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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 08/18/2015 - FIRST READING OF ORDINANCE NO. 096, 2015 AMENDINGAgenda Item 11 Item # 11 Page 1 AGENDA ITEM SUMMARY August 18, 2015 City Council STAFF Jennifer Hensley, Finance Coordinator Matt Robenalt, Executive Director SUBJECT First Reading of Ordinance No. 096, 2015 Amending to Ordinance No. 090, 2010 Relating to the City of Fort Collins Downtown Development Authority Taxable Tax Increment Revenue Bonds, Series 2010A, and Tax- Exempt Tax Increment Revenue Bonds, Series 2010B, to Reduce the Respective Interest Rates on Such Bonds. EXECUTIVE SUMMARY The purpose of this item is to amend the Downtown Development Authority’s (DDA) 2010 bond series reducing the spread on the rate adjustment date. The DDA’s 2010 bond series is set for a rate adjustment at the 5-year mark in 2015. Great Western Bank, the bond series purchaser, has offered a rate reduction resulting in an estimated savings of $143,000 in interest expense over the remaining 5-year life of the bonds. This adjustment would be executed through an amendatory ordinance encompassing each bond, Series 2010A (Taxable Tax Increment Revenue Bonds) and Series 2010B (Tax-Exempt Tax Increment Revenue Bonds). Currently these bonds are to reset at 4.5% over the 5 year U.S. Treasuries, the amendments would reduce the spread on the two series to 3.5% over the 5 year U.S. Treasuries on Series 2010A and 4.25% on Series 2010B. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION The 2010 bond series collectively were issued on September 21, 2010 for $12,500,000. The initial interest rate fixed for the first five years is 4.5% over the 5 year U.S. Treasuries on both bonds. Series 2010A is currently at 6.08%; Series 2010B is at 4.01%. These bonds were issued for various tax increment financing (TIF) investments, culture and arts funding, grants and funding to the City, and DDA programs and projects. Current balance collectively is $9,140,000; final payment on the bonds is in December 2020. Ordinance No. 90, 2010 and DDA Resolution 2010-05 authorized the issuance of these bonds. Unanimous City Council Finance Committee support was received for the amendment at its July 20 meeting. CITY FINANCIAL IMPACTS Estimated savings of $143,000 in interest expense over the remaining 5 year life of the bonds is expected. BOARD / COMMISSION RECOMMENDATION At its August 13, 2015 meeting, the Downtown Development Authority Board of Directors adopted Resolution 2015-04 requesting Council support of the amendments to reduce the interest rates on the Series 2010A and 2010B bonds. Agenda Item 11 Item # 11 Page 2 ATTACHMENTS 1. DDA Resolution 2015-004 (PDF) 2. Consent of Great Western Bank (PDF) ATTACHMENT 1 CONSENT OF GREAT WESTERN BANK Great Western Bank (the “Bank”) is the owner of 100% in aggregate principal amount of the City of Fort Collins, Colorado, Downtown Development Authority (a) Taxable Tax Increment Revenue Bonds, Series 2010A, dated September 21, 2010 (the “2010A Bonds”), and (b) Tax-Exempt Tax Increment Revenue Bonds, Series 2010B, dated September 21, 2010 (the “2010B Bonds” and together with the 2010A Bonds, the “Bonds”). The Bonds were issued by the City of Fort Collins, Colorado (the “City”) pursuant to Ordinance No. 90, 2010 (the “2010 Ordinance”). Pursuant to the terms and provisions of the 2010 Ordinance, the respective interest rates payable on the Bonds will be converted to new interest rates on December 2, 2015 in accordance with the respective formulas set forth in the 2010 Ordinance. The City, the Authority and the Bank have determined to revise the respective formulas for determining the interest rates on the Bonds in order to reduce the interest rates on the Bonds. In order to implement these revisions to the 2010 Ordinance, the City will be adopting an Ordinance (the “2015 Ordinance”) amending certain provisions of the 2010 Ordinance, as set forth in the 2015 Ordinance. The Bank has received and reviewed a copy of the 2015 Ordinance and the proposed amendments to the 2010 Ordinance set forth therein. Section 11.B of the 2010 Ordinance provides