HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 10/15/2013 - FIRST READING OF ORDINANCE NO. 154, 2013, APPROPRIAgenda Item 27
Item # 27 Page 1
AGENDA ITEM SUMMARY October 15, 2013
City Council
STAFF
Megan Bolin, Economic Health Analyst
SUBJECT
First Reading of Ordinance No. 154, 2013, Appropriating Funds from the City's General Fund Reserves
for Transfer to the Fort Collins Urban Renewal Authority for the Purpose of URA Reimbursements for the
Capstone Redevelopment Corporation Summit on College Project, and Approving a Loan Agreement for
that Purpose.
EXECUTIVE SUMMARY
The purpose of this item is to approve a Loan Agreement between the City of Fort Collins and Fort Collins
Urban Renewal Authority that will fund the approved $5 million tax increment financing reimbursement to
Capstone Development Partners.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinance.
BACKGROUND / DISCUSSION
In September 2011, the Fort Collins Urban Renewal Authority (URA) approved a Redevelopment Agreement
with Capstone Development Partners (Developer) for The Summit on College, a mixed-use student housing
project in the Prospect South Tax Increment Financing (TIF) District. The Redevelopment Agreement
obligated the URA to reimburse the Developer up to $5 million in a lump sum for eligible project costs.
Knowing that the URA would not have sufficient fund balance to make this payment outright, it has been
anticipated that the URA would seek a loan from the City of Fort Collins, repaid using tax increment revenue
generated by the project over the life of the Prospect South TIF District.
Per the Redevelopment Agreement, the $5 million reimbursement obligation is due to the Developer upon
completion of the project, subject to verification of eligible costs by URA staff. The Developer obtained a
Certificate of Occupancy for the project in August 2013, and subsequently submitted its reimbursement
request to the URA. Although URA staff is awaiting additional documentation from the Developer to verify
several of the costs, once received, the agreement requires the URA to make the reimbursement within 45
business days. The City and URA have negotiated a Loan Agreement, which requires adoption of an
Ordinance by City Council and a Resolution by the URA Board; however, this Agreement deviates from the
current City interagency loan policy because several estimates made at the time of the Redevelopment
Agreement have proven inaccurate, details described below.
Estimates vs. Actuals
When the amount of tax increment generated by The Summit was estimated in 2011, the URA used a
methodology based on project costs and assumed 1% appreciation each year, for a total of approximately $8
million. It was anticipated that the URA would have to borrow from the City to pay the reimbursement to the
Developer, and at the time, the financing charge on a $5 million loan was estimated to be $2.4 million.
Based on the most recent August 2013 preliminary valuation from Larimer County, the project is estimated to
generate $7 million of tax increment, creating a $1 million revenue shortfall from the original projection.
Agenda Item 27
Item # 27 Page 2
Additionally, a combination of rising interest over the past two years (adding 71 basis points) and the City’s
new interagency loan policy (adding 25 basis points), have increased the expected interest rate on the loan
from the City from 4.0% to 4.96%, increasing interest cost from $2.4M to $3.8M. Table 1 summarizes the
difference between the original estimates and actual numbers:
Table 1
2011 Estimates 2013 Actuals
Total Tax Increment $8 million $7 million
Reimbursement Obligation $5 million $5 million¹
Financing Cost to URA $2.4 million $3.78 million
Balance $0.6 million ($1.78 million)
¹ Subject to final verification by URA staff.
Between the decrease in tax increment revenue and increase in financing charge, the URA would be unable
to afford the full debt obligation of a $5 million loan from the City under current investment policy interest
rates. Consequently, City and URA staff have negotiated a loan agreement that allows the URA to uphold its
reimbursement obligation to the Developer and remain financially solvent, while making a concerted effort to
uphold the City’s interagency loan policy.
Proposed Loan Agreement Terms
The URA cash flow does not support a $5 million loan from the City, based on current interest rates and the
current interagency loan policy. A new loan structure was developed that assigns an interest rate based on
the known revenue stream and term, which turns out to be 2.68%. Since City policy would require 4.96%
interest, this leaves a gap of $1.78 million. To fill this gap, the URA commits to pledge 50% of future
unencumbered revenue from the Prospect South TIF District to the City.
