The URL can be used to link to this page

Home My WebLink AboutCOUNCIL - AGENDA ITEM - 04/17/2001 - SECOND READING OF ORDINANCE NO. 50, 2001, AUTHORIZ AGENDA ITEM SUMMARY ITEM NUMBER: 14 DATE: April 17, 2001 FORT COLLINS CITY COUNCIL Alan Krcmarik/ FROM: Jay Hardy SUBJECT: Second Reading of Ordinance No. 50, 2001, Authorizing the Issuance of City of Fort Collins Downtown Development Authority Tax Increment Revenue Refunding Bonds Series 2001 in the Amount of $3,640,000 for the Purpose of Refunding a Portion of the 1992 DDA Refunding Bonds. RECOMMENDATION: Staff recommends adoption of the Ordinance on Second Reading. EXECUTIVE SUMMARY: In 1992, the City refunded and restructured the outstanding debt of the Downtown Development Authority (DDA) through the issuance of $11,380,000 of revenue refunding bonds. When issued, the bonds carried an interest rate of about 6.5%, very favorable compared to interest rates in prior years. Based on the covenants made during the 1992 issue, a majority of the bonds are now eligible for refunding. The 2006 maturity bonds were issued on a non-callable basis and will not be included in this refunding. The 2001-2004 and 2007 bonds are subject to early call and will be refunded. Ordinance No. 50, 2001, was unanimously adopted on First Reading on March 20, 2001. ACKGROUND: On April 10, 2001, the City sold the bonds through a negotiated sale. The City was able to obtain a very attractive net effective interest rate of 3.77%. Based on the favorable pricing of the sale, the total amount of the bonds issued was reduced from the projected amount by $50,000 to $3,640,000. Sources and Uses of the Bonds: Sources Bond Proceeds $3,677,678 Accrued Interest 12,133 Use of the 1992 Bond Reserve 1,227,306 Payment on 1992 Bonds 557,345 Total Sources $5,474,462 Uses Escrow Deposit $5,314,445 Bond Insurance 19,000 DATE: April 17, 2001 2 ITEM NUMBER: 14 Surety Bond 34,000 Underwriters Fee 16,962 Accrued Interest 12,133 Bond Ratings 10,000 Bond Counsel 50,000 Financial Advisor 8,500 Printing &Mailing 7,000 Paying Agent&Misc. Costs 1,500 Contingency 922 Total Uses $5,474,462 Pricing Summary Maturity Yield Maturity Value ($1 12/01/01 3.20% 245,000 06/01/02 3.25% 495,000 12/01/02 3.30% 510,000 06/01/03 3.45% 535,000 12/01/03 3.50% 545,000 06/01/04 3.60% 570,000 12/01/04 3.65% 580,000 06/01/05 3.75% 40,000 12/01/05 3.75% 40,000 06/01/06 3.85% 40,000 12/01/06 3.85% 40,000 AGENDA ITEM SUMMARY ITEM NUMBER: 20 FORT COLLINS CITY COUNCIL DATE: March 20, 2001 STAFF: Alan Krcmarik/ Jay Hardy SUBJECT: First Reading of Ordinance No. 50, 2001, Authorizing the Issuance of City of Fort Collins Downtown Development Authority Tax Increment Revenue Refunding Bonds Series 2001 in the Amount of $3,690,000 for the Purpose of Refunding a Portion of the 199 i DA Refunding Bonds. RECOMMENDATION: Staff recommends adoption of the Ordinance on First Reading. FINANCIAL IMPACT: .{ 5 The 1992 Downtown Development Autho ' } . carry an mterest rate of over 6.5%. Due to the recent drop in interest rates, the City may no s e bon in the 4% range. Depending on market rates on the day of sale the City and the yybe able to reduce the remaining payments by about $200,000. By 0, a surety p lieu of the reserve fund, the City will be able to release an add' ' na in the re e _ d. These savings and funds from the reserve will allo e DDA to ate in praje' i sistent with the Plan of Development. EXECUTIVE SUMMA � In 1992£tTie City refunded%theissu _ ed the ouAting debt of the Downtown Development Authority (DDA) throug o 380,000 of revenue refunding bonds. When issued;the bonds carried an interest rate of about 6.5%, very favorable compared to interest rates in prim years. Based on the cov nants made during the 1992 issue, a majority of the bonds are noWil gible for refunding. The 006 maturity bonds were issued on a non-callable basis and will notce included in this refunding. The 2001-2004 and 2007 bonds are subject to early call and will be,refunded z Based on c egYarke a `mates, the 2001 refunding bonds should save the City and the DDA approximately $200;000 The DDA may use the Tax Increment Savings to fund other worthwhile projects consistent with its Plan of Development. Second Reading is scheduled for April 17, 2001. This will allow time for the Finance Department to mail the bond call notice to holders of the 1992 bonds on May 1, 2001. DATE: March 20. 2001 '_ ITEM NUMBER: 20 BACKGROUND The Colorado Revised Statutes (Part 8 of Article 25 of Title 31, the "Act') provide the legal foundation for creation of downtown development authorities. Following the procedures in the Act, the City Council and the qualified electors of the Downtown Development Authority District form the Authority. At a special election held on March 17, 1981, the qualified electors of the District voted to approve the formation of the Authority. Subsequently, onPrApril 21, 1981, the City Council adopted Ordinance No. 46. 