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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 03/20/2001 - FIRST READING OF ORDINANCE NO. 51, 2001, AMENDING AGENDA ITEM SUMMARY ITEM NUMBER: 21 FORT COLLINS CITY COUNCIL DATE: March 20, 2001 STAFF: Alan Krcmazik SUBJECT: First Reading of Ordinance No. 51, 2001, Amending Ordinance No. 36, 1992, Authorizing the Issuance of City of Fort Collins, Colorado, Downtown Development Authority Tax Increment Revenue Refunding Bonds, Series 1992. RECOMMENDATION: Staff recommends adoption of the Ordinance on First Reading. FINANCIAL IMPACT: Adoption of this Ordinance will increase the security for Series 1992 Downtown Development Authority Tax Increment Revenue Bonds, some of which will remain outstanding upon the issuance of the refunding bonds also before the Council in Ordinance No. 51 , 2001. In essence, the 1992 DDA bonds will be on a parity status with the City's Sales and Use Tax Revenue Bonds. Originally the City had the right to remove the pledge of sales and use tax revenues to back the bonds when certain conditions were met,and to have the bonds'lien on those revenues become subordinate to other prior bonds in certain ircumstances. The elimination of these rights is expected to keep bond insurance costs for the refunding issue to a minimum nd will help the bonds get the most competitive (lowest net cost) interest rates, at an estimated savings of approximately $25,000. This Ordinance will make equivalent changes to the remaining 1992 issue bonds so that they remain comparable in their terms to the refunding bonds. The changes do not affect future City sales tax bonds as future bonds will need voter approval of the debt due to Article X,Section 20 of the State Constitution. EXECUTIVE SUMMARY: The 1992 Downtown Development Authority Tax Increment Bonds (the "1992 Bonds") carry a contingent pledge of the City of Fort Collins sales and use tax revenue. According to Ordinance No. 36, 1992, the City may release the contingent pledge of the sales and use tax revenues if the annual tax increment revenues reach 140%of the annual debt service for two consecutive years. In addition, the City currently has the right to have the lien of the 1992 Bonds upon those sales and use tax revenues subordinated to the lien of prior sales and use tax bonds, if the ratio of the total of those revenues to the total of debt the revenues are pledged to secure falls to 5 to 1 or below. During discussions with the bond insurer for the Series 2001 Tax Increment Refunding Bonds, staff has learned that the most cost-effective refunding will be accomplished by removing the City's rights to release the contingent pledge of the sales and use tax revenues and to subordinate the lien of the 1992 Bonds to that of prior sales and use tax revenue bonds. The Ordinance amends the 1992 bond ordinance to carry out these changes with respect to the 1992 Bonds that will remaining outstanding after the issuance of the new refunding bonds proposed in Ordinance No. 50,2001. This will keep the 1992 Bonds that remain outstanding subject to the same terms as the newly issued bonds. Based on this action, the bond insurer will provide a more competitive (lower cost) premium on the new refunding bonds. With the insurer's backing, the City is assured of the widest market for the sale of its bonds. ORDINANCE NO. 51, 2001 AN ORDINANCE AMENDING ORDINANCE NO. 36, 1992, AUTHORIZING THE ISSUANCE OF CITY OF FORT COLLINS, COLORADO, DOWNTOWN DEVELOPMENT AUTHORITY TAX INCREMENT REVENUE REFUNDING BONDS, SERIES 1992 WHEREAS, the City of Fort Collins, Colorado (the "City"), has heretofore issued its Downtown Development Authority Tax Increment Revenue Refunding Bonds, Series 1992, dated March 15, 1992, in the aggregate principal amount of $11,380,000 (the 'Bonds") pursuant to Ordinance No. 36, 1992 (the "Ordinance"); and WHEREAS, MBIA Insurance Corporation (the 'Bond Insurer") has issued a financial guaranty insurance policy guaranteeing the payment of the principal of and interest on the Bonds; and WHEREAS, the City desires that certain amendments be made to the Ordinance to add to the covenants and agreements of the City or the limitations and restrictions on the City set forth in the Ordinance; and WHEREAS, the Ordinance provides in Section 11A thereof as follows: The City may, without the consent of, or notice to, the Owners of the Bonds or the Bond Insurer,adopt such ordinances supplemental hereto(which amendments shall thereafter form a part . hereof) for any one or more or all of the following purposes: (1) To cure or correct any formal defect, ambiguity or inconsistent provision contained in this Ordinance; (2) To appoint successors to the Paying Agent, Registrar, Transfer Agent, Securities Depository or Escrow Bank; (3) To designate a trustee for the Owners of the Bonds, to transfer custody and control of the Pledged Revenues to such trustee,and to provide for the rights and obligations of such trustee; (4) To add to the covenants and agreements of the City or the limitations and restrictions on the City set forth herein; (5) To pledge additional revenues,properties or collateral to the payment of the Bonds; (6) To cause this Ordinance to comply with the Trust Indenture Act of 1939, as amended from time to time; or (7) To effect any such other changes hereto which do not in the opinion of nationally recognized bond counsel materially adversely affect the interests of the Owners of the Bonds.. BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO, THAT: Section 1. Amendments. The Ordinance is hereby amended to waive and forever relinquish the right of the City reserved in Sections 5D, 5G and 5H of the Ordinance and referred to in Sections 1A(54),3B(11),5C,5D,7A,8B(2)and 8B(3)of the Ordinance to have the lien of the Bonds upon the Sales and Use Tax Revenues(as defined in the Ordinance)released and discharged as provided therein. This amendment shall take effect only upon issuance by the City of its Downtown Development Authority Tax Increment Revenue Refunding Bonds, Series 2001. The Ordinance is hereby further amended to waive and forever relinquish the right of the City reserved in Sections 5D and 5H of the Ordinance and referred to in Sections 3B(11)and 7A of the Ordinance to have the lien of the Bonds upon the Sales and Use Tax Revenues subordinated to that of the Prior Sales and Use Tax Revenue Bonds (as defined in the Ordinance). This amendment shall take effect only upon the satisfaction of the requirements of Section 7B of Ordinance No. 26, 1993, authorizing the issuance of the Prior Sales and Use Tax Revenue Bonds. In all other respects the Ordinance is not amended and remains in full force and effect. Section 2. Ratification. All action not inconsistent with the provisions hereof heretofore taken by the City or its officers and otherwise by the City directed toward the amendment of the Ordinance as provided herein is hereby ratified, approved and confirmed. Section 3. Repealer. All ordinances, resolutions, bylaws, orders, and other instruments, or parts thereof, inconsistent herewith are hereby repealed to the extent only of such inconsistency. This repealer shall not be construed to revive any ordinance,resolution,bylaw,order, or other instrument, or part thereof, heretofore repealed. Section 4. Severability. If any section, subsection, paragraph, clause or other provision hereof shall for any reason be held to be invalid or unenforceable, the invalidity or unenforceability thereof shall not affect any of the remaining sections, subsections, paragraphs, clauses or provisions hereof. 2 . INTRODUCED, READ, APPROVED ON FIRST READING AND ORDERED PUBLISHED BY NUMBER AND TITLE ONLY this 20th day of March, A.D. 2001. CITY OF FORT COLLINS, COLORADO By: (CITY) Mayor (SEAL) ATTEST: City Clerk READ, FINALLY PASSED ON SECOND READING AND ORDERED PUBLISHED BY NUMBER AND TITLE ONLY this 17th day of April, 2001. CITY OF FORT COLLINS, COLORADO By: (SEAL) Mayor ATTEST: City Clerk • 3