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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 12/02/2014 - FIRST READING OF ORDINANCE NO. 169, 2014, APPROPRIAgenda Item 6 Item # 6 Page 1 AGENDA ITEM SUMMARY December 2, 2014 City Council STAFF Tom Leeson, Redevelopment Program Manager SUBJECT First Reading of Ordinance No. 169, 2014, Appropriating Funds from the City's General Fund Reserves for Transfer to the Fort Collins Urban Renewal Authority for the Purpose of URA Reimbursements for the Prospect Station Project, and Approving a Loan Agreement for that Purpose. EXECUTIVE SUMMARY The purpose of this item is to appropriate funds from the City's General Fund Reserves for transfer to the Fort Collins Urban Renewal Authority for the purpose of URA Reimbursements for the Prospect Station Project, and approve a Loan Agreement for that purpose. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION In October 2013, the Fort Collins Urban Renewal Authority (URA) executed a Redevelopment Agreement with Prospect Station LLC (Developer) for Prospect Station, a mixed-use project in the Prospect South Tax Increment Financing (TIF) District (Attachment 1). The Redevelopment Agreement obligated the URA to reimburse the Developer up to $494,000 utilizing two payment methodologies. Fifty percent (50%) of the reimbursement obligation ($274,000) is to be paid in a single payment upon completion of the project and verification of Eligible Costs, and the remaining fifty percent (50%) is to be paid by the Authority over a 21-year period. Knowing that the URA would not have sufficient fund balance to make the single payment outright, it has been anticipated that the URA would seek a loan from the City of Fort Collins, repaid using tax increment revenue generated by the project over the life of the Prospect South TIF District. Acknowledging this intent the City Council approved Resolution 2013-079 declaring City Council's intent to provide a loan to the URA for one half of the URA’s reimbursement obligation to Prospect Station, LLC (Attachment 2). Per the Redevelopment Agreement, the $274,000 reimbursement obligation is due to the Developer upon completion of the project, subject to verification of eligible costs by URA staff. The Developer obtained a Certificate of Occupancy for the project in September 2014, and subsequently submitted their reimbursement request to the URA. The City and URA have negotiated a Loan Agreement, which requires adoption of an Ordinance by City Council and a Resolution by the URA Board. The approval of the Resolution by the URA is contingent upon approval of an Ordinance by City Council, which is scheduled for first and second reading on December 2 and 16th respectively. Loan Agreement Terms The Loan Agreement between the URA and the City of Fort Collins for the Prospect Station project has been structured in way that is consistent with the City's Interagency Loan Policy. The Interagency Loan Policy states the interest rate assigned ti the loan must be the higher of the Treasury Note or Municipal Bond of similar duration, plus 0.5%. Agenda Item 6 Item # 6 Page 2 In order to lock an interest rate, the City Finance Department calculated the average of the 20-year and 25- year municipal bond interest rate as of October 14, 2014 at 4%, so the interest rate charged to the URA is 4.5%. Payments will begin in 2015 and the principal and interest payments have been set at $17,458.58 (See Attachment 3 for Loan Payment Schedule). FINANCIAL / ECONOMIC IMPACTS Adopting this Ordinance would approve a $247,000 loan from the City of Fort Collins to the Fort Collins Urban Renewal Authority (URA). The URA would be charged an interest rate of 4.5%. Principal and interest payments will be made to the City from tax increment revenue generated by the Prospect South TIF District through 2037. ENVIRONMENTAL IMPACTS There are no direct environmental impacts resulting from this Resolution. BOARD / COMMISSION RECOMMENDATION The URA Board Finance Committee discussed the Loan Agreement on November 17, 2014. ATTACHMENTS 1. Redevelopment Agreement (PDF) 2. Resolution 2013-079 (PDF) 3. Loan Repayment Schedule (PDF) ATTACHMENT 1 Midtown URA Prospect Station Reimbursement Agreement to City from the URA (General Fund) Reimbursement Amount 247,000.00 Start Date 31-Dec-15 Interest Rate 4.500% Matures 31-Dec-37 $17,458.58 Payment Years 23 Time in Years Date Payment Interest Principal Balance 1.000 31-Dec-15 $ (17,458.58) $ (11,115.00) $ (6,343.58) (240,656.42) 2.000 31-Dec-16 (17,458.58) (10,829.54) (6,629.04) (234,027.38) 3.000 31-Dec-17 (17,458.58) (10,531.23) (6,927.35) (227,100.03) 4.000 31-Dec-18 (17,458.58) (10,219.50) (7,239.08) (219,860.95) 5.000 31-Dec-19 (17,458.58) (9,893.74) (7,564.84) (212,296.11) 6.000 31-Dec-20 (17,458.58) (9,553.32) (7,905.26) (204,390.85) 7.000 31-Dec-21 (17,458.58) (9,197.59) (8,260.99) (196,129.86) 8.000 31-Dec-22 (17,458.58) (8,825.84) (8,632.74) (187,497.12) 9.000 31-Dec-23 (17,458.58) (8,437.37) (9,021.21) (178,475.91) 10.000 31-Dec-24 (17,458.58) (8,031.42) (9,427.16) (169,048.75) 11.000 31-Dec-25 (17,458.58) (7,607.19) (9,851.39) (159,197.36) 12.000 31-Dec-26 (17,458.58) (7,163.88) (10,294.70) (148,902.66) 13.000 31-Dec-27 (17,458.58) (6,700.62) (10,757.96) (138,144.70) 14.000 31-Dec-28 (17,458.58) (6,216.51) (11,242.07) (126,902.63) 15.000 31-Dec-29 (17,458.58) (5,710.62) (11,747.96) (115,154.67) 16.000 31-Dec-30 (17,458.58) (5,181.96) (12,276.62) (102,878.05) 17.000 31-Dec-31 (17,458.58) (4,629.51) (12,829.07) (90,048.98) 18.000 31-Dec-32 (17,458.58) (4,052.20) (13,406.38) (76,642.60) 19.000 31-Dec-33 (17,458.58) (3,448.92) (14,009.66) (62,632.94) 20.000 31-Dec-34 (17,458.58) (2,818.48) (14,640.10) (47,992.84) 21.000 31-Dec-35 (17,458.58) (2,159.68) (15,298.90) (32,693.94) 22.000 31-Dec-36 (17,458.58) (1,471.23) (15,987.35) (16,706.59) 23.000 31-Dec-37 (17,458.39) (751.80) (16,706.59) 0.00 $ (401,547.15) $ (154,547.15) $ (247,000.00) Payment ATTACHMENT 3 - 1 - ORDINANCE NO. 169, 2014 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING FUNDS FROM THE CITY’S GENERAL FUND RESERVES FOR TRANSFER TO THE FORT COLLINS URBAN RENEWAL AUTHORITY FOR THE PURPOSE OF URA REIMBURSEMENTS FOR THE PROSPECT STATION PROJECT, AND APPROVING A LOAN AGREEMENT FOR THAT PURPOSE WHEREAS, the Fort Collins Urban Renewal Authority (the "URA") was created on January 5, 1982, by City Council's adoption of Resolution 1982-010, which Resolution designated the City Council as the Board of Commissioners of the Authority; and WHEREAS, by Resolution 2011-080, adopted on September 6, 2011, the City Council found and declared that the area described in such Resolution (the “Midtown Area”) is a blighted area as described in the Part 1, Article 26, Title 31 of the Colorado Revised Statutes (the “Act”) and under the Act the Midtown Area is an area appropriate for urban renewal projects; and WHEREAS, by Resolution 2011-081, adopted on September 6, 2011, the City Council approved an urban renewal plan for the Midtown Area in Fort Collins, which plan was amended by City Council on May 7, 2013, in Resolution 2013-043 (the “Midtown Plan”); and WHEREAS, the Midtown Plan established a tax increment district referred to as the Prospect South Tax Increment District (the “TIF District”) that includes the site of the Prospect Station Redevelopment Project (the “Project”); and WHEREAS, on September 17, 2013, the URA Board (the Board”) approved a Redevelopment Agreement (the “Redevelopment Agreement”) between the Authority and Prospect Station, LLC (the “Developer”) to provide financial assistance for certain improvements and enhancements for the Project; and WHEREAS, by Resolution 2013-079, adopted on September 17, 2013, the City Council declared its intent to fund a loan to the URA for the Project; and WHEREAS, on August 15, 2006, the City Council adopted Resolution 2006-082 authorizing an intergovernmental agreement between the City and the URA providing that the City would provide support services to the URA and advance funds to the URA in connection with URA redevelopment projects; and WHEREAS, on July 5, 2011, the City Council adopted Resolution 2011-055, requiring that the intergovernmental agreement between the City and the URA expressly state that all loan arrangements between the City and the URA must be documented by a loan agreement and promissory note; and WHEREAS, URA staff has prepared a loan agreement titled “Loan Agreement between the City of Fort Collins and the Fort Collins Urban Renewal Authority for Reimbursement for - 2 - Prospect Station, LLC Infill Development,” a copy of which is attached as Exhibit “A” and incorporated herein (the “Loan Agreement”); and WHEREAS, attached as Exhibit A to the Loan Agreement is the promissory note proposed to evidence the loan under the Loan Agreement (the “Promissory Note”); and WHEREAS, the Loan Agreement and the Promissory Note provide that the City will loan the URA up to $247,000, the unpaid principal balance of which will accrue interest at the rate of 4.5 percent per annum compounded annually until paid in full; and WHEREAS, there are sufficient prior year reserves in the General Fund to fund a loan to the URA for the purpose of reimbursing the Developer for the improvements and enhancements as described in the Redevelopment Agreement; and WHEREAS, the City Manager recommends funding the loan to the URA from the General Fund prior year reserves; and WHEREAS, Article V, Section 9, of the City Charter permits the City Council to appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be available from reserves accumulated in prior years, notwithstanding that such reserves were not previously appropriated. NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. The City Council hereby finds and determines, pursuant to the Constitution, the laws of the State, the City Charter and Code, and in accordance with the foregoing recitals, that adopting this Ordinance, entering into the Loan Agreement 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 blighted conditions within the Midtown Area and the TIF District pursuant to the Midtown Plan, providing a catalyst for redevelopment in the Midtown 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 2. That there is hereby appropriated from General Fund Reserves the sum of TWO HUNDRED AND SEVENTY FOUR THOUSAND DOLLARS ($274,000) for transfer to the URA as an interest-bearing loan, to provide the URA with the necessary financial support to carry out its purposes and obligations under the Redevelopment Agreement. Section 3. That the Loan Agreement is hereby approved, and the Mayor is authorized to execute the Loan Agreement on behalf of the City, subject to such modifications in form or substance, not inconsistent with the purposes or specific terms of this Ordinance, as the City Manager may, in consultation with the City Attorney, deem desirable and necessary to protect the City’s interests. - 3 - Introduced, considered favorably on first reading, and ordered published this 2nd day of December, A.D. 2014, and to be presented for final passage on the 16th day of December, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk Passed and adopted on final reading on the 16th day of December, A.D. 2014. __________________________________ Mayor ATTEST: _______________________________ City Clerk EXHIBIT "A" EXHIBIT "A" EXHIBIT "A" EXHIBIT "A" Exhibit "A" to Loan Agreement Exhibit "B" to Loan Agreement Exhibit "B" to Loan Agreement Exhibit "B" to Loan Agreement