HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/12/2009 - FIRST READING OF ORDINANCE NO. 053, 2009, APPROPRI ITEM NUMBER: 3
AGENDA ITEM SUMMARY DATE: May 12, 2009
FORT COLLINS CITY COUNCIL STAFF: Mike Freeman
Josh Birks
Christina Vincent
SUBJECT
First Reading of Ordinance No. 053, 2009, Appropriating Funds From the City's General Fund
Reserves for Transfer to the Fort Collins Urban Renewal Authority for the Purpose of Providing a
Loan for the Rocky Mountain Innovation Initiative Project.
RECOMMENDATION
Staff recommends adoption of this Ordinance on First Reading.
FINANCIAL IMPACT
The construction of the Rocky Mountain Innovation Initiative (RMI2)facility will benefit both the
Fort Collins Urban Renewal Authority (URA) and the City of Fort Collins (City):
URA—Benefits from additional property tax increment,a portion of which will be dedicated
to the project.
• CITY—Benefits from continued economic development by RMI2 through the support and
expansion of science and technology businesses, high-wage jobs, and venture capital and
grant investment.
The City will support the effort by making a $5.3 million dollar loan to the URA to fund the
development and construction of a 31,000 square foot,4-story,LEED Gold certified building. The
building will include approximately 29,000 square feet of rentable office space and 3,000 square feet
of wet lab space. The top floor will be rented at market rates to further subsidize the lease rates for
RMI2 participants. The cash for the loan between the City and the URA will come from the City's
investment funds. The City will earn a return of 2.5 percent on this cash while it is tied up in this
arrangement,roughly equal to the Treasury Bill return at the time of initial negotiations with RMI2.
The new facility will generate approximately$4.3 million in tax increment revenue over the 20 years
remaining for the URA. The proven success of RMI2 as an economic development stimulus engine
makes the project worthy of URA assistance. The project needs $2.8 million or 65 percent of the
estimated total in URA assistance to subsidize lease rates near the current level. The $2.8 million
in TIF will be pledged alongside lease revenue from RMI2 to fund loan payments on the $5.3
million loan made by the City to the URA allowing lease rates for RMI2 participants to remain
below market rates.
May 12, 2009 -2- Item No. 3
EXECUTIVE SUMMARY
The new facility for RMI2 will cost approximately$7.1 million to develop and construct. The City
will provide a loan of$5.3 million to the URA to cover development and construction costs, a
portion of which will be offset by the $2.8 million in pledged TIF. The proposed New Market Tax
Credit(NMTC) financing solution will contribute $1.8 million in project equity. In the long-term,
RMI2 will owe approximately $2.6 million on a $7.1 million project as a result of this financing
solution.
Ordinance No. 053, 2009, authorizes a loan, as authorized by City Council Resolution 2008-121,
to the URA in the amount of$5,303,939. The loan will enable the URA to lend Rocky Mountain
Innovation Initiative Properties, LLC (RMI2 Properties, LLC)the funds necessary to construction
a new facility for the business incubation program. RMI2 Properties, LLC is associated with the
Rocky Mountain Innovation Initiative, which runs a successful science and technology incubation
program on behalf of the City and other sponsors.
The deliberations as City Council should focus on the worthiness of this investment as a key
economic development tool for the City and Region. The underlying details of the project and the
financing solution should be questioned and discussed by the URA Board of Commissioners.
The loan will have a 20 year term, 2.5 percent interest rate, and stipulate interest only for the first
seven years consistent with the City's Investment Policy. In addition,the loan agreement stipulates
two disbursements from the loan. These disbursements will mirror the anticipated disbursements
required to fund the construction of the RMI2 facility, which will be owned and operated by RMI2
Properties, LLC. The first disbursement of$1,100,000 will be used to fund a "Bridge Loan" to
RMI2 Properties,LLC for the development costs occurring prior to the closing of the NMTC loans.
These development costs include: subdivision of the property, entitlement, development review,
building design,and land acquisition. The second disbursement of$4,203,939 will occur when the
NMTC loans close and provide the URA the necessary cash to fund the senior leverage loan in the
NMTC structure.
BACKGROUND
RMI2, originally the Fort Collins Technology Incubator program launched in 1998, has evolved
from its original program to a 501(c)3 non-profit organization with an expanded mission and
regional focus. Its mission to enable and accelerate the success of innovation-based start up
companies and promote the entrepreneurial culture of scientific and technology based companies
has generated 162 high-wage jobs, generated $53 million in investment and grants, and created
numerous programs and services for entrepreneurs, since 1999.
RMI2 enables and accelerates the success of innovation-based start-up companies and promotes the
entrepreneurial culture of scientific and technology based companies in the Northern Colorado
region. This has been a vital component of some of Fort Collins economic development successes,
i.e., Sprig Toys, 2009 Toy of the Year maker is a graduate of the program. The City of Fort Collins
graciously made City-owned facilities available to RMI2 and its clients. The first facility was made
available in 2004 and two additional facilities in 2007. The value of these facilities provided by the
May 12, 2009 -3- Item No. 3
City, offered at cost only(e.g., Utilities) is approximately$200,000 annually. In addition,the City
provides approximately $100,000 annually in operation revenues directly to RMI2.
The proposed RMI2 facility will enable the program to: .
• Continue its current programs;
• Expand the capacity the program to offer space to start-up companies;
• Offer new wet lab facilities for bioscience participants;
• Continue to offer below market rate rents for participating companies;
• Offer a central location near downtown for entrepreneurial events and activities; and
• Relieve the City of the provision of facilities, subsidized lease rates, and property
management.
The program is rapidly out-growing its current facility. As a result, RMI2 approached the Northern
Colorado Economic Development Corporation (NCEDC) for assistance with the site selection for
the facility. NCEDC managed the site selection process according to the normal process. The
process includes advertising the request and soliciting responses through the NCEDC broker and
developer distribution list. Based on the responses,the proposed site was selected for construction
of the new facility because it met the requirements and was within the North College Urban Renewal
Area boundary allowing for tax increment assistance.
The proposed site is in the planned Inverness Innovation Office Park located on the 200-500 block
of East Vine Drive. The property is located on the former Waste Management site. The master site
plan for the site includes four commercial buildings catering to similar high-tech and energy tenants
to the participants in the RMI2 program. The development plan for the site includes both the north
and south side of East Vine Drive and will require significant public improvements. The southern
portion of the property is located within the Downtown Development Authority(DDA)boundary,
while the northern portion of the site is located in the URA. Eventually both entities will contribute
to the development and construction of public improvements along East Vine Drive and the river.
