HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/06/2014 - RESOLUTION 2014-032 APPROVING AN AMENDMENT TO THEAgenda Item 15
Item # 15 Page 1
AGENDA ITEM SUMMARY May 6, 2014
City Council
STAFF
Darin Atteberry, City Manager
Mike Beckstead, Chief Financial Officer
SUBJECT
Resolution 2014-032 Approving an Amendment to the Redevelopment and Reimbursement Agreement with
the Fort Collins Urban Renewal Authority, Walton Foothills Holdings VI, L.L.C. and the Foothills Metropolitan
District Regarding the Redevelopment of Foothills Mall.
EXECUTIVE SUMMARY
The purpose of this item is to amend the Foothills Mall Redevelopment Agreement. The Developer has asked
to amend Section 3.1 - Conditions Precedent to Issuance of District Bonds of the Agreement to allow the Metro
District Bonds to be issued with 155k square feet of executed leases vs. the 240k square feet required in the
current agreement. The Developer is also asking for clarification to Section 4.3 - Construction of Residential
Component of Project: Affordable Housing concerning the period of time the Developer may be required to
make payments to the City if there is a delay in the completion of the residential units and Section 3.2(c) (now
Section 3.2(g)) - Provisions to be Included in District Bond Documents concerning the order in which the
Reserve and the Supplemental Reserve would be utilized.
Six additional refinements to the Agreement are recapped below to address concerns raised by Council.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution;
1. Staff recommends approving the modifications and structure of bond fund releases in Section 3.1.
2. Staff recommends approving the requested clarification to Section 4.3 and 3.2(c).
3. Staff recommends approving the four additional refinements to the Agreement
BACKGROUND / DISCUSSION
Attachment 1 is the Agenda Item Summary from April 15th, concerning the details behind the modifications
requested for Sections 3.1 and 4.3.
Amendment to Section 3.2
The current redevelopment agreement details two unique reserve accounts that will be established as part of
the Metro District bond offering. The first, “Reserve”, is typical to bond transactions where 10% of the bond
proceeds are set aside in a reserve account. The Reserve is funded directly from bond proceeds and is
funded at the time the bonds close. The second, “Supplemental Reserve”, has been added as a credit
enhancement. The Supplemental Reserve is funded from revenues from the project and is built up over the
first few years of the project. Specifically, each year, if the combined pledged revenues exceed the bond
payment requirement, the excess is put into a Supplemental Reserve account by the Bond Trustee until the
Agenda Item 15
Item # 15 Page 2
Supplemental Reserve is fully funded at 10% of the initial bond value. The two reserves will each hold $7.2M
assuming a $72M bond offering for a combined total of $14.4M of reserves.
Section 3.2(c) - Provisions to be included in District Bond Documents within the original agreement (Section
3.2(g) in the proposed modification document) specifies that in the event there are insufficient revenues from
all sources to support the debt payments, the Reserve would be used first and the Supplemental Reserve
would be used second. Use of the Reserve to support debt payments would trigger various regulatory filings
on the part of the District and put the bonds in default.
The Supplemental Reserve was intended to be a credit enhancement to the bond offering and was designed to
provide a buffer to the Reserve in the event of insufficient revenues. As such, the Supplemental Reserve
should be used first to avoid default and regulatory filings associated with using the Reserve first. Using the
Reserve first negates the credit enhancement feature the Supplemental Reserve was designed to provide.
There is no anticipated adverse financial impact to the City with this clarification.
Additional Refinements
To further refine the agreement and address several concerns raised by Council, five additional modifications
have been discussed and agreed upon with the Developer since the April 15th Council discussion. These
changes are included in the attached proposed modifications.
1. Section 3.1(c) has been modified to require 120,000 vs. 90,000 square feet of tenants new to Fort Collins
except that the City Manager shall have the authority to deem this requirement has been met if the square
footage of tenants new to Fort Collins is between 90,000 and 120,000 square feet and the City Manager
has determined that it is in the best interest of the City to do so.
2. Section 3.2(c) has been added that requires a certificate of completion on the core and shell of the new
Sears building before the release of the fourth tranche funds.
3. Section 3.2(e) has been added that stipulates the Developer will not be reimbursed from bond proceeds for
expenditures to date on public improvements until the Developer has achieved at least 255,000 square
feet of executed leased space.
4. Section 4.1(a) has been modified to allow the City Manager or City Attorney to inspect and review
executed leases subject to confidentiality provisions contained in the individual leases. Developer will use
reasonable efforts to obtain the consent of retailers where such consent is required.
5. Sections 25.5 & 26 have been modified to clarify that the City Manager, in consultation with legal counsel,
has the authority to amend the agreement provided there is no change or adverse impact to the City’s
financial interests or substantial change to the scope or general character of the project.
6. Sections 4.7 & 5.1 have been modified to strengthen the agreement to ensure the PIF covenant remains in
place and the mill levy cap and debt limits defined in the Metro District Service Plan can be enforced.
Other minor revisions have also been made. All revisions are highlighted on Attachment 3.
BOARD / COMMISSION RECOMMENDATION
Council directed staff to meet with boards and commissions to gather input and feedback on the proposed
changes to the agreement. The following meetings have occurred:
Staff met with the Economic Advisory Commission on April 17th and again on April 28th
An all board and commission meeting was held at the Lincoln Center on April 24th. 16 people were in
attendance (including 1 citizen not associated with a board), representing 12 different boards. Feedback
was provided by 14 of the 16. In summary, 12 were supportive of the Mall project, with 1 not supportive
and 1 neutral. 10 were supportive of the proposed changes to the agreement and 4 were not supportive of
the proposed changes. A recap of the feedback from the board and commission meeting is included in
Attachment 2.
Agenda Item 15
Item # 15 Page 3
PUBLIC OUTREACH
A Community event held April 28th, hosted by Councilmember Horak, included a short presentation by staff,
followed by questions and answers. Approximately 30 citizens attended.
ATTACHMENTS
1. Copy of Agenda Item Summary, April 15, 2014 (PDF)
2. Board and Commission Feedback, April 24, 2014 (PDF)
3. Mall Agreement- redlined (DOCX)
Agenda Item 17
Item # 17 Page 1
AGENDA ITEM SUMMARY April 15, 2014
City Council
STAFF
Darin Atteberry, City Manager
Mike Beckstead, Chief Financial Officer
SUBJECT
Resolution 2014-032 Approving an Amendment to the Redevelopment and Reimbursement Agreement with
the Fort Collins Urban Renewal Authority, Walton Foothills Holdings VI, L.L.C. and the Foothills Metropolitan
District Regarding the Redevelopment of Foothills Mall.
EXECUTIVE SUMMARY
The purpose of this item is to amend the Foothills Mall Redevelopment Agreement. The Developer has asked
to amend Section 3.1 – Conditions Precedent to Issuance of District Bonds of the Agreement, to allow the
Metro District Bonds to be issued with 155k square feet of executed leases vs. the 240k square feet required in
the current agreement. The Developer is also asking for clarification to Section 4.3 – Construction of
Residential Component of Project: Affordable Housing, concerning the period of time the Developer may be
required to make payments to the City if there is a delay in the completion of the residential units.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
Amendment to Section 3.1(c)
Section 3.1 - Conditions Precedent to Issuance of District Bonds was included in the agreement to provide the
City assurance that prior to the City granting authorization to the District to issue the bonds that the project
financing is in place and all project approvals have been received. Section 3.1 details 7 conditions that must
be met by the Developer prior to the issuance of the District Bonds. The seven conditions are summarized
below:
a. District Financing Plan approved by the City Manager.
b. Provide evidence that the Developer has obtained all equity and private financing necessary to
construct the non-residential components of the Project.
c. Obtain 240k square feet of executed leased space with 120k square feet of tenants new to Fort
Collins at an average sales per square foot of $375.
d. Add-On PIF imposed in accordance with Section 4.7.
e. Obtain all Development Approvals for the Project.
f. Satisfactory opinion by District’s bond counsel.
g. No event of default shall have occurred.
The Developer has indicated they are prepared to meet 6 of these conditions and are requesting a modification
to 3.1(c), concerning the square footage of lease space required before issuance. The Developer currently
has approximately 90k square feet of leases executed and anticipates having approximately 195k square feet
leased by May 2014. A combination of factors has negatively impacted the current volume of executed leases:
Agenda Item 17
Item # 17 Page 2
1. The delay from an anticipated 2014 opening to a 2015 opening.
2. Timing uncertainty of the 2015 opening until the Redevelopment Agreement was signed in
January of 2014.
3. A leasing strategy that focuses on critical retailers first, who once signed, will attract other quality
retailers.
4. Retailers are currently focused on leases for 2014 openings and will focus on leases to support
2015 openings later in this year.
The Developer has requested an amendment to the agreement that would allow for the issuance of District
bonds with 155k square feet leased including 90k square feet of tenants new to Fort Collins. However, only
$23M of the $53M of bond proceeds would be released to the project. The remaining $30M of bond proceeds
would be held in escrow by the Bond Trustee and would only be released in tranches to the project as
additional leases are executed by the developer.
Table A
Lease Space Sq Ft Funds Released Percent of…
Tranche
Total
New to
Fort
Collins
Funds
Released
Assigned
to City
Improv
Orig
240k
Mall (less
Macy's)
Current
240k 120k $ 53 $ 8 100% 47%
Request
1 155k 90k $ 23 $ 3 65% 30%
2 205k 120k 33 1 85% 40%
3 255k 130k 43 2 106% 50%
4 310k 150k 53 2 129% 60%
Table A details the additional square feet of executed leases required by the developer to receive additional
funding. As each 50k of additional leases are executed, combined with a corresponding increase in leases
associated with tenants new to Fort Collins, funding will be released by the Bond Trustee in increments of
$10M. In comparison to the original agreement, the Developer must now obtain 310k square feet of executed
leases (60% of the total Mall) before all funds are made available (vs. 240k square feet (47% of the total Mall)
in the original agreement). The amount of leased space to tenants new to Fort Collins has also increased from
120k to 150k. In addition, a portion of each tranche released would be assigned to the Underpass and
Foothills Activity Center portion of the project.
Waiting until the developer has obtained the required 240k square feet of leased space prior to the issuance of
the bonds could have multiple adverse effects on the project:
1. The equity partner and the construction financier require all funding be closed simultaneously. A delay
in the issuance of the District Bonds will delay the closing on the construction financing.
2. A delay in the close of the project financing opens the possibility of rising interest rates adding
significant cost to the project.
3. Construction timing is critical, a delay of several weeks in closing all financing will delay construction
start-up which in turn will delay the opening in 2015.
4. A delay in the 2015 mall opening will void current executed leases which specify a 2015 opening.
5. A delay in the 2015 mall opening will put at risk other interested retailers given the projects timing
uncertainty. Some of these retailers may elect to locate elsewhere within the northern Colorado region
and be lost to the Mall project indefinitely.
Agenda Item 17
Item # 17 Page 3
The Developer’s Equity Partner has agreed to provide additional security and financing to support the project
and maintain the current timeline. Current equity investment in the project is approximately $57M and will
most likely increase by the time all financing is closed. This is 40% to 50% higher than their original intentions.
In addition, the Equity Partner has agreed to provide 100% recourse vs. the normal 50% recourse on the
$100M plus construction loan. Both actions demonstrate confidence in the project.
Risks and Implications Associated with the Amendment to Section 3.1(c):
Risks and implications associated with the amendment vary by party associated with the agreement. Risks
revolve around what can be described as “Start-Up Risk”. Start-Up Risk can be defined as the bonds are
issued but something catastrophic occurs that prevents the mall from being completed and fully leased out.
