HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/07/2013 - RESOLUTION 2013-041 CONCERNING THE FORT COLLINS URDATE: May 7, 2013
STAFF: John Voss
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 32
SUBJECT
Resolution 2013-041 Concerning the Fort Collins Urban Renewal Authority and its Tax Increment Revenue Refunding
Bonds (North College Avenue Project), Series 2013, Declaring the City Council’s Present Intent to Appropriate Funds
to Replenish the Reserve Fund Securing Such Bonds, If Necessary; and Authorizing a Cooperation Agreement and
Other Actions Taken in Connection Therewith.
EXECUTIVE SUMMARY
The Fort Collins Urban Renewal Authority (URA) intends to refinance a portion of the debt it originally borrowed from
the City in relation to the North College area. Now that an established revenue stream can be shown to investors,
private money can be used to replace City money. The 2013 bonds require the URA to establish a debt reserve fund.
To further facilitate the credit rating on the replacement debt, the City needs to make a pledge to consider replenishing
the debt reserve fund, if such funds are ever used to make debt payments. With the City’s pledge, the new URA debt
is expected to have an effective interest rate of 2.98%.
BACKGROUND / DISCUSSION
The North College URA Project Area was created in 2004, allowing the URA to receive incremental property taxes
through 2029. Property tax increment revenue in North College was first received in 2007 and the 2012 property taxes
payable in 2013 are expected to be $1.3 million.
Table 1 - Net Property Tax Increment Revenue $000’s
2007 2008 2009 2010 2011 2012 2013 *
$110 $287 $263 $493 $536 $907 $1,285
*anticipated
A common measure used by lenders in determining risk is the ratio of pledged revenue to debt service, called a
coverage ratio. Investors want that ratio to be high – at least 125%. The current revenue of $1.3 million could support
up to $1 million a year in debt service. The proposed maximum annual debt service of $890,000 yields a good
coverage ratio of 144%.
City Loans to URA – The initial financing model adopted for North College has the City providing initial capital through
a loan until the tax increment revenue reaches a maturity level that can support external financing to third party
investors. The City Council first authorized an Interagency Loan Policy in December 2008, with the most recent
amendments approved in December 2012.
Eight loans have been made by the City to the URA in the North College District. The first loan has been repaid. Table
2 recaps the current status of the loans.
Table 2 – North College Loan Status $000’s
Date Project
Original
Value
Current
Balance
Term
Years Rate City Fund Holding
09/06 V. Steel, URA start-up funds $ 150 $ 0 5 5.55% General Fund
05/09 N.C. Market Place, phase 1 5,000 4,729 20 2.85% Capital Expansion
12/10 JAX 173 106 5 2.50% Capital Expansion
06/11 NEECO 326 326 10 3.01% Storm Drainage
07/11 Kaufman Robinson 193 193 5 2.46% General Fund
07/11 N.C. Market Place, phase 2 3,000 2,884 19 4.09% Water Fund
08/12 N.C. Road Improvements 2,700 2,700 18 3.92% Capital Projects BCC
Loans to be refinanced 11,542 10,938 3.44%
06/09 RMI2 5,304 5,304 20 2.50% General Fund
Total North College Area 16,846 16,242
May 7, 2013 -2- ITEM 32
The proposal is to issue enough debt to takeout $10.94 million in loans to the City, plus interest and debt issue costs.
For the following reasons the City loan to the URA that relates to RMI is not being refinanced.
• The use of the RMI2 loan proceeds does not qualify the interest to be tax exempt. Therefore the interest rate
would be significantly higher.
• The new market tax credit deal cannot be refinanced until 2017.
• There is not enough revenue capacity to meet external investor expectations. Only about $1 million of the
$5.3 million could be considered for refinancing if the favorable coverage ratio was to be preserved.
The General Fund is holding the URA loan relating to RMI2. Later this year, the loan will be reallocated and held
equally between the General Fund and Capital Expansion Fund. This will free up some monies in the General Fund.
Future debt payments by the URA will then be allocated appropriately to each fund.
Preliminary Structure of 2013 Bonds
Approximately $11.36 million of bond proceeds will be used to takeout $10.94 million of debt to the City, plus interest
of $220,000, and pay debt issue costs of $206,000. Coupon interest rates vary from 2% for near term bonds and 4%
for longer term bonds. The collective Net Interest Cost is expected to be 2.98%, which compares favorably to 3.44%
weighted average interest rate on the City debt being retired. The interest only payment on December 1, 2013 for
$161,000 will be followed by future annual payments that vary from $886,000 to $890,000 through 2029.