For example, assume the URA collects $1 million in revenue from the Prospect South TIF District in a given
year, and owes the City a $400,000 payment (principal and interest) on the Capstone loan; 50% of the
remaining $600,000, or $300,000, would be paid to the City to help pay down the $1.78 million interest rate
gap. This revenue share structure would continue for the life of the Prospect South TIF District, or until the
$1.78 million is paid in full, whichever happens first.
While City and URA staff support the negotiated loan terms, the variation from current policy is duly
acknowledged. Several practices have been put into place since approval of the Capstone Redevelopment
Agreement to prevent the need for additional policy exceptions, including:
Tax increment estimates are based on Larimer County’s estimate of valuation that the Developer
provides to the URA; the estimates assume 1% appreciation over the life of the associated TIF
District.
Establishing a maximum percentage of tax increment that would be available to reimburse a project
that includes a combination of both reimbursable costs to the developer and URA financing costs.
Establishing a maximum tax increment contribution percentage of the total project cost.
These items, particularly the last two bullets, have been the topic of recent discussions between the City and
URA, and staff is scheduled to present more detail to the Finance Committee on October 21, 2013 for further
vetting.
Next Steps
Second Reading of this Ordinance is scheduled for November 5, 2013. Also on that night, the URA Board is
scheduled to consider a Resolution approving the Loan Agreement, as well as a Resolution that would
appropriate the loan revenue to reimburse the Developer.
Agenda Item 27
Item # 27 Page 3
FINANCIAL / ECONOMIC IMPACT
Adopting this Ordinance would approve a $5 million loan from the City of Fort Collins to the Fort Collins
Urban Renewal Authority (URA). Funding from the City will come from the General Fund reserves. The
URA would be charged an interest rate of 2.68%. Principal and interest payments will be made to the
City from tax increment revenue generated by the Prospect South TIF District through 2037. Additionally,
the URA will pay the City 50% of the annual unencumbered revenue collected from the Prospect South
TIF District, up to $1.78 million, to repay the difference between agreed-upon 2.68% interest rate and the
City's current policy interest rate of 4.96%.
ENVIRONMENTAL IMPACTS
There are no direct environmental impacts resulting from this Ordinance.
BOARD / COMMISSION RECOMMENDATION
The URA Board Finance Committee discussed the Loan Agreement on September 16, 2013. The
Committee supported the proposed terms and bringing forward this Ordinance to execute the Agreement.
ATTACHMENTS
1. URA Finance Committee Minutes, September 16, 2013
2. Powerpoint presentation
2
URA Loan – Summit
In September 2011, the Fort Collins Urban Renewal Authority (URA) approved a Redevelopment
Agreement with Capstone Development Corp (Developer) for The Summit on College, a mixed-use
student housing project in the Prospect South Tax Increment Financing (TIF) District. The Agreement
obligated the URA to reimburse the Developer for up to $5 million of eligible costs upon completion of
the project. The Developer obtained a Certificate of Occupancy for the project in August 2013 and is in
the process of submitting their reimbursement request to the URA.
When the amount of tax increment generated by The Summit was estimated in 2011, the URA used a
methodology based on project costs and assumed 1% appreciation each year, for a total of approximately $8
million. It was anticipated that the URA would have to borrow from the City to pay the reimbursement to
the Developer, and at the time, the financing charge on a $5 million loan was estimated to be $2.4 million.
Based on the most recent August 2013 preliminary valuation from Larimer County, the project is estimated
to generate $7 million of tax increment, creating a $1 million revenue shortfall from the original projection.
Additionally, a combination of rising interest over the past two years (adding 71 basis points) and the City’s
new interagency loan policy (adding 25 basis points), have increased the expected interest rate on the loan
from the City from 4.0% to 4.96% increasing interest cost from $2.4M to $3.8M. Table 1 summarizes the
difference between the original estimates and actual numbers:
Table 1* – Note: numbers have been updated per latest interest rates
2011 Estimates 2013 Actuals
Total Tax Increment $8 million $7 million
Reimbursement Obligation $5 million $5 million¹
Financing Cost to URA $2.4 million $3.8 million
Balance $0.6 million ($1.8 million)
¹ Subject to final verification by URA staff.
