HomeMy WebLinkAboutAgenda - Mail Packet - 5/21/2013 - Council Finance Committee & Ura Finance Committee Agenda - May 20, 2013Council Finance Committee & URA Finance Committee
Agenda Planning Calendar 2013
RVSD 5/16/13 KW
May 20 TOPIC TIME WHO
CFC
URA N College Refinance 30 min J. Voss
Actuary Annual Pension Valuation Report (GERP) (Milliman) 30 min Joel Stewart
URA URA N College Refinance 10 min J. Voss
Jun. 17 TOPIC TIME WHO
CFC
Capital Expansion Fees 50 min J. Ping-Small
Private Activity Bond request 15 min S. Kendall
RFP Auditor Selection 10 min M. Beckstead
2012 Fund Balance Review 45 min J. Voss
URA
Jul. 15 TOPIC TIME WHO
CFC
Auditor 2012 Report 30 min Kevin Smith
Revenue Policy Review 45 min J. Ping-
Small
Assistance Package for Local Company Expansion 30 min S. Kendall
Budget Policy Review 30 min L. Pollack
URA The Summit (Capstone) update 15 min M. Bolin
Aug. 19 TOPIC TIME WHO
CFC
Utilities Building/Financing 45 min J. Voss/L.
Smith
Debt Policy Update 15 min J. Voss
Transfort Financing 60 Ravenschlag
URA
Future Council Finance Committee Topics:
• RFP for Audit Services, 5 year contract (August 2013)
• Policy review – Reserve/Fund Balances (QIII 2013)
• Revenue Implications of Annexation
• Financial Management Policy Reviews during 2013 – Quarterly Commitments
Future URA Committee Topics:
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
AGENDA
Council Finance & Audit Committee
May 20, 2013
10:00 to 11:00 a.m.
CIC Room – City Hall
Approval of the Minutes from the March 18, 2013 Meeting
1. URA N College Refinance 30 minutes J. Voss
2. Actuary Annual Pension Valuation Report (GERP) 30 minutes J. Stewart
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
Council Audit & Finance Committee
Minutes
3/18/13
10:00 to 12:00
CIC Room
Council Attendees: Mayor Karen Weitkunat, Mayor Pro Tem Kelly Ohlson,
Ben Manvel
Staff: Darin Atteberry, John Voss, Mike Beckstead,
Bruce Hendee, John Voss, Jessica Ping-Small,
Katie Wiggett
Others:
Approval of the Minutes of January 14, 2012
Kelley Ohlson moved to approve the minutes for the January 14, 2013 meeting. Ben Manvel seconded
the motion. Minutes were approved unanimously.
Other Business
Mayor Weitkunat moved that the Committee cancel the April meeting to allow for the appointment of
new councilmembers. Council agreed.
Mike Beckstead asked that the agenda be changed to make “Financial Policy Structure” the last agenda
item. Council approved the change.
Financial Highlights 2012
John Voss reviewed revenue, expenditures, debt and a summary of fund balances. Highlights
include:
• Governmental Revenues for 2012 rose 18.5% and Enterprise Revenues rose 10.8%. Sales Tax,
Grants and Utility Fees led to higher revenue. Kelley Ohlson noted the important of recognizing
that it is outside sources such as grants that have largely driven the revenue increase—not
citizens’ taxes. Mike Beckstead noted that the City hit a record high in Sales and Use Tax even
without KFCG factored in. This increase primarily reflects an increase in Use Tax collected.
Because 2012 finished so strong, the City needs sales tax to grow 1.4% to reach the 2013
budget.
• Mayor Weitkunat noted that the chart on Expenditures by Service Area needs more explanation
in order to tell a meaningful story. Council agreed.
• Per capital debt in 2012 ($987 debt per person) is 45% less than it was in 1986. With the current
limit of 15% as established in 1997, there is room for $114 M more debt. Mike noted that debt
per capita is one of the chief considerations in Moody’s rating system; our low debt per capita
contributes to our AAA rating. Kelley asked why the debt limit established in 1997 is 15% when
we have never even hit 10%. Ben noted that perhaps our policy needs to be changed to a 10%
limit.
• The General Fund balance when combined with the Sales and Use Tax Fund (which was
transferred into the General Fund in 2012) increased by $8M in 2012 over 2011 driven by
stronger revenue and expenditure underspend
Grocery, Property Tax and Utility Rebate Program – 2012 Recap
The Finance Department currently administers three rebate programs for low income, senior and
disabled residents. The rebates are for Property Tax, Utilities and Sales Tax on Food. In May of 2012,
City Council approved changes to the ordinances which improved consistency amongst the rebates,
allowed an increased number of residents to qualify for the Property Tax and Utility Refund and
simplified the process for applicants. The Sales Tax on Food Rebate was also increased from $40 to $54.
In 2012, the number of rebates issued increased 13%. Staff attributes the increase to the improvements
made to the program and additional outreach such as distributing to the Poudre School Authority and
providing on-site help at the DMA.
Goals for 2013:
In addition to the standard outreach, staff intends to partner with PSD during their Back-to-School
program to distribute information about the rebates. The application will also be translated into
Spanish to reach a larger demographic.
Kelley said that he is very pleased with the changes to the program. This rebate is vital as long as the
City taxes take-home foods; and for many years, it wasn’t universal enough. Kelley encouraged Staff to
put together a strong policy/procedure book that details the history of the rebate, including the 2005
election which pushed the importance of improving the rebate program. Such a book would help
institutionalize the changes made in the past 8 years. Kelley also asked staff to consider extending the
property tax and utility rebates to all applicants under the 50% area median income.
Financial Policy Structure
John Voss noted that many of the City’s financial policies have fallen out of regular review. Because
strong Financial Policies are valuable, Staff plans to make policies more effective in 2013. John listed
several deficiencies in the current policies, including a lack of centralization and availability and an
inconsistent review cycle. Darin Atteberry noted that this report is not a criticism of what has been
done in the past so much as a push to do even better in the future.
Kelley said that one policy that may need considered is the way we handle closing out projects, one
example of a problematic closeout being the BCC closeout. Ben said that Capital Improvement Plan
Policy needs to be fine-tuned this year. Darin agreed that the CIP Policy is a time sensitive issue.
Council Direction / Next Steps
The Council Finance supports the Financial Highlights 2012 report and hopes to see the document fine-
tuned for future Councilmembers review. Staff will work to improve the report and will put a narrative
together to better explain the expenditures by service area.
Council is pleased with the changes made in 2012 to the Grocery Tax Rebate Program. Staff will
research the impact that extending the Property and Utility rebates to all applicants below the 50%
medium income would have. Staff will also update the Rebate Policy and Procedure Manuel.
Staff will put the possibility of lowering the debt limit on the agenda for future discussion.