City Pledge
The Underwriters for the 2013 Bonds have recommended that a debt service reserve fund in the amount of
approximately $961,000 would be advisable for marketing the 2013 Bonds and that purchasing a Surety Policy for such
amount would be preferable to funding such reserve with cash. The cost of such Surety Policy would be $53,000.
If it was ever necessary to draw upon the Surety Policy, the City’s replenishment pledge would repay such draw. Staff
prefers the Surety Policy option but will make a decision later based on the potential impact on the credit rating. The
replenishment pledge is non-binding and subject to annual appropriation of funds by the City Council in its sole
discretion.
It is anticipated that the City pledge will result in the replacement debt receiving a credit rating of Aa3. Without the
City’s pledge and a proven revenue stream the interest rate would likely be 5% or higher, rather than 3%.
Concerns about Ability to Make Pledge
A question has been raised by a local citizen as to whether Council actions such as the making of this pledge violates
the City Charter. The Charter provisions in question read as follows:
ARTICLE V. FINANCE ADMINISTRATION
PART I. BUDGET AND FINANCIAL MANAGEMENT
Section 15. Appropriations forbidden.
No appropriation shall be made for any charitable, industrial, educational, or benevolent purposes
to any person, corporation, or organization not under the absolute control of the city, nor to any
denominational or sectarian institution or association.
(Ord. No. 10, 1991, § 1(a), 2-19-91, approved, election 4-2-91)
Section 16. City not to pledge credit.
The city shall not lend or pledge its credit or faith, directly or indirectly, or in any manner to or in aid
of any private person or entity for any amount or any purpose whatever, or become responsible for
any debt, contract, or liability thereof.
(Ord. No. 203, 1986, § 1, Part D, 12-16-86, approved, election 3-3-87; Ord. No. 10, 1991, § 1(a), 2-
19-91, approved, election 4-2-91)
May 7, 2013 -3- ITEM 32
These charter provisions are, in all material respects, identical to provisions contained in the Colorado Constitution.
Thus, the limitations contained in the Charter provisions apply to all Colorado municipalities through the state
constitution.
In response to the concerns that have been expressed, staff has conferred with both the City Attorney’s Office and
the City’s bond counsel to ensure that the proposed transaction does not violate either of the provisions in question.
Legal counsel has confirmed the following.
As noted above, the pledge is not a legally binding obligation but rather is subject to appropriation by the Council, when
and if the reserve fund is drawn upon. Since the City cannot be compelled to appropriate funds, the pledge does not
create a debt for purposes of the City Charter or the Colorado Constitution.
Article V, Section 15 of the City Charter is not applicable to the pledge because (1) the Urban Renewal Authority is
under the absolute control of the City (since its governing body is made up of the same members as the City’s
governing body) and it is not a denominational or sectarian institution; and (2) the projects refinanced by the bonds
are public infrastructure projects; thus, the bond proceeds are not being used, either directly or indirectly, for a
charitable, industrial, educational or benevolent purpose.
Article V, Section 16 of the City Charter is not applicable because: (1) the Urban Renewal Authority is a public entity;
(2) the City will not incur any indebtedness or other legally binding obligation by making the pledge; and (3) the
projects refinanced by the bonds are public infrastructure projects,.
It should be noted that this “moral obligation pledge” financing structure is not unique to the City. Other municipalities
that have utilized this same procedure in connection with tax increment transactions include the City and County of
Denver, the cities of Thornton, Westminster, and Steamboat Springs, and the Town of Avon. The State of Colorado
has also used moral obligation financing structures for housing, charter schools and higher education.
Cash Flow Projections
The refinancing of this debt will improve the cash flows of the URA. The URA will save $922,000 through 2029.
Future Financing Model
City staff have communicated to the URA that going forward the City intends to only loan money when alternative
financing agreements are not feasible. The reimbursement agreement recently approved for Aspen Heights is an
example of the preferred approach for future development agreements. The Aspen Heights developer will be
reimbursed over time as revenue is collected, rather than in a lump sum upon completion of the project.
Consultants
The URA and City have engaged three firms to help issue the new debt: Sherman & Howard as the Bond Attorney,
BLX as the Financial Advisor and RBC Capital Markets as the Bond Underwriters.
