Following is a letter that Grand Junction resident John Traylor, who has a background is in public finance, sent to the entire Grand Junction City council on March 1 with his analysis of the City’s proposed lease for Colorado Mesa University (CMU) to use Lincoln Park and the Barn. Traylor’s letter contains important information about the proposed lease between the City and CMU that City residents need to be aware of. Traylor commented that “As currently drafted, [the lease] a complete giveaway” to CMU. Traylor is urging the City to take its time with this lease and be more careful about it in order to keep the City and its residents from getting an unfair deal.
The full text of the City’s currently-proposed lease for Lincoln Park is in the City Council’s meeting packet for their March 4 meeting. You can see the entire proposed 79-page lease here. All of the files and the agenda for the March 4 City Council meeting can be found here.
Here is what John Traylor wrote to Council:
Members of the city council-
I strongly urge you to table action on the proposed lease between the City and Colorado Mesa University and send staff back to the negotiating table. The lease as currently drafted is not in the best interest of the City or its taxpayers, and falls far short of a fair financial transaction.
A new football stadium would cost CMU tens of millions of dollars and is probably unaffordable. For reference, Colorado School of Mines built a new stadium for $24 million in 2015. A stadium at today’s construction rates would likely be double that. So any threat by CMU to pull out of Stocker is likely an empty one. Costs to CMU would be much higher than any lost revenue to the City. This transaction needs to reflect that reality.
The City invested $11 million in the Lincoln Park complex in 2022 and is still paying off the debt service on the certificates of participation. CMU will continue to make a capital contribution to the City through 2033 but it is unclear how future capital improvements and debt service costs will be shared under this lease.
CoPs were also issued in 2010 and pledged all Lincoln Park facilities in that transaction. While these CoPs were partially refunded in 2019, the City and its bond counsel need to provide assurances that the Stocker Stadium property is free and clear of all ground lease encumbrances. If not, this lease with CMU should have some type of subordination in it to recognize this debt obligation.
CMU is already set to receive $800,000 annually in subsidies from the City beginning in 2027 (see City adopted capital plan). So taxpayers are already on the hook for large recurring payments to CMU significantly in excess of this transaction.
Under the proposed lease, the City will receive only $300,000 annually for 25 years. There are no inflationary adjustments or escalator clauses. At the very least, there should be a clause increasing payments by a minimum of 2% or actual inflation, whichever is higher. Without this, the present value of this lease declines from $7.5 million to $6 million using a 3% discount rate. Note that the current rental agreement with CMU contains an escalator.
The lease gives CMU all revenues from concessions, billboard advertisements and naming rights, even for non-CMU events on the football side. These lease terms provide a significant potential revenue stream to CMU in excess of the lease payments; the City should share in those revenues. As an example, the City
CMU President John Marshall (Source: Twitter). Marshall is trying to get use of taxpayer-owned public property in Lincoln Park exclusively for CMU.
recently received $3 million from Intermountain Health for naming rights to the Community Recreation Center. I would also add language that prevents CMU from pledging any of this revenue towards debt repayment so as to not indirectly obligate the City.
Finally, the termination clauses do not provide options to the City should CMU be unable to finance or construct the proposed stadium improvements in a timely fashion, if at all. The City should have the right to terminate the lease and resume operations if these conditions are not met within a certain time period (say 3 years). Moreover, the City should have the right to terminate this lease at its discretion and buy out any improvements made by CMU as the lessee. This is after all City property during and after the entire term of the lease.
Once this lease is renegotiated, I would also strongly encourage City staff to provide a plan of finance to you summarizing the total impact to the city budget, including lease payments, any lost concession and advertising revenue, projected maintenance and turf replacement costs, etc. so that the Council and the public can see the “all in” cost/benefit from this transaction.
CMU is requesting a 25 year lease on a valuable city asset. Don’t rush into an agreement that could hamstring the City budget for decades.
Sincerely,
John Traylor
2 thoughts on “City resident warns City Council about the pitfalls of the impending lease agreement for CMU to use Lincoln Park”
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The council should table CMU’s request indefinitely. Locker rooms already exist at the stadium and the coaches can struggle along in their current offices.
Some derided, nearly insulted, this community’s response to “tearing down” the barn. You know who you are, but that issue was like the canary in the coal mine. Once we began to look at that, other red flags emerged, more and more questions. Thanks, John, for clarifying all of the problems.
The council should table CMU’s request indefinitely. Locker rooms already exist at the stadium and the coaches can struggle along in their current offices.
Some derided, nearly insulted, this community’s response to “tearing down” the barn. You know who you are, but that issue was like the canary in the coal mine. Once we began to look at that, other red flags emerged, more and more questions. Thanks, John, for clarifying all of the problems.