City Risk/Implications – In the event the bonds are issued and the mall is not completed, there is no financial
obligation on the part of the City beyond the pledge of Sales Tax Increment from sales at the Mall. Issuing the
bonds with 155k vs. 240k square feet of leased space does not increase financial risk to the City. The
structure of financing was intentionally set up to issue the bonds via the Metro District, avoid creating a debt
obligation on the part of the City and allow the City to avoid the Start-Up Risk.
Interest Rate Risk – Current macro-economic indicators point to a rising interest rate environment in the near
term. A delay in the issuance of the bonds in a rising rate environment could have a significant impact on the
financing cost of the project. A 1% increase in interest rates on the bonds (all else held constant) would
require an additional $17M of Sales Tax Increment from the URA to meet the bond payments. The Developer
would also potentially experience additional financing costs associated with the construction loan.
Developer Risk/Implications – The Developer will not have a financial gain with the proposed amendment.
The benefit to the Developer is the project would proceed on the current planned timeline without the adverse
impact of the effects of a delay described above.
Metro District Risk/Implications - The risk to the District is related to Start-Up Risk and when such an event
occurred relative to the square footage of executed leases.
If an event occurred after 240k square feet of leases are executed, in the current agreement, all $72M of
bonds would be issued and outstanding. In the amended agreement, only $33M of the bond proceeds would
have been disbursed and the remaining $20M of proceeds would be available for an extraordinary redemption
of outstanding bonds, thereby reducing the future obligations of the District. If the event occurred prior to the
Developer achieving 255k square feet of executed leases, the amended agreement would be beneficial to the
District. If such an event occurred after 310k square feet of executed leases were obtained, there is no
difference between the two alternatives.
If an event occurred after 155k square feet of leases were executed but before 240k square feet of leases
were executed, in the current agreement, no bonds would have been issued. In the amended agreement,
$23M to $33M of the bond proceeds would have been disbursed and the remaining $20M to $30M of proceeds
would be available for an extraordinary redemption of the outstanding bonds. There is risk in the amended
agreement during the time it takes the Developer to move from 155k to 240k square feet of leased space.
Again, there is no financial risk to the City in this case. This risk can be evaluated based on two factors –
probability and severity. The probability of an event occurring during the 4-6 months it will take the Developer
to acquire the 240k square feet of leases vs. the 155k square feet of leases is very low. The severity could be
high. Approximately $41M of bonds would be outstanding plus additional capitalized interest would be
incurred if $30M of proceeds were used for an early redemption. The Start-Up Risk exists with the current
agreement and with the amended agreement, the difference relates to whether an event would occur during
the next 4-6 months that would ultimately cause the Bonds to not be issued.
Because (1) there is no added risk to the City, (2) the risk to the District is not significantly different between
authorizing bonds with 240k of leased space vs. authorizing bonds with 155k of lease space and putting funds
in escrow that can only be fully released once 310k of space is leased,( 3) the risk of delay to the construction
Agenda Item 17
Item # 17 Page 4
timeline would most likely adversely impact the projects lease opportunities and completion dates, and 4)
potential higher interest rates with a late 2014 issuance would require additional sales tax increment to cover
bond payments, staff recommends making the requested modifications to the agreement.
Amendment to Section 4.3
Section 4.3 – Construction of Residential Component of Project: Affordable Housing. of the agreement was
intended to provide a partial offset to lost residential property tax increment in the event the developer does not
meet the construction completion dates described in section 4.3. The 50% payments of the lost property tax
revenue by the developer was intended to only be in effect until the residential units are completed and
property tax revenue begins to flow to the URA and then to the Metro District.
The current wording in the agreement has been questioned by the District bond council, who interpret the
current wording to require the developer to continue making the 50% payments after the residential units are
complete if the original construction completion dates in the agreement are not met.
Staff concurs this was not the intent of this section and agree clarification is needed to indicate the 50%
payment is only required if the construction completion dates within the agreement are not met and only until
the residential units are complete and tax revenue is realized by the Metro District.
The Council Finance Committee will review this on Friday, April 11. Draft minutes from that meeting will be
provided in the read-before packet on Tuesday, April 15.
FINANCIAL / ECONOMIC IMPACTS
Financial impacts are covered within the Risk/Implications section above.
ATTACHMENTS
1. First Amendment to Revdevelopment and Reimbursement Agreement-Redline version (DOCX)
2. Powerpoint presentation (PDF)
Attachment 2 - Board and Commission/Citizen Feedback from April 24 Meeting
Survey Results – April 24, 2014
Do you support the
Mall Project?
Do you support the
proposed
Amendment?
Comments/Questions Board or Commission
A. Yes Yes I like the tranches with timeline constraints also. I agree with the other
two changes also.
Art in Public Places
Personal comments
B. Yes Yes Energy Board
Personal Comments
C. Yes Yes The amendments are reasonable and in the favor of the City. Unknown
D. Yes Yes Would prefer to see fewer deals to attract business – Fort Collins has
plenty of appeal. In this case it is a big project and some partnership is
reasonable
Water Board
Personal Comments
E. Yes Yes. The proposed
amendment is an
improvement to the
agreement.
Public private partnerships are important. City Council approved the
project. The private sector partner has demonstrated substantial
justification and need for the requested amendment. Staff supports
the requested amendment and demonstrates little or no risk to the
City. The proposed amendment actually benefits the City by requiring
more square feet leased to retailers new to the City. Plus, funds are
released in tranches. The project is located on the Max and is critical to
multiple City objectives.
Affordable Housing Board
Personal Comments
F. Yes Yes I hope that City Council will approve the modifications. Human Relations
Commission
Personal Comments
G. Yes Yes I would like to see reports (not leases, but just sq. feet leased)
published publically. I feel that #2 and 3 are simple wording corrections
– we are all human. I also support #1 fully, as Mike stated if it was
brought up at the beginning they would have used the language.
Affordable Housing Board
Personal Comments
H. Neutral Yes Changes appear to be minor with exception of leases – which in my
opinion mall developers will insure their success to issue their
(unreadable) appear (smiley face). Thanks for the opportunity for input
Unknown
ATTACHMENT 2
but these changes appear to me to be “housekeeping” considerations.
I. Yes No I find it very disappointing that only 7 board/commission members
came! (I’m a private citizen)
None
Do you support the
Mall Project?
Do you support the
proposed
Amendment?
Comments/Questions Board or Commission
J. Yes Yes I believe the proposed changes are improvements for both partners
especially the performance-based matrix for release of bond $’s. Please
support this community-shaping project and these enhancements to
the agreement.
Unknown
K. No No The mall we need at a price we can afford. Not this mall at this price. Parking Board
Personal Comments
L. Yes No Point 1. Do not support. Point 2. Support. Point 3. Do not support. Unknown
M. Yes Yes Still change good deal for Fort Collins. Economic Health Board
Personal Comments
N. Yes No Be more suspicious!! Unknown
Yes = 12
No = 1
Neutral = 1
Yes = 10
No = 4
# Meeting attendees = 16
# Surveys returned = 14
Attendees from the following boards/commissions:
Human Relations Commission Economic Advisory Board
Senior Advisory Board Affordable Housing Board
Transportation Board Zoning Board of Appeals
Energy Advisory Board Parking Board
Citizen Review Board Building Review Board
Water Board Art in Public Places
MARKED CHANGES FROM 4/15 TO 5/1
MARKED CHANGES FROM SIGNED AGREEMENT TO 4/15
1
FIRST AMENDMENT TO
REDEVELOPMENT AND REIMBURSEMENT AGREEMENT
THIS FIRST AMENDMENT TO REDEVELOPMENT AND REIMBURSEMENT
AGREEMENT (the “Amendment”) dated as of AprilMay __, 2014, is made by and among the
FORT COLLINS URBAN RENEWAL AUTHORITY, a body corporate and politic of the State
of Colorado (the “Authority”), WALTON FOOTHILLS HOLDINGS VI, L.L.C., a Delaware
limited liability company (the “Developer”), the CITY OF FORT COLLINS, COLORADO, a
municipal corporation (the “City”), and FOOTHILLS METROPOLITAN DISTRICT, a quasi-
municipal corporation organized and existing in accordance with Title 32, Article 1, C.R.S. (the
“District”). The Authority, the Developer, the City and the District are sometimes collectively
called the “Parties,” and individually, a “Party.”
RECITALS
WHEREAS, on January 17, 2014, the Parties entered into that certain Redevelopment
and Reimbursement Agreement (the “Agreement”); and
WHEREAS, the Developer has requested an amendment to the Agreement that would
change one condition precedent to the issuance of District Bonds so as to allow their issuance
upon the Developer’s having leased 155,000 square feet, 90,000120,000 of which must to be
tenants new to Fort Collins, rather than the currently required 240,000 square feet; and
WHEREAS, as a condition of agreeing to this change, the Developer has agreed to
certain restrictions on the release of a portion of the District Bond proceeds to tie their release to
additional leasing performance; and
WHEREAS, in addition, the Parties have determined that certain other clarifications to
the language of the Agreement will be mutually beneficial.
NOW THEREFORE, in consideration of the mutual covenants and promises of the
Parties contained in this Agreement, and other valuable consideration, the receipt and adequacy
of which are acknowledged, the Parties agree to the terms and conditions in this Agreement.
AGREEMENT
1. DEFINED TERMS AND RECITALS INCORPORATED. All terms used in this
Amendment and defined in the Agreement shall have the meanings ascribed to them in
the Agreement, except as otherwise expressly provided herein. All recitals set forth in
the Agreement and in this Amendment, above, are incorporated into the Agreement as
amended by this Amendment as though fully set forth in the body hereof.
MARKED CHANGES FROM 4/15 TO 5/1
MARKED CHANGES FROM SIGNED AGREEMENT TO 4/15
2
2. DEFINITION ADDED. Section 1 of the Agreement is amendment to add a definition of
the term “Tenant New to Fort Collins”, as follows:
“Tenant New to Fort Collins” means any tenant other than a tenant that is relocating to
the Project an existing business that was operating under a City of Fort Collins sales tax license
as of the date of the Agreement or this Amendment.
3. AMENDMENT TO SECTION 3.1. Section 3.1 of the Agreement is hereby amended to
read as follows:
3.1 Conditions Precedent to Issuance of District Bonds. The following conditions
shall be satisfied on or prior to the issuance of the District Bonds:
(a) The Developer and the District shall prepare the Financing Plan and the
City Manager and the Executive Director of the Authority shall have approved the
Financing Plan. The Financing Plan shall also be in form and substance satisfactory to the
District’s bond counsel and the underwriter of the District Bonds. The Financing Plan
shall demonstrate that there is expected to be sufficient Pledged Revenues derived from
the construction of the Project to pay the debt service requirements on the District Bonds
when due.
(b) The Developer shall provide to the City Manager the following evidence
satisfactory to the City Manager that the Developer has obtained all equity and private
financing necessary to construct the non-residential components of the Project:
(1) Developer shall certify that it has expended no less than $57 million
on the Project, representing the Developer’s equity commitment as of the closing of the
District Bonds; and
(2) Developer shall demonstrate that it has a closed construction loan
with a commitment from the construction lender to fund an amount not less than the
difference between the construction costs of the Project and the total of the net bond
proceeds and the Developer’s equity commitment described in Section 3.1(b)(1), which
construction loan shall provide recourse for one hundred percent (100%) of the loan
amount against an entity (or entities) that own(s) substantially all of and controls(s) the
Developer. Such recourse may be subject to decreases over time as certain financial tests
and leasing tests are achieved. The City’s Financial Officer and City Attorney (or their
delegates) shall be entitled to review the loan agreement and related documents,
including, but not limited to, any promissory note and all related guarantees and deeds of
trust, to verify compliance with this requirement.
