HomeMy WebLinkAboutCOUNCIL - PROCLAMATION - 09/17/2013 - RESOLUTION 2013-079 CONCERNING A LOAN FROM THE CITDATE: September 17, 2013
STAFF: Tom Leeson, Megan Bolin
John Voss, Chris Donegon
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 18
SUBJECT
Resolution 2013-079 Concerning a Loan from the City of Fort Collins to the Fort Collins Urban Renewal Authority for
the Purpose of Funding Certain Improvements for the Prospect Station Project and Declaring the City Council’s
Present Intent to Fund Such Loan.
EXECUTIVE SUMMARY
The purpose of this Resolution is to declare City Council’s intent to provide a loan to the Fort Collins Urban Renewal
Authority (URA) for one half of the URA’s reimbursement obligation to Prospect Station LLC.
On September 17, 2013, the Fort Collins Urban Renewal Authority (URA) Board will consider a Redevelopment
Agreement for Prospect Station, a new mixed-use development proposed within the Prospect South Tax Increment
Financing (TIF) District. The Agreement would authorize a $494,000 reimbursement obligation to Prospect Station
LLC (Developer) for eligible project costs. Half ($247,000) of the reimbursement would be provided to the Developer
upon completion of the project and verification of costs, and the remaining half would be dispersed in annual payments
over the remaining life of the TIF District.
The Redevelopment Agreement would obligate the URA to make a $247,000 payment to the Developer upon
completion of the project in 2014. Since the URA will not have sufficient fund balance to pay that amount outright, a
loan is requested from the City of Fort Collins.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
Prospect Station LLC (Developer) submitted a formal application to the Fort Collins Urban Renewal Authority (URA)
in June 2013 requesting tax increment financing (TIF) for a new, mixed-use project in the Prospect South TIF District.
URA staff has since negotiated a Redevelopment Agreement, which will be considered by the URA Board for approval
on September 17, 2013.
Based upon the Larimer County Estimate of Value, the project is anticipated to generate $865,340 over the remaining
23-year life of the Prospect South TIF District (although the TIF District ends in 2036, the URA will collect tax increment
revenue through 2037). If approved, the Redevelopment Agreement would establish a reimbursement obligation for
eligible costs from the URA to the Developer of up to $494,000. Of this amount, half would be due upon completion
of the project, and the remaining half would be dispersed through annual payments of $11,762 until 2036. The
reimbursement obligation represents approximately 57% of the total estimated tax increment generated by the project.
The project is expected to be complete by fall 2014; provided eligible costs are verified, this means that $247,000
would be due to the Developer. Since the URA will not have sufficient fund balance to pay this sum outright, it is
seeking a loan from the City of Fort Collins to fulfill this portion of the obligation. This Resolution would declare the
Council’s present intent to provide a loan to the URA. Although the Resolution would be approved now, the loan would
not be executed until such time as the funds are needed to make the payment to the Developer. The Resolution
establishes the basic terms of the loan according to the City’s current investment policy (see Attachment 1 for the
potential loan repayment schedule); if the terms need to change at time of execution and no longer adhere to
established policy, the loan would be brought back to the URA Board and City Council for reevaluation.
September 17, 2013 -2- ITEM 18
Loan Amount: $247,000
Interest Rate: Higher of the Treasury Rate or Municipal Rate plus .5%, per City investment policy. For
the purposes of this Resolution, the current rate of 5.25% was used to project a
repayment schedule. The actual rate will be established based on conditions when the
loan is executed.
Term: 21 years
Based on these assumptions, principle and interest payments will total $422,284. When combined with the remaining
half of the reimbursement obligation ($247,000), the total cost to the URA would be $669,284, which represents
approximately 77% of the total estimated increment generated by the project. See Attachment 2 for the anticipated
tax increment cash flow related to this project.
FINANCIAL / ECONOMIC IMPACTS
Adoption of this Resolution states Council’s intent to provide a loan to the URA at the time the URA needs to make
a payment to Prospect Station LLC, per the Redevelopment Agreement considered by the URA Board on September
17, 2013. The Resolution provides a repayment schedule based on the City’s current investment policy; the loan
amount and interest rate are subject to change at the time the loan is executed. Unless the terms need to change in
a way that no longer adheres to the City’s investment policy, the loan will be executed administratively.
BOARD / COMMISSION RECOMMENDATION
The Council Finance Committee will meet on September 16, 2013 to discuss this loan and Resolution. A summary
of that discussion will be provided as a read-before memo to Council on September 17.