RMI2 is a non-profit organization that receives funding through donations and contributions from
regional partners including: the City of Fort Collins (largest contributor), the City of Loveland,
Colorado State University, CSU Research Foundation, and the NCEDC. RMI2 cannot provide the
upfront revenue to fund the hefty costs associated with development and construction of a new
facility. The use of property TIF assistance and the NMTC program make the project financially
feasible by providing the necessary upfront revenue to fund development and construction of the
facility. Furthermore,this financial assistance reduces the loan payments significantly allowing the
projected revenue from RMI2 participant leases to fund the loan payment associated with the
project. Therefore, the City will realize an immediate savings of$200,000 annually in real estate
value by freeing up the current space occupied by RMI2 for market rate leases or other use by the
City (both of which are currently prevented by the presence of RMI2 in the facilities).
SUMMARY OF KEY BENEFITS
• The City gains a LEED Gold Certified facility to house the Rocky Mountain Innovation
Initiative a key part of the City's economic development strategy.
May 12, 2009 -4- Item No. 3
• The City benefits from street improvements to East Vine Drive that include sidewalks,curbs,
gutters and much needed public infrastructure that is currently non-existent.
• The City helps RMI2 move towards the eventual goal of self-sufficiency by assisting to fund
a building that will ultimately generate revenue for the program to subsidize leases and
offset operating expenses.
• The URA gains a redevelopment project that helps to revitalize the North College area and
East Vine Drive specifically.
• The URA provides financial assistance to a primary job generator that has a proven record
for creating high-wage jobs and new companies that remain in the City.
• The URA gains an additional $1.5 million for other public improvements in the Plan Area.
SUMMARY OF PROJECT COSTS
The proposed facility will cost approximately $7,114,950 to develop and construct, as shown in
Table 1 (refer to the detailed budget included in URA application/packet). Staff has had on going
discussions with the project applicant and has reviewed the details supporting these cost estimates
for propriety and reasonableness. A timeline for construction has been attached (refer to the URA
applicant/packet) and shows construction beginning in November 2009 with completion
approximately 12 months later. The project applicant will be available to discuss the costs and
timeline for construction.
Table 1
Summary of Project Costs
Item Phase I Phase II Total Percent
Raw Land $520,533 $0 $520,533 7.3%
Development Costs
Professional Fees $411,940 $67,635 $479,575 6.7%
Development& Permit Fees $25,104 $289,342 $314,446 4.4%
Subtotal $437,044 $356,977 $794,021 11.2%
Construction Costs
Hard Costs $0 $4,657,764 $4,657,764 65.5%
Owner FF& E $0 $75,000 $75,000 1.1%
Developer Fee - UDP $25,001 $226,382 $251,383 3.5%
Subtotal $25,001 $4,959,146 $4,984,147 70.1%
Financing $53,000 $407,177 $460,177 6.5%
Contingency $64,422 $291,650 $356,072 5.0%
Total Cost $1,100,000 $6,014,950 $7,114,950 100.0%
May 12, 2009 -5- Item No. 3
SUMMARY OF FINANCING
The proposed financing solution includes a combination of funds including a loan, URA TIF
revenue, and NMTC equity. The complete financing solution distributes the cost and risk between
these three revenue sources. The total cost,including costs associated with the NMTC program,will
be approximately $7.3 million. The City will provide approximately$5.3 million or 72 percent of
the total amount through a loan to the URA amortized over 20 years at 2.5 percent. The first seven
years will be interest only with payments deferred for the first four years because of the NMTC
requirements. The NMTC equity investor, US Bank Community Development Corporation
(USBCDC), will provide $2.0 million in gross equity. The project will use approximately $7.1
million of the funds for construction with the balance funding the cost of the NMTC financing
structure (approximately $200,000, paid for out of the NMTC equity investor contribution), as
shown in Table 2.
Table 2
NMTC Revenue
Amount Percent
NMTC Revenue
URA Senior Leverage Loan $5.3 Million 73%
USBCDC Gross Equity $2.0 Million 27%
Subtotal $7.3 Million 100%
Less:NMTC Fees $0.2 Million 3%
Net NMTC Revenue $7.1 Million 97%
The URA will make two loans to the project, as shown in Table 3. The first loan will be made to
cover development costs. This "Bridge Loan" will be for one year at 2.5 percent interest. The
second loan will be made for $5.3 million to the NMTC structure as the senior leverage lender,
meaning that the URA will have the senior position within the debt structure that ultimately funds
the construction of the RMI2 facility. This loan will be funded by the remaining$4.3 million from
the City to URA loan and the proceeds from the repayment of the Bridge Loan, which will occur
at the time the NMTC loans close,at or near the beginning of construction in November 2009. The
loan will be for 20-years with the first seven years will be interest only at 1.5 percent. In the eighth
year, the loan will re-amortize for 20-years on the remaining principal (estimated at $2.6 million)
and re-price to 2.5 percent interest to maintain the City's targeted return of 2.5 percent.
Table 3
URA Loan Disbursements
NMTC
URA Loan Disbursements
Phase I - Development ('Bridge Loan") $1.1 Million
Phase I I -Construction $4.2 Million
Total Loan Amount $5.3 Million
NMTC Net Equity $1.8 Million
Total Net Revenue $7.1 Million
May 12, 2009 -6- Item No. 3
During the NMTC compliance period,a seven year period that provides the tax credit benefit to the
equity investor, the URA loan to the NMTC structure will remain fixed at 1.5 percent. However,
the proposed financing solution includes the proposed dedication of 65 percent or $2.8 million of
the TIF associated with the project. These TIF monies will be available once Latimer County has
issued the Certificate of Occupancy, likely to occur after construction is completed. Therefore,the
TIF revenue will be available starting in the third year (due to the delay caused by payment in
arrears for property tax)to offset the loan payments from the URA to the City on the original loan.
These monies combined with the interest payment coming from RMI2 Properties,LLC will exceed
the City's target of 2.5 percent return; therefore, the URA can offer a discount on the interest rate
to RMI2 Properties, LLC during the NMTC compliance period.
The result of the proposed financing solution is a long-term debt to RMI2 Properties, LLC of
approximately$2.6 million, as shown in Table 4.
Table 4
RM12 Long-Term Debt Summary
NMTC
Total Project Cost $7.1 Million
Less: NMTC Equity $1.8 Million
Less: URA Contribution $2.8 Million
RMII Long-Term Debt ' $2.6 Million
Includes $100,000NMTC Exit Fee
APPLICABLE URA POLICIES
"The URA will only assist development and redevelopment projects that meet the
identified objectives of the respective Urban Renewal Plan (URP) area."
URA staff has identified the following components in conformance with the North College Urban
Renewal Plan and integrated into the RM12 proposed facility.
• "To facilitate redevelopment and new development by private enterprise through
cooperation among developers and public agencies to plan, design and build needed
improvements. " The proposed project will be a private/public partnership that includes the
construction of a major catalyst project in the plan area that will generate primary jobs for
the City.
• "To effectively utilize undeveloped and underdeveloped land. " This site was historically
used by Waste Management. The proposed use of the site for as the Innovation Office Park
constitutes a higher and better use of the property, which currently sits vacant.
• "To ultimately contribute to increased revenues for all taxing entities. " The proposed
property tax increment generated from this project will ultimately increase the valuation of
the surrounding areas and benefit all taxing entities. This project will be the first of four
proposed buildings on the property and set the stage for future development of the site.
