HomeMy WebLinkAboutCOUNCIL - COMPLETE AGENDA - 03/20/2020 - SPECIAL MEETINGCity of Fort Collins Page 1
Wade Troxell, Mayor City Council Chambers
Kristin Stephens, District 4, Mayor Pro Tem City Hall West
Susan Gutowsky, District 1 300 LaPorte Avenue
Julie Pignataro, District 2 Fort Collins, Colorado
Ken Summers, District 3
Ross Cunniff, District 5 Cablecast on FCTV Channel 14
Emily Gorgol, District 6 and Channel 881 on the Comcast cable system
Carrie Daggett Darin Atteberry Delynn Coldiron
City Attorney City Manager City Clerk
Special Meeting
March 20, 2020
12:00 p.m.
Public Participation for March 20 Special City Council Meeting
In order to limit the number of people in City Hall and to ensure adequate social distancing, the City
strongly urges remote viewing and participation for the March 20 Council meeting, except for those
persons for whom remote viewing is not a workable option.
View Meeting Agenda
Watch the Meeting: Anyone can view the Council meeting live on Channels 14 and 881 or online
at www.fcgov.com/fctv.
Public Participation: Individuals who wish to address Council via remote public participation can do so
through WebEx at https://tinyurl.com/councilmeeting03202020. Public participation will be for discussion
items only since this is a special meeting. There will be no general public comment.
The meeting will be available beginning at 11:30 a.m. Friday. In order to participate:
• You need to have a laptop or computer with a microphone and/or headset that includes a
microphone.
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• You must complete the WebEx event registration (accessed from the link shown above) and view
further instructions.
• Join the WebEx meeting.
• Keep yourself on muted status.
Staff will moderate the WebEx session to ensure all participants have an opportunity to address Council.
For assistance in registering or joining the WebEx event, call 970-224-6137 for technical support.
Note:
• To preserve bandwidth and ensure an orderly meeting, only individuals who wish to address
Council should use the WebEx link. Anyone who wants to watch the meeting, but not address
Council, should view the FCTV livestream.
• If you are unable to participate via WebEx, you may attend the meeting in person (however, we
have very limited capacity based on social distancing recommendations).
City of Fort Collins Page 2
• Alternatively, you may provide comments to Council via email prior to 11:30 a.m. at
cityleaders@fcgov.com. Emails will be read by City Leaders; however, not read into the formal
meeting record.
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to the City Clerk in a form or format readily usable on the City’s display technology no later than two (2)
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NOTE: All presentation materials for appeals, addition of permitted use applications or protests related to
election matters must be provided to the City Clerk no later than noon on the day of the meeting at which
the item will be considered. See Council Rules of Conduct in Meetings for details.
The City of Fort Collins will make reasonable accommodations for access to City services, programs, and
activities and will make special communication arrangements for persons with disabilities. Please call 221-
6515 (V/TDD: Dial 711 for Relay Colorado) for assistance.
• PLEDGE OF ALLEGIANCE
• CALL TO ORDER
• ROLL CALL
Discussion Items
The method of debate for discussion items is as follows:
● Mayor introduces the item number, and subject; asks if formal presentation will be made
by staff
● Staff presentation (optional)
● Mayor requests citizen comment on the item (three minute limit for each citizen)
● Council questions of staff on the item
● Council motion on the item
● Council discussion
● Final Council comments
● Council vote on the item
Note: Time limits for individual agenda items may be revised, at the discretion of the Mayor, to ensure
all citizens have an opportunity to speak. Please sign in at the table in the back of the room.
The timer will buzz when there are 30 seconds left and the light will turn yellow. It will buzz again
at the end of the speaker’s time.
1. Resolution 2020-030 Extending the State of Local Emergency Declared by the City Manager.
Coronavirus 2019 (COVID-19) threatens the City of Fort Collins with widespread human and economic
impact. President Donald J. Trump, Governor Jared Polis and Larimer County have declared a state
of emergency in response to the COVID-19 pandemic. On March 13, 2020, the City Manager, as
Director of the City’s Office of Emergency Management, proclaimed a local emergency and activated
the Emergency Operations Plan established by City Code. City Council is asked to approve the
City of Fort Collins Page 3
extension of the proclamation of local emergency until such time as the City Manager determines it is
no longer necessary.
2. Emergency Ordinance No. 054, 2020 Enacting Temporary Procedures to Authorize Remote
Participation in Meetings.
The purpose of this item is to propose temporary procedures that would enable City Councilmembers
to remotely participate in meetings during the current Novel Coronavirus 2019 (COVID-19) crisis.
3. Resolution 2020-029 Accepting and Adopting Ethics Opinion No. 2020-01 of the Ethics Review Board
Finding No Violation of State or Local Ethics Provisions by Councilmember Ken Summers.
The purpose of this item is consideration of the opinion of the Ethics Review Board to Council for its
consideration and possible approval.
4. Resolution 2020-027 Adopting the Recommendations of the Council Committee Regarding the
Recruitment and Selection of a Chief Judge.
The purpose of this item is to review and consider the Council Committee’s recommendations
regarding the recruitment and selection of a Chief Judge. Council will consider adoption of a plan and
schedule for the Chief Judge recruitment and selection process.
5. Items Relating to the 15-year Capital for the 2020 Epic Homes Loan Program.
A. First Reading of Ordinance No. 047, 2020, Making a Supplemental Appropriation from the Light &
Power Fund to be Expended as Loans to Utility Services Customers Under the Epic Loan
Program.
B. First Reading of Ordinance No. 048, 2020, Making a Supplemental Appropriation from
Unappropriated Prior Year Reserves in the Light & Power Fund to Make Debt Service Payments
Under the Vectra Bank Line of Credit for the Epic Loan Program.
The purpose of this item is to appropriate funds for the Epic Loan Program in 2020 for 15-year loan
issuance to Fort Collins Utilities electric customers, and anticipated debt service to third-party capital
providers. The Epic Loan Program is part of the Epic Homes comprehensive portfolio for single-family
home performance for both owner- and renter-occupied homes. These appropriations will cover 15-
year loan agreements being considered by the Electric Utility Enterprise Board on March 17 for First
Reading and April 7 for Second Reading and are necessary to formally authorize the disbursement of
funds for customer loans. For future years, staff will include loan issuance and debt service as part of
the biennial Budgeting for Outcomes process. Contingent upon authorization of the 15-year loan
agreements by the Enterprise Board, the 2020 appropriation for 15-year loan issuance is $1,600,000
and the appropriation for debt service is $100,000.
The 15-year capital agreements were presented at the January 27, 2020 Council Finance Committee
meeting.
• ADJOURNMENT
Agenda Item 1
Item # 1 Page 1
AGENDA ITEM SUMMARY March 20, 2020
City Council
STAFF
Darin Atteberry, City Manager
Jim Byrne, Office of Emergency Management
SUBJECT
Resolution 2020-030 Extending the State of Local Emergency Declared by the City Manager.
EXECUTIVE SUMMARY
Coronavirus 2019 (COVID-19) threatens the City of Fort Collins with widespread human and economic impact.
President Donald J. Trump, Governor Jared Polis and Larimer County have declared a state of emergency in
response to the COVID-19 pandemic. On March 13, 2020, the City Manager, as Director of the City’s Office of
Emergency Management, proclaimed a local emergency and activated the Emergency Operations Plan
established by City Code. City Council is asked to approve the extension of the proclamation of local
emergency until such time as the City Manager determines it is no longer necessary.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution
BACKGROUND / DISCUSSION
On March 5, 2020, the State of Colorado identified its first positive case of COVID-19 and on March 9, 2020,
Larimer County identified its first positive case. In order to limit the spread of COVID-19 in the community and
slow the transmission of the virus, Colorado State University and Poudre School District have announced
remote learning for their students. On March 13, 2020, the City Manager, as Director of the City’s Office of
Emergency Operations, proclaimed a local emergency and activated the Emergency Operations Plan to
prevent and manage exposure to COVID-19 and mitigate related impact of all kinds. Current conditions
warrant the continuation of the City Manager’s proclaimed local emergency until the City Manager determines
that conditions justifying this local emergency no longer exist.
Section 2-671(a)(1) of the City Code states that a local emergency shall not be continued or renewed for a
period in excess of seven days, except by or with the consent of the City Council. Conditions continue to exist
that make it necessary for the proclamation of local emergency remain in place in order to protect the health,
safety and welfare of the citizens of Fort Collins. Therefore, this Resolution extends the proclamation of local
emergency until such time as the City Manager determines it is no longer necessary.
The City Manager will notify the Council, in writing, that the local emergency is ended.
ATTACHMENTS
1. COVID-19 Local Emergency Proclamation (PDF)
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ATTACHMENT 1
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Attachment: COVID-19 Local Emergency Proclamation (8865 : COVID-19 Emergency)
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Attachment: COVID-19 Local Emergency Proclamation (8865 : COVID-19 Emergency)
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RESOLUTION 2020-030
OF THE COUNCIL OF THE CITY OF FORT COLLINS
EXTENDING THE STATE OF LOCAL EMERGENCY
DECLARED BY THE CITY MANAGER
WHEREAS, the City of Fort Collins is threatened with serious injury and damage, consisting of
widespread human and economic impact caused by the Novel Coronavirus 2019 (COVID-19); and
WHEREAS, on March 5, 2020, the State of Colorado identified its first positive case of COVID-
19, and Colorado has begun to experience limited community spread; and
WHEREAS, on March 9, 2020, Larimer County identified its first positive case of COVID-19;
and
WHEREAS, President Donald J. Trump declared a National Emergency on March 13, 2020, in
response to the COVID-19 event; and
WHEREAS, Governor Jared Polis declared a State of Emergency in the State of Colorado on
March 10, 2020, in response to the COVID-19 event; and
WHEREAS, the Larimer County Director of Public Health has recommended that a local
emergency be declared in Larimer County in response to the COVID-19 event; and
WHEREAS, Larimer County declared a Local Disaster Emergency on March 13, 2020,
in response to the COVID-19 event; and
WHEREAS, Colorado State University has announced that all classes will be migrating
to online learning beginning March 25, 2020; and
WHEREAS, Poudre School District has announced remote learning for students,
beginning on March 23, 2020; and
WHEREAS, the City and the Larimer County Department of Public Health and
Environment, state officials, Colorado State University and the Poudre School District are
cooperatively working to limit community spread and slow the transmission of COVID-19; and
WHEREAS, on March 13, 2020, in order to undertake emergency measures to protect the
life, health, safety and property of the citizens of the City and persons conducting business
therein, and in order to attempt to minimize the loss of human life and the preservation of
property, the City Manager, as the Director of the City’s Office of Emergency Management,
proclaimed a “local emergency” in accordance with Section 2-671(a)(1) of the City Code and
activated the Emergency Operations Plan established pursuant to Section 2-673 of the City Code;
and
WHEREAS, the prevention and management of exposure to COVID-19 and mitigation of
related impacts of all kinds continue to require emergency action by the City; and
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WHEREAS, Section 2-671 (a)(1) of the City Code states that a local emergency
proclaimed by the City Manager shall not be continued or renewed for a period in excess of
seven days without the consent of the City Council; and
WHEREAS, conditions continue to exist which, for the protection of the health, safety
and welfare of the citizens of the City of Fort Collins, warrant the continuation of the previously
proclaimed local emergency; and
WHEREAS, the City Manager is requesting that the City Council continue the
proclamation of local emergency as established by the City Manager on March 13, 2020, until
such time as the City Manager determines the conditions justifying this local emergency no
longer exist.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby finds that conditions continue to exist which,
in the best interests of the health, safety and welfare of the citizens of Fort Collins, warrant the
continuation of the previously proclaimed local emergency until such time as the conditions
warranting this local emergency no longer exist.
Section 2. That the City Council hereby authorizes, approves, and consents to the
continuation of the state of local emergency until such time as the City Manager determines in
writing that the conditions justifying this local emergency no longer exist and such written
determination is filed with the Office of the City Clerk.
Passed and adopted at a special meeting of the Council of the City of Fort Collins this
20th day of March, A.D. 2020.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk
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Agenda Item 2
Item # 2 Page 1
AGENDA ITEM SUMMARY March 20, 2020
City Council
STAFF
Carrie Daggett, City Attorney
Delynn Coldiron, City Clerk
SUBJECT
Emergency Ordinance No. 054, 2020 Enacting Temporary Procedures to Authorize Remote Participation in
Meetings.
EXECUTIVE SUMMARY
The purpose of this item is to propose temporary procedures that would enable City Councilmembers to
remotely participate in meetings during the current Novel Coronavirus 2019 (COVID-19) crisis.
STAFF RECOMMENDATION
Staff recommends adoption of the Emergency Ordinance.
BACKGROUND / DISCUSSION
The City of Fort Collins is threatened with serious injury and damage, consisting of widespread human and
economic impact caused by the Novel Coronavirus 2019 (COVID-19) and are working collaboratively with the
Larimer County Department of Public Health and Environment, state officials, Colorado State University and
the Poudre School District to limit community spread and slow the transmission of COVID-19.
In order to undertake emergency measures to protect the life, health, safety and property of the citizens of the
City and persons conducting business therein, and in order to attempt to minimize the loss of human life and
the preservation of property, on March 13, 2020, the City Manager, as the Director of the City’s Office of
Emergency Management, proclaimed a “local emergency” in accordance with Section 2-671(a)(1) of the City
Code and activated the Emergency Operations Plan established pursuant to Section 2-673 of the City Code.
The prevention and management of exposure to COVID-19 and mitigation of related impacts of all kinds
continue to require emergency action by the City and continued social distancing in order to reduce its
transmission. In light of the potential for Councilmembers to be isolated and unable to physically meet
together for a Council meeting in order to conduct Council business, Council desires to make provision for an
appropriate way to conduct Council business through remote participation during the pendency of the local
emergency. Article II, Section 6 of the City Charter authorizes the Council to adopt emergency ordinances,
which shall be finally passed on first reading by the affirmative vote of at least five members of the Council and
which shall contain a specific statement of the nature of the emergency.
In response to the emergency that exists, the following special provisions for City Council meetings during a
declared state of emergency, to supplement the provisions of Division 2, Article II of Chapter 2, are as follows:
1. In the event the City Council is unable to conduct its regular meeting at the day, hour, and place fixed
by § 2-28 or at a special meeting pursuant to § 2-29 because meeting in-person would not be prudent
due to a public health emergency or other unforeseen circumstances affecting the city, meetings may
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Agenda Item 2
Item # 2 Page 2
be conducted by telephone, electronically, or by other means of communication so as to provide
maximum participation,
2. Meetings of the City Council or Council committees may be conducted by telephone, electronically or
by other means, and remote participation shall constitute presence and actual attendance for purposes
of establishing a quorum, so long as no quasi-judicial matters will be heard or considered, subject to
the following conditions:
a. The City Manager or the Mayor determines that the meeting in person would not be
prudent because of a public health emergency or other unforeseen circumstances
affecting the city;
b. All members of the Council participating in the meeting can see and hear one another, or,
if circumstances preclude an arrangement that would allow visual communication, hear
one another;
c. All members of the Council participating in the meeting can see, hear or read all
discussion, comment, and testimony in a manner designed to provide maximum
information sharing and participation.
d. Members of the public have equivalent access to all discussion, comment, and testimony,
and all Council votes and other dialogue, in a manner designed to provide maximum
information sharing and participation.
e. At least one member of the Council must be present at the physical meeting location,
unless not feasible due to the public health emergency or other unforeseen
circumstances;
f. All votes must be conducted by roll call;
g. All other meeting-related requirements must be met, including advance notice with an
explanation of how Councilmembers and the public may participate and stating the right of
the public to monitor the meeting, as well as the recording and preparation of meeting
minutes.
3. The City Clerk shall initiate the meeting by telephone, electronically, or through other means not more
than ten (10) minutes prior to the scheduled time of the meeting. Upon disconnection during a
meeting, the City Clerk shall make one attempt to re-initiate the connection.
Once adopted, the City Clerk will publish this Ordinance in the Fort Collins Coloradoan no later than March 24,
2020.
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EMERGENCY ORDINANCE NO. 054, 2020
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ENACTING TEMPORARY PROCEDURES TO
AUTHORIZE REMOTE PARTICIPATION IN MEETINGS
WHEREAS, the City of Fort Collins is threatened with serious injury and damage,
consisting of widespread human and economic impact caused by the Novel Coronavirus 2019
(COVID-19); and
WHEREAS, the City and the Larimer County Department of Public Health and
Environment, state officials, Colorado State University and the Poudre School District are
cooperatively working to limit community spread and slow the transmission of COVID-19; and
WHEREAS, on March 13, 2020, in order to undertake emergency measures to protect the
life, health, safety and property of the citizens of the City and persons conducting business
therein, and in order to attempt to minimize the loss of human life and the preservation of
property, the City Manager, as the Director of the City’s Office of Emergency Management,
proclaimed a “local emergency” in accordance with Section 2-671(a)(1) of the City Code and
activated the Emergency Operations Plan established pursuant to Section 2-673 of the City Code;
and
WHEREAS, the prevention and management of exposure to COVID-19 and mitigation of
related impacts of all kinds continue to require emergency action by the City and continued
social distancing in order to reduce its transmission; and
WHEREAS, the City Council has, with its adoption of Resolution 2020-030 extended the
City Manager’s proclamation of local emergency; and
WHEREAS, in light of the potential for Councilmembers to be isolated and unable to
physically meet together for a Council meeting in order to conduct Council business, Council
desires to make provision for an appropriate way to conduct Council business through remote
participation during the pendency of the local emergency; and
WHEREAS, Article II, Section 6 of the City Charter authorizes the Council to adopt
emergency ordinances, which shall be finally passed on first reading by the affirmative vote of at
least five members of the Council and which shall contain a specific statement of the nature of
the emergency.
NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF
FORT COLLINS as follows:
Section 1. That the City Council hereby finds that an emergency exists for the
immediate adoption of this Ordinance under Article II, Section 6 of the City Charter to
immediately enable the City Council to use technology to remotely participate in meetings of the
City Council and its committees and by doing so allow the Council to conduct official business
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in the event of local emergency or other circumstances that might otherwise prevent the Council
from carrying out its responsibilities, now and in the future.
Section 2. That the Council hereby adopts the following special provisions for City
Council meetings during a declared state of emergency, to supplement the provisions of Division
2, Article II of Chapter 2, as follows:
1. In the event the City Council is unable to conduct its regular meeting at the day, hour, and
place fixed by § 2-28 or at a special meeting pursuant to § 2-29 because meeting in-person
would not be prudent due to a public health emergency or other unforeseen circumstances
affecting the city, meetings may be conducted by telephone, electronically, or by other means
of communication so as to provide maximum participation,
2. Meetings of the City Council or Council committees may be conducted by telephone,
electronically or by other means, and remote participation shall constitute presence and
actual attendance for purposes of establishing a quorum, so long as no quasi-judicial matters
will be heard or considered, subject to the following conditions:
a. The City Manager or the Mayor determines that the meeting in person would not
be prudent because of a public health emergency or other unforeseen
circumstances affecting the city;
b. All members of the Council participating in the meeting can see and hear one
another, or, if circumstances preclude an arrangement that would allow visual
communication, hear one another;
c. All members of the Council participating in the meeting can see, hear or read all
discussion, comment, and testimony in a manner designed to provide maximum
information sharing and participation.
d. Members of the public have equivalent access to all discussion, comment, and
testimony, and all Council votes and other dialogue, in a manner designed to
provide maximum information sharing and participation.
e. At least one member of the Council must be present at the physical meeting
location, unless not feasible due to the public health emergency or other
unforeseen circumstances;
f. All votes must be conducted by roll call;
g. All other meeting-related requirements must be met, including advance notice
with an explanation of how Councilmembers and the public may participate and
stating the right of the public to monitor the meeting, as well as the recording and
preparation of meeting minutes.
3. The City Clerk shall initiate the meeting by telephone, electronically, or through other means
not more than ten (10) minutes prior to the scheduled time of the meeting. Upon
disconnection during a meeting, the City Clerk shall make one attempt to re-initiate the
connection.
Section 3. That the City Clerk is hereby directed to cause the publication of this
Ordinance in the Fort Collins Coloradoan no later than March 24, 2020.
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Introduced, considered favorably by at least five (5) members of the Council of the City
of Fort Collins and finally passed as an emergency ordinance and ordered published this 20th
day of March, 2020.
__________________________________
Mayor
ATTEST:
_____________________________
City Clerk
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Agenda Item 3
Item # 3 Page 1
AGENDA ITEM SUMMARY March 20, 2020
City Council
STAFF
Carrie Daggett, City Attorney
SUBJECT
Resolution 2020-029 Accepting and Adopting Ethics Opinion No. 2020-01 of the Ethics Review Board Finding
No Violation of State or Local Ethics Provisions by Councilmember Ken Summers.
EXECUTIVE SUMMARY
The purpose of this item is consideration of the opinion of the Ethics Review Board to Council for its
consideration and possible approval.
STAFF RECOMMENDATION
Not applicable.
BACKGROUND / DISCUSSION
Under City Code Section 2-569(d), any person who believes a Councilmember or board or commission member
has violated any provision of state law of the City Charter or City Code pertaining to ethical conduct may file a
complaint with the City Clerk. A Complaint was lodged with the Ethics Review Board through the City Attorney on
January 21, 2020, by Rory Heath (the “Complainant”), a Fort Collins resident, against Councilmember Ken
Summers and others, alleging that Councilmember Summers has a conflict of interest generally and in connection
with the Hughes Rezoning and related Ethics Review Board hearings, in light of a webpage offering his services
as a political consultant and lobbyist.
After notice to the complaining party and the subject of the complaint, an alternative Ethics Review Board
consisting of Councilmembers Pignataro, Cunniff, Gorgol and Gutowsky met on March 6 to conduct an initial
screening review of the Complaint to determine whether the Complaint asserted a factual basis for an alleged
state or local ethics violation. At that time, the Board determined that further investigation was needed to make a
determination regarding the allegation that lobbying and political consulting activities of Councilmember Summers
violate state and local ethics laws.
The alternate Ethics Review Board met on March 13, 2020, to conduct a hearing and investigate the allegation,
taking evidence and testimony from the Complainant and from the subject of the Complaint, Councilmember
Summers. The Board unanimously concluded that that there is no violation of state and local ethics and conflicts
of interest laws pertaining to Councilmember Ken Summers’s political consulting/lobbying activities. Upon
completion of its determination, the Board considered draft Ethics Opinion 2020-01, Finding No Violation of State
or Local Ethics Provisions by Councilmember Ken Summers, and approved it unanimously.
Section 2-569(c) provides for the opinions and recommendations of the Board to be submitted to the full Council
for Council consideration and approval.
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RESOLUTION 2020-029
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ACCEPTING AND ADOPTING ETHICS OPINION NO. 2020-01
OF THE ETHICS REVIEW BOARD FINDING NO VIOLATION OF STATE
OR LOCAL ETHICS PROVISIONS BY COUNCILMEMBER KEN SUMMERS
WHEREAS, the City Council has established an Ethics Review Board (the “Board”)
consisting of designated members of the City Council; and
WHEREAS, the Board is empowered under Section 2-569 of the City Code to render
advisory opinions and recommendations regarding actual or hypothetical situations of
Councilmembers or board and commission members of the City; and after review and
investigation, to render advisory opinions or interpretations pertaining to such complaints or
inquiries under the relevant provisions of the Charter and Code and the applicable provisions of
state law, if any, and to make written recommendations to the City Council and any affected
board or commission concerning the same; and
WHEREAS, an alternate Ethics Review Board consisting of Councilmember Ross
Cunniff, Councilmember Susan Gutowsky, Councilmember Julie Pignataro and Councilmember
Emily Gorgol (the “Board”), met on March 13, 2020, to hear and consider evidence in
connection with a complaint filed by Rory Heath alleging that that lobbying and political
consulting activities and related website of Councilmember Ken Summers violate state and local
ethics laws; and
WHEREAS, at the conclusion of its hearing in this matter, the Board voted unanimously
to determine that no evidence was presented showing an ethics violation under state or local law
by Councilmember Summers, either specifically related to the Hughes Stadium rezoning matter
or generally related to other Council decisions; and
WHEREAS, the Board unanimously adopted and issued an ethics opinion, Ethics
Opinion 2020-01, stating and explaining its finding of no violation of state and local ethics
provisions by Councilmember Summers; and
WHEREAS, Section 2-569(e) of the City Code provides that all advisory opinions and
recommendations of the Board be placed on the agenda for the next special or regular City
Council meeting, at which time the City Council shall determine whether to adopt such opinions
and recommendations; and
WHEREAS, the City Council has reviewed the opinion of the Board and wishes to adopt
the same.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS that Opinion No. 2020-01 of the Ethics Review Board, a copy of which is
attached hereto and incorporated herein by this reference as Exhibit “A,” has been submitted to
and reviewed by the City Council, and the Council hereby accepts and adopts the opinion
contained therein.
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Passed and adopted at a special meeting of the Council of the City of Fort Collins this
20th day of March A.D. 2020.
__________________________________
Mayor
ATTEST:
_____________________________
City Clerk
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2020-01
OPINION OF THE ETHICS REVIEW BOARD
OF THE CITY COUNCIL OF THE CITY OF FORT COLLINS
March 13, 2020
Background.
On January 21, 2020, a complaint was filed with the City Council via the City Attorney by Rory
Heath (“Heath”). A copy of the Complaint, along with Exhibit 4 pertaining to the subject of this
Opinion, is attached. The Complaint alleges that the webpage through which Councilmember
Ken Summers (“Summers”) offers lobbying and political consulting services and such services
violate state and local ethics laws, including the conflict of interest rules contained in the City
Charter, because he improperly participated in Council decisions generally and in connection with
the City Council’s rezoning of the Hughes Stadium annexation property and related matters.
Under Section 2-569 of the City Code, the Complaint was first considered by an alternate Ethics
Review Board comprised of Councilmember Ross Cunniff, Councilmember Susan Gutowsky,
Councilmember Julie Pignataro and Councilmember Emily Gorgol (the “Board”), for initial
screening pursuant to Section 2-569(d) to determine whether the Complaint warranted further
investigation. At that time the Board determined that further investigation of this allegation of
the Complaint was needed.
Summary of Opinion and Recommendation.
The information presented to us indicates that Ken Summers has not carried out any lobbying or
political consulting activities during his time on City Council, which began in April 2017. While
it is established that Summers has posted a webpage under the business name of KGS Consulting
that offers consulting and lobbying services, the webpage is not related to any public decisions or
actions absent actual clients or matters in which Summers is or has been engaged. The Board
acknowledges that circumstances can be imagined under which a conflict of interest would arise
for a Councilmember lobbying for others, most clearly if that lobbying related to a City issue, but
also if it on Colorado Statehouse issues affecting the City. Nonetheless, there is not an inherent
conflict of interest arising as a result of lobbying or political consulting activities, and in the
complete absence of a lobbying or political consulting project, there is no relationship to any
matters or interests coming before Summers as a City Councilmember that can even be
evaluated. In addition, had Summers undertaken lobbying or political consulting activities, there
would still need to be an identifiable relationship between those undertakings and the rezoning of
the Hughes Stadium annexation property in order for a conflict of interest or other ethics
violation to be present in regards to the Hughes Stadium item. As stated by the Complainant,
there is no evidence suggesting that Summers has such a relationship.
While Summers will need to consider carefully the potential for conflicts of interest should
he take on the consulting or lobbying work suggested on his webpage, the Board finds there
has been no evidence presented showing an ethics violation under state or local law by
Summers.
EXHIBIT A
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Attachment: Exhibit A (8870 : Ethics Review Opinion RES)
Opinion of the Ethics Review Board
Opinion 2020-01
March 13, 2020
Page 2 of 3
The Information Presented to the Review Board.
Information was presented to us with regard to the Complaint at our meetings on March 6 and
13, 2020. The Complainant, Rory Heath, presented information at both meetings; Summers
appeared and presented information at the March 13 meeting. Approved minutes of the March 6
meeting and draft minutes of the March 13 meeting are attached.
Besides the Complaint itself, and the exhibits provided with it, materials presented to the Board
included copies of the City Charter, City Code and statutory provisions cited in the Complaint
and applicable to this matter, as well as email communications from Heath, memos to the Board
from Summers dated March 5 and March 7, 2020, financial disclosures by Summers in January
and April 2017, April 2018 and May 2019, and a Lobbyist Summary regarding the lobbying
registration of Kenneth G. Summers, printed from the Colorado Secretary of State’s website on
March 7, 2020. Heath provided three additional exhibits, an apparent transcript of Summers
comments at the January 21, 2020, Council meeting, and two printouts displaying lobbying
activities reported by Summers, showing activity only in 2015 and 2016, dated March 12, 2020,
from the Colorado Secretary of State’s webpage.
Summers presented testimony and evidence, supported by the exhibits provided by Heath,
document no lobbying activity by Summers since 2016. In addition, Heath has confirmed that he
knows of no evidence or information showing or suggesting that Summers has a special
relationship with Colorado State University, the owner of the Hughes Stadium property, or any
other person, that would give cause to suspect Summers has a business or personal interest in the
rezoning decision.
Analysis of the Issue Presented.
Whether Summers posting a website offering lobbying and political consulting services, or
carrying out services, violates state or local ethics laws is must be analyzed based on the
particular interests arising from that undertaking or business.
Heath has expressed repeatedly his belief that the mere offering of such a website creates the
possibility and the route for outside interests to influence the voting decision of Summers in the
Hughes Stadium rezoning process. No evidence was offered that showed or even suggested any
action or actual interest of Summers with an identifiable relationship to actions taken by
Summers as a Councilmember or an identifiable relationship to the Hughes Stadium property or
rezoning of it. There is no inherent or categorical conflict of interest that arises from specific
employment or from lobbying or political consulting work.
There was no indication of how any decision of the Council would have resulted in any
immediate financial return to Summers or any direct and substantial benefit or detriment
different in kind from that experienced by the general public. Accordingly, no facts were alleged
or shown that support a finding that actions of Summers violated the City Charter’s prohibition
against a Councilmember participating in decisions in which they have a financial or personal
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interest. (City Charter Article IV, Section 9).
Likewise, there was no evidence introduced showing that Summers took action as a
Councilmember that would benefit him privately or would directly and substantially benefit a
business or undertaking in which he had a substantial financial interest, or by which he is
engaged as counsel, consultant, representative or agent. Thus, no facts have been shown that
constitute a violation of state ethics laws. (Colorado Revised Statutes Sections 24-18-103
through -105, and Section 24-18-109).
Because of the lack of evidence of any actions by Summers as a lobbyist or political consultant
that would constitute a conflict of interest in his role as a City Councilmember, we find no state
or local ethics violation has occurred.
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Ethics Review Board Meeting Minutes
March 6, 2020
5:00 p.m.
Members in Attendance: Board members Julie Pignataro and Ross Cunniff; Councilmembers
Susan Gutowsky, Emily Gorgol; Carrie Daggett, City Attorney; Jeanne Sanford, Paralegal, Delynn
Coldiron, City Clerk.
Public in Attendance: Mayor Wade Troxell; Mayor Pro Tem Kristin Stephens; Complainant Rory
Heath and his attorney, Andrew Bertrand and approximately 30 members of the public.
A meeting of the City Council Ethics Review Board (“Board”) was held on Friday, March 6, 2020,
at 5:00 p.m. in the CIC Room, City Hall West.
The meeting began at 5:00 p.m. The Board reviewed the Agenda which contained the following
items:
1. Selection of Presiding Officer for Alternate Ethics Review Board as it considers the
pending complaints.
2. Review and Approval of the December 16, 2019 Minutes of the Ethics Review
Board.
3. Consider in accordance with City Code Section 2-569(d)(1) whether a complaint
filed on January 21, 2020, by Rory Heath, making various allegations regarding the
conduct of the Councilmembers below, warrants investigation:
a. Mayor Wade Troxell
b. Mayor Pro Tem Kristen Stephens; and
c. Councilmember Ken Summers
4. Other Business.
5. Adjournment.
The first item on the agenda, selection of a Chair, was discussed. Councilmember Ross Cunniff
made a motion to approve Councilmember Pignataro as Chair. Councilmember Emily Gorgol
seconded the motion. The motion to appoint Councilmember Pignataro as Chair was adopted by
unanimous consent.