1
COUNCIL FINANCE COMMITEE
AGENDA ITEM SUMMARY
Staff: John Voss, Controller/Assistant Financial Officer
Date: May 20, 2013
SUBJECT: A Resolution concerning the Fort Collins Urban Renewal Authority and its Tax
Increment Revenue Refunding Bonds (North College Avenue Project), Series 2013 (the “2013
Bonds”), declaring the City Council’s present intent to appropriate funds to replenish the reserve
fund securing such bonds, if necessary, and authorizing certain documents and other actions
taken in connection therewith.
EXECUTIVE SUMMARY: The URA intends to refinance a portion of the debt it originally
borrowed from the City in relation to the North College area. Now that an established revenue
stream can be shown to investors, private money can be used to replace City money. The 2013
bonds require the URA to establish a debt reserve fund. To further facilitate the credit rating on
the replacement debt, the City needs to make a pledge to replenish the debt reserve fund if such
funds are ever used to make debt payments. With the City’s pledge, the new URA debt is
expected to have an effective interest rate of 2.98%.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED:
1. Does the Committee understand the benefits and risks of a debt service reserve
replenishment pledge (Moral Obligation Pledge)?
2. Does the Committee recommend bringing the debt service reserve replenishment pledge
resolution to the City Council for consideration?
BACKGROUND/DISCUSSION: The North College URA Project Area was created in 2004,
allowing the URA to receive incremental property taxes through 2029. Property tax increment
revenue in North College was first received in 2007 and the 2012 property taxes payable in 2013
are expected to be $1.3 million.
Table 1 - Net Property Tax Increment Revenue $000’s
2007 2008 2009 2010 2011 2012 2013 *
$110 $287 $263 $493 $536 $907 $1,285
*anticipated
A common measure used by lenders in determining risk is the ratio of pledged revenue to debt
service, called a coverage ratio. Investors want that ratio to be high – at least 125%. The
current revenue of $1.3 million could support up to $1 million a year in debt service. The
proposed maximum annual debt service of $890,000 yields a good coverage ratio of 144%.
City Loans to URA – The initial financing model adopted for North College has the City
providing initial capital through a loan until the tax increment revenue reaches a maturity level
that can support external financing to third party investors. The City Council first authorized an
2
Interagency Loan Policy in December 2008, with the most recent amendments approved in
December 2012.
Eight loans have been made by the City to the URA in the North College District. The first loan
has been repaid. Table 2 recaps the current status of the loans.
Table 2 – North College Loan Status $000’s
Date Project
Original
Value
Current
Balance
Term
Years Rate City Fund Holding
09/06 V. Steel, URA start-up funds $ 150 $ 0 5 5.55% General Fund
05/09 N.C. Market Place, phase 1 5,000 4,729 20 2.85% Capital Expansion
12/10 JAX 173 106 5 2.50% Capital Expansion
06/11 NEECO 326 326 10 3.01% Storm Drainage
07/11 Kaufman Robinson 193 193 5 2.46% General Fund
07/11 N.C. Market Place, phase 2 3,000 2,884 19 4.09% Water Fund
08/12 N.C. Road Improvements 2,700 2,700 18 3.92% Capital Projects BCC
Loans to be refinanced 11,542 10,938 3.44%
06/09 RMI2 5,304 5,304 20 2.50% General Fund
Total North College Area 16,846 16,242
The proposal is to issue enough debt to takeout $10.94 million in loans to the City, plus interest
and debt issue costs. For the following reasons the City loan to the URA that relates to RMI is
not being refinanced.
• The use of the RMI2 loan proceeds does not qualify the interest to be tax exempt.
Therefore the interest rate would be significantly higher.
• The new market tax credit deal cannot be refinanced until 2017.
• There is not enough revenue capacity to meet external investor expectations. Only about
$1 million of the $5.3 million could be considered for refinancing if the favorable
coverage ratio was to be preserved.
The General Fund is holding the URA loan relating to the RMI2. Later this year the loan will be
reallocated and held equally between the General Fund and Capital Expansion Fund. This will
free up some monies in the General Fund. Future debt payments by the URA will then be
allocated appropriately to each fund.
Preliminary Structure of 2013 Bonds – Approximately $11.36 million of bond proceeds will
be used to takeout $10.94 million of debt to the City, plus interest of $220,000, and pay debt
issue costs of $206,000. Coupon interest rates vary from 2% for near term bonds and 4% for
longer term bonds. The collective Net Interest Cost is expected to be 2.98%, which compares
favorably to 3.44% weighted average interest rate on the City debt being retired. The interest
only payment on December 1, 2013 for $161,000 will be followed by future annual payments
that vary from $886,000 to $890,000 through 2029.
3
City Pledge – The Underwriters for the 2013 Bonds have recommended that a debt service
reserve fund in the amount of approximately $961,000 would be advisable for marketing the
2013 Bonds and that purchasing a Surety Policy for such amount would be preferable to funding
such reserve with cash. The cost of such Surety Policy would be $53,000. If it was ever
necessary to draw upon the Surety Policy, the City’s replenishment pledge would repay such
draw. Staff prefers the Surety Policy option but will make a decision later based on the potential
impact on the credit rating. The replenishment pledge is non-binding and subject to annual
appropriation of funds by the City Council in its sole discretion. Sherman & Howard will issue
a legal opinion that the City can make this pledge.
It is anticipated that the City pledge will result in the replacement debt receiving a credit rating
of Aa3. Without the City’s pledge and a proven revenue stream the interest rate would likely be
5% or higher rather than 3%.
Concerns about Ability to Make Pledge – Through the adoption of the resolution, the Urban
Renewal Authority is issuing property tax increment revenue bonds to refinance loans made by
the City to the URA. The loans that are being refinanced by the issuance of those bonds were
made by the City to finance public infrastructure. No private improvements were financed
through the loans. In order to enhance the marketability of the bonds that are being issued by the
URA, staff is recommending that the City Council adopt a resolution pursuant to which the City
Council would indicate that, if the reserve fund for the bonds is ever drawn upon, the City
Council will consider appropriating funds to replenish the reserve fund. This is not a legally
binding obligation but rather is subject to appropriation by the Council, when and if the reserve
fund is drawn upon. This is sometimes referred to as a “moral obligation pledge”.
Since the City cannot be compelled to appropriate funds, the moral obligation does not create a
debt for purposes of the City Charter or the Colorado Constitution.
A question has been raised by a local citizen as to whether Council actions such as the making of
this moral obligation pledge violates certain provisions of the City Charter. The Charter
provisions in question read as follows:
ARTICLE V. FINANCE ADMINISTRATION
PART I. BUDGET AND FINANCIAL MANAGEMENT
Section 15. Appropriations forbidden.
No appropriation shall be made for any charitable, industrial, educational, or benevolent
purposes to any person, corporation, or organization not under the absolute control of the city,
nor to any denominational or sectarian institution or association. (Ord. No. 10, 1991, § 1(a), 2-
19-91, approved, election 4-2-91)
Section 16. City not to pledge credit.
