HomeMy WebLinkAboutMemo - Read Before Packet - 3/26/2013 - Memorandum From Josh Birks Re: Agenda Item #8 � Woodward Business Assistance Agreement (Revised Agenda Item Summary & Staff Presentation)DATE: March 18, 2013
STAFF: Darin Atteberry, Bruce Hendee
Josh Birks, Mike Beckstead
AGENDA ITEM SUMMARY
FORT COLLINS CITY COUNCIL 8
SUBJECT
Items Relating to an Agreement Between the City of Fort Collins, the Fort Collins Downtown Development Authority,
and Woodward, Inc. to Provide Business Investment Assistance for the Relocation and Construction of the Company’s
Headquarters and Expanding its Manufacturing and Office Facilities.
A. First Reading of Ordinance No. 55, 2013, Authorizing and Approving the Execution and Delivery by the City
of an Agreement with Woodward, Inc. and Related Documents, Including the Authorization of a Borrowing,
in Connection with an Economic Development Project Relating to Woodward, Inc., and Providing Other
Matters Related Thereto.
B. First Reading of Ordinance No 56, 2013, Appropriating General Fund Reserves to Fund Capital Public
Improvements in Connection with a Community Development Business Assistance Agreement Between the
City, Downtown Development Authority, and Woodward, Inc. Regarding the Link-n-Greens Development.
EXECUTIVE SUMMARY
City Council will consider two items related to providing business investment assistance to Woodward, Inc. to
encourage the relocation and construction of the company’s headquarters and expanding its manufacturing facilities
in Fort Collins. The project will retain or create between 1,400 and 1,700 primary jobs in the community, provide 29
acres of improved open space along the river (including habitat restoration), and anchor the southeastern edge of the
River District with a major employer. The two items include:
A. An Agreement between the City, Downtown Development Authority, and Woodward, Inc.; and
B. An appropriation of $2.27 million in General Fund Reserves in connection with the Agreement with Woodward,
Inc.
BACKGROUND / DISCUSSION
Project Overview
Location
This area consists of 101.5 acres and is generally located at the southwest corner of East Lincoln and South Lemay
Avenue. The Cache la Poudre River is the southern boundary and the majority of the western boundary of the P.D.P.
The Poudre River Trail is located on the property within an easement. The project is zoned C-C-R Community
Commercial – Poudre River District, and the proposed uses are permitted in this zone district at this location.
History
The land is currently used as the Link-n-Greens golf course which has been in operation since 1986. The property
contains a barn, silos and outbuildings known as the Coy/Hoffman Barn, which were designated on the Colorado State
Register of Historic Properties in 1995. The barn is associated with the earliest development of agriculture in the area,
having been built during the 1860s as part of a homestead. Woodward has expressed an interest in working with the
City in recognizing the historic importance of the downtown river corridor. Although there are no specific plans to date,
they have indicated an interest in participating in some manner in recognizing the Coy Barn and other historic features.
As part of the development the barn will be renovated. A specific use has not been identified, although, in order to
protect the structure, it may not be open to the general public.
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Project Description
The proposed Woodward project is being established to accommodate a new campus to accommodate the company’s
continuing growth. Woodward is a global company and has been in Fort Collins since 1955. They have continued
to experience growth in sales and breadth of market of their products. The company serves two major market sectors,
including aerospace and energy. It is Woodward’s intent to expand their facilities to meet the growing demand for their
products and to expand in northern Colorado. Over time, the project will be home to their international headquarters
and for the global headquarters of up to two of their businesses: Industrial Turbomachinery Systems (ITS) and Engine
Systems (ES). As a large base level employer Woodward generates over $2 billion in sales per year.
Woodward has outgrown their Drake facility and need to expand their overall facilities to accommodate continued
growth. Woodward intends to develop a campus of office, manufacturing, and testing facilities on the Link-N-Greens
site. The campus will include a collection of buildings with parking areas served by private drives. In conjunction with
the campus, a retail and commercial center is proposed to be located in the southeast corner of the site.
Approximately 70,000 square feet of office and commercial development is planned for this area. The combined
building footprint of the industrial/manufacturing facility is projected to be 600,500 square feet in buildings ranging from
one to three stories. A future phase of construction will contain an unknown amount of commercial development
including service based restaurant, retail and office for the benefit of the general public and Woodward employees.
Development of the industrial campus for Woodward will occur in four phases beginning with a first phase of
approximately 259,300 square feet. Timing of each of the phases will be based on market demand. Unlike the Drake
campus this one will not be fenced. Instead security will be through other measures, primarily at the buildings. This
will allow the campus to have an open street-front landscape appearance. The project plan is divided into Phase One
and Future Phases up to four phases. Phase One includes the core components of the Woodward operations and
would represent over $100 million in investment. Over all four phases construction would be approximately $200
million (including production equipment). The river restoration area would be dedicated to the City and be constructed
with phase one.
The project anticipates four phases as described below
• Phase I – 259,000 square feet of manufacturing and office space including the relocation of the ITS
operations from the Drake/Lemay site. In addition, this phase includes receiving and material space, a
production support building, and a café/multipurpose building. Woodward has committed to start this project
with final approval of this Agreement and their Board of Directors.
• Phase II – 60,000 square feet office building to include the relocation of the Corporate Headquarters from the
Drake/Lemay site. Final decision to proceed on this phase anticipated in early 2014.
• Phase III – 209,000 square feet of manufacturing and office space including the relocation of the ES
operations from Loveland. This expansion may occur on the Drake/Lemay site rather than at Link-N-Greens.
• Phase IV – 72,000 square feet Energy Tech Center. In recent discussions this phase may happen
concurrently with Phase II. A decision on this phase is likely in early 2014.
• Drake/Lemay Facility – The facility will remain a productive part of Woodward’s operations. At this time, it
is unclear what aspect of the business will use the facility.
