Wednesday, December 15, 2010

City defends handling of URA funds

Says housing might be built


By TREVON MILLIARD
Express Staff Writer

The Ketchum Urban Renewal Agency bought this property at the corner of First Street and Washington Avenue in 2007, using $824,000 of the city’s affordable-housing funds. Photo by Mountain Express

Ketchum City Administrator Gary Marks is vehemently disputing allegations made by several residents that Ketchum's Urban Renewal Agency misused $1.46 million in city money restricted for providing affordable housing, and should repay the city.

The allegations have been made repeatedly since the URA spent the money in 2007 to buy vacant property at the corner of First Street and Washington Avenue and property on Sun Valley Road that now serves as the visitors center and Ketchum Town Square.

Marks argued in an interview that the vacant Washington Avenue lot—whose purchase required $750,000 in affordable-housing money plus $116,000 more in interest payments, also from the affordable-housing fund—could someday be used to build affordable housing. His argument is bolstered by the URA's repeatedly stated plans from the get-go to use the lot for affordable housing.

However, Marks asserted that the URA's plans were derailed by the recession, and this is "not the time" for an affordable-housing project. The recession particularly affects the URA because it depends on increasing property values within the city for its revenue, and property values have plummeted since 2008. Marks said the city and URA are in "wait-and-see" mode before tackling a housing project.

Recession or not, the city has never expressed any plans for using the visitor center/town square land—costing $640,000 of affordable-housing money—to build affordable housing. The lot is across the street from Giaccobi Square in the heart of the retail core. Plus, about $475,000 was used this summer to build the Town Square, $160,000 of which came from the city.

Allegations have arisen time and time again that the URA needs to set aside the $640,000 to reimburse the affordable-housing fund. But the URA has failed to show anywhere in its annual financial reports of 2007, 2008 or 2009 that money is being set aside.

City Attorney Stephanie Bonney said at an April 20, 2009, City Council meeting that the URA's audit of that year would include a footnote showing money as restricted for affordable housing.

"It is true that we have not specifically segregated [affordable-housing money] into a separate fund," Bonney said. "However, I met with City Clerk/Treasurer Sandy Cady today and we discussed putting a footnote in the URA's audit to show, in an effort of transparency, that those funds are in fact restricted funds. They have always been treated and will continue to be treated as restricted funds."

However, no footnote was included in the audit of 2008-09 published the following fall. The footnote was included in the 2009-10 audit but only for $489,000.

The concern of former Ketchum resident and former certified public accountant Jim Donoval is that the money will fall through the URA cracks and never return to the city for affordable housing, unless the URA's financial reports clearly spell out that $1.46 million was transferred in as being set aside for affordable housing and will someday return to the city if not used for affordable housing.

Donoval said the URA's self-stated intentions to pay back the affordable-housing money have so far not amounted to much concrete action, just appeasing words.

Councilman Baird Gourlay agreed at an Aug. 18, 2008, council meeting that the URA was "borrowing" affordable-housing money.

"If we don't use it for housing, we will pay back [the affordable-housing money]," Gourlay said, adding that that would "potentially" happen in 2009.

But not a dollar has been spent, to date, to either provide affordable housing or to pay back the city.

The city passed a resolution in August 2009 stating that the URA's affordable-housing money "shall be restricted and such funds shall only be used for programs, including but not limited to the purchase of land and/or buildings, which provide for affordable community housing." The resolution also said that if the money weren't spent this way, it would be "transferred back to the city."

The question is how long the URA has to use the land for affordable housing before it must pay the city back. Marks said no deadline was set in the resolution because the city doesn't have a "crystal ball" to know when the economy will improve and make affordable housing an economically feasible endeavor. Bonney said the URA has until 2035, when by state law it has to be dissolved, to repay the city or build housing. Critics contend that if the URA's annual audits don't spell out its $1.46 million obligation, who's to say the URA board and city council in 2035 will remember or honor the loan?

For that reason, Bonney recommended that in its accounting, the URA transfer all $1.46 million worth of affordable-housing money into the Washington Avenue property.

"It makes it much easier to track that money in the future," she said.

She said that in order to do this, the property needs to be worth that much, which it is. But if, for some reason, the URA happens to sell the property for less than $1.46 million without providing affordable housing, it would have to come up with the difference. She also said that if affordable housing isn't put on the property before the URA is dissolved in 2035, the URA would have to reimburse the city for the entire $1.46 million.

Marks said he supports such a resolution, as does URA Chair and Ketchum Mayor Randy Hall.

The URA's board of directors is composed of the members of the City Council and the mayor, as well as two other members appointed by the mayor and council.

Trevon Milliard: tmilliard@mtexpress.com




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