Completion of the core and shell of the Flex Buildings within Colorado Outdoors is expected for mid-November.
The north building is “90% done,” with the south building “70% done,” according to an update from David Dragoo, founder of Mayfly Outdoors, during a Montrose Urban Renewal Authority meeting.
Tenant improvements — the interior of each building — are slated for completion Q3 2021 to Q1 2022. Each unit is expected to receive a certificate of occupancy, at which point tenants can start to move in.
Dragoo expects tenants to start moving in during Q1 2022.
At least one local business has already enacted plans to move into a unit as Montrose Anglers, a local fishing store, announced its plans in late September to relocate into the north building, moving from downtown Montrose’s Main Street.
Montrose Anglers is one of 10 tenants that have signed lease agreements to date. Another tenant that signed a lease is slated to open a restaurant with full dine-in service, though Dragoo did not announce which eatery would move in. Other tenants are slated to move in for office and warehouse space, manufacturing, and distribution.
Six other tenants have yet to sign a lease, but have signed a letter of intent. One of those potential tenants would open a gym and another tenant would add a second restaurant to the Flex Buildings.
The update comes as the MURA board reviewed updated financials provided by Dragoo on the cost for the Flex Buildings and the increased price tag for horizontal site improvements.
Horizontal site improvement costs are now $1.9 million, up from the $1.1 million that was estimated in March 2020. Commodity pricing for materials like paint and PVC piping has led to the increase, in addition to the lot to the north that’s slightly larger than the one in the south. “We’re waiting on things that we never in our lifetime thought we’d be waiting on,” Dragoo said during the meeting of supply shortages.
Due to the increased cost on horizontal site improvements, Colorado Outdoors’ private investment in the project is now approximately $12.9 million, an increase from $12.097 million the company reported earlier this year.
With Colorado Outdoors covering the approximately $800,000 increase in costs, Dragoo said, it means MURA’s investment of $1.1 million for the construction and installation of horizontal site improvements remains unaffected.
“(Horizontal site improvements) also increased because of construction costs overall and the labor portion has gone up,” Dragoo said. “The good news is we’re only asking MURA to partner on what we committed to a year ago, despite the fact costs have gone up substantially. That’s a good thing.”
The MURA board approved to draft a developer’s agreement between Colorado Outdoors and MURA, in addition to a promissory note for horizontal site improvements. If approved, it would increase MURA’s promissory note amount total to a little over $13 million. As of Sept. 23, MURA’s promissory notes (loans from the city) total over $11.9 million.
MURA’s expenses, as of Sept. 23, are over $9.8 million. It’s anticipated outstanding expenses are just below $2.5 million and the total anticipated out of pocket expense is $11.5 million.
The Colorado Outdoors project is using TIF revenues — a financing method to stimulate economic development — which are expected to repay the millions worth of notes if (and when, with the Flex buildings nearly complete and construction on the the Colorado Yurt site underway) upcoming projects are developed and completed.
Projections from Anderson Analytics, which has provided MURA with market research consultation, have 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, which covers the current promissory note amount total.
The MURA board also approved and authorized City of Montrose staff to apply for a Colorado Community Revitalization Grant grant from the Colorado Office of Economic Development and International Trade to cover increased costs — tenant site improvement costs for Flex have increased 149% since 2020.
One result of the grant is expected to include reducing the financial burden on future tenants, who otherwise would be dealing with the fallout of increased material costs.
Total projected TIF revenues generated by the Flex project is a little over $5.1 million across 20 years, according to Graham Anderson of Anderson Analytics. The total is based on the estimated tax generated from the approximately 10 tenants, property tax from the buildings and the sitting meals tax increment (from the single restaurant).
Of the $5.1 million, $3.1 million would come from property taxes and $1.7 million from sales tax.
Anderson said in 2022, TIF revenues from the Flex Buildings are projected to be $71,000. In 2023, revenues are projected to be $219,000.
The updated total project cost for the Flex Buildings is $14.5 million, up from $13.2 million.
Josue Perez is a staff writer for the Montrose Daily Press