The Montrose Urban Renewal Authority Board on Wednesday approved consideration of a $853,935 tax increment financing (TIF) anticipatory loan for construction of horizontal site improvements associated with Colorado Yurt and its planned headquarters within Colorado Outdoors.
The board also approved of a development agreement with Colorado Yurt for development of that headquarters and manufacturing facility.
On Tuesday, during a Montrose City Council meeting, council members approved business expansion incentives and development agreement between the city and Colorado Yurt to include permit fee ($105,000) and utility abatements ($29,065).
There was slight concern from MURA board member and Montrose County Assessor Brad Hughes during the meeting (he mentioned he supports Colorado Yurt and the project) about the amount of promissory notes that have been issued by the board, especially since there’s no exact payment plan in place, and Graham and Mike Anderson of Anderson Analytics, hired by the URA for market research consultation, weren’t present to provide a financial update. (A meeting date was set for later this month so the MURA board could receive that update from the Andersons.)
“We can’t consider more housing incentives without a deep dive into those analytics, but commercial projects are much easier and are clear on return of investment,” City Councilor Barbara Bynum said during the meeting. Mayor Pro-Tem Dave Frank and MURA Executive Director and City Manager Bill Bell also expressed confidence in Colorado Yurt.
To date, including the $853,935, MURA’s promissory notes (loans from the city) total $10.5 million. Future outstanding notes (that are already committed) include $1.36 million for the Phase 1 apartments (the Basecamp Subdivision), which brings the total to $11.9 million. All the promissory notes have an annual interest rate of 4%.
The debt service payment, which includes the principal loan amount and the interest due, sits at $17.2 million before accounting for the notes for the Colorado Yurt site, according to the preliminary report from Anderson Analytics.
The expenses, to date, are in the neighborhood of $9 million, City Engineer Scott Murphy told the Montrose Daily Press. Any leftover funds become budget surplus, he added, though the board has to approve all expenditures for authorization.
The overall project is using TIF revenues — a financing method to stimulate economic development — which are expected to repay the millions worth of notes if upcoming projects are developed and completed.
Anderson Analytics, which provided a financial check-up to MURA board members last November, wasn’t on hand to provide that additional update, but previous projections had Stage 1 TIF revenues generating $4.5 million, a shortfall of the $10.5 million of notes currently issued.
However, the generated figure for projects slated to break ground in 2021 and 2022, in which TIF revenue is projected to reach $15.2 million, totals $19.8 million when including the revenue from Stage 1. The $19.8 million drops to $14.5 million if the planned Fairfield by Marriott hotel doesn’t develop.
Murphy said the city understands that the hotel developer will be in to pull a building permit sometime in the next several months.
Colorado Yurt’s first quarter 2021 sales are 56% above target projections, following the company’s successful trend as of late (total sales in 2020 were up 45%). Colorado Yurt didn’t lay off any employees or miss a shipment in 2020, instead purchasing Montrose Bucks so employees could shop local.
Contractors for the horizontal site improvements will be 67% Montrose-based, Colorado Yurt Owner John Gibson said, with 28% Western Slope-based.
Gibson said he hopes to start raising the wage of the employees, eventually increasing the average annual salary to $50,000 or more.
Gibson has made no job creation incentive request to the city, believing it’s his responsibility, he said.
Plans are in place to break ground on the new Colorado Yurt headquarters this summer.
The approval comes a day after the Flex Buildings within Colorado Outdoors broke ground to kickstart construction on the project. There will be two buildings, each 27,500-square feet, with 10 suites each that will house local and relocating businesses.