May 12, 2009 -7- Item No. 3
• "To watch for market and/or project opportunities to eliminate blight, and when such
opportunities exist, to take action within the financial, legal, and political limits of the
Authority to acquire land, demolish and remove structures,provide relocation benefits, and
pursue redevelopment, improvement and rehabilitation projects. " The project reuses an
existing site that is vacant and includes dilapidated buildings. The project will remove these
physical symbols of blight and help to revitalize the surrounding area.
SUMMARY OF TIF USAGE
Although a formal dedication of TIF is not being considered at this time, the project has requested
a TIF allocation of$2.8 million, which is consistent with the staff and NCCAG recommendation.
The TIF will be used to offset a variety of costs show in Table 5. This preliminary information
provides background for the discussion concerning the bridge loan and future resolution on TIF
dedication.
Table 5
Tax Increment Financing Usage
Item Amount
Fagade & Roofing $781,318
Site Improvements $250,000
Site Prep &Processing $40,510
LEED Gold Certification $299,767
Land Acquisition and Shared Detention $520,403
Construction Hard Costs 90$ 8,002
TOTAL URA Contribution $2,800,000
This project is consistent in achieving the following URA policies and will help accomplish the
goals within the North College Urban Renewal Plan by:
• Revitalization on blighted property;
• Stimulating private investment within the project and the surrounding area;
• Attracting primary jobs;
• Facilitating infrastructure improvements; and
• Achieving green built goals through LEED Gold certification.
Staff has reviewed the RMI2 development pro forma to evaluate the need for financial assistance.
This analysis shows that RMI2, which operates as a non-profit company, clearly needs financial
assistance to provide subsidized office and wet lab space to participants of the incubation program.
Therefore, the financial assistance proposed does not provide an unreasonable financial return to
RMI2. Any financial assistance ultimately goes to subsidize the lease rates for participants and the
operating costs of RMI2.
May 12, 2009 -8- Item No. 3
ATTACHMENTS
1 Loan agreement between the City and URA.
2. Promissory note.
3. Master Covenant.
4. Rights of first refusal and first offer.
5. Powerpoint presentation.
ATTACHMENT 1
LOAN AGREEMENT BETWEEN THE CITY OF FORT COLLINS
AND THE FORT COLLINS URBAN RENEWAL AUTHORITY
FOR FUNDING THE
ROCKY MOUNTAIN INNOVATION INITIATIVE PROJECT
THIS LOAN AGREEMENT (the "Agreement") made this day of May, 2009,
by and between the CITY OF FORT COLLINS, COLORADO, a municipal corporation,
(the "City"), and FORT COLLINS URBAN RENEWAL AUTHORITY, a public body
corporate and politic of the State of Colorado, (the 'Borrower").
RECITALS
A. Borrower is an urban renewal authority for the City, created pursuant to
Colorado Revised Statutes Part 1 of Title 31, Article 25, as amended (the "Act").
B. Borrower was created on January 5, 1982 to prevent and eliminate
conditions related to certain "blight factors" in the community. The Act gives the
Borrower broad powers to carry out its statutory mandate. Included are the powers to
enter into contracts, borrow or lend funds and to acquire property, among others.
Urban renewal projects may be financed in a variety of ways and urban renewal
authorities are authorized to borrow money, issue bonds, and accept grants from public
or private sources.
C. By Resolution 2004-151, the City Council for the City (the "City Council")
found and declared the area described therein (the "Area") to be a blighted area as
defined in the Act, and appropriate for inclusion in an urban renewal project.
D. By Resolution 2004-152, the City Council made findings and approved the
urban renewal plan (the "Plan") for the North College Avenue Corridor.
E. By the Intergovernmental Agreement approved by City of Fort Collins
Resolution 2006-082, the City may advance funds to the Borrower in support of its
activities so long as any such advance of funds is evidenced in writing in the form of a
loan memorialized by a promissory note, which transaction shall not be valid until first
having been approved by both the City Council and the URA Commission.
F. Borrower will incur certain costs relating to the design, installation,
construction and financing of public improvements in the Area (the "Project") and has
requested and applied to City for a loan to provide funding for these costs not to exceed
Five Million Three Hundred Three Thousand Nine Hundred Thirty Nine Dollars
1
($5,303,939) and City is willing to make a loan on the terms and conditions hereinafter
set forth (the "Loan').
G. Tax increment financing for the Project is specifically permitted pursuant
to Section 7 of the Plan.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties agree as follows:
Section 1. The Loan. After the effective date of this Agreement, the adoption
of the required resolutions by the City and Borrower, and the execution of a promissory
note and other documents as may reasonably be required the City will loan the
Borrower the sum of Five Million Three Hundred Three Thousand Nine Hundred
Thirty Nine Dollars ($5,303,939) from the City's investment portfolio (the "Loan").
Section 2. Interest. Interest on the Loan will accrue at a rate equal to 2.50%.
Section 3. Payment. Principal and accrued interest will be due and payable
by the Borrower to the City as follows:
For years 0 through 4 (No Payment Term): there will be no payments, but
interest will accrue at the rate set forth in Section 2 from the Effective Date
of this Agreement.
For year 5: there will be a lump sum, annual payment consisting of the
interest accrued during the No Payment Term and year 5.
For years 6 and 7: there will be an annual payment, of interest only,
payable each year.
For years 8 through the Maturity Date: there will be annual payments of
principal and interest.
The payment schedule, under which Borrower must make its payments, is in Exhibit A,
attached and incorporated into this Agreement.
Borrower, in its sole discretion, may prepay all or any portion of the Loan at any time
after the 4th year and that prepayment will be without any prepayment penalty. If a
prepayment is made, the funds will go first toward any interest which has accrued and
the balance then applied to the reduction of principal.
2
Section 4. Tracking. Borrower agrees to maintain a separate payable line-item
within its accounting system to track the Loan.
Section 5. Alternative Financing. The Parties contemplate that at some point
in the future the Borrower will obtain alternative financing (e.g. bond financing) and
will diligently pursue that financing with a goal to reducing the outstanding balance of
the Loan.
Section 6. Notice. Any notice required to be delivered in writing will be
accomplished by personal delivery or mailing postage prepaid by the United States
Postal Service, or other commercial carrier to the following addresses:
If to the City
City of Fort Collins
Director of Finance
PO Box 580
Fort Collins, CO 80522-0580
If to the Borrower
Fort Collins Urban Renewal Authority
Director of Advance Planning
PO Box 580
Fort Collins, CO 80522-0580.
Section 7. Entire Agreement. This Agreement will be construed according to
its fair meaning, as if prepared by both Parties, and constitutes the entire understanding
and agreement of the Parties related to the matters addressed in this Agreement.
Signatures on following page.