The approval of the December 16, 2019 Minutes of the Ethics Review Board was next on the
Agenda. Councilmember Cunniff made a motion to approve the December 16, 2019 Minutes and
Councilmember Emily Gorgol seconded the motion. The Minutes of the December 16, 2019
Ethics Review Board were approved by unanimous consent.
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City Attorney Daggett explained the background materials, including of Rory Heath’s Complaint,
were provided with an introductory Agenda Item Summary (“AIS”), accompanied by three
sections pertaining to each part of the Complaint. The allegations against Mayor Troxell were
contained in AIS 3a, Mayor Pro Tem Kristen Stephens’s portion in AIS 3b and Councilmember
Ken Summers’s portion in AIS 3c.
The Board decided to give the Complainant and respondent 5 mins to speak in turn and allowed 5
minutes of rebuttal for each.
City Attorney Daggett discussed the overview of the complaint and the structure of the materials
presented. City Attorney Daggett explained supplemental materials received on March 5, 2020,
were given to all members of Council and included Ken Summers’s statement and an email
exchange with Complainant regarding his procedural concerns. These documents were also
posted on the public website.
Complainant Rory Heath introduced his attorney, Andrew Bertrand, and then spoke for 5 minutes,
in which he asked the Board for consideration for a more judicious process. Mr. Heath stated he
felt his complaint, along with all exhibits referenced and highlighted were not given to the Board.
Councilmember Pignataro assured Mr. Heath they all received the complaint with highlighted
exhibits the day he filed the complaint contained on a jump drive which was given to all
Councilmembers.
Mr. Heath stated he felt Council was not given the full scope and key ethics laws were not
furnished by the City Attorney. Mr. Heath stated that Professor Wade Troxell is an employee of
CSU which fits within all applicable Colorado Revised Statutes definitions highlighted in his
materials. He asked the Board to consider outsourcing this Ethics Review Board as he felt the
process was biased as was the checklist supplied by City Attorney Daggett.
Mayor Troxell next spoke and pointed out previous documents related to conflict of interest with
his employment at CSU. Mayor Troxell talked about City Council Resolution 2014-107 wherein
he asked for a review regarding the CSU stadium issue. Mayor Troxell read one of the Whereas
clauses in that Resolution which stated the attached advisory opinion concluded Mayor Troxell
did not have a conflict of interest with the CSU stadium issue considering his employment by
CSU.
Mayor Troxell stated as it relates to the previous Ethics Review Board (in December, 2019), two
determinations were made. The Board voted unanimously that further investigation of a complaint
was not warranted and there was no financial or personal conflict of interest and no violation of
any state or city violation of ethics. Mayor Troxell further stated that in this complaint, there is no
financial benefit or detriment in this matter; this is a rezoning issue which is more administrative
in nature. It does not fit within the definition of financial benefit. Regarding a personal benefit,
Mayor Troxell stated he has no direct or substantial personal benefit. The state ethics provisions
exclude institutions of higher education, so directorship means fiduciary member; Mayor Troxell
stated he is only a faculty member.
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In Mr. Heath’s rebuttal time, he stated he was glad Mayor Troxell brought up the previous ethical
situation with the stadium as this speaks to a larger problem. Mr. Heath stated it would be of
interest how a court of law would interpret this; it is unfair for Councilmembers to judge their
peers. This is not fair as Mayor Troxell collects a paycheck which says CSU no matter how one
wants to look at it. Mr. Heath explained this is a first piece of a larger piece if the zoning goes
through.
Andrew Bertrand spoke to the financial benefit per dwelling payment to CSU in the current
development contract for this land being rezoned which is very different than the CSU stadium
situation and should be considered as such.
Mayor Troxell then gave his rebuttal, stating that Rory Heath had made no case and these broad
allegations did not relate to him. Mayor Troxell asked if Mr. Heath was talking about the CSU
system, CSU Fort Collins, or CSU Research Foundation. Mayor Troxell stated he is a faculty
member of the College of Engineering and is not involved with the Board of Governors and these
conversations. Mayor Troxell also spoke to Mr. Heath’s allegations regarding donations to his
campaign, and noted there is nothing to substantiate that allegation. Mayor Troxell stated Mr.
Health is factually wrong and his broad-based innuendos do not relate to him.
Councilmember Pignataro brought the issue back to the Board. Ms. Pignataro stated the City
Attorney’s Office will be coming to Council with ideas for a different Ethics Review Board
structure to hear a complaint against a Councilmember sometime this summer.
Ms. Pignataro asked City Attorney Daggett if the Board was missing the full ethics laws as Mr.
Heath alleged.
City Attorney Daggett stated she had a hard time picking out what statutes Mr. Heath was
suggesting were not provided. She noted Colorado Revised Statutes Section 24-18-108 only
applies to state officers and excludes City officials. City Attorney Daggett stated she did not
provide that statute to Councilmembers as it did not apply and that she believed all others had been
provided.
Councilmember Ross Cunniff discussed Article XXIX to the State Constitution (also referred to
as “Amendment 41”) regarding prohibiting an appearance of a conflict of interest. Mr. Cunniff
stated the City needs to update its code to reflect this as he feels the City has not adequately
addressed the issue of the appearance of conflict.
City Attorney Daggett stated Amendment 41 adopting Article XXIX of the Colorado constitution
was passed in 2006 and the City has not made amendments to its local provisions intended to
match that provision. She noted the exception language allowing home-rule cities to adopt their
own local ethics provisions, and further noted that the extent of this exception is currently being
litigated.
The Board discussed the best way to bring this issue to Council and asked the City Attorney to
provide further information to Council on this for further consideration.
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Councilmember Gutowsky stated she felt Councilmember Cunniff brought up a good point,
expressing that optics and how things look are very important. She has listened to constituents’
comments and while this may not be against the Code of Ethics, people feel the way they feel, and
it should be a natural decision to recuse yourself if your employer is involved in an issue. She
hears the public’s voice; it is all about impression.
The Board discussed the listed City and statutory ethics provisions, and in particular whether CSU
was defined as a “business or other undertaking.” City Attorney Daggett stated the Colorado
Independent Ethics Commission has specifically looked at the question of whether a public body
is a “business or undertaking” and has found that a public body is not a “business or other
undertaking.”
Chair Pignataro then went through the checklist attached to the AIS 3a.
Councilmember Cunniff made a motion that the Board find that having reviewed the allegations
of Mr. Heath’s Complaint and the applicable laws, the Board has determined that the Complaint
fails to allege that Mayor Troxell has a financial or personal interest or conflict related to the
decision on the Hughes Stadium property rezoning and no further investigation is warranted.
Councilmember Pignataro seconded the motion and the motion passed by unanimous voice vote.
The Board moved to AIS 3(b) relating to Mayor Pro Tem Stephens.
Rory Heath spoke that this was the same issue, different person. Mr. Heath stated he felt the
materials from the City Attorney’s Office were very biased. Asked again that this issue be
reviewed instead by an independent panel of outside experts.
Andrew Bertrand spoke that this is very similar to the last argument and that Amendment 41 has
been glossed over. The issue is about optics.
Mr. Heath spoke about financial benefits and drew a correlation with UNC announcing possible
layoffs. If the development deal does not go through, CSU can experience those same realities.
Mr. Heath stated he feels CSU is a business or other undertaking.
Mayor Pro Tem Stephens talked about the factual allegations and stated she does not take an oath
to CSU. Ms. Stephens stated as far as Mr. Heath’s statement about career opportunities, this is not
relevant. Mayor Pro Tem Stephens does not believe she has personal or financial interest in the
CSU Hughes Stadium rezoning issue. Ms. Stephens insisted she is a state classified employee in
the Statistics Department, and as a State classified employee, her pay is awarded by the state; CSU
has no say in her pay raises.
Rory Heath rebutted this as follows. Mr. Heath stated Mayor Pro Tem Stephens is an employee
on a one-year contract renewal who has to “sing for her supper” every year. There is a method for
reward – better position, etc. Andrew Bertrand stated based on public perception, Mayor Pro Tem
Stephens should have recused herself.
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Mr. Heath stated we need to fix this hole in the system before voting on this. We need to address
it now, not in the future.
Mayor Pro Tem Stephens’ rebutted his comments. Mayor Pro Tem Stephens stated she is not on
a one-year contact. Mr. Heath’s facts are not true. Mayor Pro Tem Stephens stated she works for
the State; there is no benefit or money involved in a rezoning and this is a City administration
decision.
Councilmember Cunniff stated the Ethics Review Board is not free to ignore the City Charter or
Code or adopt State rules in lieu of a City process. Doing so would be a violation of our Code to
shift this decision to a group of other people. While members of this Board have expressed
sympathy, we have to change the Charter by a specific process. This Board is required to follow
City Code, Charter and State laws as they now apply.
Chair Pignataro directed the Board to go through the checklist attached to AIS 3b.
Chair Pignataro then made a motion that the Board find that having reviewed the allegations of
Mr. Heath’s Complaint and the applicable laws, the Complaint fails to allege that Mayor Pro Tem
Stephens has a financial or personal interest or conflict related to the decision on the Hughes
Stadium property rezoning and no further investigation is warranted. Councilmember Gorgol
seconded the motion. The motion passed by unanimous voice consent.
Chair Pignataro directed the Board to AIS 3c, relating to Ken Summers’s alleged personal,
business-related conflicts of interest.
A statement Councilmember Summers had submitted to the Board was noted. Chair Pignataro
asked City Attorney Daggett to read the statement.
Rory Heath stated this matter was a little more difficult. Councilmember Summers’ website
advertises that he helps influence decisions. Mr. Heath stated the Board should subpoena the
records of Councilmember Summers including any and all clients he has had. Mr. Heath stressed
an investigation is needed here; this billboard is still up for the public to see.
Andrew Bertrand stated he was not sure how anyone voted, but doesn’t care; he cares about how
it looks. Now is the time to deal with it – not after Hughes gets decided.
Councilmember Cunniff stated he would like to know if Councilmember Summers has received
any revenue on this website.
City Attorney Daggett explained it was unclear in Mr. Heath’s complaint if this was tied to Hughes
Stadium or a more general complaint. Ms. Daggett explained if the complaint warrants further
investigation, there will be a need to schedule a further hearing for more evidence to be presented.
At that time, the Board would have power to subpoena more information if it chooses to. City
Attorney Daggett explained that this process would next go to the hearing step where a decision
would be made as to whether the Complaint alleges a violation specifically related to Hughes
Stadium or otherwise.
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The Board asked Rory Heath if this complaint was related to Hughes Stadium.
Mr. Heath replied it was intended to include everything – including Hughes Stadium.
The Board discussed next steps in this process. City Attorney Daggett stated the Board could
continue its screening review if that would be helpful or find that the allegation warrants further
investigations.
Councilmember Cunniff stated the allegations of the Complaint are broader than Hughes and need
further investigation, although regarding a specific complaint on Hughes, there is no evidence to
sustain an allegation Councilmember Summers has acted unethically.
Councilmember Gutowsky did not agree with this and stated the Complaint cast doubt in her mind.
Councilmember Cunniff made a motion that the Board find that the allegation that political
consulting and lobbying activities could constitute a potential ethics violation, if true, and that
further Ethics Review Board investigation and review is warranted on the specific issue of whether
Councilmember Summers has carried out political consulting or lobbying activities that constituted
an ethics violation. Councilmember Gorgol seconded the motion. The motion was passed by
unanimous voice consent.
City Attorney Daggett discussed the timing of the next meeting to review the one remaining
allegation and stated her office would get started on scheduling the next meeting.
Under Other Business, the Board briefly discussed Amendment 41 of the State Constitution and
stated this process was already in motion.
Meeting adjourned at 7:56
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Ethics Review Board Meeting Minutes
March 13, 2020
5:00 p.m.
Alternative Ethics Review Board members in attendance: Councilmembers Julie Pignataro, Ross
Cunniff, Susan Gutowsky and Emily Gorgol.
Staff in attendance: Carrie Daggett, City Attorney; Jeanne Sanford, Paralegal.
Public in Attendance: Councilmember Ken Summers; Complainant Rory Heath and
approximately 15 members of the public.
A meeting of the City Council (alternate) Ethics Review Board (“Board”) was held on Friday,
March 13, 2020, at 5:00 p.m. in the CIC Room, City Hall West.
The meeting began at 5:00 p.m. The Board reviewed the Agenda which contained the following
items:
1. Selection of Presiding Officer for Ethics Review Board as it considers the pending
complaint.
2. Review and Approval of the March 6, 2020 Minutes of the Ethics Review Board.
3. Hearing and investigation in accordance with City Code Section 2-569(e) of a complaint
filed on January 21, 2020, by Rory Heath, alleging that political consulting/lobbying
activities of Councilmember Ken Summers violate state and local ethics provisions.
4. Other Business.
5. Adjournment.
The first item on the agenda, selection of a Chair, was discussed. The Board unanimously consented to
Councilmember Julie Pignataro continuing being the Chair.
The approval of the March 6, 2020, Minutes of the Ethics Review Board meeting was next on the Agenda.
Councilmember Gorgol made a motion to approve the March 6, 2020, Minutes and Councilmember Susan
Gutowsky seconded the motion. The Minutes of the March 6, 2020, Ethics Review Board meeting were
approved by unanimous consent.
Chair Pignataro called up the next order of business, which was the discussion of the Complaint against
Councilmember Summers.
City Attorney Carrie Daggett ran through the suggested hearing process that was highlighted in the
Agenda Item Summary.
Chair Pignataro announced that each party would have a total of 15 minutes to speak and there was no
objection from other members of the Board or either the Complainant or Councilmember Summers.
City Attorney Daggett ran through the Agenda Item Summary with attachments provided in the public
packet with the addition of an email from Rory Heath received on Friday.
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For his opening remarks, Rory Heath stated Mr. Summers was not present for the last Ethics Review
Board meeting, but the crux of the matter was his website, www.kensummers.org and the statements such
as “opening doors, empowering influence”, etc. Mr. Heath stated the existence of the website and those
statements along with Mr. Summers’s representation on Council were the big issue. Mr. Heath stated this
was tip of the iceberg and if Councilmember Summers had nothing to hide, why wouldn’t he open up his
bank records for KGS?
For his opening remarks, Councilmember Summers stated Mr. Heath’s allegations were baseless and
silly. Councilmember Summers explained having a website that is inactive is not in violation of any code
of ethics. Mr. Summers further explained there was no nefarious activities going on due to the fact that
he has a tab on a personal website called KGS Consulting. Mr. Summers continued that Mr. Heath has
abused this process for political purposes because he does not like the fact that CSU owns property that
the City is obligated to zone. Mr. Summers further stated that Mr. Heath has one paragraph of a
complaint that I “voted against the 655 pages of public comments” Mr. Summers stated he checked with
City Clerk and there were approximately 140 pages, not 655. Councilmember Summers stated he was
glad Mr. Heath made it up from Colorado Springs to this meeting, which is interesting to note his interest
in Fort Collins matters. Mr. Summers explained that in 2014, he attempted to acquire some work through
this business due to his West Nile Virus disability, but never secured a client in those efforts. Mr.
Summers concluded that Mr. Heath has an obligation to identify an interest he has that is in conflict to the
zoning before Council and he has offered none.
For his presentation of evidence, Rory Heath stated he was glad Mr. Summers brought up his past. There
was an interruption from Mr. Summers. Mr. Heath handed out some exhibits to the Board which
included as Exhibit 1 a typed transcript of what was described as a statement by Councilmember
Summers at the January 21, 2020, City Council meeting. Mr. Heath read Mr. Summers’s statement.
Mr. Heath stated his Exhibit 2 was evidence of lobbying from the Secretary of State’s lobbyist website
and his Exhibit 3 was client search results from the Colorado Secretary of State’s lobbyist registration and
reporting website. The exhibits were handed out to the Board and to Mr. Summers. Mr. Heath stated
these reports show there was lobbyist money and not only is Mr. Summers lying to all us, his website
solicits work as a lobbyist, when he does not have a current lobbyist license.
In response, and as part of his presentation of evidence, Councilmember Summers rebutted by saying Mr.
Heath doesn’t understand what is involved as a lobbyist and explained he was a consultant on one bill in
two sessions in the years 2015 and 2016. Mr. Summers explained his lobbying efforts ended in 2016 and
he submitted his financial disclosures as all City Councilmembers have to submit. Mr. Summers stated
he did not make money as a lobbyist while on City Council and the clear evidence points to that.
In closing, Rory Heath stated in his rebuttal that without Councilmember Summers’s financial records,
one is left with a grey area to take his word on this. Mr. Heath stated Councilmember Summers is not to
be taken at his word and the things he has said are very scary. In closing, Mr. Heath stated the fact that
Councilmember Summers’s LLC is still in operation and the website is still soliciting business, one can
argue is negligence. He argued that the appearance of impropriety is an issue in and of itself and could be
an offense. Mr. Heath finished by saying we do not have enough evidence as it relates to Hughes and
how far this crime and dirt has gone; we need to look at every single action Councilmember Summers has
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made so far. If Councilmember Summers has nothing to hide, then he should release his tax returns, bank
statements and emails.
In closing, Councilmember Summers rebutted by stating those requests were ludicrous, insulting, and
way over the top for any reasonable person to expect. Mr. Summers continued by stating Mr. Heath has
the audacity to suggest that he has been lying for over 3 years now because I knew the zoning of Hughes
would come up in 2020 and would request recommendation from our City Staff.
Councilmember Summers further stated in the original analysis of Rory Heath’s complaint, he wants
opportunity for others to speak, no growth, walking trails only, etc. Those are statements of a lobbyist;
He is lobbying without a license. Councilmember Summers stated he does not have a bank statement or
a bank account for KGS Consulting.
At the conclusion of the comments by Rory Heath and Councilmember Summers, Chair Pignataro
brought the discussion back to Board for questions. She asked City Attorney Daggett to explain to the
Board and for the record the financial disclosures that Councilmember Summers had provided (attached
to the Agenda Item Summary) and the legal nature of those.
City Attorney Daggett stated the financial disclosures are required by law and the statements follow a
process required at the state level for state officials. She noted there is not a City process of investigation
and/or checking that the reported income or other information is correct. Mr. Daggett did state there are
legal consequences in filing an incorrect statement, but she did not have specific information about the
nature of the consequences without further checking.
City Attorney Daggett went over the form and read it to the Board and the public and stated the
completed Financial Disclosures are public documents and filed in the City Clerk’s Office.
Councilmember Cunniff directed a question to Mr. Heath and asked if his complaint against
Councilmember Summers was regarding Hughes rezoning specifically or something nonspecific as well.
Mr. Heath stated yes, it is within reason that the most critical of issues, Hughes rezoning, is intended to be
within the scope of this complaint.
Councilmember Cunniff directed a question to Councilmember Summers and asked if his financial
disclosures were accurate and complete.
Councilmember Summers replied yes, they were accurate and complete.
Councilmember Cunniff asked City Attorney Daggett if there were any City Code prohibitions on
Councilmembers having individual employment?
City Attorney Daggett stated no. She explained, however, there might be challenges if a
Councilmember’s employment was funded by the City.
Councilmember Gutowsky asked City Attorney Daggett if there was problem with not having a license if
one was a lobbyist.
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City Attorney Daggett replied there is a state statute that lays out the requirements for registering as a
lobbyist, which in some instances may be unclear; there are specific conditions that must be met or may
create an exception. For example, there is a safe harbor provision for elected officials like
councilmembers communicating with state officials that exempts them from having to register.
Councilmember Cunniff asked City Attorney Daggett to explain some examples of lobbyist activities.
City Attorney Daggett explained that generally, lobbying activities would include people getting paid by
others to communicate with state officials within the administration of state government on behalf of
payors on any policy or regulatory matters. Lobbyists are required to register and file reports on their
activities. Ms. Daggett stated when someone is actually hired to lobby, that is a business relationship
which is pretty clear.
Councilmember Gutowsky asked City Attorney Daggett if “lobbying” would be considered a job.
City Attorney Daggett responded by saying if there was no activity or income, it would be hard to call it a
job.
Councilmember Gutowsky asked if there was a conflict of interest with lobbying. City Attorney Daggett
stated no, not by definition.
Councilmember Gutowsky asked Councilmember Summers about his intentions with his webpage; he
explained his website was just a placeholder to when he might come back to lobbying in the future; there
was just no need to cancel the LLC now and restart it in the future.
City Attorney Daggett asked a question of Mr. Heath in that she has not seen or heard any particular,
factual evidence Mr. Heath has identified to tie Councilmembers Summers to CSU, Hughes, or Lennar
(the builder), so again asked Mr. Heath if there was some specific thing that gave him a belief that
Councilmember Summers had or has a relationship with one of those entities?
Rory Heath replied it was too early in the investigation to be able to know, but it has the optics of
impropriety.
City Attorney Daggett was asked to clarify how Councilmember jobs and business interests affect their
participation in matters before Council. She stated that Councilmembers are allowed to have jobs and
business interests and can participate in matters where those interests are not involved, but are not
allowed to participate in a decision that relates in a way that creates a conflict of interest.
Councilmember Cunniff stated he has seen no evidence that anything specific happened with respect to
Hughes and that is what the Ethics Review Board needs to look for -- specifics, not hypotheticals.
Councilmember Cunniff then stated absent any specifics, he did not see how the Board could conclude
there was a conflict of interest in this case.
Chair Pignataro responded by stating that is why the Board is here tonight; we did not have evidence.
Councilmember Summers has now offered evidence he did not have a conflict.
Councilmember Gorgol made a motion that the Board find that, based on the evidence presented,
Councilmember Summers has not engaged in the business of lobbying or political consulting during his
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time on Council, and that the Board conclude for that reason that no state or local ethics violation has
been shown.
Councilmember Gutowsky seconded the motion and the Board approved the motion by unanimous vote.
Councilmember Gorgol spoke about grey area and public trust and stated all councilmembers take their
oaths very seriously and the Ethics Review Board is an important part of looking at that. Ms. Gorgol
further stated that the idea that Councilmembers are lying and do not take these matters seriously, is
offensive.
Councilmember Cunniff stated regardless of emotions which are running high, the Board is charged with
looking at the City Charter very narrowly and we did not see evidence of a financial or personal conflict
largely because no income was earned during Ken Summers’s term on Council.
Under Other Business, City Attorney Daggett suggested she could generate an Opinion quickly if the
Board took a break and then if the Opinion was acceptable, City staff could get the item on the agenda for
Council consideration next Tuesday night.
The Board agreed to take a fifteen minute break.
The Board reconvened at 6:28 pm and City Attorney Daggett brought a draft of Opinion 2020-01 for the
Board to review and consider. City Attorney Daggett explained the next process, once the Board
approves the Opinion, would be to schedule Council consideration of a Resolution for next Tuesday
night, which would have the Opinion attached. City Council, minus Ken Summers, would vote on the
Resolution to accept and adopt the Opinion.
Councilmember Cunniff made a motion for the Board to approve the Opinion 2020-01 and
Councilmember Gorgol seconded the motion. The motion was approved by unanimous vote.
The Board inquired if there was any other business and with no replies, the meeting was adjourned at 6:38
pm.
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Attachment: Exhibit A (8870 : Ethics Review Opinion RES)
Agenda Item 4
Item # 4 Page 1
AGENDA ITEM SUMMARY March 20, 2020
City Council
STAFF
Teresa Roche, Chief Human Resources Officer
Jenny Lopez Filkins, Legal
SUBJECT
Resolution 2020-027 Adopting the Recommendations of the Council Committee Regarding the Recruitment
and Selection of a Chief Judge.
EXECUTIVE SUMMARY
The purpose of this item is to review and consider the Council Committee’s recommendations regarding the
recruitment and selection of a Chief Judge. Council will consider adoption of a plan and schedule for the Chief
Judge recruitment and selection process.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BACKGROUND / DISCUSSION
Chief Judge Kathleen Lane notified the City Council of her intent to retire from her employment as Chief Judge
effective July 3, 2020. On December 3, 2019, the City Council appointed an ad hoc committee to develop a
formal plan and schedule for the Chief Judge recruitment and selection process.
Since December 3, 2019, the Chief Judge Selection Process committee met on two occasions and developed
a formal plan and schedule for the recruitment and selection process. The committee voted unanimously to
recommend to City Council the formal plan and schedule (as described in Exhibit A to the Resolution) for the
recruitment and selection process to the City Council.
The purpose of this Resolution is for the City Council to review and consider the committee’s recommended
plan and schedule and adopt a plan and schedule for the recruitment and selection process.
After Resolution 2019-110 was approved by the City Council forming the Council Committee, City staff
determined there are limited, if any, search firms with substantial experience in recruiting municipal judges. As
a result, City staff elected to use for the Chief Judge search a search firm selected in 2019 using the
established City request for proposal process and that had some experience recruiting a municipal judge.
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-1-
RESOLUTION 2020-027
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ADOPTING THE RECOMMENDATIONS OF THE COUNCIL COMMITTEE
REGARDING THE RECRUITMENT AND SELECTION OF A CHIEF JUDGE
WHEREAS, on October 18, 2019, Chief Judge Kathleen Lane notified the City
Council of her intent to retire from her employment as Chief Judge effective July 3, 2020; and
WHEREAS, the Council desires to move forward with the planning and scheduling of
the process for recruitment, selection and appointment of a new Chief Judge; and
WHEREAS, on December 3, 2019, the City Council approved Resolution 2019-110
appointing certain Councilmembers to serve as the ad hoc Chief Judge Selection Process
Committee (“Committee”) to recommend a formal plan and schedule for the selection process
and other matters related to the Chief Judge recruitment and selection process; and
WHEREAS, City staff is using a qualified search firm selected using the established
City request for proposal process that has some experience recruiting a municipal judge; and
WHEREAS, the Chief Judge Selection Process Committee met, developed a plan and
schedule for the Chief Judge selection process and approved the plan by unanimous vote; and
WHEREAS, the plan and schedule for the selection process is described on Exhibit
“A,” attached hereto and incorporated herein by reference; and
WHEREAS, City Council desires to review the plan and schedule recommended by the
Council Committee.
NOW, THEREFORE, BE IT RESOLVED 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 the City Council hereby approves the detailed plan and target
schedule for the recruitment and selection of the Chief Judge as described on Exhibit “A.”
Passed and adopted at a special meeting of the Council of the City of Fort Collins this
20th day of March, A.D. 2020.
___________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Packet Pg. 47
Exhibit A Chief Judge Recruitment
Timeline and Milestones
Dates reflect the City’s targeted timeline and are subject to change.
Date Event / Milestone Note
1/30 through
March
Stakeholder Meetings
Engage key stakeholders to learn
multiple perspectives on the role of
the judge.
2/7 Position Announcement Go Live
3/6 Application Review Begins
3/16
Recruiter sends semi-finalist application materials
to City representatives for review
3/19
Ad Hoc Committee meeting to review and identify
semi-finalist candidates
Possible executive session to discuss candidates
Posted for Public
3/26 Deadline for identifying finalist candidates
3/30 Invitation to finalists for onsite interviews
4/3 Publicly announce finalists
4/4 to 4/21 Council receives finalists’ materials
4/21– 4/23
Chief Judge Onsite Interviews—Councilmembers
to Participate in Informal Gatherings with
Candidates and Attend Public Forum
Appropriate Events Posted for Public
Participation
4/28 Possible Executive Session to discuss finalist(s) Posted for Public
4/28
Council Resolution Authorizing Certain Council
Members to Begin Negotiations re Terms and
Conditions of Employment Agreement with a
Person Named in the Resolution.
Posted for Public
4/29
City engages in negotiations with top choice
candidate (if appropriate)
5/5
Council Resolutions Appointing Chief Judge and
approving the employment agreement for the
Chief Judge position and the Assistant Chief Judge
6/1 New Chief Judge start date
Bold indicates Council action
ATTACHMENT 1
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Attachment: Exhibit A (8872 : Chief Judge Recruitment and Selection Timeline RESO)
Agenda Item 5
Item # 5 Page 1
AGENDA ITEM SUMMARY March 20, 2020
City Council
STAFF
Terra Sampson, Project Manager, Energy Services
John Phelan, Energy Services Manager
Blaine Dunn, Senior Treasury Analyst
Sean Carpenter, Climate Economy Advisor
John Duval, Legal
SUBJECT
Items Relating to the 15-year Capital for the 2020 Epic Homes Loan Program.
EXECUTIVE SUMMARY
A. First Reading of Ordinance No. 047, 2020, Making a Supplemental Appropriation from the Light & Power
Fund to be Expended as Loans to Utility Services Customers Under the Epic Loan Program.
B. First Reading of Ordinance No. 048, 2020, Making a Supplemental Appropriation from Unappropriated
Prior Year Reserves in the Light & Power Fund to Make Debt Service Payments Under the Vectra Bank
Line of Credit for the Epic Loan Program.
The purpose of this item is to appropriate funds for the Epic Loan Program in 2020 for 15-year loan issuance to
Fort Collins Utilities electric customers, and anticipated debt service to third-party capital providers. The Epic
Loan Program is part of the Epic Homes comprehensive portfolio for single-family home performance for both
owner- and renter-occupied homes. These appropriations will cover 15-year loan agreements being
considered by the Electric Utility Enterprise Board on March 17 for First Reading and April 7 for Second
Reading and are necessary to formally authorize the disbursement of funds for customer loans. For future
years, staff will include loan issuance and debt service as part of the biennial Budgeting for Outcomes process.
Contingent upon authorization of the 15-year loan agreements by the Enterprise Board, the 2020 appropriation
for 15-year loan issuance is $1,600,000 and the appropriation for debt service is $100,000.
The 15-year capital agreements were presented at the January 27, 2020 Council Finance Committee meeting.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinances on First Reading.
BACKGROUND / DISCUSSION
Epic Homes
In October 2018, Fort Collins became a winner of the 2018 Bloomberg Mayors Challenge and the associated
$1M prize. The 2018 Bloomberg Mayors Challenge involved over 300 cities proposing ideas to address
important issues in their communities. The City’s proposal, Epic Homes, was selected as a winner for its
innovative approach to providing health and equity benefits to residents, specifically for low-to-moderate
income renters, by improving the energy efficiency of rental homes. Residential property owners can take
advantage of Epic Homes’ easy streamlined steps to make their homes more comfortable, healthy and
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Agenda Item 5
Item # 5 Page 2
efficient. Partnering with Colorado State University, Fort Collins is also establishing a research study which
links the health and well-being indicators of improved indoor environmental quality.
Epic Homes provides non-energy benefits in addition to efficiency, such as increased comfort, health and
safety. In nearly every energy assessment, energy advisors identify a health and safety hazard in need of
attention. This could vary from a back-drafting water heater, to air leakage pollutants entering the home from
the garage or crawlspace, to combustion appliances that need tuning or replacing producing excess carbon
monoxide. Loans are available for over 25 different types of efficiency measures, including replacing an old
furnace with a new efficient furnace that has important safety features, such as sealed combustion with intake
and exhaust to the outside.
Epic Loans
Fort Collins’ On-Bill Finance program (previously also known as Home Efficiency Loan Program or HELP, and
now called the Epic Loan Program), a component of the Epic Homes portfolio (Attachment 1), supports a
number of community and City Council priorities, including ambitious goals for energy efficiency and renewable
energy, reduced greenhouse gas emissions and increased equity and well-being for residents. Meeting these
objectives will require, among other activities, greater numbers of property owners to undertake
comprehensive efficiency improvements in the coming years, particularly for older, less-efficient rental
properties which make up a significant percentage of the City’s housing stock.
The original On-Bill Finance program issued loans from 2013 through 2016 when the maximum outstanding
loan balance funded through Light & Power reserves was reached ($1.6 million). On-Bill Finance was
revitalized as the Epic Loan Program in August 2018 during the Champions Phase of the Bloomberg Mayors
Challenge. The City has been awarded grants from the Colorado Energy Office ($200,000) and from
Bloomberg Philanthropies ($688,350) for the Epic Loan Program. The Electric Utility Enterprise has also
entered into a $2.5M line of credit loan agreement with U.S. Bank to provide up to 10-year capital for the
Program.
Staff has been working to develop third-party capital agreements to scale impact for owners and renters in Fort
Collins. This has included presentations with the Council Finance Committee to discuss the Request for
Proposals for third-party capital providers, discuss the capital strategy and review proposed capital agreement
terms.