Timeline
May 9 Complete application for credit rating with Moody’s
May 17 Receive credit rating from Moody’s
May 22 Publish Preliminary Official Statement on Internet Sites
June 4-6 Market Bonds
June 20 Closing
FINANCIAL / ECONOMIC IMPACTS
The City’s pledge includes a commitment to maintain an unrestricted fund balance in the General Fund in an amount
at least equal to the Reserve Fund Requirement, estimated at $961,000. The General Fund can easily meet that
requirement because it does not need be separate set aside, but instead maintain unrestricted balances in the
aggregate that are greater than the Reserve Fund Requirement. At the end of 2012 the collective unrestricted fund
May 7, 2013 -4- ITEM 32
balances in General Fund totaled $37 million. Property tax revenue in the North College URA plan area is unlikely to
decline enough to trigger the use of the Debt Service Reserve Fund.
The 2013 Bonds will be used to takeout $10.94 million in debt to the City, pay $220,000 of interest and pay $206, 000
in delivery date expenses.
Later this summer the City will use some of the returned monies to loan $5 million to the URA for the first Midtown
Project – The Summit (Capstone).
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BOARD / COMMISSION RECOMMENDATION
The Council Finance Committee reviewed and tentatively approved the refinancing and the concept of a debt reserve
replenishment pledge at its meeting on December 17, 2012.
ATTACHMENTS
1. Council Finance Committee minutes, December 17, 2012
2. Preliminary debt structure, prepared by RBC Capital Markets
3. Powerpoint presentation
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Council Audit & Finance Committee
Minutes
12/17/12
10:00 to 11:00
CIC Room
Council Attendees: Mayor Karen Weitkunat, Mayor Pro Tem Kelly
Ohlson, Ben Manvel
Staff: Darin Atteberry, John Voss, Mike Beckstead (via
conference call),Mindy Pfleiger, Chris Donegon,
Megan Bolin, Josh Birks, Bruce Hendee, Harold
Hall, Heather Shepherd
Others: Jim Manire of BLX; Developers Charlie Vater,
Larry Owens, Dan Fredericks, Rick Shannon
Approval of the Minutes of November 19, 2012
Ben Manvel stated that there is a word that should be removed. The words “prior to” in the
sentence “….decision scenarios before prior to the executive session to help with the
discussion.” are repetitive and should be removed. Ben moved to approve the minutes as
amended and Kelly Ohlson seconded the motion. The November minutes are approved as
amended.
URA Debt Refinancing
John Voss presented data showing how refinancing the current URA debt would be beneficial to the
City. The City has loaned a total of $16.8 million to the URA to date. The URA currently owes $16.2
million of that to the City. John said that this is the debt related to the North College Tax Increment
Financing (TIF) district.
Mayor Weitkunat stated that there should be a notation in the presentation materials of any loans the
URA has already paid off.
John Voss said that the City has been waiting for the revenue stream to mature to refinance the URA
debt. Since revenue is now more predictable and reliable, it can be marketed to third party lenders.
Currently, the North College URA financial situation is healthy and able to repay all existing loans under
current terms.
Lenders will require a coverage ratio. For example 135%:
- $1,262/1.35=$935 of URA’s existing cash balance
- At 4.0% we could refinance about $11 million
ATTACHMENT 1
- At 5.5% we could refinance about $10 million
Lenders will require Debt Service Reserve Fund equal to annual debt service payment
- Ties up approximately $935 of URA’s existing cash balance
These terms are typical for entities with credit similar to the Fort Collins URA.
With this refinancing, the URA would still owe the City between $5 and $6 million in debt.
John Voss also suggested that if the City were to provide a Moral Obligation Pledge, the debt would then
be viewed as ‘investment grade’. The City’s pledge would free up a additional $1 to $2 million.
Darin Atteberry asked if there would be potential for refinancing to affect the City’s overall credit rating.
Jim Manire, outside bond counsel, said that he would not expect the City’s rating to change in relation
to refinancing.
Mike Beckstead told the Committee that he is in solid support of refinancing and the objective at this
meeting is simply to inform the Committee and discuss it before the topic is presented to the City
Council.
Kelly Ohlson said he would prefer that money savings from the refinancing go to the general fund
instead of the staff recommended Summit Project and Capital Expansion Fund.
