Town Adopts Two-Pronged Strategy to Reduce Bond Principal, Debt
RIDGWAY – The Ridgway Town Council agreed at a special meeting last Wednesday, Dec. 18 to use town funds raised through its 0.6 percent sales tax earmarked for capital improvements to reduce the financial burden on Ridgway residents and business owners stemming from a bond initiative destined for the Town of Ridgway’s ballot next spring.
The pending bond measure would raise commercial and residential property taxes throughout the town of Ridgway, in order to finance the town’s cash match for a $10.5 million RAMP grant from the Colorado Department of Transportation to conduct a variety of downtown infrastructure improvements associated with the Town of Ridgway’s Streetscape plan.
The town is on the hook to contribute a total of $2 million in matching funds toward the grant. At Wednesday’s meeting, council agreed to pitch in $100,000 up front from its reserves that have accrued since the CIP tax was approved in 2005, shaving the dollar amount of the pending bond question down to $1.9 million. If the bond initiative succeeds, council also agreed to annually commit an additional 50 percent from CIP tax revenues, or $50,000 (whichever is greater), toward paying down the debt service once the bonds are issued.
Following this strategy, the town could pay off its debt burden twice as quickly, said Ridgway Mayor John Clark, ultimately exposing Ridgway property owners to a dramatically lower tax burden.
Ridgway voters approved a 0.6 percent sales tax hike in 2006, to be devoted toward capital improvement projects. Initially, the thought was that all of the money raised through that sales tax hike (about $100,000 annually) would be earmarked for the nascent Streetscape downtown infrastructure improvement plan, which was then in the conceptual stage.
In the ensuing years, much of the CIP money was spent in preliminary drawings and engineering plans and otherwise held in reserve for Streetscape, Clark said.
But the project was put on the back burner when the economic downturn came along, and a portion of the annual revenue stream generated through the CIP sales tax has since been leveraged toward other capital improvement items, including the Town’s current sidewalk enhancement project.
As council has discussed various ways to finance its matching fund commitment for the RAMP grant, some in the community have been vocally pushing for the town to recommit a more significant portion of its CIP sales tax revenues toward the RAMP project, at the expense of other pending capital improvement projects.
Ridgway resident Andy Mueller, an attorney, upheld this viewpoint once more at Wednesday’s meeting. He prefaced his comments by stressing that he feels the Town Council and staff “have done a great job, and spent the vast majority” of CIP funds on appropriate projects.
“I am completely in favor of passing a mill levy to raise the rest of the money to pay the town’s share for this project,” he said. “I think it’s great the way the town staff and council have worked to leverage the city’s dollars to make this project happen.”
But, he added, other pending projects for which the town had allocated CIP revenues in its 2014 budget – like a new bouldering wall, stage lighting and kiosk in Hartwell Perk – should be stripped from the budget and those funds redirected toward the RAMP project.
He also requested that council consider paying down the debt service from the pending bond initiative with a substantial annual allocation from CIP sales tax revenues.
““It’s an opportunity to really unite people and bring them together, and get the business community behind it because we know that you are spending the previously approved tax dollars the way they should be,” he said.
Mueller’s viewpoint was upheld by fellow local attorney Rodney Fitzhugh. “Overall you are doing a fine job on this and I am happy to see it moving forward,” he said. “I am here to express the opinion that the town voters won’t get behind this if the town doesn’t somehow commit to using those sales tax funds to defer the need for any future tax revenues. Whether that means pledging it somehow to pay down the bond, or paying down the amount of the initial bond, I am not sure.”
Other community members at Wednesday’s meeting said they were not behind the project and would prefer to see the CIP funds spent elsewhere, or voiced general concerns about financing, and a real aversion to voting in another tax increase.
Still others countered the assertion that the original CIP tax hike was earmarked exclusively toward the Streetscape project. “That ballot question would not have passed, had it been known at that time that 100 percent would be dedicated to downtown and there would be virtually no money dedicated to capital improvement projects elsewhere in town,” one community member stated.
Ridgway resident and former Town Councilor Jim Nowak found middle ground. “I like Ridgway with dirt streets, but I think this is an unbelievable opportunity,” he said. “This gives us an opportunity to come down (Highway) 62, clean up all the sewer, clean up all the water drainage, relocate everything underground. It’s a monstrous job and I have absolutely no idea how we’d ever have the money to ever do it again. This is an unbelievable opportunity.”
The sentiment among Town Councilors was equally diverse. Councilor Ellen Hunter maintained that many of the capital improvement projects on the Town’s five and ten year plans represent “serious true capital improvements for the town,” regardless of whether they are directly connected to the Streetscape project. “It’s all part of the big picture,” she said. “I think this project is good, but we have to look at where we can leverage the money to the best of our ability to create the best longterm environment.”
Hunter suggested reallocating only 30 percent of the town’s CIP tax revenues toward the RAMP project.
Jason Gunning offered a counter perspective. “We are asking for a lot from the voters,” he pointed out. “My ideal number is 100 percent. I am really not interested in the debate about what the money was intended for. I just think here we have an opportunity to relieve some of the pressure off of voters from whom we are asking for a considerable amount of money.”
“We are all aware of the different extremes,” said Councilor Jim Kavanaugh. “It feels like we are being called upon to have more skin in the game.”
After lengthy discussion, council agreed to just that, committing to annually allocate 50 percent of its annual CIP sales tax revenues toward paying down the bond’s debt service, plus shaving $100,000 off the principal.
The next question was whether to shave an additional $500,000 off the dollar amount of the bond question, gambling that the town will be awarded a grant in the hopper for that amount from the Department of Local Affairs. The town has applied for the grant, but won’t find out whether it has been awarded until around the time of next spring’s election.
Councilor Gunning argued that asking for $1.9 million, when they may only take $1.4 million, risked running into issues of mistrust with the voters.
“The other issue is that DOLA might give us part of that money but not all of it,” argued Councilor Rick Weaver.
“It makes very little sense to me to make this initiative contingent on us getting that grant,” Councilor Kavanaugh said. “It’s way too much of a risk.”
In the end, the consensus of council was to go for a $1.9 bond issue, “and if we do get the DOLA grant, we go around town with a bull horn announcing the good news,” Councilor Weaver said.
As Mayor Clark put it, “The smaller a number we get the more palatable it [the bond measure] gets. But what if the whole thing fails because we don’t get the DOLA grant?”
From the audience, Mueller agreed. “I think it’s irresponsible not to have all the dollars lined up to get the project done,” he said. “We don’t have control over whether DOLA awards that money or not. To hinge the entire project on the Department of Local Affairs? You have got to be kidding.”
The RAMP-funded Highway 62 project would combine CDOT’s proposed “three-laning” of Highway 62 to incorporate a center turn lane from Laura Street to the new bridge, with a variety of infrastructure improvements along the highway corridor and elsewhere in the core downtown area including bike lanes, curb, gutter, sidewalk, storm water drainage, landscaping, irrigation, lighting and paving. Future phases of the project extend beyond the highway bridge to the intersection of Highway 62 with U.S. 550 and also include some improvements from Laura Street to Amelia.
CDOT announced the $10.5 million RAMP grant award for the project in October 2013. It was initially predicated upon the Town of Ridgway successfully raising $2 million in matching funds through a bond question on the November ballot. The Ridgway Town Council moved to strike that question in response to business owners’ protests over the proposed property tax hike. CDOT officials then indicated they were willing to give Ridgway until next spring to get a bond measure passed to raise the needed funds.
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