Economy & Economic Development  September 10, 2010

Cuts take bite out of crime lab

WELD COUNTY – Gov. Bill Ritter’s recent decision to freeze energy impact grants and divert those funds elsewhere to help curb a $60 million budget shortfall means that Weld County – one of the largest energy producers in the state – will be paying more than its fair share to balance the state budget, county officials argue.

The $4 million Weld County is losing as a result of cuts puts two projects indefinitely on hold – communication towers and a regional crime lab. Weld County Commissioner Sean Conway said the loss is not just a financial blow, it means the county’s emergency management system cannot keep up with the county’s growth in the midst of an oil and gas boom.

“We’re one of the largest producers of oil and gas, and when the legislature set this fund up it was specifically to deal with impacts from the oil and gas industry to communities,” Conway said. “Particularly with what is going on up north, with our most recent oil and gas lines, we have holes in our (communication and public safety) system and if, God forbid, if an accident were to happen with one of those major pipelines which runs through the northern part of Weld County, I hope the lack of getting these towers up doesn’t endanger our first responders given the responsibility of dealing with that kind of incident.”

Upgrading communication towers has been a priority for the county since the Windsor tornado in 2008. New oil and gas development in the northern part of the county, where coverage is still spotty, has further exacerbated the problem.

“Our first priority is those communication towers,” Conway said. “Now we’re going to have to go back and figure out how we’re going to do it in the absence of severance funds. I regard the governor’s decision as a raid. To have these funds snatched away from us is greatly disappointing; I don’t know what options will be available.”

The regional crime lab also lost a $2 million energy impact grant. The project has been nearly four years in the making and will now be delayed until summer 2011, at the earliest, when grant funding could potentially become available.

Weld County had already secured $800,000 in federal funding for the facility, and just before the budget cuts were announced last month, the Larimer County Commission and city councils in Fort Collins and Loveland passed resolutions to help pay for the lab’s operations. The city of Greeley was also expected to support the lab.

“We were kind of excited about the process and looking at what it would have done, particularly for increasing the quality of some of the investigations up here in Larimer County and a little more efficiency on the part of our investigators,´ said Larimer County Manager Frank Lancaster. “My understanding is the project is pretty much on hold if not dead.”

Distributions divided

On Sept. 1, the state Department of Local Affairs released figures for its severance tax direct distribution payments to local governments. Severance tax revenue in Colorado is divided between DOLA and the Department of Natural Resources. Those DOLA funds are then further divided between the local impact grants that are being diverted and direct distributions to local governments.

Weld County will be receiving $764,976 in severance direct distributions in 2010, compared to $2.68 million in 2009 and $421,421 in 2008. (If you include distributions to all municipalities, the pool for Weld County in 2010 is $1.82 million, second only to Garfield County with a $1.83 million pool.)

Linda Rice, DOLA public information officer, said distributions are down across the board from last year because 2009 was a high year for commodity prices. Those prices have since dropped, particularly for natural gas.

In 2008 the state legislature also changed the formula for determining distribution of energy impact dollars. The formula used to account only for the number of employees in the impacted communities, but now also consider permits, production, employee residence, population and highway user miles.

Rice said the amount of severance tax revenue generated in Weld County is a proprietary figure that is not released by the Department of Revenue, and that there is not a direct correlation between what a local government receives and what it pays in severance tax.

The gross severance tax base is determined based on the value of production – quantity produced times the price of the commodity – less any deductions for transportation and processing and small wells that are exempt from taxation. The law also includes a property tax credit that often reduces severance liability of a producer to zero in rural areas where local mill levies are higher.

Rice also pointed out that Weld County and its municipalities received nearly $41 million in Energy Impact grants between 2006 and 2009.

Still, the loss of the $4 million for the communication towers and crime lab will be felt this year. The cuts also mean the county will be missing out on the jobs two multimillion-dollar infrastructure projects would have generated.

“Once again, Weld County has one of the highest unemployment rates in the state, so it gets shortchanged on that end too,” Conway said.

New tenant at Iron Mountain?

There had been speculation that a regional crime lab project would breathe life back into the former Iron Mountain Autoplex on U.S. Highway 34 between Windsor and Greeley. Since the huge complex closed and its buildings were foreclosed on last year, the four large dealerships have been vacant, awaiting new tenants – one of which could have been the crime lab.

“We can come back and look at (the crime lab) again in the future if the energy impact grants come back, but the property market will be different,” Lancaster said. “There will be different buildings available, different options. We’re pretty much back to square one thanks to the change at the state.”

The crime lab would have fit the vision Steve Kawulok, who is marketing the Iron Mountain Mitsubishi dealership, has for the former auto complex as an employment center. He has four tech and energy businesses looking at the property, though none under contract yet.

“If you look at the buildings as shells, they’re very open, nice, new properties, which could be used for production, for office, for shop space, so many multiple uses,” he said. “I think the attraction is the location and the modern construction. They’re very prominent buildings, and they’re a clean slate to work with and lend themselves to various kinds of retrofit and can accommodate parking for high numbers of employees. I think you’re going to see a rebirth of that complex into a really key employment center in Weld County.”

Sam Brenner of Cushman & Wakefield, who is listing the other properties, including the Kia dealership, said the “phenomenal access” makes sense for a crime lab. In addition, the Kia facility was occupied for less than three months, so had almost zero wear and tear.

“We’ve had a lot of interest,” he said. “Churches can benefit from high ceilings. Event centers can benefit from open areas. The opportunities are really endless because an auto dealership is a large open facility and there’s a lot to allow for the imagination. “

He wouldn’t specify who’s currently interested in the space except to say, “We’ve had bites and we’re close.”

WELD COUNTY – Gov. Bill Ritter’s recent decision to freeze energy impact grants and divert those funds elsewhere to help curb a $60 million budget shortfall means that Weld County – one of the largest energy producers in the state – will be paying more than its fair share to balance the state budget, county officials argue.

The $4 million Weld County is losing as a result of cuts puts two projects indefinitely on hold – communication towers and a regional crime lab. Weld County Commissioner Sean Conway said the loss is not just a financial blow, it means the…

Related Content