HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/17/2018 - ITEMS RELATING TO THE APPROPRIATION FROM LIGHT ANDAgenda Item 15
Item # 15 Page 1
AGENDA ITEM SUMMARY April 17, 2018
City Council
Removed from Discussion for Consideration
at the April 24, 2018 Adjourned Council Meeting.
STAFF
Travis Storin, Accounting Director
Mike Beckstead, Chief Financial Officer
John Duval, Legal
SUBJECT
Items Relating to the Appropriation From Light and Power/Broadband Fund Debt Proceeds and Other Funds
Related to the Broadband Project.
EXECUTIVE SUMMARY
A. First Reading of Ordinance No. 056, 2018, Appropriating Bond Proceeds from the Issuance of 2018 Electric
Utility Enterprise Revenue Bonds for Capital, Operating and Debt Service Expenditures Associated with the
Construction of a Broadband System to Provide Telecommunication Facilities and Services to Customers
Within Fort Collins and Excepting This Appropriation from the City Code’s Art In Public Places Requirement.
B. First Reading of Ordinance No. 057, 2018, Appropriating Funds from the Light and Power Fund to Defease
the City of Fort Collins, Colorado, Electric Utility Enterprise Taxable Revenue Bonds Series 2010B.
The purpose of this item is to appropriate (1) bond proceeds for the construction of a municipal broadband
system and (2) Light & Power reserves for the defeasance of outstanding debt. The issuance and defeasance
were authorized by the Electric Utility Enterprise Board Ordinances No. 003 and No. 004, respectively. This
agenda item is consistent with Strategic Objective 3.9 from the 2016 Strategic Plan: Encourage the development
of reliable, high speed internet services throughout the community.
STAFF RECOMMENDATION
The City Manager recommends adoption of the Ordinances on First Reading. The City Manager has also
determined that these appropriations are available and previously unappropriated from the Light and Power
Fund and will not cause the total amount appropriated in the Light and Power Fund to exceed the current estimate
of actual and anticipated revenues to be received in this Fund during the fiscal year.
BACKGROUND / DISCUSSION
Overview
At its April 3, 2018, meeting the Electric Utility Enterprise Board adopted Ordinances No. 003 and No. 004 on
Second Reading, authorizing the issuance of debt for construction of the broadband system. The ensuing step
is to appropriate bond proceeds for operating costs of 2018, the capital project itself, debt issuance costs,
repayment of the General Fund bridge loan, capitalized interest, and defeasance of the 2010 Light & Power
bonds.
For reference, below is the schedule previously published for the broadband project:
Agenda Item 15
Item # 15 Page 2
Table 1: Broadband Project Schedule
CITY FINANCIAL IMPACTS
Appropriations and Budget
Appropriations of the above proceeds are brought forward to City Council under Ordinance No. 056, 2018. Of
the $142,146,898 project funding, $114,688,348 will be appropriated upon issuance while $27,458,550 will be
set aside for future appropriations.
Of the $27,458,550 for future appropriations, staff recommends a balance sheet assignment of $8,200,000
million of unappropriated proceeds for the exclusive use of expanding the system in response to market share
and/or future annexations. This step will require staff to return to Council to authorize the use of these funds.
The remaining $8,200,000 of unappropriated proceeds are for operating costs to be appropriated in the 2019
and 2020 biennial budget as part of Budgeting for Outcomes (BFO). The remaining $11,058,550 of
unappropriated bond proceeds will be placed into escrow as the capitalized interest fund.
Staff recommends approving the Broadband (BB) appropriation without a contribution to At in Public Places
(APP) but include a commitment to evaluate alternatives for future funding and contributions from BB to APP by
2022 with a target contribution of $125K to $150K based on BB’s anticipated annual operating revenues once
fully operational.
Staff has been assessing how APP fits within the new BB effort. The current APP provisions in the City Code
would require a range of APP contributions from zero if BB is treated as a separate utility to over $600K if BB is
combined with Light & Power in calculating the required contribution. The BB network has uniquely competitive
and market-driven business needs versus other traditional utility and governmental infrastructure projects. The
recommendation avoids creating a competitive cost disadvantage with incumbent internet service providers. The
attached memo provides additional detail behind this recommendation.