MARKED CHANGES FROM 4/15 TO 5/1
MARKED CHANGES FROM SIGNED AGREEMENT TO 4/15
3
(c) The Developer shall have obtained executed lease agreements, excluding
the existing department store located on Larimer County Parcel Number 9725391002,
totaling at least 240,000155,000 square footage of the retail area of the Project with
tenants that, in the aggregate, have an average sales per square foot of at least $375 based
on average national sales performance, and, except as hereinafter provided, of which at
least 90,000120,000 square feet shall be leased to Tenants New to Fort Collins, except
that the City Manager shall have the authority to deem this requirement has been
satisfactorily met when leases have been executed with Tenants New to Fort Collins
totaling no less than 90,000 square feet, so long as the City Manager has determined that
it is in the best interests of the City to do so, and that all other conditions and obligations
of this Agreement have been mettenants new to the City of Fort Collins.
Notwithstanding the foregoing, however, in the event that at least 60,000 of such square
footage is leased to tenants that are new to Fort Collins, then this minimum requirement
of 120,000 square feet shall be deemed satisfied with the prior written consent of the City
Manager, which consent shall not be unreasonably withheld, conditioned or delayed,
provided that in determining whether to give such consent the City Manager may
consider the impact on the proposed financing from a reduced percentage of tenants new
to the City. The Developer shall certify to the City upon the City’s request that the
conditions of this Subsection (c), excluding verification of the sales per square foot
requirement, have been met in full.
(d) The Developer shall have imposed the Add-On PIF in accordance with
Section 4.7 hereof.
(e) The Developer shall have obtained the Development Approvals for the
Project, as described in this Agreement and in Exhibit C.
(f) The City and the Authority shall receive an opinion of the District’s bond
counsel that the District Bonds have been validly issued and opining as to the tax-exempt
status of the bonds, which opinion shall be addressed to the City and the Authority, or the
City and the Authority shall receive a reliance letter from the District’s bond counsel.
(g) No Event of Default hereunder shall have occurred and be continuing
hereunder, unless such Event of Default has been cured, remedied or waived, or a remedy
has been agreed upon by the Parties which will become effective with the passage of
time.
4. AMENDMENT TO SECTION 3.2. Section 3.2 is hereby amended to read as follows:
3.2 Provisions to be Included in District Bond Documents. The District Bond
Documents shall contain the following provisions:
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MARKED CHANGES FROM SIGNED AGREEMENT TO 4/15
4
(a) The District Bonds shall be payable from the Pledged Revenues in the
following order of priority:
(i) the District Debt Service Mill Levy Revenues;
(ii) the Pledged District Specific Ownership Taxes;
(iii) the Pledged Property Tax Increment Revenues;
(iv) the Add-On PIF Revenues; and
(v) the Pledged Sales Tax Increment Revenues.
(b) The District Bond proceeds may only be made available to the District in
tranches, upon the achievement by Developer of threshold requirements for executed
leases for tenants as set forth in the table below. The parties acknowledge that, as
provided in Section 3.1(c) above, attainment of the threshold for the first such tranche is a
condition precedent of issuance of the District Bonds. As to tranches 1, 2 and 3 only, the
tenants comprising the required threshold shall have an average sales per square foot of at
least $375 in the aggregate based on average national sales. A portion of each tranche
shall be allocated to the Underpass and Foothills Activity Center improvements as set
forth in the table below, except as approved in writing by the City Manager. The balance
of the available proceeds within each tranche may be spent without restriction, except as
otherwise set forth in this Agreement.
(c) Additionally, as a condition precedent to the District’s ability to receive
the funds in the fourth tranche 4, the Developer shall have obtained a letter of completion
for the core and shell of the new building being constructed on Lot 16 as shown in the
Tranche
Cumulative Total
Square Feet of
Executed Lease
Agreements
Total Amount of
Bond Proceeds
Disbursed in
Tranche
Cumulative
Total Amount of
Bond Proceeds
Disbursed
Minimum Bond
Proceeds for
Underpass and
Foothills Activity
Center (FAC)
1 155,000 $23M $23M $3M (Underpass)
2 205,000 $10M $33M $1M (FAC)
3 255,000 $10M $43M $2M (FAC)
4 310,000 $10M $53M $2M (FAC)
MARKED CHANGES FROM 4/15 TO 5/1
MARKED CHANGES FROM SIGNED AGREEMENT TO 4/15
5
Development Approvals, and delivered into Sears’ possession premises on which the
Sears retail store will be located of said building to Sears or its affiliate.
(cd) If, on the third anniversary date of the issuance of the District Bonds, any
portion of the District Bond proceeds that has not been disbursed as a result of failure to
meet one or more leasing thresholds described in Section 3.2(b), then the remaining
undisbursed proceeds shall be used to carry out the mandatory extraordinary redemption
of a corresponding portion of the District Bonds.
(e) Until the leasing thresholds applicable to tranche 3 have been met, The
Developer’s equity commitment described in Section 3.1(b)(1) of this Agreement shall
remain invested in the Project and Developer shall not receive any repayment of its
equity commitment from proceeds from the District Bonds. until the leasing threshold
applicable to Tranche 3, set forth in the chart, above, has been met.
(df) After the debt service requirements on the District Bonds have been paid
or provided for in each Fiscal Year, and after all payments have been made to replenish
the reserve fund for the District Bonds and to make any payments into any required
rebate funds for the District Bonds, any excess Pledged Revenues shall be applied by the
District Bond Trustee as follows:
(i) To the extent required by the underwriter of the District Bonds
based on market conditions, the District Bond Documents may establish a
supplemental reserve fund (the “Supplemental Reserve Fund”) and provide that
any excess Pledged Revenue shall be deposited into the Supplemental Reserve
Fund to be maintained in an amount that is not more than 10% of the original
aggregate principal amount of the District Bonds. The District Bond Trustee shall
keep a record of the sources of the Pledged Revenue that are used to fund and
maintain the Supplemental Reserve Fund, if any.
(ii) After the Supplemental Reserve Fund, if any, has been fully
funded, any excess Pledged Revenues shall be applied by the District Bond
Trustee as follows:
(A) The District, the City and the Authority hereby
agree pursuant to Section 31-25-107(11) C.R.S. that any such
excess Sales Tax Increment Revenues shall be released from the
lien of the District Bond Documents and remitted by the District
Bond Trustee to the City. The District Bond Documents shall
provide that the City is a third-party beneficiary under the District
Bond Documents with respect to this provision relating to the
requirement of remitting any excess Sales Tax Increment Revenues
to the City as set forth above.
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6
(B) Any excess Add-On PIF Revenues shall be applied
by the District Bond Trustee to prepay principal on the District
Bonds upon payment of all scheduled debt service for the year in
which said Add-On PIF Revenues were collected. In the event that
Add-On PIF Revenues are used to fund or maintain the
Supplemental Reserve Fund and are released after full payment of
the District Bonds, excess Add-On PIF Revenues shall be remitted
to the District for deposit in the Foothills Mall Fund.
(C) Any excess Pledged Property Tax Increment
Revenues shall be released from the lien of the District Bond
Documents and remitted to the Authority.
(D) Any excess Pledged District Specific Ownership
Taxes and District Debt Service Mill Levy Revenues shall be
applied by the District Bond Trustee to debt service payments on
the District Bonds in the following year.
(eg) Except as may be expressly agreed to the contrary in writing by the
District, the City Manager on behalf of the City, and the Authority Executive Director on
behalf of the Authority, the District Bond Documents shall provide that moneys on
deposit in the Supplemental Reserve Fund shall be applied solely to pay the debt service
requirements on the District Bonds in the event of an insufficiency of Pledged Revenues
to make such payments, provided, however, that all moneys on deposit in the reserve
fund for the District Bonds must first have been applied to the payment of the debt
service requirements on the District Bonds prior to applying any funds on deposit in the
Supplemental Reserve Fund to such payment. Upon termination of the Supplemental
Reserve Fund, the moneys on deposit in the Supplemental Reserve Fund shall be remitted
by the District Bond Trustee based on the source of Pledged Revenues used to fund and
maintain the Supplemental Reserve Fund in accordance with the provisions set forth in
subparagraph (d)(ii) above, except as may otherwise be provided in the District Bond
Documents with the consent of the District, the City Manager on behalf of the City and
the Authority Executive Director on behalf of the Authority, notwithstanding the terms of
subparagraph (d)(ii), above.
(fh) The District Bond Documents shall provide that the net proceeds of the
Bonds shall be deposited in the Project Fund and requisitioned by the District to pay
Eligible Costs as set forth in Exhibit D hereof, with such requisitions to be made
substantially in accordance with Exhibit E hereof. The District Bond Documents shall
provide that any requisition remitted to the District Bond Trustee shall simultaneously be
remitted to the City Manager, or the City Manager’s designee. In the event that the City
provides written notice to the Developer and the District that it disputes that all or any
portion of the requisition qualifies as an Eligible Cost or otherwise fails to comply with
the requisition requirements in Exhibit E, then the City, the Developer and the District
agree to act in good faith to attempt to resolve any such dispute.
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7
(gi) Without the prior written consent of the City Manager, the District Bonds
shall mature no later than 25 years after the date of issuance thereof, and shall not contain
a pledge of Pledged Property Tax Increment Revenues or Pledged Sales Tax Revenues
that extends beyond the final payment of said revenues to the Authority; the total Net
Debt Service of the District Bonds shall not exceed $180,000,000, and the maximum
annual Net Debt Service on the District Bonds shall not exceed the amounts set forth in
Exhibit I hereto.
5. AMENDMENT TO SECTION 4.1. Section 4.1 is hereby amended to read as follows:
4.1 Construction of Project. As set forth in Section 2.1 hereof, the Developer and/or
the District shall construct the Project. The Project shall be constructed substantially in
accordance with the Development Approvals and Exhibit C attached hereto. Additionally, as
construction proceeds on the Project, Developer shall comply with the following requirements.
(a) Developer shall provide a monthly written status report to the City
regarding the status of construction of the Project with respect to the overall schedule.
The City acknowledges that Developer has identified or may identify certain information
contained in such reports as confidential, proprietary business information. The City
agrees that it will maintain the confidentiality of such information except as required by
applicable law. If the City is requested to disclose information identified by Developer as
confidential and if the City believes it is legally required to make disclosure of such
information, the City will notify Developer at least two business days prior to making
such disclosure, so as to permit Developer to propose appropriate redactions or seek a
judicial declaration preventing disclosure. The Developer shall reimburse the City for
any attorneys’ fees or costs incurred by the City or that the City is ordered to pay in
connection with such proceedings.
(b) Developer shall certify to the City prior to the release of each tranche of
District Bond proceeds as set forth in Section 3.2(b) that the total square footage of leases
to Tenants New to Fort Collins meets the minimum threshold for such tranche as set forth
in the table below:
Tranche
Total Square Feet of
Executed Lease Agreements
Total Leasing to
Tenants New to Fort Collins
1 155,000 90,000120,000
2 205,000 110,000120,000
3 255,000 130,000
4 310,000 150,000
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8
(c) Developer shall also provide monthly reports to the City which include the
following information: (i) the percentage of the total square footage to be leased for
which leases have been executed; (ii) the percentage of the total square footage to be
leased for which letters of intent have been executed; and (iii) the percentage of the total
square footage to be leased that is under negotiation. The City acknowledges that
Developer has identified or may identify certain information provided under this
subsection as confidential, proprietary business information. The City agrees that it will
maintain the confidentiality of such information to the same extent and under the same
terms and conditions as set forth in Section 4.1(a), above. Subject to confidentiality
provisions contained in individual leases with which Developer must comply, and to the
above provisions regarding confidentiality of proprietary business information,
Developer additionally agrees to allow a representative of the City the City Manager and
City Attorney (or their delegates) to inspect those portions of executed leases or other
documents which may be reasonably necessary in order to verify the information set forth
in the certifications referenced in Section 3.1(c) and Section 4.1(b), above. Developer
shall use commercially reasonable efforts to obtain consent from the retailers who are
parties to such leases, where such consent is required, in order to make such information
available to the City.
