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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 07/20/2004 - SECOND READING OF ORDINANCE NO. 120, 2004, APPROPR ITEM NUMBER: 21 AGENDA ITEM SUMMARY DATE: July20, 2004 FORT COLLINS CITY COUNCIL STAFF: Harrison/Krcmarik/ Mannon SUBJECT Second Reading of Ordinance No. 120, 2004, Appropriating Proceeds from the Lease Purchase Certificates of Participation of the City of Fort Collins, Colorado, Series 2004A for the Purpose of Making Certain Capital Improvements (The Police Building and the Streets Deicing Facility Projects), the Acquisition and Conservation of Natural Areas and Open Lands, and for Costs of Issuance of the Lease Certificates Transaction. RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. EXECUTIVE SUMMARY This Ordinance, which was adopted 5-0 (Councilmembers Hamrick and Roy were absent)on First Reading on July 6,2004, appropriates the proceeds from the transaction in the Capital Projects Fund and the Open Lands Fund. ORDINANCE NO. 120, 2004 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING PROCEEDS FROM THE LEASE PURCHASE CERTIFICATES OF PARTICIPATION OF THE CITY OF FORT COLLINS, COLORADO, SERIES 2004A FOR THE PURPOSE OF MAKING CERTAIN CAPITAL IMPROVEMENTS (THE POLICE BUILDING AND THE STREETS DEICING FACILITY PROJECTS), THE ACQUISITION AND CONSERVATION OF NATURAL AREAS, AND FOR COSTS OF ISSUANCE OF THE LEASE CERTIFICATES TRANSACTION WHEREAS, on July 6, 2004, City Council adopted Ordinance No. 099, 2004, authorizing the Council authorized the execution of issuance of the City of Fort Collins, Colorado, Lease Certificates of Participation, Series 2004A (the "COPS"), in the aggregate principal amount $48,650,000; and WHEREAS, the marketing and the sale of the certificates of participation using premiums an discounts resulted in net proceeds of$50,365,732; and WHEREAS, the execution of the agreements associated with the lease transaction, and the appropriation of the proceeds thereof, are necessary to complete the construction of certain capital improvements and the acquisition and conservation of open lands and natural areas by the City; and WHEREAS, Article V, Section 9, of the Charter of the City of Fort Collins permits the City Council to make supplemental appropriations by ordinance at any time during the fiscal year, provided that the total amount of such supplemental appropriations, in combination with all previous appropriations for that fiscal year, does not exceed the current estimate of actual and anticipated revenues to be received during the fiscal year; and WHEREAS, it is the desire of the Council to appropriate the sum of $50,365,732 in unanticipated revenue in the Capital Project Fund and the Natural Areas Fund, representing proceeds from the lease financing described herein, to be used for the Police Building Project, the Streets Deicing Facility Project, the acquisition and conservation of open lands and natural areas, and the payment of costs associated with said lease financing. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That, contingent upon the closing of the Series 2004A lease certificate of participation transaction, there is hereby appropriated for expenditure from certificate of participation proceeds in the Capital Projects Fund, the Police Building Project, the sum of THIRTY-THREE MILLION THREE HUNDRED-EIGHTY-NINE THOUSAND FIVE- HUNDRED-TWENTY-EIGHT DOLLARS ($33,389,528). Section 2. That, contingent upon the closing of the Series 2004A lease certificate of participation transaction, there is hereby appropriated for expenditure from certificate of participation proceeds in the Capital Projects Fund, the Streets Deicing Facility Project, the sum of ONE-MILLION SEVEN-HUNDRED-THIRTY-ONE-THOUSAND FIVE-HUNDRED- SIXTY-THREE DOLLARS ($1,731,563). Section 3. That, contingent upon the closing of the lease certificate of participation transaction, there is hereby appropriated for expenditure from certificate of participation proceeds in the Natural Areas Fund the sum of FIFTEEN MILLION TWO-HUNDRED FORTY- FOUR-THOUSAND SIX-HUNDRED-FORTY ONE DOLLARS ($15,244,641). Introduced and considered favorably on first reading and ordered published this 6th day of July, A.D. 2004, and to be presented for final passage on the 20th day of July, A.D. 2004. Mayor ATTEST: �OL-UL City Clerk Passed and adopted on final reading this 20th day of July, A.D. 2004. Mayor City Clerk ITEM NUMBER: 12 A-B AGENDA ITEM SUMMARY DATE: JUly6, 2004 FORT COLLINS CITY COUNCIL STAFF: Harrison/Krcmarik/ Mannon SUBJECT Items Relating to Certain Lease Certificates of Participation, Series 2004 A. RECOMMENDATION Staff recommends adoption of the Ordinances on Second Reading and on First Reading. EXECUTIVE SUMMARY A. Second Reading of Ordinance No.099,2004,an Ordinance Approving and Authorizing the City of Fort Collins, C t iPa re nt Between the City and Fort Collins Capital Leasin orpo n, a e etween the Corporation and the City,a Certificate Pure se Agre ent orp tion,the