An ongoing and attractive financing structure to support energy efficiency retrofits will be a critical element for
success moving forward. Through 2019, Fort Collins Utilities has serviced 211 on-bill loans to support energy
efficiency upgrades in residential homes and overcome financial barriers for making these important upgrades.
Detailed information regarding the Epic Homes program and loan terms can be found at
https://www.fcgov.com/utilities/epichomes/.
2020 15-Year Capital Appropriation for Loan Issuance and Anticipated Debt Service
These appropriations will cover 15-year loan agreements being considered by the Electric Utility Enterprise
Board on March 17 for First Reading and April 7 for Second Reading and are necessary to formally authorize
the disbursement of funds for customer loans. The Epic Loan Program will have available $1,600,000 from 15-
year capital sources being considered by the Electric Utility Enterprise Board, and contingent upon
authorization of the loan agreements, for loan issuance to support energy efficiency upgrades in Fort Collins’
owner- and renter-occupied homes. The capital available is summarized in Table 1.
Table 1. 15-year Capital Sources for Loan Issuance in 2020
Capital Source Amount
Vectra Bank Colorado $800,000 (of $2,500,000 line of credit)
Colorado Energy Office $800,000
Total $1,600,000
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Agenda Item 5
Item # 5 Page 3
The Epic Loan Program blends various capital sources to meet customer demand and offer attractive interest
rates for customers, including grants, Light and Power reserves, and third-party market capital. The third-party
capital will have associated debt service, anticipated to be up to $100,000 in 2020 for the Vectra Bank
Colorado loan. The Colorado Energy Office loan will not require debt service in 2020. The anticipated debt
service is summarized in Table 2. The source of funding for the associated debt service will be from prior years
reserves in the Light & Power Fund.
Table 2. Anticipated 15-Year Capital Debt Service in 2020
Interest Rate Anticipated 2020
Borrowing
Anticipated 2020
Debt Service
Vectra Bank
Colorado
10-year US Treasury +
2.75% (4.30% Currently)*
Up to $730,435 Up to $100,000
Colorado Energy
Office
0% Up to $389,565 None until 2035
*As of February 18, 2020; subject to change.
These appropriations are in addition to the appropriations authorized in Ordinance No. 004 and 005, 2020. For
future years, staff will include loan issuance and debt service as part of the biennial Budgeting for Outcomes
process.
The City Manager recommended the appropriations described in both Ordinances and the City Finance
Department determined that the total amount of these appropriations, together with all previous appropriations
from the Light & Power Fund for this fiscal year, will not cause the total amount appropriated in the Light &
Power Fund to exceed the current estimate of actual and anticipated revenues to be received in the Light &
Power Fund during this fiscal year.
CITY FINANCIAL IMPACTS
Staff projects the Program will be cashflow positive. Staff also projects the Ordinances under consideration will
meet the projected demand in loans for 2020 and anticipated debt service for loan terms up to 15 years. The
Ordinances are not anticipated to affect electric rates.
Risks include lack of customer demand for energy upgrade loans and/or risk of customer default if borrowers
choose not to repay their Epic Loans. Customer default risk is considered de minimis based on lack of defaults
over the 6-year history of the Program and the default protections the City already has in place. Customer
demand risk is difficult to assess however the line of credit model helps ensure that principal borrowed
matches the Epic Loan volumes as closely as possible.
Core tenants of the loan program are to ensure no negative impact on Light & Power planned debt offerings,
and to protect the Utilities credit rating and broadband coverage covenants.
BOARD / COMMISSION RECOMMENDATION
The 15-year loan agreement details and capital sources were discussed at the January 27, 2020, Council
Finance Meeting (Attachment 2)
ATTACHMENTS
1. Epic Homes Structure and Components Diagram (PDF)
2. Council Finance Committee Minutes, January 27, 2020 (excerpt) (PDF)
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ATTACHMENT 1
5.1
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Attachment: Epic Homes Structure and Components Diagram (8875 : Epic Loan 15-Year Capital Appropriation)
FUTURE ACTION ITEM: When we have capacity, I think at some point it would be good to talk with Council
Finance about these relationships and providers and to delve into their ability to serve. How do we go about
having those providers coming in to talk about their ability to serve as well and how we are aligning with the city
objectives -they are separate entities. Kevin Gertig’s teams are working very closely with these providers on a
daily basis sometimes but I don’t think we have good alignment on a policy standpoint.
What is Loveland / Fort Collins water district’s 10-year capital plan? What is their financial capacity?
What should we be aware of? There should be a bright light on that
Mayor Troxell; same presentation as we just had.
Ross Cunniff; I think we do have an obligation to understand the other utility districts; their capital plans -
provide for those utilities - I support having that discussion. Policies regarding conservation, energy, river
health, etc.
B. EPIC 15 Year Loan Program
Blaine Dunn, Sr. Treasure Analyst
Sean Carpenter, Climate Economy Advisor
SUBJECT FOR DISCUSSION: Epic Homes 15-Year Capital
EXECUTIVE SUMMARY
This item will provide updated details to Council Finance regarding the proposed Epic Homes 15-year capital
sources. Staff will present on two capital agreements with attractive terms and no associated City financial
policy exceptions. One agreement is for a fixed-interest rate loan up to $2.5M with a Denver-based bank and the
other is for an $800k interest-free loan from the Colorado Energy Office.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Committee support presentation of the proposed 15-year capital agreements to the Electric Utility
Enterprise Board on February 18th?
BACKGROUND/DISCUSSION
Epic Homes
In October 2018, Fort Collins became a winner of the 2018 Bloomberg Mayors Challenge and the associated
$1M prize. The 2018 Bloomberg Mayors Challenge involved over 300 cities proposing ideas to address important
issues in their community. The City’s proposal, Epic Homes, was selected as a winner for its innovative approach
to providing health and equity benefits to residents, specifically for low-to-moderate income renters, by
improving the energy efficiency of rental homes. Residential property owners can take advantage of Epic
Homes’ easy streamlined steps to make their homes more comfortable, healthy and efficient. Partnering with
Colorado State University, Fort Collins is also establishing a research study which links the health and well-being
indicators of improved indoor environmental quality.
Epic Homes provides non-energy benefits in addition to efficiency, such as increased comfort, health and safety.
In nearly every energy assessment, energy advisors identify a health and safety hazard in need of attention. This
could vary from a back-drafting water heater, to air leakage pollutants entering the home from the garage or
crawlspace, to combustion appliances that need tuning or replacing producing excess carbon monoxide. Loans
Council Finance Committee January 27, 2020 Meeting Minutes
Excerpt: Epic 15-Year Loan Program/ Details P. 16-21
ATTACHMENT 2
5.2
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Attachment: Council Finance Committee Minutes, January 27, 2020 (excerpt) (8875 : Epic Loan 15-Year Capital Appropriation)
17
are available for over 25 different types of efficiency measures, including replacing an old furnace with a new
efficient furnace that has important safety features, such as sealed combustion with intake and exhaust to the
outside.
Epic Loans
Fort Collins’ On-Bill Finance program (previously also known as Home Efficiency Loan Program or HELP, and now
called the Epic Loan Program), a component of the Epic Homes portfolio (Attachment 1), supports a number of
community and City Council priorities, including ambitious goals for energy efficiency and renewables, reduced
greenhouse gas emissions and increased equity and well-being for residents. Meeting these objectives will
require, among other activities, greater numbers of property owners to undertake comprehensive efficiency
improvements in the coming years, particularly for older, less-efficient rental properties which make up a
significant percentage of the City’s housing stock.
The original On-Bill Finance program issued loans from 2013 through 2016 when the maximum outstanding loan
balance funded through Light & Power reserves was reached ($1.6 million). On-Bill Finance was revitalized as the
Epic Loan Program in August 2018 during the Champions Phase of the Bloomberg Mayors Challenge. The City
has been awarded grants from the Colorado Energy Office ($200,000) and from Bloomberg Philanthropies
($688,350) for the Epic Loan Program. The Electric Utility Enterprise has also entered into a $2.5M line of credit
loan agreement with U.S. Bank to provide up to 10-year capital for the Epic Loan Program.
Staff has been working to develop third-party capital agreements to scale impact for owners and renters in Fort
Collins. This has included presentations with the Council Finance Committee to discuss the Request for Proposals
for third-party capital providers, discuss the capital strategy and review proposed capital agreement terms. The
proposed ‘capital stack’ is provided below in Table 1 and the customer interest rates based on third-party capital
terms are provided in Table 2.
An ongoing and attractive financing structure to support energy efficiency retrofits will be a critical element for
success moving forward. Through 2019, Fort Collins Utilities has serviced 211 on-bill loans to support energy
efficiency upgrades in residential homes and overcome financial barriers for making these important upgrades.
Detailed information regarding the Epic Homes program and loan terms can be found at fcgov.com/epichomes.
Table 1. Epic Loan Capital Stack Summary
Capital
Type
Provider Term Rate Amount
Internal &
Grant
Previously authorized Light &
Power reserves
Ongoing 0% $1,600,000
Bloomberg Philanthropies Grant 0% $688,350
Colorado Energy Office –
Grant
Grant 0% $200,000
Internal Subtotal $2,488,350
External
Market
Colorado Energy Office – Loan 15 year 0% $800,000
5.2
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Attachment: Council Finance Committee Minutes, January 27, 2020 (excerpt) (8875 : Epic Loan 15-Year Capital Appropriation)
18
U. S. Bank 5 & 10
year
76% of Prime
(3.99% Currently)
Up to $2,500,000
Denver Based Bank 15 year 10-year US
Treasury + 2.75%
(4.55% Currently)
Up to $2,500,000
External Subtotal $5,800,000
Total $8,288,350
Table 2. Customer Interest Rate
Loan Term Customer Rate (Effective
Aug. 2019)
3 or 5 years 3.75%
7 or 10 years 4.25%
15 years* 4.75%
*The 15-year loan option is currently paused until external capital is secured.
Council Finance Meetings Review
An overview of Council Finance Committee presentations and discussions related to Epic Homes is provided
below in Table 3.
Table 3. Overview of Council Finance Committee Items Related to Epic Homes
Date Topic Outcomes
November 2018 Program background and issuing
an RFP for third-party capital
sources
• City issued RFP #8842 in December 2018
• Staff pursued conversations and negotiations
with respondents and other potential capital
providers
May 2019 Capital strategy, potential capital
sources and next steps for
bringing capital agreements to
Council
• Staff continued negotiations with potential
capital providers (including a locally
managed national bank, a regional bank,
Colorado Clean Energy Fund, and the CEO)
• Received Legal and Purchasing review of
draft contracts
July 2019 Capital agreement terms • Staff directed to bring two of the three
capital sources to full Council for
consideration (US Bank Loan authorized by
Electric Utility Enterprise Board in Ordinance
007 & 008, 2019)
• Staff directed to provide additional
information on interest rate swaps and 15-
year capital to Council Finance
August 2019 15-year capital and interest rate
swaps
• Staff directed to bring third capital source to
full Council for consideration (Staff reached
impasse in terms with capital provider and is
proposing new 15-year capital sources)
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Attachment: Council Finance Committee Minutes, January 27, 2020 (excerpt) (8875 : Epic Loan 15-Year Capital Appropriation)
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Importance of 15-year Capital
During prototyping for the Bloomberg Mayors Challenge, rental property owners reported that no-money-down,
affordable monthly payments are critical considerations, in particular for owners with multiple units. OBF 1.0
(also known as HELP) proved these factors are also important for owner-occupied properties, where many
homeowners preferred longer term loans which often allow for more comprehensive projects and/or solar
installations with affordable monthly payments. In 2016, Fort Collins Utilities implemented the Efficiency Works
Neighborhood pilot, with nearly 60 long term loans issued totaling over $750,000. Additionally, of those that
used a loan during the pilot, 80% of customers stated they would not have done a project without the attractive
on-bill loan option.
Throughout the on-bill financing history (2013-2016 and 2018-2019), 50% of customers have used longer loan
terms to reduce monthly payments and/or undertake more comprehensive energy efficiency projects (Table 4).
As a result, the longer-termed loans account for a larger percentage of the on-bill loan portfolio value, at 60%.
Longer term loans are generally used for bigger, more comprehensive projects that can generate increased
benefits for the people who live in and own those homes, as well as positively impacting overall City goals.
Table 4. Summary of On-Bill Financed Projects by Loan Term
Loan Terms 3 & 5 year 7 & 10 year 15 (& 20) year Total
Projects Using OBF by
Term
41 71 99 211
Percentage of Total 19% 34% 47% 100%
In order to keep monthly payments low and make energy retrofit projects attractive, longer loan terms are
required. The average on-bill long-term loan amount is $13,000, with monthly payments of $101. Heating,
ventilation and cooling (HVAC) projects are an example of higher cost projects where longer loan terms are
more attractive. The average HVAC project loan in Epic Loans is $14,000. With a 10-year loan, the monthly
payment is $143; however, with a 15-year loan, the monthly payment is $109, a 30% lower monthly payment
that is much more attractive and feasible. These attractive monthly payments are critical for overcoming cost
barriers for home and rental property owners considering energy upgrades.
Denver Based Bank Overview
Staff previously presented a 15-year capital source with a Midwest-based commercial bank through the
Colorado Clean Energy Fund, which included some uncommon terms for City loan agreements, such as a
required collateral deposit and variable interest rate resulting in the need for a derivative instrument. After
presentation of this capital source to the Council Finance Committee, staff reached an impasse in terms with the
capital provider as the terms became unfavorable for the City. Staff was able to find a new source for 15-year
capital from an in-state commercial bank with highly desirable terms, including a fixed interest rate at the time
of closing, no collateral requirements, and no debt policy exceptions needed.
Staff has reviewed a draft loan agreement with the Denver Based bank for 15-year capital. The terms include:
• Amount: Up to $2,500,000
• Length: 17-years inclusive of draw period
• Draw period: Up to 2 years, with draw timing and amounts based on program / customer demand
• Fixed rate: 10-year US Treasury + 2.75% (4.55% Currently); Rate set at time of loan closing
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Attachment: Council Finance Committee Minutes, January 27, 2020 (excerpt) (8875 : Epic Loan 15-Year Capital Appropriation)
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• Collateral: None
• Pre-pay: City may pre-pay in whole or in part after 2027 with no penalty. No prepayment is allowed
prior to 2025, and between 2025 and 2027 there is a 1% prepayment fee.
• Repayment position: Senior pledge on customer loan repayments and subordinate position on Electric
Utility revenues, after the more senior pledge held by revenue bondholders
Colorado Energy Office Overview
The Colorado Energy Office (CEO) showed support of Epic Loans in 2018 with a $200,000 grant. Staff have also
negotiated a $800,000 loan from CEO. Terms of the agreement include:
• Amount: $800,000
• Length: 15-years
• Draw period: None
• Fixed Rate: 0%
The principal will be due at the end of the 15-year period and any program income may be used for
administrative expenses and/or issuing new loans. Any unused program income will also be due at the time of
principal repayment.
Next Steps
Staff seeks approval from Council Finance to proceed for Electric Utility Enterprise Board consideration of the
proposed 15-year agreements. If supported, staff is scheduled to present the 15-year agreements on February
18, 2020.
Discussion / Next Steps:
Better, cleaner deal / better partner / lower cost - eliminated complexity - no collateral required
These will be through the electric enterprise - we will need to go through the Electric Enterprise Board
Will be able to draw in tranches up to once per quarter in the 2-year period. We will make those decisions
based on the demand. The rate when we close will be the rate for the duration of the loan and will include all
tranches. We will pay Interest only during 2-year draw period – then it will turn into a 15-year loan (principle
and interest)
Mike Beckstead; this is a rate risk question - before we had talked about locking in at stages.
There is a little rate risk - policy change risk went away - much better terms overall
No debt policy exception or interest rate swap instrument needed for this program as was for the previous
program.
5.2
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Attachment: Council Finance Committee Minutes, January 27, 2020 (excerpt) (8875 : Epic Loan 15-Year Capital Appropriation)
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No draw period - 0% total principle will be due at end of loan - one-time balloon payment
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Committee support presentation of the proposed 15-year capital agreements to the Electric Utility
Enterprise Board on February 18th?
Results:
Ross Cunniff; yes - this sounds great. Thank you for finding this and bringing it to us. I enthusiastically support
this.
Mayor Troxell and Ken Summers also support going forward.
Good meeting - US Mayor’s Challenge oversite perspective this is viewed as a good project
Sean Carpenter; we are excited to get the financing in place so we can move aggressively into outreach - start
getting projects done.
5.2
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Attachment: Council Finance Committee Minutes, January 27, 2020 (excerpt) (8875 : Epic Loan 15-Year Capital Appropriation)
-1-
ORDINANCE NO. 047, 2020
OF THE COUNCIL OF THE CITY OF FORT COLLINS
MAKING A SUPPLEMENTAL APPROPRIATION FROM THE LIGHT
AND POWER FUND TO BE EXPENDED AS LOANS TO UTILITY
SERVICES CUSTOMERS UNDER THE EPIC LOAN PROGRAM
WHEREAS, the City has previously established and funded a program to assist certain
Electric Utility customers of Fort Collins Utility Services (“Utility Services”) in financing home-
energy-efficiency and renewable-energy improvements for single-family residential properties
they own by making loans to these customers, whether their properties are owner- or renter-
occupied (“Epic Loan Program”); and
WHEREAS, two new sources of funds for such loans in the Epic Loan Program have
recently become available to Utility Services through an anticipated $800,000 loan to be
obtained by the City’s Electric Utility Enterprise (the “Enterprise”) from the Colorado Energy
Office (the “CEO Loan”) and an anticipated $2.5 million line-of-credit to be obtained by the
Enterprise from Vectra Bank Colorado (the “Vectra Bank Line of Credit”); and
WHEREAS, for loans under the Epic Loan Program in 2020, Utility Services expects to
need all $800,000 of the proceeds from the CEO Loan and to draw up to $800,000 from the
Vectra Bank Line of Credit; and
WHEREAS, this $1.6M in total proceeds from the CEO Loan and the Vectra Bank Line
of Credit will be deposited into the City’s Light and Power Fund established in City Code
Section 8-77 (the “Light & Power Fund”); and
WHEREAS, City Charter Article V, Section 8 allows an appropriation to be made by
City Council based upon anticipated revenues, reserves or other funds provided such
appropriation does not exceed those anticipated revenues, reserves or other funds; and
WHEREAS, City Charter Article V, Section 9 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 this fiscal year; and
WHEREAS, the City Manager has recommended the appropriations described herein and
determined that the total amount of these appropriations, together with all previous
appropriations from the Light & Power Fund for this fiscal year, will not cause the total amount
appropriated in the Light & Power Fund to exceed the current estimate of actual and anticipated
revenues to be received in the Light & Power Fund during this fiscal year; and
WHEREAS, this appropriation benefits the public’s health, safety and welfare and serves
the utility and public purposes of improving the energy efficiency of older homes in Fort Collins,
thereby benefiting Electric Utility ratepayers and the health, safety and comfort of the inhabitants
of the improved homes.
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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 & Power Fund, in
anticipation of receiving the proceeds from the CEO Loan and the Vectra Bank Line of Credit,
the sum of ONE MILLION SIX HUNDRED THOUSAND DOLLARS ($1,600,000) to be
expended as loans to Utility Services customers under the Epic Loan Program.
Introduced, considered favorably on first reading, and ordered published this 20th day of
March, A.D. 2020, and to be presented for final passage on the 7th day of April, A.D. 2020.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 7th day of April, A.D. 2020.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Packet Pg. 60
-1-
ORDINANCE NO. 048, 2020
OF THE COUNCIL OF THE CITY OF FORT COLLINS
MAKING A SUPPLEMENTAL APPROPRIATION FROM UNAPPROPRIATED PRIOR
YEARS RESERVES IN THE LIGHT & POWER FUND TO MAKE DEBT SERVICE
PAYMENTS UNDER THE VECTRA BANK LINE OF CREDIT
FOR THE EPIC LOAN PROGRAM
WHEREAS, the City has previously established and funded a program to assist certain
Electric Utility customers of Fort Collins Utility Services (“Utility Services”) in financing home-
energy-efficiency and renewable-energy improvements for single-family residential properties
they own by making loans to these customers, whether their properties are owner- or renter-
occupied (“Epic Loan Program”); and
WHEREAS, as one source of funds for the Epic Loan Program, the City’s Electric Utility
Enterprise (the “Enterprise”) anticipates obtaining a $2.5 million line-of-credit from Vectra Bank
Colorado (“Vectra Bank Line of Credit”); and
WHEREAS, it is anticipated that up to $800,000 will be drawn from the Vectra Bank
Line of Credit in 2020 by the Enterprise and then loaned to eligible Utility Services customers
under the Epic Loan Program, thereby requiring a debt service payment in 2020 from the City to
Vectra Bank Colorado in an amount of up to $100,000; and
WHEREAS, this Ordinance authorizes the appropriation of this $100,000 from
unappropriated prior years’ reserves in the Light and Power Fund established in City Code
Section 8-77 (the “Light & Power Fund”); 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 this fiscal year; and
WHEREAS, the City Manager has recommended the appropriation described herein and
determined that the total amount of this appropriation, together with all previous appropriations
from the Light & Power Fund for this fiscal year, will not cause the total amount appropriated in
the Light & Power Fund to exceed the current estimate of actual and anticipated revenues to be
received in the Light & Power Fund during this fiscal year; and
WHEREAS, Article V, Section 9 of the City Charter also 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 in the Light & Power Fund, notwithstanding
that such reserves were not previously appropriated; and
WHEREAS, this appropriation benefits the public’s health, safety and welfare and serve
the utility and public purposes of improving the energy efficiency of older homes in Fort Collins,
thereby benefiting Electric Utility ratepayers and the health, safety and comfort of the inhabitants
of the improved homes.
Packet Pg. 61
-2-
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 unappropriated prior years reserves
in the Light & Power Fund the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000)
to be used for the payment of debt service under the Vectra Bank Line of Credit.
Introduced, considered favorably on first reading, and ordered published this 20th day of
March, A.D. 2020, and to be presented for final passage on the 7th day of April, A.D. 2020.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Passed and adopted on final reading on the 7th day of April, A.D. 2020.
__________________________________
Mayor
ATTEST:
_______________________________
City Clerk
Packet Pg. 62
City of Fort Collins Page 1
Wade Troxell, President City Council Chambers
Kristin Stephens, District 4, Vice President City Hall West
Susan Gutowsky, District 1 300 LaPorte Avenue
Julie Pignataro, District 2 Fort Collins, Colorado
Ken Summers, District 3
Ross Cunniff, District 5 Cablecast on FCTV, Channel 14
Emily Gorgol, District 6 and Channel 881 on the Comcast cable system
Carrie Daggett Darin Atteberry Delynn Coldiron
City Attorney Executive Director Secretary
The City of Fort Collins will make reasonable accommodations for access to City services, programs, and activities and
will make special communication arrangements for persons with disabilities. Please call 221-6515 (V/TDD: Dial 711
for Relay Colorado) for assistance.
Electric Utility Enterprise Board Meeting
March 20, 2020
(after the Special Council Meeting, which begins at 12:00 p.m.)
CALL MEETING TO ORDER
1. Items Relating to the Epic Loan Program. (staff: Blaine Dunn, Sean Carpenter; 5 minute staff
presentation; 10 minute discussion)
A. First Reading of Ordinance No. 009, Authorizing a Loan Agreement with Vectra Bank Colorado to
Provide Funding for the Epic Loan Program.
B. First Reading of Ordinance No. 010, Authorizing a Loan Agreement with the Colorado Energy
Office to Provide Funding for the Epic Loan Program.
In 2012, the City Council established, by ordinance, the On-Bill Utility Financing Program, which is
now known as the Epic Loan Program. The Program provides financing for home energy upgrades by
making loans to property owners who are customers of Fort Collins Utilities. Staff is recommending
the Electric Utility Enterprise borrow additional capital for the Program from two third party lenders for
15-year capital. Ordinance No. 009 authorizes the Enterprise to borrow up to $2.5 million, under a line
of credit, from Vectra Bank Colorado (Vectra Loan) as additional funding for the Program. Ordinance
No. 010 authorizes the Enterprise to borrow $800,000 at 0% interest from the Colorado Energy Office
(CEO Loan) as additional funding for the Program. Fifty percent of customers to date have used longer
loan terms to reduce monthly payments and/or undertake more comprehensive energy efficiency
projects, making 15-year capital an essential component for the success of the Program. These items
were presented at the January 27, 2020 Council Finance Committee meeting and received support
for bringing these Ordinances to the Electric Utility Enterprise Board for consideration.
OTHER BUSINESS
ADJOURNMENT
ELECTRIC UTILITY ENTERPRISE
BOARD
Agenda Item 1
Item # 1 Page 1
AGENDA ITEM SUMMARY March 20, 2020
Electric Utility Enterprise Board
STAFF
Terra Sampson, Project Manager, Energy Services
John Phelan, Energy Services Manager
Sean Carpenter, Climate Economy Advisor
Blaine Dunn, Senior Treasury Analyst
John Duval, Legal
SUBJECT
Items Relating to the Epic Loan Program.
EXECUTIVE SUMMARY
A. First Reading of Ordinance No. 009, Authorizing a Loan Agreement with Vectra Bank Colorado to Provide
Funding for the Epic Loan Program.
B. First Reading of Ordinance No. 010, Authorizing a Loan Agreement with the Colorado Energy Office to
Provide Funding for the Epic Loan Program.
In 2012, the City Council established, by ordinance, the On-Bill Utility Financing Program, which is now known
as the Epic Loan Program. The Program provides financing for home energy upgrades by making loans to
property owners who are customers of Fort Collins Utilities. Staff is recommending the Electric Utility
Enterprise borrow additional capital for the Program from two third party lenders for 15-year capital. Ordinance
No. 009 authorizes the Enterprise to borrow up to $2.5 million, under a line of credit, from Vectra Bank
Colorado (Vectra Loan) as additional funding for the Program. Ordinance No. 010 authorizes the Enterprise to
borrow $800,000 at 0% interest from the Colorado Energy Office (CEO Loan) as additional funding for the
Program. Fifty percent of customers to date have used longer loan terms to reduce monthly payments and/or
undertake more comprehensive energy efficiency projects, making 15-year capital an essential component for
the success of the Program. These items were presented at the January 27, 2020 Council Finance Committee
meeting and received support for bringing these Ordinances to the Electric Utility Enterprise Board for
consideration.
STAFF RECOMMENDATION
Staff recommends adoption of the Ordinances on First Reading.
BACKGROUND / DISCUSSION
Epic Homes
In 2012, the City Council established, by ordinance, the On-Bill Utility Financing Program, which is now known
as the Epic Loan Program. The Program provides financing for home energy upgrades by making loans to
property owners who are customers of Fort Collins Utilities. Initial funding of $1.6 million for the loan fund and
lending (Epic Loans) were authorized by City Council and drawn from Light and Power and Water reserve
funds (Utility Reserves). The City has also recently been awarded a grant for the Program from the Colorado
Energy Office ($200,000), and prize monies from winning the 2018 Bloomberg Philanthropies Mayors
Challenge ($1 million total/$688,350 of which is dedicated to providing capital for Epic Loans). With Ordinance
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Agenda Item 1
Item # 1 Page 2
No. 110, 2019, Council adopted an increase in the amount of loan capital available for the Program reflecting
the existing Utility Reserve funds, grant and prize monies, and proposed new borrowing. Ordinance No. 007
and 008, 2019 authorized the Electric Utility Enterprise to borrow up to $2.5 million under a line of credit from a
third party lender, U. S. Bank (US Bank Loan), allowing Epic Loans to offer utility customers loan terms of up to
10-years.
In October 2018, Fort Collins became a winner of the 2018 Bloomberg Mayors Challenge and the associated
$1M prize. The 2018 Bloomberg Mayors Challenge involved over 300 cities proposing ideas to address
important issues in their communities. The City’s proposal, Epic Homes, was selected as a winner for its
innovative approach to providing health and equity benefits to residents, specifically for low-to-moderate
income renters, by improving the energy efficiency of rental homes. Residential property owners can take
advantage of Epic Homes’ easy streamlined steps to make their homes more comfortable, healthy and
efficient. Partnering with Colorado State University, Fort Collins is also establishing a research study which
links the health and well-being indicators of improved indoor environmental quality.
Epic Homes provides non-energy benefits in addition to efficiency, such as increased comfort, health and
safety. In nearly every energy assessment, energy advisors identify a health and safety hazard in need of
attention. This could vary from a back-drafting water heater, to air leakage pollutants entering the home from
the garage or crawlspace, to combustion appliances that need tuning or replacing producing excess carbon
monoxide. Loans are available for over 25 different types of efficiency measures, including replacing an old
furnace with a new efficient furnace that has important safety features, such as sealed combustion with intake
and exhaust to the outside.
Epic Loans
Fort Collins’ On-Bill Finance program (previously also known as Home Efficiency Loan Program or HELP, and
now called the Epic Loan Program), a component of the Epic Homes portfolio (Attachment 1), supports a
number of community and City Council priorities, including ambitious goals for energy efficiency and renewable
energy, reduced greenhouse gas emissions and increased equity and well-being for residents. Meeting these
objectives will require, among other activities, greater numbers of property owners to undertake
comprehensive efficiency improvements in the coming years, particularly for older, less-efficient rental
properties which make up a significant percentage of the City’s housing stock.
The original On-Bill Finance program issued loans from 2013 through 2016 when the maximum outstanding
loan balance funded through Light & Power reserves was reached ($1.6 million). On-Bill Finance was
revitalized as the Epic Loan Program in August 2018 during the Champions Phase of the Bloomberg Mayors
Challenge. The City has been awarded grants from the Colorado Energy Office ($200,000) and from
Bloomberg Philanthropies ($688,350) for the Epic Loan Program. The Electric Utility Enterprise has also
entered into a $2.5M line of credit loan agreement with U.S. Bank to provide up to 10-year capital for the
Program.
Staff has been working to develop third-party capital agreements to scale impact for owners and renters in Fort
Collins. This has included presentations with the Council Finance Committee to discuss the Request for
Proposals for third-party capital providers, discuss the capital strategy and review proposed capital agreement
terms. The proposed “capital stack” is provided below in Table 1 and the customer interest rates based on
third-party capital terms are provided in Table 2.
An ongoing and attractive financing structure to support energy efficiency retrofits will be a critical element for
success moving forward. Through 2019, Fort Collins Utilities has serviced 211 on-bill loans to support energy
efficiency upgrades in residential homes and overcome financial barriers for making these important upgrades.
Detailed information regarding the Epic Homes program and loan terms can be found at fcgov.com/epichomes
<http://www.fcgov.com/epichomes>.
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Agenda Item 1
Item # 1 Page 3
Table 1. Epic Loan Capital Stack Summary
Capital
Type
Provider Term Rate Amount
Internal &
Grant
Previously authorized Light &
Power reserves
Ongoing 0% $1,600,000
Bloomberg Philanthropies Grant 0% $688,350
Colorado Energy Office - Grant Grant 0% $200,000
Internal Subtotal $2,488,350
External
Market
Colorado Energy Office - Loan 15 year 0% $800,000
U. S. Bank 5 & 10
year
76% of Prime
(3.99% Currently)
Up to $2,500,000
Vectra Bank Colorado 15 year 10-year US
Treasury + 2.75%
(4.30% currently)*
Up to $2,500,000
External Subtotal $5,800,000
Total $8,288,350
*As of February 18th, 2019; subject to change.
Table 2. Customer Interest Rate
Loan Term Customer Rate (Effective
Aug. 2019)
3 or 5 years 3.75%
7 or 10 years 4.25%
15 years* 4.75%
*The 15-year loan option is currently paused until third party external capital is secured.
Importance of 15-year Capital
During prototyping for the Bloomberg Mayors Challenge, rental property owners reported that no-money-down,
affordable monthly payments are critical considerations, in particular for owners with multiple units. OBF 1.0
(also known as HELP) proved these factors are also important for owner-occupied properties, where many
homeowners preferred longer term loans which often allow for more comprehensive projects and/or solar
installations with affordable monthly payments. In 2016, Fort Collins Utilities implemented the Efficiency Works
Neighborhood pilot, with nearly 60 long term loans issued totaling over $750,000. Additionally, of those that
used a loan during the pilot, 80% of customers stated they would not have done a project without the attractive
on-bill loan option.