Darin Atteberry said that overall, he agrees that the refinancing would be a positive move for the City.
Mike Beckstead said that staff members will recommend this to City Council for consideration in the
April or May, 2013 timeframe.
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets
TABLE OF CONTENTS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Report Page
Sources and Uses of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bond Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bond Summary Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bond Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bond Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ATTACHMENT 2
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 1
SOURCES AND USES OF FUNDS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Dated Date 06/20/2013
Delivery Date 06/20/2013
Sources:
Bond Proceeds:
Par Amount 10,645,000.00
Premium 718,718.60
11,363,718.60
Uses:
Project Fund Deposits:
Proceeds to Takeout Loans - Principal 10,938,089.54
Proceeds to Takeout Loans - Interest 220,082.29
11,158,171.83
Delivery Date Expenses:
Cost of Issuance 104,232.27
Underwriter's Discount 47,902.50
Surety @ 6% (AGM Est) 53,412.00
205,546.77
11,363,718.60
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 2
BOND PRICING
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Maturity Yield to Premium
Bond Component Date Amount Rate Yield Price Maturity (-Discount)
Serial bonds:
12/01/2014 525,000 2.000% 0.670% 101.912 10,038.00
12/01/2015 540,000 3.000% 0.870% 105.146 27,788.40
12/01/2016 555,000 3.000% 1.100% 106.409 35,569.95
12/01/2017 570,000 3.000% 1.360% 107.053 40,202.10
12/01/2018 590,000 3.000% 1.590% 107.328 43,235.20
12/01/2019 605,000 3.000% 1.830% 107.084 42,858.20
12/01/2020 625,000 3.000% 2.110% 106.103 38,143.75
12/01/2021 640,000 3.000% 2.300% 105.345 34,208.00
12/01/2022 660,000 3.000% 2.490% 104.268 28,168.80
12/01/2023 680,000 3.000% 2.630% 103.359 22,841.20
12/01/2024 700,000 4.000% 2.750% 111.282 C 2.839% 78,974.00
12/01/2025 730,000 4.000% 2.870% 110.136 C 3.017% 73,992.80
12/01/2026 760,000 4.000% 3.000% 108.910 C 3.180% 67,716.00
12/01/2027 790,000 4.000% 3.110% 107.885 C 3.309% 62,291.50
12/01/2028 820,000 4.000% 3.200% 107.055 C 3.409% 57,851.00
12/01/2029 855,000 4.000% 3.270% 106.414 C 3.484% 54,839.70
10,645,000 718,718.60
Dated Date 06/20/2013
Delivery Date 06/20/2013
First Coupon 12/01/2013
Par Amount 10,645,000.00
Premium 718,718.60
Production 11,363,718.60 106.751701%
Underwriter's Discount -47,902.50 -0.450000%
Purchase Price 11,315,816.10 106.301701%
Accrued Interest
Net Proceeds 11,315,816.10
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 3
BOND SUMMARY STATISTICS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Dated Date 06/20/2013
Delivery Date 06/20/2013
Last Maturity 12/01/2029
Arbitrage Yield 2.668434%
True Interest Cost (TIC) 2.894357%
Net Interest Cost (NIC) 2.976786%
All-In TIC 3.010203%
Average Coupon 3.631204%
Average Life (years) 9.629
Duration of Issue (years) 8.157
Par Amount 10,645,000.00
Bond Proceeds 11,363,718.60
Total Interest 3,722,190.69
Net Interest 3,051,374.59
Total Debt Service 14,367,190.69
Maximum Annual Debt Service 890,200.00
Average Annual Debt Service 873,532.96
Par Average Average PV of 1 bp
Bond Component Value Price Coupon Life change
Serial bonds 10,645,000.00 106.752 3.631% 9.629 7,847.25
10,645,000.00 9.629 7,847.25
All-In Arbitrage