The city shall not lend or pledge its credit or faith, directly or indirectly, or in any manner to or
in aid of any private person or entity for any amount or any purpose whatever, or become
responsible for any debt, contract, or liability thereof. (Ord. No. 203, 1986, § 1, Part D, 12-16-86,
approved, election 3-3-87; Ord. No. 10, 1991, § 1(a), 2-19-91, approved, election 4-2-91)
4
These charter provisions are, in all material respects, identical to provisions contained in the
Colorado Constitution. Thus, the limitations contained in the Charter provisions apply to all
Colorado municipalities through the state constitution.
In response to the concerns that have been expressed, staff has conferred with both the City
Attorney’s Office and the City’s bond counsel to ensure that the proposed transaction does not
violate either of the provisions in question. Legal counsel has confirmed the following:
Article V, Section 15 of the City Charter is not applicable in this situation because (1) the Urban
Renewal Authority is under the absolute control of the City (since its governing body is made up
of the same members as the City’s governing body) and it is not a denominational or sectarian
institution; and (2) the projects refinanced by the bonds are public infrastructure projects; thus,
the bond proceeds are not being used, either directly or indirectly, for a charitable, industrial,
educational or benevolent purpose.
Article V, Section 16 of the City Charter is not applicable because: (1) the Urban Renewal
Authority is a public entity; (2) the City would not incur any indebtedness or other legally
binding obligation by making the moral obligation pledge; and (3) as noted above, the projects
refinanced by the bonds are public infrastructure projects,.
It should be noted that this moral obligation financing structure being recommended by staff is
not unique to the City. Other municipalities that have utilized this same procedure in connection
with tax increment transactions include the City and County of Denver, the cities of Thornton,
Westminster, and Steamboat Springs, and the Town of Avon. The State of Colorado has also
used moral obligation financing structures for housing, charter schools and higher education.
Cash Flow Projections – The refinancing of this debt will improve the cash flows of the URA
and save $922,000 through 2029.
Future Financing Model – City staff have communicated to the URA that going forward the
City intends to only loan money when alternative financing agreements are not feasible. The
reimbursement agreement recently approved for Aspen Heights is an example of the preferred
approach for future development agreements. The Aspen Heights developer will be reimbursed
over time as revenue is collected, rather than in a lump sum upon completion of the project.
Consultants – The URA and City have engaged three firms to help issue the new debt: Sherman
& Howard as the Bond Attorney, BLX as the Financial Advisor and RBC Capital Markets as the
Bond Underwriters.
Timeline –
May 16 Send rating documents to Moody’s
May 29 Receive credit rating from Moody’s
June 4 City Council and URA Board approve refinancing actions
June 6 Publish Preliminary Official Statement on internet sites
June 18-19 Market Bonds
July 9 Closing
5
Council Finance Committee reviewed and tentatively approved the refinancing and the concept
of a debt reserve replenishment pledge at their meeting on December 17, 2012.
FINANCIAL/ECOMOMIC IMPACTS: The City’s pledge includes a commitment to
maintain an unrestricted fund balance in the General Fund in an amount at least equal to the
Reserve Fund Requirement, estimated at $961,000. The General Fund can easily meet that
requirement because it does not need be separate set aside, but instead maintain unrestricted
balances in the aggregate that are greater than the Reserve Fund Requirement. At the end of
2012 the collective unrestricted fund balances in General Fund totaled $37 million. Property tax
revenue in the North College URA plan area is unlikely to decline enough to trigger the use of
the Debt Service Reserve Fund.
The 2013 Bonds will be used to takeout $10.94 million in debt to the City, pay $220,000 of
interest and pay $206, 000 in delivery date expenses.
Later this summer the City will use some of the returned monies to loan $5 million to the URA
for the first Midtown Project – The Summit (Capstone).
Council Finance Committee reviewed and tentatively approved the refinancing and the concept
of a debt reserve replenishment pledge at their meeting on December 17, 2012.
ATTACHMENTS:
1. Preliminary debt structure, prepared by RBC Capital Markets.
2. PowerPoint presentation
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets
TABLE OF CONTENTS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Report Page
Sources and Uses of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bond Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bond Summary Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bond Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bond Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 1
SOURCES AND USES OF FUNDS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Dated Date 06/20/2013
Delivery Date 06/20/2013
Sources:
Bond Proceeds:
Par Amount 10,645,000.00
Premium 718,718.60
11,363,718.60
Uses:
Project Fund Deposits:
Proceeds to Takeout Loans - Principal 10,938,089.54
Proceeds to Takeout Loans - Interest 220,082.29
11,158,171.83
Delivery Date Expenses:
Cost of Issuance 104,232.27
Underwriter's Discount 47,902.50
Surety @ 6% (AGM Est) 53,412.00
205,546.77
11,363,718.60
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 2
BOND PRICING
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Maturity Yield to Premium
Bond Component Date Amount Rate Yield Price Maturity (-Discount)
Serial bonds:
12/01/2014 525,000 2.000% 0.670% 101.912 10,038.00
12/01/2015 540,000 3.000% 0.870% 105.146 27,788.40
12/01/2016 555,000 3.000% 1.100% 106.409 35,569.95
12/01/2017 570,000 3.000% 1.360% 107.053 40,202.10
12/01/2018 590,000 3.000% 1.590% 107.328 43,235.20
12/01/2019 605,000 3.000% 1.830% 107.084 42,858.20
12/01/2020 625,000 3.000% 2.110% 106.103 38,143.75
12/01/2021 640,000 3.000% 2.300% 105.345 34,208.00
12/01/2022 660,000 3.000% 2.490% 104.268 28,168.80
12/01/2023 680,000 3.000% 2.630% 103.359 22,841.20
12/01/2024 700,000 4.000% 2.750% 111.282 C 2.839% 78,974.00
12/01/2025 730,000 4.000% 2.870% 110.136 C 3.017% 73,992.80
12/01/2026 760,000 4.000% 3.000% 108.910 C 3.180% 67,716.00