ATTACHMENTS
1. Potential Loan Repayment Schedule
2. Prospect Station TIF Cash Flow
3. Powerpoint presentation
Midtown URA
Prospect Station
Reimbursement Agreement to City from the URA
Reimbursement Amount 247,000.00 Start Date 31-Dec-15
Interest Rate 5.250% Matures 31-Dec-37
$19,194.75 Payment Years 22
Time in
Years Date Payment Interest Principal Balance
- 31-Dec-15 (247,000.00)
1.000 31-Dec-16 ($19,194.75) ($12,967.50) ($6,227.25) (240,772.75)
2.000 31-Dec-17 (19,194.75) (12,640.57) (6,554.18) (234,218.57)
3.000 31-Dec-18 (19,194.75) (12,296.47) (6,898.28) (227,320.29)
4.000 31-Dec-19 (19,194.75) (11,934.32) (7,260.43) (220,059.86)
5.000 31-Dec-20 (19,194.75) (11,553.14) (7,641.61) (212,418.25)
6.000 31-Dec-21 (19,194.75) (11,151.96) (8,042.79) (204,375.46)
7.000 31-Dec-22 (19,194.75) (10,729.71) (8,465.04) (195,910.42)
8.000 31-Dec-23 (19,194.75) (10,285.30) (8,909.45) (187,000.97)
9.000 31-Dec-24 (19,194.75) (9,817.55) (9,377.20) (177,623.77)
10.000 31-Dec-25 (19,194.75) (9,325.25) (9,869.50) (167,754.27)
11.000 31-Dec-26 (19,194.75) (8,807.10) (10,387.65) (157,366.62)
12.000 31-Dec-27 (19,194.75) (8,261.75) (10,933.00) (146,433.62)
13.000 31-Dec-28 (19,194.75) (7,687.77) (11,506.98) (134,926.64)
14.000 31-Dec-29 (19,194.75) (7,083.65) (12,111.10) (122,815.54)
15.000 31-Dec-30 (19,194.75) (6,447.82) (12,746.93) (110,068.61)
16.000 31-Dec-31 (19,194.75) (5,778.60) (13,416.15) (96,652.46)
17.000 31-Dec-32 (19,194.75) (5,074.25) (14,120.50) (82,531.96)
18.000 31-Dec-33 (19,194.75) (4,332.93) (14,861.82) (67,670.14)
19.000 31-Dec-34 (19,194.75) (3,552.68) (15,642.07) (52,028.07)
20.000 31-Dec-35 (19,194.75) (2,731.47) (16,463.28) (35,564.79)
21.000 31-Dec-36 (19,194.75) (1,867.15) (17,327.60) (18,237.19)
22.000 31-Dec-37 (19,194.64) (957.45) (18,237.19) 0.00
(422,284.39) (175,284.39) (247,000.00)
Payment
* Dates and rates are preliminary.
Specifics will be set after the loan is authorized.
ATTACHMENT 1
TIF Growth Rate 0%
TIF for Obligations 669,284
% of TIF pledged
for Obligations 77%
TIF Net Income 196,056
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 TOTALS
Cash Inflows
TIF - 3,916 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 865,340
Loan from City 247,000 247,000
Total Cash Inflows - 250,916 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156
1,112,340
Cash Outflows
Lump Sum to Developer (247,000) (247,000)
Debt / Dev Pay Back Prin (to the City) (6,227) (6,554) (6,898) (7,260) (7,642) (8,043) (8,465) (8,909) (9,377) (9,870) (10,388) (10,933) (11,507) (12,111) (12,747) (13,416) (14,121)
(14,862) (15,642) (16,463) (17,328) (18,237) (247,000)
Interest (to the City) (12,968) (12,641) (12,296) (11,934) (11,553) (11,152) (10,730) (10,285) (9,818) (9,325) (8,807) (8,262) (7,688) (7,084) (6,448) (5,779) (5,074) (4,333) (3,553)
(2,731) (1,867) (957) (175,284)
Dev Pay over Time - (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762)
(11,762) (11,762) (11,762) - (247,000)
Total Cash Outflows - (247,000) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957)
(30,957) (30,957) (30,957) (30,957) (19,195) (916,284)
-
Net Cash Flow - 3,916 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 19,961 196,056
Obligations to the Developer
% of
Total TIF
Lump Sum Payment 247,000 28.54%
Payments to Developer 247,000 28.54%
Loan Interest 175,284 20.26%
Total Obligations 669,284 77.34%
TIF Collections 865,340
Total Revenue 865,340
Net Income 196,056 22.66%
Obligations to the City
Obligations
Revenue
Midtown URA Prospect Station
(50% Loan and 50% Payback)
Assumptions
TIF Growth
ATTACHMENT 2
1
Prospect Station
City Loan Agreement
City Council
September 17, 2013
ATTACHMENT 3
2
Tonight’s Action
• Resolution declaring the City Council’s intent to
fund a loan to the URA for the purpose of funding
certain improvements for the Prospect Station
project.
3
Financial Request
Total Project Cost $5,980,924
Projected Actual Value $5,224,236
Projected Annual Tax Increment $39,155
Total Property Tax Increment Expected $865,340*
TIF Requested $494,000
% of Total Tax Increment Requested 57%
* Assumes 23 years of increment with zero growth.