Ordinance No. 056, 2018, directs staff to study whether the APP Code provisions need to be amended to address
future Broadband System projects and to present any recommended amendments by 2022.
Appropriated and unappropriated proceeds for the Broadband project totaling $142.1M are summarized below:
Agenda Item 15
Item # 15 Page 3
Table 2: Broadband Appropriations
Table 3: Unappropriated Proceeds
Appropriations for the Light and Power Defeasance are summarized below:
Table 4: Light and Power Appropriations
Impact to Other Projects
The Utility Customer Information System (CIS) replacement project planned for a $7M+ implementation cost,
with $2.3M appropriated in 2018 and the remainder to be brought forward for the 2019-2020 budget. Broadband
was to be put on a separate billing system funded by the project.
Throughout February and March, staff has learned that it can implement a single system to serve all five utilities.
Doing so necessitates a faster implementation so that Broadband can activate customers in late 2019. Long-
term this is expected to decrease cost, and in fact the bids for the new system are coming in lower than the
original project plan for the four utilities.
The immediate impact is for the four existing utilities to bring forward the full project cost for appropriation sooner
than initially planned.
2018 Operating Appropriations
Cost of Issuance (legal, advisor, underwriter) 822,100
Interest on $1.8 M loan from General Fund 15,000
2010 L&P defeasance, backfill QECB subsidy 373,000
Operating expenses 2018, repay GF loan 1,800,000
Capitalized Interest 2018 3,070,000
Operating Budget 2018 6,080,100
Multiyear Non‐lapsing Capital Appropriations
Capital Projects 108,608,249
Capital Budget 108,608,249
Appropriated by Ordinance in 2018 114,688,348
Set aside for future appropriations
Working capital future years (2019‐20 BFO) 8,200,000
Success capital (higher take rate or annexation) 8,200,000
Capitalized Interest 11,058,550
Total set aside for future appropriations 27,458,550
Budgeting for Defeasance of 2010 Light and Power Bonds
2018 Budget (already appropriated) 1,992,324
New Appropriation from L&P Reserves 3,791,004
Total escrow amount for 2018‐2020 payments 5,783,328
Agenda Item 15
Item # 15 Page 4
BOARD / COMMISSION RECOMMENDATION
At its February 27, 2018 meeting, the Council Finance Committee supported proceeding to First Reading with
the full Council.
PUBLIC OUTREACH
Two separate ballot measures brought to voters were successful in authorizing the establishment of a municipal
fiber retail broadband network.
ATTACHMENTS
1. Broadband and Art in Public Places Memo (PDF)
2. Council Finance Committee minutes, February 27, 2018 (PDF)
3. Powerpoint presentation (PDF)
215 N Mason Street
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6795
970.221.6782 - fax
fcgov.com
M E M O R A N D U M
Date: March 29
th
, 2018
To: Mayor and City Councilmembers
Through: Darin Atteberry, City Manager
From: Mike Beckstead, Chief Financial Officer
Re: Broadband – Art in Public Places
Bottom Line:
Staff has been assessing how Art in Public Places (APP) fits within the new Broadband (BB)
effort. The current APP provisions in the City Code would require a range of APP contributions
from zero if BB is treated as a separate utility to over $600k if BB is combined with L&P in
calculating the required contribution.
As a competitive venture vs. a single source utility, BB needs to maintain a competitive cost
position to the current incumbents to be successful. The incumbents are not required to incur
such a cost.
Staff believes additional analysis and policy discussions need to occur to resolve how APP
should be included within a new, competitive venture such as broadband. As a result, staff
recommends approving the BB appropriation without a contribution to APP but including a
commitment to evaluate alternatives for future funding and contributions by 2022 with a target
contribution of $125k to $150k based on BB’s anticipated annual operating revenues once BB is
in full operation.
Background Discussion:
APP guidelines within City Code Sec. 23-304 are summarized below:
1. A 1% contribution to APP applies to construction projects over $250k.
2. If partially funded by restricted sources, the 1% applies to sources not restricted
3. Funds are expended for projects as prescribed by APP guidelines. Within utilities the
project needs to benefit the rate payers in some fashion.
