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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 12/07/2010 - FIRST READING OF ORDINANCE NO. 122, 2010, APPROPRI DATE: December 7, 2010 STAFF: Mike Freeman, John Voss _ Christina Vincent ID First Reading of Ordinance No. 122, 2010, 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 Jax, Inc. Building Expansion Project. EXECUTIVE SUMMARY The Fort Collins Urban Renewal Authority ("URA") is seeking a loan from the City to reimburse Jax, Inc. ("Jax") for the local street obligations for College Avenue, Jerome Street and the street oversizing fees associated with the Jax. Building Expansion Project(the"Project"). Offsetting these costs allowed the expansion of the Jax retail site at 1200 North College Avenue to be economically feasible. The total cost of this Project was$172,758. The requested loan amount from the City of Fort Collins General Fund Reserves to the URA will be $172,758. The URA will utilize the City's Interfund Borrowing program that was formally added to the City's investment policies in 2008. This program enables the City to use a portion of its investment portfolio to assist City Departments and related entities (e.g., the Downtown Development Authority and the URA) to access funds at a competitive interest rate while still providing a market based yield to the City investment portfolio. BACKGROUND / DISCUSSION The City and the URA entered into an intergovernmental agreement on August 15,2006 allowing"the City to advance fund to the URA in support of its activities. Any such advance of funds shall be evidenced in writing in the form of a loan memorialized by a promissory note or a grant,which transaction shall not be valid until first having been approved by both the City Council and the URA Commission." On May 18, 2010, the URA Board of,Commissioners approved a Redevelopment Agreement between the URA and Jax to provide financial assistance through a reimbursement for the expansion project located at 1200 North College Avenue. The obligation was to reimburse Jax for eligible costs up to a maximum amount of $197,460 upon the issuance of a Certificate of Occupancy for the expansion as stated in the Redevelopment Agreement. Exhibit C from the Redevelopment Agreement for the Jax Building Expansion project, which lists the public improvements included as total eligible costs is attached as Attachment 1. FINANCIAL/ ECONOMIC IMPACTS The Project is part of the North College Urban Renewal Authority Plan. Over the life of the North College Urban Renewal Authority Plan Area,the Project will generate an estimated$656,000 in tax increment. This action approves the loan agreement between the City and URA to finance the commitment made by the URA Board to Jax. URA funding for the Project totals $172,758. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. ATTACHMENTS 1. Exhibit C to the JAX, INC. Building Expansion Redevelopment Agreement — List of estimated costs for improvements. -- - ----- -- ATTACHMENT 1 EXHIBIT C to the JAX, Inc. Building Expansion Redevelopment Agreement IMPROVEMENTS Jerome Street Obligations Removals/Design Cost $1,000 Streets $39,000 Concrete $21,000 Pond Re-grading $1,000 Utilities $17,000 SUBTOTAL $79,000 25% Contingency—Development Review $19,750 TOTAL $98,750 North College Avenue Street Obligations Streets $25,594 Concrete $8,253 SUBTOTAL $33,847 250% Contingency—Development Review $8,462 TOTAL $42,309 Street Oversizing Fees=$56,400 15 ORDINANCE NO. 122, 2010 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 JAX, INC. BUILDING EXPANSION PROJECT WHEREAS, the Fort Collins Urban Renewal Authority (the "URA") 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, 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 URA whereby the City will provide support services to the URA and will advance funds to the URA so long as the advance of such funds is evidenced in writing by a promissory note; and WHEREAS, on May 18, 2010, the Urban Renewal Authority Board approved a Redevelopment Agreement between the URA and Jax, Inc. ("Jax") to provide financial assistance for public infrastructure required by the Jax Building Expansion Project (the "Project"); and WHEREAS, the Project is located within the boundaries of the Plan and will generate an estimated $656,000 in tax increment funds over the life of the Project; and WHEREAS, the cost of the financial assistance for public infrastructure of the Project is $172,758; and WHEREAS, the URA does not anticipate having sufficient tax increment revenues in 2011 to fund its contribution to the Project and City staff therefore recommends that the City lend the URA sufficient funds for that purpose in the amount of$172,758; and WHEREAS, there are sufficient prior year reserves in the General Fund to fund a loan to the URA for the purpose of reimbursing Jax for the public infrastructure improvements within the North College Urban Renewal Plan Area, and the City Council hereby finds it is in the best interests of the City to authorize the execution of such loan to the URA; and WHEREAS, City staff has prepared a proposed promissory note and loan agreement titled "Loan Agreement between the City of Fort Collins and the Fort Collins Urban Renewal Authority for Funding the Jax, Inc. Building Expansion Project" (the "Loan Agreement") attached hereto as Exhibit "A" and incorporated herein by this reference; and WHEREAS, the City Manager recommends funding the loan to the URA from the General Fund prior year reserves; 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. 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 ONE HUNDRED SEVENTY TWO THOUSAND SEVEN HUNDRED FIFTY EIGHT DOLLARS ($172,758) 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 Jax Inc. Building Expansion Project, as provided in the Loan Agreement. Section 2. That the Loan Agreement is hereby approved, and the City Manager is authorized to execute said agreement, subject to such modifications in form or substance as the City Manager may, in consultation with the City Attorney, deem desirable and necessary to protect the City's interests. Introduced, considered favorably on first reading, and ordered published this 7th day of December, A.D. 2010, and to be presented for final passage on the 21 st day of December, A.D. 2010. Mayor ATTEST: City Clerk Passed and adopted on final reading on the 21 st day of December, A.D. 2010. Mayor ATTEST: City Clerk -2- EXHIBIT A LOAN AGREEMENT BETWEEN THE CITY OF FORT COLLINS AND THE FORT COLLINS URBAN RENEWAL AUTHORITY FOR FUNDING THE JAX, INC. BUILDING EXPANSION PROJECT THIS LOAN AGREEMENT (the "Agreement") made this day of December, 2010, 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 One Hundred Seventy Two Thousand Seven Hundred Fifty Eight Dollars ($172,758) 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. I 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 "Effective Date"), 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 One Hundred Seventy Two Thousand Seven Hundred Fifty Eight Dollars ($172,758) 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 (Annual Payment Term): there will be annual payments of principal and interest. For the anniversary of the 5th Effective Date: there will be a lump sum payment of all remaining 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 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. 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 2 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. 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 3 Table 1 Payment Schedule JAX Interfund Loan from General Fund Reserves to URA Payments YEAR Principal Interest Total Balance (P&1) Year.0 ($172,758) Year 1 $32,866.65 $4,318.95 $37,186 ($139,891) Year2 $33,688.32 $3,497.28 $37,186 ($106,203) Year 3 $34,530.52 $2,655.07 $37,186 ($71,672) Year4 $35,393.79 $1,791.81 $37,186 ($36,279) Year 5 $36,278.63 $906.97 $37,186 $0 Total $172,758 $13,170 $185,928 Source:City of Fort Collins-Economic Health C: munnents and SettingskvincentWy DmumentsYl 123_Pmt_Schedule.XlslPmts EXHIBIT a PROMISSORY NOTE $172,758 December 2010 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 One Hundred Seventy Two Thousand Seven Hundred Fifty Eight Dollars ($172,758). 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 JAX, Inc. Building Expansion Project dated , 2010, 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 fifth anniversary of the Effective Date. 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, suitor 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 - 3 -