*Number have been updated since the
Between the decrease in tax increment revenue and increase in financing charge, the URA would be unable
to afford the full debt obligation of a $5 million loan from the City under current investment policy interest
rates. Consequently, City and URA staff have negotiated a loan agreement that allows the URA to uphold
its reimbursement obligation to the Developer and remain financially solvent, while making a concerted
effort to uphold the City’s interagency loan policy.
Proposed Loan Agreement Terms
The URA cash flow does not support a $5 million loan from the City based on the current interest rates and
the current interagency loan policy. A new loan structure was developed that assigns an interest rate based
on the known revenue stream and term, which turns out to be 2.68%. Since City policy would require 4.96%
interest, this leaves a gap of $1.78 million. To fill this gap, the URA commits to pledge 50% of future
unencumbered revenue from the Prospect South TIF District to the City.
For example, assume the URA collects $1 million in revenue in a given year and owes the City a $400,000
payment on the Capstone loan; 50% of the remaining $600,000, or $300,000, would be paid to the City to
help pay down the $1.78 million interest rate gap. This revenue share structure would continue for the life
Urban Renewal Authority
Finance Committee meeting
September 16, 2013
ATTACHMENT 1
3
of the Prospect South TIF District, or until the $1.78 million is paid in full, whichever happens first.
While City and URA staff support the negotiated loan terms, the variation from current policy is duly
acknowledged. Several practices have been put into place since approval of the Capstone Redevelopment
Agreement to prevent the need for additional policy exceptions, including:
Tax increment estimates are based on Larimer County’s estimate of valuation that the Developer
provides to the URA; the estimates assume 1% appreciation over the life of the associated TIF
District.
Establishing a maximum percentage of tax increment that would be available to reimburse a project
that includes a combination of both reimbursable costs to the developer and URA financing costs.
Establishing a maximum tax increment contribution percentage of the total project cost.
These items, particularly the last two bullets, have been the topic of recent discussions between the City and
URA, and staff is scheduled to present more detail to the Finance Committee for further vetting at an
upcoming meeting.
Bob Overbeck asked why the City would make an exception to common practices in this case. Mike
Beckstead answered that the City has a commitment to the developer, and by making this exception, we
can honor that commitment. The Mayor agreed that Council would need to know how this exception
would affect City policies or practices. Is the City setting a precedent by making this exception? Mike
Beckstead answered that, going forward, the City may limit itself to a 75% commitment to ensure that
this situation never happened again.
Next Steps
Staff will work on drafting a policy for estimating TIF financing.
