Was rec center proposal based on inaccurate numbers?

Staff Writer

As it turns out, when the Pagosa Springs town council voted in January to put the community recreation center question on the April ballot, the decision might have been based on inaccurate information about how much sales tax is actually collected within the town limits.

The full version of this story is available in the print edition of the Pagosa Springs SUN. Subscribe today by calling (970)264-2100. 


This story was posted on February 27, 2014.

76 Responses to Was rec center proposal based on inaccurate numbers?

  1. ajpagosa

    February 27, 2014 at 12:23 pm

    Nice work Mr. Fincher. Getting to the point maybe the ballot should be pulled if possible, given this and especially no disclosure at all on where the $44.9M on the ballot came from.

  2. Billy Skipper

    February 27, 2014 at 4:59 pm

    WOW! The SUN is in some hot water here. Got some info that proves this article is complete bull. Anyone want to bet on a retraction in next week’s issue?

  3. pagosasun

    February 27, 2014 at 5:12 pm


  4. Dave

    February 27, 2014 at 8:05 pm

    If you win you get this shiny fiddle made of gold, but if you lose the Devil gets your soul. “Charlie Daniels”

  5. Billy Skipper

    February 27, 2014 at 10:00 pm

    Newcomer to town, but must comment. I find it ironic that in the same issue you tout the awards your publication has received there is front page content that is potentially libelous, specifically the article concerning the rec center. You say your publication wants to “encourage dialogue and debate that leads to greater understanding.” Why, then, was I privy today to an accurate record of the correspondence between yourself and those quoted in the rec center article that makes the article read like pure fiction? I doubt you will be getting any awards for that one. A lawsuit would be more appropriate. Do the honorable thing and make it right.

  6. Billy Skipper

    February 27, 2014 at 10:23 pm

    Hey, I heard the other side of this story (literally) today and I now know where the $44 million comes from. So does the editor of this publication. Why, being the newspaper of record for this strange place, would she not have that info made public? She may have to, very soon, along with a number of other full disclosures.

  7. ajpagosa

    February 28, 2014 at 4:39 am

    So you are not disclosing it either? Hmmm. Wonder why?

  8. ajpagosa

    February 28, 2014 at 4:48 am

    How does a “newcomer to town” become privy to this “private correspondence” (in itself an act which may violate privacy laws and open one to legal action), yet also have all the tired old talking points for the Wrecking Crew? Curious. Plus you showed up right as Brian disappeared. Hmmm…

    Anyone who talks about disclosure and threatens lawsuits who wants to be taken seriously on this issue needs to reveal their public identity ASAP. So all motives can be examined. ‘Specially when you start throwing around the L word. Hiding behind anonymous screen names and throwing bombs is kind of cowardly.

  9. Billy Skipper

    February 28, 2014 at 7:27 am

    Not sure who “Brian” is, but O.K., Albert.

  10. ajpagosa

    February 28, 2014 at 7:34 am

    You’re welcome, “Tom”.

  11. Billy Skipper

    February 28, 2014 at 7:49 am

    Nice try, you’re getting hotter.

  12. ajpagosa

    February 28, 2014 at 7:51 am

    Lucky guess, though unlike you I am relatively new to the area and not an insider. But meeting lots of new friends.

  13. Billy Skipper

    February 28, 2014 at 7:56 am

    You’re last post, like most, makes no sense.

  14. ajpagosa

    February 28, 2014 at 7:59 am

    You are clearly not new to the area and you are an insider. I am relatively new to the area and not an insider. But I am meeting lots of new people as I get up to speed on this issue.

    Does that help?

  15. Tom Carosello

    February 28, 2014 at 9:22 am

    My name is Tom Carosello, and I am the parks and recreation director for the Town of Pagosa Springs. I take my profession and its associated responsibilities seriously and have refrained from commenting in forums such as this for that reason. However, to end the speculation here, after reading the above article in this week’s issue of The SUN, I confronted Terri House and Shari Pierce in Terri’s office Thursday morning and made it known that, in my opinion, the article is an irresponsible, gross misrepresentation of the context of our discussion regarding the basis for the Town Council’s decision to place the rec center initiative on the ballot. Because the article could be interpreted as defamatory (to me), I told them I wanted a copy of the tape used to produce the article for my records, if possible, and indicated that if I did not receive a copy, I would consider legal action at the civil level. This will be my first and last post in this forum. Enjoy your day.