4. Annual contributions for each utility is limited to .5% of annual operating revenue in the
year of the appropriation
5. Construction project defined as:
ATTACHMENT 1
a. The construction, rehabilitation, renovation, remodeling or improvement of any
building, structure, street, sidewalk, park, utility or other public improvement by
or for the City including landscaping, parking, design, engineering, equipment or
furnishing for such improvement and all other costs, but excluding the cost of real
property acquisition, vehicles and equipment not affixed to public property.
Broadband is operating in a competitive environment which requires different business
decisions:
1. BB is not a single source utility where a captive market exists and rates are set based on
revenue requirements needed to support programs such as energy efficiency, APP, or
low-income rates.
2. BB is a competitive business and needs to maintain a competitive cost position compared
with the incumbents.
a. Including APP as a cost to BB puts BB at a competitive cost disadvantage to the
incumbents who are not required to support such a program. Similar discussions
occurred around the topic of low income rates. A low-income internet rate will be
developed but funded outside of BB. PILOTs (payment in lieu of taxes) are
another example. Three of the City’s utilities pays a 6% PILOT to the general
fund. Broadband will most likely carry a PILOT but at a rate that is equal to taxes
paid by the existing incumbents.
3. Governance discussions with Council focused on decision factors based on business and
competitive criteria vs. social and community decision criteria. The omission of an APP
contribution from the broadband capital estimates is consistent with those discussions.
The application of APP to Broadband:
1. If BB were treated as a separate utility, without operating revenue in 2018 when the start-
up capital is appropriated, no contributions would be required to APP.
a. The startup of BB will occur within the current L&P Enterprise fund to leverage
the ability to issue revenue bonds to support the BB capital costs. Other than this
leverage, staff has received direction to not comingle resources and BB will have
a separate set of books within the Enterprise.
2. Combining L&P and BB in calculating the appropriate APP contribution has BB
contributing just over $600k to APP based on the operating revenue of L&P. Staff does
not believe this was the intent behind the APP requirements in the Code.
a. The APP requirements in the Code were developed for established utilities. If BB
is combined with L&P, L&P has a very large APP cap given it’s $130M of
operating revenue and has a very small capital spend that uses very little of the
APP cap in 2018. BB has a very significant capital spend as a start-up utility but
no operating revenue.
Staff believes additional policy discussions need to occur to resolve how APP should be included
within a new, competitive venture such as BB. Considerations and evaluation of items such as:
1. Should BB make similar contributions as the other single source utilities or does the
competitive nature of BB exclude it from the program?
2. If excluded, should other income sources be considered such that the APP program is
supported in some fashion?
3. If a PILOT were established for BB that is competitive with what the incumbents incur,
could that be a source of funding for APP in a way that doesn’t create a competitive
disadvantage?
4. If a PILOT were established for BB, would/could that also be used to fund a low-income
internet rate. If so, how would that compete with APP funding from the same revenue
source?
5. Should forecasted operating revenue after start-up be used to establish a targeted funding
level? BB is anticipated to have operating revenues of $25M to $30M by 2023. A base
level of funding associated with start-up capital could be set at $125k to $150K consistent
with the cap defined in code once the funding questions above have been evaluated.
Staff recommends approving the BB appropriation without a contribution to APP but including
in the appropriations ordinance direction from Council for staff to evaluated alternatives for
funding and contributions by 2022 and targeting a contribution associated with the start-up
capital of $125k to $150k.
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Special Finance Committee Meeting Minutes
02/27/18
11 am - noon
CIC Room - City Hall
Council Attendees: Mayor Wade Troxell, Ross Cunniff, Ken Summers
Staff: Darin Atteberry, Mike Beckstead, Jeff Mihelich, Kevin Gertig, Carrie Daggett,
Travis Storin, John Voss, John Duval, Andres Gavaldon, Lance Smith, Tyler Marr,
Joanne Cech, Kelly DiMartino, Andres Gavaldon, Zach Mozer, Jennifer
Poznanovic, SeonAh Kendall, Patrick Rowe, Allyssa Johnson, Blaine Dunn,
Josh Birks
Others: James Manire, Tim Tilleson, Colin Garfield, Todd Parker, Kevin Brinkman,
Kevin Jones (Chamber of Commerce), Dale Adamy (Citizen),
Meeting called to order at 11:04 am
A. 2018 Light & Power Revenue Bonds, Series A and B
Mike Beckstead, CFO
Travis Storin, Accounting Director
Lance Smith, Utilities Strategic Finance Director
James Manire, Bond Advisor
EXECUTIVE SUMMARY
Staff is preparing to bring forward ordinances for first reading on March 20th for the following:
• Issuance of 2018 Light & Power Revenue Bonds
• Defeasance of 2010 Light & Power Revenue Bonds
• Appropriation of proceeds for construction of a municipal retail broadband network
Subject to change and as currently structured, bonds will be issued in gross for $141.9 million, which will cover
issuance costs of $0.9 million, establishment of a capitalized interest fund of $13.8 million, and project proceeds
of $127.2 million.