City and George k.Baum & Company and a Fin u At en the City and the Certificate Insurer and Approving a Trust Indenture Between the Corporation and the Trustee, a Leasehold Deed of Trust from the Corporation to the Public Trustee of Latimer County for the Benefit of the Trustee and a Preliminary Official Statement and a Final Official Statement Relating to Certain Lease Certificates of Participation, Series 2004A. The City has been planning for the construction of a Police Services building for many years. Monies for the acquisition of land for the facility were approved by the voters as part of the Building Community Choices dicated a cen les and use ty- 'ea Services, with the assistance of Operations Services, has id ' ifie a to s or the new facility The lease transaction will also vi a di so' ce foruction of a storage facility to contain deicing materials at the City's existing Streets facility on North Lemay. The estimated cost of the storage facility will be about $1.7 million with $30,000 of financing costs. Ordinance No. 099, 2004, was unanimously adopted on First Reading on June 15, 2004. B. First Reading of Ordinance No. 120,2004,Appropriating Proceeds from the Lease Purchase Certificates of Participation of the City of Fort Collins, Colorado, Series 2004A for the Purpose of Making Certain Capital Improvements (The Police Building and the Streets Deicing Facility Projects), the Acquisition and Conservation of Natural Areas and Open Lands, and for Costs of Issuance of the Lease Certificates Transaction. This Ordinance appropriates the proceeds from the transaction in the Capital Projects Fund and the Open Lands Fund. July 6, 2004 -2- Item No. 12 A-B BACKGROUND On June 22, 2004,the City received the rating of Aa2 on the lease certificates of participation from Moody's Investors Service. This is the highest rating of any lease transaction for a municipality in Colorado. It indicates that the City has a strong ability to make payments on the certificates and that the chance of default is perceived to be very low. Ambac Insurance Company provided the most competitive bid,roughly 12 basis points(0.12%)less than anticipated in the transaction budget. This provides an"AAA"rating for the transaction and draws the most investors to the transaction. With the underlying rating and insur h C'P Y' e market the certificates. On June 23, 2004,the underw ing fi f Ge any conducted pre-marketing with key investors to determin ev narket. Interest in the City's certificate transaction was firm as many investors indicated they would be willing to buy if the certificates were offered immediately. Therefore, the trading desk at Baum recommended with proceeding with the sale on that same date. To achieve the best rates for the City, the certificates were priced aggressively,that is,the lowest rates that would receive bids from investors. During the day,certificates in certain years were re-priced. In some cases this saved money for the transaction; in other years, we had to increase the amount that we would pay. At the end of the trading day, approximately 1/3 of the certificates were not sold. Confident of its ability to sell the certificates over the next few days, BaumCedto ed t urchase the remainder of the certificates. The interest rate yields (calcu first d t ific can be called) on the certificates varied from 1.650°/o in 2005 ti 00 rates hav een incorporated into the Second Reading of the Ordinance. Based on comparisons to other similar transactions near this time period,the Fort Collins transaction did very well. Investors were looking for certain performance and this led the underwriter to price some of the certificates at a premium (investors pay more than the par amount, but get a higher coupon) or at a discount (investors pay an amount less than the face value of the certificate, but receive a lower interest rate. The net result of the premium and discount certificates is that the City will have more proceeds from the sale of the certificates than the par amount. Through the transaction, the City has been e s ' PtranYsawill here is sufficient funding for the projects and within the an ipated gets r The following table shows how roce o be used by the City. July 6, 2004 -3- Item No. 12 A-B City of Fort Collins Lease Certificates of Participation Sources and Uses of Funds Police Sources Natural Areas Building Streets Total Principal Amount of COPS $ 14,735,000 $ 32,250,000 $ 1,665,000 $48,650,000 Net Premium Paid for COPS 509,641 1,139,527 66,563 1,715,732 Subtotal Sources C24QO0032, 8 52 $ 3 ,563 $ 50,365,732 UsesProject Fund 39,500 $ 1,700,000 $49,539,500 Debt Service Surety 27,923 51,392 2,923 82,237 Underwriter's Fee 91,468 200,337 10,389 302,194 Bond Insurance 74,970 198,533 9,814 283,317 Cost of Issuance 45,432 99,435 5,134 150,000 Contingency 4,849 331 3,304 8,483 Subtotal Uses $ 15,244,641 $ 33,389,527 $ 1,731,563 $50,365,732 All numbers have been round(*to th n est 11 S ' lu ns or rows may not add due to the rounding. s' P Y