Woodward has been in discussion with the City over the last 6 to 8 months on details of the project layout and
relationship with the community. The project was reviewed and approved unanimously by the Planning & Zoning Board
on February 21st. There was no opposition to the project. Woodward intends to close on sale of the property in April
or May of 2013 with site work for Phase I commencing in August or September of 2013. The estimated time of
completion of construction for Phase I would be late winter of 2015 with delivery of production parts by 2016.
Public Improvements
The project will utilize Tax Increment Financing to make various upgrades to various site features. The first three public
improvements listed below will be completed as part of Phase I. Following is a brief description:
• Transmission Line – Currently there is a significant Platte River Power Authority (“PRPA”) transmission line
that crosses the site diagonally from Northeast to Southwest. The current location of the transmission line
impacts the development potential of the property. The City, working with PRPA, will cause the transmission
line to be relocated along Lemay Avenue extending across Mulberry Street and connecting back to the current
alignment south of the Poudre River. The route of the transmission line will be positioned back from Lemay
March 26, 2013 -3- ITEM 8
far enough to allow for a row of trees. Additionally, the new route will reduce the impact to the City owned
natural areas along the river reducing the number of existing towers in the natural area. The Land
Conservation and Preservation Board supported the proposed alignment on March 13, 2013.
• Right of Way Improvements – The City will design and construct improvements to both Lincoln Avenue and
Lemay Avenue required by the proposed relocation and expansion of Woodward’s corporate headquarters
and production facility. The improvements along Lincoln Avenue will generally include a center turn lane, bike
lanes, and a temporary pedestrian path along the south side of the street. Improvements to Lemay Avenue
will include a parkway, trees, sidewalk, street lighting, and other improvements to comply with the full street
cross section. Some improvements may be on an interim basis until funds are available for the broader
Lincoln Boulevard Improvements.
• Open Space Improvements – Woodward will gift a 2931 acre parcel to the City for the purpose of restoring
the property to a natural condition. The restoration will include landscape and habitat improvements based
on a design developed by the City’s natural areas department. The tax increment financing will be used to help
offset the design and construction costs related with these improvements.
• Lincoln Boulevard Improvements – To the extent available, tax increment financing may provide funds to
assist with future enhancements along Lincoln Avenue. The intent of the improvements is to transform the
standard cross section into a boulevard similar to Mountain Avenue west of Old Town. The specific details
of these improvements are not set but may include construction of new or improved street and intersections,
sidewalks and benches, bicycle lanes and racks, trees and other landscaping, gateway features, transit
related infrastructure, storm water improvements, directional signage, public art and other project for a positive
neighborhood image, and interpretive features of culture and history relevant to the area. These improvements
are subject to a successful voter initiative to provide capital funding for the portion of the cost not covered by
tax increment financing and subject to the availability of tax increment depending on the timing of Phase III
construction.
Utility Partnership
There is an opportunity in the future for Woodward to partner with the City and participate in the Fort Collins Solar
Program (FCSP). The intent of the FCSP is to enter into 20 year purchase power agreements with commercial
customers for the purchase of the energy produced from customer photovoltaic systems. The program is currently
funded in the 2013 and 2014 budgets. Timing is a significant issue related to solar installed with this program. Utilities
are allowed to apply a multiplier of 3 towards meeting the State’s Renewable Energy Standard up until July 2015. The
FCSP must use the multiplier to be economically practical. Rooftop space for the installation of solar at Woodward
may or may not be available until 2015. Fort Collins Utilities has expressed an interest in working with Woodward as
a participation in the Program. Note, the one caveat will have to be completion of any solar array whose energy will
be purchased through the FCSP before July of 2015.
Fort Collins Utilities (FCU) is working with Woodward through the Integrated Design Assistance Program (IDAP) and
has committed $75,000 in funds to assist with this energy efficiency design. Through this program, FCU is providing
financial and technical assistance in the design phase and will provide a financial incentive based on facility energy
savings. Utilities staff are participating in an early design charrette attended by multiple stakeholders to promote a
holistic approach to design. A copy of the preliminary IDAP package is attached.
In addition to the work on site, there is also discussion related to a partnership that would utilize Woodward equipment,
which would allow them to demonstrate their equipment, at the Drake Waste processing plant to use the methane
created in the treatment process to make electricity. The electricity created would qualify towards our Renewable
Energy Standard.
PRPA Transmission Line Relocation IGA
The City will enter into an Intergovernmental Agreement (“IGA”) with PRPA subject to approval by the City Council.
The IGA provides that the City of Fort Collins will pay for the relocation and installation of the transmission lines that
currently cross the property. Funding for the relocation of the lines will be paid from tax increment financing (“TIF”)
generated by the development of the Woodward Property. The IGA has been presented to and approved by the PRPA
Board of Directors. Relocation of the line will occur starting in 2013 and will result in one new transmission tower
placed in a natural area just south of Mulberry and the removal of three transmission towers northwest of Mulberry
in a natural area. The City, upon approval of the IGA will manage the project including all public outreach.
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Public Benefit
Fort Collins provides a high quality of place attributed to the lively historic downtown and the city’s impressive parks,
trails and open space networks. These community assets make Fort Collins an attractive place for both a well-
educated workforce and diverse industries. Woodward’s proposed relocation and expansion represents an opportunity
to strengthen the existing high quality of place. The Project meets numerous City Plan policy objectives, occurs in a
Catalyst Project Area (as defined by City Plan), and presents the opportunity to enhance and expand the Poudre River
Corridor natural area. Thus, the project represents an opportunity to achieve more than economic outcomes but an
opportunity to strengthen the overall community.
City Plan Policy Objectives
The project as proposed by Woodward meets a variety of City Plan objectives, including but not limited to:
Economic Health
• EH 1.1 – Support Job Creation: The project will create between 185 and 400 new primary jobs as well as
transfer between 515 and 600 jobs from within the region.
