HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/15/2001 - HEARING AND SECOND READING OF ORDINANCE NO. 81, 20 RPM
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AGENDA ITEM SUMMARY ITEM NUMBER: 9
FORT COLLINS CITY COUNCIL DATE: May 15, 2001
FROM: Alan Krcmarik
SUBJECT:
Hearing and Second Reading of Ordinance No. 81, 2001, Authorizing the Issuance of Variable
Rate Economic Development Revenue Bonds for the Residence at Oakridge Project.
RECOMMENDATION:
Staff recommends adoption of the Ordinance on Second Reading.
EXECUTIVE SUMMARY:
On February 15, 2000, Council adopted Resolution 2000-32 indicating its willingness to issue
tax-exempt private activity bonds for the Residence at Oakridge Project. On February 6, 2001.
Council adopted Resolution 2001-18 extending the time for the Project to complete the
financing. The financing team has completed the negotiations required to issue the bonds. This
Ordinance, which was unanimously adopted on First Reading on May 1, 2001, authorizes the
issuance of variable rate economic development revenue bonds for the Oakridge Project.
AGENDA ITEM SUMMARY ITEM NUMBER: 16
DATE:
FORT COLLINS CITY COUNCIL May 1, 2001
STAFF:
Alan Krrmarik
SUBJECT:
First Reading of Ordinance No. 81, 2001, Authorizing the Issuance of Variable Rate Economic
Development Revenue Bonds for the Residence at Oakridge Project.
RECOMMENDATION:
Staff recommends adoption of the Ordinance on First Reading.
FINANCIAL IMPACT:
Under the federal and state laws governing the use mpt priv activity bonds, the City may issue the
bonds, but may not use its own revenues to support the Thgj*oject will generate the revenue required
to repay the bonds. In the event the project does not gene dent revenue, the bondholders may request
payment from the letter of credit provider urer of the tion. The total amount of private activity
bonds to be issued will not exceed $ ect pro National Healthcare Associates, or the
limited partnership that will be fo ed may use i es to pa orids or issue additional taxable
bonds to finance the project. Th xpected total cost roject w $4.9 million. The bond allocation
amount consists of $800,000 fr the State of Colora 579,7501 'om Larimer County, and $1,178.750
from the City of Loveland.
EXECUTIVE SUMMA
On Fe _ ry 15, 2000, Coun Resol � 2000-32 indicating its willingness to issue
tax-e pt private activity bonds nce at Oakridge Project. On February 6, 2001,
Co I adopted Resolution 2001-18 extending the time for the Project to complete the
fin g. The financing team s completed the negotiations required to issue the bonds. The
pro
s a multi-family assiste living project for low-income frail elderly individuals. The
proj located along McM Drive in the Oakridge Business Park. National Healthcare
Asso e Project prop on , estimates the total cost of the project to be $4.9 million with
$3,555, mic deve ent bonds (a form of private activity bonds). The project will
contain 44 a total of 58 beds. Of the total, 50% will be reserved for persons
whose incomes exceed 60% of the Area Median Income. This qualifies the Project as a
low-income rental project. The remaining units will be leased at market rates.
ACKGROUND:
In late 1999, National Healthcare Associates approached the City with the concept for this
project. The City had also received another affordable rental housing project from another
developer. Based on the review and recommendation of the Affordable Housing Board, the City
us
B ed its year 2000 private activity bond allocation to support the other project. Based on the
DATE: May 1, 2001 2 ITEM NUMBER: 16
discussions with the Affordable Housing Board and the Finance Committee, Finance Department
staff contacted Larimer County and the City of Loveland to determine if their allocations for the
vear 2000 would be available. Both Loveland and Larimer County assigned their allocations to
the City of Fort Collins. Staff then applied for additional allocation from the Statewide balance
of private activity bond allocation and the State Allocation Committee provided an additional
$800,000.
A copy of the Agenda Item Summary from February 15, 2000, which pr es a complete
description of the Project, is attached.
Under the federal tax laws and the Colorado Revised Statutes, the City's rollint s transaction is
to be the Issuer of the Bonds. The proceeds of the Bonds w' -be loaned t the National
Healthcare Associates or a corporation to be formed for the ose of own* the project
according to the terms of the Loan Agreement to provide the
SOURCES AND USES
The sources and uses of funds to pay the costs of roje Z_,jimated to be as follow'Aate'
Sources of Funds: i
Tax Exempt Bonds Proceeds t,555,000
Taxable Financing Proceeds ..... . 255.000
Proponent's Equity .,... y . 672,000
Deferred Devel . 343,653
Proceeds frotxl � eveloper L .K411 12 081
Totaources ...... :; a ................ 734
Uses of Funds
Project C .....................................r $4,181.378
Soft Costs title, appraisal, le ............... 79,500
es (C d Interest and O tmg) ........ 338,551
Letter o Credi .. .. 116,590
Financ)estimates
229J15
............................................. $4,945,734
So and uses are will likely change prior to second reading.
STR OF BThe objec saction is to achieve the lowest possible borrowing costs for
the Project thr ' nancing. In return for the tax-exempt financing, the City's
public policy of supporting affordable housing is accomplished. The underwriter believes this
can best be accomplished by structuring the transaction using variable rate bonds. Using this
technique, interest rates fluctuate and reset periodically. The underwriter is estimating an
interest rate of about 4.8% on the variable rate bonds.
DATE: May 1. 2001 3 ITEM NUMBER: 16
The Bond documents set up the repayment schedule. The documents supporting this transaction
have estimated the following principal repayment schedule:
Date of Principal Principal Amount
Redemption to be Redeemed
2001 $ 0
2002 0
2003 40.000
2004 40,000
2005 45.000
200650,000 ''
2007 �' .000
2008
2009
2010 70,000
2011 80,000 a
2012 80,000
2013 '' 85.000
2014 90.000
2015 100.000
'016 100,000
2017 110,000
2018 ,sue" , .� : ;� $ ' *904
115,000
2019
2020 %a .000
2021 140,000
2022 t 150,000
2023 155.000
AQR4 165,000
N44175.000
2026 t`" 185,000
2027 200,000
2028 210,000
2029 225,000
2030 240,000
2031 255,000
2032 270,000
r
Debt sent �T es the $255.000 of taxable bonds with the $3,555,000 of tax-exempt
financing. Pay scheduled to be made on June I and December I of each year.
According to the City of Fort Collins policies regarding issuance of tax-exempt financing for this
type of project, the City charges an issuer's fee when the bonds are issued. However, for
affordable housing projects the fee may be waived to lower the cost of the project. Staff has
recommended and the bond financing documents are written with the issuer's fee waived.
DATE: M! ! tlnn ! 1 4 1 ITEM NUMBER: E
This project is consistent with the cy 3&a Collinspolicies reg ard housing and .
with its private activity bond policies. The project willprovide housing Ulow-inmme me
that haveassisted living needs. Staff recommends adoption of the Ordinance on as
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