Private-activity bonds might be mall option
Longmont City Councilwoman Bonnie Finley suggested that mall redeveloper Allen Ginsborg might be able to receive private-activity bond funds after hearing a presentation about them from David Starnes, the city's redevelopment program manager, at a City Council meeting Tuesday, March 5.
In general, a private-activity bond is one issued by a local or state government to help finance a private project. Such bonds generally are used to encourage private projects in economic development and low-income housing.
These types of bonds can be sold to finance redevelopment of blighted areas - such as that found in the urban renewal area on which the mall sits - and to prepare land for redevelopment, according to the Colorado Department of Local Affairs website.
Applications for the private-activity bonds are due May 8, with city council members expected to select a project in August. Bond payback would be similar to any loan repayment structure, according to Ann Watts, a spokeswoman for the department.
Similar to the way a home loan foreclosure process works, if a developer were to default on such bonds, property could be resold to pay off the debt, Watts said.
Ginsborg, mall project manager for NewMark Merrill Mountain States in Fort Collins, did not immediately return a request for comment on Wednesday, March 6.
City council members discussed negotiations related to mall development in a closed meeting Tuesday. Because no formal action was taken as a result of the executive session, no information was made public about it. However, the session prompted Finley to link the private-activity bond discussion to potential use at the mall, which is in a blighted urban renewal district, she said Wednesday.
"I was thinking about the mall because we had that executive session," Finley said. "It popped into my head."
Starnes said Tuesday night that such bonds could be used for activities in urban renewal districts.
The city has issued no private-activity bonds since 2008, Starnes told the council. The bonds are allocated each year by the Colorado Department of Local Affairs based on population, Starnes said. Longmont has used about $100 million in bond funds since 1990 for projects such as the purchase and remodel of the Cannery Apartments affordable housing project at 15 Third St.
City staffers also are looking into whether the bonds could be used for a broadband infrastructure project, Starnes told the council Tuesday. Because of restrictions in the Longmont City Charter, the bonds must be issued through another government entity, such as the Colorado Department of Local Affairs.
Mayor pro-tempore Gabe Santos said he has a lot of questions about how issuing such bonds could work - mainly because of the city charter restrictions. When Santos was asked Wednesday by a reporter if he would rather see such bonds used to help develop the mall or to develop broadband infrastructure, he chose the mall.
"If we could use it for the mall, of course I like to use it for that, but it's a wait-and-see," Santos said. "Staff is still in the process of seeing if (the bonds) can be used."
The redeveloped mall is expected to feature an as-yet-unnamed retailer in a 100,000-square-foot space, a natural grocery store, a 50,000-square-foot movie theater and a "village" of freestanding stores and public spaces. It is expected to open in fall 2014, Ginsborg has said in the past. NewMark Merrill paid $8.5 million for the existing 550,000-square-foot mall in February 2012. It is slated for demolition this fall.
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