• EH 1.4 – Target the Use of Incentives to Achieve Community Goals: The project will achieve broader
community goals as described, including natural areas restoration, open space preservation, and
infill/redevelopment.
• EH 2.1 – Support Targeted Industry Clusters: Woodward is a member of the Clean Energy cluster and an
active member of the Colorado Clean Energy Cluster non-profit entity supporting clean energy research and
development.
• EH 4.1 – Prioritize Targeted Redevelopment Areas: The Link-N-Greens site is within an identified targeted
redevelopment areas within City Plan.
Environmental Health
• ENV 1.1 – Protect and Enhance Natural Features: The project as proposed and approved by the Planning
and Zoning board protects and restores approximately 2931 acres of open space adjacent to the Cache la
Poudre River.
• ENV 2.1 – Maintain System of Open Lands: The project adds to the open space system surrounding the
Cache la Poudre River. Through habitat restoration it will enhance the integrity of wildlife habitat.
• ENV 2.10 – Maintain Access: The Poudre River Trail currently travels along the boundary of the project.
Subject to available funding, the trail will be moved further from the river’s edge with select developed river
access points. This approach provides access to the natural area while providing for habitat restoration.
• ENV 5.4 – Support Renewable Energy in New Development: The project is actively engaged in the IDAP
program provided by FCU to achieve facility energy savings. In addition, Woodward is looking to partner with
FCU through the Fort Collins Solar Program.
• ENV 7.11 – Participate in Research, Development and Demonstrations: Woodward and FCU are
contemplating a partnership to foster research, development and demonstrations projects in the renewable
energy and energy management sector.
• ENV 24.2 – Conserve Natural Features: The project includes a dedication of 2931 acres along the Cache
la Poudre River. This land also includes an area of a historic river oxbow.
• ENV 24.4 – Restore and Enhance: The project includes the restoration of landscaping and habitat on a 2931
acre parcel adjacent to the river.
• ENV 26.3 – Ensure Setbacks for Channel Instability and Improve Channel Migration: The 2931 acre
natural parcel includes an opportunity to stabilize the river bank and allow for greater lateral migration,
potentially in the location of the historic river oxbow.
Community and Neighborhood Livability
• LIV 5.1 – Encourage Targeted Redevelopment and Infill: The Link-N-Greens site is encompassed by the
identified targeted redevelopment areas within City Plan.
• LIV 21.4 – Provide Access to Transit: The project includes access to bus stops along Lincoln Avenue and
Lemay Avenue. In addition, future enhancements to Lincoln Avenue may include additional transit facilities
intended to provide circulation to and through Old Town.
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Transportation
• T 3.3 – Transit Supportive Design: Interim and future enhancements to Lincoln Avenue will seek to integrate
transit and alternative modes of transportation into the immediate improvements and final design.
Catalyst Project Areas
During the Plan Fort Collins process project team members, City Council, and the public identified areas throughout
the city that have the potential to “showcase” opportunities to embrace the Plan Fort Collins vision themes of Innovate,
Sustain, and Connect. Through a combination of public and private actions that complement and build upon one
another, these areas have the potential for lasting, desirable change. The Lincoln Triangle Area was identified as one
of these Catalyst Project Areas.
The Lincoln Triangle Area contains a rich mix of historic and new development as well as substantial vacant and
underdeveloped parcels. The Link-N-Greens site is one such underdeveloped area. The proposed Project meets many
aspects of the Area Vision, including:
• Showcase Heritage: The Coy/Hoffman Barn will be maintained as a part of the project preserving a link to
the history of the area.
• River Links: The dedication of additional open space along the river will provide an opportunity to enhance
and expand the Poudre River corridor.
• Connect: The interim and ultimate improvements along both Lemay and Lincoln Avenue will provide
additional pedestrian and bicycle connective in the area.
Finally, the Lincoln Triangle Catalyst Project Area lists several priority projects; one of these projects is the
improvement of Lincoln Avenue. The City has already begun the planning of these improvements; however, the
project, if all phases are completed, may provide much needed funding for the completion of the project.
Net Benefits to Other Taxing Entities
The Project will generate additional benefits and costs for local taxing districts other than the City and the DDA.
Additional discussion of the City and DDA fiscal impacts occurs below under the Financial Assistance Overview
section. Both Larimer County and the Poudre School District (“PSD”) will see net benefits from the project, primarily
from additional property tax revenue. Despite the site’s location within the DDA, both Larimer County and PSD retain
50 percent of any property tax increment generated in the district. The net benefits to each are summarized below:
• Larimer County: Between $5.5 million and $5.8 million in net benefits with a present value of $3.9 million to
$4.1 million (using a 5 percent discount rate).
• PSD: Between $11.7 million and $12.0 million in net benefits with a present value of $8.1 million to $8.2 million
(using a 5 percent discount rate).
Financial Assistance Overview
The opportunity to retain approximately 700 primary jobs and encourage the expansion of a business to include 700
– 1,000 new primary jobs to Fort Collins (with 185-400 new jobs to Northern Colorado) generates significant positive
economic impacts to the community (See Financial/Economic Impacts). As a result, the City Council will consider a
Business Assistance Agreement (the “Agreement”) providing three primary forms of investment in the proposed
Project. These investments include: (1) tax increment assistance through the DDA; (2) rebate of use tax on eligible
manufacturing equipment and construction materials; and (3) rebate of applicable development review, capital
expansion, street oversizing, and utility plant investment fees (“Capital Expansion/PIF Rebates”).
March 26, 2013 -6- ITEM 8
Table 1
Business Assistance Package Summary
Response
DDA Tax Increment Revenues $16.7 MM
Manufacturing Equipment and Construction Use
Tax Rebates (80%)
$3.8 MM
Development Fee Rebates (100%) $0.3 MM
Capital Expansion/PIF Rebates (80%50%) $2.7 MM
Total $23.5 MM
Tax Increment Assistance
Woodward has focused on the Link-N-Greens property (see Attachment 1: Project Location Map) for the potential
relocation and expansion of the company’s corporate headquarters and production facilities. On March 5, 2013 City
Council, with unanimous support, considered the amendment of the DDA Plan of Development to include the property
on first reading of Ordinance No. 49, 2103. By amending the Plan of Development, the City Council enables the use
of tax increment financing to support the Project.