TIC TIC Yield
Par Value 10,645,000.00 10,645,000.00 10,645,000.00
+ Accrued Interest
+ Premium (Discount) 718,718.60 718,718.60 718,718.60
- Underwriter's Discount -47,902.50 -47,902.50
- Cost of Issuance Expense -104,232.27
- Other Amounts -53,412.00 -53,412.00 -53,412.00
Target Value 11,262,404.10 11,158,171.83 11,310,306.60
Target Date 06/20/2013 06/20/2013 06/20/2013
Yield 2.894357% 3.010203% 2.668434%
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 4
BOND DEBT SERVICE
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Period
Ending Principal Coupon Interest Debt Service
12/01/2013 161,290.69 161,290.69
12/01/2014 525,000 2.000% 360,650.00 885,650.00
12/01/2015 540,000 3.000% 350,150.00 890,150.00
12/01/2016 555,000 3.000% 333,950.00 888,950.00
12/01/2017 570,000 3.000% 317,300.00 887,300.00
12/01/2018 590,000 3.000% 300,200.00 890,200.00
12/01/2019 605,000 3.000% 282,500.00 887,500.00
12/01/2020 625,000 3.000% 264,350.00 889,350.00
12/01/2021 640,000 3.000% 245,600.00 885,600.00
12/01/2022 660,000 3.000% 226,400.00 886,400.00
12/01/2023 680,000 3.000% 206,600.00 886,600.00
12/01/2024 700,000 4.000% 186,200.00 886,200.00
12/01/2025 730,000 4.000% 158,200.00 888,200.00
12/01/2026 760,000 4.000% 129,000.00 889,000.00
12/01/2027 790,000 4.000% 98,600.00 888,600.00
12/01/2028 820,000 4.000% 67,000.00 887,000.00
12/01/2029 855,000 4.000% 34,200.00 889,200.00
10,645,000 3,722,190.69 14,367,190.69
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 5
BOND SOLUTION
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Period Proposed Proposed Total Adj Revenue Unused Debt Serv
Ending Principal Debt Service Debt Service Constraints Revenues Coverage
12/01/2013 161,291 161,291 1,300,000 1,138,709 805.99816%
12/01/2014 525,000 885,650 885,650 1,300,000 414,350 146.78485%
12/01/2015 540,000 890,150 890,150 1,300,000 409,850 146.04280%
12/01/2016 555,000 888,950 888,950 1,300,000 411,050 146.23995%
12/01/2017 570,000 887,300 887,300 1,300,000 412,700 146.51189%
12/01/2018 590,000 890,200 890,200 1,300,000 409,800 146.03460%
12/01/2019 605,000 887,500 887,500 1,300,000 412,500 146.47887%
12/01/2020 625,000 889,350 889,350 1,300,000 410,650 146.17417%
12/01/2021 640,000 885,600 885,600 1,300,000 414,400 146.79313%
12/01/2022 660,000 886,400 886,400 1,300,000 413,600 146.66065%
12/01/2023 680,000 886,600 886,600 1,300,000 413,400 146.62757%
12/01/2024 700,000 886,200 886,200 1,300,000 413,800 146.69375%
12/01/2025 730,000 888,200 888,200 1,300,000 411,800 146.36343%
12/01/2026 760,000 889,000 889,000 1,300,000 411,000 146.23172%
12/01/2027 790,000 888,600 888,600 1,300,000 411,400 146.29755%
12/01/2028 820,000 887,000 887,000 1,300,000 413,000 146.56144%
12/01/2029 855,000 889,200 889,200 1,300,000 410,800 146.19883%
10,645,000 14,367,191 14,367,191 22,100,000 7,732,809
1
1
URA Refinancing
City Council/URA Board
May 7, 2013
2
Overview
• City has loaned money to the URA
• Looking to refinance some of those loans with
external investors
• Returns about $11.2 million, including interest, to
the City
ATTACHMENT 3
2
3
Financing Model for URA Projects
• Initial financing model
– City provides capital upfront
– Establish a stable revenue stream
– Replace with external financing
• Future financing will be similar to Aspen Heights
– No lump sum at completion of project
– Share percent of revenue as collected
– Consider exceptions for special circumstances
4
City Loans to URA for N. College
Date Project
Orig.
