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HomeMy WebLinkAbout5097RESOLUTION NO. 5097 A RESOLUTION OF THE CITY COUNCIL OF PUEBLO, COLORADO, APPROVING AN APPLICATION FOR ENERGY /MINERAL IMPACT ASSISTANCE FUNDS IN THE AMOUNT OF $500,000 TO THE COLORADO DIVISION OF ENERGY AND MINERAL IMPACT AND AUTHORIZING THE PRESIDENT OF THE CITY COUNCIL TO SIGN SAID APPLICATION. WHEREAS, the City of Pueblo, hereinafter called City, is eligible for Colorado Energy /Mineral Impact Assistance Funds; and WHEREAS, the City has submitted an Urban Development Action Grant (UDAG) for $2,600,000 to the Department of Housing and Urban Development (HUD) for a hotel/ convention center in downtown Pueblo; and WHEREAS, HUD will not approve the UDAG application until a firm financial commitment is secured for the $10,000,000 development revenue bonds; and WHEREAS, Jess Kortz, the principal developer for the proposed hotel /convention center, has agreed to underwrite the debt repayment on the project for the first three years, if necessary; and WHEREAS, the firm financial commitment on the mortgage revenue bonds may be facilitated by a reserve fund for possible operating losses, if any, for years four through eight after commencement of the project; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PUEBLO, COLORADO, that: Section 1. The application for Energy /Mineral Impact Assistance Funds in the amount of $500,000 to the Colorado Division of Energy and Mineral Impact is approved. The President of City Council is authorized to sign said application and the City Manager is designated as the agent of the City to act on its behalf during the process of the application and throughout the term of the project. Cortinn 9 In the event the UDAG application is not approved or in the event that the funds are not needed for operating losses of the hotel /convention center, the $500,000 of Energy /Mineral Impact Assistance funds will be used for other improvements in the Central Business District of Pueblo, Colorado. INTRODUCED February 14 , 1983 BY MIKE OCCHIATO COUNCILMAN APPROVED: ATTEST: Y CLERK RESTU NT THE CITY COUNCIL - 1 - .AS PE—NDIt C Application dumber: Date Received: Application for: Energy /Mineral Impact Assistance Submitted to: The Division of Energy and Mineral Impact 1313 She; Street, :coon 518 Denver, Colorado 80203 1. Applicant Agency: Name City of P ueblo Name of Contact Person Fred E. Weisbrod Telephone No. (303) 545 -0561 Address P.O. Box 1427 Pueblo, Colorado 81002 2. Local Government Sponsor (if different than above): Name N/A Name or Contact Verson Telephone No. Address 3. ?- oject T:. tie: Capitalization of Reserve Fund for Possible Operatin Losses, Pueblo Hotel/Convention Center I. ?. oject ?.mou,t: (a) Local Share $2.900,Q00 (b) Federal Share $2,,600,000 (c) Indust: Snare (d) Other (please ideal =:y source) Private Developer5 $11,500.000 (z) Impact Assistance -c::ds $500,000 (f) ?=eject T .)cal $17,500,000 C -i9 -2- 5. Description of ;Deed for the Projecc: In this section, please describe those characteristics and /or problems (current or projected) which the project will address. Liclude here the connection the project has with solving energy or mineral - related impact problems. The problems addressed by this project are three - fold: 1. High unemployment due primarily to lay --offs at CF &I Steel and the general recession Pueblo's current unemployment rate stands at 10.7, one of the highest in the State. At CF &I Steel Corporation, our largest employer, the Pueblo work force at present is 3,500; down 2,000 from its normal level of 5,500. This reduction in force is due to lack of orders for steel, primarily from energy - related industries. Of the total products manufactured at the Pueblo Plant of CF &I Steel. Corporation, 75% are energy oriented. The impact of this large reduction in force is being felt by nearly every retail, banking and wholesale establishment in the Pueblo area. Any diversification of our employment base will ameliorate the 'boom- bust'' cycle which the community experiences because of its heavy dependence on CF &I employment. In addition, Pueblo's lack of new industries and slow growth rate compound the recession impact which is currently being felt by many other cities throughout the State and nation. 