Based on a Larimer County Assessor Estimate of Future Value dated January 29, 2013 and the initial phasing
schedule provided by Woodward, the project will generate approximately $16.7 million in tax increment revenue over
the remaining life of the DDA area. These funds will be used to reimburse Woodward and the City for several costs
associated with the Project, including: facades, right of way improvements (Lincoln and Lemay), relocation of a Platte
River Power Authority (“PRPA”) transmission line, open space restoration, and future enhancements to Lincoln
Avenue, as shown in Table 2. In addition, a portion of the tax increment revenue will cover financing cost associated
with the reimbursement amounts.
Table 2
Summary of Public Improvement Costs
Estimated Total
Cost (Millions)
Tax Increment
Pledge (Millions)
Balance*
(Millions) Recipient
Building Facades $6.00 $3.80 $2.20 Woodward
Right of Way
Improvements $1.75 $1.75 $0.00 City
Transmission Line
Relocation $1.30 $1.30 $0.00 City
Open Space
Improvements
$3.50 $3.00 $0.50 City
Lincoln Boulevard $11.00 $2.85 $8.15 City
Financing $4.00 $4.00 $0.00 N/A
Total $27.55 $16.70 $11.15
*Any unfunded balance remaining after the TIF pledge is the responsibility of the recipient listed in
the table.
Woodward has generously agreed to advance the funds necessary to relocation the Transmission Line and construct
the Right of Way Improvements and Open Space Improvements (described above). The DDA and City have agreed
to reimburse this advance and evidence that commitment with a bond1. Tax Increment revenue will be used to repay
the Bond principal and interest on the bond will be variable and indexed to the 10 year U.S. Treasury Note rate2. This
1 The Bond is being issued pursuant to Article XX, Section 6 of the Colorado Constitution, Article V, Section 19.8
of the City Charter, the Downtown Development Authority Act, the Supplemental Act, and pursuant to the 2006
Election.
2 The actual interest rate will be determined by comparing the 10 year U.S. Treasury Note on the initial advance date
compared to the 10 year U.S. Treasury Note on each subsequent anniversary date and using the difference. At no
time will the interest fall below 0.25 percent per annum.
March 26, 2013 -7- ITEM 8
rate will likely fall well below the current market based cost of capital. Woodward has agreed to these terms as a way
to demonstrate their commitment to the community and improvement of the Lincoln Triangle Catalyst Project Area.
Due to the variable rate and uncertainty regarding phasing, the City has agreed to appropriate $2.27 million in General
Fund Reserves for the purpose of creating a reimbursement reserve. These reimbursement reserve funds will only
be required if the Tax Increment revenue generated by the project falls short of the amount necessary to reimburse
Woodward’s advanced funds with interest, as described in the Bond. In the event only Phase I is completed, the entire
amount of these funds may be needed to complete the capital projects. However, if only Phases I, II, and IV are
completed; the additional TIF generated by these additional Phases should eliminate the need for the reimbursement
reserve funds (depending on the actual schedule of these phases).
Use Tax Rebate
Woodward plans to invest approximately $169.1 million in new buildings and $50.5 million in new equipment as part
of the proposed Project. As part of the Agreement, City Council will consider rebating 80 percent of the use tax
collected in connection with these investments. The rebate would include approximately $2.6 million of the total $3.3
million due on construction materials and $1.2 million of the total $1.4 million due on eligible equipment see Table 3.
In both cases, the rebates go beyond the general fund portion of the rate. As a result, the general fund must bear the
additional cost of the rebate to avoid impacting revenue associated with the dedicated sales tax rates (e.g., Open
Space, Street Maintenance, Building on Basics, and Keep Fort Collins Great). This additional cost will be backfilled
from the revenue generated by indirect and induced economic impacts to the community. The estimated total backfill
is approximately $800,000 for all phases.
The actual amount of the use tax rebate will be tied to Woodward achieving an employment level of 1,400 by
December 31, 2018. The City will retain 40 percent of any rebate amount until the employment level has been reached
by Woodward. If the target employment level is reached after December 31, 2018 but before December 31, 2020
Woodward will receive the retained 40 percent less $500,000 (combined between use tax and development fee
rebates). Woodward will not be entitled to the remaining 40 percent if the target level is not reached by December 31,
2020.
Table 3
Summary of Use Tax Rebates
Estimated Total
(Millions)
Tax Rebate
(Millions)
Retained
Revenue
(Millions)
Backfill
(Millions)
Construction Materials $3.3 $2.6 $0.7 $0.7
Eligible Equipment $1.4 $1.2 $0.2 $0.1
Total $4.7 $3.8 $0.9 $0.8
Development Fee Rebate
As part of the Agreement, City Council will consider rebating 50 percent of the applicable Capital Expansion, Street
Oversizing and Utility Plant Investment fees due for the Project. In addition, City Council will consider rebating 100
percent of the applicable Development Review Fees (e.g., Plan Check, and Base Building Permit Fee). The rebate
will include approximately $3.0 million of the total $5.7 million due see Table 4. These fees are collected to offset the
cost each new project imposes on the capital infrastructure within the City. As a result, the cost of the rebate must be
backfilled from the revenue generated by indirect and induced economic impacts to the community. The backfilled
revenue will make each capital fund whole. The estimated total backfill is approximately $2.7 million.
The actual amount of the development fee rebate will be tied to Woodward achieving an employment level of 1,400
by December 31, 2018. The City will retain 40 percent of any rebate amount until the employment level has been
reached by Woodward. If the target employment level is reached after December 31, 2018 but before December 31,
2020 Woodward will receive the retained 40 percent less $500,000(combined between use tax and development fee
rebates). Woodward will not be entitled to the remaining 40 percent if the target level is not reached by December 31,
2020.