3
CITY:
CITY OF FORT COLLINS, COLORADO, a
municipal corporation
By:
Douglas P. Hutchinson, Mayor
ATTEST:
By:
Wanda Krajiceck, City Clerk
APPROVED AS TO FORM:
By:
Assistant City Attorney
BORROWER:
FORT COLLINS URBAN RENEWAL
AUTHORITY, a public body corporate and
politic of the State of Colorado.
By:
Executive Director
4
i
Exhibit A
i
Payment Schedule
RM12 Financing Strategy
Payments
YEAR Principal Interest Total Balance
I
(p&1) I
I
0 ($5,303,939)
1 $0 $0 $0 ($5,303,939)
2 $0 $0 $0 ($5,303,939) i
3 $0 $0 $0 ($5,303,939)
4 $0 $0 $0 ($5,303,939)
5 $0 $662,992 $662,992 ($5,303,939)
6 $0 $132,598 $132,598 ($5,303,939)
7 $0 $132,598 $132,598 ($5,303,939)
8 ....$764,810 $113,478 $878,288 ($4,539,129) I
9 $252,333 $107,170 $359,503 ($4,286,796) i
10 $266,692 $100,503 $367,195 ($4,020,104)
11 $273,360 $93,669 $367,028 ($3,746,744)
12 $288,567 $86;454 $375,021 ($3,458,177)
13 $295,781 $79,060 $374,841 ($3,162,396)
14 $311,884 $71,263 $383,146 ($2,850,513)
15 $319,681 $63,271 $382,951 ($2,530,832)
16 $336,729 $54,853 $391,582 ($2,194,103)
17 $345,147 $46,224 $391,371 ($1,848,956)
18 $363,194 $37,144 $400,338 ($1,485,761)
19 $388,096 $27,442 $415,538 ($1,097,665)
20 $137,094 $24,014 $161,108 ($960,572)
21 $960,572 $0 $960,572 $0
$5,303,939 $1,832,733 $7,136,672
i
City Return 2.52%
I
'Assumes prepayment of principal by TIF in Year 5-7
I
f
I
I
I
,
I
1
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ATTACHMENT 2
PROMISSORY NOTE
$5,303,939 May 2009
FOR VALUE RECEIVED, FORT COLLINS URBAN RENEWAL AUTHORITY, a public body
corporate and politic of the State of Colorado (`Borrower"), promises to pay to the order of THE
CITY OF FORT COLLINS, COLORADO, a municipal corporation ("Lender'), at its office at 300
LaPorte Avenue, Fort Collins, Colorado 80524, in lawful money of the United States of America
the principal amount of Five Million Three Hundred Three Thousand Nine Hundred Thirty
Nine Dollars ($5,303,939). This Promissory Note is issued pursuant to the Loan Agreement
Between the City of Fort Collins and The Fort Collins Urban Renewal Authority for Funding the
Rocky Mountain Innovation Initiative Project dated as of , 2009,between
Borrower and Lender(the "Loan Agreement"). Capitalized terms used herein but not defined
herein have the meanings given such terms in the Loan Agreement. The obligations of
Borrower evidenced by this Promissory Note are payable in accordance with the terms and
conditions of the Loan Agreement.
The rate of interest borne by this Promissory Note is a fixed rate equal to 2.50%per
annum ("Interest Rate"). Final payment of all unpaid Principal and accrued interest will be due
and payable on the Maturity Date. The annual interest rate of this Promissory Note is
computed on a 360 day year basis, multiplied by the actual number of days elapsed.
The Loan may be drawn 100%upon execution of the Loan Documents, or in part from
time to time,but not more frequently than monthly.
This Promissory Note shall mature on December 31, 2029. At such time all unpaid
principal, interest, default interest, fees and charges owing under this Note shall be deemed
payable in full.
Unless otherwise agreed or required by applicable law, payments will be applied first to
any accrued interest; then to principal; then to any late charges; and then to any unpaid
collection costs.
If Lender refers this Note to an attorney for collection or seeks legal advice following a
default beyond all cure periods alleged under this Note, or the Lender is the prevailing party in
any action instituted on this Note, or if any other judicial or non-judicial action, suit or
proceeding is instituted by Lender or any future holder of this Note, and an attorney is
employed by Lender to appear in any such action or proceeding, or to reclaim, seek relief from
a judicial or statutory stay, sequester, protect, preserve or enforce Lender's interest in this Note,
the Loan Documents or any other security for this Note (including, but not limited to,
proceedings under federal bankruptcy law or in connection with any state or federal tax lien),
then Borrower promises to pay reasonable attorneys' fees and reasonable costs and expenses
incurred by Lender and/or its attorney in connection with the above-mentioned events. If not
paid within ten(10) days after such fees become due and written demand for payment is made,
such amount shall be due on demand or may be added to the principal, at the Lender's
discretion.
Should any payment or installment hereunder be not paid when the same becomes due
and payable, Borrower recognizes that the Lender will incur extra expenses for both the
administrative cost of handling delinquent payments and the cost of funds incurred by Lender
after such due date as a result of not having received such payment when due. Therefore,
Borrower shall, in such event, without further notice, and without prejudice to the right of
Lender to collect any other amounts provided to be paid herein, including default interest or to
declare a default hereunder, pay to Lender to cover such expenses incurred as a result of any
installment payment due being not received within ten (10) days of its due date, a "late charge"
of five percent(5%) of the amount of such delinquent payment.
Except as otherwise provided herein, the Borrower waives presentment and demand for
payment,notice of acceleration or of maturity, protest and notice of protest and nonpayment,
bringing of suit and diligence in taking any action to collect sums owing hereunder and agrees
that its liability on this Note shall not be affected by any release or change in any security for the
payment of this Note or release of anyone liable hereunder. No extension of time for the
payment of this Note, or any installment or other modification of the terms made by the Lender
with any person now or hereafter liable for the payment of this Note, shall affect the original
liability under this Note of the Borrower, even provided the Borrower is a party to such
agreement.
In no event whatsoever shall the amount paid, or agreed to be paid, to the holder of this
Note for the use, forbearance or retention of the money to be loaned hereunder("Interest")
exceed the maximum amount permissible under applicable law. If the performance or
fulfillment of any provision hereof or of any of the Loan Documents or any agreement between
Borrower and the Lender of this Note shall result in Interest exceeding the limit for interest
prescribed by law, then the amount of such Interest shall be reduced to such limit. If, from any
circumstance whatsoever, the Lender of this Note should receive as Interest, an amount which
would exceed the highest lawful rate, the amount which would be excessive Interest shall be
applied to the reduction of the principal balance owing (or, at the option of the Lender,be paid
over to Borrower) and not to the payment of Interest.
If any provision hereof or any of the Loan Documents shall, for any reason and to any
extent, be invalid or unenforceable, then the remainder of the document or instrument in which
such provision is contained and any of the other Loan Documents shall not be affected thereby
but instead shall be enforceable to the maximum extent permitted by law.
Borrower and Lender hereby knowingly, voluntarily, and intentionally waive any rights
they may have to a trial by jury in respect of any litigation based hereon or arising out of,under
or in connection with this note or any course of conduct, course of dealing, statements (whether
oral or written) or actions of the other party.