  16. Chris Gerlach

    February 28, 2014 at 9:30 am

    I am sorry but there IS no other side to the story, the fact is that so far there has been no public revelation of support for the very high potential liability of the town if the bond measure is adopted as it is written, and that exposes the community to being severely limited in the future as to how it can respond to changing conditions. That is one of the key problems with the proposal and what makes it both unreasonable at this time and unaffordable. Posting vague threats and casting aspersions is hardly useful in a potentially useful public forum, let’s keep the discussion on topic and with substance. For now, the SUN coverage is one of the best sources for this important issue and I look forward to more of the same.

  17. Chris Gerlach

    February 28, 2014 at 9:33 am

    I hope we can get this discussion back to the actual facts and issues and leave behind unsupported aspersions. This is an important topic and worthy of forthright and open discussion based on respect and the merits of the situation and their potentially deleterious impact.

  18. Billy Skipper

    February 28, 2014 at 9:46 am

    You can quit calling me “Tom” now. That riddle is solved.

  19. Dave

    February 28, 2014 at 10:17 am

    Did that or tried that “reasoned approach” already. Is it not obvious that my post are meant to just fan the flames to further instigate this “Good Fight” so to speak? I feel like I’m beating a dead horse here. You keep trying to put out the fire with water. I will try to put it out with gasoline. I dare the Town to build this Recreation Center.

  20. ajpagosa

    February 28, 2014 at 10:20 am

    Over react much?

  21. ajpagosa

    February 28, 2014 at 10:21 am

    Well you’re clearly tight with “Tom”, care to disclose that relationship?

  22. Billy Skipper

    February 28, 2014 at 10:26 am

    Certainly. He happened to be one of the first people I met when I moved here about a half year ago. Also happens to be working for the town recreation department. I ask him questions, he gives me answers. Pretty simple.

  23. ajpagosa

    February 28, 2014 at 10:28 am

    Maybe you and we ought to try to get better answers.

  24. ajpagosa

    February 28, 2014 at 10:31 am

    Would urge anyone reading these comments to please get a paper copy of the Sun with the full article. I have one here and can;t for the life of me understand why Tom wants to file a lawsuit over it. Clearly the data given the council to support ballot language was not accurate or complete.

    Not sure what Tom is so upset about maybe he could articulate it a bit better than his letter below.

  25. Billy Skipper

    February 28, 2014 at 10:35 am

    The answers I have make sense. It is obvious that nothing about this will ever make sense to you.

  26. Dave

    February 28, 2014 at 10:41 am

    How did you do that? I’m next. Can you talk to dead people too?

  27. ajpagosa

    February 28, 2014 at 10:46 am

    Why don’t you calm down and read the print article. I have and not seeing what your buddy is so upset about.

  28. Chris Gerlach

    February 28, 2014 at 10:52 am

    Yes i agree with AJPagosa, i have just read the article myself and Ed did a great job bringing to light the tax issues and the impact they have on the potential for the Rec Center project to drag the Town into a deep hole of liability and inability to afford not only new projects beyond our reach but existing projects that need and do not yet have adequate funding. There is absolutely no reason to be throwing out threats of lawsuits when we are all working together to find clarity and do what is right for our community. The SUN is to be greatly appreciated for the candor and the insight it is bringing to this challenging issue and I urge everyone involved to move past blame and recrimination, to accept that mistakes have been made and to try to work together to find the best course for our town and community and to include the County at all levels of thought and discussion. We are all in this together, and as one of our Founding Fathers said, if we don’t hang (work) together we will surely hang apart. I believe we can do the right thing and face the matter with courage and sincerity. Let’s try.

  29. Billy Skipper

    February 28, 2014 at 11:05 am

    Gotta beat the storm through Wolf Creek Pass. But I did read the article, also listened to the “article.” You’d be “upset” too, and not just a little.

  30. ajpagosa

    February 28, 2014 at 11:18 am

    But I did read it and I’m not upset! Is that not just awesome? In fact I thought it was a great article, Mr Fincher and the Sun are doing good work here. Especially appreciate finally being able to read the letter from the county, and getting the 3% thing out there.