March 26, 2013 -8- ITEM 8
Table 4
Summary of Development Fees
Total
(Millions)
Rebate
(Millions)
Retained
Revenue
(Millions) Backfill
Wastewater $0.60 $0.30 $0.30 $0.30
Water $1.10 $0.55 $0.55 $0.55
Stormwater $0.30 $0.15 $0.15 $0.15
Electric $2.00 $1.00 $1.00 $1.00
Street Oversizing $1.20 $0.60 $0.60 $0.60
Capital Expansion $0.20 $0.10 $0.10 $0.10
Development Review/Other $0.30 $0.30 $0.00 $0.00
Total $5.70 $3.00 $2.70 $2.70
Use Tax and Fee Backfill
As described, the Agreement contemplates rebates of use tax and fees that will require backfill by the General Fund.
Based on the Economic Impact Analysis, there is between $3.8 million and $6.2 million in indirect and induced net
benefits to the City from various sources over the first 16 years (these sources exclude any revenue from utilities as
they cannot be comingled with General Fund revenues to meet these obligations). These indirect and induced impacts
and the resulting revenue will backfill the portions of the rebates over a period of between 10 and 16 years depending
on financing costs.
The total backfill required (including use tax and fees) assuming all phases are constructed on schedule is
approximately $3.5 million. However, the actual Project phasing will impact the contemplated use tax rebates and
development fee rebates. As stated, the nature of the rebate will require backfill for a portion of the total rebate
amount. Therefore, the backfill shifts depending on the construction phasing. Table 5 provides an overview of the total
rebates and the required backfill. Under the Phase I only scenario the City will rebate $1.37 million in use tax and $1.73
million in development fees for a total rebate of $3.11 million. This scenario requires a backfill of $1.93 million.
Furthermore, the hold back of 40 percent of the rebates will influence the actual cash needed in any given year to fund
this backfill. The 40 percent holdback of the rebates will most likely not be due to Woodward until after December
31,2018 but before December 31, 2020. This lowers the backfill amount as initially need for each phase. Staff
continues to evaluate the best method to fund the backfill amount.
Table 5
Overview of Use Tax by Scenario
Phase I Only
(Millions)
Phase I,
II, &
IV(Million
s)
All Phases
(Millions)
Use Tax Rebate $1.37 $2.43 $3.8
Use Tax Backfill $0.29 $0.51 $0.80
Development Fee Rebates $1.73 $2.36 $2.98
Total Rebates $3.11 $4.79 $6.78
Total Backfill Required $1.93 $2.68 $3.50
Initial Backfill (60%) $1.16 $1.61 $2.10
Holdback (40%) $0.77 $1.07 $1.40
NOTE: The proposed project is subject to change. Changes in timing, final construction investment, and final
equipment purchases will affect both the financial assistance offered by the City and the financial/economic impacts
to the City.
March 26, 2013 -9- ITEM 8
FINANCIAL / ECONOMIC IMPACTS
Economic Impact Analysis Overview
The Project will generate economic impacts during construction and operations. The construction activities, occurring
while Woodward builds its new facilities, will generate one-time impact for construction workers and businesses in the
area. The on-going operations of the firm will create annual economic impacts, employing workers in the community
and supporting additional economic activity throughout the region.
The economic impacts were evaluated based on two scenarios: (1) a total employment level of 1,400, including 700
existing employees, 515 employees transferred from within the region, and 185 new employees; and (2) a total
employment level of 1,700 including 700 existing employees, 600 employees transferred from within the region, and
400 new employees. Both scenarios assume a total investment in the buildings of $169.1 million and $50.5 million
in manufacturing equipment. In addition, both scenarios assume an average annual salary for all jobs of $76,000,
which equates to 170% of the Larimer County average annual income ($44,564 based on Bureau of Labor Statistics
Employment and Wage data, Fourth Quarter 2011).
The economic impact analyses (See Attachment 8 and 9) estimate the one-time impacts from construction will be the
same for both scenarios with approximately 1,652 jobs supported by the $169.1 million investment at an average
annual salary of $55,106. In addition, the analyses estimate that the facility will support between 1,400 and 2,227 total
jobs see Table 6. These estimates assume a modest manufacturing multiplier for the transferred jobs and a full
manufacturing multiplier of 2.23 for the new jobs. The average salary ranges from $49,794 to $52,393.
Table 6
Summary of Economic Impacts
Scenario 1 Scenario 2
Construction (One-Time)
Jobs 1,652 1,652
Earnings $91,034,579 $91,034,579
Average Earnings per Job $55,106 $55,106
Operations (On-going)**
Jobs 1,400 2,227
Earnings $73,349,666 $110,890,650
Average Earnings per Job $52,393 $49,794
**Total change in earning during the first year of full employment.
In addition, the analyses evaluate the fiscal impacts to the City of Fort Collins, Larimer County, Poudre School District,
and Downtown Development Authority. These impacts include estimates of both revenues and expenses based on
the published 2012 budgets for each jurisdiction. Full details of the calculations can be found in the attached reports.
Furthermore, the analyses net out the costs of the proposed assistance described above before estimating additional
benefits. The net benefits are estimated to range from $8.7 million to $12.0 million (net benefits here includes all
revenue sources, e.g., sales and use tax, utility revenue, etc.); including all revenue sources see Table 7. The net
benefits previously described, between $3.8 million and $6.2 million, exclude the utility net benefits included here
because the rebate backfill cannot rely on utility funds to meet that obligation. Assuming a 5 percent discount rate the
present value of the estimated net benefits today is between $7.0 million and $9.1 million.
