchased the property containing a business and buildings located at 1825 and 1839 Washington Blvd in Ogden along the Ogden River. Prior to purchasing I made inquiries with the Ogden City Redevelopment agency, who informed me that they not only didn’t have an option on the property, but also didn’t have the money for the rest of the project, and most likely wouldn’t have it for years, considering 24th Street and Washington was their priority. They all wished me the best of luck with my acquisition. My intention was to buy the buildings, get a new business license to operate the Motel, and another new business license to open the restaurant building (which has been vacant for years), as the first Indian restaurant in the City.

In late October the City Planners office directed me to file a petition to rezone the property. On November 1st, I went before the City Planning Commission to inform them of my intention to rezone the restaurant land in order to be able to sell alcohol. I was told that wine and beer sales would be allowed with a provisional use permit and was asked to work with the city planner’s office to get a provisional use permit. I was then told that alcohol sales would likely be rejected and my petition to rezone was “tabled” until the December Planning commission meeting to give me time to work out the details with Ogden City planning division. I went along with their recommendation and on November 27th we submitted a formal site plan to scale, North, South, East, and West elevations and artist renderings of the restaurant site, conforming to the spirit of the Ogden River Redevelopment Project. John Mayer from the City planner’s office told me considering everything was moving ahead with my site plan, Greg Montgomery had asked that I withdraw my petition to rezone the property. John Mayer drafted a letter, I signed it and Mr. Montgomery submitted it to the city recorders office. (Mr. Montgomery, City Planning Division Manager once told me that the only acceptable use for my buildings was to demolish them)

Two (2) days later on November 29th, we received a “Motel Business License Denial letter” based on alleged poor business practices by the Motel’s previous owners specifying business dates from January 1st 2004 to September 30th 2006, all prior to our ownership. We appealed the business license denial the same day and our hearing was set for December 7th 2006, one month after starting our new business. My partner and I along with a couple character witnesses attended the appeal hearing to strongly object the City’s decision.

On December 13th, my partner and I met with Mayor Godfrey of Ogden to discuss openly our business intentions and concerns. Although he appeared to be understanding and after he explained his obligations toward the City and his developer/investors, he stated “you should have expected to pay for the previous owner’s sins!” I strongly disagreed and our meeting was concluded. About a week later, we received an official letter allowing us a “6 month probationary business license”, to clean up the property. Actually, all the code violations given to the previous owner (abandoned/unlicensed vehicles, violations of 90 day ordinance, etc…) had all been addressed and resolved in the first week of our ownership, and the City had so been advised.

On December 15th we received a letter dated December 13th from John Mayer at the city planner’s office informing us of the various conditions to meet in order to proceed with our restaurant site plan. Once the city planner came to review the parking and landscape requirements that we could have easily accomplished, we were made aware of a new, temporary ordinance, a moritorium dated December 19th that denied any new site plan approvals, provisional use permits and building permits for 6 months.

On January 2nd, my partner and I attended the City council meeting and regardless of our objections to the proposed ordinance preventing the improvement of our property (from 18th to 20th, Washington to Wall); and our requests for the building permit required to improve our restaurant building, the ordinance was passed.

Also on January 2nd, my electrical contractor was issued a building permit for the purpose of getting electrical service to our restaurant, now to be an unimproved building with no riverside deck and without the new stucco facade.

On January 3rd, I was contacted by John Patterson from the mayor’s office and asked to meet on January 4th in his office. My partner and I, our attorney, John Patterson, the city attorney, and Scott Brown the River Redevelopment Manager were present for this meeting. In the course of the meeting, many issues were raised and we re-expressed our interest and willingness to consider any options that may help the city with their river planed visions. The City attorney (who once told me that upgrading my buildings would be like “putting lipstick on a pig”) at that time informed us that due to the new ordinance, our only legal use for our restaurant building was as “a vacant and abandoned building”.

Mr. Godfrey had told us that the City of Ogden had planned to lock out the previous motel owners about 8 months ago, but he was advised by the city attorney that the ordinance needed to be revised before such an action could be legal. We are now faced with the very threatening possibility that our entire business operation will be “locked out” within six months, according to the City’s revised “lock out ordinance”. This will leave us with more abandoned/vacant buildings, and no other option but to give in to the City’s arbitrary wishes.

Ogden has either through gross negligence or concerted efforts orchestrated events which have effectively denied us the reasonable economic use of our property and placed our capital at risk. The City’s scheme has denied us the right to use and develop our property with the apparent reason being to enhance some undefined future plan for the area. We followed instructions given to us, which have resulted in denials and delays, and which have effectively denied us due process.

The foregoing article is the full version of this letter, which was edited by the author and published in today's Standard-Examiner letters section. Readers who would like to contact Mr. Moyal for further information may do so through the following link: Weber County Forum Blogmeister

*FOM: Friend of Matt (Godfrey)