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Delta makes the case for 100% DURA participation

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Hotel development along the Gunnison River will only become a reality if every taxing entity in the plan area is willing to give up the property, sales and/or lodging taxes that would be gained from the development.

City manager David Torgler laid out the numbers during a joint meeting of city and county officials last week. The Delta Urban Renewal Authority is seeking tax increment financing to secure bonding for infrastructure improvements to a 10-acre parcel being eyed for development. This type of financing requires the taxing entities to give up property tax they would have realized from increased value of the developed property, the additional sales tax generated through sales in the plan area, and the lodging tax that would be levied on the hotel rooms. Torgler has pointed out that taxing entities are not giving up anything they have in hand, because without the development there is no tax increment.

With intergovernmental agreements in hand, DURA will seek bonds to cover the cost of intersection improvements and street/utility extensions. The bond, estimated at $2.7 million, would be repaid over 25 years using the tax increment.

Based on the city's projections, annual bond payments would be about $170,000. Without buy-in from all participants, DURA will not be able to meet that obligation or the higher expectation of bond companies. To get the most favorable interest rate, Torgler said DURA will need to show projected revenues of 125 to 150 percent of the bond payment.

The school district, library district and hospital district have committed 100 percent of their tax increment, Torgler reported. Decisions from the mosquito control district, fire district, ambulance district and Delta County are anticipated in mid-June. Tri-River Water District is giving up only 3 percent of the increment, the same promised to a tax increment project in Montrose.

Torgler said a hotel developer has expressed interest in the project, but until the intergovernmental agreements are in place and a project plan has been adopted, discussions can not proceed.

"What kind of promises will have to be made to the hotelier?" asked Don Suppes, county commissioner.

"We haven't been able to sit down and seriously negotiate," Torgler said.

Torgler answered additional questions from the county commissioners and from two city council members who said they're not yet entirely sold on the project.

The city's numbers are based on an $8 million hotel with 80 rooms and a 60 percent occupancy rate. The goal has been to attract a chain with name recognition and a rewards program for its guests.

County officials have indicated they're willing to give up property and sales tax, but they believe the lodging tax could be used for marketing to support the riverfront development and other attractions in Delta County. Torgler is asking them to reconsider.

"If Delta County can come in with the lodging tax it will cover the difference," Torgler said. "To make this work, we need everybody in."

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