Table 7
Summary of Fiscal Impacts
Scenario 1 Scenario 2
Additional Benefits $32,541,701 $50,740,478
Additional Costs ($23,861,724) ($38,751,622)
Net Benefits $8,679,877 $11,988,856
Present Value of Net Benefits *** $6,957,716 $9,088,081
*** This analysis uses a 5% discount rate.
March 26, 2013 -10- ITEM 8
This project considers an expansion of an existing manufacturer in Fort Collins. Woodward is considering locations
outside the City for possible relocation and expansion of its manufacturing and headquarters operations. The company
currently employs 700 workers in the City and supports real and personal property of $22.3 million. Woodward’s
current operations represent approximately $850,000 in net revenues to the City annually. The new construction and
expansion would increase the company’s impact on Fort Collins by approximately $8.68 million over the next 16 years.
Therefore, the estimated value to Fort Collins if the manufacturer were to leave the city is a loss of $22.55 million over
the next 16 years or a loss to the city of $1.4 million per year on average or $16.2 million in present value. More than
27 percent ($6.25 million) of the total net revenue is generated in the first two years as shown in the graph below.
NOTE: The proposed project is subject to change. Changes in timing, final construction investment, and final
equipment purchases will affect both the financial assistance offered by the City and the financial/economic impacts
to the City.
General Fund Reserves Appropriation Impact
The proposed Project and the Agreement contemplate a phased approach to construction. Due to this phasing, the
commitments by the City, DDA, and Woodward shift accordingly. In addition, the timing of the phases may significantly
impact the available TIF pledge for the project. There are several potential scenarios that could unfold as Woodward
reacts to market demand. The most likely scenarios have been analyzed further. The impacts of each scenario to the
TIF and Loan are summarized in Table 8.
If Woodward never constructs more than Phase I, then the TIF will not support full repayment of the advanced funds
plus interest. The agreement contemplates the City appropriating up to $2.27 million for the purpose of creating a
reimbursement reserve. The need for these reimbursement reserve funds will change as additional phases are
completed by Woodward. Assuming Phase I, II, and IV are built, on the current proposed schedule, the need for these
additional funds will disappear. Staff recommends this approach because the community receives $4.8 million in public
improvements (Right-of-Way improvements and Open Space improvements) at a $2.27 million discounted cost in the
worst case. Otherwise, the TIF funds these costs exclusively. In addition, the City has agreed to stand behind the full
reimbursement of the advanced funds plus interest regardless of the Tax Increment revenue, interest rate increase,
or other unforeseen economic condition. This commitment is, however, subject to annual appropriation as required
by the Colorado State Constitution.
Table 8
Overview of TIF/Loan by Scenario
Phase I Only
(Millions)
Phase I,
II, & IV
(Millions)
All Phases
(Millions)
Total TIF Available $7.30 $11.10 $16.70
Façade Pledge $1.50 $2.80 $3.80
TIF Balance $5.80 $8.30 $12.90
Bond Principal $6.05 $6.05 $8.90
Estimated Interest $2.02 $2.25 $4.00
Additional Funds Required ($2.27) $0.00 --
ENVIRONMENTAL IMPACTS
Landscape
Of the 101.5 acre parcel almost one third of the site will be preserved and restored as natural area. A river restoration
area of approximately 28.7 acres is proposed as part of the project, and would be constructed as part of the initial
phase. Additionally, the remainder of the site will be designed incorporating Xeriscape principles.
The project’s Ecological Characterization Study reports that the Link-n-Greens site contains several natural habitats
and features, predominately the Poudre River corridor, several wetlands that have formed along the fringe of the golf
course ponds (0.10 acres), and 464 significant trees. The site’s existing habitat value is largely contained within the
March 26, 2013 -11- ITEM 8
areas immediately adjacent to the Poudre River due to the ornamental nature of the golf course and the lack of habitat
diversity associated with a bluegrass lawn. The site has also been evaluated for Threatened and Endangered species
and the only potentially suitable habitat was for the Preble’s Meadow Jumping Mouse. However, no populations of
jumping mouse are known to exist in the Poudre River downstream of Watson Lake (north of Bellevue).
To meet the standards associated with the Land Use Code, the project has proposed an overall buffer area of 28.7
acres instead of the 23.4 acres that would be required through the 300' standard. At no point is the proposed buffer
zone less than 210’ and the buffer zone is as large as 600’ along the historical oxbow (a U-shaped area where the
Poudre River was able to meander out of its main channel when it was connected with its floodplain). Staff has worked
extensively with the applicant to develop a river restoration project that would enhance the overall river habitat
substantially beyond conditions existing today. Additionally the Poudre River Trail will be realigned to allow more
distance between the river riparian habitats while still providing an interesting experience.
Noise
Production activities will be conducted within the proposed buildings and the level of noise is not anticipated to exceed
maximum allowable Db(A) levels. Buildings and service areas are located interior to the site to mitigate off site
impacts.
STAFF RECOMMENDATION
Both City and DDA staff recommend adoption of these Ordinances on First Reading.
BOARD / COMMISSION RECOMMENDATION
Planning and Zoning Board, February 21, 2013
Water Board, January 17, 2013
Land Conservation and Stewardship Board, March 13, 2013 (Meeting Minutes Unavailable)
Economic Advisory Commission, March 15, 2013 (Meeting Minutes Unavailable)
PUBLIC OUTREACH
Neighborhood Meetings: August 20, 2012(ODP), November 2, 2012 (PDP)
Natural Area/River Concept Neighborhood Meeting: January 30, 2013
In addition, the Fort Collins Area Chamber of Commerce commissioned a study conducted by Behavior Research
Center during February 2013. The study measured the attitude of registered Fort Collins voters in regard to various
issues within the community. Of the 301 respondents, most were in agreement on the need to retain existing
employers (88%) to create quality jobs. The study specifically asked respondents on whether Wooward, Inc. should
be a top priority for the City of Fort Collins. A resounding 85 percent agreed that retaining Woodward, Inc. should be
a priority for the City, while 9 percent were not sure and 6 percent did not see this as a priority.