Throughout the on-bill financing history (2013-2016 and 2018-2019), approximately 50% of customers have
used longer loan terms to reduce monthly payments and/or undertake more comprehensive energy efficiency
projects (Table 3). As a result, the longer-termed loans account for a larger percentage of the on-bill loan
portfolio value, at approximately 60%. Longer term loans are generally used for bigger, more comprehensive
projects that can generate increased benefits for the people who live in and own those homes, as well as
positively impacting overall City goals. Attractive monthly payments are critical for overcoming cost barriers for
home and rental property owners considering energy upgrades.
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Agenda Item 1
Item # 1 Page 4
Table 3. Summary of On-Bill Financed Projects by Loan Term
Loan Terms 3 & 5 year 7 & 10 year 15 (& 20) year Total
Projects Using OBF by
Term
41 71 99 211
Percentage of Total 19% 34% 47% 100%
Vectra Bank Colorado
Staff has negotiated a loan agreement with Vectra Bank Colorado, a Denver-based bank, for 15-year capital
with highly desirable terms, including a fixed interest rate at the time of closing and no collateral requirements.
The terms include:
• Amount: Up to $2,500,000
• Length: 17-years inclusive of 2-year draw period
• Draw period: Up to 2 years, with draw timing and amounts based on program/customer demand (no more
than quarterly)
• Fixed rate: 10-year US Treasury + 2.75% (4.30% Currently); Rate set at time of loan closing
• Pre-pay: City may pre-pay in whole or in part after 2027 with no penalty. No prepayment is allowed prior to
2025, and between 2025 and 2027 there is a 1% prepayment fee.
• Repayment position: Parity pledge (with other Epic Loans) on customer loan repayments and subordinate
position on Electric Utility revenues, after the more senior pledge held by revenue bondholders
These and other terms are reflected in the Loan Agreement attached as Exhibit A to Ordinance No. 009.
Colorado Energy Office
The Colorado Energy Office (CEO) showed support of Epic Loans in 2018 with a $200,000 grant. Staff have
also negotiated a $800,000 loan from CEO. Terms of the agreement include:
• Amount: $800,000
• Length: 15-years
• Draw period: None
• Fixed Rate: 0%
The principal will be due at the end of the 15-year period and any program income may be used for
administrative expenses and/or issuing new loans. Any unused program income will also be due at the time of
principal repayment.
These and other terms are reflected in the Loan Agreement attached as Exhibit A to Ordinance No. 010.
Third-Party Capital
Leveraging external capital is critical to achieving the long-term “revolving loan” vision of Epic Loans and offers
a continuing source of funds to meet increasing customer demand for energy efficiency financing. Epic Loans
is designed to balance the programmatic objectives and financial requirements of the City, while also meeting
the needs and expectations of capital providers and Utilities customers.
In all third-party loan agreements, the Enterprise would be the borrower, with the third-party funds being
loaned to customers by Utilities. The Enterprise would be responsible for the repayment to the capital provider.
In turn, Utilities customers carry the obligation for repayment of loans to the City via their utility bill. Utilities has
various code-specified tools for recourse of delinquent utility bills that makes the risk profile for the Epic Loan
portfolio extremely low. There have been zero loan defaults since OBF began in 2013.
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Agenda Item 1
Item # 1 Page 5
CITY FINANCIAL IMPACTS
Staff projects the Program will be cashflow positive. Staff also projects the Ordinances under consideration will
meet the project demand for the next 4 years or more, for loans with a payback of up to 15 years. The
Ordinances are not anticipated to affect electric rates.
Risks include lack of customer demand for energy upgrade loans and /or risk of customer default if borrowers
choose not to repay their Epic Loans. Customer default risk is considered de minimis based on lack of defaults
over the 6-year history of the Program and the default protections the City already has in place. Customer
demand risk is difficult to assess, but the line of credit model helps ensure that principal borrowed matches the
Epic Loan volumes as closely as possible.
Core tenants of the loan program are to ensure no negative impact on Light & Power planned debt offerings,
and to protect the Utilities credit rating and broadband coverage covenants.
BOARD / COMMISSION RECOMMENDATION
Third-party loan agreements and terms were discussed at the July 15, 2019 Council Finance Meeting.
(Attachment 2) Details of the 15-year lending agreement were discussed further at the August 19, 2019
Council Finance Meeting (Attachment 3), and updated details and capital sources were discussed at the
January 27, 2020 Council Finance Meeting. (Attachment 4) Council Finance supported bringing forward the
included Ordinances for consideration.
ATTACHMENTS
1. Epic Homes Structure and Components Diagram (PDF)
2. Council Finance Meeting Minutes, July 15, 2019 (PDF)
3. Council Finance Meeting Minutes, January 27, 2020 (PDF)
4. Council Finance Meeting Minutes, August 19, 2019 (PDF)
5. Powerpoint presentation (PDF)
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ATTACHMENT 1
1.1
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Attachment: Epic Homes Structure and Components Diagram (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
Travis Storin; these are not cash accounts but are upstream from JDE - managing developer escrows to funds –
there is no interface built into the system, so the balancing activity is a manual activity (similar to balancing
checkbook)
Mike Beckstead; we will get a process defined and a cadence to that process put in place and the team will be
focused on this effort in 2019 – 20.
Chris Tilley; our recommendation is exactly as Mike Beckstead stated (analyze, clean up, reconciliation, no
impact)
Ross Cunniff; you mentioned that some smaller federal grants might never be audited - risk to city is much lower
but randomly picking one of them every year for auditing might be something to consider.
Chris Telli; we can look into doing that – they would never be required due to $750K threshold.
Programs that never reach that threshold typically don’t get to the point of requiring an audit.
ATION ITEM
Ross Cunniff; Do any of your other clients have whistle blower programs?
Chris Tilly; many clients have a fraud hotline in place which we highly recommend - it should be available to all
employees and to the community at large. There are many other vendors that offer this service in addition to
BKD.
Kelly DiMartino; we have an Ethics Hotline available to employees and citizens. It is promoted on our website.
Ross Cunniff; what about policies against retaliation?
Darin Atteberry; we have internal administrative policies around retaliation
ACTION ITEM:
Ross Cunniff; I would recommend we take this to Council as a Resolution given that we have a significant finding.
Mike Beckstead; we will get that scheduled and bring it forward to Council.
Kudos to BKD and to the Staff for a great working relationship.
B. Epic External Borrowing Terms / Details
Sean Carpenter, Lead Specialist, Economic Sustainability
Travis Storin, Director, Accounting
SUBJECT FOR DISCUSSION: Epic Homes Capital Plan - Update & Next Steps
EXECUTIVE SUMMARY
This item will provide an update to Council Finance regarding the Epic Homes capital plan and next steps for
capital agreements. Updates include:
Council Finance Committee July 15, 2019 Meeting Minutes
Excerpt: Epic External Borrowing Terms/ Details P. 5-12
ATTACHMENT 2
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Attachment: Council Finance Meeting Minutes, July 15, 2019 (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
6
• Review of on-bill financing history and capital recruitment process;
• Future capital stack;
• Loan terms and rates;
• Cash flow projections; and
• Next steps regarding securing and appropriation of third-party capital into a revolving loan fund.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
• Does the Council Finance Committee approve the presentation of financial / loan agreements to the full City
Council for consideration in August?
BACKGROUND/DISCUSSION
Fort Collins’ innovative On-Bill Finance (OBF) program supports a number of community and City Council
priorities, including ambitious goals around energy efficiency and renewables, reduced greenhouse gas
emissions and increased equity and wellbeing of all residents (see Energy Policy and Climate Action Plan).
Meeting these objectives will require, among other activities, that greater numbers of property owners
undertake comprehensive efficiency improvements in the coming years, particularly for older, less-efficient
rental properties which make up a large percentage of the City’s housing stock. An ongoing and attractive
financing structure to support energy efficiency retrofits will be a critical element for success moving forward.
On-Bill Financing History
The Home Efficiency Loan Program (HELP, aka OBF 1.0) operated successfully from January 2013 through early
2017 when the maximum outstanding loan balance of $1.6M was reached. In 2017, Elevations Credit Union was
selected through an RFP process for energy loan financing. Utilities staff qualify the efficiency project based on
the rebate measures in the Efficiency Works Home program; however, the loan origination and servicing are
independent of Utilities programs. With the implementation of Epic Loans, Elevations loans will continue to be
an option for interested customers.
Epic Loans (aka OBF 3.0) were revitalized in August 2018 during the Champions Phase of the Bloomberg Mayors
Challenge. The $100,000 award from the Champions Phase and a $200,000 grant from the Colorado Energy
Office were used to kick off the revitalized on-bill financing. Fort Collins is among nine winning cities for the
Mayor Challenge, each receiving $1 M to implement their winning idea. The grant agreement with Bloomberg
Philanthropies was completed in February 2019 and the initial $100,00 tranche of the $1M was awarded. As of
March 2019, Epic Loans has serviced over 20 on-bill loans for $280,000 to support energy efficiency retrofits that
would not have occurred without an attractive financing option.
Leveraging external capital is critical to achieving the long-term vision of Epic Loans and offers a continuing
source of funds to meet increasing customer demand for energy efficiency financing. Epic Loans is designed to
balance the programmatic objectives and financial requirements of the City, while also meeting the needs and
expectations of capital providers and Utilities customers. The program team seeks to design an “evergreen”
revolving loan fund which:
• Supports residential energy efficiency upgrades for years to come;
• Scales to meet long-term efficiency objectives;
• Removes financial barriers to efficiency upgrades with attractive rates and terms;
• Aligns capital commitments with customer loan terms; and
• Minimizes the City and Utilities risk and administrative effort.
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Attachment: Council Finance Meeting Minutes, July 15, 2019 (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
7
Council Finance Meetings Review
The Epic Homes team presented to Council Finance in November 2018 regarding the program background and
issuing an RFP for third-party capital sources. The City issued RFP #8842 in December 2018 and the team
pursued conversations and negotiations with respondents and other potential capital providers.
The Epic Homes team presented to Council Finance again in May 2019 regarding the potential capital sources
and next steps for bringing capital agreements to Council. Staff have continued negotiations with potential
capital providers (including a locally managed national bank, a regional bank, Coalition for Green Capital, and the
Colorado Energy Office) and received Legal and Purchasing review of draft contracts.
Capital Stack and Terms
Capital sources for the Epic Loan need to align with the following high-level objectives:
• Attractive: The loan program must be able to provide attractive loan terms to customers, specifically
attractive interest rates.
• Scalable: The program must be scalable in support of Fort Collins ambitious energy goals. It is
anticipated that Fort Collins will upgrade thousands of homes in the coming years.
• Parity: In both length and rate, borrowed capital should match loaned capital as closely as possible.
• Simple: The implementation and administration of the program must be as simple as possible for all
parties, including customers, Utilities, and the capital partners.
Capital Stack
To provide sufficient financing for the expected number of projects, the short-term (3-4 year) capital goal is $7M
to $8M. This assumes $1.5M to $2M annually in energy efficiency project financing. The longer-term capital goal
is up to $16M in order to establish a self-sustaining revolving loan. To meet the short-term capital goal, the Epic
Homes team proposes the capital stack below.
Capital Type Provider Term Rate Amount Status
Low or No Cost
Bloomberg Philanthropies –
Champions Phase Award
N/A 0% $100,000 Appropriated July
2018
Bloomberg Philanthropies – Award
Initial Tranche
N/A 0% $100,000 Appropriated
March 2019
Bloomberg Philanthropies – Award
Second Tranche
N/A 0% $488,350 To be appropriated
August 20
Colorado Energy Office –Grant N/A 0% $200,000 Appropriated
August 2018
Colorado Energy Office – Loan 15 year 1-2% $1,000,000 To be appropriated
August 20
External Market
National Commercial Bank 5 & 10
year
3.95% -
4.25%
$2,500,000 To be appropriated
August 20
Regional Private Bank (through
National Green Bank)
15 year 5.75% $2,500,000 To be appropriated
August 20
Internal
Repayments of previously paid
loans
N/A 0% $374,000 Appropriated as
part of revolving
loan fund in OBF
1.0
Total $7,262,350
8
Flexible structures which minimize the need for the City to carry non-deployed debt capital, such as lines of
credit versus term loans, are being pursued with the capital providers. In all cases, Fort Collins Utilities would be
the borrower, with the third-party funds being loaned to customers by Utilities. Fort Collins Utilities would be
responsible for the repayment to the capital provider. In turn, Utilities customers carry the obligation for
repayment of loans to the City via their utility bill. Utilities has various code-specified tools for recourse of
delinquent utility bills that makes the risk profile for the Epic Loan portfolio extremely low. Third-party capital
providers will have a senior pledge on customer loan repayments and second position on Electric Utility
revenues, after the more senior pledge held by revenue bondholders. Finally, the City may pre-pay any of these
agreements in whole or in part at any time and without penalty.
Capital Source #1: Colorado Energy Office
• Amount: Up to $1,000,000
• Length: 15-years inclusive of draw period
• Draw period: None
• Fixed Rate: 1.25% to 2.25%
External Capital Source #2: National Commercial Bank
• Amount: Up to $2,500,000
• Length: 5-year and 10-year portions, inclusive of draw period
• Draw period: Up to 2 years with monthly draws based on customer loans
• Variable Rate Period: Fed SOFR plus X% (applies during draw period)
• Fixed Rate: 5-year or 10-year Treasury Note plus X% (rate becomes fixed after draw period)
External Capital Source #3: National Green Bank
• Amount: Up to $2,500,000
• Length: 15-years inclusive of draw period
• Draw period: Up to 2 years with quarterly draws based on customer loans
• Variable Rate: Wall Street Journal Prime + 0.25% (currently 5.75%)
• Collateral: City will deposit 50% of drawn amount into FDIC-insured account
Policy Exceptions
Source #2 and #3 each have terms that interact or conflict with Financial Policy #7.
Debt Instrument Policy Issue
Source #1: State Energy Office • None
Source #2: 5- and 10-year National
Commercial Bank
• Variable rate for 2 years, managed in 6-
month intervals
Source #3: 15-year National Green Bank • Credit Enhancement, and
• Variable Rate, or
• Derivative Swap instrument
For source #2 (5- and 10-year commercial funds), staff has arranged for rate-lock rights during the 2-year
variable draw window which effectively stabilizes the debt service per policy.
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Attachment: Council Finance Meeting Minutes, July 15, 2019 (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
9
For source #3 (15-year green bank funds), staff assesses an appropriate use of a credit enhancement via the
collateral pledge.
The note is written with variable rate for its duration, however. Staff has attempted to negotiate rate lock-in
rights during the draw period, but the lender has been unable to flex. Alternatives are to accept the terms of this
deal, terminate the deal, or manage the variable rate risk via an interest rate swap. The swap would qualify as a
derivative instrument, which is also covered by policy as an instrument the City should avoid.
Retail Rates and Terms
In December 2018, the financial officer’s rules and regulations were revised to remove language about specific
interest rates and allows for regular review and necessary adjustments of interest rates based on third-party
capital terms, and approval of the City CFO. The City will blend capital sources and interest rates into loan
offerings that recover the cost of capital and include a modest administrative premium to cover administrative
costs in the future. The current loan interest rates interest rates based on capital sources are as follows:
Loan Term Interest Rate (Effective
Jan. 2019)
Interest Rate (Effective
Jul 2019)
3 or 5 years 3.49% 3.75%
7 or 10 years 3.99% 4.25%
15 years 4.49% 4.75%
Next Steps
The Epic Homes team is finalizing lending agreements with third-party capital providers. The Epic Homes team
seeks approval from Council Finance to proceed with City Council consideration of financial agreements during
the August 20 Council session. A separate ordinance will be prepared for each capital provider.
NEXT STEPS / DISCUSSION:
Mike Beckstead; policy consideration - some I would consider to be in a bit of a gray zone - we want to be clear -
we will be coming back to clarify consistency in terms with our current debit policy. Variable rates, slots.
There is one that is are looking for a 50% deposit of what we borrow as a credit enhancer which is a stretch to
our current policy and needs to be discussed. We pushed back hard, and they came back and said it is a
requirement to do this loan.
Sean Carpenter; we have heard consistently that trying to borrow money beyond 10 years will be difficult -
finding 15 year money has been a real challenge but it is important programmatically especially in the
Bloomberg project where we are targeting rental properties - HVACS - owners need that longer term to keep
payments lower.
Travis Storin; there are several interactions with policy and one outright exception - we will be very transparent
and upfront about any proposed policy exceptions when this is brought forward.
L&P reserves would fund it and would be restricted for the life of the contract and would become reserves we
can’t appropriate.
Variable Rate Debt – discouraged by not prohibited by policy - if we feel it is warranted.
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15 year money variable rate for life offered - we can terminate the deal if we needed to or modify our program
or product offerings to Epic loan customers or we can try to manage that risk with another instrument - variable
interest rate swap which is a derivative financial instrument and is to be avoided per policy - approach a
separate bank - the financial industry calls it a plain vanilla swap - fixed for variable rate trade. Low risk and
widely available.
Mike Beckstead; challenge to me is borrowing 15-year money at a variable rate and loaning it out at a fixed rate
is a bit of a non-starter from my perspective - that is where the swap came from – has some challenges but
might be better than doing nothing.
Ross Cunniff; access to larger pool of money - moves some of the risk to the lender - use our capital as collateral
3 different policy excursions from this same source - to get us a 15-year product it will cost us half of that total -
we could do 15-year terms but we would assume the risk
Mike Beckstead; we have the Council approved $1.6M of L&P reserves and of that amount $400K is still
available. Less attractive because it will take a while to get those funds paid back but using our money is an
option if we wanted to do that out of reserves and fund balance
Travis Storin; From a scalability perspective, we have gone at this from the view that the city cannot be the
banker long term - Staff assessment to date is that it is unattractive to use our own money to deploy loans
Darin Atteberry; what is the cost premium for the plain vanilla swap?
Travis Storin; currently it would be 25-50 basis points above the prevailing variable rate.
100 basis points of spread between our overall costs and the costs the consumer sees- this is not intended to be
money making. We previously offered a 20-year product, but we are not going to offer 20-year product in the
future.
Mike Beckstead; one of our tenets is we don’t borrow money for a shorter period than we loan money.
Ross Cunniff; 15-year loans would be for HVAC and largely for multi-family rental housing. Do we ask for any
collateral?
Travis Storin; UCC filing - right to shut off the utility - No defaults in 300 loans we have issued
Ross Cunniff; heading down the road of using our own capital – one of the considerations to mitigate our risk
Sean Carpenter; more comprehensive programs – folks also want that 15-year loan - Want to prove our
hypothesis – positive impacts from these upgrades / changes.
Variable draw period lines up with program parameters nicely
Mike Beckstead; we are thinking $1.5 - 2M a year in loans - Can we get an option for year 3 from the lenders if
we don’t draw at all or do we renegotiate a separate program in year 3 – our expectation is that we won’t use
$6M in a two year process - we will be 2/3 of that at best based on our historical loan rates - still some
ambiguity with what we do in year 3
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Mike Beckstead; August 20th is the design to put these in place in time to support the program - we are not
presuming Council Finance is going to support. That date is subject to this discussion.
Ken Summers; what is the largest amount we would loan in a 15-year time frame?
Sean Carpenter; $25K is the maximum loan amount - multi-unit apartment buildings, duplex / triplex / quad plex
- larger than that would be commercial. Average loan size is in the $11-12K range. Larger would include solar -
other features - solar companies - attractive financing
Ross Cunniff; heat pump type installation - solar which as an obvious payoff - solar companies are able to create
their own deals
Sean Carpenter; after almost a year of prototyping these with rental property owners, we learned that the
15 year was critical to get monthly payments down - to incentivize them to make these upgrades on older,
inefficient properties.
Ross Cunniff; I understand and support the analysis - I don’t know about question #3 - what is your
recommendation as of now?
Mike Beckstead; I haven’t had a chance to meet with Lance Smith to investigate implications - borrowing
variable and lending fixed is a non-starter for me so that is where the swap comes into play. 25-50 basis point
premium - that is a way to contain risk. Making sure we are not lending at low end of curve then locking in a
higher end. Our ability to adjust rates when we need to - Can’t borrow low and lend high
Action Item; Keep Option 3 separate – We have work to do to tighten up before 20th
Research on interest rate
Ross Cunniff; come back to Council Finance to discuss #3 (15-year product)
#1 and #2 sources can come forward on the 20th but let’s discuss #3 again at Council Finance (scheduled for
August 19th)
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Darin Atteberry; A brief synopsis / read before would be helpful
B. Northfield Metro District Application
Josh Birks, Director Economic Sustainability
SUBJECT FOR DISCUSSION
Proposed Metro District by Landmark Homes for the Northfield Metropolitan District
EXECUTIVE SUMMARY
The developer of the proposed Northfield Metro District has submitted a Metro District Service Plan to
support a proposed development of approximately 56 acres located north of Vine Street on the west
side of Lindenmeier Road/Lemay Avenue (southeast of the Lake Canal and north of the to-be
designated historic Alta Vista neighborhood). The development is anticipated to include approximately
442 attached housing units, of which a minimum of approximately fourteen percent (14%) will be
designated and sold as deed-restricted affordable housing, and the majority of the rest of the units will
be sold as attainable housing units. The Planned Development is also anticipated to include a mixed-
use center that will offer light commercial use on the first floor, residential for-rent units on the second
floor, and small amenities open to the public. The estimated population at build-out is 1,139.
Construction of the Planned Development is planned to be completed by year 2026.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. What additional information does the committee recommend including for the Council evaluation
of the Landmark Development’s proposed Metro District Service Plan?
BACKGROUND/DISCUSSION
Landmark Homes is proposing a residential community situated within walking distance of the City’s
Old Town. The Planned Development incorporates goals of the following plans: City Plan,
Transportation Master Plan, Master Street Plan, Nature in the City Strategic Plan, Natural Areas Master
Plan, Paved Recreational Trail Master Plan, Northside Neighborhoods Plan, Pedestrian Plan, and Bicycle
Master Plan.
PROJECT OVERVIEW
The proposed Metro District will support 56 acres of planned development located north of Vine Street
on the west side of Lindenmeier Road/Lemay Avenue (southeast of the Lake Canal and north of the to-
be designated historic Alta Vista neighborhood). The project anticipates constructing:
• Approximately 442 residential units (a mix of single-family and multi-family);
• Minimum of 14.7% affordable (65 units)
• The remaining housing units in the project are expected to be priced in an attainable range,
considered by other cities to be between 80% and 120% of AMI.
• A mixed-use center that will offer light commercial use on the first floor, residential for-rent units
on the second floor, and small amenities open to the public
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FUTURE ACTION ITEM: When we have capacity, I think at some point it would be good to talk with Council
Finance about these relationships and providers and to delve into their ability to serve. How do we go about
having those providers coming in to talk about their ability to serve as well and how we are aligning with the city
objectives -they are separate entities. Kevin Gertig’s teams are working very closely with these providers on a
daily basis sometimes but I don’t think we have good alignment on a policy standpoint.
What is Loveland / Fort Collins water district’s 10-year capital plan? What is their financial capacity?
What should we be aware of? There should be a bright light on that
Mayor Troxell; same presentation as we just had.
Ross Cunniff; I think we do have an obligation to understand the other utility districts; their capital plans -
provide for those utilities - I support having that discussion. Policies regarding conservation, energy, river
health, etc.
B. EPIC 15 Year Loan Program
Blaine Dunn, Sr. Treasure Analyst
Sean Carpenter, Climate Economy Advisor
SUBJECT FOR DISCUSSION: Epic Homes 15-Year Capital
EXECUTIVE SUMMARY
This item will provide updated details to Council Finance regarding the proposed Epic Homes 15-year capital
sources. Staff will present on two capital agreements with attractive terms and no associated City financial
policy exceptions. One agreement is for a fixed-interest rate loan up to $2.5M with a Denver-based bank and the
other is for an $800k interest-free loan from the Colorado Energy Office.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Committee support presentation of the proposed 15-year capital agreements to the Electric Utility
Enterprise Board on February 18th?
BACKGROUND/DISCUSSION
Epic Homes
In October 2018, Fort Collins became a winner of the 2018 Bloomberg Mayors Challenge and the associated
$1M prize. The 2018 Bloomberg Mayors Challenge involved over 300 cities proposing ideas to address important
issues in their community. The City’s proposal, Epic Homes, was selected as a winner for its innovative approach
to providing health and equity benefits to residents, specifically for low-to-moderate income renters, by
improving the energy efficiency of rental homes. Residential property owners can take advantage of Epic
Homes’ easy streamlined steps to make their homes more comfortable, healthy and efficient. Partnering with
Colorado State University, Fort Collins is also establishing a research study which links the health and well-being
indicators of improved indoor environmental quality.
Epic Homes provides non-energy benefits in addition to efficiency, such as increased comfort, health and safety.
In nearly every energy assessment, energy advisors identify a health and safety hazard in need of attention. This
could vary from a back-drafting water heater, to air leakage pollutants entering the home from the garage or
crawlspace, to combustion appliances that need tuning or replacing producing excess carbon monoxide. Loans
Council Finance Committee January 27, 2020 Meeting Minutes
Excerpt: Epic 15-Year Loan Program/ Details P. 16-21
ATTACHMENT 3
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are available for over 25 different types of efficiency measures, including replacing an old furnace with a new
efficient furnace that has important safety features, such as sealed combustion with intake and exhaust to the
outside.
Epic Loans
Fort Collins’ On-Bill Finance program (previously also known as Home Efficiency Loan Program or HELP, and now
called the Epic Loan Program), a component of the Epic Homes portfolio (Attachment 1), supports a number of
community and City Council priorities, including ambitious goals for energy efficiency and renewables, reduced
greenhouse gas emissions and increased equity and well-being for residents. Meeting these objectives will
require, among other activities, greater numbers of property owners to undertake comprehensive efficiency
improvements in the coming years, particularly for older, less-efficient rental properties which make up a
significant percentage of the City’s housing stock.
The original On-Bill Finance program issued loans from 2013 through 2016 when the maximum outstanding loan
balance funded through Light & Power reserves was reached ($1.6 million). On-Bill Finance was revitalized as the
Epic Loan Program in August 2018 during the Champions Phase of the Bloomberg Mayors Challenge. The City
has been awarded grants from the Colorado Energy Office ($200,000) and from Bloomberg Philanthropies
($688,350) for the Epic Loan Program. The Electric Utility Enterprise has also entered into a $2.5M line of credit
loan agreement with U.S. Bank to provide up to 10-year capital for the Epic Loan Program.
Staff has been working to develop third-party capital agreements to scale impact for owners and renters in Fort
Collins. This has included presentations with the Council Finance Committee to discuss the Request for Proposals
for third-party capital providers, discuss the capital strategy and review proposed capital agreement terms. The
proposed ‘capital stack’ is provided below in Table 1 and the customer interest rates based on third-party capital
terms are provided in Table 2.
An ongoing and attractive financing structure to support energy efficiency retrofits will be a critical element for
success moving forward. Through 2019, Fort Collins Utilities has serviced 211 on-bill loans to support energy
efficiency upgrades in residential homes and overcome financial barriers for making these important upgrades.
Detailed information regarding the Epic Homes program and loan terms can be found at fcgov.com/epichomes.
Table 1. Epic Loan Capital Stack Summary
Capital
Type
Provider Term Rate Amount
Internal &
Grant
Previously authorized Light &
Power reserves
Ongoing 0% $1,600,000
Bloomberg Philanthropies Grant 0% $688,350
Colorado Energy Office –
Grant
Grant 0% $200,000
Internal Subtotal $2,488,350
External
Market
Colorado Energy Office – Loan 15 year 0% $800,000
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U. S. Bank 5 & 10
year
76% of Prime
(3.99% Currently)
Up to $2,500,000
Denver Based Bank 15 year 10-year US
Treasury + 2.75%
(4.55% Currently)
Up to $2,500,000
External Subtotal $5,800,000
Total $8,288,350
Table 2. Customer Interest Rate
Loan Term Customer Rate (Effective
Aug. 2019)
3 or 5 years 3.75%
7 or 10 years 4.25%
15 years* 4.75%
*The 15-year loan option is currently paused until external capital is secured.
Council Finance Meetings Review
An overview of Council Finance Committee presentations and discussions related to Epic Homes is provided
below in Table 3.
Table 3. Overview of Council Finance Committee Items Related to Epic Homes
Date Topic Outcomes
November 2018 Program background and issuing
an RFP for third-party capital
sources
• City issued RFP #8842 in December 2018
• Staff pursued conversations and negotiations
with respondents and other potential capital
providers
May 2019 Capital strategy, potential capital
sources and next steps for
bringing capital agreements to
Council
• Staff continued negotiations with potential
capital providers (including a locally
managed national bank, a regional bank,
Colorado Clean Energy Fund, and the CEO)
• Received Legal and Purchasing review of
draft contracts
July 2019 Capital agreement terms • Staff directed to bring two of the three
capital sources to full Council for
consideration (US Bank Loan authorized by
Electric Utility Enterprise Board in Ordinance
007 & 008, 2019)
• Staff directed to provide additional
information on interest rate swaps and 15-
year capital to Council Finance
August 2019 15-year capital and interest rate
swaps
• Staff directed to bring third capital source to
full Council for consideration (Staff reached
impasse in terms with capital provider and is
proposing new 15-year capital sources)
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Importance of 15-year Capital
During prototyping for the Bloomberg Mayors Challenge, rental property owners reported that no-money-down,
affordable monthly payments are critical considerations, in particular for owners with multiple units. OBF 1.0
(also known as HELP) proved these factors are also important for owner-occupied properties, where many
homeowners preferred longer term loans which often allow for more comprehensive projects and/or solar
installations with affordable monthly payments. In 2016, Fort Collins Utilities implemented the Efficiency Works
Neighborhood pilot, with nearly 60 long term loans issued totaling over $750,000. Additionally, of those that
used a loan during the pilot, 80% of customers stated they would not have done a project without the attractive
on-bill loan option.
Throughout the on-bill financing history (2013-2016 and 2018-2019), 50% of customers have used longer loan
terms to reduce monthly payments and/or undertake more comprehensive energy efficiency projects (Table 4).
As a result, the longer-termed loans account for a larger percentage of the on-bill loan portfolio value, at 60%.
Longer term loans are generally used for bigger, more comprehensive projects that can generate increased
benefits for the people who live in and own those homes, as well as positively impacting overall City goals.
Table 4. Summary of On-Bill Financed Projects by Loan Term
Loan Terms 3 & 5 year 7 & 10 year 15 (& 20) year Total
Projects Using OBF by
Term
41 71 99 211
Percentage of Total 19% 34% 47% 100%
In order to keep monthly payments low and make energy retrofit projects attractive, longer loan terms are
required. The average on-bill long-term loan amount is $13,000, with monthly payments of $101. Heating,
ventilation and cooling (HVAC) projects are an example of higher cost projects where longer loan terms are
more attractive. The average HVAC project loan in Epic Loans is $14,000. With a 10-year loan, the monthly
payment is $143; however, with a 15-year loan, the monthly payment is $109, a 30% lower monthly payment
that is much more attractive and feasible. These attractive monthly payments are critical for overcoming cost
barriers for home and rental property owners considering energy upgrades.
Denver Based Bank Overview
Staff previously presented a 15-year capital source with a Midwest-based commercial bank through the
Colorado Clean Energy Fund, which included some uncommon terms for City loan agreements, such as a
required collateral deposit and variable interest rate resulting in the need for a derivative instrument. After
presentation of this capital source to the Council Finance Committee, staff reached an impasse in terms with the
capital provider as the terms became unfavorable for the City. Staff was able to find a new source for 15-year
capital from an in-state commercial bank with highly desirable terms, including a fixed interest rate at the time
of closing, no collateral requirements, and no debt policy exceptions needed.
Staff has reviewed a draft loan agreement with the Denver Based bank for 15-year capital. The terms include:
• Amount: Up to $2,500,000
• Length: 17-years inclusive of draw period
• Draw period: Up to 2 years, with draw timing and amounts based on program / customer demand
• Fixed rate: 10-year US Treasury + 2.75% (4.55% Currently); Rate set at time of loan closing
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• Collateral: None
• Pre-pay: City may pre-pay in whole or in part after 2027 with no penalty. No prepayment is allowed
prior to 2025, and between 2025 and 2027 there is a 1% prepayment fee.
