OGDEN -- Generating about $3 million in yearly profits, the sprawling Business Depot Ogden complex is one of the city's most significant cash cows.
Even in tough economic times, city officials are bullish on the ability of the former military installation off 12th Street to provide sufficient building lease revenue for a myriad of capital improvement projects and to subsidize bond payments for The Junction, the downtown entertainment complex.
Recently, Mayor Matthew Godfrey provided the city council with a $3.1 million wish list for projects that could be funded with BDO lease revenues.
Godfrey estimates there will be $777,985 in carry-over BDO lease revenue from fiscal 2010 and $2.8 million in new funds for fiscal 2011. Of that amount, about $600,000 is expected to go for bond debt service at The Junction.
Godfrey's wish list includes one-time funding for several big ticket items, including $950,000 for a velodrome field house, $545,150 for the demolition of vacant homes in the Ogden River Project area, $500,000 toward parking garage construction and $250,000 for a program aimed at returning homes that have become apartment buildings to single family residences.
The mayor has indicated to the city council the allocations would leave $439,433 in lease revenues available for other projects.
However, it's unlikely that funding for all of the projects on Godfrey's list will be appropriated this year because costs may change and other needs for the money may arise, said John Arrington, the city finance manager.
"He (Godfrey) knows it and I know it that we can't pay for everything on that list," Arrington said.
Godfrey agrees but hopes the council will designate the projects for future BDO lease revenue funding.
"There is no way we can get all of the projects done in 12 months," he said.
City Councilwoman Susie Van Hooser said the council needs to review the wish list.
"We need to look at it and each one needs to be brought up individually," she said.
The council will hold a public hearing Tuesday to consider amending its Capital Improvement Plan for some of the projects proposed by Godfrey, including full funding for home demolition in the river project.
Other projects that may be approved by the city council include, $315,000 for a retail building improvement loan program and $91,800 to refurbish tennis courts at Mt. Ogden Park and Mt. Erie Park.
Godfrey said it could take time to completely fund all of the items on his wish list because of the administration's goal of leaving $750,000 in BDO lease revenues in reserve annually for four years.
That amount would give the city a year's worth of revenue that could be used for emergencies, Arrington said.
The city began building up the reserve in fiscal 2010 by stopping expenditures from lease revenues when the $750,000 threshold was reached, he added.
Godfrey described the approach to building up revenue reserves as fiscally prudent and innovative. "Many cities have to borrow money (to complete various projects)," he said.
While BDO leases are a major source of income, property, sales and franchise taxes account for about 90 percent of the city's annual revenues.
Ogden and The Boyer Co., which manages BDO for the city, evenly split profits derived from the lease of buildings at the 1,200-acre complex.
Following the payment of bond debt shortages at The Junction, 50 percent of the balance from lease revenues are used for capital improvement projects and the rest is available for discretionary purposes.
In addition, BDO is also part of an economic development project area which means that 75 percent of tax increment generated there can be used for infrastructure improvements within BDO.
The remaining 25 percent is passed through to other taxing entities. Tax increment is derived from the increased assessed value of development property in a designated project area.
BDO lease revenues increase as more building space is rented.
There is about 9 million square-feet of space in 80 buildings in BDO and the occupancy rate is about 85 percent, said Blake Wahlen, who manages the complex for Boyer.
"In this economy, we feel very good about our occupancy rate," he said. "We feel like the relationship we have with the city is positive."
Comments