4
TIF Reimbursement Structure
• Developer receives lump sum payment equal to
50% of total reimbursement amount
• Developer receives annual reimbursement
payments for 21 years that total 50% of
reimbursement amount
• Total Reimbursement Amount = $494,000
Example:
Lump Sum Payment = $247,000
Annual Reimbursement payment = $11,762
Total Annual Payments = $247,000
Total Reimbursement - $494,000
5
TIF Reimbursement Structure
• Total Reimbursement Amount + Interest = 77% of
Estimated Total Tax Increment
TIF Growth Rate 0%
Percent of TIF Pledged 77%
Total TIF Collected (Est.) $865,340
Developer Lump Sum $247,000
Developer Payback over time $247,000
Cost of Capital $175,284
Total TIF Pledged $669,284
6
City Loan Structure
Terms
Loan Amount $247,000
Interest Rate Treasury Rate or Muni Rate plus .5%.
Current rate of 5.25% was used to project
a repayment schedule. Actual rate will be
established when the loan is executed.
Term 22 years
Principal and Interest $422,284
7
Recommendations
• Staff recommends adoption of the Resolution.
8
Thank you
- 1 -
RESOLUTION 2013-079
OF COUNCIL OF THE CITY OF FORT COLLINS
CONCERNING A LOAN FROM THE CITY OF FORT COLLINS
TO THE FORT COLLINS URBAN RENEWAL AUTHORITY
FOR THE PURPOSE OF FUNDING CERTAIN IMPROVEMENTS FOR
THE PROSPECT STATION PROJECT AND DECLARING THE
CITY COUNCIL’S PRESENT INTENT TO FUND SUCH LOAN
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 area
includes the Property; 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, Prospect Station, LLC (the “Developer”) desires to construct a new
residential and commercial development with approximately 29 residential rental units and one
small retail commercial space immediately west of the Mason Trail, south of Prospect Road (the
“Project”); and
WHEREAS, by separate action on this date, the Board of Commissioners of the URA (the
ABoard@), by the adoption of Resolution No. 061, will consider whether providing financial
assistance to the Developer for the Project is in the best interests of the URA and serves important
public purposes within the plan area, including the promotion, retention and expansion of local
businesses; improving the property and sales tax base; enhancing and building public
infrastructure; eliminating blight; and otherwise furthering and implementing the purposes, goals,
and objectives of the Plan; and
- 2 -
WHEREAS, pursuant to Resolution No. 061, the Board will consider authorization of
Redevelopment Agreement for the reimbursement of certain redevelopment costs required for
completion of the Project (the “Agreement”); and
WHEREAS, the total cost of the Project is expected to be approximately $5.9 million and
the cost of the activities and improvements to be funded by the URA is capped at $ 494,000, half of
which ($247,000) will be paid upon completion of the determination of the eligible costs for
reimbursement (the “Initial Reimbursement”), and the other half of which ($247,000) will be paid
over time from the tax increment revenues expected to be generated by the Project; and
WHEREAS, the URA must borrow funds to pay for the Initial Reimbursement until it is
able to use the additional increment of property tax generated by the Developer=s Project to issue a
bond or obtain other financing; and
WHEREAS, the City Council wishes to state its present intent to authorize a loan to the
URA to fund the Initial Reimbursement, as more specifically provided herein; and
WHEREAS, upon completion of the Project and a determination of the final amount of the
reimbursement to the Developer under the Agreement, the City Council intends to lend to the
URA, subject to appropriation of funds for such purpose, and the execution of a loan agreement
(the “Loan Agreement’) and promissory note (“Note”) appropriate to evidence the URA’s
obligation for repayment, the amount of the Initial Reimbursement (the “Loan”); and
WHEREAS, the interest rate and payment schedule for the Loan will be set by the City’s
Financial Officer in accordance with the City Council approved policy for interfund loans in effect
at the time of the Loan; and
WHEREAS, the City is authorized by Section 31-25-105 of the Colorado Revised Statutes
to borrow money in such amounts as may be needed to meet its purposes; and
WHEREAS, the City Council believes that the Loan is in the best interests of the City and
the URA and will promote the mutual purposes of the City and the URA.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE FORT
COLLINS as follows:
Section 1. 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 Loan Agreement, and facilitating the provision by the
Authority of support for the Project in the form of the Initial Reimbursement 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 elimination and
prevention of blight and the redevelopment of property within the Midtown Area.
- 3 -
Section 2. The City Council hereby authorizes and directs the City Manager, upon request
of the URA for the Loan, in consultation with the Financial Officer and the City Attorney, to
prepare a Loan Agreement and Note consistent with the terms of the Resolution and the City
Council-adopted policy for interfund loans. Said Loan Agreement and Note shall include a
payment schedule for the remaining term of the tax increment revenues to be received by the URA
from the Project, and a provision for repayment in the event the URA issues bonds for which said
revenues are to be pledged.
Section 3. Provided that funds necessary for the Loan have been appropriated by the City
Council, the City Manager is hereby authorized to execute said Loan Agreement and, upon
execution of the Loan Agreement and Note by the URA Executive Director, the City Manager is
further authorized to make the Loan to the URA in accordance with the terms and conditions set
forth in the Loan Agreement and this Resolution.
Section 4. 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.
Section 5. The actions set forth in this Resolution are contingent upon the approval by the
Board of Board Resolution No. 061, authorizing the Agreement and the Loan, consistent with this
Resolution.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 17th
day of September, A.D. 2013.
_________________________________
Mayor
ATTEST:
__________________________________
City Clerk