12/01/2027 790,000 4.000% 3.110% 107.885 C 3.309% 62,291.50
12/01/2028 820,000 4.000% 3.200% 107.055 C 3.409% 57,851.00
12/01/2029 855,000 4.000% 3.270% 106.414 C 3.484% 54,839.70
10,645,000 718,718.60
Dated Date 06/20/2013
Delivery Date 06/20/2013
First Coupon 12/01/2013
Par Amount 10,645,000.00
Premium 718,718.60
Production 11,363,718.60 106.751701%
Underwriter's Discount -47,902.50 -0.450000%
Purchase Price 11,315,816.10 106.301701%
Accrued Interest
Net Proceeds 11,315,816.10
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 3
BOND SUMMARY STATISTICS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Dated Date 06/20/2013
Delivery Date 06/20/2013
Last Maturity 12/01/2029
Arbitrage Yield 2.668434%
True Interest Cost (TIC) 2.894357%
Net Interest Cost (NIC) 2.976786%
All-In TIC 3.010203%
Average Coupon 3.631204%
Average Life (years) 9.629
Duration of Issue (years) 8.157
Par Amount 10,645,000.00
Bond Proceeds 11,363,718.60
Total Interest 3,722,190.69
Net Interest 3,051,374.59
Total Debt Service 14,367,190.69
Maximum Annual Debt Service 890,200.00
Average Annual Debt Service 873,532.96
Par Average Average PV of 1 bp
Bond Component Value Price Coupon Life change
Serial bonds 10,645,000.00 106.752 3.631% 9.629 7,847.25
10,645,000.00 9.629 7,847.25
All-In Arbitrage
TIC TIC Yield
Par Value 10,645,000.00 10,645,000.00 10,645,000.00
+ Accrued Interest
+ Premium (Discount) 718,718.60 718,718.60 718,718.60
- Underwriter's Discount -47,902.50 -47,902.50
- Cost of Issuance Expense -104,232.27
- Other Amounts -53,412.00 -53,412.00 -53,412.00
Target Value 11,262,404.10 11,158,171.83 11,310,306.60
Target Date 06/20/2013 06/20/2013 06/20/2013
Yield 2.894357% 3.010203% 2.668434%
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 4
BOND DEBT SERVICE
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Period
Ending Principal Coupon Interest Debt Service
12/01/2013 161,290.69 161,290.69
12/01/2014 525,000 2.000% 360,650.00 885,650.00
12/01/2015 540,000 3.000% 350,150.00 890,150.00
12/01/2016 555,000 3.000% 333,950.00 888,950.00
12/01/2017 570,000 3.000% 317,300.00 887,300.00
12/01/2018 590,000 3.000% 300,200.00 890,200.00
12/01/2019 605,000 3.000% 282,500.00 887,500.00
12/01/2020 625,000 3.000% 264,350.00 889,350.00
12/01/2021 640,000 3.000% 245,600.00 885,600.00
12/01/2022 660,000 3.000% 226,400.00 886,400.00
12/01/2023 680,000 3.000% 206,600.00 886,600.00
12/01/2024 700,000 4.000% 186,200.00 886,200.00
12/01/2025 730,000 4.000% 158,200.00 888,200.00
12/01/2026 760,000 4.000% 129,000.00 889,000.00
12/01/2027 790,000 4.000% 98,600.00 888,600.00
12/01/2028 820,000 4.000% 67,000.00 887,000.00
12/01/2029 855,000 4.000% 34,200.00 889,200.00
10,645,000 3,722,190.69 14,367,190.69
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 5
BOND SOLUTION
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Period Proposed Proposed Total Adj Revenue Unused Debt Serv
Ending Principal Debt Service Debt Service Constraints Revenues Coverage
12/01/2013 161,291 161,291 1,300,000 1,138,709 805.99816%
12/01/2014 525,000 885,650 885,650 1,300,000 414,350 146.78485%
12/01/2015 540,000 890,150 890,150 1,300,000 409,850 146.04280%
12/01/2016 555,000 888,950 888,950 1,300,000 411,050 146.23995%
12/01/2017 570,000 887,300 887,300 1,300,000 412,700 146.51189%
12/01/2018 590,000 890,200 890,200 1,300,000 409,800 146.03460%
12/01/2019 605,000 887,500 887,500 1,300,000 412,500 146.47887%
12/01/2020 625,000 889,350 889,350 1,300,000 410,650 146.17417%
12/01/2021 640,000 885,600 885,600 1,300,000 414,400 146.79313%
12/01/2022 660,000 886,400 886,400 1,300,000 413,600 146.66065%
12/01/2023 680,000 886,600 886,600 1,300,000 413,400 146.62757%
12/01/2024 700,000 886,200 886,200 1,300,000 413,800 146.69375%
12/01/2025 730,000 888,200 888,200 1,300,000 411,800 146.36343%
12/01/2026 760,000 889,000 889,000 1,300,000 411,000 146.23172%
12/01/2027 790,000 888,600 888,600 1,300,000 411,400 146.29755%
12/01/2028 820,000 887,000 887,000 1,300,000 413,000 146.56144%
12/01/2029 855,000 889,200 889,200 1,300,000 410,800 146.19883%
10,645,000 14,367,191 14,367,191 22,100,000 7,732,809
1
URA Refinancing
City Council/URA Board – Finance Committee’s
May 20, 2013
2
Overview
• City has loaned money to the URA
• Looking to refinance some of those loans with
external investors
• Returns about $11.2 million, including interest, to
the City
3
Financing Model for URA Projects
• Initial financing model
– City provides capital upfront
– Until revenue stream is proven
– Replace with external financing
• Future financing will be similar to Aspen Heights
– No lump sum at completion of project
– Share percent of revenue as collected
– Consider exceptions for special circumstances
4
City Loans to URA for N. College
Date Project
Orig.
Value
Current
Balance
Term
Years Rate City Fund Holding
09/06 V. Steel, URA start-up funds $ 150 $ 0 5 5.55% General Fund
05/09 N.C. Market Place, phase 1 5,000 4,729 20 2.85% Capital Expansion
12/10 JAX 173 106 5 2.50% Capital Expansion
06/11 NEECO 326 326 10 3.01% Storm Drainage
07/11 Kaufman Robinson 193 193 5 2.46% General Fund
07/11 N.C. Market Place, phase 2 3,000 2,884 19 4.09% Water Fund
08/12 N.C. Road Improvements 2,700 2,700 18 3.92%
Capital Projects
BCC
Loans to be refinanced 11,542 10,938 3.44%
06/09 RMI2 5,304 5,304 20 2.50% General Fund
Total North College Area 16,846 16,242
$000’s
5
North College TIF District
• Created in 2004, expires in 2029
• Increment on property taxes, none on sales tax
• Property tax increment revenue started flowing in 2007
• Revenue is now mature and stable, more attractive to
investors
* anticipated
2007 2008 2009 2010 2011 2012 2013 *
$110 $287 $263 $493 $536 $907 $1,285
Tax Increment Revenue $000s
6
City Pledge Highlights
• Pledging to replenish URA’s debt service reserve fund,
if it were to used to make debt payments
– Non-binding; pledge is to consider replenishing
– However, not honoring the pledge would significantly impact
the City’s credit rating and ability to borrow money in future
• Commits the General Fund to maintain unrestricted
fund balance at least equal to the Reserve Fund
Requirement
– Estimated reserve required is $961,000
– Current unrestricted balance is $37 million
– Does not require a special set aside in the General Fund
7
Concerns about Ability to Pledge
• Article V, Section 15 Appropriations Forbidden, No
appropriation shall be made for any charitable, industrial,
educational, or benevolent purposes to any person,
corporation, or organization not under the absolute control
of the city, nor to any denominational or sectarian institution
or association.
