During the height of the global pandemic, the City of Steamboat Springs didn’t anticipate having a surplus so early into the recovery era, but after aggressively cutting expenditures, receiving recovery funds and seeing an influx of post-pandemic sales tax revenue, the city forecasts about $32 million in unassigned general fund reserves by the end of 2022.
In 2019, the city had about $14.3 million of unassigned reserve funds, less than half what is forecasted this year.
City Council now has the fortuitous task of deciding how to spend that money.
“According to our fiscal policy, unrestricted reserves should not be used for ongoing operations,” said Kim Weber, the city’s finance director. “They should be used for capital projects or paying down debt or one-time purchases.”
Four large capital projects were brought before City Council on Monday, June 20, for direction: the new fire station and city hall on 10th Street, and the two city employee housing projects — the More Ranch Community Housing project at Barn Village, and seasonal employee housing at the transit center.
The new fire station is expected to cost around $16.3 million. The sale of the fire station and adjoining parking lot on Yampa Street yielded $5.2 million toward the new facility, while revenue from the Steamboat Springs Area Fire Protection District will provide another $5.4 million. Another $4 million will be paid from the reserves of the fire/EMS fund, leaving only about $1.7 million anticipated to come from the capital projects reserve, leaving no need to take any money out of the general fund.
The new city hall building was initially estimated to cost $6.5 million and was expected to be funded entirely through loans, but swelling construction costs have pushed the estimated cost to about $13 million. City staff recommended issuing $7 million in Certificate of Participation (COPs) bonds as previously planned, while also dedicating $5.25 million from general fund reserves. The city hopes to receive about $750,000 in grants for the project.
The $7 million in COPs would cost about $470,000 in annual debt service for 25 years. The city issued similar bonds in 2010 which cost $430,000 in debt service payments annually, but that debt matured last year so city staff expects the financial impact of the debt service to be minor.
Weber asked City Council for direction on pursuing $7 million in COPs to help fund the new city hall building, to which the council members agreed she should, but clarified that the $7 million number may change over time.
Projected to cost about $5.5 million, the More Ranch Community Housing Project already has $1 million in approved grants. Under the current proposal brought to City Council, the remaining $4.5 million would come out of the general fund reserves.
Another $4.5 million from the general fund would go toward the employee housing project at the transit facility, funding the project entirely.
The city qualified for $2.1 million in funds from the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, which allocated $14 billion to support the transit industry during the pandemic. Those funds could be used for the employee housing project at the transit facility, but city staff recommended using those funds for renovating transit buses or purchasing new ones.
Winnie DelliQuadri, the special projects manager for the city, said putting the CRRSAA funds toward employee housing “greatly decreases the flexibility of the site,” saying the stipulations of those funds would strictly limit the availability of units to transit employees, whereas the city planned to house Steamboat Springs Parks and Recreation employees in the summer.
The American Rescue Plan Act of 2021 allocated $3.3 million to the city in pandemic recovery funds, which must be dedicated to a specific project by 2024 and spent by 2026. City staff recommends using those funds on a single one-time expense that generates no revenue otherwise the reporting requirements would cause an expensive and time-consuming burden on the city’s staff. Because of these stipulations, city staff strongly advised against using ARPA funds for a housing project.
Instead, city staff recommended using the ARPA funds toward the new city hall building, which would lessen the funding needed to come out of reserves. City staff say the additional money in the general fund could then be repurposed for any number of projects without restrictions.
Based on forecasts, subtracting the costs of these proposed projects would leave the city with around $12.7 million in unassigned general fund reserves, if the CRRSAA funds and ARPA fund aren’t used toward the large projects listed. While the CRRSAA will likely go toward the city’s fleet of buses, the ARPA funds have a decent chance of going toward the new city hall, which would boost the leftover reserves.
The city’s fiscal policy states that an amount equal to 25% of the previous year’s expenditures should be maintained as a “rainy day fund,” which is $9 million for this year.
Subtracting the large project expenditures brought to City Council and the $9 million rainy day fund would leave the city with an estimated $3.46 million in unassigned reserves. If the ARPA funds are put toward building the new city hall, the remaining unassigned reserves would be around $6.9 million.
“We need to set the example to some of our community that we’re willing to spend our own money to build housing for our own community,” said council member Michael Buccino. “We want to encourage the other business owners in this town to do the same thing.”
To reach Spencer Powell, call 970-871-4229 or email him at spowell@SteamboatPilot.com