January 26, 2012
Several City Council members expressed frustration Thursday that no one told them about financial problems with one of the most prominent urban renewal projects in Colorado Springs before they were asked to sign off on another project.
Council members said it was hard to say whether they would have voted differently in September when they approved the creation of a special taxing district for a nearly $1 billion business park called the Vineyards Data Center on the city’s south side.
But they said knowing about the financial troubles of the other project, on North Nevada Avenue, would have prompted them to delve deeper.
It wasn’t until they picked up The Gazette on Thursday, they said, that they discovered the Colorado Springs Urban Renewal Authority had defaulted on a repayment of money borrowed for the North Nevada redevelopment project.
“Before we started voting on the Vineyards, I think we should have been informed that, ‘Oh, by the way, this urban renewal project, we’re going to be defaulting on the bonds,’” Councilwoman Angela Dougan said. “People need to know it. We need to know it.”
Financial challenges with the North Nevada project have been discussed by the authority board for several months, and were reflected in the authority’s minutes.
“They had to dip into their reserves early on in the project to service the debt, but that’s typically what happens in those kinds of projects,” said former Mayor Lionel Rivera.
“You set aside sufficient interest in the bond issue to cover the first part of the project because you know it’s not going to start generating revenue for several months,” he said.
While the project was “a little bit behind schedule,” Rivera said, “there wasn’t the anticipation” that Urban Renewal would default on the bonds.
Last month, the authority made an approximately $650,000 payment on $7.5 million in bonds — $50,000 short of what was owed. The authority doubts it will be able to make the next scheduled payment, in December, an official said Wednesday.
Council members said they should have been alerted.
“I would have known that the mathematical calculations for Nevada had not panned out, so the possibility exists that we should definitely look at that for the Vineyards,” Councilwoman Brandy Williams said.
Neither Jim Rees nor Chuck Miller of Urban Renewal returned a call for comment.
The North Nevada and Vineyards projects are structured differently.
Tax revenue generated to pay off the North Nevada bonds, proceeds of which were used to make improvements to North Nevada, buy property and build a retaining wall along Monument Creek, is from both property and sales taxes. Bonds issued for Vineyards, which could pay for improvements to the area, are expected to be paid off primarily with property tax revenue.
Vineyards developer Vince Colarelli, a Colorado Springs general contractor, did not return a call for comment.
Council President Scott Hente, who represents the council on the Urban Renewal Authority board, said his colleagues had information about the challenges with the North Nevada project but apparently didn’t pay attention to it. The council receives the authority’s agendas and minutes, he said.
“That item was clearly discussed,” he said.
“Do I need to jump up and down every once in a while and say, ‘Be sure you read this,’ I don’t know the answer to that,” Hente said.
The council receives a lot of information, and the Urban Renewal Authority’s minutes “are not at the top of my reading list,” Council President Pro Tem Jan Martin said.
“It certainly would have raised additional questions that we probably would have asked and delved more deeply into the recommendations for the Vineyards,” she said.
Councilman Tim Leigh said the authority may have added value to the city in the past, but whether it still does is up for debate.
“Somebody should question whether or not they should continue to be a valid entity going forward in Colorado Springs or if what they’re doing could be done by staff at less cost,” he said.
The mayor asked to be briefed on all projects and financial affairs concerning Urban Renewal, and Hente and Kin agreed to make it happen, according to the mayor’s office. The meeting followed a blowup at Tuesday’s council meeting over the financials behind another Urban Renewal project at the former Ivywild school building. That project is expected to get underway. Wednesday’s meeting with the mayor was closed to the public.
Contact Daniel Chacón: 476-1623
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