A third-party study into the city of Greeley’s Catalyst project found that the project may not generate enough revenue to meet its debt obligations in the near term.
Greeley Demands Better, a local issue committee that is taking the project’s zoning to the ballot, released a feasibility study that the city commissioned but hadn’t yet published Monday.
Greeley Demands Better co-chairs Rhonda Solis and Brandon Wark presented the findings of the study by Hotel & Leisure Advisors in a press briefing. The Catalyst project aims to construct a hotel, water park and hockey arena for the Colorado Eagles hockey team in west Greeley that the city estimates will cost $832 million, which includes design, construction, infrastructure and utilities.
City officials said the study may not present the whole picture and that other studies are ongoing. The city has previously highlighted projected benefits including new jobs and more tax revenue as well as boosting development in west Greeley.
In August, the city contracted Hotel & Leisure Advisors for $95,000 as a third-party advisor to conduct the study, which was delivered to then-Public Works Director Paul Trombino on Nov. 3. He has since left his role with the city. The committee obtained the report under the Colorado Open Records Act.
The project’s debt service, estimated at $41.5 million annually, cannot be covered by the city’s proposed revenue sources in the first nine to sixteen years, according to the study. The study reports the city will be short at least $9.5 million or as much as $15.8 million in the first few years of the project, which is planned to finish construction in 2028.
“As a result, based solely on operational performance, the project does not appear financially feasible at this time, and additional measures would be needed to bridge the deficit,” the report states.
Solis said the report confirmed her concerns about the project and raised questions about how the city would secure the additional funding. This is why the Greeley Demands Better group circulated the petition and urged voters to vote in favor of repealing the zoning designation for the project in the city’s special election scheduled for Feb. 24, she said.
“I had been gathering signatures to try and slow down the project so we can really reevaluate how we are funding this as a community and the risk that we are taking on, and if everybody understands that risk,” Solis said. “Once we got the study, it kind of reaffirmed our concerns around the hotel and the water park not being able to sustain themselves, and who fills those gaps in, and we know that the city will be responsible for paying anything that doesn’t go through the way they planned it.”
Greeley Communications and Engagement Director Winna Ironkwe said the study is one of four the city has ordered, each examining the project from a different angle. The city didn’t release the Hotel & Leisure Advisors study earlier because officials had planned to release all four at the same time, she said.
“This study is one of four studies underway right now, each looking at different aspects of the project with the goal of providing a clear and full picture,” Ironkwe said. “The City expects that once all four studies are complete, there will be key interdependencies that will impact the final findings. Until a full analysis looking at all four studies is finalized, the City is not drawing conclusions from partial or unvetted information.”
After reporting about the potential financial feasibility issue, the Hotel & Leisure Advisors study notes that “it is important to consider the broader context.” The additional revenues from surrounding commercial and residential activity, including sales, property and lodging taxes could offset the gap in the early years, according to the study.
A financial overview published on the Speak Up Greeley page for the Catalyst project shows the city has several contingencies in place if the anticipated revenue is less than expected. The city maintains that the net Catalyst revenue, combined with collected sales tax, public improvement fees and $12 million economic development payment that increases by 2% annually, will be enough to cover the debt as planned.
If, between all of those funding sources, the city is still short on the needed funding to pay the debt service, they will have $33.2 million sourced from the city’s general funds to cover it as part of the moral obligation. The city has long said the project will not increase taxes for existing residents.
“If you’re gonna engage in a project like that, be as transparent as possible and really accept that public scrutiny. The public deserves to scrutinize a big decision like this for the city,” Wark said. “Everyone agrees that transparency matters. And when we feel like the city is not being transparent, that does not make the public happy.”
Thomas Donkle and other representatives of Greeley Forward and the Water Valley Company, the project developer, declined to comment on the study.
Greeley Demands Better has published the Hotel & Leisure Advisors study at greeleydemandsbetter.com/hla.
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