• does not apply because:
1. URA is under absolute control of City
2. Projects being refinanced were for public
infrastructure projects
8
Concerns about Ability to Pledge
• Article V, Section 16 City not to pledge credit, The
city shall not lend or pledge its credit or faith, directly or
indirectly, or in any manner to or in aid of any private person
or entity for any amount or any purpose whatever, or
become responsible for any debt, contract, or liability
thereof.
• does not apply because:
1. URA is public entity
2. Moral obligation is not debt or legal obligation
3. Projects refinanced are public infrastructure
projects
9
Pledge is Not Unique
• The same tax increment financing procedure is
used by
– City & County of Denver
– City of Thornton
– City of Westminster
– City of Steamboat Springs
– Town of Avon
• State of Colorado uses moral obligation financing
structures for housing, charter schools and higher
education.
10
2013 Bonds (preliminary)
• 2.98% Interest Rate, lower than City rate
• 16 year term
• Saves the URA $922,000 through 2029
Bond Proceeds $11,364
Costs of Issuance (206)
Repay City Loans with interest $11,158
11
Next Steps
• May 16 complete credit application
• May 29 receive credit rating from Moody’s
• June 4 City Council/URA Board actions
• June 6 publish Preliminary Official Statement
• June 18-19 market the bonds
• July 9 closing
12
13
Sources and Use of Funds
Sources
Bond Proceeds
Par Amount $10,645
Premium 719
11,364
Uses
Project Fund Deposits
Takeout Loans-Principal $10,938
Takeout Loans-Interest 220
11,158
Delivery Date Expenses
Cost of Issuance 105
Underwriters Discount 48
Surety (6% AGM) 53
206
11, 364
$000’s
1
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: John Voss, Controller / Assistant Financial Officer
Harold Hall, Investment Administrator
Presenter: Joel Stewart, Milliman
SUBJECT: Review of the 2013 Actuarial Valuation of the General Employees’ Retirement
Plan for year ending 2012.
EXECUTIVE SUMMARY:
The Actuarial Valuation review covers Plan highlights, economic and demographic assumptions,
unfunded actuarial accrued liabilities, and the solvency /sensitivity model.
BACKGROUND/DISCUSSION:
Review the Plan’s Actuarial valuation for year ending 2012 and discuss the impact to the plan
from investment return sensitivity. The Plan investment return assumption was lowered for year
2012 to 6.8% from 7.8% based on the actuary estimate of the 50
th
percentile for expected returns.
This change increased the unfunded liability by $3.7 million.
The General Employees’ Retirement Committee reviewed the 2013 actuary report in March and
approved the report at their April 11
th
meeting.
FINANCIAL/ECOMOMIC IMPACTS:
The 2012 investment return of 11.6% exceeded the Plan return assumption of 6.8%. Positive
investment returns added to supplemental and payroll contributions exceeded retiree payouts
which contributed to a year over year market value increase of $2.5 million. The future impact to
the Plan from the increase in market value is a projected reduction in the end date for
supplemental contributions from year 2042 to year 2033. The market value calculation
recognizes total asset gains and losses in the current year. Supplemental contribution end dates
fluctuate annually based on actual Plan economic and demographic performance.
The unfunded liability of the Plan however increased in 2012 from $13.8 million to $15.7
million. The unfunded liability calculation recognizes one-fifth of the asset gains and losses from
each of the previous five years. Total asset gains or losses for years 2008 to 2012 were $-15.2M,
$6.8M, $1.1M, $-4.2M, and $1.5M respectively. The asset loss recognized in year 2012 is
$1.9M.
STAFF RECOMMENDATION:
Staff recommends the City continue to fund the current $1.12M supplemental contribution.
ATTACHMENTS:
1. Actuarial Valuation presentation.
Council Finance Committee
Meeting
May 20, 2013
GERP
Actuarial Valuation
January 1, 2013
Joel Stewart, ASA, EA, MAAA
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who
receive this work.
1
Agenda
Highlights
Assumptions
Unfunded Actuarial Accrued Liabilities
– Actuarial Liability
– Actuarial Value of Assets
– Entry Age Normal Cost Method
Gain / Loss Review
Solvency Model / Sensitivity
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
2
2013 Actuarial Valuation Report Highlights
This work product was prepared solely to provide assistance to the City of Fort Collins and the General Employees’ Retirement Committee. It may
not be appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
There were 454 members reported on January 1, 2013, 140 of whom
were active members who continue to accrue benefits under the plan.
The remaining 314 were inactive members retaining benefits under the
plan, including 185 members currently receiving monthly benefits.
The plan assets returned 11.6% during the 2012 plan year on a market
value basis. The average annual return over the last 19 years is 5.8%.
The assumed rate of return for the 2012 plan year was 6.8%.
At the end of 2012, the market value of assets was $39,489,447, up
from the previous year ending market value of $37,015,380.
As of January 1, 2013, the ratio of the actuarial value of assets to the
actuarial liability was 71.2%. The ratio of the market value of assets to
the actuarial liability was 72.2%.
The Unfunded Actuarial Liability on January 1, 2013 was $15.7 million,
an increase from $13.8 million on January 1, 2012.
3
Assumptions
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
2 Types of
Assumptions
Economic
• Inflation – 2.5%
• Investment Return – 6.8%
• Salary Scale – graded by age,
4.5% to 3.6%
Demographic
• Mortality – predicts life
expectancy increases
• Retirement – graded by age
55 to 69
• Termination – graded by age
• Form of payment – 30% will
elect a lump sum
4
Historical Return on MVA
21.1%
-3.5%
-4.0%
-9.3%
18.8%
9.5% 8.5%
13.6%12.2%
-26.5%
20.5%
11.1%
-3.1%
11.6%
-30%
-20%
-10%
0%
10%
20%
30%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Assumed Return Actual Return
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
5
Liabilities
Actuarial Liability
$54,682,992
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
Note: 109 of the 140 Active Participants on January 1, 2013 are retirement eligible.
6
Entry Age Normal Cost Method – 1/1/2013
$15,742,554
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
$54,682,992 Actuarial Liability
$38,940,438 Assets
Unfunded (UAL)
7
Solvency Projections
• The following graphs show the historical results of the
solvency projections, from 2010 through the current year.
• Each year we update the solvency projection to reflect the
current year’s actuarial valuation results, including the
actual return on assets for the current year.
• Historical asset returns for the last few years are as
follows:
2010: 11.1%
2011: -3.1%
2012: 11.6%
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
8
Valuation Date: 1/1/2011
Future Return on Assets: 7.5%
Base Contribution Rate: 10.5%
Supplemental Contributions: $232,000 for 2011-12, $967,000 for 2013, $740,000 for 2014-31
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Millions
Market Value of Assets Contributions Benefit Payments
9
Valuation Date: 1/1/2012
Future Return on Assets: 6.8%
Base Contribution Rate: 10.5%
Supplemental Contributions: $290,000 for 2012, $1,120,000 for 2013 - 2042
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Millions
Market Value of Assets Contributions Benefit Payments
10
Valuation Date: 1/1/2013
Future Return on Assets: 6.8%
Base Contribution Rate: 10.5%
Supplemental Contributions: $1,120,000 for 2013 - 2033
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Millions
Market Value of Assets Contributions Benefit Payments
11
Sensitivity
• The actual cost of the plan is based on the actual benefits
that will ultimately be paid. Therefore we want the
assumptions modeling the expected future benefit
payments to be as good as possible.
