HomeMy WebLinkAboutMemo - Mail Packet - 1/23/2024 - Memorandum From Josh Birks Re: Council Request: Overview Of Foothills Mall Redevelopment Public FinancingSustainability Services
222 LaPorte Ave.
PO Box 580, Fort Collins, CO 80522
970-416-2170
jbirks@fcgov.com
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MEMORANDUM
Date: January 17, 2024
To: Mayor and City Councilmembers
Through: Kelly DiMartino, City Manager
Tyler Marr, Deputy City Manager
Travis Storin, Chief Financial Officer
Jacob Castillo, Chief Sustainability Officer
From: Josh Birks, Deputy Director, Sustainability Services
Subject: COUNCIL REQUEST: Overview of Foothills Mall Redevelopment Public Financing
This memorandum responds to a request from a Councilmember to provide an overview of the public
financing that supported the redevelopment of the Foothills Mall and an update on the anticipated
contribution required from the City.
BOTTOM-LINE:
Original projections estimated the investment from the City and URA for the Foothills Mall Redevelopment
project from sales tax increment would total $5.1 million (revised to account for the refund of the reserve
when the bonds are retired). Revised projections based on current economic trends place the new
estimate at $1.3 million, a change of negative $3.8 million.
DISCUSSION
PUBLIC FINANCING PACKAGE
The Foothills Mall Redevelopment is supported by a public finance package that includes five revenue
sources: (a) Metro District Capital Mills; (b) Metro District Specific Ownership Tax; (c) Property Tax
Increment; (d) a Public Improvement Fee; and (e) Sales Tax Increment. All revenues were pledged to the
Foothills Metropolitan District to support the issuance of bonds. The bond provided a direct subsidy to the
project to fund a portion of the on-site and off-site construction costs. The pledge of sales tax revenue is
intended to support the bond debt service only if needed and to fill a supplemental reserve account
required by the bond terms. Any pledged sales tax revenue in excess of that commitment is to be
remitted back to the City.
FOOTHILLS MALL FINANCIAL PERFORMANCE
DocuSign Envelope ID: 2F1A2975-4ECA-449C-A1BC-D06F0F3E23F0
Staff have prepared an update on the performance of the public finance package.
The estimated investment contributed from the City of Fort Collins (City) through the Fort Collins Urban
Renewal Authority (URA) when the Foothills mall project was approved by council and the URA board
was $8.8 million. However, these assumptions did not account for the sales tax increment pledged to fill
the reserve fund, which will be refunded at the retiring of the bonds. In the original estimate, that refund is
an estimated $3.7 million. By including this credit, the City’s contribution should have been $5.1 million.
Based on current trends, the staff has revised the estimate resulting in a new forecast City total
contribution of $1.3 million after accounting for the reserve refund at the retiring of the metro district
bonds.
Year
Metro
District
Revenue
City Sales Tax
Revenue
Non-Pledged
Sales Tax
Pledged
Increment
Bond
Payments &
Reserve
Increment
Returned to City
City
Contribution
2012 4.8
2015 2.1 5.0 5.0 2.5 4.6 - 2.5
2016 2.3 5.3 5.3 3.1 5.4 - 3.1
2017 6.5 5.4 5.4 3.2 9.7 - 3.2
2018 6.5 8.8 5.5 3.3 6.0 3.3 -
2019 6.7 9.0 5.6 3.4 5.7 3.4 -
TOTAL 15.4 6.6 8.8
Original Assumptions
Year
Metro
District
Revenue
City Sales
Tax
Revenue
Non-
Pledged
Sales Tax
Pledged
Increment
Bond
Payments &
Reserve
Increment
Returned to
City
City
Contribution
2012 4.8
2015 0.8 2.2 3.0 - 0.8 - -
2016 1.4 3.1 3.0 - 1.4 - -
2017 2.1 3.5 3.2 0.2 2.3 - 0.2
2018 4.2 3.3 3.1 0.3 4.5 - 0.3
2019 4.4 3.5 3.2 0.5 4.9 - 0.5
2020 5.2 3.4 3.2 0.4 5.6 - 0.4
2021 5.0 3.0 3.0 - 5.0 - -
2022 5.8 3.8 3.3 0.7 6.4 - 0.7
2023 8.2 4.0 3.4 0.8 9.1 - 0.8
2024 7.4 3.7 3.3 0.6 8.0 - 0.6
2025 7.3 3.7 3.3 0.6 6.4 0.6 -
2026-2038 95.3 48.0 43.0 7.9 86.1 7.8 0.1
Refund Reserve - - - (2.3) - - (2.3)
Total 146.9 85.1 78.2 9.7 140.4 8.4 1.3
Updated Forecast January 2024
DocuSign Envelope ID: 2F1A2975-4ECA-449C-A1BC-D06F0F3E23F0
Under the revised scenario, pledged sales tax revenue does not start being remitted back to the City until
2025 –later than projected in the original estimate. Additionally, the amount of the anticipated annual
pledged sales tax increment is significantly reduced resulting in a lower overall pledge of sales tax to the
project. Finally, the metro district revenues contribute more towards the required reserve fund than sales
tax increment reducing that portion of the City’s contribution from $3.7 million under the original estimate
to $2.3 million under the revised estimate.
The revised scenario is driven by several factors:
Construction delays and a slower lease-up rate of the project.
Lower sales per square foot performance that anticipated driven by tenant mix, including more
service-based businesses (which do not generate sales tax revenue) than included in the original
forecast.
Retails sales stagnation at the site with 2023 assumed to be the height of sales production. Sales
are assumed to remain constant from 2024 onwards – a conservative assumption.
The revised scenario includes the following information not available when the original estimate was
developed:
The bond closing at a lower interest rate than originally assumed - 5.92% versus 7.00%.
Actual property values of the constructed buildings and improvements along with actual tax
collections – both increment and metro district – from 2015 to 2023.
Actual retails sales performance of the project from 2015 to 2023.
DocuSign Envelope ID: 2F1A2975-4ECA-449C-A1BC-D06F0F3E23F0