Value
Current
Balance
Term
Years Rate City Fund Holding
09/06 V. Steel, URA start-up funds $ 150 $ 0 5 5.55% General Fund
05/09 N.C. Market Place, phase 1 5,000 4,729 20 2.85% Capital Expansion
12/10 JAX 173 106 5 2.50% Capital Expansion
06/11 NEECO 326 326 10 3.01% Storm Drainage
07/11 Kaufman Robinson 193 193 5 2.46% General Fund
07/11 N.C. Market Place, phase 2 3,000 2,884 19 4.09% Water Fund
08/12 N.C. Road Improvements 2,700 2,700 18 3.92% Capital Projects
BCC
Loans to be refinanced 11,542 10,938 3.44%
06/09 RMI2 5,304 5,304 20 2.50% General Fund
Total North College Area 16,846 16,242
$000’s
3
5
North College TIF District
• Created in 2004, expires in 2029
• Increment on property taxes, none on sales tax
• Property tax increment revenue started flowing in 2007
• Revenue is now mature and stable, more attractive to
investors
* anticipated
2007 2008 2009 2010 2011 2012 2013 *
$110 $287 $263 $493 $536 $907 $1,285
Tax Increment Revenue $000s
6
City Pledge Highlights
• Pledging to replenish URA’s debt service reserve fund,
if it were to be used to make debt payments
– Non-binding; pledge is to consider replenishing
– However, not honoring the pledge would significantly impact
the City’s credit rating and ability to borrow money in future
• Commits the General Fund to maintain unrestricted
fund balance at least equal to the Reserve Fund
Requirement
– Estimated reserve required is $961,000
– Current unrestricted balance is $37 million
– Does not require a special set aside in the General Fund
4
7
Concerns about Ability to Pledge
• Charter Article V, Section 15 prohibits appropriations for specified purposes
to entities not under absolute control of the City or to denominational or
sectarian institutions. Not applicable to pledge because:
1. Council and Board have same members, so URA under absolute control of City;
2. URA not a denominational or sectarian institution; and
3. Bonds are refinancing public infrastructure, not prohibited purposes.
• Charter Article V, Sections 16 prohibits City from lending or pledging faith or
credit to private person or entity or becoming responsible for any debt,
contract, or liability of private person or entity. Not applicable to pledge
because:
1. URA is not a private entity;
2. No legally binding City obligation is being created;
3. Loan proceeds were used for public infrastructure, not private benefit.
• Same procedure used by other municipalities in Colorado
8
2013 Bonds (preliminary)
• 2.98% Interest Rate, lower than City rate
• 16 year term
• Saves the URA $922,000 through 2029
Bond Proceeds $11,364
Costs of Issuance (206)
Repay City Loans with interest $11,158
5
9
Next Steps
• May 9 complete credit application
• May 17 receive credit rating from Moody’s
• May 22 publish preliminary official statement
• June 4-6 market bonds
• June 20 closing
10
RESOLUTION 2013-041
CONCERNING THE FORT COLLINS URBAN RENEWAL AUTHORITY AND ITS TAX
INCREMENT REVENUE REFUNDING BONDS (NORTH COLLEGE AVENUE PROJECT),
SERIES 2013, DECLARING THE CITY COUNCIL’S PRESENT INTENT TO
APPROPRIATE FUNDS TO REPLENISH THE RESERVE FUND SECURING SUCH
BONDS, IF NECESSARY; AND AUTHORIZING A COOPERATION AGREEMENT AND
OTHER ACTIONS TAKEN IN CONNECTION THEREWITH
WHEREAS, the City Council (the “City Council”) of the City of Fort Collins,
Colorado (the “City”) has heretofore created the Fort Collins Urban Renewal Authority
(“Authority”) as an urban renewal authority pursuant to Colorado Revised Statutes, Part 1 of
Title 31, Article 25, as amended (the “Act”); and
WHEREAS, the City Council by Resolution No. 2004-152 approved and adopted
on December 21, 2004 has authorized and approved the “North College Urban Renewal Plan” as
an urban renewal plan under the Act (the “Plan”) for the area described therein (the “Plan
Area”); and
WHEREAS, in order to undertake certain urban renewal projects within the Plan
Area, the Authority has previously borrowed money from the City and entered into certain prior
loan agreements with the City and executed certain prior promissory notes (collectively, the
“Prior City Loans”) in connection therewith; and
WHEREAS, pursuant to an Indenture of Trust (the “Indenture”) between the
Authority and U.S. Bank National Association, as trustee (the “Trustee”), the Authority is
issuing its Tax Increment Revenue Refunding Bonds (North College Avenue Project), Series
2013 (the “Series 2013 Bonds”) for the purpose of repaying the Prior City Loans made by the
City to the Authority; and
WHEREAS, a reserve fund (the “Reserve Fund”) will be created under the
Indenture to secure the payment of the Series 2013 Bonds and such Reserve Fund is required to
be maintained in an amount equal to the Reserve Fund Requirement (as defined in the
Indenture); and
WHEREAS, the Indenture provides that the Reserve Fund may either be cash
funded or that a reserve fund insurance policy (a “Reserve Fund Policy”) may be deposited in the
Reserve Fund; and
WHEREAS, the City Council wishes to make a non-binding statement of its
present intent with respect to the appropriation of funds for the replenishment of the Reserve
Fund or the repayment of any draws made under any Reserve Fund Policy, if necessary, and to
authorize and direct the City Manager to take certain actions for the purpose of causing requests