• The following pages show the sensitivity of the projection
to various asset returns.
• The table below summarizes the Unfunded Actuarial
Liability (UAL) at 1/1/2013 under various return
assumptions.
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
6.8% 5.8% 7.8%
Actuarial Liability $54.7m $60.9m $49.5m
AV of Assets $38.9m $38.9m $38.9m
UAL $15.7m $22.0m $10.6m
12
Valuation Date: 1/1/2013
Future Return on Assets: 5.8%
Base Contribution Rate: 10.5%
Supplemental Contributions: $1,120,000 for 2013 - 2033
This work product was prepared solely to provide assistance to the City of Fort Collins and the Council Finance Committee. It may not be
appropriate for other purposes. Milliman does not intend to benefit and assumes no duty or liability to other parties who receive this work.
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
Millions
Market Value of Assets Contributions Benefit Payments
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
AGENDA
Urban Renewal Authority Board Finance Committee
May 20, 2013
11:00 to noon
CIC Room – City Hall
Approval of the Minutes from the December 17, 2012 Meeting
1. URA N College Refinance 10 min J. Voss
Finance Administration
215 N. Mason
2nd Floor
PO Box 580
Fort Collins, CO 80522
970.221.6788
970.221.6782 - fax
fcgov.com
URA Finance Committee Meeting
Minutes
12/17/12
11:00 to 12:00
CIC Room
Committee Members: Mayor Karen Weitkunat, Mayor Pro Tem Kelly
Ohlson, Ben Manvel
Staff: Darin Atteberry, John Voss, Mike Beckstead (via
conference call),Mindy Pfleiger, Chris Donegon,
Megan Bolin, Josh Birks, Bruce Hendee, Harold
Hall, Heather Shepherd
Others: Jim Manire of BLX; Developers Charlie Vater,
Larry Owens, Dan Fredericks, Rick Shannon
URA Project
This is the first meeting of the Urban Renewal Authority Finance Committee. Members of the
Committee are:
Mayor Karen Weitkunat
Kelly Ohlson
Ben Manvel
Darin Atteberry
Josh Birks presented some information to the Committee on the Aspen Heights project. Josh
said it is still very early in the process and agreement negotiation has not yet begun.
Megan Bolin reviewed specifics of the project
• Northwest corner of Redwood Street and re-aligned Vine Drive
• 220 units, student-oriented housing
• 62 duplexes
• 76 multi-family units
• 82 single-family units
• 712 bedrooms for individual leasing
Offsite Street Improvements
Developer = $135,139
City = $639,122
URA Total = $764,156
• $685,401 – Streets
• $63,756 - Landscaping
• $15,000 – CLOMR/LOMR
•
Stormwater Detention Improvements
Developer = $547,385
URA Total = $558,187
• $537,410 – NECCO piping
• $13,500 – Trees
• $7,277 - Environmental mitigation
Financial Request:
Total Project Cost $46,538,171
Projected Actual Value $34,000,000
Projected Annual Tax Increment $174,641
Total Property Tax Increment Expected $2,794,253
Total TIF Requested $784,934
% of Tax Increment Requested 28%*
Potential Bridge Loan for NECCO Improvements $537,410
Ben Manvel and Kelly Ohlson stated that they would prefer some dollar amounts or estimate
for projects even if it is still early in the process.
Josh said direction is being sought from this committee on the structure of the deal, which
could include either
1. A one-time reimbursement payment plan
2. A multi-year payout
Direction Sought
1. Does the Committee believe the financial request of the URA is reasonable?
2. Should staff proceed with negotiating and drafting a Redevelopment Agreement with
the Developer?
3. Does the Committee have a preference for the Redevelopment Agreement structure?
• Developer builds infrastructure and gets repaid.
• City builds infrastructure and gets repaid.
Kelly Ohlson stated that while the project seems reasonable, he is still not convinced.
Karen W. said that this is a beneficial project since it will improve the storm water situation in
the area.
Developer Rich Shannon said he wanted to point out that none of the improvements made will
benefit the project directly but they will be completed anyway.
Kelly Ohlson stated that generally, he agrees with the project and improvements but he wants
to ensure the outcome is what is best for the City, and is not 'overly generous' for the
developers.
Ben Manvel said he has a few reservations about the project costs, and he would like to get
more detailed information on Loan terms, but acknowledges that everyone, not just Aspen
Heights, will benefit from new sidewalks, street improvements, etc.
Karen Weitkunat prefers more fully developed information be presented in future, if this
Committee is being asked for recommendations.
1
AGENDA TEMPLATE – URA BOARD
Staff: John Voss, Controller/Assistant Financial Officer
SUBJECT: Resolution of the Board of Commissioners of the Fort Collins Urban Renewal
Authority authorizing, approving and directing the issuance, sale and delivery by the Authority
of Tax Increment Revenue Refunding Bonds (North College Avenue Project) Series 2013(the
“2013 Bonds”), in the maximum aggregate principal amount of $11,800,000; approving
documents in connection therewith; and ratifying prior actions.
EXECUTIVE SUMMARY: Property tax revenue in the North College Plan Area has matured
and is therefore attractive to outside investors. The City is going to make a pledge to replenish
the URA’s debt service reserve fund if such funds are ever used to make debt service payments.
Such a pledge is subject to annual appropriation of funds by the City Council in its sole
discretion. Their pledge improves the credit rating on the 2013 Bonds. With the City’s pledge,
the 2013 Bonds are expected to have an effective interest rate of 2.98%.
BACKGROUND/DISCUSSION: The Underwriters for the 2013 Bonds have recommended
that a debt service reserve fund in the amount of $961,000 would be advisable for marketing the
2013 Bonds and that purchasing a Surety Policy for such an amount would be preferable to
funding such a reserve with cash. The cost of such a Surety Policy would be $53,000. If it was
ever necessary to draw upon the Surety Policy, the City’s replenishment pledge would repay
such draw, subject to annual appropriation.
Staff prefers this option but will make a decision later based on the potential impact to the credit
rating.
It is anticipated the City’s pledge will result in a credit rating of Aa3. Without the City’s pledge
and a proven revenue stream the interest rate would likely be 5% or higher rather than 3%.
Revenue – The North College URA Project Area was created in 2004, allowing the URA to
receive incremental property taxes through 2029. Collection of property tax increment revenue
in North College began in 2007 and the 2012 property taxes payable in 2013 are expected to be
$1.3 million.