    Bring on the sunshine.

  31. Dave

    February 28, 2014 at 12:03 pm

    Then a band of demons joined in and it sounded something like this.

  32. Billy Skipper

    February 28, 2014 at 6:48 pm

    So I suppose Wal-Mart won’t mind operating at a loss? Don’t follow? Surely a company that operates at a profitable level wouldn’t be interested in constructing a 90,000 square foot store in this little town, especially since there is one in Durango, Cortez, etc. and if you take per capita cost and divide by waist size you get blah blah blah blah. Point is, Wal-Mart is coming because they know “it will work” with our demographics. And, do some research – there is NO cap on the amount of town or county sales tax that can be implemented if the voters approve of such measures. Again, if there is NO support for this project, how did it get this far?? You think the council was sleeping (the mayor might have been) during both readings?? It passed 5-2. Have you been to the rec office to get real numbers and explanations from people who have worked on this for years? You haven’t? Then I guess your satisfied with posting comments in an almost readerless forum because you’re afraid the numbers might work after all.

  33. Ray Reddington

    February 28, 2014 at 9:01 pm


  34. ajpagosa

    March 2, 2014 at 4:38 pm

    I think Walmart might be doing a better analysis of costs and revenue than the folks behind the rec center. They know how and need to know how to run at a profit. They do it better than anybody in big box retail. The rec center never will, they will ALWAYS run at a significant loss and they can stiff taxpayers for the difference (most who can’t vote on it) for the bill. Walmart has this thing called “shareholders” who would not allow that to happen.

    Actually I think people who threaten to file frivolous lawsuits, and use their anonymous buddies to defend them, might have a lot to hide. You guys are trying to intimidate the paper into not looking at this, when there is ZERO factually wrong with the content of the article.

    Finally, if this is an almost readerless forum why are you here?

  35. ajpagosa

    March 2, 2014 at 4:39 pm

    Still waiting….

  36. Billy Skipper

    March 2, 2014 at 5:42 pm

    hahahahahahahahahahahahaha. There will be a retraction or correction, or both, probably buried on B 13 or somewhere obscure. Quit with the conspiracy theories, already. Go play.

  37. ajpagosa

    March 2, 2014 at 5:46 pm

    This is play, I love it.

  38. Billy Skipper

    March 2, 2014 at 6:30 pm

    It is an arbitrary number never meant to be reached. TABOR requires that the ballot question state a max repayment. So why not state the current estimate of 27.7 million, which is a borrowed amount of 18 million plus interest at current rate of approx 4.3 percent for 20 years (unless the town would choose to pay down early)? Here’s why – if you state the exact estimate and the measure passes but interest rates go up even slightly before the bonds are sold and now the repayment cost is, say 28 million, you have to borrow less and may not be able to build the same footprint. But in the above scenario, if you wildly overstate the max, you don’t come close to having to worry about borrowing less or shrinking the size of the building.

  39. ajpagosa

    March 2, 2014 at 6:45 pm

    HAHAHHAHHHAHAHHAHA! So like they just made up a number that would obligate us to pay up to that rate for some random reason? That will NEVER HAPPEN? Then why that particular number? Why not a ceiling at 5%?

    But 8.9% without doc or support? Last minute no public review, never before seen. On ballot language they told no one about before hand? That rate is actually possible, and the ballot gives them the authority to indebt us at those rates for 25 years without further voter consent.

    HAHAHAHAHAHAHAHA! Oh that’s awesome. Keep it up. No one needs to make up conspiracy theories when you say this stuff.

    You guys don’t even have land in the cost proposal, you’re assuming the sewer commission will just hand over a 6M parcel.

    Keep going, really, this is top notch finance.

  40. Billy Skipper

    March 2, 2014 at 7:06 pm

    If you insist. It is tempting to “back up” the 8.9 percent interest rate you mention by using a simple amortization calculator on the 45 million. But it is not correct. There is ZERO chance the 45 mil comes into play, because the bond schedule assumes sales tax collections will never go up at all for the life of the bond. Not gonna happen. Second, no council would authorize the sale of the bonds without reducing the borrowed amount if rates skyrocketed for some unforeseen reason after the measure passes. Third, you would have to believe BOTH of these assumptions plus a billion other things falling exactly into place to ever, ever, ever, get to that number. NOT GONNA HAPPEN.