for any such appropriation to be presented to the City Council for consideration; and
WHEREAS, in connection with the issuance of the Series 2013 Bonds, it is
necessary and in the best interests of the City to enter into a Cooperation Agreement (the
“Cooperation Agreement”) between the City and the Authority; and
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WHEREAS, there is attached hereto as Exhibit A the proposed form of the
Cooperation Agreement; and
WHEREAS, capitalized terms used herein and not otherwise defined shall have
the meanings given to them in the Indenture.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS, COLORADO:
Section 1. Finding of Best Interests and Public Purpose. The City Council
hereby finds and determines, pursuant to the Constitution, the laws of the State and the City’s
Charter, and in accordance with the foregoing recitals, that adopting this Resolution, entering
into the Cooperation Agreement, and facilitating the issuance of the Series 2013 Bonds by the
Authority to finance the Refunding Project are necessary, convenient, and in furtherance of the
City’s purposes and are in the best interests of the inhabitants of the City; and will serve the
important public purpose of facilitating the repayment of the Prior City Loans by the Authority
to the City.
Section 2. Replenishment of Reserve Fund; Declaration of Intent. To the
extent that the Reserve Fund is cash funded, within 90 days after the City’s receipt of the written
notice from the Trustee of a draw on the Reserve Fund, to the extent that such draw has not been
replenished by another source, as provided in Section 4.06 of the Indenture (the “Written
Notice”), the City shall replenish the Reserve Fund to the Reserve Fund Requirement from
legally available funds of the City, subject to appropriation by the City Council in its sole
discretion. Any such City payment (the “City Payment”) shall be made directly to the Trustee
for deposit in the Reserve Fund in immediately available funds pursuant to the instructions set
forth in the Written Notice. It is the present intention and expectation of the City Council to
appropriate the City Payment requested in any such Written Notice received by the City, within
the limits of available funds and revenues, but this declaration of intent shall not be binding upon
the City Council or any future City Council in any future fiscal year. The City Payments shall
constitute currently appropriated expenditures of the City.
In the event that a Reserve Fund Policy is deposited in the Reserve Fund and the
City receives written notice from the Trustee that it has drawn on the Reserve Fund Policy and
such draw has not been repaid by another source, the City shall repay the provider of the Reserve
Fund Policy in the amount of such draw, plus any interest due thereon, from legally available
funds of the City, subject to appropriation by the City Council in its sole discretion. Any such
payment shall be made directly to the provider of the Reserve Fund Policy. It is the present
intention and expectation of the City Council to appropriate moneys to repay the provider of any
Reserve Fund Policy in the event of a draw thereunder, within the limits of available funds and
revenues, but this declaration of intent shall not be binding upon the City Council or any future
City Council in any future fiscal year. Any such payments shall constitute currently appropriated
expenditures of the City.
This Resolution shall not create a general obligation or other indebtedness or
multiple fiscal year direct or indirect debt or other financial obligation of the City within the
meaning of its Home Rule Charter or any constitutional debt limitation, including Article X,
Section 20 of the Colorado Constitution. Neither this Resolution nor the issuance of the Series
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2013 Bonds shall obligate or compel the City to make City Payments or to repay the provider of
any Reserve Fund Policy in the event of a draw thereunder beyond those appropriated in the City
Council’s sole discretion.
Section 3. Direction to City Manager. To the extent that the Reserve Fund is
cash funded, within five (5) Business Days following a draw on the Reserve Fund to pay the debt
service requirements on the Series 2013 Bonds, to the extent any such draw is not replenished
from another source, the Trustee is required under Section 4.06 of the Indenture to provide
Written Notice of such draw to the City. The Written Notice shall state the amount required to
be paid by the City to restore the Reserve Fund to the Reserve Fund Requirement after
replenishment from all other sources available under the Indenture. The Written Notice shall
also include instructions for making the City Payment. Any such Written Notice is required to
be sent to the City Manager. Upon receipt of a Written Notice by the City Manager, the City
Council hereby authorizes and directs the City Manager to prepare and submit to the City
Council a request for an appropriation of the amount set forth in the Written Notice. Such
request shall be made in sufficient time to enable the City to make the City Payment within 90
days of receipt of the Written Notice as provided in Section 1 hereof.
