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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 07/05/2011 - SECOND READING OF ORDINANCE NO. 075, 2011, APPROPR (2)DATE: July 5, 2011 STAFF: Mike Freeman Christina Vincent AGENDA ITEM SUMMARY FORT COLLINS CITY COUNCIL 11 SUBJECT Second Reading of Ordinance No. 075, 2011, Appropriating Prior Year Reserves in the Water Fund for the Purpose of Providing a Second Loan to the Fort Collins Urban Renewal Authority for the North College Marketplace Project. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on June 7, 2011, authorizes a loan in the amount of $3 million from the City to the Urban Renewal Authority (URA) to fulfill the remaining reimbursement obligation for the North College Marketplace granted by the URA Board in September 2008. The first appropriation for $5 million was received in April 2009 for Off Site Street Infrastructure, Wetlands Mitigation, and Demolition/Site Preparation. The requested loan amount from the City of Fort Collins’ Water Fund Reserves to the URA will be $3 million and reimbursed to the project for the On-Site public improvements. Staff originally intended to request the funds from the City’s General Fund reserves however, after discussions with the Finance department, Utilities and the Attorney’s office, the request changed to the Utilities Water Fund reserves to ensure the URA was not overburdening the General Fund reserves. Utilities anticipates that significant capital project needs in the future and ongoing systemic adjustment of Water Utility revenues and operating costs may necessitate water rate increases in the future. The proposed loan of Water Fund reserves is not expected to create additional need for rate increases or to cause the reserves to fall below required levels, assuming that staff-projected rate increases are implemented. The Ordinance provides that it is the Council’s intent that in the event that unexpected capital projects needs or timing results in an increased need for reserves in the Water Fund, the Council would provide replacement funds in order to repay the loan to the Water Fund to meet that need It is anticipated that the URA will issue bonds within the next few years, and in that event, the loan from the Water Fund would be repaid at that time. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. Copy of First Reading Agenda Item Summary - June 7, 2011 (w/o attachments) COPY COPY COPY COPY ATTACHMENT 1 DATE: June 7, 2011 STAFF: Mike Freeman Christina Vincent AGENDA ITEM SUMMARY FORT COLLINS CITY COUNCIL 23 SUBJECT First Reading of Ordinance No. 075, 2011, Appropriating Funds from the City’s General Fund Reserves for Transfer to the Fort Collins Urban Renewal Authority for the Purpose of Providing a Second Loan for the North College Marketplace Project. EXECUTIVE SUMMARY The Urban Renewal Authority (URA) is seeking a loan in the amount of $3 million from the City to fulfill the remaining reimbursement obligation for the North College Marketplace granted by the URA Board in September 2008. The first appropriation for $5 million was received in April 2009 for Off Site Street Infrastructure, Wetlands Mitigation, and Demolition/Site Preparation. The requested loan amount from the City of Fort Collins’ General reserves to the URA will be $3 million and reimbursed to the project for the On-Site public improvements. 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 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 September 16, 2008 the URA Board approved Resolution No. 011, authorizing a Redevelopment Agreement between the URA and the developer to provide financial assistance for the North College Marketplace. It was determined at that time that the URA would need to borrow the funds to pay for the public improvements and then bond against that amount in the future. The City loaned the URA funds in the amount of $5 million on April 21, 2009 for those public improvements associated with the first three line items of Exhibit C of the Redevelopment Agreement (Attachment 1). Below are the line items listed in Exhibit C for the initial appropriation of $5 million: Off Site Street Infrastructure $ 2,812,620 Demolition, Property Clean up and Site Preparation Cost $ 366,650 Wetlands Mitigation, Landscaping, Unsuitable Materials and Payment to the Wetlands’ Reserve Fund $ 1,763,206 Contingency (initial amount) $ 57,524 $ 5,000,000 The remaining line items listed in Exhibit C are requested for this appropriation of $3 million: On Site Utilities (Sanitary, Storm, Water, Dry) $1,022,861 Gateway/Landscaping/Pedestrian Connection/Grading/ North South Circulation and College Avenue Public Access Easement/Paving of Grape Street $1,702,128 Relocation Assistance (Up to 1,000 per residence) $ 10,000 Contingency (remaining) $ 265,011 $3,000,000 Exhibit C from the Redevelopment Agreement lists the public improvements included as potential eligible costs (Attachment 1). COPY COPY COPY COPY June 7, 2011 -2- ITEM 23 FINANCIAL / ECONOMIC IMPACTS The Project was determined by the URA Board to be a qualified project for tax increment financing and consistent with the North College URA Plan as well as the North College Corridor Plan. Over the remaining life of the plan area, the project will generate an estimated $15.5 million in property tax increment. This action approves the loan agreement between the City and URA to finance the commitment made by the URA Board for the North College Marketplace. URA funding for the Project’s second appropriation amount totals $3,000,000. This loan is a 20-year term loan. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. ATTACHMENTS 1. Exhibit C to the North College Marketplace Redevelopment Agreement – List of estimated costs for public improvements. 2. Powerpoint presentation ORDINANCE NO. 075, 2011 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING FUNDS FROM THE CITY’S GENERAL FUND RESERVES APPROPRIATING PRIOR YEAR RESERVES IN THE WATER FUND FOR TRANSFER TO THE FORT COLLINS URBAN RENEWAL AUTHORITY FOR THE PURPOSE OF PROVIDING A LOAN TO THE FORT COLLINS URBAN RENEWAL AUTHORITY FOR THE NORTH COLLEGE MARKETPLACE 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, 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 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, the 1908 North College, LLC (the “Developer”) owns property in the Plan area and has nearly completed the construction of the North College Marketplace on property located northeast of the intersection of North College Avenue and East Willox Lane (the “Project”); and WHEREAS, the Project included the construction and installation of public infrastructure such as street and utility improvements as well as gateway, landscaping and pedestrian improvements within the North College Urban Renewal Area; and WHEREAS, on September 16, 2008, the Board of Commissioners of the URA adopted Resolution No. 011 approving a financial assistance agreement with the Developer; and WHEREAS, the URA must borrow funds to pay for its portion of the improvements related to the Project as provided in Resolution No. 011, and has opted to borrow these funds in two phases; and WHEREAS, on May 5, 2009, the City Council adopted Ordinance No. 046, 2009, approving a loan in the amount of $5,000,000 for Phase One of the funding; and WHEREAS, City staff has been advised, and has confirmed, that the Developer is nearing completion of the Project, and the URA is therefore in need of obtaining the second phase of funding; and WHEREAS, the City Manager recommends providing this funding thethrough a loan to the URA from the General FundWater Fund Reserves and it is the desire of the City Council to appropriate the sum of $3,000,000 from General FundsWater Fund Reserves for transfer to the URA, as a loan (the “URA Loan”). WHEREAS, City staff has prepared 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 North College Marketplace Project (Phase Two)” (the “Loan Agreement”) attached hereto as Exhibit A and incorporated herein by this reference; and WHEREAS, Article V, Section 12, of the City Charter permits the City Council to provide direction as to the investment of City funds; and WHEREAS, while the lending of these funds does not fit within the categories of approved investments established in the Investment Policy approved by the City Council in 2008, the City Council finds that, based on the interest rate and other conditions in the Loan Agreement, the URA Loan is a suitable investment for City funds; and WHEREAS, the URA Loan will not necessitate any increase in water rates above those already projected by staff, and after investing the Water Fund reserves in the URA Loan, the Water Fund will still have a sufficient balance of reserve funds to meet reserve fund requirements, assuming that the projected rate increases are implemented; and WHEREAS, in the event that the timing of, or unanticipated need for, Water Utility capital improvements results in a need for the URA Loan funds to be restored to the Water Fund, it is the intent of the Council to provide a replacement funding source for the URA Loan; and WHEREAS, the City has funds available in its General Fund Reserves to fund the loan to the URA 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. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That there is hereby appropriated from GeneralWater Fund Reserves an amount not to exceed THREE MILLION DOLLARS ($3,000,000) for expenditure as a loan to the Fort Collins Urban Renewal Authority. Section 2. That the use of this sum for the purpose of funding a loan to the URA, according to the terms and conditions of the Note and Loan Agreement, will provide necessary improvements to public infrastructure and will be beneficial for all City citizens. -2- Section 3. That the Note, Loan Agreement and related documents are hereby approved 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. Introduced, considered favorably on first reading, and ordered published this 7th day of June, A.D. 2011, and to be presented for final passage on the 5th day of July, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on the 5th day of July, A.D. 2011. _________________________________ Mayor ATTEST: _____________________________ City Clerk -3-