6. AMENDMENT TO SECTION 4.3. Section 4.3 is hereby amended to read as follows:
4.3 Construction of Residential Component of Project; Affordable Housing. The
Developer shall Complete Construction of the residential components of the Project, subject to
Force Majeure, as follows:
(a) on or prior to December 31, 2016, the Developer shall Complete
Construction of the first phase of the residential component of the Project consisting of a
minimum of 200 units;
(b) on or prior to December 31, 2018, the Developer shall Complete
Construction of the second phase of the residential component of the Project consisting of
at least an additional 246 units.
Failure to Complete Construction of the residential components of the Project in
accordance with this Section 4.3 shall not be deemed to be an Event of Default under this
Agreement, provided, however, that if Construction of the residential components of the Project
is not Completed as set forth above, then beginning with the 2020 Fiscal Year, the Developer
shall be obligated to pay in such Fiscal Year and each Fiscal Year thereafter, regardless of
whether the Developer is the owner of the Property on which the residential component of the
Project is to be constructed, an amount equal to 50% of the difference between the Pledged
Revenues generated from the residential component of the Project and the Estimated Revenues
from the Residential Property, as follows: (i) such payment shall be made to the City to the
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9
extent that any Pledged Sales Tax Increment Revenues are applied in such fiscal year to the
payment of the debt service requirements on the District Bonds; and (ii) to the extent that such
payment is not due and owing to the City in any fiscal year, the balance of any such amount to be
paid by the Developer in such fiscal year shall be applied toward principal on the District Bonds.
Said payment shall be made in each fiscal year until either: (1) the pledge of any Authority
Pledged Revenues has ceased; or (2) property taxes are due from the residential component of
the Project for 446 units that have been assessed as 100% complete.
The Project shall pay any affordable housing fees that may be enacted by the City
Council on or before December 1, 2014, as if such fees had been in place and applicable to the
Project. Any affordable housing impact fee that may be adopted as part of such requirements
shall be paid by the Developer when due for the Project, except that for any portion of the
Project developed prior to the imposition of the fee, such fee shall be paid no later than sixty
days after adoption.
7. AMENDMENT TO SECTION 4.7. Section 4.7 of the Agreement is hereby amended to
read as follows:
4.7 Imposition of Add-On PIF.
(a) On or prior to the issuance of the District Bonds, the Developer shall
impose the Add-On PIF on retail sales occurring on the Property that are subject to the
City’s Sales Tax, provided, however, that in connection with any property that is not
owned by the Developer as of the Effective Date, the Developer shall use its best efforts
to impose such Add-On PIF on such retail sales occurring on any such Property, subject
to the consent of the owners of such Property. Except as provided herein, aAll property
under the Developer’s control as of the Effective Date shall be made subject to the Add-
On PIF, and any property within the Project acquired by the Developer subsequent to the
Effective Date shall become subject to this requirement. This requirement shall not apply
to those portions of the Property or later acquired property governed by existing leases,
until the expiration or termination of said existing leases, provided that Developer shall
use commercially reasonable efforts to obtain consent from the retailers who are parties
to such leases to become subject to the same. The Add-On PIF shall be imposed only for
so long as the District Bonds are outstanding. So long as the District Bonds are
outstanding, the Developer covenants to cause all Add-On PIF Revenues to be remitted to
the District Bond Trustee and such Add-On PIF Revenues shall be pledged to the
payment of the District Bonds. To the extent that the Add-On PIF is imposed prior to the
initial issuance of the District Bonds, the Developer covenants to cause all Add-On PIF
Revenues to be held in a trust account and remitted to the District Bond Trustee upon the
initial issuance of the District Bonds. The Developer agrees that it shall be responsible
for enforcing the placard requirements and for the implementation of the Add-On PIF
with the retailers in the Project.
(b) The Add-On PIF shall be imposed and collected as required by this section
through the PIF Covenant. The PIF Covenant shall provide that during the term that the
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10
Add-On PIF is to be imposed and collected under this Agreement, the PIF Covenant may
not be amended, modified, waived or terminated in any manner inconsistent with the
terms of this Agreement without the City’s prior written consent. The PIF Covenant shall
be reviewed by the City Attorney to determine that the PIF Covenant satisfies the
applicable requirements of this Agreement. The City Attorney shall have twenty-one
(21) days after its submittal to the City to review and provide comments in writing to the
Developer with regard to the same. In the event the City Attorney’s written approval or
disapproval is not provided to the Developer within such period, the PIF Covenant shall
be deemed approved by the City. Upon approval and in connection with the closing of
the construction loan referenced in Section 3.1(b)(2), the Developer shall record the PIF
Covenant with the Larimer County Clerk and Recorder to encumber the Property as
provided in this section and the PIF Covenant so recorded shall be prior to all liens,
except liens for property taxes.
8. AMENDMENT TO SECTION 4.8. Section 4.8 of the Agreement is hereby amended to
read as follows:
4.8 Access to Property. Developer will make arrangements for representatives of the
City, including elected officials and staff, and the public, to participate in regular tours of the
Property during construction, which tours shall be conducted no less frequently than once per
month. Additionally, Developer will permit representatives of the City and the Authority access
to the Property and the Project at reasonable times during regular business hours and with prior
notice as necessary for the purpose of carrying out or determining compliance with the
Agreement, the Urban Renewal Plan, or any City code or ordinance, including, without
limitation, inspection of any work being conducted. No compensation will be payable for such
access. The City and the Authority, as applicable, agree to restore the Property and any
component of the Project to its condition prior to any tests or inspections made by the City and
further agree that they shall be responsible for any damage that results from the City or the
Authority, as applicable, accessing the Property pursuant to their respective rights under this
Agreement, to the extent permitted by law and, in the case of the City, subject to annual
appropriation of funds by the City Council, in its sole discretion.
9. AMENDMENT TO SECTION 5.1. Section 5.1 of the Agreement is hereby amended to
read as follows:
5.1 Compliance with Service Plan and Applicable Law. At all times the District will
comply with the requirements of the Service Plan as it may be amended from time to time.
The District further agrees that it will not make any material modification to the Service Plan
without first obtaining the City Council’s approval of that modification, as required in CRS
Section 32-1-207. For purposes of this Agreement, a “material modification” shall include,
without limitation, any increase in the “Maximum Debt Authorization,” “Maximum Debt
Maturity Term” or in the “Maximum Debt Service Mill Levy,” as these terms are defined in
the Service Plan. The District’s failure to obtain the City Council’s approval shall be deemed
an Event of Default under Sections 18 and 19 hereof. To the extent authorized by its Service
Plan, the District may design, construct, finance, own, acquire, maintain, and operate Eligible
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11
Improvements in accordance with all applicable laws, ordinances, standards, policies, and
specifications of the State of Colorado, the City, and any other entity with jurisdiction. The
City and the District agree that this First Amendment shall not constitute a material
modification to the Service Plan and shall be incorporated into the definition of
“Redevelopment Agreement” in the Service Plan.
10. AMENDMENT TO SECTION 25.5. Section 25.5 of the Agreement is hereby amended
to read as follows:
25.5. The City Manager shall have the authority to act on behalf of the City under
this Agreement and the Executive Director shall have the authority to act on behalf of the
Authority under this Agreement. In exercising such authority, they each may agree to
amendments to the Agreement that they, in consultation with appropriate legal counsel,
determine are in the best interests of the City and Authority and do not have a significant
adverse effect on the City’s or Authority’s financial interests under this Agreement, or
result in a significant change to the scope or general character of the Project from that
defined in this Agreement.
11. AMENDMENT TO SECTION 26. Section 26 of the Agreement is hereby amended to
read as follows:
26. AMENDMENT. This Agreement may be amended only by an instrument in writing
signed by all the Parties. Amendments within the authority of the City Manager and Executive
Director pursuant to Section 25.5 may be entered into without action of the City Council and
Authority Board of Commissioners, respectively.
12. VALIDITY OF REMAINING PROVISIONS. All provisions of the Redevelopment
Agreement that are not expressly amended herein shall remain in full force and effect and
continue to bind the parties thereto.
IN WITNESS WHEREOF, this Amendment is executed by the Parties as of AprilMay
__, 2014.
FORT COLLINS URBAN RENEWAL AUTHORITY
_____________________________________
Gerry Horak, Vice Chairperson
ATTEST:
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12
_____________________________
Darin Atteberry, Executive Director
Notice Address:
Fort Collins Urban Renewal Authority
300 LaPorte Avenue
P.O. Box 580
Fort Collins, CO 80522
Attention: Darin Atteberry, Executive Director
Email: datteberry@fcgov.com
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13
CITY OF FORT COLLINS, COLORADO
By:
Gerry Horak, Mayor Pro Tem
(SEAL)
ATTEST:
_______________________
Wanda Nelson, City Clerk
APPROVED AS TO FORM
_______________________
Carrie Mineart Daggett, Deputy City Attorney
Notice Address:
City of Fort Collins
300 LaPorte Avenue
P.O. Box 580
Fort Collins, Colorado 80522
Attention: Carrie Mineart Daggett, Esq., Deputy City Attorney
Email: cdaggett@fcgov.com
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14
FOOTHILLS METROPOLITAN DISTRICT
_________________________________
ATTEST: ________________________, President
_____________________________
Secretary
Notice Address:
c/o White, Bear and Ankele, P.C.
The Streets at Southglenn
2154 E. Commons Avenue, Suite 2000
Centennial, CO 80122
Attention: Kristen Bear
Email: kbear@wbapc.com
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15
WALTON FOOTHILLS HOLDINGS VI, L.L.C.,
a Delaware limited liability company
By: Foothills Alberta Management, LLC,
a Colorado limited liability company
Its: Authorized Agent
By: ____________________________
Donald G. Provost
Its: Manager
Notice Address:
Walton Foothills Holdings VI, L.L.C.
5750 DTC Pkwy, Suite 210
Greenwood Village, CO 80111
Attention: Donald G. Provost
Email: dgp@albdev.com
With a copy to:
Brownstein Hyatt Farber Schreck, LLP
410 Seventeenth Street, Suite 2200
Denver, CO 80202
Attention: Carolynne C. White, Esq.
Email: cwhite@bhfs.com
1
Foothills Mall
Redevelopment
First Amendment to
Redevelopment Agreement
May 6, 2014
ATTACHMENT 4
2
Developer Request Discussed April 15th
1. Modification to Section 3.1(c) concerning leased space
required prior to City authorization to issue Metro District
Bonds
2. Clarification to Section 4.3 concerning payment required of
the Developer if the residential units are not completed on
time
3. Modification to the original Section 3.2(c) concerning the
use of Reserve and Supplemental Reserve funds
3
Section 3.1(c) Request
Equity Position and Recourse Commitments Above Normal….
Demonstrates Confidence in the Project
Additional Considerations by the Developer & Equity Partner:
• Equity Position higher than original intent
• Equity Partner 100% recourse on the construction loan
• Monthly status reports on leasing & Quarterly tours of the project
($ millions)
Tranche
Total
New to
Fort
Collins
Funds
Released
Assigned
to City
Improv
Orig 240k
Mall (less
Macy's)
Current
240k 120k $ 53 $ 8 100% 47%
Request
1 155k 120k $ 23 $ 3 65% 30%
2 205k 120k 33 1 85% 40%
3 255k 130k 43 2 106% 50%
4 310k 150k 53 2 129% 60%
Lease Space Sq Ft Funds Released Percent of…
4
Section 4.3 Clarification
Clarification Requested is Consistent with the Original Intent
• Intent of the original Section 4.3 was to require the Developer to
pay 50% of the lost property tax increment in the event the
residential units were delayed.