Proceeds are split into separate tax-exempt and taxable series. Tax-exempt bonds have certain requirements to
maintain their exempt status, including:
• A reasonable expectation to spend 85% of the exempt proceeds within a 3-year window
• A limitation on proceeds funding private use of up to 10%
• A limitation on “bad money”, or the use of proceeds for working capital, of 5% of the issuance.
ATTACHMENT 2
2
The bonds are structured with a 25-year maturity and allow for early redemption beginning in year 10, or mid-
2028. Debt service at the currently contemplated terms is presented as follows:
In addition, existing Light & Power bonds of $5.3 million will be defeased by placing cash reserves into an
irrevocable escrow account. Doing so will satisfy bond covenants limiting the ability to pledge net revenues
toward the 2018 bond issuance.
Proceeds of the bonds will repay the $1.8 million short-term loan made from the General Fund earlier in 2018.
Defeasance of the 2010 bonds will forfeit approximately $400,000 in Qualified Energy Conservation Bond
subsidies, which will be repaid to Light and Power reserves from bond proceeds.
The bond ordinance will be brought forward as a parameters ordinance, allowing for a reasonable range of
market scenarios in the weeks that elapse between second reading and pricing of the bonds.
Staff recommends multiple external rating agencies to review the issuance in March and April, and pricing and
distribution to take place in May after second reading of the ordinance April 3.
3
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Finance Committee support proceeding to first reading on March 20, 2018?
BACKGROUND/DISCUSSION
For reference, below is the broadband implementation timeline, including the milestones on bond issuance:
Within the bond issuance milestone above are the below key dates:
4
Discussion / Next Steps;
Mike Beckstead; this is completely neutral to L&P - no adverse impact on L&P revenues, reserves or rates.
We had 13 organizations responded to our RFP - we interviewed 4 - the city should be proud as high-level firms
participated. Very robust and transparent process.
Mike Beckstead; Travis sent an email yesterday talking about the rating agency review – 30-40% of rating is
management / leadership as opposed to financial - how L&P has been managed - we want to highlight next
week - this is a big part of the rating - qualitative side - Fitch / S&P
Option we are exploring - retail only order period of 1-2 days – access before the institutional investors - -
access and can yield benefits to the city – it is not w/out risk as it is one more day it is in the marketplace.
Institutional buyers projected to make up 70% - Encourage as much retail as possible anticipate it will top out
10-30% range.
Ross Cunniff; enable retail - are we talking with investment advisors around the city to let their clients know of
this option?
Travis Storin; that will be part of what the underwriters do – we will work with the senior underwriter and CPIO
to have a little bit of a marketing campaign on how to buy bonds via retail channels. newspaper, etc.
5
Ross Cunniff; Will sequestering be part of the ordinance?
ACTION ITEM:
Mike Beckstead; we haven’t thought that through yet but we will and will come back with a recommendation.
When fully ramped up this will be $10 - 10.2M of annual debt service
Rates have ticked up 50 basis points recently - volatility - 2-3 months before we issue -there could be more
movement up or down
6
Mayor Troxell; comprehensive and well thought through - ready to go
Ken Summers; I agree
Ross Cunniff; ordinance and reserve 8.2 - I do have a bias toward wanting that - keep body informed.
Mike Beckstead; to confirm, if we want to activate the reserve we need to come back to Council.