that the City may reduce the interest rates on the Bonds by amending the 2010 Ordinance only with the prior written consent of the owners of one hundred percent (100%) in aggregate principal amount of the outstanding Bonds. The Bank, as the owner of 100% of the outstanding Bonds, hereby consents to the adoption of the 2015 Ordinance and the amendment of the 2010 Ordinance as provided therein. As required by Section 11.C. and Section 11.D. of the 2010 Ordinance, the Bank shall cause a copy of this Consent to be filed with the City Clerk of the City prior to the adoption of the 2015 Ordinance. DATED this _____ day of August, 2015. GREAT WESTERN BANK By: _________________________________________ Name: ____________________________________ Title: _____________________________________ ATTACHMENT 2 - 1 - ORDINANCE NO. 096, 2015 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING ORDINANCE NO. 090, 2010 RELATING TO THE CITY OF FORT COLLINS, COLORADO, DOWNTOWN DEVELOPMENT AUTHORITY TAXABLE TAX INCREMENT REVENUE BONDS, SERIES 2010A, AND TAX-EXEMPT TAX INCREMENT REVENUE BONDS, SERIES 2010B, TO REDUCE THE RESPECTIVE INTEREST RATES ON SUCH BONDS. WHEREAS, the City of Fort Collins, Colorado (the “City”) is a home rule municipality and political subdivision of the State of Colorado (the “State”) organized and existing under a home rule charter (the “Charter”) pursuant to Article XX of the Constitution of the State; and WHEREAS, the City duly established the Fort Collins Downtown Development Authority (the “Authority”) pursuant to Ordinance No. 46, 1981, and approved the Plan of Development for the Fort Collins Colorado Downtown Development District pursuant to Resolution 81-129; and WHEREAS, the City duly adopted Ordinance No. 090, 2010 (the “2010 Ordinance”) authorizing the issuance of the City’s (a) Downtown Development Authority Taxable Tax Increment Revenue Bonds, Series 2010A, dated September 21, 2010, in the original aggregate principal amount of $8,015,000 (the “2010A DDA Taxable Bonds”), and its (b) Downtown Development Authority Tax-Exempt Tax Increment Revenues Bonds, Series 2010B, dated September 21, 2010, in the original aggregate principal amount of $4,485,000 (the “2010B DDA Tax-Exempt Bonds,” and together with the 2010A DDA Taxable Bonds, the “2010 DDA Bonds”); and WHEREAS, all of the outstanding 2010 DDA Bonds are owned by Great Western Bank (the “Bank”); and WHEREAS, pursuant to the terms and provisions of the 2010 Ordinance, the interest rate payable on the 2010A DDA Taxable Bonds will be converted to a new interest rate on December 2, 2015 in accordance with a formula set forth in Section 3.D.(3) of the 2010 Ordinance; and WHEREAS, pursuant to the terms and provisions of the 2010 Ordinance, the interest rate on the 2010B DDA Tax-Exempt Bonds will be converted to a new interest rate on December 2, 2015 in accordance with a formula set forth in Section 3.D.(3) of the 2010 Ordinance; and WHEREAS, the City, the Authority and the Bank have determined to revise the formulas for determining the respective interest rates on the 2010 DDA Bonds in order to reduce the respective interest rates on the 2010 DDA Bonds; and WHEREAS, pursuant to Section 11 of the 2010 Ordinance, the City may reduce the interest rates on the 2010 DDA Bonds by amending the 2010 Ordinance only with the prior - 2 - written consent of the owners of one hundred percent (100%) in aggregate principal amount of the outstanding 2010 DDA Bonds; and WHEREAS, the Bank, as the owner of 100% of the outstanding 2010 DDA Bonds, has given its written consent to the amendment of the 2010 Ordinance and the adoption of this Ordinance and has filed its written consent and approval in the office of the City Clerk, as required by Section 11.C. and Section 11.D. of the 2010 Ordinance; and WHEREAS, the Authority has adopted a resolution (the “Authority Resolution”) requesting that the City Council adopt this amendatory Ordinance in order to reduce the interest rates on the 2010 DDA Bonds; and WHEREAS, the City Council has determined and hereby determines that adopting this amendatory Ordinance is necessary and in the best interest of the City; and WHEREAS, capitalized terms used herein and not otherwise defined shall have the meanings set forth in the 2010 Ordinance. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO: Section 1. Ratification and Approval of Prior Actions. All action heretofore taken (not inconsistent with the provisions of this Ordinance) by the City Council or the officers, agents or employees of the City Council or the City relating to reducing the respective interest rates on the 2010A DDA Taxable Bonds and the 2010B DDA Tax-Exempt Bonds and the execution and delivery of this Ordinance is hereby ratified, approved and confirmed. Section 2. Finding of Best Interests. The City Council hereby finds and determines, pursuant to the Constitution, the laws of the State and the Charter, that amending the 2010 Ordinance in accordance with the terms and provisions of this Ordinance is necessary, convenient, and in furtherance of the City’s purposes and is in the best interests of the inhabitants of the City. Section 3. Amendment of 2010 Ordinance. A. Section 3.D.(3) of the 2010 Ordinance shall be amended and restated in its entirety as follows: (3) Interest Rates. The 2010A DDA Taxable Bonds shall initially bear interest at the per annum interest rate of 6.08% from the date of issuance to December 1, 2015. The 2010B DDA Tax-Exempt Bonds shall initially bear interest at the per annum interest rate of 4.01% from the date of issuance to December 1, 2015. From December 2, 2015 (the “Conversion Date”) to their respective Maturity Dates (a) the interest rate on the 2010A DDA Taxable Bonds shall be converted to a new interest rate calculated by the Financial Officer no more than thirty (30) days and no less than fifteen (15) days prior to the Conversion Date as the rate on such calculation date that is 3.5% above the United - 3 - States 5-year Treasury Rate based on a 365/366-day year, and (b) the interest rate on the 2010B DDA Tax-Exempt Bonds shall be converted to a new interest rate calculated by the Financial Officer no more than thirty (30) days and no less than fifteen (15) days prior to the Conversion Date as the rate on such calculation date that is 0.66 multiplied by the following rate: 4.25% above the United States 5-year Treasury Rate and based on a 365/366-day year. The City will notify the Owners of the Bonds by first-class postage prepaid mail of the new interest rate on the Bonds within ten (10) days of such calculations. The maximum net effective interest rate on the Bonds shall not exceed 10.00% per annum. B. The footnote on the first page of the Form of Bond set forth in Section 3.D.(8) of the 2010 Ordinance shall be conformed to comply with the amendments to Section 3.D.(3) set forth above . Section 4. Direction to Act. The Mayor, the City Manager, the Financial Officer, the City Clerk and other appropriate officials and employees of the City are hereby authorized and directed to execute and deliver for and on behalf of the City any and all 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 this Ordinance. Section 5. Ratification of 2010 Ordinance. Except as expressly amended hereby, the 2010 Ordinance shall remain as originally adopted and is hereby ratified, approved and confirmed. Section 6. Severability. If any section, subsection, paragraph, clause or provision of this Ordinance 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 Ordinance, the intent being that the same are severable. Section 7. Repealer. All orders, resolutions, bylaws, ordinances or regulations of the City, or parts thereof, inconsistent with this Ordinance are hereby repealed to the extent only of such inconsistency. Section 8. Effective Date. As set forth in Article II, Section 7 of the Charter, this Ordinance shall take effect on the tenth day following its passage. - 4 - Introduced, considered favorably on first reading, and ordered published this 18th day of August, A.D. 2015, and to be presented for final passage on the 1st day of September, A.D. 2015. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 1st day of September, A.D. 2015. __________________________________ Mayor ATTEST: _______________________________ City Clerk