Table 2 - Net Property Tax Increment Revenue $000’s
2007 2008 2009 2010 2011 2012 2013 *
$110 $287 $263 $493 $536 $907 $1,285
*anticipated
A common measure used by lenders in determining risk is the ratio of pledged revenue to debt
service, called a coverage ratio. Investors want that ratio to be high; at least 125%. The current
revenue of $1.3 million could support up to $1 million a year in debt service. The proposed
maximum annual debt service of $890,000 yields a good coverage ratio of 144%.
Preliminary Structure of Replacement Debt – Approximately $11.36 million of bond
proceeds will be used to takeout $10.94 million of debt to the City, plus interest of $220,000, and
2
pay debt issue costs of $206,000. Coupon interest rates vary from 2% for near term bonds and
4% for longer term bonds. The collective Net Interest Cost is expected to be 2.98%, which
compares favorably to 3.44% weighted average interest rate on the debt being retired. The
interest only payment on December 1, 2013 for $161,000 will be followed by future annual
payments that vary from $886,000 to $890,000 through 2029.
City Loans to URA – The initial financing model adopted for North College has the City
providing initial capital through a loan until the tax increment revenue reaches a maturity level
that can support external financing to third party investors. Eight loans have been made by the
City to the URA in the North College District. The first loan has been repaid. Table 2 recaps the
current status of the loans.
Table 1 – North College Loan Status $000’s
Date Project
Original
Value
Current
Balance
Term
Years Rate City Fund Holding
09/06 V. Steel, URA start-up funds $ 150 $ 0 5 5.55% General Fund
05/09 N.C. Market Place, phase 1 5,000 4,729 20 2.85% Capital Expansion
12/10 JAX 173 106 5 2.50% Capital Expansion
06/11 NEECO 326 326 10 3.01% Storm Drainage
07/11 Kaufman Robinson 193 193 5 2.46% General Fund
07/11 N.C. Market Place, phase 2 3,000 2,884 19 4.09% Water Fund
08/12 N.C. Road Improvements 2,700 2,700 18 3.92% Capital Projects BCC
Loans to be refinanced 11,542 10,938 3.44%
06/09 RMI2 5,304 5,304 20 2.50% General Fund
Total North College Area 16,846 16,242
The proposal is to issue enough debt to takeout $10.94 million in loans to the City, plus interest
and debt issue costs. For the following reasons, the City loan to the URA that relates to RMI is
not being refinanced.
• The use of the RMI loan proceeds does not qualify the interest to be tax exempt.
Therefore the interest rate would be significantly higher.
• The new market tax credit deal cannot be refinanced until 2017.
• There is not enough revenue capacity to meet external investor expectations relating to
coverage ratios. Only about $1 million of the $5.3 million could be considered for
refinancing if the favorable coverage ratio was to be preserved.
Future Financing Model – City staff have communicated to the URA that going forward the
City intends to only loan money when alternative financing agreements are not feasible. The
reimbursement agreement recently approved for Aspen Heights is an example of the preferred
approach for future development agreements. The Aspen Heights developer will be reimbursed
over time as revenue is collected, rather than in a lump sum upon completion of the project.
Timeline –
May 9 Complete application for credit rating with Moody’s
3
May 17 Receive credit rating from Moody’s
May 22 Publish Preliminary Official Statement on Internet Sites
June 4-6 Market Bonds
June 20 Closing
Consultants – The URA and City have engaged three firms to help issue the new debt: Sherman
& Howard as the Bond Attorney, BLX as the Financial Advisor and RBC Capital Markets as the
Bond Underwriters.
FINANCIAL/ECOMOMIC IMPACTS: The replacement debt will take out $10.94 million
in debt to the City, pay $220,000 of interest and pay $206, 000 in delivery date expenses. It
should be noted that later this summer the City will use some of the returned monies to loan $5
million to the URA for the first Midtown Project – The Summit (Capstone). The initial savings
in 2013 is $643,000 and cumulative savings through 2029 that will total $922,000.
Table 3
000s
Before 2013 Refinancing 2012 2013 2014 2015 2016
Cash In-flows
Property Tax Increment $ 907 $ 1,285 $ 1,310 $ 1,310 $ 1,337
Other Inflows 109 97 95 92 97
Loan Proceeds 2,700
Total Inflows 3,716 1,382 1,405 1,402 1,433
Cash Out-flows
Operating Costs (132) (235) (263) (268) (272)
Project Costs (3,718) (212)
Subordinate Debt Service (645) (804) (1,539) (1,008) (1,162)
Total Outflows (4,496) (1,251) (1,802) (1,276) (1,434)
Net Cash Flow (780) 130 (397) 126 (0)
Beginning Cash 2,531 1,751 1,881 1,485 1,611
Ending Cash 1,751 1,881 1,485 1,611 1,611
Table 4
000s
After 2013 Refinancing 2012 2013 2014 2015 2016
Cash In-flows
Property Tax Increment $ 907 $ 1,285 $ 1,310 $ 1,310 $ 1,337
Other Inflows 109 97 100 97 103
Loan Proceeds 2,700
Refinancing Proceeds
11,364
Total Inflows 3,716 12,745 1,410 1,407 1,440
Cash Out-flows
Operating Costs (132) (235) (263) (268) (272)
Project Costs (3,718) (212)
Debt Service 2013 Bonds
(161) (886) (890) (889)
Subordinate Debt Service (645)
(663) (133) (133)
Bond Issue Costs
(206)
Takeout loans plus interest
(11,158)
Total Outflows (4,496) (11,972) (1,812) (1,290) (1,293)
Net Cash Flow (780) 773 (402) 117 146
Beginning Cash 2,531 1,751 2,524 2,122 2,239
Ending Cash 1,751 2,524 2,122 2,239 2,385
Table 5
Increase In Ending Cash 2012 2013 2014 2015 2016
$ 0 $ 643 $ 638 $ 628 $ 774
4
STAFF RECOMMENDATION: Staff recommends adoption of the Resolution.
BOARD OR COMMISSION RECOMMENDATION: Council Finance Committee reviewed
and tentatively approved the refinancing and the concept of a debt reserve replenishment pledge
at their meeting on December 17, 2012.
PUBLIC OUTREACH: None.