• Repayment position: Senior pledge on customer loan repayments and subordinate position on Electric
Utility revenues, after the more senior pledge held by revenue bondholders
Colorado Energy Office Overview
The Colorado Energy Office (CEO) showed support of Epic Loans in 2018 with a $200,000 grant. Staff have also
negotiated a $800,000 loan from CEO. Terms of the agreement include:
• Amount: $800,000
• Length: 15-years
• Draw period: None
• Fixed Rate: 0%
The principal will be due at the end of the 15-year period and any program income may be used for
administrative expenses and/or issuing new loans. Any unused program income will also be due at the time of
principal repayment.
Next Steps
Staff seeks approval from Council Finance to proceed for Electric Utility Enterprise Board consideration of the
proposed 15-year agreements. If supported, staff is scheduled to present the 15-year agreements on February
18, 2020.
Discussion / Next Steps:
Better, cleaner deal / better partner / lower cost - eliminated complexity - no collateral required
These will be through the electric enterprise - we will need to go through the Electric Enterprise Board
Will be able to draw in tranches up to once per quarter in the 2-year period. We will make those decisions
based on the demand. The rate when we close will be the rate for the duration of the loan and will include all
tranches. We will pay Interest only during 2-year draw period – then it will turn into a 15-year loan (principle
and interest)
Mike Beckstead; this is a rate risk question - before we had talked about locking in at stages.
There is a little rate risk - policy change risk went away - much better terms overall
No debt policy exception or interest rate swap instrument needed for this program as was for the previous
program.
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No draw period - 0% total principle will be due at end of loan - one-time balloon payment
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
Does the Committee support presentation of the proposed 15-year capital agreements to the Electric Utility
Enterprise Board on February 18th?
Results:
Ross Cunniff; yes - this sounds great. Thank you for finding this and bringing it to us. I enthusiastically support
this.
Mayor Troxell and Ken Summers also support going forward.
Good meeting - US Mayor’s Challenge oversite perspective this is viewed as a good project
Sean Carpenter; we are excited to get the financing in place so we can move aggressively into outreach - start
getting projects done.
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Ross Cunniff; I assume new Council members know many of these funds are not mix and match
Mike Beckstead; yes, the color of money will be covered in our Council on Boarding later this week
Confirmed that there is a continency fund of $2.2M in case it is needed – inflation, etc. which we have not
touched.
Mayor Troxell; I am in support of where you are - you have done a great job of delicately teasing out and putting
togethe a proposal that makes sense.
E. Epic Program – Long Term Financing
Travis Storin, Director Accounting
Sean Carpenter, Lead Specialist, Economic Sustainability
SUBJECT FOR DISCUSSION: Epic Homes 15-year Capital Options
EXECUTIVE SUMMARY
This item will provide an update to Council Finance regarding the Epic Homes 15-year capital options and
discussion of each. Topics include:
• Review of capital recruitment process;
• Importance of 15-year capital in achieving desired program outcomes;
• 15-year capital options;
• Banking relationship with the national green bank; and
• Interest rate swap background.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
• Does the Committee support funding a 15-year Epic Loan option?
• Which 15-year capital option does the Committee support?
• Does the Committee support staff analysis of the debt policy and the exception request if the variable-rate,
collateralized option is desired?
BACKGROUND/DISCUSSION
Fort Collins’ innovative Epic Homes portfolio supports several community and City Council priorities, including
ambitious goals around energy efficiency and renewables, reduced greenhouse gas emissions and increased
equity and wellbeing of all residents. Meeting these objectives will require, among other activities, greater
numbers of property owners to undertake comprehensive efficiency improvements in the coming years,
particularly for older, less-efficient rental properties which make up a large percentage of the City’s housing
stock. An ongoing and attractive financing structure to support energy efficiency retrofits will be a critical
element for success moving forward.
On-Bill Financing (OBF) 1.0 (also known as the Home Efficiency Loan Program or HELP) operated successfully
from 2013 through 2016 when the encumbered funds reached the maximum outstanding loan balance of
$1.6M. At that time, Elevations Credit Union was selected through an RFP process to continue HELP for energy
Council Finance Committee August 19, 2019 Meeting Minutes
Excerpt: Epic Program - Long Term Financing/ Details P. 20-28
ATTACHMENT 4
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loan financing. Utilities staff qualify the efficiency project based on the rebate measures in the Efficiency Works
Home program; however, the loan origination and servicing are independent of Utilities programs. With the
implementation of Epic Loans, Elevations loans will continue to be an option for interested customers.
Epic Loans began in August 2018 during the Champions Phase of the Bloomberg Mayors Challenge, using the
$100,000 award from the Champions Phase and a $200,000 grant from the Colorado Energy Office (CEO) to
revitalize on-bill financing. Fort Collins is among nine winning cities for the Mayors Challenge, each receiving
$1M to implement their winning idea.
Leveraging external capital is critical to achieving the long-term “revolving loan” vision of Epic Loans and offers a
continuing source of funds to meet increasing customer demand for energy efficiency financing. Epic Loans is
designed to balance the programmatic objectives and financial requirements of the City, while also meeting the
needs and expectations of capital providers and Utilities customers.
Council Finance Meetings Review
Staff presented to Council Finance in November 2018 regarding the program background and issuing an RFP for
third-party capital sources. The City issued RFP #8842 in December 2018 and staff pursued conversations and
negotiations with respondents and other potential capital providers.
Staff presented to Council Finance in May 2019 regarding the potential capital sources and next steps for
bringing capital agreements to Council. Staff have continued negotiations with potential capital providers
(including a locally managed national bank, a regional bank, Colorado Clean Energy Fund, and the CEO) and
received Legal and Purchasing review of draft contracts.
Staff presented to Council Finance in July 2019 regarding capital agreement terms. Staff was directed to bring
two of the three capital sources to full Council for consideration. Staff was also directed to explore 15-year
capital options and provide additional information on interest rate swaps to Council Finance.
Importance of 15-year Capital
During prototyping for the Bloomberg Mayors Challenge competition, rental property owners reported that no
money down, affordable monthly payments are critical considerations, in particular for owners with multiple
units. OBF 1.0 proved these factors are also important for owner-occupied properties, where many homeowners
preferred longer term loans which often allow for more comprehensive projects and /or solar installations with
affordable monthly payments. In 2016, Fort Collins Utilities implemented the Efficiency Works Neighborhood
pilot, with nearly 60 long term loans issued totaling over $750,000. An additional $1.5M in 15-year capital for
Epic Loans would support approximately120 similar projects.
Throughout the program history (2013-2019, including Elevations Credit Union loans), 35% of customers have
used longer loan terms to reduce monthly payments and / or undertake more comprehensive energy efficiency
projects. As a result, the longer-termed loans account for a larger percentage of the total loan portfolio value, at
45%. When looking specifically at on-bill financed loans (2013-2016 and 2018-2019), nearly 50% of customers
have used longer term loans (Table 1), accounting for approximately 60% of the on-bill financed loan portfolio
value. In short, longer term loans are generally used for bigger, more comprehensive projects that can generate
increased benefits for the people who live in and / or own those homes, as well as positively impacting overall
City goals.
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Table 1. Summary of On-Bill Financed Projects by Loan Term
3- & 5-year loans 7- & 10-year loans 15 (& 20) year loans
Projects 38 65 95
Percentage 19% 33% 48%
In order to keep monthly payments low and make energy retrofit projects attractive, longer loan terms are
required. With a 15-year loan at the average long-term loan amount of $13,000, monthly payments are $101.
These attractive monthly payments are critical for overcoming both upfront cost and continual cost barriers for
home and rental property owners considering energy upgrades.
15-year Capital Options
Per Council Finance request, staff has identified the following four options for 15-year capital:
1. Pursue an agreement with the national green bank for up to $2.5M with the required 50% deposit and
use an interest rate swap to stabilize variable rates (This is the staff recommendation.)
2. Use L&P Reserves to fund $1.5M, in addition to the current $1.6M that is currently deployed or has been
repaid
3. Use only the 15-year funding available from CEO, Bloomberg, and repaid L&P Reserves
4. Implement a hybrid of Options 2 and 3, using L&P Reserves to provide backfill demand once other
Option 3 sources are exhausted
To provide sufficient financing for the expected number of projects, the short-term (3-4 year) capital goal is $7M
to $8M. This assumes $1.5M to $2M annually in energy efficiency project financing. As staff has outlined,
sufficient 15-year capital is critical to the success of the overall program.
Option 1: National Green Bank
Staff has been in discussions with a national green bank to negotiate 15-year loan terms, which were presented
and discussed at the July 15, 2019 Council Finance meeting. The terms include:
• Amount: Up to $2,500,000 (staff expects to only draw $1,500,000)
• Length: 15-years inclusive of draw period
• Draw period: Up to 2 years with quarterly draws based on customer loans
• Variable rate: Wall Street Journal Prime + 0.25% (currently 5.50%)
• Collateral: City will deposit 50% of drawn amount into interest bearing account from L&P Reserves
(staff expects $750,000 deposit)
• Pre-pay: City may pre-pay in whole or in part at any time and without penalty
• Repayment position: Senior pledge on customer loan repayments and second position on Electric
Utility revenues, after the more senior pledge held by revenue bondholders
Banking Relationship
Staff issued RFP #8842 in December 2018, to which the Colorado Green Energy Fund was one of two
respondents. The Colorado Green Energy Fund has found and managed the relationship with a financier willing
to provide 15-year terms (Figure 1). If this option is selected, Fort Collins Utilities would borrow from the
Colorado Green Energy Fund.
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Figure 1. Banking Relationship with the Colorado Green Energy Fund and Commercial Bank
Policy Interactions
This Option has two interactions with Financial Policy #7 - Debt.
The first interaction is the required 50% collateral, or credit enhancement. Staff assesses an appropriate use of a
credit enhancement via the collateral pledge.
The second interaction is the variable rate and/or derivative swap instrument. The proposed lender is offering a
variable interest rate for the loan duration. Staff has attempted to negotiate rate lock-in rights during the draw
period, but the lender has been unable to flex. An alternative is to use an interest rate swap, which would
qualify as a derivative instrument and is covered by policy as an instrument the City should avoid. Staff assesses
a “plain vanilla” interest swap is a feasible solution, although it carries a cost premium, but it would effectively
“lock in” a fixed rate on the 15-year note if City is unwilling to accept variable rate risk.
Interest Rate Swap
Interest rate swaps are a common financial instrument, used by a wide variety of businesses to manage their
debt service payments in a manner that best suits their organizational needs. For some entities, variable rates
are preferred; for others, fixed rate obligations are best. In this option, the City would negotiate with another
party (who prefers a variable rate interest obligation) and the City would exchange the variable rate obligation
under the proposed loan with the national green bank (Option 1) for the swap party’s fixed rate instrument
(Figure 2), using well established markets / providers for these types of financial transactions. The swap would
be based on the notional principal, and only the netted difference between fixed and variable interest rate
amounts is paid. The interest swap party would also agree to a settlement cadence.
Figure 2. Example of Cash Flows of Interest Rate Swap
•Midwest Commercial
Bank providing 15-
year capital
Financier
•Colorado Green
Energy Fund
managing relationship
and finding financiers
(RFP respondent)
Broker •Fort Collins Utilities
borrowing from green
bank and issuing
loans to customers
Fort Collins
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Option 2: Light & Power Reserves
Currently, $1.6M of L&P Reserves have been deployed for on-bill financing since 2013, of which nearly $400,000
have been repaid without any losses to date. Option 2 would dedicate an additional $1.5M of L&P Reserves for
15-year loans. Available Reserves at the end of 2018 were $8.4M. Anticipated 2019-20 budget changes include a
2019 drawdown on Reserves by $340K and a 2020 increase on Reserves by $320K. The Capital Improvement
Plan will be updated in Fall 2019, prior to updating the Strategic Financial Plans for a November 2019
presentation to Council Finance.
There is no anticipated need to increase electric rates for a one-time $1.5M appropriation of Reserves. However,
appropriating L&P Reserves for use in Epic Loans will make those funds unavailable for use in other future
capital projects, until such time that those funds are repaid by Epic Loan customers.
Option 3: 15-year Funding from Grants and Low-Cost Capital Only
There are currently other sources of limited 15-year capital, which include:
• Up to $1M low-cost loan from CEO dedicated to 15-year projects (to be presented to Council on
September 3, 2019)
• Re-allocation of up to $900K from Bloomberg and CEO grant funds, away from 5-year and 10-year
projects
Without external or Reserve financing, the full capital stack across all product offerings will support
approximately 130 fewer home upgrades for each “cycle” of the loan portfolio (e.g. each time the capital is lent,
repaid and therefore available to be re-loaned), or approximately 370 projects versus an estimated 500 projects.
In this Option, the capital burn rate would be 1 to 1.5 years faster.
Option 4: Hybrid of Options 2 & 3 Using L&P Reserves After Other Sources Exhausted
A final Option is to use the 15-year capital sources outlined in Option 3 above and use L&P Reserves
once all other sources have been exhausted.
15-year Capital Option Analysis
Staff analysis of the benefits and challenges for each Option is outlined in Table 2. If supported by Council
Finance, staff recommends bringing Option 1 to full Council for consideration on October 1, 2019.
Table 2. Analysis of 15-year Capital Options
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Option Benefits Challenges
Option 1:
National Green
Bank (staff
recommendation)
• Provides sufficient funding for
expected 15-year projects
• Scalable for the long-term, and
replicable for other cities
• Only market capital provider willing
to provide 15-year terms, all other
market capital providers will not go
over 10-year terms
• Requires a 50% deposit into an
interest-bearing account from L&P
Reserves
• Requires a policy exception to use an
interest rate swap
• Contingent on other low-cost capital
sources to provide an attractive rate
for customers
Option 2: Light &
Power Reserves
• Provides easy access to low-cost
capital
• Impacts the opportunity costs of
other important Utilities needs
• Not scalable for long-term, or
replicable for other cities
Option 3: 15-year
Funding from
Grants and Low-
Cost Capital Only
• No additional capital agreements
needed (after CEO loan presented
to full Council)
• Does not provide sufficient funding
for expected 15-year projects
• Not scalable for long-term
• Removes low-cost capital from 5-year
and 10-year loans for blending to
create attractive customer rates
Option 4: Hybrid
of Options 2 & 3
Using L&P
Reserves After
Other Sources
Exhausted
• No additional capital agreements
needed (after CEO loan presented
to full Council)
• Not scalable for long-term, or
replicable for other cities
• Removes low-cost capital from 5-year
and 10-year loans for blending to
create attractive customer rates
• Impacts the opportunity costs of
other important Utilities needs
Next Steps
26
Travis Storin; credibility of the institution - that is a key element as we go shop for this
Will have to be one of the large multi-national banks we are targeting to take on this risk.
They do have the risk of defaulting - it is a possibility and deliberate vendor selection is our mitigating measure.
Ross Cunniff; if the economy tanked, we could decide to not engage or draw the full amount, right?
Travis Storin; yes, the notional amount is going to be whatever we have drawn - we will have a draw period on
the facility and only swap the amount we have drawn not the full amount -
Ross Cunniff; still some risk - the advantage to program and to businesses that cannot make the cash flow work
Are powerful to me along with the ability to make this a sustainable proposition. My concern is I would not want
to make this a standing change to policy - I would want to make it a case by case basis – so would need to be
very narrowly tailored for this circumstance - vitally important program. I am supportive of moving forward -
we need to be careful sending the message – I don’t want us to be used as part of a portfolio
This is really a special case - Fort Collins is not going to be a variable interest player - bigger picture policy
perspective
Mike Beckstead; staff is very much aligned with that - This is an exception specific to version 3.0. If we find this
works and would want to do it again - we would need to come back to Council and share our experience for 4.0 -
we view this is a one-time event as well.
Mayor Troxell; I would agree - let’s keep it as a one-time exception
Option 1 with the National Green Bank is my preference.
Question – with the interest rate swap how does the deposit play into that?
Travis Storin; the deposit scales with what we draw at a rate of 50% - according to policy we are only to do this
when we run an NPV and this is still beneficial to City of Fort Collins. In this case there is really not an NPV to run
- more a deal or no deal – we are working with Lance Smith and we have determined that it is up to $750K
earmark on reserves which would go into an interest bearing account - Comparable rates to a money market -
when we prepay or it matures, we would get those funds back
Sean Carpenter; The max loan amount would be $25K - we have not issued any loans that large to date
The average loan amount is currently $14K so we anticipate $10-14K will be the range for the vast amount of
these projects over 5, 10 or 15-year terms
Mike Beckstead: the consumer chooses the term based on the value of the energy efficiency they want to put
into their properties – the savings from the improvements are hard to realize over a shorter term - which
impacts their cashflow
Ken Summers: how many loans are we anticipating?
Travis Storin; our peak year was 2016 where we did 110 loans
Ken Summers; what happens if they default? Concerned about someone needing to borrow that amount over
such a long term
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Mike Beckstead; we would have a lien on the house but our experience to date in the 4-5 years of this program
is that we have not had a single delinquent loan - part of that is the nature of what people are borrowing for –
they know with the lien in place that if they do sell we will get our piece.
Darin Atteberry; projects like new windows, furnaces, major capital equipment
Ross Cunniff; we are targeting certain types of projects that typically pay back similar or higher value on their
energy bill to what they are paying - that is probably also why you would want to get the monthly cost down.
Travis Storin; one of our iterations was a strictly 3rd party bank that they would go to as a qualified borrower –
with much the same amount of rigor as a mortgage – not serviced on the bill so the protections were different –
the demand for that product has been pretty limited - people like being able to pay it on their utility bill the on-
bill portion is a positive.
Ken Summers; we are talking about modifying policy and additional risk – I am concerned on the trade-off
standpoint
Mike Beckstead; might be helpful is we zoom out to 10K feet and provide some context - we started this
program in 1012 using $800K from L&P reserves as the funding source for the loans and in 2014 Council
approved another $800K for additional loans -revolving. Currently there is $1.8M in reserves available for these
loans - we can’t continue to use that funding methodology and make the volume of energy efficiency changes
we want to make in our community so we turned to how to use 3rd party capital - we went to version 2.0 with a
local credit union but when we did that the number of loans tanked dramatically. Now we are at version 3.0
where we are trying to figure out how to get a competitive capital stack across 3 different terms providing home
energy efficiencies that would not happen without this type of financing - a little bit of history on how we came
to this point. Our goal has been to figure out how we can use 3rd party capital as opposed to using our own
capital which comes with some risk.
Travis Storin; This is one component of the greater energy works portfolio - of the energy efficiency
improvements that are made - loans account for 25% of the expenditure and 15-year loans count for 50% of
loans and for 60% of the dollars
80% of those who used 10-15 year terms and on-bill financing said that they would not have done it without the
10 or 15 year terms.
Mayor Troxell; this is a model - some other municipalities are looking to us -
Sean Carpenter; that is right - some of the support we are not talking about today includes the $200K grant we
received from the Colorado Energy Office – in the hopes that we can create a ‘cookbook’ to help other
communities replicate this in Colorado and elsewhere.
Travis Storin; the low cost capital is a critical success factor- for every loan 2/3 of the loan amount comes from a
market driven source
Mike Beckstead; To summarize, there are some questions and concerns, some things in the AIS that we will
want to clarify. But I believe we have the direction to bring this forward to Council on October 1st
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Ken Summers; to do 15 years – we will need to make a policy exception and take on more risk I am trying to get
a handle on year 11-15 – as opposed to years 1-10 and the impact
Mike Beckstead; the consumer is making the choice – we are just providing the alternatives to match the savings
of the investment, the energy efficiency benefits and their cashflow
Meeting adjourned at 11:56 am
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1
Epic Homes 15-Year Capital
Sean Carpenter, Climate Economy Advisor
Blaine Dunn, Sr Treasury Analyst
ATTACHMENT 5
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Attachment: Powerpoint presentation (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
ECONOMIC HEALTH
GOALS
• B.4 Support development
of new and enhanced
capital access tools
• B.6 Encourage Fort Collins
residents to support local
businesses
Alignment
2
COUNCIL
PRIORITIES
• Low income benefits
• Equity and inclusion
• Improve air quality
STRATEGIC
OBJECTIVES
Social Health
• 1.3 Accessibility for
low- and moderate-income
Environmental Health
• 4.1 Climate Action
• 4.2 Air quality
• 4.3 Energy Policy
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Attachment: Powerpoint presentation (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
Ordinance Summary
3
Authorize 15-year capital agreements
• Ordinance No. 009 Authorizing a loan agreement with
Vectra Bank Colorado to provide funding for the Epic
Loan Program
• Ordinance No. 010 Authorizing a loan agreement with
the Colorado Energy Office to provide funding for the
Epic Loan Program
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4
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Attachment: Powerpoint presentation (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
Epic Homes Capital History
• On-Bill Financing 1.0 from Utilities reserve funds (2013-2016)
• Revitalization though Bloomberg and Colorado Energy Office
grant funds (2018-2019)
• Council Finance review (Nov. 2018, May 2019, Jul. 2019, Aug. 2019,
Jan. 2020)
• Council adoption of increase in program lending threshold (Sep. 2019)
• Electric Utility Enterprise Board adoption of up to 10-year capital
agreement (Nov. 2019)
Today
• 15-year third-party capital to scale impact for owners and renters
5
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Attachment: Powerpoint presentation (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
Why 15-Year Loan Terms?
• Long-term loans account for:
• 47% of on-bill loans
• 60% of on-bill loan dollars
• More comprehensive projects often use longer-term loans
• A low monthly payment often makes the difference between making
efficiency upgrades or choosing minimum efficiency equipment
• Average HVAC loan is $14,000
• Loan with 15-year term = $109
• Loan with 10-year term = $143
• 30% lower payment with 15-year term
6
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Attachment: Powerpoint presentation (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
Ordinance Overview
Ordinance Term Rate Amount Additional Details
Colorado
Energy Office
15-year 0% $800,000 Principal due at end
of 15-year period
Vectra Bank
Colorado
17-year,
inclusive of
2-year draw
period
10-year US
Treasury +
2.75%
(4.30%
Currently)*
Up to
$2.5M
Rate set at time of
loan closing;
City may pre-pay in
whole or part with no
penalty starting in
2027
7
*As of Feb. 18, subject to change
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Attachment: Powerpoint presentation (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
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Capital Stack Summary
Capital Type Provider Term Rate Amount
Internal & Grant
Previously authorized Light & Power
reserves
Ongoing 0% $1,600,000
Bloomberg Philanthropies Grant 0% $688,350
Colorado Energy Office – Grant Grant 0% $200,000
Internal Subtotal $2,488,350
External Market
Colorado Energy Office – Loan 15 year 0% $800,000
U.S. Bank 5 & 10 year 76% of Prime
(3.99% Currently)
Up to $2,500,000
Vectra Bank Colorado 15 year 10-year US Treasury +
2.75% (4.30% Currently)
Up to $2,500,000
External Subtotal $5,800,000
Total $8,288,350
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Thank you
9
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-1-
ORDINANCE NO. 009
OF THE CITY OF FORT COLLINS, COLORADO, ELECTRIC UTILITY ENTERPRISE
AUTHORIZING A LOAN AGREEMENT WITH VECTRA BANK COLORADO TO
PROVIDE FUNDING FOR THE EPIC LOAN PROGRAM
WHEREAS, the City of Fort Collins, Colorado (the “City”) is a duly organized and
existing home rule municipality of the State of Colorado, created and operating pursuant to
Article XX of the Constitution of the State of Colorado and the home rule charter of the City (the
“Charter”); and
WHEREAS, the members of the City Council of the City (the “Council”) have been duly
elected and qualified; and
WHEREAS, Section 19.3(b) of the Charter Article V (“Section 19.3(b)”) provides that
the Council may, by ordinance establish the City’s electric utility (the “Utility”) as an enterprise
of the City; and
WHEREAS, pursuant to Section 19.3(b), the Council has heretofore established the
Utility as an enterprise of the City (the “Enterprise”) in ordinances codified in Section 26-392 of
the Code of the City of Fort Collins; and
WHEREAS, pursuant to Section 19.3(b) and Code Section 26-392, the Council has
authorized the Enterprise, by and through the Council, sitting as the board of the Enterprise (the
“Board”), to issue, by ordinance, revenue and refunding securities and other debt; and
WHEREAS, the City has established a program (the “Epic Program”) to assist certain
customers of the Utility in financing home energy efficiency and renewable energy
improvements by making loans to customers who are property owners (“Epic Loans”); and
WHEREAS, the Board has determined that in order to finance Epic Loans (the
“Project”), it is necessary and advisable and in the best interests of the Enterprise (i) to enter into
a loan agreement (the “Loan Agreement”) with ZB, N.A., dba Vectra Bank Colorado (the
“Bank”) pursuant to which the Bank shall loan the Enterprise an amount of not to exceed
$2,500,000 (the “Loan”) for such purposes, and (ii) to issue a promissory note (the “Note”) to the
Bank to evidence the Enterprise’s repayment obligations under the Loan Agreement; and
WHEREAS, the Enterprise has previously incurred the following financial obligations
which are payable from and secured by a lien on the Net Pledged Revenues (as defined in the
Loan Agreement): its “City of Fort Collins, Colorado, Electric Utility Enterprise, Tax-Exempt
Revenue Bonds, Series 2018A” (the “2018A Bonds”), its “City of Fort Collins, Colorado,
Electric Utility Enterprise, Taxable Revenue Bonds, Series 2018B” (the “2018B Bonds” and,
together with the 2018A Bonds, the “2018 Bonds”) and a Loan Agreement with U.S. Bank
National Association (the “2019 Loan Agreement”, together with the 2018 Bonds, the “Prior
Obligations”); and
WHEREAS, except for the Prior Obligations, neither the City nor the Enterprise has
pledged or hypothecated the Gross Pledged Revenues (as defined in the Loan Agreement) to the
payment of any bonds or for any other purpose, with the result that the Net Pledged Revenues
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may now be pledged lawfully and irrevocably to the payment of the Loan which pledge will be
subordinate to the pledge of Net Pledged Revenues to the payment of the 2018 Bonds and on a
parity with the pledge of Net Pledged Revenues to the payment of the 2019 Loan Agreement;
and
WHEREAS, pursuant to Enterprise Ordinance No. 003 adopted on April 3, 2018, the
Mayor of the City has been appointed President of the Enterprise (the President”), the City
Financial Officer has been appointed Treasurer of the Enterprise (the “Treasurer”), and the City
Clerk has been appointed Secretary of the Enterprise (the “Secretary”) which appointments the
Board hereby reaffirms and ratifies for purposes of this Ordinance; and
WHEREAS, there are attached hereto the forms of the Loan Agreement and the Note
(jointly, “the “Financing Documents”); and
WHEREAS, pursuant to Section 11-57-205, Colorado Revised Statutes (“C.R.S.”), the
Enterprise desires to delegate to the President or the Treasurer the independent power to make
final determinations relating to the Financing Documents, subject to the parameters contained in
this Ordinance.
BE IT ORDAINED BY THE BOARD OF THE CITY OF FORT COLLINS,
COLORADO, ELECTRIC UTILITY ENTERPRISE AS FOLLOWS:
Section 1. Adoption of Recitals, Approvals, Authorizations, and Amendments. The
Board hereby adopts and incorporates herein by reference as operative provisions of this
Ordinance the recitals set forth above. The forms of the Financing Documents in substantially
the forms attached hereto as Exhibit “A” are incorporated herein by reference and are hereby
approved. The Enterprise shall enter into and perform its obligations under the Financing
Documents in the forms of such documents, with such changes as are not inconsistent herewith
and as are hereafter approved by the President or the Treasurer. The President and Secretary are
hereby authorized and directed to execute the Financing Documents and to affix the seal of the
Enterprise thereto, and further to execute and authenticate such other documents or certificates as
are deemed necessary or desirable in connection therewith. The Financing Documents shall be
executed in substantially the forms approved at this meeting. The execution of any instrument or
certificate or other document in connection with the matters referred to herein by the President,
the Secretary, the Treasurer, any member of the Board, or by other appropriate officers of the
Enterprise, shall be conclusive evidence of the approval by the Enterprise of such instrument.
Section 2. Election to Apply the Supplemental Act. Section 11-57-204 of the
Supplemental Public Securities Act, constituting Title 11, Article 57, Part 2, C.R.S. (the
“Supplemental Act”) provides that a public entity, including the Enterprise, may elect in an act
of issuance to apply all or any of the provisions of the Supplemental Act. The Enterprise hereby
elects to apply all of the provisions of the Supplemental Act to the Financing Documents.
Section 3. Delegation. (a) Pursuant to Section 11-57-205 of the Supplemental Act,
the Board hereby delegates to the President or Treasurer, the independent authority to make the
following determinations relating to and contained in the Financing Documents, subject to the
restrictions contained in paragraph (b) of this Section 3:
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(i) The interest rate on the Loan;
(ii) The principal amount of the Loan;
(iii) The amount of principal of the Loan maturing in any given year
and the final maturity of the Loan;
(iv) The dates on which the principal of and interest on the Loan are
paid; and
(v) The existence and amount of capitalized interest or reserve funds
for the Loan, if any.
(b) The delegation in this Section 3 shall be subject to the following
parameters and restrictions:
(i) The interest rate on the Loan shall not exceed 9.5%;
(ii) The principal amount of the Loan shall not exceed $2,500,000; and
(iii) The final maturity of the Loan shall not be later December 31,
20__.
Section 4. Conclusive Recital. Pursuant to Section 11-57-210 of the Supplemental
Act, the Financing Documents shall contain recitals that the Financing Documents are issued
pursuant to certain provisions of the Supplemental Act. Such recital shall be conclusive
evidence of the validity and the regularity of the issuance of the Financing Documents after their
delivery for value.
Section 5. Pledge of Revenues. The creation, perfection, enforcement, and priority
of the pledge of revenues to secure or pay the Loan evidenced by the Financing Documents
provided herein shall be governed by Section 11-57-208 of the Supplemental Act and this
Ordinance. The amounts pledged to the payment of the Loan evidenced by the Financing
Documents shall immediately be subject to the lien of such pledge without any physical delivery,
filing, or further act. The lien of such pledge shall have the priority described in the Financing
Documents. The lien of such pledge shall be valid, binding, and enforceable as against all
persons having claims of any kind in tort, contract, or otherwise against the Enterprise
irrespective of whether such persons have notice of such liens.
Section 6. Limitation of Actions. Pursuant to Section 11-57-212 of the Supplemental
Act, no legal or equitable action brought with respect to any legislative acts or proceedings in
connection with the Financing Documents shall be commenced more than thirty days after the
issuance of the Financing Documents.
Section 7. Limited Obligation; Special Obligation. The Loan evidenced by the
Financing Documents is payable solely from the Net Pledged Revenues and the Financing
Documents do not constitute a debt within the meaning of any constitutional, charter, or statutory
limitation or provision.
Section 8. No Recourse Against Officers and Agents. Pursuant to Section 11-57-209
of the Supplemental Act, if a member of the Board, or any officer or agent of the Enterprise acts
in good faith, no civil recourse shall be available against such member, officer, or agent for
payment of the principal of or interest on the Loan. Such recourse shall not be available either
Packet Pg. 42
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directly or indirectly through the Board or the Enterprise, or otherwise, whether by virtue of any
constitution, statute, rule of law, enforcement of penalty, or otherwise. By the acceptance of the
Financing Document and as a part of the consideration for making the Loan, the Bank
specifically waives any such recourse.
Section 9. Authorized Persons. Pursuant to the Loan Agreement, the President and
the Treasurer are hereby designated as the Authorized Persons (as defined in the Loan
Agreement) for the purpose of performing any act or executing any document relating to the
Loan, the Enterprise, or the Financing Documents. A copy of this Ordinance shall be furnished
to the Bank as evidence of such designation. The President may designate additional authorized
Persons.
Section 10. Direction to Take Authorizing Action. The appropriate officers of the
Enterprise and members of the Board are hereby authorized and directed to take all other actions
necessary or appropriate to effectuate the provisions of this Ordinance, including but not limited
to such certificates and affidavits as may reasonably be required by the Bank.