- 2 -
This Promissory Note shall be construed in accordance with the laws of the State of
Colorado.
IN WITNESS WHEREOF, Borrower has duly executed this Promissory Note as of the
day and year first above written.
BORROWER:
FORT COLLINS URBAN RENEWAL
AUTHORITY, a public body corporate and politic
of the State of Colorado:
By:
Executive Director
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ATTACHMENT
MASTER COVENANT
FOR THE OCCUPANCY AND RESALE OR LEASE OF THE
ROCKY MOUNTAIN INNOVATION INITIATIVE INCUBATOR BUILDING
(EAST VINE DRIVE)
THIS MASTER COVENANT FOR THE OCCUPANCY AND RESALE OR LEASE
OF THE ROCKY MOUNTAIN INNOVATION INITIATIVE INCUBATOR BUILDING
(EAST VINE DRIVE) (the "Covenant") is made and entered into this day of , 2009,
by RMI2 PROPERTIES, LLC, a Colorado limited liability company (the "Declarant"), and
enforceable by the CITY OF FORT COLLINS, COLORADO, a municipal corporation, or its
designee (the "City").
WITNESSETH:
WHEREAS, Urban Development Partners, LLC, a Colorado limited liability company
("UDP"), has acquired approximately 7.58-acre parcel of real property located on both sides of
Vine Drive in the 200-500 block of East Vine Drive, Fort Collins, Colorado, which UDP intends
to subdivide and develop into a real estate development to be known as "Inverness Innovation
Park" (herein, the "Subdivision").
WHEREAS, Declarant has entered into the Purchase and Sale Agreement dated
2009, with UDP (the "Purchase Agreement"), for an approximately 1.34-acre parcel
of real property located within the Subdivision and described and generally depicted on Exhibit
A attached hereto and incorporated herein by reference ("Property"), together with
approximately eighty-five (85) parking spaces.
WHEREAS, Declarant intends to cause UDP to construct a four(4) story Gold USGBC
LEED-certified building containing approximately thirty-one thousand (31,000) gross square feet
suitable for use as office and laboratory space ("Building") on the Property.
WHEREAS, UDP will convey the Property and all improvements thereon to Declarant
upon completion of the City's development process.
WHEREAS, Declarant agrees to restrict the acquisition, resale, lease or transfer of the
Building or Property and Owner is restricted from causing or permitting any use and occupancy
inconsistent with the Covenant.
NOW, THEREFORE, for consideration hereby acknowledged by Declarant, Declarant
hereby represents, covenants and declares as follows:
1. Definitions. The following terms shall have the following meanings when used in
this Covenant:
a. "Eligible Tenant" means a natural person or legal entity and whose
proposed use of the Building and Property complies with this Covenant and meets criteria set by
the Board of the Rocky Mountain Innovation Initiative.
b. "Lease Date" means the date of lease for a portion of the Property to an
Eligible Tenant.
C. "Owner" means Declarant and any successor in interest of Declarant.
d. "Rights of First Refusal and First Offer" means that document attached as
Exhibit B and executed by the Declarant and the City.
e. "Tenant' means a natural person or other entity, other than an Eligible
Tenant, which pays full market rates for the leased Building or Property.
f. "Transfer" means any sale, assignment or transfer that is voluntary,
involuntary or by operation of law(whether by deed, contract of sale, gift, devise, bequest,
trustee's sale, deed in lieu of foreclosure, or otherwise) of any interest in the Property, including,
but not limited to a fee simple interest, a joint tenancy interest, a tenancy in common, a life
estate, or any interest evidenced by a land contract by which possession of the Property is
transferred.
2. Transfer Subject to Covenant. Owner and each Eligible Tenant and Tenant of the
Property hereby covenants and agrees that the Property shall be used, occupied and Transferred
strictly in conformance with the provisions of this Covenant for so long as this Covenant remains
in force and effect.
3. Use and Occupancy.
a. The Eligible Tenant must:
i) be early stage companies that meet the requirements and policies
set by the Board of the Rocky Mountain Innovation Initiative;
ii) occupy the Property as its, his or her primary place of business
during the time the Property is leased, excluding use of other
facilities owned by the Rocky Mountain Innovation Initiative;
iii) not engage in any business activity other than that permitted under
applicable zoning ordinances and the condominium declaration
governing the Property; and
iv) not permit any use or occupancy of the Property except in
compliance with this Covenant.
b. Owner and Tenant must:
i) occupy no more than twenty percent(20%) of the Building except
with the consent of the City, which consent will not be
unreasonably withheld or delayed; and
ii) not engage in any business activity other than that permitted under
applicable zoning ordinances and the condominium declaration
governing the Property.
4. Enforcement.
a. Except as otherwise provided herein, the City or the Declarant shall have
the right to enforce all of the provisions of this Covenant.
b. In addition to the potential remedies in Section 6 below, every act or
omission whereby any provision of this Covenant is violated in whole or in part is hereby
declared to be a nuisance and may be enjoined or abated by the City or the Declarant, whether or
not the relief sought is for a negative or affirmative action.
5. Transfer of the Property.
a. In the event that the Declarant desires to sell the Property, the Declarant
shall provide notice to the City of that intent to sell at least thirty (30) days prior to engaging a
broker to list the Property for sale.
6. Remedies in the Event of Breach.
a. In the event that the City has reasonable cause to believe that the
Declarant, an Eligible Tenant, or any occupant is violating the provisions of this Covenant, the
City, by its authorized representative, may inspect the Property at reasonable times, after
providing the Declarant with no less than twenty-four (24) hours advance written notice.
b. In the event a violation of this Covenant is discovered, the City shall send
a notice of violation to the Declarant. Declarant then has thirty (30) days to cure the default.
C. There is hereby reserved to the City the right to enforce this Covenant, by
the following remedies and any other means that are lawful to the City:
i) disgorgement of rental proceeds received by the Declarant; and/or
ii) obtaining a court order requiring the eviction from the Property of
an occupant violating the Covenant. The costs of such sale shall
be assessed against the Declarant. In the event the City resorts to
litigation with respect to any or all provisions of this Covenant and
the City prevails, the City shall be entitled to recover damages and
costs, including reasonable attorney's fees.
d. The failure in any instance by the City to enforce any covenant or
restriction herein contained shall in no event be deemed a waiver of the right to do so thereafter.
l
7. Covenant Running with Land; Duration of Covenant.
a. The terms of this Covenant shall constitute covenants running with the
Property, as a burden thereof, for the benefit of, and shall be specifically enforceable by the City
and its successors and assigns, as applicable, by any appropriate legal action including but not
limited to specific performance, injunction, reversion or eviction of non-complying Eligible
Tenants, Tenants, and other occupants.
b. This Covenant shall terminate, expire and be of no further force and effect
with respect to the Property forty (40) years after the date of this Covenant is placed of record in
the Office of the Clerk and Recorder of the County of Larimer, Colorado.
