Credit crunch delays $21M Garfield County road project
Glenwood Springs Correspondent
Glenwood Springs, CO Colorado
GLENWOOD SPRINGS, Colorado “The county commissioners Monday had planned to approve a $21.4 million contract to rebuild County Road 204 in Garfield County, Colorado.
But one large snag suddenly got in the way: Chevron was unable to obtain a letter of credit ” which would assure the county there is money for the project should the company default ” from Wachovia.
Michael DeBerry, manager of Chevron’s Piceance operations, said the company received assurances from Wachovia mid-Thursday that it would receive a letter of credit for the project. But later in the day, Wachovia called Chevron and said the bank had frozen all unissued lines of credit and the letter would not come.
“It was a sudden and unexpected line of development,” DeBerry said of the notice from Wachovia, which has been swallowed up by Wells Fargo in the wake of the United States’ continuing financial market woes.
DeBerry said the company has since moved to J.P. Morgan Chase to receive that letter of credit, he said.
Because of the development, the county commissioners on Monday voted to amend an agreement it has with Chevron about reconstruction of Garfield CR 204, which heads north of DeBeque. The change of the contract, which Chevron sought, would give the company another week to obtain the letter of credit.
Republicans Larry McCown and John Martin voted in favor of the move.
The agreement calls for Chevron to put up $25 million to help reconstruct CR 204. The county will contribute $3 million toward the rebuilding of the road, with half of that total coming from a Colorado Department of Local Affairs grant.
Tresi Houpt, a Democrat, voted against giving the company more time because of her continuing opposition to a clause in the county’s agreement with Chevron that says the county would support the company’s move to apply for a severance tax credit from the project. Those credits would reduce the company’s severance tax bill.
Houpt has said the use of severance tax credits for CR 204 was not in the public benefit because the project largely benefits Chevron and companies should contribute to help rebuild roads as part of doing business in the county. Other local Democrats worry the county may lose potential severance tax dollars and grant funding because of the county’s support of a tax credit for Chevron.
But DeBerry said on Monday Chevron hasn’t made a decision about whether to apply for the severance tax credits.
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