Section 11. Ratification and Approval of Prior Actions. All actions heretofore taken
by the officers of the Enterprise and members of the Board, not inconsistent with the provisions
of this Ordinance, relating to the Financing Documents, or actions to be taken in respect thereof,
are hereby ratified, approved, and confirmed.
Section 12. Severability. If any section, 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, paragraph, clause, or provision shall not affect any of the
remaining provisions of this Ordinance, the intent being that the same are severable.
Section 13. Repealer. All orders, resolutions, bylaws, ordinances or regulations of the
Enterprise, or parts thereof, inconsistent with this Ordinance are hereby repealed to the extent
only of such inconsistency.
Section 14. Ordinance Irrepealable. After the Financing Documents are executed and
delivered, this Ordinance shall constitute an irrevocable contract between the Enterprise and the
Bank and shall be and remain irrepealable until the Loan and the interest thereon, as applicable,
shall have been fully paid, satisfied, and discharged. No provisions of any constitution, statute,
charter, ordinance, resolution or other measure enacted after the Financing Documents are
executed and delivered shall in any manner be construed as impairing the obligations of the
Enterprise to keep and perform the covenants contained in this Ordinance.
Section 15. Disposition. A true copy of this Ordinance, as adopted by the Board, shall
be numbered and recorded on the official records of the Board and its adoption and publication
shall be authenticated by the signatures of the President and the Secretary, and by a certificate of
the publisher.
Section 16. Effective Date. This Ordinance shall take effect on the tenth day
following its adoption.
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Introduced, considered favorably on first reading and ordered published this 20th day of
March, 2020, and to be presented for final passage on the 7th day of April, 2020.
CITY OF FORT COLLINS, COLORADO,
ELECTRIC UTILITY ENTERPRISE
By:________________________________
President
ATTEST:
_________________________________
Secretary
Passed and adopted on final reading this 7th day of April, 2020.
CITY OF FORT COLLINS, COLORADO,
ELECTRIC UTILITY ENTERPRISE
By:________________________________
President
ATTEST:
_________________________________
Secretary
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4810-7991-0321.7
LOAN AGREEMENT
by and between
CITY OF FORT COLLINS, COLORADO, ELECTRIC UTILITY ENTERPRISE
AND
ZB, N.A., DBA VECTRA BANK COLORADO
Relating to:
Not to exceed $2,500,000 2020 Taxable Subordinate Lien Revenue Note
Dated as of April __, 2020
EXHIBIT A
1
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Attachment: Exhibit A (8879 : EUE - Vectra Bank ORD)
TABLE OF CONTENTS
Page
i
ARTICLE I
DEFINITIONS ............................................................................................................................... 2
ARTICLE II
LOAN
Section 2.01. Loan ................................................................................................................. 8
Section 2.02. Interest Rate; Interest Payments; Principal Payments ..................................... 9
Section 2.03. Costs, Expenses and Taxes ............................................................................ 11
Section 2.04. Pledge ............................................................................................................. 11
Section 2.05. Conditions to Closing .................................................................................... 11
Section 2.06. Procedure for Requesting and Funding Advances ......................................... 13
Section 2.07. Conversion to Amortizing Term Loan ........................................................... 14
ARTICLE III
FUNDS AND ACCOUNTS
Section 3.01. Light and Power Fund .................................................................................... 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ENTERPRISE
Section 4.01. Due Organization ........................................................................................... 15
Section 4.02. Power and Authorization ............................................................................... 15
Section 4.03. No Legal Bar .................................................................................................. 15
Section 4.04. Consents ......................................................................................................... 15
Section 4.05. Litigation ........................................................................................................ 15
Section 4.06. Enforceability ................................................................................................. 16
Section 4.07. Changes in Law.............................................................................................. 16
Section 4.08. Financial Information and Statements ........................................................... 16
Section 4.09. Accuracy of Information ................................................................................ 16
Section 4.10. Financing Documents .................................................................................... 16
Section 4.11. Regulations U and X ...................................................................................... 16
Section 4.12. Default, Etc .................................................................................................... 16
Section 4.13. Sovereign Immunity....................................................................................... 16
Section 4.14. No Filings....................................................................................................... 17
Section 4.15. Outstanding Debt ........................................................................................... 17
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ARTICLE V
COVENANTS OF THE ENTERPRISE
Section 5.01. Performance of Covenants, Authority ........................................................... 17
Section 5.02. Contractual Obligations ................................................................................. 17
Section 5.03. Further Assurances......................................................................................... 17
Section 5.04. Conditions Precedent ..................................................................................... 18
Section 5.05. Rules, Regulations and Other Details ............................................................ 18
Section 5.06. Payment of Governmental Charges ............................................................... 18
Section 5.07. Protection of Security .................................................................................... 18
Section 5.08. Prompt Payment ............................................................................................. 19
Section 5.09. Use of Funds and Accounts ........................................................................... 19
Section 5.10. Other Liens..................................................................................................... 19
Section 5.11. Reasonable and Adequate Charges ................................................................ 19
Section 5.12. Adequacy and Applicability of Charges ........................................................ 19
Section 5.13. Limitations Upon Free Service ...................................................................... 19
Section 5.14. Collection of Charges .................................................................................... 20
Section 5.15. Maintenance of Records ................................................................................ 20
Section 5.16. Accounting Principles .................................................................................... 20
Section 5.17. Laws, Permits and Obligations ...................................................................... 20
Section 5.18. Bonding and Insurance .................................................................................. 20
Section 5.19. Other Liabilities ............................................................................................. 20
Section 5.20. Proper Books and Records ............................................................................. 20
Section 5.21. Reporting Requirements ................................................................................ 21
Section 5.22. Visitation and Examination............................................................................ 21
Section 5.23. Additional Debt .............................................................................................. 21
ARTICLE VI
INVESTMENTS
Section 6.01. Permitted Investments Only ........................................................................... 22
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default ........................................................................................... 22
Section 7.02. Remedies ........................................................................................................ 23
Section 7.03. Notice to Bank of Default .............................................................................. 23
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Section 7.04. Additional Bank Rights.................................................................................. 24
Section 7.05. Delay or Omission No Waiver ....................................................................... 24
Section 7.06. No Waiver of One Default to Affect Another; All Remedies
Cumulative ..................................................................................................... 24
Section 7.07. Other Remedies .............................................................................................. 24
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Loan Agreement and Relationship to Other Documents ............................... 24
Section 8.02. Assignments, Participations, etc. by the Bank ............................................... 24
Section 8.03. Notice of Claims Against Bank; Limitation of Certain Damages ................. 24
Section 8.04. Notices ........................................................................................................... 25
Section 8.05. Payments ........................................................................................................ 25
Section 8.06. Applicable Law and Jurisdiction; Interpretation; Severability ...................... 25
Section 8.07. Copies; Entire Agreement; Modification ....................................................... 26
Section 8.08. Waiver of Jury Trial; Class Action Waiver ................................................... 26
Section 8.09. Attachments ................................................................................................... 26
Section 8.10. No Recourse Against Officers and Agents .................................................... 26
Section 8.11. Conclusive Recital ......................................................................................... 27
Section 8.12. Limitation of Actions ..................................................................................... 27
Section 8.13. Pledge of Revenues ........................................................................................ 27
Section 8.14. No Liability .................................................................................................... 27
Section 8.15. No Waiver; Modifications in Writing ............................................................ 27
Section 8.16. Document Imaging......................................................................................... 28
Section 8.17. Payment on Non-Business Days .................................................................... 28
Section 8.18. Execution in Counterparts; Electronic Storage .............................................. 28
Section 8.19. Severability .................................................................................................... 28
Section 8.20. Headings ........................................................................................................ 28
Section 8.21. Waiver of Rules of Construction ................................................................... 28
Section 8.22. Integration ...................................................................................................... 28
Section 8.23. Patriot Act Notice .......................................................................................... 29
Section 8.24. Termination of Agreement ............................................................................. 29
EXHIBIT A FORM OF 2020 NOTE
EXHIBIT B FORM OF ADVANCE REQUEST
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4810-7991-0321.7
LOAN AGREEMENT
THIS LOAN AGREEMENT (this “Agreement”) is made and entered into as of April
__, 2020, by and between CITY OF FORT COLLINS, COLORADO, ELECTRIC
UTILITY ENTERPRISE, an enterprise established and existing pursuant to the home rule
charter of the City of Fort Collins, Colorado (the “Enterprise”), and ZB, N.A., DBA VECTRA
BANK COLORADO, a national banking association, in its capacity as lender (the “Bank”).
W I T N E S S E T H :
WHEREAS, the City of Fort Collins, Colorado (the “City”) is a duly organized and
existing home rule municipality of the State of Colorado, created and operating pursuant to
Article XX of the Constitution of the State of Colorado and the home rule charter of the City (the
“Charter”); and
WHEREAS, the members of the City Council of the City (the “Council”) have been duly
elected and qualified; and
WHEREAS, Section 19.3(b) of the Charter Article V (“Section 19.3(b)”) provides that
the Council may, by ordinance establish the City’s electric utility (the “Utility”) as an enterprise
of the City; and
WHEREAS, pursuant to Section 19.3(b), the Council has heretofore established the
Utility as an enterprise of the City (the “Enterprise”) in ordinances codified in Section 26-392 of
the Code of the City of Fort Collins (“Section 26-392”); and
WHEREAS, pursuant to Section 19.3(b) and Section 26-392, the Council has authorized
the Enterprise, by and through the Council, sitting as the board of the Enterprise (the “Board”),
to issue revenue and refunding securities and other debt; and
WHEREAS, the Enterprise has established a program (the “Epic Program”) to assist
certain customers of the Utility in financing home energy efficiency and renewable energy
improvements by making loans to customers who are property owners (“Epic Loans”); and
WHEREAS, the Board has determined that in order to finance Epic Loans (the
“Project”), it is necessary and advisable and in the best interests of the Enterprise (i) to enter into
this Agreement with the Bank pursuant to which the Bank shall loan the Enterprise an amount of
not to exceed $2,500,000 (the “Loan”) for such purposes, and (ii) to issue a promissory note (the
“Note”) to the Bank to evidence the Enterprise’s repayment obligations under this Agreement;
and
WHEREAS, the Enterprise has previously issued 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 “2018 Bonds”)
which are payable from a secured by a lien on the Net Pledged Revenues (as herein defined); and
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WHEREAS, the Enterprise has previously issued in 2019 its “City of Fort Collins,
Colorado, Electric Utility Enterprise, Taxable Subordinate Lien Revenue Note in an amount not
to exceed $2,500,000 (the “2019 Note”) which is payable from a secured by a subordinate lien
on the Net Pledged Revenues
WHEREAS, except for the 2018 Bonds and the 2019 Note, neither the City nor the
Enterprise has pledged or hypothecated the Gross Net Pledged Revenues (as herein defined) to
the payment of any bonds or for any other purpose, with the result that the Net Pledged Revenues
may now be pledged lawfully and irrevocably to the payment of the Loan which pledge will be
subordinate to the pledge of Net Pledged Revenues to the payment of the 2018 Bonds and on a
parity with the 2019 Note; and
WHEREAS, the Bank is willing to enter into this Agreement and to make the Loan to the
Enterprise pursuant to the terms and conditions stated below; and
WHEREAS, the Loan shall be payable from and secured by the Net Pledged Revenues
on a parity basis with the 2019 Note as more fully set forth herein;
NOW THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Words and terms defined in the recitals hereof, as hereby supplemented and amended,
shall have the same meanings herein or therein assigned to them, unless the context or use
indicates another meaning or intent, and except to the extent amended by the definitions
hereinafter set forth. In addition, the following terms shall have the meanings set forth herein:
“2018 Bond Ordinance” means the ordinance of the Enterprise which provides for the
issuance and delivery of the 2018A Bonds and 2018B Bonds.
“2018A Bonds” means the Enterprise’s Tax-Exempt Revenue Bonds, Series 2018A.
“2018B Bonds” means the Enterprise’s Taxable Revenue Bonds, Series 2018B.
“2019 Note” means the City of Fort Collins, Colorado, Electric Utility Enterprise not to
exceed $2,500,000 2019 Taxable Subordinate Lien Revenue Note evidencing the Loan from the
Enterprise, as maker, to US Bank, N.A. as payee.
“2020 Note” or “Note” means the City of Fort Collins, Colorado, Electric Utility
Enterprise not to exceed $2,500,000 2020 Taxable Subordinate Lien Revenue Note evidencing
the Loan from the Enterprise, as maker, to the Bank, as payee.
“Advance” means a disbursement of proceeds of the Unfunded Portion of the Loan
pursuant to the terms hereof.
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“Advance Maturity Date” means the second anniversary of the Closing Date.
“Advance Period” means the period commencing on the date of the Closing Date and
terminating on the second anniversary of the Closing Date unless terminated or extended as
provided herein.
“Advance Termination Date” means the earlier to occur of (a) the Full Funding Date; (b)
the date which is the last day of the Advance Period or (c) a date determined by the Enterprise
and provided in writing to the Bank.
“Authorized Person” means the President of the Enterprise or the Treasurer of the
Enterprise and also means any other individual authorized by the President to act as an
Authorized Person hereunder.
“Authorizing Ordinance” means the Ordinance adopted by the Board on April 7, 2020
authorizing the Enterprise to finance the Project, enter into the Loan and execute and deliver the
Note, this Agreement, and the other Financing Documents.
“Bank” means ZB, N.A., dba Vectra Bank Colorado, a national banking association, in its
capacity as lender of the Loan.
“Business Day” means any day of the week on which the Bank is conducting its banking
operations nationally and on which day the Bank’s offices are open for business in Denver,
Colorado.
“Capital Improvements” means the acquisition of land, easements, facilities, and
equipment (other than ordinary repairs and replacements), and those property improvements or
any combination of property improvements which will constitute enlargements, extensions or
betterments to the System and will be incorporated into the System.
“Closing” means the date of the execution and delivery of the Note, this Agreement, and
the other Financing Documents by the respective parties thereto.
“Closing Date” means date of the Closing for the Loan.
“Commitment Fee” has the meaning set forth in Section 2.01(d) hereof.
“C.R.S.” means the Colorado Revised Statutes, as amended and supplemented as of the
date hereof.
“Debt” means, without duplication, all of the following obligations of the Enterprise for
the payment of which the Enterprise has promised or is required to pay from the Net Pledged
Revenues: (a) borrowed money of any kind; (b) obligations evidenced by bonds, debentures,
notes or similar instruments; (c) obligations upon which interest charges are customarily paid;
(d) obligations arising from guarantees made by the Enterprise; (e) obligations as an account
party in respect of letters of credit and bankers’ acceptances or similar obligations issued in
respect of the Enterprise; and (f) obligations evidenced by any interest rate exchange agreement;
provided that notwithstanding the foregoing, the term “Debt” does not include obligations issued
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for any purpose, the repayment of which is contingent upon the Enterprise’s annual
determination to appropriate moneys therefore.
“Default Interest Rate” means a rate per annum equal to the lesser of the sum of the Wall
Street Journal Prime Rate plus 4% or the Maximum Rate.
“Electronic Notification” means telecopy, facsimile transmissions, email transmissions
or other similar electronic means of communication providing evidence of transmission.
“Event of Default” has the meaning set forth in Section 7.01 hereof.
“Financing Documents” means this Agreement, the Note, the Authorizing Ordinance,
and any other document or instrument required or stated to be delivered hereunder or thereunder,
all in form and substance satisfactory to the Bank.
“Fiscal Year” means the 12 months commencing January 1 of any year and ending
December 31 of such year.
“Full Funding Date” means the date on which, if at all, the aggregate amount of all
Advances equals the Maximum Advance Amount.
“Gross Pledged Revenues” means all rates, fees, charges and revenues derived directly or
indirectly by the City from the operation and use of and otherwise pertaining to the System, or
any part thereof, whether resulting from Capital Improvements or otherwise, and includes all
rates, fees, charges and revenues received by the City from the System, including without
limitation:
(a) All rates, fees and other charges for the use of the System, or for any
service rendered by the City or the Enterprise in the operation thereof, directly or
indirectly, the availability of any such service, or the sale or other disposal of any
commodities derived therefrom, including, without limitation, connection charges, but:
(i) Excluding any moneys borrowed and used for the acquisition of
Capital Improvements or for the refunding of securities, and all income or other
gain from any investment of such borrowed moneys; and
(ii) Excluding any moneys received as grants, appropriations or gifts
from the Federal Government, the State, or other sources, the use of which is
limited by the grantor or donor to the construction of Capital Improvements,
except to the extent any such moneys shall be received as payments for the use of
the System, services rendered thereby, the availability of any such service, or the
disposal of any commodities therefrom; and
(b) All income or other gain from any investment of Gross Pledged Revenues
(including without limitation the income or gain from any investment of all Net Pledged
Revenues, but excluding borrowed moneys and all income or other gain thereon in any
project fund, construction fund, reserve fund, or any escrow fund for any Parity Bonds
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payable from Net Pledged Revenues heretofore or hereafter issued and excluding any
unrealized gains or losses on any investment of Gross Pledged Revenues); and
(c) All income and revenues derived from the operation of any other utility or
other income-producing facilities added to the System and to which the pledge and lien
herein provided are lawfully extended by the Board or by the qualified electors of the
City; and
(d) All revenues which the Enterprise receives from the repayment of Epic
Loans.
“Initial Advance” means the first Advance made by the Bank to the Enterprise pursuant
to Section 2.06 hereof.
“Interest Payment Date” means the first Business Day of each month, commencing the
first such day occurring after the Initial Advance continuing through and including the Maturity
Date.
“Interest Rate” means fixed rate of interest equal to __%.
“Light and Power Fund” means the special fund of that name heretofore created by the
City pursuant to Section 8-77 of the Code of the City of Fort Collins.
“Loan” means the Loan Amount bearing interest pursuant to the terms of this Agreement.
“Loan Amount” means, with respect to the Loan, a maximum amount of Two Million
Five Hundred Thousand and 00/100 U.S. Dollars ($2,500,000), or such lesser amount that has
been Advanced by the Bank from time to time in accordance with the terms and provisions of
this Agreement.
“Material Adverse Effect” means a material adverse effect on (a) the business, property,
liabilities (actual and contingent), operations or condition (financial or otherwise), results of
operations, or prospects of the Enterprise taken as a whole, (b) the ability of the Enterprise to
perform its obligation under this Agreement, or (c) the validity or enforceability of this
Agreement or the rights or remedies of the Bank under this Agreement.
“Maturity Date” means April __, 2037.
“Maximum Advance Amount” means, with respect to the 2020 Note, $2,500,000.
“Maximum Rate” means 18% per annum.
“Net Pledged Revenues” means the Gross Pledged Revenues remaining after the payment
of the Operation and Maintenance Expenses of the System.
“Operation and Maintenance Expenses” means such reasonable and necessary current
expenses of the City, paid or accrued, of operating, maintaining and repairing the System
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including, except as limited by contract or otherwise limited by law, without limiting the
generality of the foregoing:
(a) All payments made to the Platte River Power Authority, a wholesale
electricity provider that acquires, constructs and operates generation capacity for the City,
or its successor in function;
(b) Engineering, auditing, legal and other overhead expenses directly related
and reasonably allocable to the administration, operation and maintenance of the System;
(c) Insurance and surety bond premiums appertaining to the System;
(d) The reasonable charges of any paying agent, registrar, transfer agent,
depository or escrow agent appertaining to the System or any bonds or other securities
issued therefor;
(e) Annual payments to pension, retirement, health and hospitalization funds
appertaining to the System;
(f) Any taxes, assessments, franchise fees or other charges or payments in
lieu of the foregoing;
(g) Ordinary and current rentals of equipment or other property;
(h) Contractual services, professional services, salaries, administrative
expenses, and costs of labor appertaining to the System and the cost of materials and
supplies used for current operation of the System;
(i) The costs incurred in the billing and collection of all or any part of the
Gross Pledged Revenues; and
(j) Any costs of utility services furnished to the System by the City or
otherwise.
“Operation and Maintenance Expenses” does not include:
(a) Any allowance for depreciation;
(b) Any costs of reconstruction, improvement, extensions, or betterments,
including without limitation any costs of Capital Improvements;
(c) Any accumulation of reserves for capital replacements;
(d) Any reserves for operation, maintenance, or repair of the System;
(e) Any allowance for the redemption of any bonds or other securities payable
from the Net Pledged Revenues or the payment of any interest thereon;
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(f) Any liabilities incurred in the acquisition of any properties comprising the
System; and
(g) Any other ground of legal liability not based on contract.
“Parity Debt” means any obligations of the Enterprise payable from and with a lien on
the Net Pledged Revenues on a parity basis with the 2019 Note and the 2020 Note.
“Permitted Investments” means any investment or deposit permissible under then
applicable law for governmental entities such as the Enterprise.
“Person” means an individual, a corporation, a partnership, an association, a joint
venture, a trust, an unincorporated organization or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
“Prime Rate” means a variable per annum rate of interest equal at all times to the rate of
interest established and quoted by the Bank as its “Prime Rate,” “Base Rate” or “Reference
Rate,” such rate to change contemporaneously with each change in such established and quoted
rate, provided that it is understood that the Prime Rate shall not necessarily be representative of
the rate of interest actually charged by the Bank on any loan or class of loans.
“Principal Payment Date” means the first Business Day of each month, commencing the
first such day occurring after the conversion to a Term Loan pursuant to Section 2.07 hereof and
continuing through and including the Maturity Date.
“Senior Debt” means the 2018A Bonds, the 2018B Bonds, and any obligations of the
Enterprise payable from and with a lien on the Net Pledged Revenues on a basis superior to the
2020 Note.
“Supplemental Public Securities Act” means Title 11, Article 57, C.R.S.
“System” means the City’s electric distribution system that furnishes electricity and
related services and excludes the City’s broadband system using fiber-optic technology. The
System consists of all properties, real, personal, mixed and otherwise, now owned or hereafter
acquired by the City, through purchase, construction and otherwise, and used in connection with
such system of the City, and in any way pertaining thereto and consisting of all properties, real,
personal, mixed or otherwise, now owned or hereafter acquired by the City, whether situated
within or without the City boundaries, used in connection with such system of the City, and in
any way appertaining thereto, including all present or future improvements, extensions,
enlargements, betterments, replacements or additions thereof or thereto and administrative
facilities.
“Unfunded Portion” means, as of any date, an amount equal to the Maximum Advance
Amount, less the total amount of all Advances funded as of such date, less any reduction of the
Unfunded Portion made pursuant to Section 2.01 hereof.
“Wall Street Journal Prime Rate” means the Wall Street Journal Prime Rate quoted by
the Bank from the Wall Street Journal or any successor thereto.
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ARTICLE II
LOAN
Section 2.01. Loan.
(a) Agreement to Make Loan. The Bank hereby agrees to extend the Loan to
the Enterprise in the maximum aggregate principal amount of $2,500,000 subject to the
terms and conditions of this Agreement. The Loan shall be evidenced by the 2020 Note,
the form of which is set forth in Exhibit A attached hereto.
(b) Advances. Subject to the terms and conditions of this Agreement,
including without limitation satisfaction of the conditions set forth in Section 2.06 hereof
and upon delivery to the Bank of an Advance Request in the form of Exhibit B hereto, the
Bank hereby agrees to make Advances to the Enterprise from time to time during the
Advance Period in the aggregate original principal amounts not to exceed $2,500,000
with respect to the Loan (as more particularly defined in Article I hereof, the “Maximum
Advance Amount”). On the Advance Termination Date, the Unfunded Portion shall be
reduced to zero and no further Advances will be made hereunder.
(c) Note. The Loan shall be evidenced by the 2020 Note. On the Closing
Date, the Enterprise shall execute and deliver the 2020 Note payable to the Bank, in
substantially the form set forth in Exhibit A attached hereto. The Enterprise shall
maintain a book for the registration of ownership of the 2020 Note. Upon any transfer of
the 2020 Note as provided herein, such transfer shall be entered on such registration
books of the Enterprise.
With respect to each Advance funded by the Bank from time to time hereunder,
the Bank shall maintain, in accordance with its usual practices, records evidencing the
indebtedness resulting from each such Advance and the amounts of principal and interest
payable and paid from time to time hereunder. In any legal action or proceeding in
respect of any Advance or the Loan, the entries made in such records shall be conclusive
evidence (absent manifest error) of the existence and amounts of the obligations therein
recorded. The Note shall evidence the obligation of the Enterprise to pay the Loan and
shall evidence the obligation of the Enterprise to pay the principal amount of each
Advance funded by the Bank hereunder, as such amounts are outstanding from time to
time, and accrued interest
(d) Commitment Fee. The Enterprise shall pay to the Bank a nonrefundable
fee (the “Commitment Fee”), which shall be in the amount of 0.005% ($12,500) of the
maximum aggregate principal amount of the Loan. The Commitment Fee shall be paid
on the Closing Date.
(e) Application of Loan Proceeds. The Enterprise shall apply the proceeds of
each Advance to pay the costs of the Project.
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(f) Special Obligations. All amounts due under this Agreement or the 2020
Note shall be payable and collectible solely out of the Net Pledged Revenues, which
revenues are hereby so pledged which pledge is in all respects subordinate to the pledge
and lien thereon of the Senior Debt at any time outstanding. The Bank may not look to
any general or other fund for the payment of such amounts; this Agreement and the 2020
Note shall not constitute a debt or indebtedness within the meaning of any constitutional,
charter, or statutory provision or limitation; and this Agreement and the 2020 Note shall
not be considered or held to be general obligations of the Enterprise or the City but shall
constitute special obligations of the Enterprise. No statutory or constitutional provision
enacted after the execution and delivery of this Agreement or the 2020 Note shall in any
manner be construed as limiting or impairing the obligation of the Enterprise to comply
with the provisions of this Agreement or the 2020 Note. None of the covenants,
agreements, representations and warranties contained herein or in the 2020 Note shall
ever impose or shall be construed as imposing any liability, obligation or charge against
the Enterprise or the City (except the Net Pledged Revenues and the special funds
pledged therefor), or against its general credit, or as payable out of its general fund or out
of any funds derived from taxation or out of any other revenue source (other than those
pledged therefor). The payment of the amounts due under this Agreement or the 2020
Note is not secured by an encumbrance, mortgage or other pledge of property of the City
or the Enterprise, except for the Net Pledged Revenues. No property of the City or the
Enterprise, subject to such exception, shall be liable to be forfeited or taken in payment of
such amounts.
Section 2.02. Interest Rate; Interest Payments; Principal Payments.
(a) Interest Rate. The unpaid principal balance of the Loan will bear interest
at the Interest Rate. All interest due and payable under this Agreement shall be
calculated on the basis of actual interest due based on a 360-day year. Interest payments
on the Loan shall be due on each Interest Payment Date and on the Maturity Date.
(b) Default Interest Rate. Immediately upon the occurrence of an Event of
Default or upon the Maturity Date, interest shall begin to accrue on all principal amounts
owing on the Loan at the Default Interest Rate for so long as such Event of Default
continues and remains uncured or, if after the Maturity Date, for so long as amounts due
on the Loan remain unpaid.
(c) Principal Payments. Repayment of principal amounts owing under the
Loan shall occur on each Principal Payment Date.
(d) Prepayment. The Loan may not be prepaid in whole until April ___,
2025. From April __, 2025 to April __, 2027; the Loan may be prepaid in whole at a
prepayment price equal to the principal amount so prepaid, plus accrued interest to the
prepayment date and a prepayment fee equal to 1% of the outstanding balance of the
Loan. On and after April __, 2027; the Loan may be prepaid in whole at a prepayment
price equal to the principal amount so prepaid, plus accrued interest without prepayment
fee. Notwithstanding the foregoing, the Enterprise may repay the Loan in part without
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penalty. All prepayments shall be made upon written notice to the Bank two Business
Days in advance of such prepayment.
(e) Obligations Unconditional. The Enterprise’s obligation to repay the Loan
hereunder and all of its other obligations under this Agreement shall be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Enterprise may have against the Bank or
any other Person, including, without limitation, any defense based on the failure of any
nonapplication or misapplication of the proceeds of the Loan hereunder, and irrespective
of the legality, validity, regularity or enforceability of all or any of the Financing
Documents, and notwithstanding any amendment or waiver of (other than an amendment
or waiver signed by the Bank explicitly reciting the release or discharge of any such
obligation), or any consent to, or departure from, all or any of the Financing Documents
or any exchange, release, or nonperfection of any collateral securing the obligations of
the Enterprise hereunder and any other circumstances or happening whatsoever, whether
or not similar to any of the foregoing; provided, however, that nothing contained in this
Section 2.02(e) shall abrogate or otherwise affect the rights of the Enterprise pursuant to
Section 8.06 hereof.
(f) Waivers, Etc. To the full extent permitted by law: (i) the Enterprise
hereby waives (A) presentment, demand, notice of demand, protest, notice of protest,
notice of dishonor and notice of nonpayment; (B) to the extent the Bank is not in default
hereunder, the right, if any, to the benefit of, or to direct application of, any security
hypothecated to the Bank until all obligations of the Enterprise to the Bank hereunder,
howsoever arising, have been paid; (C) the right to require the Bank to proceed against
the Enterprise hereunder, or against any Person under any guaranty or similar
arrangement, or under any agreement between the Bank and any Person or to pursue any
other remedy in the Bank’s power; and (D) any defense arising out of the election by the
Bank to foreclose on any security by one or more non-judicial or judicial sales; (ii) the
Bank may exercise any other right or remedy, even though any such election operates to
impair or extinguish the Enterprise’s right to repayment from, or any other right or
remedy it may have against, any Person, or any security; and (iii) the Enterprise agrees
that the Bank may proceed against the Enterprise or any Person directly and
independently of any other, and that any forbearance, change of rate of interest, or
acceptance, release or substitution of any security, guaranty, or loan or change of any
term or condition thereunder or under any Financing Document (other than by mutual
agreement between the Enterprise and the Bank) shall not in any way affect the liability
of the Enterprise hereunder.
(g) Manner of Payments. All interest, fees, and other payments to be made
hereunder by or on behalf of the Enterprise to the Bank shall be made, and shall not be
considered made until received, in United States dollars in immediately available funds.
The Enterprise shall make each payment hereunder in the manner and at the time
necessary so that each such payment is received by the Bank not later than 12:00 p.m.,
Colorado time, on the day when due in lawful money of the United States of America in
immediately available funds. Any payment received after 12:00 p.m., Colorado time,
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shall be deemed made on the next succeeding Business Day. All payments made
hereunder by or on behalf of the Enterprise to the Bank shall be applied to such amounts
due hereunder and under the Financing Documents in the following order: first, to unpaid
Commitment Fee, second, to accrued but unpaid interest, third, to principal and, fourth, to
any other amounts due hereunder.
(h) Default Interest Rate; Calculation of Interest and Fees. All interest and
fees due and payable under this Agreement shall be calculated on the basis of actual
interest due based on a 360-day year. Any sum due to the Bank and not paid when due
and any sum due to the Bank upon the occurrence or during the continuance of any Event
of Default hereunder shall bear interest at the Default Interest Rate.
Section 2.03. Costs, Expenses and Taxes. The Enterprise agrees to pay all reasonable
costs and expenses actually incurred by the Bank in connection with (a) the preparation,
execution and delivery of this Agreement or any other documents, including the other Financing
Documents, which may be delivered by any party in connection with this Agreement and the
other Financing Document, and (b) the filing, recording, administration (other than normal,
routine administration), enforcement, transfer, amendment, maintenance, renewal or cancellation
of this Agreement and all amendments or modifications thereto (or supplements hereto),
including, without limitation, the reasonable fees and out of pocket expenses of counsel for the
Bank and independent public accountants and other outside experts retained by the Bank in
connection with any of the foregoing; and. In addition, the Enterprise agrees to pay promptly all
reasonable costs and expenses of the Bank, including, without limitation, the actual, reasonable
fees and expenses of external counsel, for (i) any and all amounts which the Bank has paid
relative to the Bank’s curing of any Event of Default under this Agreement or any of the
Financing Documents; (ii) the enforcement of this Agreement or any of the Financing
Documents; or (iii) any action or proceeding relating to a court order, injunction, or other process
or decree restraining or seeking to restrain the Bank from paying any amount hereunder.
Without prejudice to the survival of any other agreement of the Enterprise hereunder, the
agreements and obligations contained in this Section 2.03 shall survive the payment in full of all
amounts owing to the Bank hereunder.