• But only until such time as the residential units are built and
property tax increment is being paid.
• Clarification added to Section 4.3:
“Said payment shall be made in each fiscal year until either: 1) the
pledge of any authority pledged revenue has ceased; or 2) property
taxes are due from the residential component of the Project for 446
units that have been assessed as 100% complete.”
5
Section 3.2 (c) Modification
No Financial Impact to the City
• Review of Bond Documents identified an issue in the
Redevelopment Agreement that does not work with the Bond
issuance
• Two Reserve Funds Planned
• Supplemental Reserve – funded from project revenue
• Reserve – funded from bond proceeds
• Supplemental Reserve was set up to enhance the normal
Reserve, use of Reserve first would trigger regulatory filings
• Current wording in Section 3.2(c)
• In the event of insufficient Pledged Revenue, Reserve is used before
the Supplemental Reserve
• Modification needed to allow the use of the Supplemental
Reserve first
6
Additional Modifications Since April 15
Additional Modifications Strengthen the Agreement
• Change the lease requirement on tenants new to Fort Collins from 90k
to 120k square feet of executed leases with City Manager exception
• Tie the release of the 4th
tranche funds to a certificate of completion on
the core & shell of the Sears building
• No Developer reimbursement for public improvement expenditures to
date until 255k square feet of executed leases
• City Manager or City Attorney can review executed leases subject to
confidentiality provisions within the leases
• Clarification on City Manager authority to amend the agreement
provided substantial change to the City’s financial interests or to the
scope or character of the project
• Strengthen PIF covenant language and Metro District Service Plan
enforcement
7
Questions & Discussion
8
Developer Request
Back - Up
9
• Objectives:
• Realize Community Vision & Expectations
• Launch a Catalytic Opportunity in Midtown
• Realize a Significant Revenue Opportunity
• Minimize Risk to Balance Sheet, Credit Rating & Revenue
• Challenges
• Build a Competitive Design & Create a Sense of Place
• Resolve Tenant Issues
• Create a Connection with Mason BRT
• Replace the Youth Activity Center
Objectives & Challenges
10
Historical Mall Sales Net Taxable Sales
Estimated Net Taxable Sales at the Mall Began to Decline in 2001….
Data is Not Adjusted for Inflation – Actual Deterioration is Worse
11
Public Improvement Costs
Public Improvement Costs Support Blight Removal
and Higher Cost Infill Redevelopment
($ millions)
Blight Removal
Infrastructure
City
Infrastructure
Total
Public
Land Acquisition $ 5.5 $ 5.5
Parking Structure 9.6 9.6
Deconstruction / Abatement 3.9 3.9
Fixture & Amenities 1.4 1.4
Ditch Relocation 2.8 2.8
Site Work 12.9 12.9
Utilities 4.5 4.5
Soft Costs 4.6 4.6
Foothills Activity Center 4.8 4.8
Pedestrian Crossing / Culvert 3.0 3.0
TOTAL $ 45.2 $ 7.8 $ 53.0
12
Bond Details
• Metro District Bond Issue in 2014 – Par Value $72
• less Capitalized Interest 9
• less Reserve Fund 7
• less Issuance Cost 3
• Net Proceeds to Support Public Improvements $53
• Bond Payments over 25 years
• Metro District 50 mills property tax – paid by mall property owners $43
• URA Property Tax Increment – paid by mall property owners 42
• Developer 1% Public Improvement Fee – paid by mall shoppers 65
• City Sales Tax Revenue remittance – paid by mall shoppers 9
• Total Bond Payments $159
Property Tax Revenue From Mall Owners and 1% PIF Paid by Mall
Customers Funds 94% of the Bond Payments over 25 Years
($ millions)
13
$0
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
3.85% Sales Tax (Baseline) 3.85% Sales Tax (Transfer) Annual Remit of Sales Tax 3.85% Sales Tax (New)
Sales Tax by Year Summary
$117M
$76M
$53M
$9M
$255M Cumulative Sales
Tax Generated by Mall
7% Scenario Including Dedicated Taxes
14
Seven Conditions Precedent to Issuance of Bonds
Developer has Indicated All Conditions Will Be Met
With The Exception of (c)
a) Financing Plan approved by City Manager – demonstrates sufficient
pledged revenue to meet debt service requirements
b) Obtained all equity and private financing necessary to construct the
non-residential component of the project
c) 240k square feet of executed leased space with 120k square feet
new tenants to Fort Collins
d) Add-On PIF imposed in accordance with Section 4.7
e) Developer obtained all Development Approvals for the Project
f) Satisfactory opinion by District’s bond counsel
g) There is no event of default
15
Section 3.1(c) Request
Allows Bonds to be Issued with 155k sq. ft. of Leased Space….
$23M of Funds Disbursed….
Remaining Funds Released as Leasing Grows to 310k sq. ft.
Current Agreement requirement prior to bond issuance:
• Developer to have obtained 240k of executed lease agreements
• 120k of the 240k to be new tenants to Fort Collins
• If 60k-120k of new tenants – subject to consent of City Manager
• Leases to have an average sales per square foot of at least $375
Modification Requested:
• Bonds issued with 155k of executed lease agreements
• 90k of the 155k to be new tenants to Fort Collins
• Leases to have an average sales per square foot of at least $375
• $23M of $53M in bond proceeds released to Developer
• Remaining $30M held in escrow & released in $10M tranches as additional
leases signed – final release at 310k
• Portion of leases new to Fort Collins is laddered to total leases
16
Risk & Implications of Executed Lease Change
No Additional Financial Risk to the City….
District Risk Related to a Low Probability Event in next 6 Months
City:
• No change in financial risk to the City – Metro District Bonds
• Avoids interest rate risk associated with late 2014 issuance
Developer:
• No benefit to the Developer’s financial position
Metro District:
• Start-Up Risk – bonds are issued and the Mall is not completed
• Bonds issued with 155k sq. ft. of leased vs. 240K sq. ft.
• If Start-Up Risk occurs between 155k & 240k
• Added Risk - bonds are issued and project stalls
• If Start-Up Risk occurs after 240k leased
• Reduced or Equal Risk – partial pay down possible
17
Critical Mass & Timing
Critical
Mass
Required
Redevelopment
Agreement
Leasing
Strategy
Equity
Financing
Construction
Timeline
pg gy
All Elements Must Come Together Simultaneously….
If One Element is Delayed, the Ripple can Impact the Completion
Date Which Can Impact Leasing Strategy
• Redevelopment Agreement
linked to Date Certainty
• Date Certainty Influences
Leasing Strategy
• All Financing Needs to Close
Simultaneously
• Financing Needs to Close in
Time to Allow Construction
to Achieve Completion Date
18
Benefits of This Change
Retains Current Project Timeline and Planned Start-up Dates
• Project retains planned time-line for completion – Fall 2015
• Avoid interest rate risk associated with a fall bond issuance
• Supports a Revitalized Mid-Town – catalyst project
• Creation of a sense of place
• Increase to City Sales Tax Revenue
• $4.2M in 2019 growing to $7M in 2038
19
Section 3.1(c) Request
Cost of Service Impact on County over 25 years
• County Estimate – Cost of Service Impact $12M
• City Estimate based on 446 units vs. 800 units 7M
• City Estimate adjusting for 70% variable cost vs. 90% $ 4M
• City Support to offset the impact on Cost of Service
• Share 50% of the residential property tax increment $ 1.3M
• Share $60K a year of personal property tax 1.2M
• “Rising Tide” impact on County revenue – the Square, Toys R Us TBD
• Refine economic model to better determine cost of service
impacts on County – adjust sharing if appropriate TBD
20
Start-Up Risk
• What would the Metro District cash flow look like if only 155k
sq. ft. of space is leased?
• Start-up risk discussed in January 2014 and May 2013
• Bonds are issued but the project doesn’t come out of the ground
• Issue is the same at 240k sq. ft. as at 155k sq. ft.
• City is not obligated to support the bonds beyond the sales tax
pledge
• “Stalled Project”…. what it looks like is a very difficult question
to answer with any degree of certainty
• Factors include
• Without additional leasing, signed leases would become void
• Developer would have access to a limited portion of both the
bond proceeds and the construction loan
• What ultimately gets built and who occupies it is unknown
The Developer & Equity Partners Equity Position and 100% Recourse
Demonstrates Confidence in the Projects Leasing Strategy
21
Section 3.2 (c) Modification
• Reserve Funded by Bond Proceeds:
• Bonds Issued at Par Value $72M
• Transaction costs 3M
• Capitalized interest 9M
• Reserve 7M
Net Bond Proceeds $53M
• Supplemental Reserve Funded by Revenue:
• Revenue from the project will fund a supplemental reserve of $7M
• Revenue assigned to Metro District $2.5M
• Sales Tax Increment 4.5M
Two Reserves….
One Funded by Bond Proceeds and One Funded By Project Revenue
22
Summary of Changes – May ‘13 to Jan ‘14
• Change in Mall Configuration
• Commercial square footage down by 10%
• 6% second floor of theater – low value square footage
• 4% from retail space
• Grand opening delayed approximately 1 year – phased opening
• Financial Incentive Deal is Largely Unchanged
• $53M Public Improvements
• Maintained cap on maximum bond payments at $180M
• New – Early bond pay down from upside revenue potential
• Financial Return to the City Equal To / Slightly Better
• Sales per square foot increased based on known tenant mix
• Net new sales tax (net of remittance to support bonds)
• Flat at $108M - $111M – excluding additional transfer sales
• Increased slightly to $114M - $117M including additional transfer
23
Foothill Mall Project Summary Comparison
$9 - $12 of URA Sales Tax Increment Remitted Depending on Rates…..