  41. ajpagosa

    March 2, 2014 at 7:11 pm

    If it is NOT GONNA HAPPEN there is no need to obligate us to the possibility. However the numbers in the current cost proposals that we can see are so unrealistic I could easily see it happening. Never ever come close to user fees projected. Never ever have operating costs as low as projected.

    You can’t expect people to believe a word you’re saying when for months you talk about doing it now while rates are low, then putting out a number like 44.9M for 25 years, and the fantasy projections you base the “good” scenario on.

    And what’s up with no land costs?

  42. Billy Skipper

    March 2, 2014 at 7:33 pm

    Again, if you don’t believe me, call George K. Baum, or any bond underwriting agency, for that matter. It is arbitrarily overstated. Council
    Could have debated the figure, but must not have. There are no land costs involved because the town council is the sanitation district board, the same people. Do you think the same people who approved it would then say, no just kidding, you can’t put it there. However, that (the people) will change on April 8, so that will be addressed by the new council, if it passes. It doesn’t have to go there, just the logical spot at this point.

  43. ajpagosa

    March 2, 2014 at 7:38 pm

    I plan on calling GKB tomorrow and asking. Will you be in the office?

    Oh and the council cannot arbitrarily reassign land they paid 6M for sewer use for, to a rec center, without accounting for the transfer. I have asked this question directly to three sitting council members and they all said can’t be done. It would leave a 6M hole int he budget that would have to be filled. If I have been misinformed I do not know it yet. Will be a good question for the open town meeting on Tuesday, be prepared.

  44. Billy Skipper

    March 2, 2014 at 7:45 pm

    No, won’t be in the office. I work here. Won’t be at the meeting, either, don’t work for the town. As for a transfer from the sanitation district, that’s where Yamaguchi Park came from, so it can be done.

  45. ajpagosa

    March 2, 2014 at 7:47 pm

    Well as I said three sitting council members told me that was not the case. Someone is wrong.

  46. Billy Skipper

    March 2, 2014 at 7:54 pm

    6 mil is the price tag for the new sewer line up the hill, not the property.

  47. ajpagosa

    March 2, 2014 at 8:02 pm

    Yes I know, I pointed this out to the council people, they said 6M must be come up with before land could be re-purposed. Perhaps they meant the 6M already spent would be wasted and the new sewer line not effective or need to be rebuilt? Another question to ask them.

    But clearly, there is no money in the cost proposal for land, or costs to acquire or re-purpose existing land. The current proposal assumes the land is free.

  48. Billy Skipper

    March 2, 2014 at 8:09 pm

    Not free, but perhaps discounted.

  49. ajpagosa

    March 2, 2014 at 8:12 pm

    Well even 50% off is still 3M not accounted for and 1/6th total anticipated construction cost.

  50. ajpagosa

    March 4, 2014 at 1:52 pm

    Just heard that the official numbers have been released by the Town for taxable sales within Town limits vs County-wide for the proposed new 1%. That number is….78%. What that means is the first GKB cost proposal used 100%, the second somewhat less, but no one has used a number this low. It means roughly 200k/yr less in projected revenue vs the previous numbers. That is 4M over 20 years or 5M over 25. These are numbers generated by the Town and blessed by David Mitchum.

    Is it too late to pull the ballot?

  51. Billy Skipper

    March 4, 2014 at 8:31 pm

    You forgot to mention your figures assume zero sales tax growth forever. The debt service will be fine. The projections will be fine.

  52. ajpagosa

    March 4, 2014 at 8:38 pm

    LOL sure they will. User fees light, operating costs too low. Projections are garbage.

    Hey had a great talk with GKB senior VP. Let’s see what he has to say. Hint: not thrilled with 78%.

  53. Billy Skipper

    March 4, 2014 at 8:56 pm

    We’ll see.

  54. ajpagosa

    March 4, 2014 at 9:01 pm

    Yes indeed we will. By the way, those aren’t “my” numbers, those were GKB’s numbers, used by rec center proponents and presented to the council. Now we know they were wrong by a lot. So they were “your” numbers.