Ross Cunniff; yes, come back to Council
Carrie Daggett; make sure and touch base with bond council regarding this -
7
Jim Manire; satisfy that as a policy matter - appropriation
Ken Summers; confirming tax exempt is 3.8% - taxable is 4%
Mike Beckstead; based on proposals we received about 3-4 weeks ago - I have a feeling it will be north of that
but do not know by how much
Travis Storin; taxable side scales up - earliest maturities are 3.1% in 2022, latest maturities are 3.9% in 2031.
Ken Summers; 4.0 is 25-year term
Travis Storin; because taxables are more expensive we have them maturing faster - maturing in year 13 where
the exempt go through year 25. So taxable are 4% over 13 years, while exempt are 3.8% over 25 years
Jim Manire; your staff in the due diligence, development, research and consulting has been strong and puts the
city in a terrific position for this project – favorable position because of the ability to combine your finances with
the electric utility -gives you market access for a project like this that a lot of communities in Colorado simply
don’t have. Well organized approach to the project and financing.
Darin Atteberry; we had consultants in the business planning process - best in industry - 3 years ago
Jim is part of Bond Council which is a great team including Sally, Dee, Lance, Mike and Travis.
Thank you for your professionalism and competency.
Ross Cunniff; this has been a very streamlined and well done approach. Excited to move forward and get this off
the ground.
Ken Summers; positive effect - flexibility - makes sense
Jeff Mihelich; appreciate Council’s willingness to going forward with success capital - allow us to expand.
Meeting adjourned at 11:31 am
Broadband Project Appropriations
April 17
2018
ATTACHMENT 3
2
Overview
Recommend appropriating bond proceeds for:
• Broadband build-out capital project
• 2018 Operations/General Fund repayment plus interest
• Cost of bond issuance
• Capitalized interest on bonds
• Repayment of forfeited subsidy to Light & Power
Term Summary:
Proceeds
3
Series 2018A
(Tax‐exempt)
Series 2018B
(Taxable) Total
Project Fund $87,433,000 31,562,000 $118,995,000
Sequestered capital for
annexations and/or market share
‐ 8,200,000 8,200,000
Capitalized Interest Fund 10,272,106 3,856,444 14,128,550
Cost of Issuance 541,793 281,556 823,348
Total $98,246,898 $43,900,000 $142,146,898
Broadband Budget
4
Total Appropriations, 2018/Current and Future 142,146,898
Set aside for future appropriations
Working capital future years (2019‐20 BFO) 8,200,000
Success capital (higher take rate or annexation) 8,200,000
Capitalized Interest 11,058,550
Total set aside for future appropriations 27,458,550
2018 Operating Appropriations
Cost of Issuance (legal, advisor, underwriter) 822,100
Interest on $1.8 M loan from General Fund 15,000
2010 L&P defeasance, backfill QECB subsidy 373,000
Operating expenses 2018, repay GF loan 1,800,000
Capitalized Interest 2018 3,070,000
Operating Budget 2018 6,080,100
Multiyear Non‐lapsing Capital Appropriations
Capital Projects 108,608,249
Capital Budget 108,608,249
Appropriated by Ordinance in 2018 114,688,348
Retirement/defeasance of debt
5
Light & Power will receive $373K from the Broadband Bond proceeds to repay
forfeited federal subsidies for energy conservation
2018 Budget (already appropriated) 1,992,324
New Appropriation from L&P Reserves 3,791,004
Total escrow amount for 2018‐2020 payments 5,783,328
Impact to Other Initiatives:
Utility Customer Information System (CIS)
6
Previous plan
• Utilities planned $7M+ for new billing system; appropriated $2.3M in 2018, planned on
appropriating the remainder in 2019
• Broadband assumed a separate billing system was required
What we learned
• Issued RFP and several responses provided an integrated solution that will support current
utility and broadband needs.