$108 to $117 Net New Sales Tax Revenue (Rates & Transfer)
May 7 2013 Jan 14 2014
@7.00% Bond
($ millions – Except Sales per Square Foot)
Jan 14 2014
@7.25% Bond
GLA 711K + 24K 641K + 24K
Sales Per Sq Ft $350 $378 Same
Total Cost Retail Project $237 $231
Open Assumption Nov ’14 Phases ‘14-’15
Bonds at Par Value $ 73 $ 71 $ 72
Cum Bond Payments $165 $159 $163
First Three Revenue Sources $170 $151 $151
Dedicated Sales Tax Rev $105 $106 $106
Core Sales Tax Revenue $147 $149 $149
Est Sales Tax Increment Remitted $ 8.8 $9.0 $12.0
Net New Sales Tax Revenue $108 $117 $114
Net New without Addtl Transfer $111 $108
24
First Three Revenue Sources
• First 3 Revenue Sources:
• Releases URA Sales Tax Increment if First 3 Revenue Sources covers debt
• Revenue above debt service assigned to pay down debt principal
3 Pledged Revenue Sources with Higher Priority than
URA Sales Tax Increment
($ millions)
Cumulative
First Three Revenue Sources 25 Years
District Property Tax $ 50.0 $ 2.1
URA Property Tax Increment 55.2 2.3
Developer Sales PIF 64.7 2.3
Bond Funding $ 169.9 $ 6.7
Today's Value $ 62.5
Annual
Funding 2020
25 Years
$ 43.1 $ 1.8
42.7 1.9
65.6 2.4
$ 151.4 $ 6.1
$ 55.3
Cumulative
Funding
Annual
Funding 2020
May 7 2013 Jan 14 2014
25
Sales Tax Revenue
Total of Sales Tax Revenue Expected over 25 years $252M………………….$255M
Annual Sales Tax Revenue in the First Full Year $8.4M………………….$8.7M
Base = existing revenue from the existing mall
Transfer = revenue from other areas of the city that will transfer to the mall
New = net new revenue associated with the redeveloped mall
($ millions)
Cumulative
Sales Tax Revenue 25 Years First Full Year
Dedicated Base / Transfer / New $ 104.6 $ 3.5
Core Base 44.4 1.8
Core Transfer & New 102.7 3.1
Sales Tax $ 251.7 $ 8.4
Today's Value $ 94.7
Annual
Funding 2016
25 Years First Full Year
$ 106.0 $ 3.6
44.5 1.8
104.6 3.3
$ 255.1 $ 8.7
$ 94.8
Cumulative
Funding
Annual
Funding 2016
May 7 2013 Jan 14 2014
26
Base Transfer New
44 31 74 $ 149
32 22 52 $ 106
$ 76 $ 53 $ 126 $ 255
Sales Tax over 25 years
Foothills Mall Sales Tax Revenue
Net New Sales Tax Revenue for the City After Remittance of $9M
Towards Debt Service Is Estimated at $117M
($ millions)
Sales Tax Revenue retained by the City = $150M
Sales Tax Revenue “pledged” towards debt service = $105M
New City Revenue
Dedicated Tax 1.60%
• Natural Areas
• Streets
• Capital
• KFCG
Core Tax 2.25%
Sales Tax Revenue “used for debt” service = $ 9M
27
($ millions) Sales Tax Revenue – First 5 Years
Sales Tax Revenue in 2016 Exceeds 2012 Current Revenue.
Net New Sales Tax Revenue Exceeds May 7th
Estimate.
+
+
=
=
Jan 14th
YEAR
2012 ‐ 4.8
2015 1.8 0.8 ‐ 3.4 ‐ 3.8 3.8
2016 2.4 3.2 4.9 0.7 ‐ 5.5 5.5
2017 4.9 3.3 4.9 3.1 0.2 5.5 5.7
2018 5.5 3.4 5.3 ‐ 3.4 5.6 9.0
2019 5.5 3.5 5.4 ‐ 3.5 5.7 9.2
Sales Tax
Revenue
First 3
Revenue
Sources
Pledged
Sales Tax
Incremen
Supplemental
Reserve
Funding
Sales Tax
Returned
Base &
Dedicated
Sales Tax
Bond
Payments
28
Risk Analysis
A Rate Increase Or Sales Decline Are The Two Primary Risks
1% Increase in Bond Rate = $17M Reduction in Net New Revenue.
($ millions)
Note: 2012 Sales per Square Foot at Foothills = $185 sq ft
Assumptions May 7th Jan 14th Jan 14th Jan 14th Jan 14th
Sales per square foot $350 Sq Ft $378 Sq Ft $378 Sq Ft $378 Sq Ft $340 Sq Ft
Property Tax Estimate Value Estimate Value Estimate Value Base less 10% Estimate Value
Cum Bond Pmts & Supp Res $165 $159 $163 $177 $177
Risk Sensitivity
First 3 Revenue Sources 170 151 151 151 145
Remitted URA Sales Tax increment 9 9 12 26 32
Net New Revenue $ 108 $ 117 $ 114 $ 100 $ 76
7% Interest
Base Case
7% Interest
Base Case 7.Interest25% Interest 8%
8% Interest
‐10% Sales
- 1 -
RESOLUTION 2014-032
OF THE COUNCIL OF CITY OF FORT COLLINS
APPROVING AN AMENDMENT TO THE
REDEVELOPMENT AND REIMBURSEMENT AGREEMENT
WITH THE FORT COLLINS URBAN RENEWAL AUTHORITY,
WALTON FOOTHILLS HOLDINGS VI, L.L.C., AND THE
FOOTHILLS METROPOLITAN DISTRICT
REGARDING THE REDEVELOPMENT OF FOOTHILLS MALL
WHEREAS, at its regular meeting convened on May 7, 2013, the City Council adopted
Resolution 2013-042, approving a Redevelopment and Reimbursement Agreement among the
City of Fort Collins (the “City”), the Fort Collins Urban Renewal Authority (the “Authority”),
Walton Foothills Holdings VI, L.L.C. (the “Developer”), and the Foothills Metropolitan District
(the “District”) regarding the redevelopment of Foothills Mall (the “Agreement”); and
WHEREAS, on January 14, 2014, the City Council adopted Resolution 2014-004,
approving an updated Redevelopment and Reimbursement Agreement among the City, the
Authority, the Developer, and the District regarding the redevelopment of Foothills Mall (the
“Agreement”); and
WHEREAS, in Resolution 2013-42 and Resolution 2014-004, the City Council stated its
finding that it is in the best interests of the City to provide financial assistance to the Foothills
Mall redevelopment project (the “Mall Project”) in order to remedy blight conditions within and
around the Mall pursuant to the Midtown Urban Renewal Plan, using certain property and sales
tax increment revenues in accordance with the Act, together with certain available revenues of
the District and the Developer, to provide a catalyst for redevelopment in the Midtown Urban
Renewal Area, to increase sales tax revenues and job opportunities, and to provide other
economic and social benefits to the City and surrounding community; and
WHEREAS, on January 17, 2014, the current version of the Agreement was signed by all
parties, and was placed on file in the Office of the City Clerk; and
WHEREAS, following the execution of the Agreement, the Mall Project has moved
forward, and a formal groundbreaking ceremony for the Mall Project took place on February 26,
2014; and
WHEREAS, the Developer has requested an amendment to the Agreement that would
change a condition precedent to the issuance of District bonds so as to allow their issuance upon
the execution of leases for 155,000 square feet, 120,000 of which must to be tenants new to Fort
Collins, rather than the currently required 240,000 square feet; and
WHEREAS, as a condition of the City agreeing to this change, the Developer has agreed
to certain restrictions on the release of a portion of the District bond proceeds that tie their
release to additional leasing performance; and
- 2 -
WHEREAS, in addition, $8 million in District bond proceeds allocated to the College
Avenue Underpass and Foothills Activity Center elements of the Mall Project will be reserved
exclusively for that purpose, as part of the release conditions; and
WHEREAS, in order to document and make enforceable these proposed terms and
conditions, the parties have also negotiated modifications to the language of the Agreement that
are described in the First Amendment to Redevelopment and Reimbursement Agreement,
attached hereto as Exhibit “A” and incorporated herein by this reference (the “Amendment”);
and
WHEREAS, City staff has recommended that the City agree to the proposed changes to
the leasing conditions set forth in the Amendment, to avoid the costs and other detriments
associated with a delay in the issuance of the District bonds called for under the Agreement; and
WHEREAS, as part of the Amendment, the Developer has also agreed to provide
additional security and financing to support the Mall Project and maintain the current timeline
for completion; and
WHEREAS, in light of the foregoing, the City Council desires to approve the
Amendment.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS, as follows:
Section 1. Ratification and Approval of Prior Actions. The City Council hereby
ratifies, approves and confirms all action heretofore taken (not inconsistent with the provisions of
this Resolution) by the City Council or the officers of the City Council or the City named in this
Resolution relating to the Mall Project, the execution and delivery of the Agreement and the
Amendment, and the performance of the City’s obligations under the Agreement and related
documents.
Section 2. Finding of Best Interests and Public Purpose. The City Council hereby
finds and determines, pursuant to the Colorado Constitution, the laws of the State, the City
Charter and the City Code, and in accordance with the foregoing recitals, that adopting this
Resolution, providing the specified assistance for the Mall Project, and entering into the
Agreement and the Amendment 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 blight
conditions within and around the Foothills Mall pursuant to the Midtown Urban Renewal Plan,
providing a catalyst for redevelopment in the Midtown Urban Renewal 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 3. Approval of Amendment. The Amendment, in substantially the form
attached hereto as Exhibit “A”, is in all respects approved, authorized and confirmed.
- 3 -
Section 4. Authorization to Execute. The Mayor Pro Tem of the City is hereby
authorized and directed to execute and deliver the Amendment, for and on behalf of the City, in
substantially the form and with substantially the same content as attached, provided that the
approval hereby given to the Amendment includes an approval of such additional details therein,
deletions therefrom, or additions thereto as the City Manager, in consultation with the City
Attorney, determines to be necessary and appropriate for its completion, or desirable to protect
the interests of the City. The execution of the Amendment by the Mayor Pro Tem shall be
conclusive evidence of the approval by the City Council of the same in accordance with the
terms of this Resolution and the Amendment.
Section 5. Delegation for Future Amendments. It is the intent of the City Council
that the City Manager is hereby authorized, in consultation with the City Attorney, to approve
and enter into future amendments to the Agreement as provided in Section 10 of the
Amendment.
Section 6. Direction to Act. 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. The execution of any instrument by the aforementioned
officers or members of the City Council shall be conclusive evidence of the approval by the City
of such instrument in accordance with the terms of this Resolution and the Amendment.
Section 7. Severability. If any section, subsection, paragraph, clause or provision of
this Resolution or the Amendment 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 the Amendment, the intent being that the same are severable.
Section 8. Repealer. All prior resolutions, or parts thereof, inconsistent herewith are
hereby repealed to the extent of such inconsistency.
Section 9. Effectiveness. This Resolution shall take effect immediately upon its
passage.
- 4 -
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 6th
day of May, A.D. 2014.
_________________________________
Mayor Pro Tem
ATTEST:
_____________________________
City Clerk
1
FIRST AMENDMENT TO
REDEVELOPMENT AND REIMBURSEMENT AGREEMENT
THIS FIRST AMENDMENT TO REDEVELOPMENT AND REIMBURSEMENT
AGREEMENT (the “Amendment”) dated as of May __, 2014, is made by and among the FORT
COLLINS URBAN RENEWAL AUTHORITY, a body corporate and politic of the State of
Colorado (the “Authority”), WALTON FOOTHILLS HOLDINGS VI, L.L.C., a Delaware
limited liability company (the “Developer”), the CITY OF FORT COLLINS, COLORADO, a
municipal corporation (the “City”), and FOOTHILLS METROPOLITAN DISTRICT, a quasi-
municipal corporation organized and existing in accordance with Title 32, Article 1, C.R.S. (the
“District”). The Authority, the Developer, the City and the District are sometimes collectively
called the “Parties,” and individually, a “Party.”
RECITALS
WHEREAS, on January 17, 2014, the Parties entered into that certain Redevelopment
and Reimbursement Agreement (the “Agreement”); and
WHEREAS, the Developer has requested an amendment to the Agreement that would
change one condition precedent to the issuance of District Bonds so as to allow their issuance
upon the Developer’s having leased 155,000 square feet, 120,000 of which must to be tenants
new to Fort Collins, rather than the currently required 240,000 square feet; and
WHEREAS, as a condition of agreeing to this change, the Developer has agreed to
certain restrictions on the release of a portion of the District Bond proceeds to tie their release to
additional leasing performance; and
WHEREAS, in addition, the Parties have determined that certain other clarifications to
the language of the Agreement will be mutually beneficial.
NOW THEREFORE, in consideration of the mutual covenants and promises of the
Parties contained in this Agreement, and other valuable consideration, the receipt and adequacy
of which are acknowledged, the Parties agree to the terms and conditions in this Agreement.
AGREEMENT
1. DEFINED TERMS AND RECITALS INCORPORATED. All terms used in this
Amendment and defined in the Agreement shall have the meanings ascribed to them in
the Agreement, except as otherwise expressly provided herein. All recitals set forth in
the Agreement and in this Amendment, above, are incorporated into the Agreement as
amended by this Amendment as though fully set forth in the body hereof.