ATTACHMENTS
1. Project Location Map
2. Drainage Easement Map
3. River Restoration Exhibit
4. Transmission Line Relocation Map
5. Water Board Meeting Minutes, January 17, 2013
6. Economic Impact Analysis, Project Blue Home, March 8, 2013 (Assumes total employment of 1,400)
7. Economic Impact Analysis, Project Blue Home, March 4, 2013 (Assumes total employment of 1,700)
8. Transmission Line Collaboration Letter from Woodward, March 12, 2013
1
An Agreement between
City of Fort Collins,
Downtown Development Authority, and
Woodward, Inc.
March 26, 2013
2
PROJECT DESCRIPTION
3
Site
Old Town
Mulberry Corridor
Buckingham
Neighborhood
Lincoln
Lemay
Site Context
4
Overall Development Plan
5
Phase One
ITS
Phase One
ITS
Phase Two
HQ
Phase Two
HQ
Phase
Three
Phase
Three
Phase Four
ETC
Phase Four
ETC
Project Phasing
6
31 Acre Open Space
Lemay Avenue
Lincoln Ave.
Public Improvements
7
Transmission Line Relocation
8
PUBLIC BENEFIT
9
Overall Benefits
• Revitalization of an area due east of Old Town
• Dedication and restoration of 31 acres within the 100 year
flood plain including trails and natural vegetation
• Potential Improvement to Lincoln Avenue
• Economic Benefits:
– Retention of large primary employer’s World
Headquarters and Industrial Turbomachinery Systems
(ITS) (700 jobs)
– Expansion to include relocation of Engine Systems
(ES) (700 to 1,000 jobs)
– Potential for additional Woodward
suppliers and vendors
10
City Plan: Objectives
• Economic Health
– Support Job Creation (EH 1.1), Target the Use of
Incentives to Achieve Community Goals (EH 1.4),
Support Targeted Industry Clusters (EH 2.1), Prioritize
Targeted Redevelopment Areas (EH 4.1)
• Community and Neighborhood Livability
– Encourage Targeted Redevelopment and Infill (LIV
5.1), Provide Access to Transit (LIV 21.4)
• Transportation
– Transit Supportive Design (T 3.3)
11
City Plan: Objectives
• Environmental Health
– Protect and Enhance Natural Features (ENV 1.1),
Maintain System of Open Lands (ENV 2.1), Maintain
Access (ENV 2.10), Support Renewable Energy in
New Development (ENV 5.4), Participate in Research,
Development and Demonstrations (ENV 7.11),
Conserve Natural Features (ENV 24.2), Restore and
Enhance (ENV 24.4), Ensure Setbacks for Channel
Instability and Improve Channel Migration (ENV 26.3)
12
City Plan: Catalyst Project Areas
• Showcase Heritage: The Coy/Hoffman Barn will be
maintained as a part of the project preserving a link to the
history of the area.
• River Links: The dedication of additional open space
along the river will provide an opportunity to enhance and
expand the Poudre River corridor.
• Connect: The interim and ultimate improvements along
both Lemay and Lincoln Avenue will provide additional
pedestrian and bicycle connective in the area.
• Improvement of Lincoln Avenue: City planning these
improvements; however, the project, may provide much
needed funding for the completion of the project.
13
Net Benefits to Other Taxing Entities
• Larimer County
– Additional Benefits: $10.7 to $14.2 million
– Additional Costs: $5.2 to $8.5 million
– Net Benefits: $5.5 to $5.8 million
• Poudre School District
– Additional Benefits: $14.7 to $18.0 million
– Additional Costs: $3.0 to $6.0 million
– Net Benefits: $11.7 to $12.0 million
14
ECONOMIC IMPACTS
15
Project Employment
• Employment Scenarios:
• Average Salary:
– $76,000 or 170% of Larimer County Average
– County Average = $44,564; BLS 2011 Q4
Scenario 1 Scenario 2
Existing 700 700
Net New 185 400
Transferred 515 600
Total 1,400 1,700
16
Scenario 1 Scenario 2
Construction (One-Time)
Jobs 1,652 1,652
Earnings $91,034,579 $91,034,579
Average Earnings per Job $55,106 $55,106
Operations (On-going)**
Jobs 1,400 2,227
Earnings $73,349,666 $110,890,65
0
Average Earnings per Job $52,393 $49,794
**Total change in earning during the first year of full employment.
Economic Impacts
17
Scenario 1 Scenario 2
Additional Benefits $32,541,701 $50,740,478
Additional Costs ($23,861,724) ($38,751,622)
Net Benefits $8,679,877 $11,988,856
Present Value
of Net Benefits *** $6,957,716 $9,088,081
Net Benefits (General Fund) $3,809,694 $6,253,207
*** This analysis uses a 5% discount rate.
Fiscal Impacts
18
FINANCIAL SUMMARY
19
Business Assistance Overview
Total Business Assistance Valued at $12.7M to $23.5M…..
85% of the Assistance is a Reinvestment of Revenue From the Project
All Phases Phase Phase
Total I Only I, II, & IV
DDA Tax Increment $ 16.7 $ 7.3 $ 11.1
City Reimbursement Reserve ‐ 2.3 ‐
City Use Tax Rebate 80% 3.8 1.4 2.4
City Fee Rebate 80% 2.7 1.6 2.2
City Fee Rebate 100% 0.3 0.1 0.2
Total Business Assistance $ 23.5 $ 12.7 $ 15.9
20
Total Tax Increment From the Project
Property Tax Increment
DDA
Poudre School
District
Larimer County
Others
Total Tax Increment From the Project Estimated at $30.2M….
$13.5M to the County, PSD & Others…. $16.7M to the DDA
$16.7M
$8.9M
$3.6M
$1.0M $30.2M
21
DDA Tax Increment Assistance
Phase I Only Requires City Reserve Appropriation…..