Section 2.04. Pledge. The Enterprise hereby pledges, assigns and grants to the Bank a
lien in the Net Pledged Revenues, which is subordinate to the lien which is pledged to secure the
payment of Senior Debt but on a pari passu basis with the Parity Debt, to secure its obligations to
the Bank hereunder and under the other Financing Documents. The lien of the Bank on the Net
Pledged Revenues hereunder shall be subject to no other liens except those liens granted on the
Net Pledged Revenues to any Senior Debt heretofore or hereafter issued in accordance with the
terms hereof and the Subordinate Debt. The Enterprise represents and warrants that, except for
the Senior Debt, the Net Pledged Revenues is not and shall not be subject to any other lien or
encumbrance without the prior written consent of the Bank except as otherwise permitted
pursuant to this Agreement.
Section 2.05. Conditions to Closing. The Closing on the Loan is conditioned upon the
satisfaction of each of the following:
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(a) all Financing Documents and other instruments applicable to the Loan are
in form and content satisfactory to the Bank and have been duly executed and delivered
in form and substance satisfactory to the Bank and shall have not been modified,
amended or rescinded, shall be in full force and effect on and as of the Closing Date and
executed original or certified copies of each thereof shall have been delivered to the
Bank;
(b) the Bank has received a certified copy of the Authorizing Ordinance of the
Enterprise, which shall be in form and content satisfactory to the Bank and authorize the
Enterprise to finance the Project, obtain the Loan and perform all acts contemplated by
this Agreement and all other Financing Documents; and a certified copy of all other
ordinances, resolutions and proceedings taken by the Enterprise authorizing the
Enterprise to finance the Project, obtain the Loan and the execution, delivery and
performance of this Agreement and the other Financing Documents and the transactions
contemplated hereunder and thereunder, together with such other certifications as to the
specimen signatures of the officers of the Enterprise authorized to sign this Agreement
and the other Financing Documents to be delivered by the Enterprise hereunder and as to
other matters of fact as shall reasonably be requested by the Bank;
(c) the Enterprise has provided a certificate certifying that on the Closing
Date each representation and warranty on the part of the Enterprise contained in this
Agreement and in any other Financing Document is true and correct and no Event of
Default, or event which would, with the passage of time or the giving of notice, constitute
an Event of Default, has occurred and is continuing and no default exists under any other
Financing Documents, or under any other agreements by and between the Enterprise and
the Bank and certifying as to such other matters as the Bank might reasonably request;
(d) the Enterprise has provided a certificate certifying that the only Senior
Debt outstanding as of the Closing Date is the 2018A Bonds and the 2018B Bonds and
that no Parity Debt (other than the 2019 Note) is outstanding as of the Closing Date;
(e) the Bank shall have received the opinion of Butler Snow LLP to the effect
that (i) the obligation of the Enterprise to pay the principal of and interest on the Loan
constitutes a valid and binding special obligation of the Enterprise payable solely from
the Net Pledged Revenues with a lien on the Net Pledged Revenues which is subordinate
to the lien thereon of the Senior Debt, and (ii) this Agreement and the Note are valid and
binding obligations of the Enterprise, enforceable against the Enterprise in accordance
with their respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, and other similar laws affecting creditors’ rights
generally, and by equitable principles, whether considered at law or in equity;
(f) all proceedings taken in connection with the transactions contemplated by
this Agreement, and all instruments, authorizations and other documents applicable
thereto, are satisfactory to the Bank and its counsel;
(g) no law, regulation, ruling or other action of the United States, the State of
Colorado or any political subdivision or authority therein or thereof shall be in effect or
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shall have occurred, the effect of which would be to prevent the Enterprise from fulfilling
its obligations under this Agreement or the other Financing Documents;
(h) all Bank counsel fees and any other fees and expenses due and payable in
connection with the execution and delivery of this Agreement shall have been paid by the
Enterprise upon execution and delivery of this Agreement;
(i) the Bank shall have been provided with the opportunity to review all
pertinent financial information regarding the Enterprise, agreements, documents, and any
other material information relating to the Enterprise or the Net Pledged Revenues or any
other component of the collateral securing the obligations of the Enterprise hereunder;
(j) all information provided by the Enterprise to the Bank is accurate in all
respects;
(k) the Bank shall have received such other certificates, approvals, filings,
opinions and documents as shall be reasonably requested by the Bank;
(l) all other legal matters pertaining to the execution and delivery of this
Agreement and the other Financing Documents shall be reasonably satisfactory to the
Bank.
Section 2.06. Procedure for Requesting and Funding Advances.
(a) Conditions to Funding Advances. No Advance shall be requested by the
Enterprise and the Bank shall have no obligation to honor an Advance Request except in
accordance with the provisions and upon fulfillment of the terms and conditions set forth
in this Agreement. The funding by the Bank of each Advance is conditioned upon the
satisfaction of each of the following, each of which shall be satisfactory in all respects to
the Bank:
(i) Advance Frequency. Advance Requests may only be made during
the Advance Period and shall be submitted to the Bank no more than once in any
calendar month, unless permitted more frequently by the Bank. Advances shall
be made in amounts of $75,000 or more.
(ii) Representations and Warranties True; No Default. At the time
any Advance is to be made and as a result thereof, immediately thereafter, all
representations and warranties of the Enterprise set forth in Article IV are true and
correct as though made on the date of such Advance Request and on the date
when such Advance is funded and no Event of Default hereunder has occurred
and is continuing and no litigation is then pending or threatened concerning the
Enterprise’s authority to pledge the Net Pledged Revenues as provided herein, and
the Enterprise shall deliver an executed certificate of an Authorized Person to
such effect in connection with each Advance in substantially the form of Exhibit
B.
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(iii) Payments Current. The Enterprise shall be current on all of its
obligations hereunder.
(iv) Advance Request. The Bank shall have received an Advance
Request from the Enterprise, the form of which is attached hereto as Exhibit B
(each, an “Advance Request”), signed by the Authorized Person of the Enterprise
and containing the calculation of the amount of such Advance requested by the
Enterprise.
(v) Amount of Advance. The amount of the requested Advance, when
combined with the sum of all prior Advances made hereunder shall not exceed the
Maximum Advance Amount for the Loan. From each Advance the Bank will
transfer amounts as specified in each Advance Request.
(vi) Material Adverse Changes. Since December 31, 2018, there has
been no change in the business, property, prospects, condition (financial or
otherwise) or results of operations of the Enterprise which could reasonably be
expected to have a Material Adverse Effect.
(vii) Other Conditions Precedent to Funding Each Advance. No
Advance shall be requested or made after the Advance Termination Date.
(b) Funding of Advances. Provided that the conditions set forth in Section
2.06(a) above are satisfied, within 2 days of receipt by the Bank of an Advance Request
signed by the Authorized Person, the Bank shall provide the amount of such Advance to
the Enterprise at such depository as the Enterprise may direct.
Section 2.07. Conversion to Amortizing Term Loan. Provided that (i) no Event of
Default shall have occurred and be continuing (ii) all representations and certifications and
agreements herein are then true and correct, and (iii) the outstanding Senior Debt is rated in one
of its four highest rating categories by a national recognized organization which regularly rates
obligations such as the Senior Debt on the Advance Loan Maturity Date the Loan shall convert
to a term loan (a “Term Loan”) that shall be payable in full by no later than the 17th anniversary
of the Closing Date. The Term Loan shall bear interest at the Interest Rate.
ARTICLE III
FUNDS AND ACCOUNTS
Section 3.01. Light and Power Fund. So long as this Agreement is in effect, the entire
Gross Pledged Revenues, upon their receipt from time to time by the Enterprise, shall be set
aside and credited immediately to the Light and Power Fund. In each month, after making in full
all deposits or payments required in connection with the Senior Debt, the Enterprise shall pay to
the Bank from the Net Pledged Revenues remaining in the Light and Power Fund, the amounts
due under this Agreement and the Note.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ENTERPRISE
While any obligations hereunder or under any of the other Financing Documents are
unpaid or outstanding, the Enterprise continuously represents and warrants to the Bank as
follows:
Section 4.01. Due Organization. The Enterprise is an enterprise of the City duly
organized and validly existing under Charter and Enterprise Ordinances.
Section 4.02. Power and Authorization. The Enterprise has all requisite power and
authority to own and convey its properties and to carry on its business as now conducted and as
contemplated to be conducted under the Financing Documents; to execute, deliver and to
perform its obligations under this Agreement and the other Financing Documents; and to cause
the execution, delivery and performance of the Financing Documents.
Section 4.03. No Legal Bar. To the best of the Enterprise’s knowledge, the Enterprise
is not in violation of any of the provisions of the laws of the State of Colorado or the United
States of America or any of the provisions of any order of any court of the State of Colorado or
the United States of America which would affect its existence, or its powers referred to in the
preceding Section 4.02. The execution, delivery and performance by the Enterprise of this
Agreement and of the other Financing Documents (a) will not violate any provision of any
applicable law or regulation or of any order, writ, judgment or decree of any court, arbitrator or
governmental authority; (b) will not violate any provisions of any document constituting,
regulating or otherwise affecting the operations or activities of the Enterprise; and (c) will not
violate any provision of, constitute a default under, or result in the creation, imposition or
foreclosure of any lien, mortgage, pledge, charge, security interest or encumbrance of any kind
other than liens created or imposed by the Financing Documents, on any of the revenues or other
assets of the Enterprise which could have a material adverse effect on the assets, financial
condition, business or operations of the Enterprise, on the Enterprise’s power to cause the
Financing Documents to be executed and delivered, or its ability to pay in full in a timely fashion
the obligations of the Enterprise under this Agreement or the other Financing Documents.
Section 4.04. Consents. The Enterprise has obtained all consents, permits, licenses and
approvals of, and has made all registrations and declarations with any governmental authority or
regulatory body required for the execution, delivery and performance by the Enterprise of this
Agreement and the other Financing Documents.
Section 4.05. Litigation. Except as disclosed in writing to the Bank, there is no action,
suit, inquiry or investigation or proceeding to which the Enterprise is a party, at law or in equity,
before or by any court, arbitrator, governmental or other board, body or official which is pending
or, to the best knowledge of the Enterprise, threatened in connection with any of the transactions
contemplated by this Agreement or the Financing Documents or against or affecting the assets of
the Enterprise, nor, to the best knowledge of the Enterprise, is there any basis therefor, wherein
an unfavorable decision, ruling or finding (a) would adversely affect the validity or
enforceability of, or the authority or ability of the Enterprise to perform its obligations under, the
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Financing Documents; or (b) would, in the reasonable opinion of the Enterprise, have a
materially adverse effect on the ability of the Enterprise to conduct its business as presently
conducted or as proposed or contemplated to be conducted.
Section 4.06. Enforceability. This Agreement and each other Financing Document
constitutes the legal, valid and binding special obligation of the Enterprise, enforceable against
the Enterprise in accordance with its terms (except as such enforceability may be limited by
bankruptcy, moratorium or other similar laws affecting creditors’ rights generally and provided
that the application of equitable remedies is subject to the application of equitable principles).
Section 4.07. Changes in Law. To the best knowledge of the Enterprise, there is not
pending any change of law which, if enacted or adopted could have a material adverse effect on
the assets, financial condition, business or operations of the Enterprise, on the Enterprise’s power
to enter into this Agreement or the other Financing Documents or its ability to pay in full in a
timely fashion the obligations of the Enterprise under this Agreement or the other Financing
Documents.
Section 4.08. Financial Information and Statements. The financial statements and
other information previously provided to the Bank or provided to the Bank in the future are or
will be complete and accurate and prepared in accordance with generally accepted accounting
principles. There has been no material adverse change in the Enterprise’s financial condition
since such information was provided to the Bank.
Section 4.09. Accuracy of Information. All information, certificates or statements
given to the Bank pursuant to this Agreement and the other Financing Documents will be true
and complete when given.
Section 4.10. Financing Documents. Each representation and warranty of the
Enterprise contained in any Financing Document is true and correct as of the Closing Date.
Section 4.11. Regulations U and X. The Enterprise is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U or X issued by the Board of Governors of the Federal Reserve System); and no
proceeds of the Loan will be or have been used to extend credit to others for the purpose of
purchasing or carrying any margin stock.
Section 4.12. Default, Etc. The Enterprise is not in default in the performance,
observance, or fulfillment of any of the obligations, covenants or conditions contained in any
Financing Document or other ordinance, resolution, agreement or instrument to which it is a
party which would have a material adverse effect on the ability of the Enterprise to perform its
obligations hereunder or under the other Financing Documents, or which would affect the
enforceability hereof or thereof.
Section 4.13. Sovereign Immunity. The Enterprise represents that, under Section 24-
10-106, C.R.S., its governmental immunity is limited to claims for injury which lie in tort or
could lie in tort. Under existing law, the Enterprise is not entitled to raise the defense of
sovereign immunity in connection with any legal proceedings to enforce its contractual
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obligations under the Financing Documents, or the transactions contemplated hereby or thereby
including, without limitation, the payment of the principal of and interest on the Note.
Section 4.14. No Filings. No filings, recordings, registrations or other actions are
necessary to create and perfect the pledges provided for herein; all obligations of the Enterprise
hereunder are secured by the lien and pledge provided for herein; and the liens and pledges
provided for herein constitute valid prior liens subject to no other liens.
Section 4.15. Outstanding Debt. Upon the execution and delivery of this Agreement,
except for the Financing Documents and the 2018A Bonds and 2018B Bonds, the Enterprise will
have no other Debt outstanding payable from or secured by the Net Pledged Revenues or any
portion thereof. The Enterprise represents and warrants that it will incur additional Debt only in
accordance with the provisions of Section 5.23 of this Agreement.
ARTICLE V
COVENANTS OF THE ENTERPRISE
While any obligations hereunder or under any of the other Financing Documents are
unpaid or outstanding, the Enterprise continuously warrants and agrees as follows:
Section 5.01. Performance of Covenants, Authority. The Enterprise covenants that it
will faithfully perform and observe at all times any and all covenants, undertakings, stipulations,
and provisions contained in the Authorizing Ordinance, this Agreement, the Note, the other
Financing Documents and all its proceedings pertaining thereto as though such covenants,
undertakings, stipulations, and provisions were set forth in full herein (for the purpose of this
provision the Financing Documents shall be deemed to continue in full force and effect
notwithstanding any earlier termination thereof so long as any obligation of the Enterprise under
this Agreement shall be unpaid or unperformed). The Enterprise covenants that it is duly
authorized under the constitution and laws of the State of Colorado, including, particularly and
without limitation, the Charter and the Enterprise Ordinances, to obtain the Loan and to execute
and deliver the Note, this Agreement, and the other Financing Documents, and that all action on
its part for the execution and delivery of the Note, this Agreement, and the other Financing
Documents has been duly and effectively taken and will be duly taken as provided herein, and
that the Loan, the Note, this Agreement, and the other Financing Documents are and will be
valid and enforceable obligations of the Enterprise according to the terms hereof and thereof.
Section 5.02. Contractual Obligations. The Enterprise shall perform all contractual
obligations undertaken by it under any agreements relating to the Loan, the Gross Pledged
Revenues, the Project, or the System, or any combination thereof.
Section 5.03. Further Assurances. At any and all times the Enterprise shall, so far as it
may be authorized by law, pass, make, do, execute, acknowledge, deliver and file or record all
and every such further instruments, acts, deeds, conveyances, assignments, transfers, other
documents and assurances as may be reasonably necessary or desirable for better assuring,
conveying, granting, assigning and confirming all and singular the rights, the Net Pledged
Revenues and other moneys and accounts hereby pledged or assigned, or intended so to be, or
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which the Enterprise may hereafter become bound to pledge or to assign, or as may be
reasonable and required to carry out the purposes of this Agreement and to comply with any
instrument of the Enterprise amendatory thereof, or supplemental thereto. The Enterprise, acting
by and through its officers, or otherwise, shall at all times, to the extent permitted by law, defend,
preserve and protect the pledge of the Net Pledged Revenues and other moneys and accounts
pledged hereunder and all the rights of the Bank hereunder against all claims and demands of all
Persons whomsoever.
Section 5.04. Conditions Precedent. Upon the date of the execution and delivery of
this Agreement, all conditions, acts and things required by the Federal or State Constitution, the
Charter, the Supplemental Act, the Enterprise Ordinances, or any other applicable law to exist, to
have happened and to have been performed precedent to the execution and delivery of this
Agreement shall exist, have happened, and have been performed; and the Bonds, together with
all other obligations of the Enterprise, shall not contravene any debt or other limitation
prescribed by the State Constitution.
Section 5.05. Rules, Regulations and Other Details. The Enterprise shall observe and
perform all of the terms and conditions contained in this Agreement, and shall comply with all
valid acts, rules, regulations, orders and directions of any legislative, executive, administrative or
judicial body applicable to the System, the Enterprise, except for any period during which the
same are being contested in good faith by proper legal proceedings.
Section 5.06. Payment of Governmental Charges. The Enterprise shall pay or cause
to be paid all taxes and assessments or other governmental charges, if any, lawfully levied or
assessed upon or in respect of the System, or upon any part thereof, or upon any portion of the
Gross Pledged Revenues, when the same shall become due, and shall duly observe and comply
with all valid requirements of any governmental authority relative to the System or any part
thereof, except for any period during which the same are being contested in good faith by proper
legal proceedings. The Enterprise shall not create or suffer to be created any lien upon the
System, or any part thereof, or upon the Gross Pledged Revenues, except the pledge and lien
created by for Senior Debt and Parity Debt and except as herein otherwise permitted. The
Enterprise shall pay or cause to be discharged or shall make adequate provision to satisfy and to
discharge, within 60 days after the same shall become payable, all lawful claims and demands
for labor, materials, supplies or other objects which, if unpaid, might by law become a lien upon
the System, or any part thereof, or the Gross Pledged Revenues; but nothing herein requires the
Enterprise to pay or cause to be discharged or to make provision for any such tax, assessment,
lien or charge, so long as the validity thereof is contested in good faith and by appropriate legal
proceedings.
Section 5.07. Protection of Security. The Enterprise and its officers, agents and
employees shall not take any action in such manner or to such extent as might prejudice the
security for the payment of the amounts due under this Agreement or the Note. No contract shall
be entered into nor any other action taken by which the rights of the Bank might be prejudicially
and materially impaired or diminished.
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Section 5.08. Prompt Payment. The Enterprise shall promptly pay the amounts due
under this Agreement or the Note at the places, on the dates and in the manner specified herein
and in the Agreement or the Note according to the true intent and meaning hereof.
Section 5.09. Use of Funds and Accounts. The funds and accounts described herein
shall be used solely and only for the purposes described herein.
Section 5.10. Other Liens. Other than the 2018A Bonds and 2018B Bonds, there are no
liens or encumbrances of any nature whatsoever on or against the System, or any part thereof, or
on or against the Net Pledged Revenues on a parity with or superior to the lien thereon of this
Agreement and the Note.
Section 5.11. Reasonable and Adequate Charges. The fees, rates and other charges
due to the Enterprise for the use of or otherwise pertaining to and services rendered by the
System to the Enterprise, to its inhabitants and to all other users within and without the
boundaries of the Enterprise shall be reasonable and just, taking into account and consideration
public interests and needs, the cost and value of the System, the Operation and Maintenance
Expenses thereof, and the amounts necessary to meet the debt service requirements of all Senior
Debt, Parity Debt, and any other securities payable from the Net Pledged Revenues, including,
without limitation, reserves and any replacement accounts therefor.
Section 5.12. Adequacy and Applicability of Charges. There shall be charged against
users of service pertaining to and users of the System, except as provided by Section 5.13 hereof,
such fees, rates and other charges so that the Gross Pledged Revenues shall be adequate to meet
the requirements of this Section. Such charges pertaining to the System shall be at least
sufficient so that the Gross Pledged Revenues annually are sufficient to pay in each Fiscal Year:
(a) Operation and Maintenance Expenses. amount equal to the annual
Operation and Maintenance Expenses for such Fiscal Year that are payable from the
Gross Pledged Revenues
(b) Principal and Interest. An amount equal to 125% of the debt service
requirements on the Senior Debt and any Parity Debt then outstanding in that Fiscal Year
(excluding the reserves therefor), and
(c) Deficiencies. All sums, if any, due and owing to meet then existing
deficiencies pertaining to any fund or account relating to the Gross Pledged Revenues or
any securities payable therefrom.
Section 5.13. Limitations Upon Free Service. No free service or facilities shall be
furnished by the System, except that the City shall not be required to pay for any use by the City
of any facilities of the System for municipal purposes. If the City chooses, in its sole discretion,
to pay for its use of the System, all the income so derived from the City shall be deemed to be
income derived from the operation of the System, to be used and to be accounted for in the same
manner as any other income derived from the operation of the System.
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Section 5.14. Collection of Charges. The Enterprise shall cause all fees, rates and other
charges pertaining to the System to be collected as soon as is reasonable, shall reasonably
prescribe and enforce rules and regulations or impose contractual obligations for the payment of
such charges, and for the use of the System, and shall provide methods of collection and
penalties, to the end that the Gross Pledged Revenues shall be adequate to meet the requirements
of this Agreement and the Note
Section 5.15. Maintenance of Records. Proper books of record and account shall be
kept by the Enterprise, separate and apart from all other records and accounts.
Section 5.16. Accounting Principles. System records and accounts, and audits thereof,
shall be currently kept and made, as nearly as practicable, in accordance with the then generally
accepted accounting principles, methods and terminology followed and construed for utility
operations comparable to the System, except as may be otherwise provided herein or required by
applicable law or regulation or by contractual obligation existing on the execution and delivery
of this Agreement.
Section 5.17. Laws, Permits and Obligations. The Enterprise will comply in all
material respects with all applicable laws, rules, regulations, orders and directions of any
governmental authority and all agreements and obligations binding on the Enterprise,
noncompliance with which would have a material adverse effect on the Enterprise, its financial
condition, assets or ability to perform its obligations under the other Financing Documents;
provided that the Enterprise may in good faith contest such laws, rules, regulations, orders and
directions and the applicability thereof to the Enterprise to the extent that such action would not
be likely to have a material adverse effect on the Enterprise’s ability to perform its obligations
hereunder.
Section 5.18. Bonding and Insurance. The Enterprise shall carry general liability
coverage, workers’ compensation, public liability, and such other forms of insurance on
insurable Enterprise property upon the terms and conditions, and issued by recognized insurance
companies, as in the judgment of the Enterprise would ordinarily be carried by entities having
similar properties of equal value, such insurance being in such amounts as will protect the
Enterprise and its operations.
Section 5.19. Other Liabilities. The Enterprise shall pay and discharge, when due, all
of its liabilities, except when the payment thereof is being contested in good faith by appropriate
procedures which will avoid financial liability and with adequate reserves provided therefor.
Section 5.20. Proper Books and Records. The Enterprise shall keep or cause to be
kept adequate and proper records and books of account in which complete and correct entries
shall be made with respect to the Enterprise, the Net Pledged Revenues and all of the funds and
accounts established or maintained pursuant to any of the Financing Documents. The Enterprise
shall (a) maintain accounting records in accordance with generally recognized and accepted
principles of accounting consistently applied throughout the accounting periods involved;
(b) provide the Bank with such information concerning the business affairs and financial
condition (including insurance coverage) of Enterprise as the Bank may request; and (c) without
request, provide the Bank with the information set forth below.
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Section 5.21. Reporting Requirements.
(a) The Enterprise shall notify the Bank promptly of all interim litigation or
administrative proceedings, threatened or pending, against the Enterprise which would, if
adversely determined, in the Enterprise’s reasonable opinion, have a material effect on
the Enterprise’s financial condition arising after the date hereof.
(b) The Enterprise shall provide the following to the Bank at the times and in
the manner provided below:
(i) as soon as available, but not later than 210 days following the end
of each Fiscal Year, the Enterprise shall furnish to the Bank its audited financial
statements prepared in accordance with generally accepted accounting principles
consistently applied, in reasonable detail and certified by a firm of independent
certified public accountants selected by the Enterprise;
(ii) within 30 days of each calendar year’s quarter end, the Enterprise’s
financial statements with respect to the collection of revenue of the EPIC
Program; and
(iii) promptly upon request of the Bank, the Enterprise shall furnish to
the Bank such other reports or information regarding the collateral securing the
obligations of the Enterprise hereunder or the assets, financial condition, business
or operations of the Enterprise, as the Bank may reasonably request.
(c) The Enterprise shall promptly notify the Bank of any Event of Default of
which the Enterprise has knowledge, setting forth the details of such Event of Default and
any action which the Enterprise proposes to take with respect thereto.
(d) The Enterprise shall notify the Bank as soon as possible after the
Enterprise acquires knowledge of the occurrence of any event which, in the reasonable
judgment of the Enterprise, is likely to have a material adverse effect on the financial
condition of the Enterprise or affect the ability of the Enterprise to perform its obligations
under this Agreement or under any other Financing Documents.
Section 5.22. Visitation and Examination. Unless otherwise prohibited by law, the
Enterprise will permit any Person designated by the Bank to visit any of its offices to examine
the Enterprise’s books and financial records, and make copies thereof or extracts therefrom, and
to discuss its affairs, finances and accounts with its principal officers, all at such reasonable
times and as often as the Bank may reasonably request.
Section 5.23. Additional Debt. The Enterprise may issue Debt with a lien on the Net
Pledged Revenues that is on a parity with or subordinate to the lien of this Agreement, without
the Bank’s prior written consent. The Enterprise may issue Debt with a lien on the Net Pledged
Revenues that is senior to the lien of this Agreement, without the Bank’s prior written consent, if
such Debt is issued pursuant to the provisions of the 2018 Bond Ordinance.
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ARTICLE VI
INVESTMENTS
Section 6.01. Permitted Investments Only. All moneys held in the Light and Power
Fund shall be invested in Permitted Investments only.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The occurrence of any one or more of the following
events or the existence of any one or more of the following conditions shall constitute an Event
of Default under this Agreement (whatever the reason for such event or condition and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment,
decree, rule, regulation or order of any court or any administrative or governmental body):
(a) the Enterprise fails to pay the principal of or interest on the Note or any
Parity Debt when due;
(b) the Enterprise fails to pay when due any other amounts due and payable to
the Bank under this Agreement or any other Financing Documents;
(c) the Enterprise fails to observe or perform any other of the covenants,
agreements or conditions on the part of the Enterprise in this Agreement, the Note, or the
Authorizing Ordinance and the Enterprise fails to remedy the same within 30 days after
the Bank has provided the Enterprise with notice thereof;
(d) any representation or warranty made by the Enterprise in this Agreement
or in any other Financing Document or any certificate, instrument, financial or other
statement furnished by the Enterprise to the Bank, proves to have been untrue or
incomplete in any material respect when made or deemed made;
(e) the pledge of the collateral or any other security interest created hereunder
fails to be fully enforceable with the priority required hereunder or thereunder;
(f) any judgment or court order for the payment of money exceeding any
applicable insurance coverage by more than $100,000 in the aggregate is rendered against
the Enterprise and the Enterprise fails to vacate, bond, stay, contest, pay or satisfy such
judgment or court order for 60 days;
(g) the Enterprise shall initiate, acquiesce or consent to any proceedings to
dissolve the Enterprise or to consolidate the Enterprise with other similar entities into a
single entity or the Enterprise shall otherwise cease to exist;
(h) a change occurs in the financial or operating conditions of the Enterprise,
or the occurrence of any other event that, in the Bank’s reasonable judgment, will have a
materially adverse impact on the ability of the Enterprise to generate Net Pledged
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Revenues sufficient to satisfy the Enterprise’s obligations under this Agreement or its
other obligations, and the Enterprise fails to cure such condition within six months after
receipt by the Enterprise of written notice thereof from the Bank;
(i) the Enterprise shall commence any case, proceeding or other action
(A) under any existing or future law of any jurisdiction relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it or seeking to adjudicate it insolvent or a bankrupt or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts; or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for itself or for any substantial part of
its property, or the Enterprise shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Enterprise any case, proceeding or
other action of a nature referred to in clause (i) and the same shall remain undismissed; or
(iii) there shall be commenced against the Enterprise any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its property which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal, within 60 days from the entry thereof; (iv) the Enterprise shall take
action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any
of the acts set forth in clause (i), (ii) or (iii) above; or (v) the Enterprise shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they
become due;
(j) this Agreement or any other Financing Document, or any material
provision hereof or thereof, (i) ceases to be valid and binding on the Enterprise or is
declared null and void, or the validity or enforceability thereof is contested by the
Enterprise (unless being contested by the Enterprise in good faith), or the Enterprise
denies it has any or further liability under any such document to which it is a party; or
(ii) any pledge or security interest created fails to be fully enforceable with the priority
required hereunder or thereunder; and
(k) the Enterprise’s auditor delivers a qualified opinion with respect to the
Enterprise’s status as an on-going concern.
Section 7.02. Remedies. Upon the occurrence and during the continuance of any Event
of Default, the Loan shall bear interest at the Default Interest Rate. Upon the occurrence and
during the continuance of any Event of Default, the Bank, at its option, may take any action or
remedy available under the other Financing Documents or any other document, or at law or in
equity. Notwithstanding anything to the contrary herein, acceleration of the Loan shall not be an
available remedy for the occurrence or continuance of an Event of Default. In exercising any
remedy hereunder, the Bank shall give notice to all Notice Parties.
Section 7.03. Notice to Bank of Default. Notwithstanding any cure period described
above, the Enterprise will immediately notify the Bank in writing when the Enterprise obtains
knowledge of the occurrence of any Event of Default or any event which would, with the
passage of time or the giving of notice, constitute an Event of Default.
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Section 7.04. Additional Bank Rights. Upon the occurrence of an Event of Default the
Bank may at any time take such other steps to protect or preserve the Bank’s interest in the Net
Pledged Revenues.
Section 7.05. Delay or Omission No Waiver. No delay or omission of the Bank to
exercise any right or power accruing upon any default shall exhaust or impair any such right or
power or shall be construed to be a waiver of any such default, or acquiescence therein; and
every power and remedy given by this Agreement may be exercised from time to time and as
often as may be deemed expedient.
Section 7.06. No Waiver of One Default to Affect Another; All Remedies
Cumulative. No waiver of any Event of Default hereunder shall extend to or affect any
subsequent or any other then existing Event of Default or shall impair any rights or remedies
consequent thereon. All rights and remedies of the Bank provided herein shall be cumulative
and the exercise of any such right or remedy shall not affect or impair the exercise of any other
right or remedy.
Section 7.07. Other Remedies. Nothing in this Article VII is intended to restrict the
Bank’s rights under any of the Financing Documents or at law or in equity, and the Bank may
exercise all such rights and remedies as and when they are available.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Loan Agreement and Relationship to Other Documents. The
warranties, covenants and other obligations of the Enterprise (and the rights and remedies of the
Bank) that are outlined in this Agreement and the other Financing Documents are intended to
supplement each other. In the event of any inconsistencies in any of the terms in the Financing
Documents, all terms will be cumulative so as to give the Bank the most favorable rights set
forth in the conflicting documents, except that if there is a direct conflict between any preprinted
terms and specifically negotiated terms (whether included in an addendum or otherwise), the
specifically negotiated terms will control.
Section 8.02. Assignments, Participations, etc. by the Bank. The Bank may not
assign or transfer this Agreement or the Note or participate any of the Bank’s interests in the
Agreement or the Note without the Enterprise’s prior written consent. Any such assignment
without the Enterprise’s prior written consent shall be deemed null and void and of no effect.
Section 8.03. Notice of Claims Against Bank; Limitation of Certain Damages. In
order to allow the Bank to mitigate any damages to the Enterprise from the Bank’s alleged
breach of its duties under the Financing Documents or any other duty, if any, to the Enterprise,
the Enterprise agrees to give the Bank written notice no later than 30 days after the Enterprise
knows of any claim or defense it has against the Bank, whether in tort or contract, relating to any
action or inaction by the Bank under the Financing Documents, or the transactions related
thereto, or of any defense to payment of the obligations of the Enterprise hereunder for any
reason. The requirement of providing timely notice to the Bank represents the parties’ agreed to
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standard of performance regarding the duty of the Bank to mitigate damages related to claims
against the Bank. Notwithstanding any claim that the Enterprise may have against the Bank, and
regardless of any notice the Enterprise may have given the Bank, the Bank will not be liable to
the Enterprise for indirect, consequential and/or special damages arising therefrom, except those
damages arising from the Bank’s willful misconduct, negligence or bad faith. Failure by the
Enterprise to give notice to the Bank shall not waive any claims of the Enterprise but such failure
shall relieve the Bank of any duty to mitigate damages prior to receiving notice.