Urban Renewal Authority
Finance Committee meeting
September 16, 2013
1
The Summit
URA-City Loan Agreement
City Council
October 15, 2013
ATTACHMENT 2
2
Tonight’s Action
•1st
Reading, Ordinance approving a loan
agreement between the City and Fort Collins
Urban Renewal Authority (URA) to reimburse The
Summit project
3
The Summit – Before and After
• Vacant since 1997 flood
• Deteriorating structures
• Overhead power lines
• 676 beds student housing
• 8,000 sq. ft. retail
• Removed from floodplain
• Street and utility improvements
4
Redevelopment Agreement
• Redevelopment Agreement approved Sep. 2011
• $5 M tax increment financing (TIF) reimbursement
upon completion of project
• Developer obtained Cert. of Occupancy Aug. 2013
and submitted reimbursement request for eligible
costs
• URA does not have fund balance for reimbursement
and seeks loan from the City
5
TIF Estimates v. Actuals
2011 Estimates 2013 Actuals
Total Tax Increment $8M $7M
Reimbursement Obligation ($5M) ($5M)
Financing Cost to URA 4.0% = ($2.4M) 4.96 % = ($3.8M)
Balance $600K ($1.8M)
• URA cannot afford a loan at current City interest rate
• Proposed loan agreement re-structured to be
affordable and still uphold City policy
6
Loan Agreement
Term 24 years
Loan amount $5M
Adjusted interest 2.68% = $2M
Total cost to URA $7M
City policy interest* 4.96% = $3.78M
Interest rate difference ($1.78M)
• URA agrees to share future unencumbered revenue
to repay $1.78M interest shortfall
* Interest rate will be set when Agreement is executed
7
Revenue Share Example
• URA shares 50% of unencumbered revenue from
Prospect South TIF District
*Hypothetical Example*
Prospect South Tax Increment Revenue $200,000
Capstone Payment ($100,000)
Other Prospect South Debt Obligations ($50,000)
Unencumbered Revenue $50,000
50% to City $25,000
50% to URA $25,000
8
Recommendation and Next Steps
• Finance Committee supported bringing the loan
forward
• Staff recommends adoption of the Ordinance
November 5, 2013
• City Council 2nd
Reading
• URA Board Resolution approving Agreement
• URA Board Resolution appropriating loan proceeds
9
Thank you
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ORDINANCE NO. 154, 2013
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 URA REIMBURSEMENTS FOR THE
CAPSTONE REDEVELOPMENT CORPORATION
SUMMIT ON COLLEGE PROJECT, AND APPROVING A LOAN
AGREEMENT FOR THAT PURPOSE
WHEREAS, on June 6, 1978, the City Council adopted Resolution 78-49, adopting
findings and establishing the Fort Collins Urban Renewal Authority (the “Authority”) as an
urban renewal authority, pursuant to Colorado Revised Statutes, Part 1 of Title 31, Article 25, as
amended (the “Act”); and
WHEREAS, by Resolution 2011-080, adopted and approved on September 6, 2011, the
City Council found and declared that the area described in such Resolution (the “Midtown
Area”) is a blighted area as described in the Act and appropriate for an urban renewal project;
and
WHEREAS, by Resolution 2011-081, adopted and approved on September 6, 2011, the
City Council adopted an urban renewal plan for the Midtown Area in Fort Collins, which
established a tax increment district referred to as the Prospect South Tax Increment District that
includes the site of the Summit on College Redevelopment Project (the “Project”); and
WHEREAS, by Resolution 2013-043, adopted and approved on May 7, 2013, the City
Council adopted amendments to the previously adopted urban renewal plan for the Midtown
Area (as amended, the “Urban Renewal Plan” or the “Plan”); and
WHEREAS, the purpose of the Urban Renewal Plan is to eliminate blight and otherwise
implement and further the above-referenced resolutions, and the purposes, policies, goals, and
objectives of the Authority and the Plan, pursuant to the Act; and
WHEREAS, on September 13, 2011, the Urban Renewal Authority Board approved a
Redevelopment Agreement (the “Redevelopment Agreement”) between the URA and Capstone
Development Corporation (“Capstone”) to provide financial assistance for certain improvements
and enhancements required by the Project; and
WHEREAS, the Project is located within the boundaries of the Plan and will generate an
estimated $7,000,000 in tax increment funds over the life of the Project; and
WHEREAS, on August 15, 2006, the City Council adopted Resolution 2006-082
authorizing an intergovernmental agreement between the City and the URA which provides that
the City would provide support services to the URA and advance funds to the URA in
connection with URA redevelopment projects; and
- 2 -
WHEREAS, on July 5, 2011, the City Council adopted Resolution 2011-055, requiring
that the intergovernmental agreement between the City and the URA expressly state that all loan
arrangements between the City and the URA must be documented by a loan agreement and
promissory note; and
WHEREAS, the URA does not anticipate having sufficient tax increment revenues in
2013 to fund its contribution to the Project under the Redevelopment Agreement and City staff
therefore recommends that the City lend the URA sufficient funds for that purpose in the amount