  55. Billy Skipper

    March 4, 2014 at 9:02 pm

    Did he tell you about the 44 million? You forgot to mention that.

  56. ajpagosa

    March 4, 2014 at 9:06 pm

    Yes he did. Interesting answer. He said a town with cash flow that bad would never be allowed to issue bonds, and if they did no one would buy them. So a 100% made up number. Not sure that makes me feel better. I’d much rather have a realistic answer based on worst case scenario that capped costs.

  57. Billy Skipper

    March 4, 2014 at 9:07 pm

    So you see why the chance to get to that number is zero?

  58. Billy Skipper

    March 4, 2014 at 9:20 pm

    Well, statute on libel/defamation is a year, so he has time to think on it. The 78 percent is the average over the last three years, I see. The 10 year average is higher. Won’t matter much in grand scheme since the ballot language says up to 18 million, not def 18 mil and again, the sales tax has no chance of staying flat, especially with Tractor Supply and Wally coming. Also hear rec office will finally be allowed to publish info, which the mayor had opposed.

  59. Billy Skipper

    March 4, 2014 at 9:26 pm

    I’m just glad “we” have a real number, at least the average over the last 3 years. With Wal-Mart alone, the number goes to almost 90, not a big deal. Who do you think went after the real number? The opponents? No, the proponents. Nothing to hide.

  60. ajpagosa

    March 4, 2014 at 9:30 pm

    Better talk to your buddy some more.

    Yes, there was a suggestion to put all available info out to the public, through the town website. That is great, more transparency the better. That took place in the context of a larger issue.

    That issue was, rec center people have had nearly exclusive access to GKB, filtering what they put out and what they receive. That needs to end and a more objective entity needs to be the primary contact to GKB for generating further cost studies and projections. Then those projections need to be made available to the public in a timely manner. That was discussed, we’ll see what happens.

  61. Billy Skipper

    March 4, 2014 at 9:33 pm

    Well GKB will run the numbers soon, I imagine. When that is made public, great. It ends speculation on both sides.

  62. ajpagosa

    March 4, 2014 at 9:33 pm

    Yes of course it is a meaningless scenario presently, not sure why a meaningless scenario was put on a ballot. However he did say it was only meaningless with rates where they are now. If for example the 10 year treasury were at 5% when these bonds get issued, I could see that being a realistic scenario.

    I am not sure how closely you follow treasury rates or federal reserve policy, but 4-4.5% by the end of this year would not be unreasonable on a 1-year note, and then 44.9 might be in play, esp if revenue is light.

  63. ajpagosa

    March 4, 2014 at 9:39 pm

    Well unfortunately there are rules about issuing bonds of this nature, and what kind of historical revenue you can use. I do not think you are allowed to speculate on revenue from stores not yet built and get a credit rating based on that. At least that was was I got from talking to the GKB guy. Another concrete question to ask.

    What I mean is there are pretty severe underwriting standards these guys have to adhere to. Ergo the disappointment hearing the 78% number, that HAS to be used now. Not sure rosy growth projections based on things that haven’t happened yet are allowed.

    But we’ll find out soon.

  64. Billy Skipper

    March 4, 2014 at 9:40 pm

    You think proponents like the number? 33 would have been acceptable, to me. No, nobody would let it get that far (to 44), and sales tax can’t stay flat for the duration it would take to get there.

  65. ajpagosa

    March 4, 2014 at 9:45 pm

    No one likes the number, believe me. But I want to hear someone who hasn’t been drinking the kool aid tell me WHY it can’t get there, and why if the kool aid drinkers take over the council, they can’t take it there.

  66. Billy Skipper

    March 4, 2014 at 9:48 pm

    No, the bond schedule can’t assume the numbers, but we know Tractor Supply is scheduled to open in June, and Wal-Mart is paying their plan review costs this week and expected to pull building permits any day. You will see less “coverage” on the bond schedule, but it won’t blow the debt service. Also won’t factor much in future tax collection projections, which will jump with the addition of the two stores above.