In the event that a Reserve Fund Policy is deposited in the Reserve Fund and the
City receives written notice from the Trustee that a draw has been made on the Reserve Fund
Policy and such draw has not been repaid from another source, the City Council hereby directs
the City Manager, upon receipt of such notice, to forthwith prepare and submit to the City
Council a request for an appropriation in an amount sufficient to repay the provider of such
Reserve Fund Policy for such draw, plus any interest due thereon.
Section 4. Fund Balance Covenant. So long as the Series 2013 Bonds are
outstanding, the City covenants to maintain an unrestricted fund balance in its General Fund in
an amount at least equal to the Reserve Fund Requirement (as defined in the Indenture).
Section 5. Repayment of Amounts Appropriated. In the event that the City
Council appropriates funds to make a payment as contemplated by Section 1 hereof, any
amounts actually transferred by the City to the Trustee in accordance with the provisions of
Section 1 or transferred by the City to the provider of a Reserve Fund Policy in accordance with
the provisions of Section 1, shall be treated as an advance under the Cooperation Agreement and
shall be repaid by the Authority in accordance with the provisions of the Cooperation
Agreement, on a basis expressly subordinate and junior to that of the Series 2013 Bonds, any
Additional Bonds and any other obligations or indebtedness that is secured or payable in whole
or in part by the Pledged Revenues on a parity with the Series 2013 Bonds.
Section 6. Limitation to Series 2013 Bonds. Unless otherwise expressly
provided by a subsequent resolution of the City Council, the provisions of this Resolution shall
apply only to the replenishment of the Reserve Fund originally established in the Indenture that
secures the payment of the Series 2013 Bonds and shall not apply to any other reserve funds
established in connection with the issuance of any other obligations.
Section 7. Approval of Cooperation Agreement. The Cooperation
Agreement, in substantially the form attached hereto as Exhibit A, is in all respects approved,
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authorized and confirmed. The Mayor is hereby authorized and directed to execute and deliver
the Cooperation Agreement, for and on behalf of the City, in substantially the form and with
substantially the same content as attached hereto as Exhibit A, provided that such document may
be completed, corrected or revised as deemed necessary by the parties thereto in order to carry
out the purposes of this Resolution. The execution of the Cooperation Agreement by the Mayor
shall be conclusive evidence of the approval by the City Council of such document in accordance
with the terms hereof and thereof.
Section 8. Direction to Act. The City Clerk of the City (the “City Clerk”) is
hereby authorized and directed to attest all signatures and acts of any official of the City in
connection with the matters authorized by this Resolution and to place the seal of the City on any
document authorized and approved by this Resolution. The Mayor, the Mayor Pro-Tem of the
City, the City Manager, the Financial Officer, the City Clerk and other appropriate officials or
employees of the City are hereby authorized and directed to execute and deliver for and on
behalf of the City any and all additional certificates, documents, instruments and other papers,
and to perform all other acts that they deem necessary or appropriate, in order to implement and
carry out the transactions and other matters authorized by this Resolution.
Section 9. Ratification. All actions (not inconsistent with the provisions of
this Resolution) heretofore taken by the City Council or the officers, employees or agents of the
City directed toward the issuance of the Series 2013 Bonds by the Authority and the execution
and delivery of the Cooperation Agreement are hereby ratified, approved and confirmed.
Section 10. Severability. If any section, subsection, paragraph, clause or
provision of this Resolution or the documents hereby authorized and approved shall for any
reason be held to be invalid or unenforceable, the invalidity or unenforceability of such section,
subsection, paragraph, clause or provision shall not affect any of the remaining provisions of this
Resolution or such documents, the intent being that the same are severable.
Section 11. Repealer. All prior resolutions, or parts thereof, inconsistent
herewith are hereby repealed to the extent of such inconsistency.
Section 12. Effectiveness. This Resolution shall take effect immediately upon
its passage.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 7th
day of May, A.D., 2013.
Mayor
ATTEST:
City Clerk