EXHIBIT A
2
2. DEFINITION ADDED. Section 1 of the Agreement is amendment to add a definition of
the term “Tenant New to Fort Collins”, as follows:
“Tenant New to Fort Collins” means any tenant other than a tenant that is relocating to
the Project an existing business that was operating under a City of Fort Collins sales tax license
as of the date of the Agreement or this Amendment.
3. AMENDMENT TO SECTION 3.1. Section 3.1 of the Agreement is hereby amended to
read as follows:
3.1 Conditions Precedent to Issuance of District Bonds. The following conditions
shall be satisfied on or prior to the issuance of the District Bonds:
(a) The Developer and the District shall prepare the Financing Plan and the
City Manager and the Executive Director of the Authority shall have approved the
Financing Plan. The Financing Plan shall also be in form and substance satisfactory to the
District’s bond counsel and the underwriter of the District Bonds. The Financing Plan
shall demonstrate that there is expected to be sufficient Pledged Revenues derived from
the construction of the Project to pay the debt service requirements on the District Bonds
when due.
(b) The Developer shall provide to the City Manager the following evidence
satisfactory to the City Manager that the Developer has obtained all equity and private
financing necessary to construct the non-residential components of the Project:
(1) Developer shall certify that it has expended no less than $57 million
on the Project, representing the Developer’s equity commitment as of the closing of the
District Bonds; and
(2) Developer shall demonstrate that it has a closed construction loan
with a commitment from the construction lender to fund an amount not less than the
difference between the construction costs of the Project and the total of the net bond
proceeds and the Developer’s equity commitment described in Section 3.1(b)(1), which
construction loan shall provide recourse for one hundred percent (100%) of the loan
amount against an entity (or entities) that own(s) substantially all of and controls(s) the
Developer. Such recourse may be subject to decreases over time as certain financial tests
and leasing tests are achieved. The City’s Financial Officer and City Attorney (or their
delegates) shall be entitled to review the loan agreement and related documents,
including, but not limited to, any promissory note and all related guarantees and deeds of
trust, to verify compliance with this requirement.
3
(c) The Developer shall have obtained executed lease agreements, excluding
the existing department store located on Larimer County Parcel Number 9725391002,
totaling at least 155,000 square footage of the retail area of the Project with tenants that,
in the aggregate, have an average sales per square foot of at least $375 based on average
national sales performance, and, except as hereinafter provided, of which at least 120,000
square feet shall be leased to Tenants New to Fort Collins, except that the City Manager
shall have the authority to deem this requirement has been satisfactorily met when leases
have been executed with Tenants New to Fort Collins totaling no less than 90,000 square
feet, so long as the City Manager has determined that it is in the best interests of the City
to do so, and that all other conditions and obligations of this Agreement have been met.
The Developer shall certify to the City upon the City’s request that the conditions of this
Subsection (c), excluding verification of the sales per square foot requirement, have been
met in full.
(d) The Developer shall have imposed the Add-On PIF in accordance with
Section 4.7 hereof.
(e) The Developer shall have obtained the Development Approvals for the
Project, as described in this Agreement and in Exhibit C.
(f) The City and the Authority shall receive an opinion of the District’s bond
counsel that the District Bonds have been validly issued and opining as to the tax-exempt
status of the bonds, which opinion shall be addressed to the City and the Authority, or the
City and the Authority shall receive a reliance letter from the District’s bond counsel.
(g) No Event of Default hereunder shall have occurred and be continuing
hereunder, unless such Event of Default has been cured, remedied or waived, or a remedy
has been agreed upon by the Parties which will become effective with the passage of
time.
4. AMENDMENT TO SECTION 3.2. Section 3.2 is hereby amended to read as follows:
3.2 Provisions to be Included in District Bond Documents. The District Bond
Documents shall contain the following provisions:
(a) The District Bonds shall be payable from the Pledged Revenues in the
following order of priority:
(i) the District Debt Service Mill Levy Revenues;
(ii) the Pledged District Specific Ownership Taxes;
(iii) the Pledged Property Tax Increment Revenues;
(iv) the Add-On PIF Revenues; and
4
(v) the Pledged Sales Tax Increment Revenues.
(b) The District Bond proceeds may only be made available to the District in
tranches, upon the achievement by Developer of threshold requirements for executed
leases for tenants as set forth in the table below. The parties acknowledge that, as
provided in Section 3.1(c) above, attainment of the threshold for the first such tranche is a
condition precedent of issuance of the District Bonds. As to tranches 1, 2 and 3 only, the
tenants comprising the required threshold shall have an average sales per square foot of at
least $375 in the aggregate based on average national sales. A portion of each tranche
shall be allocated to the Underpass and Foothills Activity Center improvements as set
forth in the table below, except as approved in writing by the City Manager. The balance
of the available proceeds within each tranche may be spent without restriction, except as
otherwise set forth in this Agreement.
(c) Additionally, as a condition precedent to the District’s ability to receive
the funds in tranche 4, the Developer shall have obtained a letter of completion for the
core and shell of the new building being constructed on Lot 16 as shown in the
Development Approvals, and delivered possession of said building to Sears or its
affiliate.
(d) If, on the third anniversary date of the issuance of the District Bonds, any
portion of the District Bond proceeds that has not been disbursed as a result of failure to
meet one or more leasing thresholds described in Section 3.2(b), then the remaining
undisbursed proceeds shall be used to carry out the mandatory extraordinary redemption
of a corresponding portion of the District Bonds.
Tranche
Cumulative Total
Square Feet of
Executed Lease
Agreements
Total Amount of
Bond Proceeds
Disbursed in
Tranche
Cumulative
Total Amount of
Bond Proceeds
Disbursed
Minimum Bond
Proceeds for
Underpass and
Foothills Activity
Center (FAC)
1 155,000 $23M $23M $3M (Underpass)
2 205,000 $10M $33M $1M (FAC)
3 255,000 $10M $43M $2M (FAC)
4 310,000 $10M $53M $2M (FAC)
5
(e) Until the leasing thresholds applicable to tranche 3 have been met,
Developer’s equity commitment described in Section 3.1(b)(1) of this Agreement shall
remain invested in the Project and Developer shall not receive any repayment of its
equity commitment from proceeds from the District Bonds.
(f) After the debt service requirements on the District Bonds have been paid
or provided for in each Fiscal Year, and after all payments have been made to replenish
the reserve fund for the District Bonds and to make any payments into any required
rebate funds for the District Bonds, any excess Pledged Revenues shall be applied by the
District Bond Trustee as follows:
(i) To the extent required by the underwriter of the District Bonds
based on market conditions, the District Bond Documents may establish a
supplemental reserve fund (the “Supplemental Reserve Fund”) and provide that
any excess Pledged Revenue shall be deposited into the Supplemental Reserve
Fund to be maintained in an amount that is not more than 10% of the original
aggregate principal amount of the District Bonds. The District Bond Trustee shall
keep a record of the sources of the Pledged Revenue that are used to fund and
maintain the Supplemental Reserve Fund, if any.
(ii) After the Supplemental Reserve Fund, if any, has been fully
funded, any excess Pledged Revenues shall be applied by the District Bond
Trustee as follows:
(A) The District, the City and the Authority hereby
agree pursuant to Section 31-25-107(11) C.R.S. that any such
excess Sales Tax Increment Revenues shall be released from the
lien of the District Bond Documents and remitted by the District
Bond Trustee to the City. The District Bond Documents shall
provide that the City is a third-party beneficiary under the District
Bond Documents with respect to this provision relating to the
requirement of remitting any excess Sales Tax Increment Revenues
to the City as set forth above.
(B) Any excess Add-On PIF Revenues shall be applied
by the District Bond Trustee to prepay principal on the District
Bonds upon payment of all scheduled debt service for the year in
which said Add-On PIF Revenues were collected. In the event that
Add-On PIF Revenues are used to fund or maintain the
Supplemental Reserve Fund and are released after full payment of
6
the District Bonds, excess Add-On PIF Revenues shall be remitted
to the District for deposit in the Foothills Mall Fund.
(C) Any excess Pledged Property Tax Increment
Revenues shall be released from the lien of the District Bond
Documents and remitted to the Authority.
(D) Any excess Pledged District Specific Ownership
Taxes and District Debt Service Mill Levy Revenues shall be
applied by the District Bond Trustee to debt service payments on
the District Bonds in the following year.
(g) Except as may be expressly agreed to the contrary in writing by the
District, the City Manager on behalf of the City, and the Authority Executive Director on
behalf of the Authority, the District Bond Documents shall provide that moneys on
deposit in the Supplemental Reserve Fund shall be applied solely to pay the debt service
requirements on the District Bonds in the event of an insufficiency of Pledged Revenues
to make such payments, provided, however, that all moneys on deposit in the reserve
fund for the District Bonds must first have been applied to the payment of the debt
service requirements on the District Bonds prior to applying any funds on deposit in the
Supplemental Reserve Fund to such payment. Upon termination of the Supplemental
Reserve Fund, the moneys on deposit in the Supplemental Reserve Fund shall be remitted
by the District Bond Trustee based on the source of Pledged Revenues used to fund and
maintain the Supplemental Reserve Fund in accordance with the provisions set forth in
subparagraph (d)(ii) above, except as may otherwise be provided in the District Bond
Documents with the consent of the District, the City Manager on behalf of the City and
the Authority Executive Director on behalf of the Authority, notwithstanding the terms of
subparagraph (d)(ii), above.
(h) The District Bond Documents shall provide that the net proceeds of the
Bonds shall be deposited in the Project Fund and requisitioned by the District to pay
Eligible Costs as set forth in Exhibit D hereof, with such requisitions to be made
substantially in accordance with Exhibit E hereof. The District Bond Documents shall
provide that any requisition remitted to the District Bond Trustee shall simultaneously be
remitted to the City Manager, or the City Manager’s designee. In the event that the City
provides written notice to the Developer and the District that it disputes that all or any
portion of the requisition qualifies as an Eligible Cost or otherwise fails to comply with
the requisition requirements in Exhibit E, then the City, the Developer and the District
agree to act in good faith to attempt to resolve any such dispute.
(i) Without the prior written consent of the City Manager, the District Bonds
shall mature no later than 25 years after the date of issuance thereof, and shall not contain
7
a pledge of Pledged Property Tax Increment Revenues or Pledged Sales Tax Revenues
that extends beyond the final payment of said revenues to the Authority; the total Net
Debt Service of the District Bonds shall not exceed $180,000,000, and the maximum
annual Net Debt Service on the District Bonds shall not exceed the amounts set forth in
Exhibit I hereto.
5. AMENDMENT TO SECTION 4.1. Section 4.1 is hereby amended to read as follows:
4.1 Construction of Project. As set forth in Section 2.1 hereof, the Developer and/or
the District shall construct the Project. The Project shall be constructed substantially in
accordance with the Development Approvals and Exhibit C attached hereto. Additionally, as
construction proceeds on the Project, Developer shall comply with the following requirements.
(a) Developer shall provide a monthly written status report to the City
regarding the status of construction of the Project with respect to the overall schedule.
The City acknowledges that Developer has identified or may identify certain information
contained in such reports as confidential, proprietary business information. The City
agrees that it will maintain the confidentiality of such information except as required by
applicable law. If the City is requested to disclose information identified by Developer as
confidential and if the City believes it is legally required to make disclosure of such
information, the City will notify Developer at least two business days prior to making
such disclosure, so as to permit Developer to propose appropriate redactions or seek a
judicial declaration preventing disclosure. The Developer shall reimburse the City for
any attorneys’ fees or costs incurred by the City or that the City is ordered to pay in
connection with such proceedings.