of $5,000,000; and
WHEREAS, there are sufficient prior year reserves in the General Fund to fund a loan to
the URA for the purpose of reimbursing Capstone for the improvements and enhancements as
described in the Redevelopment Agreement; 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 Capstone Redevelopment Corporation Summit on College 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, on December 18, 2012, the City Council adopted Resolution 2012-119,
adopting an updated City Investment Policy describing the City’s Inter-Agency Loan Program,
to outline terms and requirements for City loans to outside agencies such as the URA; and
WHEREAS, the adopted Inter-Agency Loan Program calls for interest on loans with a
term greater than 16 years to be the higher of the Treasury Note or Municipal Bond rate plus 0.5
percent, with a floor of 4.00 percent, and pursuant to this provision, the rate of interest for the
proposed loan, based on early October rates, would be 4.96 percent; and
WHEREAS, the Loan Agreement states that the URA will instead pay interest to the City
at a rate of 2.68 percent per annum on the loaned funds, but will provide additional repayment by
pledging 50 percent of future Prospect South property tax increment revenues, to the extent such
revenues are unencumbered by URA obligations for the Project or other redevelopment projects
in the Prospect South tax increment district, up to a maximum of $1,780,000; 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:
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Section 1. The City Council hereby finds and determines, pursuant to the
Constitution, the laws of the State, the Charter and the Code of the City, and in accordance with
the foregoing recitals, that adopting this Ordinance, entering into the Loan Agreement and
performing all obligations set forth therein, 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 purposes of remedying blighted conditions within the Plan area and the
Prospect South tax increment district pursuant to the Urban Renewal Plan, providing a catalyst
for redevelopment in the Midtown Area, increasing sales tax revenues and job opportunities, and
providing other economic and social benefits to the City and surrounding community, and the
City Council hereby authorizes and approves the same.
Section 2. That there is hereby appropriated from General Fund Reserves the sum of
FIVE MILLION DOLLARS ($5,000,000) 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 to carry out its purposes and obligations
under the Redevelopment Agreement for Capstone Development Corporation Infill
Development, dated September 13, 2011, in accordance with the Loan Agreement.
Section 3. That the Loan Agreement is hereby approved as an exception to the City’s
Investment Policy, and the City Manager is authorized to execute said Loan Agreement on
behalf of the City, subject to such modifications in form or substance, not inconsistent with the
purposes or specific terms of this Ordinance, 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 15th day of
October, A.D. 2013, and to be presented for final passage on the 5th day of November, A.D.
2013.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
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Passed and adopted on final reading on the 5th day of November, A.D. 2013.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
1
LOAN AGREEMENT BETWEEN THE CITY OF FORT COLLINS
AND THE FORT COLLINS URBAN RENEWAL AUTHORITY
FOR REIMBURSEMENTS FOR
THE CAPSTONE REDEVELOPMENT CORPORATION
INFILL DEVELOPMENT
(SUMMIT ON COLLEGE PROJECT)
THIS LOAN AGREEMENT (the “Agreement”) made this ___ day of November, 2013
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 “URA” or “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 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 2011-080, adopted and approved on September 6, 2011, the City
Council found and declared that the area described in such Resolution (the “Midtown Area”) is a
blighted area as described in the Act and appropriate for an urban renewal project.
D. By Resolution 2011-081, adopted and approved on September 6, 2011, the City
Council adopted an urban renewal plan for the Midtown Area in Fort Collins, which area
includes the Property.
E. By Resolution 2013-043, adopted and approved on May 7, 2013, the City Council
adopted amendments to the previously adopted urban renewal plan for the Midtown Area (as
amended, the “Urban Renewal Plan” or the “Plan”), the purpose of which is to eliminate blight
and otherwise implement and further the above-referenced Resolutions, and the purposes,
policies, goals, and objectives of the Borrower and the Plan, pursuant to the Act.
F. By the Intergovernmental Agreement approved and amended by City of Fort
Collins City Council Resolution 2006-082 and Resolution 2011-055, 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 agreement and promissory note, and has been approved by both the
City Council and the Board of Commissioners of the URA (the “Board”).