2. Deterioration of the retail aspect of our downtown area, resulting in loss of tourism and other dollars to the community. Pueblo's downtown has more vacant buildings than any other comparable city on the front range. In addition, three large structures have been demolished within the last 12 months. When the three major department stores moved from downtown to the Pueblo Mall a few years ago, downtown ceased to be a viable retail trade center. Although much public and private investment has gone into the downtown area, it is in dire need of a major facility to bring more people into the down- town area. Many tourists pass through Pueblo, but relatively few stop. The proposed hotel /convention center, to be visible from Interstate 25, would entice more tourists to stop and spend some time Here. The 30,000 square feet convention area in the new hotel would afford Pueblo the opportunity to host more state and regional conventions, many of which are currently turned away due to lack of adequate facilities. The viability of this proposal. is supported by three feasibility studies completed since 1978. Please see Exhibit C for the latest feasibility study. We feel the appearance and lack of activity in our downtown area is a deterrent to the attraction of new industries into the Pueblo area. 3. Lack of entry -level jobs for a large segment of our population with few skills and inadequate education. Of the estimated 350 new jobs to be added by the proposed hotel /convention center, approximately 217 would be entry -level positions. The tremendous need for this type of employment is evidenced by the fact that, as of December, 1982, 21,922 persons are receiving assistance from our County Social Services Department. This amounts to 17.4% of our 1980 Pueblo County total population. Pueblo County is second only to Denver in the number of welfare recipients, even though we are ranked eighth in population. z C -20 -3- 6. ?roject Desc:ipcion: Please use this section only for details directly related to this project itself, such as: (a) Describe the project. (b) what Will the project do? (c) Is this a complete project or a phase of a larger project? (d) Wt is the Budget Breakdown? (e) If design or feasibilit;r work has been done, please submit copies. (f) If the project includes conscruc_icn of any kind, please include a nap 'indicating the site :where the improvemencs are to be done. (g) Other details. (a) The proposed Pueblo Hotel /Convention Center /Retail Complex envisions a unique blend of local and federal public funding and new private investment designed to completely redevelop an underutilized and deteriorating area in the center of the Central. Business District. The development of the physical improvements outlined below shall be accomplished within the area bounded by 4th Street, Santa Fe Avenue, the east -west alley .between 3rd and 4th Streets and Main Street. Located two blocks from the dual north/ south interchange of Interstate 25, the area is the "100% corner" of Downtown Pueblo. The major components of the revitalization effort to be developed within the structure include: (1) a new high quality hotel of at least 240 rooms representing nearly 11 million of private investment; (2) a new retail complex of at least 6,000 square feet of gross floor area representing nearly .2 million of private investment; (3) a new 30,000 square foot convention /conference center representing nearly .4 million of private investment which shall include meeting rooms and banquet facilities. In addition, over 300 parking spaces shall be publicly developed to service those three facilities. (b) As described in item 5, the proposed hotel /convention center would provide more tourist dollars into Pueblo's economy; it would enhance the appearance of downtown; it would create more activity for the downtown area; it would provide much needed entry -level jobs; it would help diversify our economy and its dependence on energy related industries. It would also increase the City's property and sales tax revenue and would enable the City to be the recipient of a $2.6 million UDAG grant to be loaned to the developer. Please