1981, establishing the Authority with the powers provided in the Act. ' ` vy Under the Act, the city council of a city in which an authority is sought to `be, formed must determine that such an authority is necessary to protect the public health, safety, prosperity, security and welfare of the inhabitants thereof. Following such determination, the city council adopts a resolution submitting to the qualified electors, wtthtnse ' uthoritX's proposed boundaries the question of establishing the authority. If a majority df ttie. quafifred electors voting on the question vote to establish the downtown development authority, the authority is , . established by ordinance pursuant to the requirements bftheA� ctyyt i{ ri Once formed, the authority has various expressa w owers under the Act. These poerstnclude: the power to plan and propose plans of devel nt for public�;agilities and other improvements to public or private property; to sell or dispose of,:.property; to orrow money and accept grants; to cooperate with the municipality in which the authortiy located; and to enter into contracts with such body and, in connectio ith public facile es, to improve land and operate improvements. As providednfi' 'the city forr ung tthe authority acts as the issuer of ) � , bonds for authority projects, -° e DDA aetss�thn City of Fo t., JJins!in making various public improvements within the central business d�stnctfthe City. Fs, s;. ? t Ip In order to effectuate the purposes of the Authont d to provide the means to finance the proposed programs and prpAects, the City Council called a special election, and on June 1, 1982, the qualified electors authGzd the City to pledge the Tax Increment Revenue as security for bonds in an aggregate,amount c to exceed $25 million. Prior to this refunding bond issue, the � r City hasJ§sued $14,15`3,100 o q11 lased on the: 982 authorization. This leaves a balance of <. dy . : $10 84 ;900 of bonds that are autltotze �auct5 y`et unissued. Under,,the Act, a downtown development authority may not begin development projects unless , . the municipality has approved a g'lan of development for such projects. By a resolution adopted " !j on September 8, 1981, the Council approved the Plan of Development and authorized the Downfown;Development Authority to undertake certain development projects. i A ;r The propertyaneluded m the Fort Collins DDA District comprises much of the City's older downtown shoppmg-4nd business district. In the 1970s and early-1980s, the construction of shopping centers and malls outside of the downtown area, along with various demographic and economic factors had led to a gradual decline in the economic viability of the downtown area, particularly for retail stores. According to the Plan of Development, the DDA places a high priority on coordinating and ) integrating its public expenditures directly with private projects that serve a public purpose. The DDA's goal was to leverage significant private development within five years of its inception. 1 DATE: March 20. 2001 ITEM NUMBER: 20 The development activities of the Authorit} have also encouraged and stimulated additional development by private interests with the District. The chart below illustrates the financial success of the Authority. Since 1981. the tax increment (tax revenue from redevelopment and new projects) has grown dramatically. After ten years of steady growth, the valuation within the district dipped in the 1992-1994 period. Since then valuations have grown at an even stronger pace. For the years 2002-2006, staff has made a conservative estimate of 2% annual growth. DDA Tax Increment Growth $2,500,000 $2,000,000 — urn;"'A $1,500,000 - �`' + � Tax Base ijdak " Y $1,000,000 _ $500,000 Air i t c. a X L T _ Year }2% Projection 2002-2006 5, Based son the strong revenue gro ` the Authority has reached the point where annual tax increment collections exceed the debt service on the bonds. This has allowed the Authority to participate in the financing of additional projects and participate in the new Civic Center Parking Structure and the Northern Hotel redevelopment. The proposed refunding will save the Authority and the City approximately $200,000 of debt service payments in 2001, which in turn may be invested in other projects. DATE: March 20, 2001 4 ITEM NUMBER: 20 Sources and Uses of the Bonds Sources Bond Proceeds $3,515.000 Accrued Interest 10,863 Use of 1992 Bond Reserve 1,227,106 Payment on 1992 Bonds 557.345 Total $5,485,515 ;tx; Uses Escrow Deposit 5,314,445 Bond Insurance 30,096 Surety Bond tx Underwriters Fee 17,195 Accrued Interest 10,863 1 Bond Ratings 1600� i, s . : Bond Counsel 500004, ` Financial Advisor )f, 8,5004,,%t k Printing &Mailing Paying Agent &Misc. Costs W, 3,501,t Contingency r1;91'S Total Uses $5 485515�p rZ ✓ Recommendation , r� b nab', �a Staff recommends adoprion,of, the Ordinance on Firstleading. The level of savings projected on the refundin i,$ about 3 7% of the refunded bond which accomplishes the desired level of savings fob aralunrTtng Staff believes the historically low market rates now available make this an optimal time to refund �a ep Y (, 'G ut t : JH , A Yy t nwp yh �