EXHIBIT A
2
G. On September 13, 2011, the Board approved a Redevelopment Agreement (the
“Redevelopment Agreement”) between the URA and Capstone Development Corporation
(“Capstone”) to provide financial assistance for certain improvements and enhancements required by
the Summit on College Redevelopment Project (referred to in the Redevelopment Agreement and
hereinafter as the “Project”); and
H. In accordance with the Redevelopment Agreement the Borrower is obligated to
reimburse Capstone for certain costs relating to the design, construction and reconstruction of all
improvements, infrastructure, parking, streets, rights-of-way, buildings, structures, signage, and
landscaping to be constructed as part of the Project.
I. The Borrower has requested that the City provide funding in the form of a loan to
the Borrower for these obligations up to an amount not to exceed Five Million Dollars
($5,000,000) and City has agreed to make a loan on the terms and conditions hereinafter set forth
(the “Loan”).
J. The Project is within the Prospect South Tax Increment District established in the Plan,
and tax increment financing for the Project is specifically permitted pursuant to Section 7 of the Plan,
and is expected to generate an estimated Seven Million Dollars ($7,000,000) in tax increment
revenues over the life of the Project.
K. The City Council has approved this Loan Agreement by its final adoption of Ordinance
No. __, 2013, on November 5, 2013, and the Board has approved this Loan Agreement by its
adoption of Resolution __, on November 5, 2013.
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”) and the execution of a promissory note and other documents as may reasonably be
required, the City will loan the Borrower upon demand hereunder an amount not to exceed Five
Million Dollars ($5,000,000). All funds received by the Borrower hereunder shall be used for the
purposes described herein and in the Redevelopment Agreement.
Section 2. Interest. Interest on the Loan will accrue at a rate equal to 2.680% per
annum.
Section 3. Payment. Principal and accrued interest will be due and payable by the
Borrower to the City as set forth in the payment schedule contained on Exhibit A, attached hereto
and incorporated herein by this reference. Payments will apply to interest first, then to principal.
If there is unpaid interest at the end of any calendar year, the shortfall will be added to the
outstanding balance, resulting in the compounding of interest. All unpaid principal, interest,
default interest, fees and charges for the Loan shall mature on December 31, 2037.
Section 4. Additional Amounts Due. In light of the interest rate reduction agreed
upon by the City in connection with the Loan, the Borrower has agreed to make additional
3
payment to the City each year of this Agreement until the Loan has been fully repaid, no later
than December 31st , in an amount equal to 50 percent of the total property tax increment
revenues received by the Borrower from the Prospect South Tax Increment District in that year,
after subtraction of all amounts the Borrower is or has become legally obligated to pay from that
year’s revenues. The total of payments made by Borrower to the City under this Section 4 shall
not exceed One Million Seven Hundred and Eighty Thousand Dollars ($1,780,000).
Section 5. Prepayment. Borrower, in its sole discretion, may prepay all or any
portion of the payments due under this Agreement 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. The URA
shall continue to be obligated to make additional payments pursuant to Section 4 in the event of
prepayment of scheduled debt service required in Section 3, until the URA has paid the amount
of the shortfall in interest considering the interest paid compared to interest accrued at the rate of
____ percent per annum (sometimes referred to as “Policy Interest”) as of the payment date, as
illustrated on Exhibit C, attached hereto and incorporated herein by this reference.
Section 6. Tracking. Borrower agrees to maintain a separate payable line-item within
its accounting system to track the Loan.
Section 7. Promissory Note. Borrower’s obligations hereunder shall be documented
in a Promissory Note in substantially the form set forth as Exhibit B, attached hereto and
incorporated herein by this reference.
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.
4
CITY:
CITY OF FORT COLLINS, COLORADO, a
municipal corporation
By:
Karen Weitkunat, Mayor
ATTEST:
By:
City Clerk
APPROVED AS TO FORM:
By:
Deputy City Attorney
BORROWER:
FORT COLLINS URBAN RENEWAL
AUTHORITY, a public body corporate and politic
of the State of Colorado.
