Report on 9/27/07 City Council Work Session

By Curmudgeon

The City Council work session began, tonight, with Ms. Janine Eller of Management Service, presenting the annual real property report [report on real property sold or acquired by all city agencies over the previous fiscal year.] Third on the agenda [I’ll get to second in a moment], Ms. Laura Lewis of LYR&B delivered a long briefing called “Municipal Bonding 101" discussing various kinds of municipal bonds and debt, interest rates, funding options, benefits and advantages and drawbacks of each. This was in anticipation, I gathered, of Ogden’s facing significant costs next year to finance the rebuilding of its water and sewer systems.

Second on the agenda was an RDA Board session with Mr. Harmer discussing a request for Ogden to grant Adams Aircraft approximately $900,000 in tax increment rebates as an inducement to move all of its manufacturing facilities, and its manufacturing headquarters to Ogden. Mr. Harmer summarized the situation this way: Adams is currently moving its production facilities for one of its two aircraft under production/development to Ogden. It has already received [via Kemp] tax increment incentives for doing that. Got incentives from the state as well. However, it also has a plant in Pueblo, CO for which it got incentives as well. Some of the parts for both models under production will be manufactured at Pueblo and shipped to Ogden for assembly. Some of the company’s management thinks it might be more efficient to move its entire manufacturing operation to Ogden, and its manufacturing division HQ as well. The Company Board, however, is not convinced because of the up-front cash cost of doing that. It will have to repay Pueblo the $2,000,000 in incentives it got to move its manufacturing plant there, plus interest. It will have to, for a time, finance duplicate tooling [so Pueblo can continue to operate until Ogden comes on line.] And so on. The Board figures the total cash outlay to move it all to Ogden would be an additional $12,000,000, which it is willing to consider, if the company management can find a way to offset a substantial portion of that figure.

Mr. Harmer said it would be prudent for Ogden to agree to the tax increment incentive for several reasons. First, it will double the number of higher-than-county average jobs coming to Ogden. The current Adams move already under way will bring 600 jobs. Moving the Pueblo unit and HQ here will add another 675 or so. Second, this would be a kind of pre-emptive strike, so that it will be much easier for the company to bring new models on line here, rather than to incentive-shop for other facilities in other states. Third: the state is working up a state incentives package for Adams to bring the Pueblo production line and HQ here but it requires local [that is, Ogden] participation. So the administration is recommending the Council agree to the tax increment incentive. He noted that this is not a tax increment bond. Adams gets the tax write off only if it brings its production lines here. It doesn’t, Ogden loses nothing. No up front money from Ogden involved. The state refuses to step up and Adams does not bring the Pueblo line here, Ogden loses nothing. In short, Ogden puts up not a dime until Adams actually moves its second facility here, and it goes on the tax rolls. No bonding involved, it seems.

There were a few questions, mostly aimed at making sure Ogden was risking nothing up front, that only tax abatement was involved, which would come into play only after Adams moved its second facility here. Mr. Harmer noted that there was opposition on the Adams Board from, among others, Genl. Wesley Clark who wants Adams to move a facility to Arkansas where he says he can get better incentives. Other board members are plumping for Love Field in Dallas. Mr. Harmer said, however, that Adams operating execs are pleased with their Ogden move so far, and find the city’s cooperation better than it is in Pueblo, and favor a move to Ogden of a second production line and HQ provided they can meet the Board’s concerns about the cash costs of making the move.

Finally, under Council Business, an interesting discussion erupted regarding the pending transportation tax referendum in November. The Northern Utah Transportation Alliance [NUTA] has asked the Ogden City Council to pass a resolution supporting passage of the tax referendum. Was apparently before the Council earlier, and the Council had asked Mr. Cook some questions regarding the proposed resolution and about how the tax money would be allocated between road projects and transit projects if the referendum passed. Specifically, the Council wanted to know if WACOG could ignore the proposed 60/40 roads/transit split of the funds if it wanted to once the tax was approved by the voters. The answer, said Mr. Cook, was “yes.” He suggested, however, that the Council could strengthen the language in the resolution [or in the cover letter transmitting it] to indicate the Council’s support for at least 40% spending on transit and its expectation that that split would be honored.

Councilwoman Wicks noted that, once the tax was passed, none of the money might be spent on Ogden transit, since WACOG would not make a final commitment on projects until after the tax passed. Mr. Cook said that was so, but UTA told him that it “believes” the spending criteria, when they are finally agreed to, will be “fair to transit.” But, he added, there are “no guarantees.”

Mr. Patterson indicated that the Mayor supported stronger language from the Council in support of at least a 40% allocation for transit, that that represented the Mayor’s wishes as well. “He’s with you on this.” But again, there is “no guarantee” of what WACOG will do after the vote. Ogden will be trusting WACOG to provide fair treatment.

Mr. Safsten noted that the Weber Co. Commissioners are on WACOG and can be relied on to support Ogden’s needs and fair treatment. Patterson noted that the past performance of the small town mayors on WACOG suggests they will treat Ogden fairly because they have in the past, and they understand that Ogden’s prosperity is important to their towns too. Mr. Stephenson said he thought it important to”trust” the small town mayors on WACOG, that Ogden had already established trust with them.

Ms. Wicks noted that a difference between the vote in SLC for its transportation tax and the one facing Ogden is that SLC voters knew when they voted what projects [TRAX lines] they were going to get. Ogden voters will have no assurances when they vote of what will be done in Ogden, if anything. Some discussion on how the wording of the resolution or the accompanying letter from the Council to NUTA might be strengthened. Mr. Stephenson suggested it might be best not to make the case in re: Ogden’s expectations about funding allocations until after the tax passes. Mr. Safsten disagreed, and said we need to “ring every bell and push every buzzer” indicating how important it is to us that 40% go to transit, and we ought to do it “early and often.”

Mr. Cook pointed out that Ogden was currently the only city left in Weber County that had not passed the resolution supporting the tax. Some general discussion about whether Ogden ran the risk of getting fewer transit dollars if it refused to endorse the tax resolution, or perhaps none, especially if the referendum failed. Ms. Jeske indicated she supported adopting the resolution. So did Mr. Safsten, with strengthened language in support of the 60/40 fund split. Wicks concurred, favoring stronger language. General agreement that either the proposed resolution and/or the covering letter of transmittal should go back to staff for strengthening in re: the importance Ogden city placed on transit funding and the city’s expectations that the 60/40 split will be honored by WACOG following passage of the referendum, even though it is not binding on WACOG yet.

Tidbits: from general conversation among those sitting in the peanut gallery [mostly city staff or consultants plus me] during the twenty five minutes everyone waited for quorum of Council members to arrive. Mr. Patterson said he thought today’s editorial in the SE was “a great editorial.” Best quip of the night laurels went to Mr. Harmer. Someone said they’d been to Reno recently and were surprised to see the city advertising itself as “a little Las Vegas.” Mr. Harmer asked “What does that mean? Only some of what happens there stays there?”

Further deponent sayeth not.