8. Miscellaneous.
a. Notices. Any notice, consent or approval which is required or permitted to
be given hereunder shall be given by mailing the same, certified mail, return receipt requested,
properly addressed and with posting fully prepaid, to any address provided herein or to any
subsequent mailing address of the party as long as prior written notice of the change of address
has been given to the other parties to this Covenant.
Said notices, consents and approvals shall be sent to the parties hereto at
the following addresses unless otherwise notified in writing:
To/Declarant: RMI2 Properties, LLC
200 West Mountain Avenue, Suite C
Fort Collins, Colorado 80521
Attn: General Manager
with a copy to: David E. Dwyer
Dwyer Law Firm, LLC
1725 Linden Lake Road
Fort Collins, CO 80524
To the City: The City of Fort Collins
300 LaPorte Avenue
Fort Collins, Colorado 80521
Attn: City Manager
with a copy to: The City of Fort Collins
City Attorney's Office
300 LaPorte Avenue
Fort Collins, Colorado 80521.
b. Exhibits. All exhibits attached hereto are incorporated herein and by this
reference made a part hereof.
C. Severability. Whenever possible, each provision of this Covenant and
any other related document shall be interpreted in such a manner as to be valid under applicable
law; but if any provision of any of the foregoing shall be invalid or prohibited under said
applicable law, such provisions shall be ineffective to the extent of such invalidity or prohibition
without invalidating the remaining provisions of such documents.
d. Choice of Law. This Covenant and each and every related document are
to be governed and construed in accordance with the laws of the State of Colorado.
e. Successors. Except as otherwise provided herein, the provisions and
covenants contained herein shall inure to and be binding upon the heirs, successors and assigns
of the parties.
f. Section Headings. Paragraph or section headings within this Covenant
are inserted solely for convenience of reference, and are not intended to, and shall not govern,
limit or aid in the construction of any terms or provisions contained herein.
g. Waiver. No claim of waiver, consent or acquiescence with respect to any
provision of this Covenant shall be valid against any party hereto except on the basis of a written
instrument executed by the parties to this Covenant. However, the party for whose benefit a
condition is inserted shall have the unilateral right to waive such condition.
h. Gender and Number. Whenever the context so requires herein, the neuter
gender shall include any and all genders and vice versa and the use of the singular shall include
the plural and vice versa.
i. Further Actions. The parties to this Covenant agree to execute such
further documents and take such further actions as may be reasonably required to carry out the
provisions and intent of this Covenant or any restriction or document relating hereto or entered
into in connection herewith.
j. Modifications. The parties to this Covenant agree that any modifications
of this Covenant shall be effective only when made by writings signed by the Declarant and the
City and recorded with the Clerk and Recorder of Larimer County, Colorado.
IN WITNESS WHEREOF, the parties hereto have executed this instrument on the day
and year above first written.
DECLARANT:
RMI2 PROPERTIES, LLC, a Colorado limited
liability company
By:
Mark Forsyth, General Manager
Date:
STATE OF COLORADO )
ss.
COUNTY OF LARIMER )
The foregoing instrument was acknowledged before me this day of 2009,
by of RMI2 Properties, LLC, a Colorado limited liability
company.
Witness my hand and official seal.
My commission expires:
[SEAL]
Notary Public
THE CITY OF FORT COLLINS, COLORADO,
a municipal corporation
By:
Darin A. Atteberry, City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
Assistant City Attorney
STATE OF COLORADO )
) ss.
COUNTY OF LARIMER )
The foregoing instrument was acknowledged before me this day of 2009,
by Darin A. Atteberry, as City Manager of the City of Fort Collins, Colorado, a municipal
corporation.
Witness my hand and official seal.
My commission expires:
[SEAL]
Notary Public
EXHIBIT A
DEPICTION OF LOT
ATTACHMENT4
RIGHTS OF FIRST REFUSAL AND FIRST OFFER
THIS RIGHTS OF FIRST REFUSAL AND FIRST OFFER (the "Agreement") is made and
entered into this day of , 2009, by and between the RMI2
PROPERTIES, LLC, a Colorado limited liability company ("Declarant"), and THE CITY OF
FORT COLLINS, COLORADO, a municipal corporation(the "City").
RECITALS:
A. Declarant is, at the time of this Agreement, under contract to acquire approximate
1.34-acre parcel of real property located in the 200-500 block of East Vine Drive also
described on Exhibit A, attached and incorporated herein by reference (the "Property").
B. Declarant is willing to grant to the City rights of first refusal and first offer to
purchase the Property once the Declarant has acquired the property, as set forth hereinafter,
and to cause this document to be recorded in the real property records of the Larimer County
Clerk and Recorder immediately after the deed conveying title in the Property to the City.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby confessed and acknowledged, the parties agree as follows:
1. Term. The term of this Agreement shall commence immediately as of the acquisition
of the Property, or the execution of a build to suit contract, by Declarant and shall end on the 40th
anniversary of the filing of this Agreement with the Larimer Clerk and Recorder (the "Term").
2. Exclusions. The rights of first refusal and first offer hereinafter set forth shall not
apply to any of the following transfers; provided, however, that the rights of first refusal and first
offer shall not terminate as a result of any of the following transfers, but shall continue in full force
and effect, shall run with the land, and shall be binding upon the transferee(s), its heirs, personal
representatives, successors and assigns:
(a) Any transfer made as security for the payment of any indebtedness or
performance of any obligation including, but not limited to, a conveyance by
mortgage, deed of trust, or other security instrument;
(b) Any transfer of public right-of-way, public or private utility easement, or
easement restricting or prohibiting specified uses or development of all or
any portion of the Property; or
(c) Any transfer made as a result of the foreclosure of any lien against all or any
portion of the Property.