By: _________________________________
Darin Atteberry, Executive Director
Urban Renewal Authority
Propect South TIF District - The Summit project
Loan from City General Fund to URA
Loan Amount 5,000,000.00 Start Date 6-Nov-13
Interest Rate 2.68000% Matures 31-Dec-37
Years 24 1/6
Year of
Loan Date Payment Interest Principal Balance
0 6-Nov-13 5,000,000.00
1/6 31-Dec-13 - 5,000,000.00
1.17 31-Dec-14 58,267.69 134,000.00 (75,732.31) 5,075,732.31
2.17 31-Dec-15 268,946.07 136,029.63 132,916.44 4,942,815.87
3.17 31-Dec-16 274,324.99 132,467.47 141,857.52 4,800,958.35
4.17 31-Dec-17 274,324.99 128,665.68 145,659.31 4,655,299.04
5.17 31-Dec-18 279,811.49 124,762.01 155,049.48 4,500,249.56
6.17 31-Dec-19 279,811.49 120,606.69 159,204.80 4,341,044.76
7.17 31-Dec-20 285,407.72 116,340.00 169,067.72 4,171,977.04
8.17 31-Dec-21 285,407.72 111,808.98 173,598.74 3,998,378.30
9.17 31-Dec-22 291,115.88 107,156.54 183,959.34 3,814,418.96
10.17 31-Dec-23 291,115.88 102,226.43 188,889.45 3,625,529.51
11.17 31-Dec-24 296,938.20 97,164.19 199,774.01 3,425,755.50
12.17 31-Dec-25 296,938.20 91,810.25 205,127.95 3,220,627.55
13.17 31-Dec-26 302,876.96 86,312.82 216,564.14 3,004,063.41
14.17 31-Dec-27 302,876.96 80,508.90 222,368.06 2,781,695.35
15.17 31-Dec-28 308,934.50 74,549.44 234,385.06 2,547,310.29
16.17 31-Dec-29 308,934.50 68,267.92 240,666.58 2,306,643.71
17.17 31-Dec-30 315,113.19 61,818.05 253,295.14 2,053,348.57
18.17 31-Dec-31 315,113.19 55,029.74 260,083.45 1,793,265.12
19.17 31-Dec-32 321,415.45 48,059.51 273,355.94 1,519,909.18
20.17 31-Dec-33 321,415.45 40,733.57 280,681.88 1,239,227.30
21.17 31-Dec-34 327,843.76 33,211.29 294,632.47 944,594.83
22.17 31-Dec-35 327,843.76 25,315.14 302,528.62 642,066.21
23.17 31-Dec-36 334,400.64 17,207.37 317,193.27 324,872.94
24.17 31-Dec-37 333,579.53 8,706.59 324,872.94 -
7,002,758.21 2,002,758.21 5,000,000.00
EXHIBIT A
EXHIBIT B to LOAN AGREEMENT
{00584920 / 4}
PROMISSORY NOTE
$5,000,000 November ___, 2013
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 Dollars ($5,000,000) (the “Loan
Amount”). This Promissory Note is issued pursuant to the Loan Agreement between the City of
Fort Collins and The Fort Collins Urban Renewal Authority For Reimbursements for the
Capstone Redevelopment Corporation Infill Development (Summit on College Project), which
Loan Agreement is dated November___, 2013 (the “Agreement”).
Capitalized terms used herein but not defined herein have the meanings given such terms
in the Agreement. The obligations of Borrower evidenced by this Promissory Note are payable
in accordance with the terms and conditions of the Agreement.
The rate of interest on the Loan Amount is a fixed rate equal to 2.68% per annum
(“Interest Rate”). As additional consideration for the Loan, Section 5 of the Agreement requires
that the Borrower make an additional payment to the City each year of this Agreement until the
Loan has been fully repaid, no later than December 31
st
, in an amount equal to 50 percent of the
total property tax increment revenues received by the Borrower from the Prospect South Tax
Increment District in that year, after subtraction of all amounts the Borrower is or has become
legally obligated to pay from that year’s revenues. The total of payments made by Borrower to
the City under this Section 4 shall not exceed One Million Seven Hundred and Eighty Thousand
Dollars ($1,780,000). All unpaid Principal and accrued interest, and any additional amount due
pursuant to Section 4 of the Agreement, 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.