Phase I, II & IV Tax Increment Funds All Improvements & Financing…..
Significant Public Benefits Realized Upfront – ROW & River
All Phases Phase Phase
Total I Only I, II, & IV
DDA Tax Increment Available $ 16.7 $ 7.3 $ 11.1
City Reserve Appropriation ‐ 2.3 ‐
Total Assistance Available $ 16.7 $ 9.6 $ 11.1
Façade Reimbursement 3.8 1.5 2.8
Power Line Relocation 1.3 1.3 1.3
Right of Way Improvements 1.8 1.8 1.8
River Restoration 3.0 3.0 3.0
Enhanced Lincoln Blvd 2.8 ‐ ‐
Financing / Contingency 4.0 2.0 2.2
Total Tax Increment $ 16.7 $ 9.6 $ 11.1
22
Financing of Facades & Public Improvements
• Woodward has agreed to fund the cost of Public
Improvements
• The DDA/City has agreed to reimburse Woodward from the
Tax Increment
• Public Improvements & Facades reimbursed based on a share of
the Tax Increment – varies by phase
• City commits to cover any shortfall in the Tax Increment
• Interest applies to the Public Improvement portion only
• Variable interest rate indexed off of the 10 Year Treasury
With the Current Historically Low Interest Rates and an Expected
Return to Normal Rates within 3-4 Years,
The Proposal Provides a Very Attractive Interest Rate
23
Financing of Facades & Public Improvements
• Variable Interest rate indexed on the 10 Yr US Treasury
• First year interest is .25% and interest cannot go below this amount
• Date of first funding becomes the floor rate.
• At each anniversary the rate is reset based on the 30 days prior
average 10 year Treasury rate less the floor rate.
•Example:
Interest for the First Year 0.25%
Interest on Date of First Draw 2.0%
Interest on First Anniversary 3.0%
Interest for the Second Year 1.0%
Interest on Second Anniversary 3.5%
Interest for the Third Year 1.5%
24
Use Tax Rebates
Use Tax Rebate of 80% on Equipment & Construction Materials,
40% Holdback until Employment Target is Achieved
Total Use Phase Phase Phase
Tax Paid I Only II, & IV III
Total Use Tax Paid by Woodward 4.7 1.7 1.3 1.7
Use Tax Rebate (80%) $ 3.8 $ 1.4 $ 1.0 $ 1.4
Use Tax Initially Paid (60%) 2.2 0.8 0.6 0.8
Use Tax Holdback (2018‐2020) 1.6 0.6 0.4 0.6
Use Tax Backfill Requirement 0.8 0.3 0.2 0.3
25
Fee Rebates
Capital Improvement Fee Rebate of 50%, Development Fee Rebate of
100%, 40% Holdback until Employment Target is Achieved…..
Total Fees Phase Phase Phase
Paid I Only II, & IV III
Utility Plant Investment Fees Paid (50%) $ 4.0 $ 2.7 $ 0.7 $ 0.6
Street Oversizing & Capital Exp Paid (50%) 1.4 0.5 0.4 0.5
Development Fees (100%) 0.3 0.1 0.1 0.1
Total Fees Paid by Woodward $ 5.7 $ 3.3 $ 1.2 $ 1.2
Capital Improvement Fee Rebate (50%)** $ 2.7 $ 1.6 $ 0.5 $ 0.6
Development Fee Rebate (100%) $ 0.3 $ 0.1 $ 0.1 $ 0.1
Fee Rebate Initially Paid (60%) 1.8 1.0 0.4 0.4
Fee Rebate Holdback (2018‐2020) 1.2 0.7 0.2 0.3
** Required Backfill
26
Rebate Backfill
General Fund Balance Adequate to Support Reserve
Appropriation and Back Fill Requirements
Total Fees Phase Phase Phase
Backfill I Only II, & IV III
Use Tax & Fee Back Fill by Year
2013 1.0 1.0
2014 0.5 0.2 0.3
2015 0.1 0.1
2018 ‐ 2020 1.9 0.7 0.3 0.9
Year End Year End
2011 2012
General Fund 40.2 55.3
Sales & Use Tax Fund 7.1 ‐
Total General Fund $ 47.3 $ 55.3
27
Risks & Mitigation
• Woodward Completes Phase I Only
• Insufficient Tax Increment to Reimburse
$6M of public improvements + interest
• Interest Rate Spike
• Drives interest cost beyond what the
Tax Increment can support
• Reserve Appropriation covers
shortfall
• City realizes $4.8M of public
improvements for $2.3M
• City loans funds to DDA and is
reimbursed from Tax Increment
• City realizes $4.8M of public
improvements for cost of the DDA
loan
28
Business Assistance Overview
Total Business Assistance Valued at $12.7M to $23.5M…..
85% of the Assistance is a Reinvestment of Revenue From the Project
All Phases Phase Phase
Total I Only I, II, & IV
DDA Tax Increment $ 16.7 $ 7.3 $ 11.1
City Reimbursement Reserve ‐ 2.3 ‐
City Use Tax Rebate 80% 3.8 1.4 2.4
City Fee Rebate 80% 2.7 1.6 2.2
City Fee Rebate 100% 0.3 0.1 0.2
Total Business Assistance $ 23.5 $ 12.7 $ 15.9
29
Summary / Benefits
• Retention & Expansion of Woodward
• Stable, long time Fort Collins employer with good salaries & benefits
• Opportunity for additional expansion from an energy & aerospace company
• Incentives Largely Funded by the Project
• Tax increment, Use Tax associated with equipment & construction
• Public Improvements - $5M - $8M
• Open space restoration deeded to the City
• Right of Way improvements along Lemay and Lincoln
• Possible Lincoln Avenue enhancements
• Indirect/Induced Benefits Conservatively $4M - $6M
• Local spending from primary jobs
• Additional indirect jobs and associated local spending