Upon Recordation Return To:
City Attorney's Office
City of Fort Collins
PO Box 885
Fort Collins,CO 80522
3. Right of First Refusal. During the first twenty (20 years of the Term, the following
right of first refusal shall apply. In the event Declarant receives a bona fide written offer to
purchase during the first twenty (20) years of the Term(the "Purchase Offer") for all or any portion
of the Declarant's interest in the Property (the "Purchase Property"), which the Declarant is willing
to accept, the Declarant shall deliver to the City a copy of the Purchase Offer signed by the
purchaser and shall indicate to the City, in writing, that the Declarant is ready, willing and able to
accept the Purchase Offer. The City shall have seventy-five (75) days after receipt of the offer
within which to notify the Declarant that the City will purchase the Purchase Property at the price
and on the terms and provisions set forth in the Purchase Offer. If the City notifies the Declarant of
the City's intent to acquire the Purchase Property on the terms and conditions set forth in the
Purchase Offer, then the Declarant and the City shall, within seven (7) days after such notice,
execute an agreement of purchase and sale at the price and on the terms and conditions set forth in
the Purchase Offer. If the City fails to notify the Declarant of the City's intent to acquire the
Purchase Property within the time period specified, then the Declarant may sell the Purchase
Property in accordance with the terms of the Purchase Offer, and the City shall have no further right
to purchase the Purchase Property pursuant to the terms of this Agreement. If the Declarant does not
sell the Purchase Property pursuant to the Purchase Offer, then the Declarant shall once again offer
the Purchase Property to the City in the same manner as hereinabove provided, and the City shall
have an additional sixty (60) days within which to accept such subsequent Purchase
4. Right of First Offer. During the second twenty (20 years of the Term, the following
right of first offer shall apply. If, at any time after the first twenty (20 years of the Term, but before
the expiration of the Term, the Declarant desires to offer the Property for sale, Declarant must first
offer to sell the Property to the City at a price and on such reasonable terms Declarant desires. The
City shall either accept or reject such offer within ninety(90) days following receipt of Declarant's
offer. If the City accepts such offer, the sale shall be completed on or before the time set forth in
such offer substantially in accordance with the terms set forth in the offer by the Declarant. If the
City fails to timely exercise its option under this Section, Declarant may, at the any time for one
year following such rejection, close the sale of the Property at a price and on terms no less favorable
to Declarant than those set forth in Declarant's offer to the City pursuant to this Section. In the
event Declarant closes such sale to a third party, the option granted to the City under this shall be
void and of no further force or effect. If Declarant has not completed such sale to an unrelated third
party within such one year month period, this Section shall again be in effect with respect to any
subsequent proposed.
5. Notice. Any notice required or desired to be given by any party pursuant to this
Agreement shall be in writing and may be personally delivered; mailed, certified mail, return receipt
requested; sent by telephone facsimile with a hard copy sent by regular mail; or sent by a nationally
recognized, receipted, overnight delivery service, including, by example and not limitation, United
Parcel Service, Federal Express, or Airborne Express. Any such notice shall be deemed given when
personally delivered; if mailed, three (3) delivery days after deposit in the United States mail,
postage prepaid; if sent by telephone facsimile on the day sent if sent on a business day during
normal business hours of the recipient (8:00 a.m. - 5:00 p.m.) or on the next business day if sent at
any other time; or if sent by overnight delivery service, one (1) business day after deposit in the
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custody of the delivery service. The addresses and telephone numbers for the mailing, transmitting,
or delivering of notices shall be as follows:
If to Declarant, to:
RMI2 Properties, LLC
200 West Mountain Avenue, Suite C
Fort Collins, Colorado 80521
Attn: General Manager
If to the City, to:
City of Fort Collins and City of Fort Collins
c/o City Attorney c/o Manager, Real Estate Services
Post Office Box 580 Post Office Box 580
Fort Collins, CO 80522 Fort Collins, CO 80522
Notice of a change of address of any party shall be given in the same manner as all other notices as
hereinabove provided.
6. Assignment. This Agreement may be assigned by the City only with written
permission of Declarant, except that the City shall be entitled to assign in whole or in part its rights
hereunder to a governmental or nonprofit entity.
7. BindingEffect.ffect. This Agreement shall run with the land and shall be binding upon
and inure to the benefit of the parties hereto and their respective successors and assigns, and the
heirs, personal representatives, successors and assigns of any entity or person that acquires an
interest in the Property, pursuant to a transaction that is excluded from the application of the right
of first refusal as provided in paragraph 3 above.
8. Notice to Bum. Declarant will record this Agreement in the real property records
of Larimer County, Colorado, promptly upon its execution and delivery, and will promptly provide
to the City a certified copy evidencing that recordation. Declarant and its successors-in-interest to
the Property shall further provide, and shall require its successors-in-interest in the Property to
provide, actual notice of the terms of this Agreement to any party seeking to acquire any interest in
or rights to the Property.
9. Remedies. In the event of default by Declarant in the performance its obligations
under this Agreement, the City shall have the right to an action for specific performance or
damages, or both. In the event of any litigation arising out of this Agreement, the court shall award
to the party that substantially prevails in such litigation, all costs and reasonable attorneys' fees.
10. Rights of Redemption. Any rights of redemption of the Property of Declarant, its
3 of 5
successors, and assigns, whether arising in relation to nonpayment of taxes, liens or any other
obligation secured or burdening the Property, are hereby irrevocably assigned to the City.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
RMI2 PROPERTIES, LLC, a Colorado limited liability
company
By:
Mark Forsyth, General Manager
STATE OF COLORADO
ss.
COUNTY OF LARIMER
The foregoing instrument was acknowledged before me this day of 2009, by
Mark Forsyth as General Manager of RMI2 Properties, LLC.
Witness my hand and official seal
My commission expires:
Notary Public
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CITY OF FORT COLLINS, COLORADO, a
municipal corporation
By:
Darin Atteberry, City Manager
ATTEST:
City Clerk
APPROVED AS TO FORM:
Assisstant City Attorney
STATE OF COLORADO
ss.
COUNTY OF LARIMER
The foregoing instrument was acknowledged before me this day of 2009, by
Darin Atteberry as City Manager and Wanda Krajicek as City Clerk, of the City of Fort Collins,
Colorado.
Witness my hand and official seal
My commission expires:
Notary Public
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Rocky Mountain Innovation Initiative
New Facility Financing Overview
May 12, 2009
City aF
r�rtl1
Executive Summary
• Ordinance overview
- An interfund loan to the URA
- Enables the URA to lend the Rocky Mountain Innovation Initiative
the funds necessary to construct a new facility for the business
incubator
• Loan Details
- Amount: $5,303,939
- 20 year term
- 2.5 percent interest rate
- Interest only for the first seven years
• The underlying details of the project and the financing solution should
be questioned and discussed by the URA Board of Commissioners
Background
• RMII evolved from its original program to a 501(c)3
non-profit organization
• Mission: To enable and accelerate the success of
innovation-based start up companies and promote
the entrepreneurial culture of scientific and
technology based companies
• Current City Funding:
— $200,000 in real estate value — unused city
facilities at cost (e.g. utilities)
— $100,000 annually in operation revenues
Metrics as of November 2008
162 jobs created
• Angel/Venture Funds and Grants $53 million
• New RMI2 Services and Programs:
— SAGE Mentorship/Advising
— Pre-incubation advising
— Innovation After Hours
— Geospatial Cluster facilitation and projects
— Nocoangels.com
— Upgraded CEO roundtable
�„F�rt
Benefits to RMII
• The proposed RMII facility will enable the program to:
— Continue their current programs;
— Expand the capacity the program to offer space to start-up
companies;
— Offer new wet lab facilities for bioscience participants;
— Continue to offer below market rate rents for participating
companies;
— Offer a central location near downtown for entrepreneurial
events and activities; and
— Relieve the City of the provision of facilities, subsidized lease
rates, and property management
Key City Benefits
- The City gains a LEED Gold Certified facility to house the Rocky
Mountain Innovation Initiative a key part of the City's economic
development strategy
- The City benefits from street improvements to East Vine Drive
that include sidewalks, curbs, gutters and much needed public
infrastructure that is currently non-existent.