  67. ajpagosa

    March 4, 2014 at 9:52 pm

    My position on this whole mess is, let’s forget about a bond issue now, and get a year or two of Walmart and TS revenue going. See where we are. Then if a sensible rec center (or other capital improvement) plans come up, we go to sell bonds on a much healthier financial footing.

    Now we’re mainly putting lipstick on a pig, with all the reserve and collateral req, struggling to make A rating. What’s the hurry if we could get actual cash in the bank and verified income. Lot of things might look different then, including our credit rating.

  68. Billy Skipper

    March 4, 2014 at 9:54 pm

    The sales tax would still have to stay exactly static at enormous interest rates, just not likely. Also, the town could not afford that mythical scenario, so couldn’t get there even if they “tried.”

  69. Billy Skipper

    March 4, 2014 at 9:57 pm

    I don’t disagree, but if the costs of the facility rise significantly, you’re in the same boat. Actual estimate for this one is 12-13 mil, I am told, plus soft costs that the town could waive or cover with in-house labor.

  70. ajpagosa

    March 4, 2014 at 10:03 pm

    Well it is interesting exercise to notice that the annual debt service in the “impossible” scenario is 1.8M for 25 years. That is not so far off in an annual cash flow sense from 1.44M in the current “possible” scenarios (but over 20 yrs). But that doesn’t take into account the 78%, which knocks about 200k/yr off expected revenues.

    My point is annual cash flow wise, “impossible” vs possible is a few hundred K using wrong numbers, begins to get closer using 78%. I have a feeling that using numbers allowed for underwriting standards, the “possible” scenarios are pretty close to the edge already. We’ll see what GKB says after the 78% gets figured into it.

  71. Billy Skipper

    March 4, 2014 at 10:08 pm

    Only if you expect zero growth over the entire 25-year span, which the bond schedule does. Never happens, though, average life of a bond like this is 12-15 years.

  72. ajpagosa

    March 4, 2014 at 10:08 pm

    I doubt building costs will rise significantly in 2-3 years, esp if 10 year UST goes to 4%.

  73. ajpagosa

    March 4, 2014 at 10:10 pm

    Once again, GKB I do not think is allowed to make favorable assumptions on growth when underwriting the bonds. whether you believe them or not is irrelevant since they have the money.

    For example a prospective home buyer cannot put anticipated income from that MD he was planning on eventually getting on his loan application. Well not anymore, we figured out that was bad recently.

  74. Billy Skipper

    March 4, 2014 at 10:16 pm

    I know, but you wouldn’t buy such a bond if you expected zero growth in sales tax by the “sponsoring” entity. So even though they assume zero, they “know” it will not be the case. We can pick this up tomorrow, should be interesting next few weeks.

  75. ajpagosa

    March 4, 2014 at 10:17 pm

    Yeah I agree sure will be.

  76. ajpagosa

    March 6, 2014 at 6:33 am

    Wanted to add one last “numbers” topic to this discussion before the new issue comes out later today. This relates to the 25 years and $44.9M on the ballot, also known as the NEVER GONNA HAPPEN (NGH) number only there “because TABOR required it”.

    Well yes, TABOR does require something. It does not require an NGH number backed up by nothing but a WAG. We now know the $44.9M in addition to NGH, was “made up” in the sense that no scenarios were run to back it up as a legitimate worst case scenario, a real not-to-exceed number limiting borrowing authority.

    This does not make me feel good for the following reason. There is a gap of approx $15M between the 20-year and approx $30M proposal from GKB, and this NGH 25-yr $44.9M. Does that mean $44M could happen but $44.9M can’t? How about $40M? $38M? Etc. Where is a realistic cap on the total cost of this? Well there ISN’T one.

    So it strikes me as extremely irresponsible and misleading to throw out a number like 25-years and $44.9M (and put it on a ballot no less), and then attempt to immediately dismiss it because it’s NEVER GONNA HAPPEN. Because nobody apparently is very interested in talking about ugly stuff that could happen.

    So let me be clear. Anything from $30M up to $44.9M could happen, that is what the ballot language allows. Don’t be misled by the NGH crowd into thinking that means it is completely impossible to be “bad”. $35M, $40M, etc definitely COULD HAPPEN but nobody ran the scenarios so we could see how it would affect our finances going forward.

    Please vote NO on this nonsense.