• Evaluating integrated proposal in April & May
Implications
• If integrated solution works, we’ll need to accelerate utility funding
• 2018 appropriation to be brought forward from the four existing utilities
Questions and Comments
7
• Ordinances on first reading:
• Appropriation of Bond Proceeds for project and operations
• Appropriation of Light & Power Reserves for defeasance
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ORDINANCE NO. 056, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING BOND PROCEEDS FROM THE ISSUANCE OF 2018 ELECTRIC
UTILITY ENTERPRISE REVENUE BONDS FOR CAPITAL, OPERATING AND DEBT
SERVICE EXPENDITURES ASSOCIATED WITH THE CONSTRUCTION OF A
BROADBAND SYSTEM TO PROVIDE TELECOMMUNICATION FACILITIES AND
SERVICES TO CUSTOMERS WITHIN FORT COLLINS AND EXCEPTING THIS
APPROPRIATION FROM THE CITY CODE’S ART IN PUBLIC PLACES REQUIREMENT
WHEREAS, after final passage of Ordinance No. 003 of the Board of the City of Fort
Collins, Colorado, Electric Utility Enterprise (the “Enterprise Ordinance”), the Electric Utility
Enterprise (the “Enterprise”) intends to issue its “City of Fort Collins, Colorado, Electric Utility
Enterprise, Tax-Exempt Revenue Bonds, Series 2018A” (the “2018A Bonds”) and its “City of
Fort Collins, Colorado, Electric Utility Enterprise, Taxable Revenue Bonds, Series 2018B” (the
“2018B Bonds” and, together with the 2018A Bonds, the “Bonds”)
WHEREAS, as described in the Enterprise Ordinance, the Bonds are being issued and
sold to fund the construction of a municipal broadband system by the City’s Electric Utility (the
“Electric Utility”) to provide telecommunication facilities and services, including the
transmission of voice, data, graphics and video, to customers within the City, which facilities and
services the Electric Utility has not previously provided but is now authorized to provide
pursuant to City Charter Article XII, Section 7 and City Code Section 26-398 (the “Broadband
System”); and
WHEREAS, the net proceeds from the sale of the Bonds are anticipated to be
$142,146,898, and of this amount, City staff is requesting that only $114,688,348 be
appropriated now from the Light and Power Fund to be used to fund the construction of the
Broadband System, including for all related capital, operating and debt service expenditures,
leaving an unappropriated balance of $27,458,550 to be appropriated for future operation and
expansion costs relating to the Broadband System and capitalized interest to bondholders; and
WHEREAS, in 1995, the City Council adopted Article XII of City Code Chapter 23 to
establish a program to acquire, exhibit and maintain art in public places to be funded by
including in the Council’s appropriations for certain capital projects, including those of its
utilities, an amount equal to 1% of the construction costs for those projects, but this contribution
amount for the City’s utilities is limited to a total annual contribution amount of .5% of each
utility’s “budgeted operating revenue” (the “APP Ordinance”); and
WHEREAS, the Electric Utility’s budgeted operating revenue for 2018 is $130.53
million, but this amount does not include any budgeted revenues generated from the Broadband
System since the System will not be in operation in 2018, so this amount only includes revenues
to be generated from electric services provided in 2018 by the Electric Utility; and
WHEREAS, as currently written, the APP Ordinance therefore requires that this
appropriation include a 1% contribution for art in public places capped at the Electric Utility’s
Light and Power Fund’s annual limit of .5% of the $130.53 million budgeted operating revenues,
-2-
which is $652,650, and the Light and Power Fund has so far contributed $43,124 of this cap in
2018, so this leaves $609,526 available to be contributed for the Broadband System project under
the APP Ordinance; and
WHEREAS, this appropriation, which includes $108,608,249 for the construction costs
of the Broadband System, does not include the 1% contribution under the APP Ordinance capped
at the .5%, which would be the remaining cap amount of $609,526, as City staff has requested
that the City Council waive this contribution for the construction of the Broadband System since
the City will be operating the System as a competitive, market-driven business, unlike the City’s
other utilities and governmental services which are generally operated without significant, if any,
market competition; and
WHEREAS, in addition, when the APP Ordinance was adopted by Council and the .5%
cap was placed on the contributions by utility funds, it was not contemplated that the City would