• The City helps RMII move towards the eventual goal of self-
sufficiency by assisting to fund a building that will ultimately
generate revenue for the program to subsidize leases and offset
operating expenses
�Lf�
Key URA Benefits
• The URA gains a redevelopment project that helps to
revitalize the North College area and East Vine Drive
specifically.
• The URA provides financial assistance to a primary
job generator that has a proven record for creating
high-wage jobs and new companies that remain in
the City.
• The URA gains an additional $1.5 million for other
public improvements in the Plan Area
�rtr ris
Project Financing
• City to provide URA with a $5.3 million loan
• URA will disburse$5.3 million in two phases
— Phase I—Development Activities: Subdivision, Entitlement,
Building Design, Development Review, Land Purchase, $1.1
Million
— Phase II—Construction Activities: Off-and On-Site
improvements, Building Construction,Tenant Finishes, $4.2
Million
• The New Market Tax Credit will provide$1.8 million in net equity
to the project
• The proposed URA/TIF equity participation is$2.8 million or
65% of the overall TIF generated
�rt_r=5
Lease Rates
• The targeted maximum base lease rate for an office tenant was
$8.00/sf. With NNN/CAM expenses projected at$8.00, the gross
rate would be$16.00 per rentable square foot.
• Now with the NMTC Financing, RMII can offer a lower base lease
rate$6.00 per square foot for a total gross lease rate of$14.00 per
square foot.
• The Wet Lab lease rate is projected at$16.00 base plus$8.00
NNN/CAM for a gross rate of$24.00. This is estimated to be $6.00 or
more below market wet lab space.
• In the near term, the 4th Floor is anticipated to be leased at market
rate(estimated at$12.00/sf NNN). This revenue helps to keep the
incubator tenant lease rate below the$14 gross target.
Legal Documents
• Loan Agreement/Promissory Note — Stipulates the
terms of the loan and creates the "promise to pay"
• Master Covenant— Provides security that RMI I will
use the new facility for the purpose intended;
Provides the opportunity to review any alternative use
of the building by RMII
• Rights of First Refusal/First Offer— Provides security
that the new facility cannot be sold by RMII without
City review (Ist 20 years) or opportunity to purchase
(2nd 20 years)
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Questions
City Of
�,rtr
ORDINANCE NO. 053, 2009
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING FUNDS FROM THE CITY'S GENERAL FUND RESERVES FOR
TRANSFER TO THE FORT COLLINS URBAN RENEWAL AUTHORITY FOR THE
PURPOSE OF PROVIDING A LOAN FOR THE ROCKY MOUNTAIN INNOVATION
INITIATIVE PROJECT
WHEREAS, the Fort Collins Urban Renewal Authority (the "Authority") was created on
January 5, 1982 to prevent and eliminate conditions related to certain blight factors in the City; and
WHEREAS, the City Council, by Resolution 2004-152, has made findings required by
Colorado Revised Statutes Part 1 of Title 31, Article 25 and declared the area described in
Resolution 2004-151 as blighted and approved the Urban Renewal Plan for the North College
Avenue Corridor(the "Plan"); and
WHEREAS,on August 15,2006,the City Council adopted Resolution 2006-082 authorizing
an intergovernmental agreement between the City and the Authority whereby the City will provide
support services to the Authority and will advance funds to the Authority so long as the advance of
such funds is evidenced in writing by a promissory note; and
WHEREAS, the Rocky Mountain Innovation Initiative is a private 501(c)(3) non-profit
organization with a mission of enabling and accelerating the success of high growth, high impact,
innovation-based startup companies and promoting the development of an entrepreneurial culture
and infrastructure to sustain and nurture scientific and technology-based industries in the Northern
Colorado region; and
WHEREAS, RM12 has evolved from the successful Fort Collins Technology Incubator
launched by the City in 1998 and funded over the years by the City,Colorado State University,CSU
Ventures and the Northern Colorado Economic Development Corporation; and
WHEREAS,RMI2 has contracted with a local developer to acquire property for,design,and
construct a 31,000 square foot, 4-story, LEED Gold certified building and related improvements
near the intersection of East Vine Drive and Redwood Street(the "Project"); and
WHEREAS, RMI2 has requested that the Authority finance the Project; and
WHEREAS, RM12 will partially repay the loan from the Authority with rental income
generated by leasing office space in the building and with funds obtained through fund-raising
efforts; and
WHEREAS,the balance of the`loan will be repaid using the tax increment funding generated
by the increased increment of property tax that will be collected because of the Project; and
WHEREAS,the Authority recognizes the benefit that will result to the Plan area because of
the Project and has determined that it is in the best interest of the Authority to make the loan
requested by RMI2 and commit the additional increment of property tax generated by the Project
to funding the construction of the Project; and
WHEREAS,the Authority must borrow funds to pay for the construction of the Project;and
WHEREAS, the City Council has adopted Resolution 2008-121, which updated the City's
Investment Policy to allow for interfund borrowing; and
WHEREAS, City staff has prepared and placed on file in the office of the City Clerk a
proposed promissory note (the "Note") and loan agreement in the form entitled"Loan Agreement
Between the City of Fort Collins and the Fort Collins Urban Renewal Authority for funding the
Rocky Mountain Innovation Initiative Project" (the "Loan Agreement"); and
WHEREAS, the City has funds available in its General Fund Reserves to fund the loan to
the Authority and finds it is in the best interests of the City to authorize execution of the Loan
Agreement and certain related documents; and
WHEREAS,Article V,Section 9,of the City Charter permits the City Council to appropriate
by ordinance at any time during the fiscal year such funds for expenditure as may be available from
reserves accumulated in prior years, notwithstanding that such reserves were not previously
appropriated; and
WHEREAS, it is the desire of the Council to appropriate the sum of $5,303,939 from
General Funds Reserves for transfer to the Fort Collins Urban Renewal Authority, as a loan.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT
COLLINS as follows:
Section 1. That there is hereby appropriated from General Fund Reserves the sum of
FIVE MILLION THREE HUNDRED THREE THOUSAND NINE HUNDRED THIRTY NINE
DOLLARS($5,303,939)for transfer to the Fort Collins Urban Renewal Authority and appropriated
therein as an interest-bearing loan, to provide the Fort Collins Urban Renewal Authority with the
necessary financial support for the Rocky Mountain Innovation Initiative Project.
Section 2. That the Note, Loan Agreement and related documents are hereby approved
by the City Council on substantially the terms and conditions contained therein, subject to
modifications in form or substance as the Mayor may, in consultation with the City attorney, deem
to be desirable and necessary to protect the interests of the City.
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Introduced, considered favorably on first reading, and ordered published this 12th day of
May, A.D. 2009, and to be presented for final passage'on the 2nd day of June, A.D. 2009.
Mayor
ATTEST:
City Clerk
Passed and adopted on final reading on the 2nd day of June, A.D. 2009.
Mayor
ATTEST:
City Clerk
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