(b) Developer shall certify to the City prior to the release of each tranche of
District Bond proceeds as set forth in Section 3.2(b) that the total square footage of leases
to Tenants New to Fort Collins meets the minimum threshold for such tranche as set forth
in the table below:
Tranche
Total Square Feet of
Executed Lease Agreements
Total Leasing to
Tenants New to Fort Collins
1 155,000 120,000
2 205,000 120,000
3 255,000 130,000
4 310,000 150,000
8
(c) Developer shall also provide monthly reports to the City which include the
following information: (i) the percentage of the total square footage to be leased for
which leases have been executed; (ii) the percentage of the total square footage to be
leased for which letters of intent have been executed; and (iii) the percentage of the total
square footage to be leased that is under negotiation. The City acknowledges that
Developer has identified or may identify certain information provided under this
subsection as confidential, proprietary business information. The City agrees that it will
maintain the confidentiality of such information to the same extent and under the same
terms and conditions as set forth in Section 4.1(a), above. Subject to confidentiality
provisions contained in individual leases with which Developer must comply, and to the
above provisions regarding confidentiality of proprietary business information,
Developer additionally agrees to allow the City Manager and City Attorney (or their
delegates) to inspect those portions of executed leases or other documents reasonably
necessary in order to verify the information set forth in the certifications referenced in
Section 3.1(c) and Section 4.1(b), above. Developer shall use commercially reasonable
efforts to obtain consent from the retailers who are parties to such leases, where such
consent is required, in order to make such information available to the City.
6. AMENDMENT TO SECTION 4.3. Section 4.3 is hereby amended to read as follows:
4.3 Construction of Residential Component of Project; Affordable Housing. The
Developer shall Complete Construction of the residential components of the Project, subject to
Force Majeure, as follows:
(a) on or prior to December 31, 2016, the Developer shall Complete
Construction of the first phase of the residential component of the Project consisting of a
minimum of 200 units;
(b) on or prior to December 31, 2018, the Developer shall Complete
Construction of the second phase of the residential component of the Project consisting of
at least an additional 246 units.
Failure to Complete Construction of the residential components of the Project in
accordance with this Section 4.3 shall not be deemed to be an Event of Default under this
Agreement, provided, however, that if Construction of the residential components of the Project
is not Completed as set forth above, then beginning with the 2020 Fiscal Year, the Developer
shall be obligated to pay in such Fiscal Year and each Fiscal Year thereafter, regardless of
whether the Developer is the owner of the Property on which the residential component of the
Project is to be constructed, an amount equal to 50% of the difference between the Pledged
Revenues generated from the residential component of the Project and the Estimated Revenues
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from the Residential Property, as follows: (i) such payment shall be made to the City to the
extent that any Pledged Sales Tax Increment Revenues are applied in such fiscal year to the
payment of the debt service requirements on the District Bonds; and (ii) to the extent that such
payment is not due and owing to the City in any fiscal year, the balance of any such amount to be
paid by the Developer in such fiscal year shall be applied toward principal on the District Bonds.
Said payment shall be made in each fiscal year until either: (1) the pledge of any Authority
Pledged Revenues has ceased; or (2) property taxes are due from the residential component of
the Project for 446 units that have been assessed as 100% complete.
The Project shall pay any affordable housing fees that may be enacted by the City
Council on or before December 1, 2014, as if such fees had been in place and applicable to the
Project. Any affordable housing impact fee that may be adopted as part of such requirements
shall be paid by the Developer when due for the Project, except that for any portion of the
Project developed prior to the imposition of the fee, such fee shall be paid no later than sixty
days after adoption.
7. AMENDMENT TO SECTION 4.7. Section 4.7 of the Agreement is hereby amended to
read as follows:
4.7 Imposition of Add-On PIF.
(a) On or prior to the issuance of the District Bonds, the Developer shall
impose the Add-On PIF on retail sales occurring on the Property that are subject to the
City’s Sales Tax, provided, however, that in connection with any property that is not
owned by the Developer as of the Effective Date, the Developer shall use its best efforts
to impose such Add-On PIF on such retail sales occurring on any such Property, subject
to the consent of the owners of such Property. Except as provided herein, all property
under the Developer’s control as of the Effective Date shall be made subject to the Add-
On PIF, and any property within the Project acquired by the Developer subsequent to the
Effective Date shall become subject to this requirement. This requirement shall not apply
to those portions of the Property or later acquired property governed by existing leases,
until the expiration or termination of said existing leases, provided that Developer shall
use commercially reasonable efforts to obtain consent from the retailers who are parties
to such leases to become subject to the same. The Add-On PIF shall be imposed only for
so long as the District Bonds are outstanding. So long as the District Bonds are
outstanding, the Developer covenants to cause all Add-On PIF Revenues to be remitted to
the District Bond Trustee and such Add-On PIF Revenues shall be pledged to the
payment of the District Bonds. To the extent that the Add-On PIF is imposed prior to the
initial issuance of the District Bonds, the Developer covenants to cause all Add-On PIF
Revenues to be held in a trust account and remitted to the District Bond Trustee upon the
initial issuance of the District Bonds. The Developer agrees that it shall be responsible
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for enforcing the placard requirements and for the implementation of the Add-On PIF
with the retailers in the Project.
(b) The Add-On PIF shall be imposed and collected as required by this section
through the PIF Covenant. The PIF Covenant shall provide that during the term that the
Add-On PIF is to be imposed and collected under this Agreement, the PIF Covenant may
not be amended, modified, waived or terminated in any manner inconsistent with the
terms of this Agreement without the City’s prior written consent. The PIF Covenant shall
be reviewed by the City Attorney to determine that the PIF Covenant satisfies the
applicable requirements of this Agreement. The City Attorney shall have twenty-one
(21) days after its submittal to the City to review and provide comments in writing to the
Developer with regard to the same. In the event the City Attorney’s written approval or
disapproval is not provided to the Developer within such period, the PIF Covenant shall
be deemed approved by the City. Upon approval and in connection with the closing of
the construction loan referenced in Section 3.1(b)(2), the Developer shall record the PIF
Covenant with the Larimer County Clerk and Recorder to encumber the Property as
provided in this section and the PIF Covenant so recorded shall be prior to all liens,
except liens for property taxes.
8. AMENDMENT TO SECTION 4.8. Section 4.8 of the Agreement is hereby amended to
read as follows:
4.8 Access to Property. Developer will make arrangements for representatives of the
City, including elected officials and staff, and the public, to participate in regular tours of the
Property during construction, which tours shall be conducted no less frequently than once per
month. Additionally, Developer will permit representatives of the City and the Authority access
to the Property and the Project at reasonable times during regular business hours and with prior
notice as necessary for the purpose of carrying out or determining compliance with the
Agreement, the Urban Renewal Plan, or any City code or ordinance, including, without
limitation, inspection of any work being conducted. No compensation will be payable for such
access. The City and the Authority, as applicable, agree to restore the Property and any
component of the Project to its condition prior to any tests or inspections made by the City and
further agree that they shall be responsible for any damage that results from the City or the
Authority, as applicable, accessing the Property pursuant to their respective rights under this
Agreement, to the extent permitted by law and, in the case of the City, subject to annual
appropriation of funds by the City Council, in its sole discretion.
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9. AMENDMENT TO SECTION 5.1. Section 5.1 of the Agreement is hereby amended to
read as follows:
5.1 Compliance with Service Plan and Applicable Law. At all times the District will
comply with the requirements of the Service Plan as it may be amended from time to time. The
District further agrees that it will not make any material modification to the Service Plan without
first obtaining the City Council’s approval of that modification, as required in CRS Section 32-1-
207. For purposes of this Agreement, a “material modification” shall include, without limitation,
any increase in the “Maximum Debt Authorization,” “Maximum Debt Maturity Term” or in the
“Maximum Debt Service Mill Levy,” as these terms are defined in the Service Plan. The
District’s failure to obtain the City Council’s approval shall be deemed an Event of Default
under Sections 18 and 19 hereof. To the extent authorized by its Service Plan, the District may
design, construct, finance, own, acquire, maintain, and operate Eligible Improvements in
accordance with all applicable laws, ordinances, standards, policies, and specifications of the
State of Colorado, the City, and any other entity with jurisdiction. The City and the District
agree that this First Amendment shall not constitute a material modification to the Service Plan
and shall be incorporated into the definition of “Redevelopment Agreement” in the Service Plan.
10. AMENDMENT TO SECTION 25.5. Section 25.5 of the Agreement is hereby amended
to read as follows:
25.5. The City Manager shall have the authority to act on behalf of the City under
this Agreement and the Executive Director shall have the authority to act on behalf of the
Authority under this Agreement. In exercising such authority, they each may agree to
amendments to the Agreement that they, in consultation with appropriate legal counsel,
determine are in the best interests of the City and Authority and do not have a significant
adverse effect on the City’s or Authority’s financial interests under this Agreement, or
result in a significant change to the scope or general character of the Project from that
defined in this Agreement.
11. AMENDMENT TO SECTION 26. Section 26 of the Agreement is hereby amended to
read as follows:
26. AMENDMENT. This Agreement may be amended only by an instrument in writing
signed by all the Parties. Amendments within the authority of the City Manager and Executive
Director pursuant to Section 25.5 may be entered into without action of the City Council and
Authority Board of Commissioners, respectively.
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12. VALIDITY OF REMAINING PROVISIONS. All provisions of the Redevelopment
Agreement that are not expressly amended herein shall remain in full force and effect and
continue to bind the parties thereto.
IN WITNESS WHEREOF, this Amendment is executed by the Parties as of May __,
2014.
FORT COLLINS URBAN RENEWAL AUTHORITY
_____________________________________
Gerry Horak, Vice Chairperson
ATTEST:
_____________________________
Darin Atteberry, Executive Director
Notice Address:
Fort Collins Urban Renewal Authority
300 LaPorte Avenue
P.O. Box 580
Fort Collins, CO 80522
Attention: Darin Atteberry, Executive Director
Email: datteberry@fcgov.com
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CITY OF FORT COLLINS, COLORADO
By:
Gerry Horak, Mayor Pro Tem
(SEAL)
ATTEST:
_______________________
Wanda Nelson, City Clerk
APPROVED AS TO FORM
_______________________
Carrie Mineart Daggett, Deputy City Attorney
Notice Address:
City of Fort Collins
300 LaPorte Avenue
P.O. Box 580
Fort Collins, Colorado 80522
Attention: Carrie Mineart Daggett, Esq., Deputy City Attorney
Email: cdaggett@fcgov.com
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FOOTHILLS METROPOLITAN DISTRICT
_________________________________
ATTEST: ________________________, President
_____________________________
Secretary
Notice Address:
c/o White, Bear and Ankele, P.C.
The Streets at Southglenn
2154 E. Commons Avenue, Suite 2000
Centennial, CO 80122
Attention: Kristen Bear
Email: kbear@wbapc.com
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WALTON FOOTHILLS HOLDINGS VI, L.L.C.,
a Delaware limited liability company
By: Foothills Alberta Management, LLC,
a Colorado limited liability company
Its: Authorized Agent
By: ____________________________
Donald G. Provost
Its: Manager
Notice Address:
Walton Foothills Holdings VI, L.L.C.
5750 DTC Pkwy, Suite 210
Greenwood Village, CO 80111
Attention: Donald G. Provost
Email: dgp@albdev.com
With a copy to:
Brownstein Hyatt Farber Schreck, LLP
410 Seventeenth Street, Suite 2200
Denver, CO 80202
Attention: Carolynne C. White, Esq.
Email: cwhite@bhfs.com