This Promissory Note shall mature on December 31, 2037. At such time all unpaid
principal, interest, default interest, fees and charges, and any additional amount due and owing
under this Note shall be deemed payable in full.
Unless otherwise agreed or required by applicable law, payments will apply to interest
first, then to principal. If there is unpaid interest at the end of any calendar year, the shortfall will
be added to the outstanding balance, resulting in the compounding of interest.
Borrower, in its sole discretion, may prepay all or any portion of the payments due under
this Agreement 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. Borrower shall continue to be obligated to
- 2 -
make additional payments pursuant to Section 4 of the Agreement in the event of prepayment of
scheduled debt service required in Section 3 of the Agreement, until Borrower has paid the
amount of the shortfall in interest considering the interest paid compared to interest accrued at
the rate of ___ percent per annum (sometimes referred to as “Policy Interest”) as of the payment
date, as described in Section 5 of the Agreement.
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
Agreement 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 advanced hereunder (“Interest”)
exceed the maximum amount permissible under applicable law. If the performance or
fulfillment of any provision hereof or of the Agreement or any other document 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
- 3 -
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 provision of the Agreement 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 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.
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:
Darin Atteberry, Executive Director
Dated: ______________________________
EXHIBIT C
Urban Renewal Authority
Propect South TIF District - The Summit project
Loan from City General Fund to URA
Revenue Sharing - Ongoing Tracking
Year of
Loan Date Agreed Interest Policy Interest
Difference
Owed
50% Revenue
shared
Unpaid Rev
Share Balance
0 6-Nov-13 -
0.17 31-Dec-13 - - - -
1.17 31-Dec-14 134,000.00 289,416.00 155,416.00 155,416.00
2.17 31-Dec-15 136,029.63 248,000.00 111,970.37 267,386.37
3.17 31-Dec-16 132,467.47 241,984.13 109,516.66 376,903.03
4.17 31-Dec-17 128,665.68 235,669.87 107,004.19 483,907.22
5.17 31-Dec-18 124,762.01 229,042.42 104,280.41 588,187.63
6.17 31-Dec-19 120,606.69 222,086.25 101,479.56 689,667.19
7.17 31-Dec-20 116,340.00 214,785.05 98,445.05 788,112.24
8.17 31-Dec-21 111,808.98 207,121.72 95,312.74 883,424.98
9.17 31-Dec-22 107,156.54 199,078.28 91,921.74 975,346.72
10.17 31-Dec-23 102,226.43 190,635.89 88,409.46 1,063,756.18
11.17 31-Dec-24 97,164.19 181,774.76 84,610.57 1,148,366.75
12.17 31-Dec-25 91,810.25 172,474.11 80,663.86 1,229,030.61
13.17 31-Dec-26 86,312.82 162,712.16 76,399.34 1,305,429.95
14.17 31-Dec-27 80,508.90 152,466.01 71,957.11 1,377,387.06
15.17 31-Dec-28 74,549.44 141,711.65 67,162.21 1,444,549.27
16.17 31-Dec-29 68,267.92 130,423.87 62,155.95 1,506,705.22
17.17 31-Dec-30 61,818.05 118,576.22 56,758.17 1,563,463.39
18.17 31-Dec-31 55,029.74 106,140.93 51,111.19 1,614,574.58
19.17 31-Dec-32 48,059.51 93,088.85 45,029.34 1,659,603.92
20.17 31-Dec-33 40,733.57 79,389.38 38,655.81 1,698,259.73
21.17 31-Dec-34 33,211.29 65,010.42 31,799.13 1,730,058.86
22.17 31-Dec-35 25,315.14 49,918.26 24,603.12 1,754,661.98
23.17 31-Dec-36 17,207.37 34,077.53 16,870.16 1,771,532.14
24.17 31-Dec-37 8,706.59 17,451.11 8,744.52 1,780,276.66
2,002,758.21 3,783,034.87 1,780,276.66 -