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GOCO says ‘no go’ to grant

The Pagosa Springs Town Council will hear the second reading of Ordinance 770 today that, if passed, would approve $5,000 in earnest money for properties along South 5th and 6th streets and would commit the town to the purchase of those properties in the summer provided a Great Outdoors Colorado (GOCO) River Corridors Initiative Grant is awarded in mid-June.

Unfortunately, GOCO money will not be forthcoming, at least during this grant cycle, throwing into question how council will adjudicate today’s ordinance.

On Monday, Town Planner James Dickhoff received news from Dale Craker, Director of Programs for GOCO, that the town would not be receiving any of the near $6 million it had applied for to fund a river corridor project, including acquisition of the aforementioned properties.

Craker’s letter to Dickhoff stated, “(O)f the 17 applications, only 8 are recommended for funding, and none of those are slated to receive their full requests.”

After alerting Dickhoff that the town’s application had been denied, Craker’s letter went on to provide reasons why GOCO had turned down the request.

“When compared to other recreational development projects ... we found this project to be less compelling and less urgent,” Craker’s letter stated. “The town presents a minimal match (money required to secure the grant), which is understandable for a town of Pagosa’s size, but still leaves it at a competitive disadvantage to other projects.”

In the “Reviewer Comments” section of the letter, it was noticed that, “Match is too low; perhaps the project is too ambitious.”

In fact, that point was raised in the March 1 edition of The SUN. In that article, it was noted that, last December, Dickhoff had requested that council consider allocating a match for a $2 million GOCO River Corridors Initiative Grant — a substantially more modest request.

However, by February, the town had set its sites on a much larger chunk of money and Dickhoff returned to council with a more ambitious request: Commit to spending well over $300,000 a year, for the next three years, in order to meet minimal match requirements for GOCO funding.

Combining the town’s money with the GOCO grant, the total amount to be spent on the river corridor improvements (following Dickhoff’s February presentation) would have amounted to nearly $8 million.

Citing various issues with certain aspects of the project, Craker’s letter suggested that the town consider phasing in some features at a later date, seeking funding for other features through alternative granting sources and seeking out more partnerships to fund the project’s overall scope.

“Doesn’t seem very urgent,” another comment read, adding, “I think some parts could wait on funding and more partnerships.”

GOCO did not close the door on future funding of the project with Craker’s letter stating, “We are confident that we can work with the Town to identify the most urgent and impactful pieces of this project, help them identify other potential funders (such as economic development grants) and phase construction of the most recreational components with a series of GOCO grants.”

It was that suggestion of possible future funding that Pagosa Town Manager David Mitchem held onto when considering the future of the project.

“We’re going to have a conversation with GOCO staff,” Mitchem said yesterday. “If we’re next in line, we’ll proceed. If we’re deep in the queue, we may have to put it aside for awhile, unfortunately.”

Saying that conversation would most likely take place in late June or early July, Mitchem said, “We’re hoping to find out what will make us more competitive for another round of grant funding.”

Asked if council would be asked to consider the second reading of Ordinance 770 at today’s council meeting, Mitchem replied, “As it stands now, yes.”

Predicated on secured GOCO funding, Ordinance 770 not only commits the town to $5,000 in earnest money to hold properties desired for the river corridor — money that could be lost if the town fails to agree to purchase those properties — but also puts the town on the hook for $340,000 if it agrees to the purchase.

Ordinance 770 (in two options approving the property purchase) posits, “Approving the execution of a Purchase Agreement and $5,000 in earnest monies on May 17, 2012 and if Awarded a GOCO grant for property acquisitions by June 20, 2012, Approving the execution of a Promissory Note and an additional $29,000 in earnest money by June 20, 2012 for the purchase of 180 S. 6th Street and 151 S. 5th Street for $340,000.”

The phrase, “(I)f Awarded a GOCO grant for property acquisitions,” presents a problem for council, however. Regarding the second reading of an ordinance, section 3.9.C of the town’s Home Rule Charter states, “An ordinance may be approved, approved with minor amendments, disapproved, continued for substantive amendments or continued for further consideration before taking final action on second reading.”

Considering that a GOCO grant will not be forthcoming to subsidize a property purchase, securing those funds as a condition for allocations towards a promissory note and property purchase seems to fit the definition of a “substantive amendment” enough to suggest that Ordinance 770 would require a continuance in order to amend language that sets GOCO funding as a precondition for subsequent real estate processes.

If council deems amending language in the ordinance sufficient enough to necessitate a continuance, the next question would be, how will the town afford the $340,000 price tag for the properties?

In 2010, the town received an unexpected $1 million windfall when the Colorado Department of Revenue paid on previously unpaid sales tax. The town promptly stashed those funds into reserves, split equally between the General and Capital Improvement Funds, agreeing to use those funds as matches to leverage potential future grants.

In addition, current budget policy has allowed the town to sock away over $1 million in reserves on the back of increasing sales tax revenues (see related story). That policy has kept the town at 10 percent below 2008 expenditure levels, with surpluses going to reserves. Again, the town has adopted a position that those reserves (above six-month operating reserves) would be used to match potential grants.

The town has sufficient funds to purchase the two properties named in Ordinance 770, should council decide that acquiring those properties is an urgent enough priority. That urgency was not identified in Monday’s GOCO letter, however, providing one of the reasons for not awarding the town $6 million.

While GOCO has made it clear that it has left the door open for future river corridor improvement funding, the organization hinted that any later funding would depend on the town rethinking the project.

What is less clear is how vital property acquisitions are to that project and how the council will proceed on Ordinance 770 today, at noon, in Town Hall.

jim@pagosasun.com

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