ATTACHMENTS:
1. Preliminary debt structure, prepared by RBC Capital Markets, April 22, 2013.
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets
TABLE OF CONTENTS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Report Page
Sources and Uses of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Bond Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Bond Summary Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bond Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bond Solution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 1
SOURCES AND USES OF FUNDS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Dated Date 06/20/2013
Delivery Date 06/20/2013
Sources:
Bond Proceeds:
Par Amount 10,645,000.00
Premium 718,718.60
11,363,718.60
Uses:
Project Fund Deposits:
Proceeds to Takeout Loans - Principal 10,938,089.54
Proceeds to Takeout Loans - Interest 220,082.29
11,158,171.83
Delivery Date Expenses:
Cost of Issuance 104,232.27
Underwriter's Discount 47,902.50
Surety @ 6% (AGM Est) 53,412.00
205,546.77
11,363,718.60
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 2
BOND PRICING
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Maturity Yield to Premium
Bond Component Date Amount Rate Yield Price Maturity (-Discount)
Serial bonds:
12/01/2014 525,000 2.000% 0.670% 101.912 10,038.00
12/01/2015 540,000 3.000% 0.870% 105.146 27,788.40
12/01/2016 555,000 3.000% 1.100% 106.409 35,569.95
12/01/2017 570,000 3.000% 1.360% 107.053 40,202.10
12/01/2018 590,000 3.000% 1.590% 107.328 43,235.20
12/01/2019 605,000 3.000% 1.830% 107.084 42,858.20
12/01/2020 625,000 3.000% 2.110% 106.103 38,143.75
12/01/2021 640,000 3.000% 2.300% 105.345 34,208.00
12/01/2022 660,000 3.000% 2.490% 104.268 28,168.80
12/01/2023 680,000 3.000% 2.630% 103.359 22,841.20
12/01/2024 700,000 4.000% 2.750% 111.282 C 2.839% 78,974.00
12/01/2025 730,000 4.000% 2.870% 110.136 C 3.017% 73,992.80
12/01/2026 760,000 4.000% 3.000% 108.910 C 3.180% 67,716.00
12/01/2027 790,000 4.000% 3.110% 107.885 C 3.309% 62,291.50
12/01/2028 820,000 4.000% 3.200% 107.055 C 3.409% 57,851.00
12/01/2029 855,000 4.000% 3.270% 106.414 C 3.484% 54,839.70
10,645,000 718,718.60
Dated Date 06/20/2013
Delivery Date 06/20/2013
First Coupon 12/01/2013
Par Amount 10,645,000.00
Premium 718,718.60
Production 11,363,718.60 106.751701%
Underwriter's Discount -47,902.50 -0.450000%
Purchase Price 11,315,816.10 106.301701%
Accrued Interest
Net Proceeds 11,315,816.10
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 3
BOND SUMMARY STATISTICS
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Dated Date 06/20/2013
Delivery Date 06/20/2013
Last Maturity 12/01/2029
Arbitrage Yield 2.668434%
True Interest Cost (TIC) 2.894357%
Net Interest Cost (NIC) 2.976786%
All-In TIC 3.010203%
Average Coupon 3.631204%
Average Life (years) 9.629
Duration of Issue (years) 8.157
Par Amount 10,645,000.00
Bond Proceeds 11,363,718.60
Total Interest 3,722,190.69
Net Interest 3,051,374.59
Total Debt Service 14,367,190.69
Maximum Annual Debt Service 890,200.00
Average Annual Debt Service 873,532.96
Par Average Average PV of 1 bp
Bond Component Value Price Coupon Life change
Serial bonds 10,645,000.00 106.752 3.631% 9.629 7,847.25
10,645,000.00 9.629 7,847.25
All-In Arbitrage
TIC TIC Yield
Par Value 10,645,000.00 10,645,000.00 10,645,000.00
+ Accrued Interest
+ Premium (Discount) 718,718.60 718,718.60 718,718.60
- Underwriter's Discount -47,902.50 -47,902.50
- Cost of Issuance Expense -104,232.27
- Other Amounts -53,412.00 -53,412.00 -53,412.00
Target Value 11,262,404.10 11,158,171.83 11,310,306.60
Target Date 06/20/2013 06/20/2013 06/20/2013
Yield 2.894357% 3.010203% 2.668434%
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 4
BOND DEBT SERVICE
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Period
Ending Principal Coupon Interest Debt Service
12/01/2013 161,290.69 161,290.69
12/01/2014 525,000 2.000% 360,650.00 885,650.00
12/01/2015 540,000 3.000% 350,150.00 890,150.00
12/01/2016 555,000 3.000% 333,950.00 888,950.00
12/01/2017 570,000 3.000% 317,300.00 887,300.00
12/01/2018 590,000 3.000% 300,200.00 890,200.00
12/01/2019 605,000 3.000% 282,500.00 887,500.00
12/01/2020 625,000 3.000% 264,350.00 889,350.00
12/01/2021 640,000 3.000% 245,600.00 885,600.00
12/01/2022 660,000 3.000% 226,400.00 886,400.00
12/01/2023 680,000 3.000% 206,600.00 886,600.00
12/01/2024 700,000 4.000% 186,200.00 886,200.00
12/01/2025 730,000 4.000% 158,200.00 888,200.00
12/01/2026 760,000 4.000% 129,000.00 889,000.00
12/01/2027 790,000 4.000% 98,600.00 888,600.00
12/01/2028 820,000 4.000% 67,000.00 887,000.00
12/01/2029 855,000 4.000% 34,200.00 889,200.00
10,645,000 3,722,190.69 14,367,190.69
Apr 22, 2013 3:18 pm Prepared by RBC Capital Markets Page 5
BOND SOLUTION
Fort Collins Urban Renewal Authority
Tax Increment Revenue Refunding Bonds, Series 2013
(North College Avenue Project)
'Aa3' Est Rating | 4/16/13 Market Rates
**Preliminary Numbers - Subject to Change**
Period Proposed Proposed Total Adj Revenue Unused Debt Serv
Ending Principal Debt Service Debt Service Constraints Revenues Coverage
12/01/2013 161,291 161,291 1,300,000 1,138,709 805.99816%
12/01/2014 525,000 885,650 885,650 1,300,000 414,350 146.78485%
12/01/2015 540,000 890,150 890,150 1,300,000 409,850 146.04280%
12/01/2016 555,000 888,950 888,950 1,300,000 411,050 146.23995%
12/01/2017 570,000 887,300 887,300 1,300,000 412,700 146.51189%
12/01/2018 590,000 890,200 890,200 1,300,000 409,800 146.03460%
12/01/2019 605,000 887,500 887,500 1,300,000 412,500 146.47887%
12/01/2020 625,000 889,350 889,350 1,300,000 410,650 146.17417%
12/01/2021 640,000 885,600 885,600 1,300,000 414,400 146.79313%
12/01/2022 660,000 886,400 886,400 1,300,000 413,600 146.66065%
12/01/2023 680,000 886,600 886,600 1,300,000 413,400 146.62757%
12/01/2024 700,000 886,200 886,200 1,300,000 413,800 146.69375%
12/01/2025 730,000 888,200 888,200 1,300,000 411,800 146.36343%
12/01/2026 760,000 889,000 889,000 1,300,000 411,000 146.23172%
12/01/2027 790,000 888,600 888,600 1,300,000 411,400 146.29755%
12/01/2028 820,000 887,000 887,000 1,300,000 413,000 146.56144%
12/01/2029 855,000 889,200 889,200 1,300,000 410,800 146.19883%
10,645,000 14,367,191 14,367,191 22,100,000 7,732,809