Section 8.04. Notices. Notices shall be deemed delivered when the notice has been
(a) deposited in the United States Mail, postage pre-paid; (b) received by overnight delivery
service; (c) received by Electronic Notification; or (d) when personally delivered at the following
addresses (the “Notice Parties”): Notice of any record shall be deemed delivered when the
record has been (a) deposited in the United States Mail, postage pre-paid; (b) received by
overnight delivery service; (c) received by Electronic Notification; or (d) when personally
delivered at the following addresses (the “Notice Parties”):
to Enterprise: City of Fort Collins
P.O. Box 580
Fort Collins, CO 80522
Attn: City Manager
with a copy to: City of Fort Collins
P.O. Box 580
Fort Collins, CO 80522
Attn: City Attorney
to Bank: ZB, N.A., dba Vectra Bank Colorado
2000 S. Colorado Boulevard
Suite 2-1200
Denver, CO 80222
Attention: Conrad Freeman
Email: cfreeman@vectrabank.com
Telephone: (720) 947-8802
Section 8.05. Payments. Payments due on the Loan shall be made in lawful money of
the United States. All payments may be applied by the Bank to principal, interest and other
amounts due under the Note and this Agreement pursuant to the terms of this Agreement.
Section 8.06. Applicable Law and Jurisdiction; Interpretation; Severability. This
Agreement and all other Financing Documents will be governed by and interpreted in
accordance with the internal laws of the State of Colorado, except to the extent superseded by
Federal law. Invalidity of any provisions of this Agreement will not affect any other provision.
TO THE EXTENT PERMITTED BY LAW, THE ENTERPRISE AND THE BANK HEREBY
CONSENT TO THE EXCLUSIVE JURISDICTION OF ANY STATE COURT SITUATED IN
LARIMER COUNTY, COLORADO, AND WAIVE ANY OBJECTIONS BASED ON FORUM
NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR
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PROCEEDINGS RELATING TO THIS AGREEMENT, THE NOTE, THE NET PLEDGED
REVENUES, ANY OTHER FINANCING DOCUMENT, OR ANY TRANSACTIONS
ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF
THE FOREGOING. Nothing in this Agreement will affect the Bank’s rights to serve process in
any manner permitted by law. This Agreement, the other Financing Documents and any
amendments hereto (regardless of when executed) will be deemed effective and accepted only at
the Bank’s offices, and only upon the Bank’s receipt of the executed originals thereof. Invalidity
of any provision of this Agreement shall not affect the validity of any other provision.
Section 8.07. Copies; Entire Agreement; Modification. The Enterprise hereby
acknowledges the receipt of a copy of this Agreement and all other Financing Documents.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT
SHOULD BE READ CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING,
EXPRESSING CONSIDERATION AND SIGNED BY THE PARTIES ARE ENFORCEABLE.
NO OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN
CONTRACT MAY BE LEGALLY ENFORCED. THE TERMS OF THIS AGREEMENT
MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE
SHALL ALSO BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS
NOW IN EFFECT BETWEEN THE ENTERPRISE AND THE BANK. A MODIFICATION
OF ANY OTHER CREDIT AGREEMENT NOW IN EFFECT BETWEEN THE ENTERPRISE
AND THE BANK, WHICH OCCURS AFTER RECEIPT BY THE ENTERPRISE OF THIS
NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN INSTRUMENT. ORAL OR
IMPLIED MODIFICATIONS TO ANY SUCH CREDIT AGREEMENT IS NOT
ENFORCEABLE AND SHOULD NOT BE RELIED UPON.
Section 8.08. Waiver of Jury Trial; Class Action Waiver. As permitted by applicable
law, each party waives their respective rights to a trial before a jury in connection with any
Dispute (as "Dispute" is hereinafter defined), and Disputes shall be resolved by a judge sitting
without a jury. If a court determines that this provision is not enforceable for any reason and at
any time prior to trial of the Dispute, but not later than 30 days after entry of the order
determining this provision is unenforceable, any party shall be entitled to move the court for an
order compelling arbitration and staying or dismissing such litigation pending arbitration
("Arbitration Order"). To the extent permitted by applicable law, each party also waives the
right to litigate in court or an arbitration proceeding any Dispute as a class action, either as a
member of a class or as a representative, or to act as a private attorney general.
Section 8.09. Attachments. All documents attached hereto, including any appendices,
schedules, riders and exhibits to this Agreement, are hereby expressly incorporated by reference.
Section 8.10. No Recourse Against Officers and Agents. Pursuant to
Section 11-57-209 of the Supplemental Public Securities Act, if a member of the Board, or any
officer or agent of the Enterprise, acts in good faith in the performance of his duties as a member,
officer, or agent of the Board or the Enterprise and in no other capacity, no civil recourse shall be
available against such member, officer or agent for payment of the principal of and interest on
the Loan. Such recourse shall not be available either directly or indirectly through the Board or
the Enterprise, or otherwise, whether by virtue of any constitution, statute, rule of law,
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enforcement of penalty, or otherwise. By the acceptance of the delivery of the Note evidencing
the Loan and as a part of the consideration for such transfer, the Bank and any Person purchasing
or accepting the transfer of the obligation representing the Loan specifically waives any such
recourse.
Section 8.11. Conclusive Recital. Pursuant to Section 11-57-210 of the Supplemental
Public Securities Act, this Agreement is entered into pursuant to certain provisions of the
Supplemental Public Securities Act. Such recital shall be conclusive evidence of the validity and
the regularity of the issuance of this Agreement after delivery for value.
Section 8.12. Limitation of Actions. Pursuant to Section 11-57-212 of the
Supplemental Public Securities Act, no legal or equitable action brought with respect to any
legislative acts or proceedings in connection with the authorization or issuance of the Loan shall
be commenced more than 30 days after the authorization of the Loan.
Section 8.13. Pledge of Revenues. The creation, perfection, enforcement, and priority
of the pledge of revenues to secure or pay the Loan provided herein shall be governed by
Section 11-57-208 of the Supplemental Public Securities Act, this Agreement, the Note, and the
Authorizing Ordinance. The amounts pledged to the payment of the Loan shall immediately be
subject to the lien of such pledge without any physical delivery, filing, or further act. The lien of
such pledge shall have a first priority. The lien of such pledge shall be valid, binding, and
enforceable as against all Persons having claims of any kind in tort, contract, or otherwise
against the Enterprise irrespective of whether such Persons have notice of such liens.
Section 8.14. No Liability. The Bank, including its agents, employees, officers,
directors and controlling Persons, shall not have any liability to the Enterprise, and the Enterprise
assumes all risk, responsibility and liability for (a) the form, sufficiency, correctness, validity,
genuineness, falsification and legal effect of any demands and other documents, instruments and
other papers relating to the Loan even if such documents, should prove to be in any or all
respects invalid, insufficient, fraudulent or forged; (b) the general and particular conditions
stipulated therein; (c) the good faith acts of any Person whosoever in connection therewith;
(d) failure of any Person (other than the Bank, subject to the terms and conditions hereof) to
comply with the terms of the Loan; (e) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telex, telegraph, wireless or otherwise, whether or
not they be in code; (f) errors in translation or errors in interpretation of technical terms; (g) for
any other consequences arising from causes beyond the Bank’s control; or (h) any use of which
may be made of the proceeds of the Loan, except to the extent of any direct, as opposed to
indirect, consequential, or special damages suffered by the Enterprise which direct damages are
proven by the Enterprise to be caused by the Bank’s willful or grossly negligent failure to make
lawful payment under the Loan.
Section 8.15. No Waiver; Modifications in Writing. No failure or delay on the part of
the Bank in exercising any right, power or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or remedy preclude any other
right, power or remedy. The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to the Bank at law or in equity or otherwise. No
amendment, modification, supplement, termination or waiver of or to any provision of this
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Agreement, nor consent to any departure by the Enterprise therefrom, shall be effective unless
the same shall be in writing and signed by or on behalf of the Bank and the Enterprise. Any
amendment, modification or supplement of or to any provision of this Agreement, and any
consent to any departure by the Enterprise from the terms of any provision of this Agreement,
shall be effective only in the specific instance and for the specific purpose for which made or
given. No notice to or demand on the Enterprise in any case shall entitle the Enterprise to any
other or further notice or demand in similar or other circumstances or constitute a waiver of the
right of the Bank to any other or further action in any circumstances without notice or demand.
Section 8.16. Document Imaging. The Bank shall be entitled, in its sole discretion, to
image all or any selection of the Financing Documents, other instruments, documents, items and
records governing, arising from or relating to the Loan, and may destroy or archive the paper
originals. The Enterprise hereby waives any right to insist that the Bank produce paper originals;
agrees that such images shall be accorded the same force and effect as the paper originals; and
further agrees that the Bank is entitled to use such images in lieu of destroyed or archived
originals for any purpose, including as admissible evidence in any demand, presentment or
proceedings.
Section 8.17. Payment on Non-Business Days. Whenever any payment hereunder shall
be stated to be due on a day which is not a Business Day, such payment may be made on the next
succeeding Business Day.
Section 8.18. Execution in Counterparts; Electronic Storage. This Agreement may
be executed in counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which counterparts, taken together, shall constitute but one and the same
Agreement. The parties hereto agree that the transactions described herein may be conducted
and related documents may be stored by electronic means. Copies, telecopies, facsimiles,
electronic files and other reproductions of original executed documents shall be deemed to be
authentic and valid counterparts of such original documents for all purposes, including the filing
of any claim, action or suit in the appropriate court of law.
Section 8.19. Severability. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or nonauthorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or legality of such provision
in any other jurisdiction.
Section 8.20. Headings. Article and Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction of this Agreement.
Section 8.21. Waiver of Rules of Construction. The Enterprise hereby waives any and
all provisions of law to the effect that an ambiguity in a contract or agreement should be
interpreted against the party responsible for its drafting.
Section 8.22. Integration. This Agreement is intended to be the final agreement
between the parties hereto relating to the subject matter hereof and this Agreement and any
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4810-7991-0321.7
agreement, document or instrument attached hereto or referred to herein shall supersede all oral
negotiations and prior writings with respect to the subject matter hereof.
Section 8.23. Patriot Act Notice. The Bank hereby notifies the Enterprise that pursuant
to the requirements of the Patriot Act it is required to obtain, verify and record information that
identifies the Enterprise, which information includes the name and address of the Enterprise and
other information that will allow the Bank to identify the Enterprise in accordance with the
Patriot Act. The Enterprise hereby agrees that it shall promptly provide such information upon
request by the Bank.
Section 8.24. Termination of Agreement. At such time as all amounts due to the Bank
have been duly paid, or provided for, this Agreement shall terminate.
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4810-7991-0321.7
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
set forth above.
ZB, N.A., DBA VECTRA BANK COLORADO,
a national banking association
By _______________________________________
Name _____________________________________
Title ______________________________________
CITY OF FORT COLLINS, COLORADO,
ELECTRIC UTILITY ENTERPRISE, an
enterprise of the City of Fort Collins, Colorado
By _______________________________________
President
[SEAL]
Attest:
By
Secretary
[Signature Page to Loan Agreement]
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A-1
EXHIBIT A
FORM OF 2020 NOTE
THIS NOTE MAY NOT BE SOLD TRANSFERRED OR OTHERWISE DISPOSED OF
WITHOUT THE CONSENT OF THE ENTERPRISE.
UNITED STATES OF AMERICA
STATE OF COLORADO
CITY OF FORT COLLINS, COLORADO, ELECTRIC UTILITY ENTERPRISE
2020 TAXABLE SUBORDINATE LIEN REVENUE NOTE
IN THE AGGREGATE PRINCIPAL AMOUNT OF
NOT TO EXCEED $2,500,000
Advances Not to Exceed US $2,500,000 __________, 2020
FOR VALUE RECEIVED, CITY OF FORT COLLINS, COLORADO, ELECTRIC
UTILITY ENTERPRISE, an enterprise of the City of Fort Collins, Colorado, (hereinafter
referred to as “Maker”), promises to pay to the order of ZB, N.A., DBA VECTRA BANK
COLORADO, a national banking association, its successors and assigns (hereinafter referred to
as “Payee”), at the office of Payee or its agent, designee, or assignee at ___________________
or at such place as Payee or its agent, designee, or assignee may from time to time designate in
writing, all Advances made in an amount not to exceed the principal sum of TWO MILLION
FIVE HUNDRED THOUSAND AND NO/100 DOLLARS (US $2,500,000) (this “Note”)
pursuant to the terms of the Loan Agreement dated of even date herewith by and between Maker
and Payee (the “Loan Agreement”), in lawful money of the United States of America.
This Note shall bear interest, be payable, and mature pursuant to the terms and provisions
of the Loan Agreement. All capitalized terms used and not otherwise defined herein shall have
the respective meanings ascribed in the Loan Agreement.
All amounts due under this Note shall be payable and collectible solely out of the Net
Pledged Revenues, which revenues are hereby so pledged which pledge is in all respects
subordinate to the pledge and lien thereon of the Senior Debt at any time outstanding. The Bank
may not look to any general or other fund for the payment of such amounts; this Note shall not
constitute a debt or indebtedness within the meaning of any constitutional, charter, or statutory
provision or limitation; and this Note shall not be considered or held to be general obligations of
the Enterprise or the City but shall constitute a special obligation of the Enterprise. No statutory
or constitutional provision enacted after the execution and delivery of the Note shall in any
manner be construed as limiting or impairing the obligation of the Enterprise to comply with the
provisions of this Note. None of the covenants, agreements, representations and warranties
contained herein or in this Note shall ever impose or shall be construed as imposing any liability,
obligation or charge against the Enterprise or the City (except the Net Pledged Revenues and the
special funds pledged therefor), or against its general credit, or as payable out of its general fund
or out of any funds derived from taxation or out of any other revenue source (other than those
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A-2
pledged therefor). The payment of the amounts due under this Note is not secured by an
encumbrance, mortgage or other pledge of property of the City or the Enterprise, except for the
Net Pledged Revenues. No property of the City or the Enterprise, subject to such exception,
shall be liable to be forfeited or taken in payment of such amounts.
Amounts received by Payee under this Note shall be applied in the manner provided by
the Loan Agreement. All amounts due under this Note shall be payable without setoff,
counterclaim or any other deduction whatsoever by Maker.
Unless payments are made in the required amount in immediately available funds in
accordance with the provisions of the Loan Agreement, remittances in payment of all or any part
of the amounts due and payable hereunder shall not, regardless of any receipt or credit issued
therefor, constitute payment until the required amount is actually received by Payee in funds
immediately available at the place where this Note is payable (or any other place as Payee, in
Payee’s sole discretion, may have established by delivery of written notice thereof to Maker) and
shall be made and accepted subject to the condition that any check or draft may be handled for
collection in accordance with the practice of the collecting bank or banks. Acceptance by Payee
of any payment in an amount less than the amount then due shall be deemed an acceptance on
account only and any unpaid amounts shall remain due hereunder, all as more particularly
provided in the Loan Agreement.
In the event of nonpayment of this Note, Payee shall be entitled to all remedies under the
Loan Agreement and at law or in equity, and all remedies shall be cumulative.
It is expressly stipulated and agreed to be the intent of Maker and Payee at all times to
comply with applicable state law and applicable United States federal law. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any amount called for
under this Note or under the Loan Agreement, or contracted for, charged, taken, reserved or
received with respect to the indebtedness evidenced by this Note, then it is Maker’s and Payee’s
express intent that all excess amounts theretofore collected by Payee be credited on the principal
balance of this Note (or, if this Note has been or would thereby be paid in full, refunded to
Maker), and the provisions of this Note shall immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity of the execution of
any new document, so as to comply with the applicable law, but so as to permit the recovery of
the fullest amount otherwise called for hereunder and under the Loan Agreement. All sums paid
or agreed to be paid to Payee for the use, forbearance and detention of the indebtedness
evidenced hereby and by the Loan Agreement shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such indebtedness until
payment in full so that the rate or amount of interest on account of such indebtedness does not
exceed the maximum rate permitted under applicable law from time to time in effect and
applicable to the indebtedness evidenced hereby for so long as such indebtedness remains
outstanding.
Maker and any endorsers, sureties or guarantors hereof jointly and severally waive
presentment and demand for payment, protest and notice of protest and nonpayment, all
applicable exemption rights, valuation and appraisement, notice of demand, and all other notices
in connection with the delivery, acceptance, performance, default or enforcement of the payment
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Attachment: Exhibit A (8879 : EUE - Vectra Bank ORD)
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of this Note and the bringing of suit and diligence in taking any action to collect any sums owing
hereunder or in proceeding against any of the rights and collateral securing payment hereof.
Maker and any surety, endorser or guarantor hereof agree (a) that the time for any payments
hereunder may be extended from time to time without notice and consent; (b) to the acceptance
of further collateral; (c) to the release of any existing collateral for the payment of this Note;
(d) to any and all renewals, waivers or modifications that may be granted by Payee with respect
to the payment or other provisions of this Note; and/or (e) that additional makers, endorsers,
guarantors or sureties may become parties hereto all without notice to them and without in any
manner affecting their liability under or with respect to this Note. No extension of time for the
payment of this Note shall affect the liability of Maker under this Note or any endorser or
guarantor hereof even though Maker or such endorser or guarantor is not a party to such
agreement.
Failure of Payee to exercise any of the options granted herein to Payee upon the
happening of one or more of the events giving rise to such options shall not constitute a waiver
of the right to exercise the same or any other option at any subsequent time in respect to the same
or any other event. The acceptance by Payee of any payment hereunder that is less than payment
in full of all amounts due and payable at the time of such payment shall not constitute a waiver
of the right to exercise any of the options granted herein or in the Loan Agreement to Payee at
that time or at any subsequent time or nullify any prior exercise of any such option without the
express written acknowledgment of Payee.
Maker (and the undersigned representative of Maker, if any) represents that Maker has
full power, authority and legal right to execute, deliver and perform its obligations pursuant to
this Note and this Note constitutes the legal, valid and binding obligation of Maker.
All notices or other communications required or permitted to be given hereunder shall be
given in the manner and be effective as specified in the Loan Agreement, directed to the parties
at their respective addresses as provided therein.
This Note is governed by and interpreted in accordance with the internal laws of the State
of Colorado, except to the extent superseded by federal law. Invalidity of any provisions of this
Note will not affect any other provision.
Pursuant to Section 11-57-210 of the Colorado Revised Statutes, as amended, this Note is
entered into pursuant to and under the authority of the Supplemental Public Securities Act, being
Title 11, Article 57, of the Colorado Revised Statutes, as amended. Such recital shall be
conclusive evidence of the validity and the regularity of the issuance of this Note after delivery
for value and shall conclusively impart full compliance with all provisions and limitations of said
statutes, and this Note shall be incontestable for any cause whatsoever after delivery for value.
By acceptance of this instrument, the Payee agrees and consents to all of the limitations
in respect of the payment of the principal of and interest on this Note contained herein, in the
Authorizing Ordinance of the Maker authorizing the issuance of this Note and in the Agreement,
as the same may be amended from time to time.
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TO THE EXTENT PERMITTED BY LAW, MAKER HEREBY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF ANY STATE COURT SITUATED IN LARIMER
COUNTY, COLORADO, AND WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR
PROCEEDINGS RELATING TO THIS NOTE, THE LOAN AGREEMENT, THE NET
PLEDGED REVENUES, ANY OTHER FINANCING DOCUMENT, OR ANY
TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR
INTERPRETATION OF ANY OF THE FOREGOING.
TO THE EXTENT PERMITTED BY LAW, MAKER HEREBY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO
THIS NOTE, THE LOAN AGREEMENT, OR ANY OF THE OTHER FINANCING
DOCUMENTS, THE OBLIGATIONS THEREUNDER, ANY COLLATERAL SECURING
THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR
CONNECTED THERETO. MAKER REPRESENTS TO PAYEE THAT THIS WAIVER IS
KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
THE PROVISIONS OF THIS NOTE MAY BE AMENDED OR REVISED ONLY BY
AN INSTRUMENT IN WRITING SIGNED BY MAKER AND PAYEE. THERE ARE NO
ORAL AGREEMENTS BETWEEN MAKER AND PAYEE WITH RESPECT TO THE
SUBJECT MATTER HEREOF.
IN WITNESS WHEREOF, an authorized representative of City of Fort Collins,
Colorado, Electric Utility Enterprise, as Maker, has executed this Note as of the day and year
first above written.
CITY OF FORT COLLINS, COLORADO,
ELECTRIC UTILITY ENTERPRISE
By
President
[SEAL]
Attest:
By
Secretary
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Attachment: Exhibit A (8879 : EUE - Vectra Bank ORD)
4810-7991-0321.7
EXHIBIT B
FORM OF ADVANCE REQUEST
City of Fort Collins, Colorado, Electric Utility Enterprise
Loan Agreement
The undersigned certifies that he/she is an Authorized Person under that certain Loan
Agreement dated as of April __, 2020 (the “Agreement”) by and between City of Fort Collins,
Colorado, Electric Utility Enterprise and ZB, N.A., dba Vectra Bank Colorado (the “Bank”). All
capitalized terms used in this Advance Request (“Advance Request”) shall have the respective
meanings assigned in the Agreement.
The undersigned Authorized Person hereby makes a request to the Bank for an Advance
on the Loan, and in support thereof states:
(i) The amount of the Advance so requested is $___________.
(ii) Upon the funding of such Advance, the sum of all Advances will not exceed the
Maximum Advance Amount of the Loan.
(iii) At the time the requested Advance is to be made and as a result thereof,
immediately thereafter, all representations and warranties of the Enterprise set forth in Article IV
of the Loan Agreement are true and correct as though made on the date hereof and will be true
and correct as though made on the Advance Date and no Event of Default shall have occurred
and be continuing on the date hereof and on the Advance Date and no litigation is currently
pending or threatened concerning the Enterprise’s authority to pledge the Net Pledged Revenues
as provided in the Loan Agreement.
(iv) The outstanding Senior Debt is rated in one of its four highest rating categories by
a national recognized organization which regularly rates obligations such as the Senior Debt.
(v) The requested Advance shall be made by the Bank by ACH batch transfer to the
Enterprise in accordance with the instructions set forth below:
[Insert wire instructions]
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of ________,
20__.
CITY OF FORT COLLINS, COLORADO,
ELECTRIC UTILITY ENTERPRISE
By
Authorized Person
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Attachment: Exhibit A (8879 : EUE - Vectra Bank ORD)
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ORDINANCE NO. 010
OF THE CITY OF FORT COLLINS, COLORADO, ELECTRIC UTILITY ENTERPRISE
AUTHORIZING A LOAN AGREEMENT WITH THE COLORADO ENERGY OFFICE TO
PROVIDE FUNDING FOR THE EPIC LOAN PROGRAM
WHEREAS, the City of Fort Collins, Colorado (the “City”) is a duly organized and
existing home rule municipality of the State of Colorado, created and operating pursuant to
Article XX of the Constitution of the State of Colorado and the home rule charter of the City (the
“Charter”); and
WHEREAS, the members of the City Council of the City (the “Council”) have been duly
elected and qualified; and
WHEREAS, Section 19.3(b) of the Charter Article V (“Section 19.3(b)”) provides that
the Council may, by ordinance establish the City’s electric utility (the “Utility”) as an enterprise
of the City; and
WHEREAS, pursuant to Section 19.3(b), the Council has heretofore established the
Utility as an enterprise of the City (the “Enterprise”) in ordinances codified in Section 26-392 of
the Code of the City of Fort Collins; and
WHEREAS, pursuant to Section 19.3(b) and Code Section 26-392, the Council has
authorized the Enterprise, by and through the Council, sitting as the board of the Enterprise (the
“Board”), to issue, by ordinance, revenue and refunding securities and other debt; and
WHEREAS, the City has established a program (the “Epic Program”) to assist certain
customers of the Utility in financing home energy efficiency and renewable energy
improvements by making loans to customers who are property owners (“Epic Loans”); and
WHEREAS, the Board has determined that in order to finance Epic Loans (the
“Project”), it is necessary and advisable and in the best interests of the Enterprise (i) to enter into
a loan agreement (the “Loan Agreement”) the State of Colorado acting by and through the
Colorado Energy Office (the “CEO”) pursuant to which the CEO shall loan the Enterprise
$800,000 (the “Loan”) for such purposes, and (ii) to issue a promissory note (the “Note”) to the
CEO to evidence the Enterprise’s repayment obligations under the Loan Agreement; and
WHEREAS, the Loan shall accrue interest at 0% interest and shall be repaid in one
principal payment of $800,000 on April 20, 2035; and
WHEREAS, the Enterprise has previously incurred the following financial obligations
which are payable from and secured by a lien on the Enterprise’s “Net Pledged Revenues” (as
defined in Exhibit “A” of the Loan Agreement): (i) its “City of Fort Collins, Colorado, Electric
Utility Enterprise, Tax-Exempt Revenue Bonds, Series 2018A” and its “City of Fort Collins,
Colorado, Electric Utility Enterprise, Taxable Revenue Bonds, Series 2018B,” both approved in
Enterprise Ordinance No. 003 (jointly, the “2018 Bonds”), (ii) a loan agreement with U.S. Bank
National Association approved in Enterprise Ordinance No. 007 as amended in Enterprise
Ordinance No. 008 (the “2019 Loan Agreement”), and (iii) a loan agreement with Vectra Bank
Colorado approved in Enterprise Ordinance No. 009 (the “2020 Loan Agreement”); and
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WHEREAS, the 2018 Bonds, the 2019 Loan Agreement and the 2020 Loan Agreement
shall be collectively referred to herein as the “Prior Obligations”; and
WHEREAS, except for the Prior Obligations, neither the City nor the Enterprise has
pledged or hypothecated the Enterprise’s “Gross Pledged Revenues” (as defined in Exhibit “A”
of the Loan Agreement) to the payment of any bonds or for any other purpose, with the result
that the Net Pledged Revenues may now be pledged lawfully and irrevocably to the payment of
the Loan which pledge will be subordinate to the pledge of Net Pledged Revenues to the
payment of the Prior Obligations; and
WHEREAS, pursuant to Enterprise Ordinance No. 003, the Mayor of the City has been
appointed President of the Enterprise (the President”), the City Financial Officer has been
appointed Treasurer of the Enterprise (the “Treasurer”), and the City Clerk has been appointed
Secretary of the Enterprise (the “Secretary”) which appointments the Board hereby reaffirms and
ratifies for purposes of this Ordinance; and
WHEREAS, there are attached hereto as Exhibit “A” and incorporated herein by
reference the forms of the Loan Agreement and the Note (jointly, “the “Financing Documents”).
BE IT ORDAINED BY THE BOARD OF THE CITY OF FORT COLLINS,
COLORADO, ELECTRIC UTILITY ENTERPRISE AS FOLLOWS:
Section 1. Adoption of Recitals, Approvals, Authorizations, and Amendments. The
Board hereby adopts and incorporates herein by reference as operative provisions of this
Ordinance the recitals set forth above. The forms of the Financing Documents in substantially
the forms attached hereto as Exhibit “A” are hereby approved. The Enterprise shall enter and
perform its obligations under the Financing Documents in the forms of such documents, with
such changes as are not inconsistent herewith and as are hereafter approved by the President or
the Treasurer. The President and Secretary are hereby authorized and directed to execute the
Financing Documents and to affix the seal of the Enterprise thereto, and further to execute and
authenticate such other documents or certificates as are deemed necessary or desirable in
connection therewith. The Financing Documents shall be executed in substantially the forms
approved at this meeting. The execution of any instrument or certificate or other document in
connection with the matters referred to herein by the President, the Secretary, the Treasurer, any
member of the Board, or by other appropriate officers of the Enterprise, shall be conclusive
evidence of the approval by the Enterprise of such instrument.
Section 2. Pledge of Revenues. The amounts pledged to the payment of the Loan
evidenced by the Financing Documents shall immediately be subject to the lien of such pledge
without any physical delivery, filing, or further act subject to. The lien of such pledge shall have
the priority described in the Financing Documents. The lien of such pledge shall be valid,
binding, and enforceable as against all persons having claims of any kind in tort, contract, or
otherwise against the Enterprise irrespective of whether such persons have notice of such liens.
Section 3. Limited Obligation; Special Obligation. The Loan evidenced by the
Financing Documents is payable solely from the Net Pledged Revenues of the Enterprise and the
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Financing Documents do not constitute a debt within the meaning of any constitutional, charter
or statutory limitation or provision.
Section 4. Authorized Persons. Pursuant to the Loan Agreement, the President and
the Treasurer are hereby designated as the Authorized Persons (as defined in the Loan
Agreement) for the purpose of performing any act or executing any document relating to the
Loan, the Enterprise, or the Financing Documents. A copy of this Ordinance shall be furnished
to the CEO as evidence of such designation. The President may designate additional authorized
Persons.
Section 5. Direction to Take Authorizing Action. The appropriate officers of the
Enterprise and members of the Board are hereby authorized and directed to take all other actions
necessary or appropriate to effectuate the provisions of this Ordinance, including but not limited
to such certificates and affidavits as may reasonably be required by the CEO.
Section 6. Ratification and Approval of Prior Actions. All actions heretofore taken
by the officers of the Enterprise and members of the Board, not inconsistent with the provisions
of this Ordinance, relating to the Financing Documents, or actions to be taken in respect thereof,
are hereby ratified, approved, and confirmed.
Section 7. Severability. If any section, 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, paragraph, clause, or provision shall not affect any of the
remaining provisions of this Ordinance, the intent being that the same are severable.
Section 8. Repealer. All orders, resolutions, bylaws, ordinances or regulations of the
Enterprise, or parts thereof, inconsistent with this Ordinance are hereby repealed to the extent
only of such inconsistency.
Section 9. Ordinance Irrepealable. After the Financing Documents are executed and
delivered, this Ordinance shall constitute an irrevocable contract between the Enterprise and the
CEO and shall be and remain irrepealable until the Loan and the interest thereon, as applicable,
shall have been fully paid, satisfied, and discharged. No provisions of any constitution, statute,
charter, ordinance, resolution or other measure enacted after the Financing Documents are
executed and delivered shall in any manner be construed as impairing the obligations of the
Enterprise to keep and perform the covenants contained in this Ordinance.
Section 10. Disposition. A true copy of this Ordinance, as adopted by the Board, shall
be numbered and recorded on the official records of the Board and its adoption and publication
shall be authenticated by the signatures of the President and the Secretary, and by a certificate of
the publisher.
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Introduced, considered favorably on first reading and ordered published this 20th day of
March, 2020, and to be presented for final passage on the 7th day of April, 2020.
CITY OF FORT COLLINS, COLORADO,
ELECTRIC UTILITY ENTERPRISE
By:________________________________
President
ATTEST:
_________________________________
Secretary
Passed and adopted on final reading this 7th day of April, 2020.
CITY OF FORT COLLINS, COLORADO,
ELECTRIC UTILITY ENTERPRISE
By:________________________________
President
ATTEST:
_________________________________
Secretary
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EXHIBIT A
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Staff seeks direction from Council Finance with which option to proceed for City Council consideration. If
supported, staff is tentatively scheduled to present the selected 15-year capital option to full Council on October
1, 2019.
DISCUSSION / NEXT STEPS:
A 15 year loan term is programmatically important - 80% of customers / owners said if longer term is not
available, it would not be feasible for them to participate.
Ross Cunniff; see if my impression is right – interest rate swap – really a bet that the variable rate will go down
and they will potentially make potentially more money –
Travis Storin; speculating or they have a hedge of their own that they are trying to install
Ross Cunniff; re: the risk to the person who wants to pay the fixed interest
1) Variable rate goes down - paying more for money than we would have had to
2) Hard to back up - there may be some potential that a partner might default on the agreement
What are our contingencies if that happened?
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Attachment: Council Finance Meeting Minutes, August 19, 2019 (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)
Capital Provider Terms
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Attachment: Council Finance Meeting Minutes, July 15, 2019 (8878 : EUE - Items Regarding Epic Homes 15-Year Capital)