see Exhibit A. (c) This is a complete project. (d) Capital funds needed to develop the integrated, mixed use project should total 17 million. The sources and uses of these capital funds are as follows: 3 C -71 - 4 - 6. (d) continued: . Private Developer Federal City of Pueblo Total Cost Equity Mortgage UDAG Grant Contribution $17 Million* $1.5 Million $10 Million $2.6 Million $2.9 Million (e) Please see Exhibits B & C (f) Please see Exhibit D *This original budget does not include the $500,000 requested with this application. The $500,000 would be utilized for capitalization of a reserve fund for possible operation losses in years four through eight after the project begins to guarantee repayment of debt. Please see Page 15b for Project Budget - Summary of Proposed Expenditures. -5- 7. Describe the extent of energy industry assistance, involvement and effort in your project area. Give specific examples of industry participation. (This refers to overall industry assistance as well as aid contributed to this particular project.) As mentioned in Item 5 -1, 75ZO of the total products manufactured at the Pueblo plant of CF &I Steel Corporation are energy oriented. This includes rails utilized by the coal trains; forged grinding balls; carbon steel from 1" through 4 "; super alloy steel from 1 -2" through 4 "; grinding rods; high carbon steel, 2 ", 2- 15/16 ", 3 -2" and 4 "; super alloy steel, 2- 15/16 ", 3 -2" and 4 ". Seamless oil country tubular products. 2 -3/8" through 9 -5/8" O.D. to API standard speci- fications 5A- 5AC -5AX. Casing diameters 4 -2" through 9 -5/8" O.D. in grades K -55, N -80, L -80, P -110, C -75 and C -95; 8 round thread, buttress thread, also CF -95. Tubing diameters 2 -3/8" through 3 -2" O.D. in grades J -55, N -80, L -80, P -105 and C -75. It is important to note that work has been stopped on the new Seamless Tube Mill due to CF &I's current lack of orders for steel products. CF &I has been a fine corporate partner in the Pueblo area since the Central Colo- rado Improvement Company (parent company of CF &I Steel Corporation) incorporated in 1872. In 1981 CF &I employees comprised 11.2% of Pueblo County's total employment. CF &I pays over four and a half million dollars each year in property taxes to Pueblo County. Beginning in 1951 CF &I began major improvements to improve the quality of the air and water in Pueblo, having spent over $80,000,000 as demonstrated on Exhibit E. We feel the statement that the CF &I Steel Corporation is the cleanest steel mill west of the Mississippi is substantiated by these figures. In addition, as mentioned in the letter from Mr. Harmon (Exhibit E), CF &I people are committed to improving the quality of life in Pueblo. The company is also generous in its corporate contributions to worthy non - profit organizations. The feasibility study for the hotel /convention center projects that between 60% and 68% of the room demand for the hotel /convention center will be from the commercial category. Because the corporation is nation -wide in scope, the CF &I will be a major contributor in this category. Please see Exhibit E for more detailed information. J 8. Financial Stat:s 'o:: Applicant: (a) Assessed Valuation $264,876,490 (b) `1 4 -11 Levy _ 18.00 (c) Total Mill Levy for Overlapping Jurisdictions 84.40 (d) Sales Tax Percent and Fstin.ated Aevenue 3% $12,400,000 (1983) (e) `.Dater Tao and invest =ent Fees N /A* (f) Water User Charges N /A* (g) Sewer Tap and :svestment Fees N charge for City re sidents. (h) Sewer User Charges 1983 es timate $2,270,062 (i) Other (please specify) See Exhibit F - attached (j) Total Long -Tern Dent type) General Purpose Bon ds = $4,41 000; General Obligation Recreation Bonds = $ 680 ,000 (k) Statntorq Debt , i.'_. -it 10% of the assesse valuation of the taxable property within the City. (1) -%n ual Debt Sar - : 4 ce: '979 $619,275 1980 J613 1981 srngT 1982 $612,666 '_98.; $610,478 . (m) ?ro;ected Capita_ 3u(iget ( ?'