be establishing completely new utility services requiring a multi-year project to construct the
capital facilities before these new services could be provided and before the operating revenues
from these services could begin to be generated; and
WHEREAS, under these circumstances, the Council finds and determines that the waiver
of the art-in-public-places contribution requirement in the APP Ordinance is appropriate for the
appropriation in this Ordinance since the Broadband System will be operated as a competitive,
market-driven business, unlike the City’s other utilities and government services, and the APP
Ordinance, as originally adopted and subsequently amended by Council, does not contemplate
that the City would be appropriating funds for completely new utility facilities and services as is
now occurring for the Broadband System; and
WHEREAS, the Council has the authority to create by ordinance an exception to the
requirements of the City Code without amending the Code, when such exception is intended to
apply in only one specific circumstance, which is the Council’s intent in this Ordinance with
respect to the application of the requirements of the APP Ordinance to this appropriation; and
WHEREAS, it is also Council’s intent that the APP Ordinance shall otherwise remain
unchanged, in full force and effect, and applicable to all future Council appropriations for City
construction projects to the full extent required in the APP Ordinance; and
WHEREAS, since the APP Ordinance does not contemplate new utility facilities and
services like those now proposed for the Broadband System, the Council wishes for the City
Manager to review the APP Ordinance and make recommendations to Council as to how it
should be applied to future Broadband System construction projects, as directed in Section 4
below; and
WHEREAS, Article V, Section 9 of the City Charter permits the City Council, upon
recommendation of the City Manager, to make supplemental appropriations by ordinance at any
time during the fiscal year, provided that the total amount of such supplemental appropriations,
in combination with all previous appropriations for that fiscal year, do not exceed the current
estimate of actual and anticipated revenues to be received during the fiscal year; and
-3-
WHEREAS, the City Manager has recommended the appropriation described herein and
determined that this appropriation is available and previously unappropriated from the Light and
Power Fund and will not cause the total amount appropriated in the Light and Power Fund to
exceed the current estimate of actual and anticipated revenues to be received in this Fund during
the fiscal year; and
WHEREAS, the City Council finds and determines that the adoption of this Ordinance is
necessary for the public’s health, safety and welfare and that it is in the best interests of the City,
the Electric Utility and the Electric Utility’s ratepayers.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations
and findings contained in the recitals set forth above.
Section 2. That there is hereby appropriated from the Light and Power Fund
proceeds from the Bonds in the total amount of ONE HUNDRED FOURTEEN
MILLION SIX HUNDRED EIGHTY-EIGHT THOUSAND THREE
HUNDRED FORTY-EIGHT DOLLARS ($114,688,348) to be used to fund
the construction of the Broadband System, including for all related capital, operating and debt
service expenditures.
Section 3. That notwithstanding the requirements of the APP Ordinance, including,
without limitation, City Code Section 26-304, this appropriation for the construction of the
Broadband System is not required to include and shall not include the one percent (1%) of the
estimated construction costs of the Broadband System as capped by the APP Ordinance. The
APP Ordinance shall otherwise remain unchanged, in full force and effect, and applicable to
all future Council appropriations for City construction projects to the full extend required
under the APP Ordinance.
Section 4. That the City Manager is directed to study whether the APP Ordinance
needs to be amended to address future Broadband System projects and to present any
recommended amendments to Council before January 1, 2022. This should include
consideration of a contribution amount capped at .5% of the Broadband System’s anticipated
annual operating revenues once the system is in full operation, which capped amount is
estimated to be from $125,000 to $150,000. The City Manager should also evaluate and
recommend to Council how to fund art-in-public places contributions for Broadband System
appropriations.
