Comments on the financial risk of the proposed Center for Outdoor Adventure

By Jim Magid

Special to the Herald Times

MEEKER | I have read the plan for the center (“Feasibility Study Meeker, Colo., Center for Outdoor Adventure” by Better City, Draft), and have the following comments:

1) It is an impressive report and review of our community, and makes some obvious and true conclusions:

a.The Meeker community cannot support anything that relies on local retail traffic because of the small population, so it is necessary to have something of regional or national interest to draw from a wider population.

b. Hunting and outdoor activities are a resource so why not capitalize on them, but they might not be as “free” as implied in the plan.

2) Unfortunately, the Center would rely on a substantial local membership:

a. There is no real market research as to who would join, for how long and if there is the local market to support their assumptions,

b. Even more questionable is the assertion that the Center would draw from a broader region.

c. The calculations make it look like a viable plan, as if they were made working backward from a future profitable operation rather than based on hard evidence that the market is really there.

3) So, should the community put up any money to fund the ~$10 million project, it could be left “holding the bag”* when and if the project fails.

4) The assertion of state or federal funding is not supported by any evidence that it may materialize.

5) There is no assurance that the property envisioned is for sale at the prices specified, they have no options reported.

6) This would be a single purpose structure with difficulty in using for something else. On the other hand, after Chapter 11 of the initial operator, with all of the obligations written off, maybe it could operate.

7) If it is such a good idea, entrepreneurs should be willing to finance the entire operation, from beginning to end, particularly in the current low interest rate environment. If that is not feasible, then that is a good test.

a. Of course, some sort of tax benefit could be applied for, hopefully not as costly to the community as the very expensive concessions granted to Walmart in Rifle.

8) It is interesting that the study mentions local outfitters and Elk Creek Ranch as if this private club would have an influence on visitors to the center. It does not seem to mention another private group, Rio Blanco Ranch (the 101 Club) near Trappers Lake, close to a century old. Neither is open to the public and it is hard to see how they would enhance the attractiveness of the Center. Furthermore, it might be interesting to see a discussion of what a small fraction of fishing along the White River is open to the public and would not be a resource of the Center.

9) Summary and conclusion:

a. It appears that the Better City study started with the idea of the Center and worked from there to justify it as a community benefit, rather than to sift through all of the ideas that could help, particularly less expensive ones.

b. There is no discussion of the enormous cost to the Meeker community should the Center fail, if the town had to finance any of it.

c. It would be interesting to see a more detailed discussion of Colorado Park and Wildlife’s plans for some sort of similar (but not identical) facility in Palisade, an outdoor shooting destination, with far better logistics on I-70 and proximity to population centers. Why not combine the plans for the Center at that location and save Meeker?

d. There is no mention of possible conflicts of interest between any of the local supporters of the Center plan, and their recusal from the deliberations.

e. With the number of churches in Meeker, we should all be mindful of Joseph, when he advised Pharaoh to store the harvests of the seven fat years for the seven lean years to follow, when nothing would grow. We are probably near the end of the fat years or already entering the lean years. So, grandiose monuments may become costly white elephants in the future.

f. There is no discussion of the significant future economic problems faced by Meeker and the community from the pressure to close the coal fired generation plants of Tri-State in Craig and the intermediate pressures on local coal mining employment, which probably provides 25 to 40 percent of the above average wages from the private sector (non-government, non-agricultural) in our area.

10) The lean years may have already started:

a. Real estate tax revenue to Rio Blanco County and the assessed valuation has declined by about 36 percent since 2012.

b. Revenue at White River Electric was down more than 15 percent in 2016.

c. The Town of Meeker withdrew from reserves $957,439 in 2016, and is budgeting withdrawing $3.66 million in 2017, excluding the water budget. This means that spending is exceeding cash receipts and drawing down the reserves built up in past years when spending was less than receipts.

2) The town budget, as recently disclosed, might understate the community’s potential contributions to the Center project:

a. The town board of trustees is planning to budget $2.5 million for 2017, after spending an estimated $419,000 in the past two years with Better City.

b. Other Meeker tax districts have been solicited for abatements of their tax revenues to support the center.

c. There is no real accounting or announcement of these additional commitments, or the terms, but it may prove to be a substantial sum.

d. In that context, the Center is a very big deal. And the potential liability if it misfires could be a catastrophe.

3) Prudence might demand conservation of resources against an even rainier day for Meeker ahead in 2018 rather than a “hail Mary pass to the end zone with 2 seconds left in the game,” unless some fairy godmother comes forward to pay for the Center up front with no short term or enduring liability to the town. If it is a “good, sound, bankable concept” some commercial enterprise should seize the opportunity and relieve the Meeker taxpayers of the problem For all these reasons, I would suggest that the Center be completely and entirely financed by private investors, with the Town of Meeker and Rio Blanco County applauding their efforts and offering some property tax relief, but not investing.

*The expression “holding the bag” refers to a snipe hunt, where an unsophisticated rube is in the woods with a flashlight and bag calling “snipe, snipe, snipe” at regular intervals while his companions drive the snipe to him through the nighttime forest. Only they aren’t there, and the sap is ultimately confused and disappointed.

Jim Magid is a senior advisor for an independent investment bank and asset management firm and a Meeker-area property owner.