_ease s7eci- fy type o: is rove eats; e.g., avatar and sewer, street i----)rcve=ents, etc.) Parks $225,100 Street Improvements $1,205,500 1979 Mass Transit $255,000 Other $158,946 Total $1,844,546 Parks $338,100 Street Improvements $984,580 1980 C)t IlQr $109,350 Total $1,432,030 Parks $372,100 Street Improvements $295,000 1981 nth,r $ 40.000 Thal $ 70-7,100 — Parks $233,510 Street Improvements $452,481 1982 OLher 8388.651 Total $1,074,642 Parks $206,310 Street Improvements 1,068, 65 1983 Mass Transit $ 83,000 Other $915,219 Tot $2,273,194 1984 of saVailable -- 1985 Not available *The Pueblo Board of Water Works is a separate entity from the City of Pueblo. -7- 8. Financial Status of Applicant (continued): (n) Indicate why the project cannot be funded from local revenues. Because the City is contributing $2,900,000 to the development phase of this project, it is not enconom- ically feasible for the City to contribute any more money, even though the City believes the hotel /conven- tion center will cause an extremely beneficial impact on the area. (o) If project will require ongoing operational funds, how does applicant intend to procure their revenues? The project will be self- supporting over time. The developer, Jess Kortz, has agreed to underwrite the debt repayment in years one through three, if necessary. But in order to secure a firm financial commitment for the $10,000,000 in development revenue bonds, the debt repayment for years four through eight needs be guaranteed. The feasibility studies indicate the hotel/ convention center will be self - supporting once it becomes 9. Fnergy or *�.ineral L�act stablished. (a) - List the energy or aiz eral development protects currently iWpacting the applicant. (b) List any proposed or ex?ected energy /mine_a? development (#elude details such as- 'size, dates, employees, location, tizecable, source of _nfor-_a- t{ on) . (c) Indicate the cu.-renc and projected number of energy - related employees residing in the project area and source of the data. (a) See Items 5 & 7. (b) Attached as Exhibit G is a copy of another current UDAG Application of the City of Puehl_o for Premier Tubular Products Plant Expansion. (c) CF &I Steel 3,500 Source: Manager, Public Relations, CF &I Steel Corporation Premier Tubular - 26 (from Exhibit G) From telephone survey: Comanche Power Plant 125 Dana Corporation 235 Sand & Gravel companies 97 Railroads 1,050 Midwest Steel & Iron Works 26 Western Pipe & Tube 10 Johns Mansville 35 Tile & brick manufac- Plateau Hardware 12 turers 74 6 C -24 r 10. Current population of applicant /sponsor and source of this -'ata: 101,686, U.S. Department of Commerce, Bureau of the Census, 1980 11. Project population and the source of this projection: 1985 105,130 1995 110,828 1990 108,600 2000 113,057 Source: Pueblo Regional Planning Commission. See Exhibit 11 - attached for projections from the Colorado Division of Planning. 12. Indicate the coordination with the local impact team. Has the project been prioritized by the local team and ocher planning agencies? The Pueblo Regional Planning Commission and the Pueblo Area Council of Governments have rated this project as a high priority, as has the Southern Colorado Economic Development District, and the Pueblo Chamber of Commerce. 13. Briefly describe any other features of t "e ?roject or co=unity which make it Darcicslarly appropriate for receipt of impact fi nds: Please see Item 5. 1 '5 S: GNA :a-Ex President of the Pueblo City Counc T,:Lz Q1D OF:'IC° February 15, 1983 Z) A T 7 - Please see Exhibit I for resolution authorizing application. ",;pp? caci= must be s-gned by the :) res - n _ _ec_ =c of'_c___ c= °e a?7L -tea =:: or s agenca. C - ":: LIST OF EXHIBITS EXHIBIT A - Hotel /Convention Center Urban Development Action Grant Pages EXHIBIT B - Architectural Drawings, Hotel /Convention Center EXHIBIT C - Servico Management Corporation Report on Potential Market Demand and Statements of Estimated Annual Operating Results for a Proposed Royce Hotel in Pueblo, Colorado - June, 1982 EXHIBIT D - Hotel /Convention Center Project Site Drawing EXHIBIT E - CF &I Information EXHIBIT F - City of Pueblo Summary of Revenues EXHIBIT G - Premier Tubular Urban Development Action Grant Application EXHIBIT H - Population Projections, City of Pueblo EXHIBIT I - Resolution Authorizing Application The above exhibits were given to members of City Council previously and are available for review in the office of the Community Development Department.