Tuesday, October 20, 2009

South SL urged not to obtain loan

Deseret News
South S.L. urged not to obtain loan

Only $2M would be available for Market Station, study says

By Rebecca Palmer

Deseret News
Published: Monday, Oct. 19, 2009 9:44 p.m. MDT

SOUTH SALT LAKE — A third-party study commissioned by the City Council recommends against borrowing almost $10 million on behalf of the developers of Market Station.

If the city were to push forward with bonding, only about $2 million would be available, according to the study by David Wilcox Market & Feasibility Advisors. If borrowed, the money would be used to purchase land underlying the proposed development.

"Do not issue a bond or take a loan," the 19-page report reads. "The consultant does not believe adequate amortization funds are actually available to the city or agency."

The draft report has not been released to the public but it was openly considered Oct. 14 by the South Salt Lake City Council. Since that time, the Deseret News has received a copy of the findings.

The analysis points out that South Salt Lake has already invested heavily in the project. In addition to creating a tax-increment funding zone, elected officials have pledged to spend $2.5 million for the Sugarhouse Trolley Line planned to run through Market Station's center.

The initial funding for Market Station dried up when the credit market crashed about a year ago, according to developer Steve Aste. Since then, the aging buildings and worn parking lots in the project area have been untouched.

The project is slated for 9.5 acres near Main Street and 2100 South. It has been touted as a high-rise condominium development with office and retail space that will transform the city into a hotspot. Those plans have been scaled down by about 30 percent, according to the Wilcox study.

The analysis recommends that South Salt Lake seek buyers for individual parcels that make up the project area and that it get back alleyways granted to the developer at no cost. It also proposes providing incentives for new buyers rather than spending money to purchase property, as city-owned land is not on municipal tax rolls.

Mayor Bob Gray and Council Chairman Roy Turner could not be reached Monday for comments on the report.

Meanwhile, Aste has called many of the figures in the study inaccurate. He intends to submit a line-by-line rebuttal to the council before its next meeting. Aste declined to comment on specific inaccuracies but said a timeline forecasting a possible trustees sale of the land was incorrect.

He said that irrespective of the report, council members have already made up their minds on the bonding.

Publicly, several council members have said they are undecided on whether to borrow the $10 million.

"What we're trying to do is make the project work," said Councilman Mike Rutter. "We want to do the best we can to protect ourselves and make sure this project is viable."

Aste said after last week's meeting that additional funding opportunities have opened up, easing his timeline for repaying debt.

The council will next consider the issue at its Oct. 28 meeting.

e-mail: rpalmer@desnews.com
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