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Introduced, considered favorably on first reading, and ordered published this 17th day of
April, A.D. 2018, and to be presented for final passage on the 1st day of May, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 1st day of May, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
-1-
ORDINANCE NO. 057, 2018
OF THE COUNCIL OF THE CITY OF FORT COLLINS
APPROPRIATING FUNDS FROM THE LIGHT AND POWER FUND TO
DEFEASE THE CITY OF FORT COLLINS, COLORADO, ELECTRIC
UTILITY ENTERPRISE TAXABLE REVENUE BONDS SERIES 2010B
WHEREAS, the City Council has heretofore established, pursuant to Section 19.3(b) of
Charter Article V and Ordinance No. 060, 1993 adopted by the Council on July 20, 1993, and
Ordinance No. 038, 2010 adopted by the Council on April 20, 2010, the City’s Electric Utility as
an enterprise of the City (the “Enterprise”); and
WHEREAS, after final passage of Ordinance No. 003 by the Board of the City of Fort
Collins, Colorado, Electric Utility Enterprise (the “Board ”), the Enterprise intends to issue its
“City of Fort Collins, Colorado, Electric Utility Enterprise, Tax-Exempt Revenue Bonds, Series
2018A” (the “2018A Bonds”) and its “City of Fort Collins, Colorado, Electric Utility Enterprise,
Taxable Revenue Bonds, Series 2018B” (the “2018B Bonds”) to fund the construction of a
municipal broadband system to provide certain telecommunication facilities and services to
customers within the City (jointly, the “Broadband Bonds”); and
WHEREAS, pursuant to Ordinance No. 001 adopted by the Board in 2010, the Board
authorized the issuance of the “City of Fort Collins, Colorado, Electric Utility Enterprise, Tax-
Exempt Revenue Bonds, Series 2010A” in the aggregate principal amount of $9,675,000 (the
“2010A Bonds”), and its “City of Fort Collins, Colorado, Electric Utility Enterprise, Taxable
Revenue Bonds (Direct Pay Qualified Energy Conservation Bonds), Series 2010B” in the
aggregate principal amount of $6,410,000 (the “2010B Bonds”) to finance various improvements
to the City electric utility system; and
WHEREAS, the 2010A Bonds have been fully paid in accordance with their terms and
are no longer outstanding; and
WHEREAS, the 2010B Bonds are currently outstanding in the principal amount of
$5,270,000 and $513,328 in interest; and
WHEREAS, relating to the issuance of the Broadband Bonds, the Board has determined
in Ordinance No. 004 that it is in the best interest of the Enterprise to defease the outstanding
2010B Bonds in full prior to the issuance of the 2018 Bonds in order to eliminate certain
restrictive contractual provisions contained in the 2010B Bond Ordinance; and
WHEREAS, upon such defeasance, the 2010B Bonds will no longer be deemed to be
outstanding within the meaning of the 2010B Bond Ordinance; and
WHEREAS, the Board has determined that the Enterprise will utilize available funds in
the Light and Power Fund to defease the 2010B Bonds; and
WHEREAS, in connection with this defeasance, the Enterprise will enter into an escrow
agreement (the “Escrow Agreement”) with U.S. Bank National Association, as escrow agent,
(the “Escrow Agent”), into which escrow the funds appropriated herein will be deposited; and
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WHEREAS, in order to fully defease the 2010B bonds, the total amount of $5,783,328
will need to be deposited with the Escrow Agent under the Escrow Agreement; and
WHEREAS, there has already been appropriated in the City’s 2018 annual budget
$1,992,324 for the principal and interest payment owed under the 2010B Bonds in 2018 and,
therefore, only an additional $3,791,004 needs to be appropriated in this Ordinance to fully
defease these Bonds; and
WHEREAS, Article V, Section 9 of the City Charter permits the City Council, upon
recommendation of the City Manager, to make supplemental appropriations by ordinance at any
time during the fiscal year, provided that the total amount of such supplemental appropriations,
in combination with all previous appropriations for that fiscal year, does not exceed the current
estimate of actual and anticipated revenues to be received during the fiscal year; and
WHEREAS, the City Manager has recommended the appropriation described herein and
determined that this appropriation is available and previously unappropriated from the Light and
Power Fund and will not cause the total amount appropriated in the Light and Power Fund to
exceed the current estimate of actual and anticipated revenues to be received in this Fund during
the fiscal year; and
WHEREAS, the City Council finds and determines that the adoption of this Ordinance is
necessary for the public’s health, safety and welfare and that it is in the best interests of the City
and its Electric Utility.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby makes and adopts the determinations
and findings contained in the recitals set forth above.
Section 2. That there is hereby appropriated from the Light and Power Fund
THREE MILLION SEVEN HUNDRED NINETY-ONE THOUSAND FOUR
DOLLARS ($3,791,004) to be deposited with the Escrow Agent pursuant to
the terms and conditions of the Escrow Agreement in partial defeasance of
the 2010B Bonds. The remaining amount of $1,992,324 to be paid from the Light and
Power Fund to the Escrow Agent under the Escrow Agreement in order to fully defease the
2010B Bonds shall come from the funds already appropriated in the City’s 2018 budget to pay
the 2018 principal and interest payment due under the 2010B Bonds.
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Introduced, considered favorably on first reading, and ordered published this 17th day of
April, A.D. 2018, and to be presented for final passage on the 1st day of May, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 1st day of May, A.D. 2018.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk