HomeMy WebLinkAboutMemo - Mail Packet - 9/17/2013 - Council Finance And Audit Committee & Ura Finance Committee Agenda - September 16, 2013Council Finance Committee & URA Finance Committee
Agenda Planning Calendar 2013
RVSD 9/12/13 kw
Sep. 16 TOPIC TIME WHO
CFC
Block 32 Master Plan Review 30 min K. Mannon
Utilities Building/Financing 30 min J. Voss/
L. Smith
Memo on Clean Up Memo Going to Council—Questions? L. Pollack
URA
Prospect Station TIF Support 30 min T. Leeson
URA Loan - Summit 30 min M. Beckstead
Oct. 21 TOPIC TIME WHO
CFC
Revenue Policy Review 30 min J. Ping-Small
New Fees Review – In advance of Nov 26th work session 30 min J. Ping-Small
Audit Findings and Recommendations: Corrective Actions 15 min J. Voss
URA URA Direction / Policy / Process 30 min J. Birks
Nov. 18 TOPIC TIME WHO
CFC
Transfort Business Review 60 min Ravenschlag
Budget Policy Review 30 min L. Pollack
Investment Policy Review 30 min H. Hall
URA
Dec. 16 TOPIC TIME WHO
CFC
Policy Review – Reserve/Fund Balances 30 min J. Voss
URA
Future Council Finance Committee Topics:
• 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
September 16, 2013
10:00 to noon
CIC Room – City Hall
Approval of the Minutes from the August 19, 2013 meeting
1. Block 32 Master Plan Review 30 minutes K. Mannon
2. Utilities Building/Financing 30 minutes L. Smith/J. Voss
3. Memo on Clean Up Memo Going to Council
—Questions? L. Pollack
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
Draft of Minutes
8/19/13
10:00 to 12:00
CIC Room
Council Attendees: Mayor Karen Weitkunat, Ross Cunniff, Bob Overbeck
Staff: Darin Atteberry, Mike Beckstead, Megan Bolin, Steve
Catanach, Kevin Gertig; Brian Janonis, Diane Jones,
Mindy Pfleiger, Lawrence Pollack, Lance Smith, Jon
Haukaas, Kurt Ravenschlag; Steve Roy, John Voss,
Katie Wiggett
Others: Dale Adamy
Approval of the Minutes
Bob Overbeck moved to approve the minutes for the July 15, 2013 and the August 8, 2013 meetings.
Mayor Karen Weitkunat seconded the motion. Minutes were approved unanimously.
2014 Budget Revisions – in Advance of the September 10 Work Session
Lawrence Pollack presented the recommended revisions to the 2014 Budget; an Appropriations
Ordinance is scheduled to go to first reading October 15 and a second reading November 5.
Lawrence went through the individual recommended changes. City-wide, supplemental appropriations
recommended total $8.1 million. The following are key objectives which the recommendations line up
with:
• Address stated Council priorities
• Cover increased costs for power
• Complete funding for North College Improvements
• Maintain fund balances and start rebuilding reserves in the General Fund to support future
needs and economic uncertainty
The recommended 2014 budget supplemental appropriations meet these goals.
City Manager Darin Atteberry noted that the City’s two year budget process encourages a conservative
approach, keeping a strong fund balance. The two year process is also an important part of Budgeting
for Outcomes (BFO), a very transparent process in which staff recommends and council decides.
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Review Utility Rates
Lance Smith noted that the 2013-14 City Budget included rate increases for the Water and Wastewater
utilities. The proposed rate increases for 2014 are necessary to fund the capital improvements and
ongoing operating expenses as outlined in the 2013-14 City Budget. Below are the 2014 Proposed Rate
Increases:
• Electric—2.0%
• Wastewater—3.0%
• Water—4.0%
A new development fee is being proposed for the Water Fund to provide sufficient funding to fully
utilize accepted water rights throughout the year. This fee, called the Water Right Utilization Fee
(WRUF), is necessary to ensure that new development not only provides water rights necessary to serve
the development but also the capital associated with developing the water storage required to fully
utilize those water rights. Currently the City of Fort Collins accepts water rights from several different
irrigation companies to meet the raw water requirements for development purposes. Some of these
water rights come with short-term storage, but most do not have any storage associated with them. In
order to fully utilize those rights to meet the demand for water throughout the year it is necessary to
have sufficient storage capacity. Because the duration and magnitude of the flows from each of the
irrigation ditch company is unique, the amount of such storage depends on the specific water rights.
Thus, the new fee will vary by the water right source.
For the Electric utility, the increase is composed of a 1.5% increase from Platte River Power Authority
and $500,000 for the second phase of the Fort Collins Solar Purchased Power Program. Electric
Development Fees are being reviewed for 2014 and will be included in the Electric Rate Ordinance on
October 15.
Staff has presented the proposed changes in rates and fees to the Energy Board on August 8 and the
Water Board on August 15 for their preliminary review. No action was requested of the Boards at these
meetings. Staff will meet with these Boards again before the First Reading of the Rate Ordinances in
October and provide the Board recommendations with the Ordinances. Staff will present the rate class
specific increases and the proposed changes to the development fees to City Council at the September
24 Work Session.
The First Reading of the 2014 Utility Rate Ordinances is scheduled for October 15.
Bob II Update
Mike Beckstead opened a discussion on the potential renewal of the current community capital
improvement tax, Building on Basics (BOB). He noted that, historically, Fort Collins has a long history of
voter approved sales tax initiatives targeted for major capital projects. The current initiative, BOB, was
approved in 2005 and is a quarter cent tax which has helped finance such projects as the Lincoln Center
renovation, the Museum of Discovery and the Senior Center expansion. BOB expires December 31,
2015. Mike presented a graph showing the other taxes that are also due to expire in 2015, noting that
the transportation/street maintenance ¼ cent tax will expire at the same time as BOB While staff is
currently working on renewing BOB, they are also conducting a revenue diversification study that would
enable the Council to possibly replace the transportation ¼ cent tax with a transportation fee. Staff will
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look for direction from Council at the November 26 meeting. If Council decides to continue with a
transportation tax, this effort will be combined with the BOB renewal effort.
Diane Jones continued the discussion, noting that staff hoped to find out if Council Finance supports
pursuing a renewal of BOB, and if so at which election time. Staff also hoped to learn more about the
types or categories of City capital improvements that should be considered and highlighted as staff
begins to create a potential list of community capital improvements. Staff has begun reaching out to all
departments to identify potential projects based on existing master plans and BFO initiatives.
Should the City move forward with another community capital program and tax initiative to fund the
program, we can consider the following election dates:
• November 2014 – staff recommendation
• April 2015
• November 2015
Historically, council has put these on the ballot at the earliest possible election. Staff is currently
scheduling the work program and outreach activities in conjunction with a November 2014 election.
Staff anticipates the following:
• Meet with Council on Sep. 10 (Work Session) to review this information and the outcome of the
discussion with the Finance Committee.
• Work with Boards and Commissions and community groups between now and the next work
session (Dec. 10) to review and add to the preliminary list.
• Utilize the December work session to agree on a project list to take to the public for feedback
and preferences in early 2014.
Darin noted that staff has worked with the assumption that Council will go through with renewing BOB,
but they are aware that Council may decide not to, erasing a large funding source. Mike Beckstead
noted that the BOB ¼-cent sales and use tax revenue brought in approximately 6.8 million dollars last
year. Bob Overbeck said that Council would want to look at the different options for projects before
making this big decision. Diane noted that staff is continuing to compile the list of potentials and will
bring it to Council in September.
Mayor Weitkunat said that the success of renewal would depend 1) on public outreach and 2) on the
universality of the improvement projects. The City must ensure that it is meeting the needs of a wide-
span of the residents, considering all the different districts. Staff should look at whether we are
currently meeting the residents’ needs with our current infrastructure. Darin agreed that this would be
a big discussion for Council. Diane noted that many of the projects already on the list came from the
City’s Master Plan. Diane said that North College is a good example of a successful improvement funded
by BOB; the program has a solid history, and because the City has consistently delivered on the voter
approved improvements, the people of Fort Collins generally trust this approach taken by the City .
Debt Policy Update
John Voss brought an updated Debt Policy to Council Finance for consideration. He noted that the Debt
Policy has not been modified in many years, and Staff has developed a new framework for updating,
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controlling, formatting and publishing financial policies. The Debt Policy is one of first policies to use this
new format.
The major changes to the policy are as follows:
A. Changed method of limiting governmental debt, from percent of General Fund revenue to
percent of governmental fund revenue.
B. Added capacity guidelines for enterprise funds, i.e. the utility funds.
C. Added information about Moral Obligation Pledge and when it may be used.
D. Added language about goal to keep the City’s overall credit rating at AAA.
E. Added guidance on refinancing.
Under the new policy the governmental funds are limited to $70M more debt, compared to $150M
under the existing policy. Mike Beckstead noted that adding the objective of keeping the City’s AAA
rating helped Staff to better know how to set a debt limit.
Staff will make all recommended changes to wording and bring the updated policy to Council.
DDA IGA to Support Woodward Project
Mike Beckstead noted that Staff had put together a document outlining how the DDA IGA would
support the Woodward Project. The document is an administrative document, not a policy. Ross
Cunniff said that he had questions about how Natural Area funds would be used to fund the project,
noting that in the current document it sounded like underspend in the Natural Area funds could be used
to supplement projects such as power lines that are not Natural Area related. Mike Beckstead said that
Staff would work on rewording the document to be clear that supplemental Natural Area funds would
only be used for Natural Area purposes.
Next Steps
Staff will bring the Appropriations Ordinance to Council for first reading on October 15 and for a second
reading November 5.
Staff will bring the 2014 Utility Rate Ordinance to Council for first reading on October 15.
Staff will continue to compile a list of possible projects for a renewed BOB and will bring the issue to the
Council Work Session on September 10.
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff:
Ken Mannon – Director of Operations
Brian Hergott – Facilities Project Manager
Wayne Sterler – Utilities Health, Safety and Security Director
SUBJECT FOR DISCUSSION
Utilities Expansion Project - New Construction and Renovation
EXECUTIVE SUMMARY:
The City of Fort Collins Utilities Customer Service Building at 700 Wood Street is currently at
capacity and needing to create additional space for another 50 crew members for light and
power. A Triple Bottom Line Analysis is in the process and the current feedback is indicating
that a new building should be looked at to house Customer Service and the Utilities
Administration team. A Utility expansion will free up the necessary space at the existing 700
Wood Street building so it can be renovated to incorporate the additional crew space needed and
in the process make many necessary improvements to the existing building mechanical systems
and building envelope to improve the overall performance and increase user moral and
efficiency.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
The City of Fort Collins Utilities currently has $4.5 Million in reserves designated for facility
improvements. Current space assessments indicate Utilities need approximately 110,000 SF to
meet the current needs for administration and crew space. The existing building at 700 Wood
Street is approximately 75,000 SF and the Customer Service Center at 117 N Mason occupies
approximately 8,000 SF indicating approximately 27,000 SF of additional space is needed to
meet the current needs, but long range projection indicate a total space of 118,000 SF will be
needed by 2025.
BACKGROUND/DISCUSSION
The City of Fort Collins Utility Finance has looked at the limit of a Utility bond which could be
secured and financed without having a rate increase to the customers and it was determined a
Twenty (20) year, Fifteen Million ($15,000,000) bond would be possible.
If Utilities uses their current money in reserves of $4,500,000 and adds the $15,000,000 from the
bond it gives them $19,500,000 for construction and renovation to meet their current and future
needs. Construction of a new 33,000 SF Customer Service and Administration building at a unit
cost of $350/SF would cost $11,600,000. This would leave approximately $7,900,000 left for
renovating the existing building at 700 Wood street which would involve approximately 65,000
SF at a unit cost of $122/SF.
Our preliminary Triple Bottom Line Analysis is indicating the new Customer Service Building
should be located downtown and make use of development space available on Block 32. Utilities
have looked at what current staff would be relocated to the new building downtown and have
highlighted those people on their Org chart. The personnel Utilities is looking to relocate are
those individuals which have a great deal of interaction with the public on a frequent basis. This
new location will provide better service to their customers by giving many a one stop shop if
dealing with Utilities. The new building would incorporate the existing operations at 700 Wood
and 117 N Mason into one location, move the plan reviewers which deal with planning, zoning
and permitting downtown so they are close to our other permitting facilities.
The City of Fort Collins has teamed up with RNL Design to look at a master plan for Block 32
and see how it needs to be developed and where a new Customer Service Building might be
located on this block.
ATTACHMENTS
1. Utilities Expansion and Block 32 Development Power Point Presentation
2. Utilities Org Chart showing preliminary study of those to be relocated.
3. Utilities Preliminary TBLAM Report
Vision for Block 32
• Visioning Session held 6/25
• World Class
• Inspire the Private Sector; Lead by Example
Vision for Block 32
• 100 Year Vision; flexible and expandable
• Great Outdoor Space
Vision for Block 32
• Nature in the City
• Leader in Net Zero Energy Design
Vision for Block 32
• Concurrent Tracks: USC & Block 32
• Block 32
– Facilities Plan interviews are complete
– Facility Plan Document 10/4/13
– Vision Plan Design Charette 9/23-9/25/13
– Vision Plan Complete 12/5/13
– CSB Concept Design Complete 12/5/13
Schedule & Process
• Utility Service Center - 700 Wood Street
– Detailed Programming Meetings August & September 2013
– Detailed Program Complete 11/18/13
– USC Design Charette 10/21-10/22/13
– Construction Drawings Complete 5/11/14
Schedule & Process
• Many alterations over time has led to a complex range of potential
improvements
• Approach to renovation will need to be a balance of infrastructural and
workspace improvements
Vision for Utilities Service Center - Overview
• Significant gains to be made relative to energy savings
– Current building energy use: 120-145 kBTU/sf
– High performance building energy use: 30 kBTU/sf
• Measured electrical consumption is below predicted rates
– Plug-loads and user behaviors relative to lighting are good
– Fewer building occupants = further electrical savings
• Gas usage is considerably higher than predicted
– Attributable to the current VAV reheat mechanical system
• Energy is expended conditioning air, then gas boilers to reheat this air to
comfortable levels (boilers are running year-round)
• System is incompatible with modern energy-saving controls
• Most roof-top units near or past the end of useful life
• Mechanical system can be streamlined and potentially simplified for
operations/maintenance and energy efficiency
Vision for Utilities Service Center – Infrastructure
• Building envelope can be improved for greater insulation and efficiency
– USC barely meets established industry minimum criteria for air leakage
– The current building envelope performs 50% as well as new construction
• Opportunity exists for creative, site-based strategies for energy savings
– Geothermal loops and natural heat sink opportunities can be developed on-
site
– Creative interventions can be teaching opportunities for the general public
• Significant useful data exists on 700 Wood for evaluating the mechanical
system and building envelope
– We have a head-start in this realm thanks to this data
Vision for Utilities Service Center – Infrastructure
• Expanded crew space is a priority
– Improved locker-room, training and common space amenities
• More field personnel in the building = new opportunities for
workspaces
– Potential for fewer hard-wall offices and a more open/flexible environment
• More effective day lighting
• Increased space efficiency
• Current layout is complex with many pockets of space
– Future smart utilization of these spaces will help meet goal of keeping
working groups integrated
– Pockets of space can become common use amenities
Vision for Utilities Service Center – People Spaces
Vision for Utilities Service Center – People Spaces
• Infrastructural improvements will be a big-ticket item
– Upgraded Mechanical/Building Envelope
– These are tied to City’s sustainability goals
• Improved crew space is a driving priority for Utilities
– Need to balance infrastructural improvement costs with the desire for a
quality work environment
• Budget for this project is constrained, so decisions about improvements
will need to be prioritized
– Goals:
• Meet programmatic goals for users
• Meet the aspirations of the City and Fort Collins Utilities
Vision for Utilities Service Center – A prioritized approach
• Items that need to be resolved in the program, prior to
final issuance:
– VERIFICATION OF GROUPS AND INDIVIDUALS
• We are looking at options wherein the SSA groups would move in to the
building, and then be slated to move out when a following City building
is built on block 32, to allow Utilities to grow into their building over the
20 year timeframe.
• A back up SCU, or EOC was discussed for the building. We have taken
the line item out for this issuance of the program, but this needs to be
resolved.
Utilities Customer Service Building – Methodology/Analysis
Form Drafted: August 15, 2012 This form is based on research by the City of Olympia and Evergreen State College
Triple Bottom Line Analysis Map (TBLAM)
Project or Decision: New Building Master Plan near Mason + LaPorte –
seeking approval for building and funding plan Evaluated by:
Building Team
& TBL Team
Social Environmental Economic
STRENGTHS:
• New building provides more space for an already cramped
workforce
• Will give crew members adequate room to operate
• Combines customer service functions of the Utility to one location
near other customer service units; creates a 1-stop shop / campus
• Centralizes development review functions as a 1-stop shop between
different departments
• Easier to manage security with visitors, contractors and vendors in
one building
• Supports City Management desire to increase collaboration potential
among customer service providers
• Utilities will fund project without a rate increase
• Employee comfort inside USC building can improve morale and
efficiency / productivity
• Cogeneration with FortZED; allows Utility to become an engaged
neighbor & help support the FortZED ideal
• Frees up 3 other buildings so services can be optimized by
proximity, allowing customers to more efficiently move between
departments
• Purchasing RR spur between new building and USC provides a
walkable path between structures; encourages employee wellness
STRENGTHS:
• Renovation of USC will reduce overall environmental footprint
through energy-efficiency
• Construction of new building can be more efficient than a USC
renovation with LEED standards and others
• Utilizes space the City already owns; reusing sites
• Will be located near FortZED; allows Utility to become a
responsible neighbor
• Located near the Transit Center and along the Mason MAX
• Parking limitations encourage alternative forms of transportation
• New geothermal opportunities are available
• Purchasing RR spur between new building and USC provides a
walkable path between structures; encourages employee
wellness
• USC is one of the least-efficient buildings in the City; needs
renovation
STRENGTHS:
• Renovation of USC will save money by creating a more
energy-efficient building
• Employee comfort inside building can improve morale
and efficiency / productivity
• Utilizes space the City already owns
• Frees up 3 other buildings for lease, sale or
redevelopment
• New geothermal opportunities save HVAC costs
•
LIMITATIONS:
• May split collaboration opportunities when finance group and crews
are removed from a single building
• Further factures the Utility across town further than we are today
• Public perception of use of funds for employee building can be
COUNCIL FINANCE COMMITTEE
AGENDA ITEM SUMMARY
Staff: Lance Smith, Strategic Financial Planning Manager
John Voss, Controller & Assistant Financial Officer
SUBJECT FOR DISCUSSION
New Utilities Customer Service and Administration Building
EXECUTIVE SUMMARY
A new Utilities Customer Service and Administration building is being proposed for construction
beginning in May 2014. This building would be located in Block 32 on Mason Street and would
house the customer service and senior management of the Fort Collins Utilities Service Area.
Space initially unused by Utility staff would be leased in this building to the City's Sustainability
Services Area in the near term.
A revenue bond is recommended to finance this project. It is recommended that a single bond
issuance be made through the Light & Power Enterprise Fund.
In addition to the new building on Mason Street this debt issuance would also allow for the
renovation of existing space at 700 Wood Street to meet growing operational needs.
Together, the construction of the new building and the renovation of the existing building are
expected to cost $20M. Currently, the Light & Power Fund has $4.5M in Reserves for this effort
leaving a need for $15.5M to be financed.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Should Fort Collins Utilities continue to study and design this new building and bring
forth a bond ordinance to the Electric Utility Enterprise Board and an appropriation
request to City Council in early 2014 for this project?
BACKGROUND/DISCUSSION
Fort Collins Utilities has a need for additional office and crew space at the Utilities Service
Center (USC) on Wood Street. Initially, only a new addition to the USC was considered.
However, the USC is an older building that is actually several buildings which have been
combined into one over the past 30 years. The resulting facility is one of the least energy
efficient buildings the City owns and substantial improvements are necessary to address the
inefficiencies. An evaluation of the costs associated with these improvements and the necessary
addition revealed that it would be possible to construct a new building and renovate a portion of
the existing USC for about the same cost as the full renovation and addition. The new building
on Mason Street would be the initial phase of the Block 32 development plan and would be built
to meet the long term space requirements of the Utilities.
The new building would initially have unused space for the Utilities to grow into in the future.
The City’s Sustainability Services department could utilize this space through a lease
arrangement which would provide some revenue toward the debt obligation.
Preliminary discussions on how this project could be financed have resulted in the
recommendation that a revenue bond be issued out of one utility fund rather than having four
separate, smaller revenue bonds coming to market at once. The other three utility funds would
make annual transfers to cover their portion of the debt repayment. Because the Light & Power
Enterprise Fund is the largest utility fund and it has debt capacity in excess of $50M, it is the
recommended utility fund. This issuance will be for $15.5M, leaving more than $35M in debt
capacity. The only identified potential need for future debt issuance in the Light & Power Fund
is for the Mulberry Annexation which is several years into the future and is expected to be $10-
15M.
Construction could begin as soon as May 2014 so it will be necessary to bring the bond
ordinance before the City Council and Electric Utility Enterprise Board in early 2014 for action.
ATTACHMENTS
Attachment 1 – Powerpoint presentation to Council Finance Committee
1
Financing a New Utility
Administrative Building and
Remodeling Wood Street
Council Finance Committee
September 16, 2013
2
Space and Cost Estimates
New Building Remodel Total
Light & Power 36.5% 4.4 50.0% 4.0 41.9% 8.4
Water 18.3% 2.2 25.0% 2.0 21.0% 4.2
Wastewater 9.1% 1.1 12.5% 1.0 10.5% 2.1
Storm Drainage 9.1% 1.1 12.5% 1.0 10.5% 2.1
Sustainability Services 27.0% 3.2 0.0% - 16.2% 3.2
100.0% 12.0 100.0% 8.0 100.0% 20.0
cost in millions
• Utilities is currently finalizing a 25 year space
needs analysis to be completed before the
October 8th Council Work Session
3
Project – Sources and Uses
Light & Power Reserves (existing budget) $ 4.5 million
Revenue Bonds 15.5
SOURCES 20.0
Administrative and Customer Service Building 12.0
Remodel Facility at Wood Street 8.0
USES 20.0
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Revenue Bonds
• Light & Power issues the bonds
– Largest Utility Enterprise Fund
– Biggest capacity for debt
– Do not anticipate significant financing needs in near
term
• Light & Power holds assets until debt is retired
• Other Utilities will pay L&P annually for their share of debt
• Spaces used by non-utility Service Areas will pay a lease fee
• Evaluating 20 and 30 year options
• Rates currently in the 4 – 5% range
5
Financing Within Rate Structure
Rate structure is intended to meet long term capital needs
Judicious use of debt provides sufficient debt capacity
Incremental revenues from expiring and new service
agreements sufficient to cover debt obligations
6
Issues to Manage
Sustainability Service’s near term use of a building financed
through Enterprise debt
Internal allocation of debt service, lease rates and operating
costs
Coordination with Block 32 master plan
Potential relocation of a Parks Maintenance Facility
$200K to move to another downtown area location, not
currently budgeted
7
Estimated Timeline
Energy and Water Advisory Boards, 4th
quarter 2013
Design complete February-March 2014
Notification of major utility customers January-February 2014
Electric Enterprise Board (City Council), debt authorization
March-April 2014
City Council appropriates bond proceeds March-April 2014
Debt Closing April-May 2014
Construction begins May-June 2014
Construction complete June 2015
8
Questions and Discussion
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
September 16, 2013
11:30 to noon
CIC Room – City Hall
Approval of the Minutes from the August 19, 2013 Meeting
1. Prospect Station TIF Support 030 minutes T. Leeson
2. URA Loan – Summit 30 minutes M. Beckstead
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
Draft of Minutes
8/19/13
11:00 to Noon
CIC Room
Council Attendees: Mayor Karen Weitkunat, Ross Cunniff, Bob Overbeck
Staff: Darin Atteberry, Mike Beckstead, Megan Bolin, Mindy
Pfleiger, John Voss, Katie Wiggett
Others: Dale Adamy
Approval of the Minutes of May 20, 2013
Bob Overbeck moved to approve the minutes for the May 20, 2013 meeting. Mayor Karen Weitkunat
seconded the motion. Minutes were approved unanimously.
Capstone
Megan Bolin updated the URA Finance Committee on The Summit, the new student housing project
near the intersection of Prospect Road and College Avenue. The site had been undeveloped since the
flood in 1997 creating significant barriers to redevelopment. The URA’s Redevelopment Agreement
with Capstone provides for a $5 million reimbursement to Capstone for certain eligible costs. The
process to obtain the reimbursement begins once the improvements are made and the project is
complete. The project is nearing completion at this time, with only minor site improvements left to
complete.
At the time of the Redevelopment Agreement, staff anticipated that the project would generate $8
million in tax increment; however, staff recalculated the tax increment in 2012, and now staff
anticipates that the project will generate closer to $6.7 million, which means the project will not
generate sufficient revenue for the URA to pay the $5 million reimbursement plus financing costs to the
City. Megan noted that the forecast of $6.7 million was made prior to Larimer County’s January 2013
assessment of the property, and the amount may be higher once that is taken into account. The
updated valuation will determine whether or not a revenue shortfall will occur.
Staff proposes that Council give the URA extra time to repay their loan to the City. John Voss noted that,
if there is a shortfall in revenue, the URA will need an extension in order to remain financially viable.
The Council Finance recognizes the City’s responsibility to the URA, and would like to see more
information brought to Council for the discussion.
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URA Finance Committee
Staff: Tom Leeson, Redevelopment Program Manager
Megan Bolin, Redevelopment Specialist
SUBJECT FOR DISCUSSION
Two items related to Prospect Station, a new mixed-use development proposed in the Prospect
South Tax Increment Financing District:
1. Redevelopment Agreement between the Fort Collins Urban Renewal Authority (URA)
and Prospect Station, LLC
2. Loan between the City of Fort Collins and Fort Collins Urban Renewal Authority
EXECUTIVE SUMMARY
On September 17, 2013, the Fort Collins Urban Renewal Authority (URA) Board will consider a
Redevelopment Agreement for Prospect Station, a new mixed-use development proposed within
the Prospect South Tax Increment Financing (TIF) District. The Agreement would authorize a
$494,000 reimbursement obligation to Prospect Station LLC (Developer) for eligible project
costs. Half ($247,000) of the reimbursement would be provided to the Developer upon
completion of the project and verification of costs, and the remaining half would be dispersed in
annual payments over the remaining life of the TIF District.
The Redevelopment Agreement would obligate the URA to make a $247,000 payment to the
Developer upon completion of the project in 2014. Since the URA will not have sufficient fund
balance to pay that amount outright, a loan is requested from the City of Fort Collins. On the
same night the URA Board considers the Redevelopment Agreement, City Council will consider
a Resolution declaring Council’s present intent to fund such a loan. Provided this Resolution is
approved, Council will be asked to adopt an Ordinance once the loan is needed by the URA
(anticipated winter 2014) in order to appropriate funding and establish final terms.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Are there any questions or concerns regarding the terms of the Redevelopment
Agreement between Prospect Station LLC and the URA?
2. Are there any questions or concerns regarding the terms of the Loan between the City of
Fort Collins and URA?
3. Should staff proceed in taking the two Resolutions related to Redevelopment Agreement
and Loan for respective approvals on September 17?
BACKGROUND/DISCUSSION
In September 2011, City Council approved the creation of the Midtown Urban Renewal Plan
Area and Prospect South Tax Increment Financing (TIF) District, beginning the 25-year
timeframe within which the Fort Collins Urban Renewal Authority (URA) collects tax increment
from within the District. Per Colorado Revised Statutes § 31-25-101 et seq. (Urban Renewal
2
Law), the URA then has the ability to provide financial assistance to projects that remediate
blight. Prospect Station LLC (Developer) submitted a formal application to the URA in June
2013 requesting TIF for a new project (Attachment 1). URA staff has since negotiated a
Redevelopment Agreement, which is now ready for formal consideration by the URA Board.
The details of the project and financial assistance structure are summarized below; additional
detail can be found in the Redevelopment Agreement (Attachment 2).
Project Description
Prospect Station will be a new, three-story mixed-use development located at 221 West Prospect
Road (south side of Prospect Road to the west of the MAX guideway and Mason Trail). There
will be 32 residential rental units, offering a combination of studio, one-, two-, and three-
bedrooms, for a total of 49 bedrooms. A total of 48 parking spaces will be provided; 37 on-site
and 11 off-site. The commercial portion will be 1,040 square feet and include two ground-floor,
live-work units that allow residents to operate a home-based business (the site plan is included as
Exhibit A of the Redevelopment Agreement).
The site is the former location of a gas station and is considered to be a brownfield, meaning
there are hazardous environmental contaminants that require remediation. It has been vacant and
underutilized since, and was acquired by the Developer in 2006. The Project Development Plan
(PDP) was approved by the City in summer 2013. Construction is anticipated to begin by
October 2013, and be completed no later than fall 2014.
Tax Increment
Based on an Estimate of Value provided by Larimer County (see Exhibit C of the
Redevelopment Agreement), Prospect Station, once complete, is expected to generate $39,156
per year of tax increment revenue. Based on a conservative projection that assumes no
appreciation, the project will generate a total of $865,340 over the remaining 23-year life of the
Prospect South TIF District.
Eligible Costs
The total project cost is $5,980,924, which includes land acquisition and construction of the
project. Of this total, the Developer originally requested $772,879 in TIF assistance; however,
that amount was negotiated to $494,000 for various improvements, which have been verified to
be eligible costs according to Urban Renewal Law and are listed in Table 1.
Table 1: Eligible Costs
Description Amount
Environmental Mitigation
Installation of underground environmental vapor barrier $15,000
Materials testing $8,750
Deconstruction of existing structure and improvements, and Phase 1
environmental report
$32,000
Removal of soil at old tank locations, replaced with new structural fill $62,000
Infrastructure Upgrades
Upgrade stormwater system $72,124
Modify and enhance the Prospect Road Transfort bus pullout $63,472
Extend and upgrade water and sewer line¹ $93,778
3
Public Amenities
Enhanced public plaza adjacent to transportation corridor including seating,
lighting, dog waste station, bike fix-it station, and enhanced landscaping
$137,500
Façade Enhancements
Enhancements to façade to address four-sided architecture $9,376
Total TIF Requested $494,000
¹ These costs have already been incurred by the Developer. The URA does not typically reimburse for costs incurred
prior to approval of the Redevelopment Agreement, but exceptions are allowed for hard costs related to public
improvements, subject to URA Board approval.
One aspect to bring to the Board’s attention is the fact that the Developer has already incurred
costs associated with the line item “extend and upgrade water and sewer line”. Pursuant to URA
policy, TIF may be used to retroactively reimburse costs incurred prior to approval of the
Redevelopment Agreement, provided such costs are hard costs associated with public
improvements. In this case, the segment of Prospect Road in front of the project site was
planned to be closed for several weeks this summer due to construction. Knowing that the
extension and upgrade of the water and sewer line for this project would require closure of
Prospect Road, the Developer coordinated the timing of that improvement with the planned
construction in order to avoid a second closure of Prospect Road later this year. Staff
recommends such costs remain eligible for reimbursement and are thus included in the
Redevelopment Agreement; this decision, however, is ultimately the URA Board’s.
Blight Remediation/Public Benefit
Urban Renewal Law identifies eleven factors of blight; this project will remediate several that
were identified within the Prospect South TIF District, including:
Slum, deteriorating, or deteriorating structures
Deterioration of site or other improvements
Environmental contamination of buildings or property
Additionally, Prospect Station supports a number of City Plan policies, including:
EH 4.1 Prioritize Targeted Redevelopment and Infill
ENV 17.2 Manage Hazardous Materials and Waste
LIV 5.2 Target Public Investment Along the Community Spine
LIV 35.2 Mix of Uses
LIV 43.3 Support Transit-Supportive Development Patterns
T 9.2 Pedestrian, Bicycle and Transit Interface and Access
Redevelopment Agreement
Based on an evaluation of eligible costs and blight remediation, URA staff supports the project
and has negotiated a Redevelopment Agreement (Agreement) with the Developer. This
Agreement is unique in that it blends reimbursement methodologies, but is believed to result in a
compromise that provides benefit to the project while mitigating risk to the URA.
The Agreement would create a reimbursement obligation from the URA to the Developer for up
to $494,000 of tax increment. This amount would be used for approved, eligible costs that will
ultimately be verified based on invoices for actual work completed. The reimbursement is
structured so that half, or $247,000, would be reimbursed to the Developer in a lump sum upon
4
completion of the project. The remaining $247,000 would be dispersed to the Developer through
annual payments of $11,762 until 2036. The reimbursement obligation represents approximately
57% of the total estimated tax increment generated by the project.
Loan from the City
The URA will not have sufficient fund balance to pay the $247,000 lump sum to the Developer,
and has thus requested a loan from the City of Fort Collins for that portion of the reimbursement
obligation. The preliminary loan terms will be considered separately via Resolution by City
Council on September 17; this Resolution would declare the Council’s present intent to provide a
loan to the URA. Although the Resolution would be approved now, the loan would not be
executed until such time as the funds are needed to make the payment to the Developer. When it
is time to execute the loan, a formal loan agreement will be brought to City Council via
Ordinance to finalize the terms and appropriate funding.
The Council Resolution considered on September 17 establishes the basic terms of the loan
according to the City’s current investment policy (Attachment 3, estimated loan repayment
schedule); if the terms need to change at time of execution and no longer adhere to established
policy, the loan would be brought back to the URA Board and City Council for reevaluation.
Loan Amount: $247,000
Interest Rate:
Higher of the Treasury Rate or Muni Rate plus .5%, per City investment policy.
For the purposes of this Resolution, the current rate of 5.25% was used to
project a repayment schedule. The actual rate will be established based on
conditions when the loan is executed.
Term:
22 years
Based on these assumptions, principle and interest payments will total $422,284. When
combined with the remaining half of the reimbursement obligation ($247,000), the total cost to
the URA for Prospect Station would be $669,284, which represents approximately 77% of the
total estimated increment generated by the project. See Attachment 4 for the estimated tax
increment cash flow related to this project.
ATTACHMENTS
1. Prospect Station URA Application
2. Redevelopment Agreement
3. Estimated Loan Repayment Schedule
4. Prospect Station Tax Increment Cash Flow
5. Staff Presentation
1
Prospect Station
Redevelopment Project
Council Finance Committee
September 16, 2013
2
Prospect Station
221 W. Prospect Rd.
South of Prospect Rd.
West of MAX Guideway
Site
3
Existing Conditions
• Former gas station
• Deteriorating structure
• Unsafe Conditions
• Environmental contamination
4
Project Description
• SW corner of Mason Trail and Prospect Rd.
• 32 Residential Rental Units
• 1 Commercial/Retail Unit
• Approved Project Development Plan (PDP)
5
Prospect Station Site Plan
6
Public Benefits
• Blight Remediation
– Environmental mitigation of hazardous site
– Removal of unsafe structures
• Infrastructure Upgrades
– Transportation Improvements
– Water/sewer lines upgrades
• Housing/Mixed Use
– Desired use for Midtown
– TOD
– Housing type variety
City Plan
Midtown Urban
Renewal Plan
Midtown Existing
Conditions Survey
7
Transportation
Improvements
Façade Improvements
Public Amenities Along
Mason Trail
8
Financial Request
Total Project Cost $5,980,924
Projected Actual Value $5,224,236
Projected Annual Tax Increment $39,155
Total Property Tax Increment Expected $865,340*
TIF Requested $494,000
% of Total Tax Increment Requested 57%
* Assumes 23 years of increment with zero growth.
9
Eligible Costs
Environmental Mitigation $117,750
Infrastructure Upgrades $229,374
Public Amenities $137,500
Façade Improvements $9,376
Total Eligible Costs $494,000
• Original Request = $772,879
• Negotiated Reimbursement = $494,000
10
TIF Reimbursement Structure
• Developer receives lump sum payment equal to
50% of total reimbursement amount
• Developer receives annual reimbursement
payments for 21 years that total 50% of
reimbursement amount
• Total Reimbursement Amount = $494,000
Example:
Lump Sum Payment = $247,000
Annual Reimbursement payment = $11,762
Total Annual Payments = $247,000
Total Reimbursement - $494,000
11
TIF Reimbursement Structure
• Total Reimbursement Amount + Interest = 77% of
Estimated Total Tax Increment
TIF Growth Rate 0%
Percent of TIF Pledged 77%
Total TIF Collected (Est.) $865,340
Developer Lump Sum $247,000
Developer Payback over time $247,000
Cost of Capital $175,284
Total TIF Pledged $669,284
12
Key Reimbursement Points
• Developer must obtain C.O. of building before
URA will make lump sum payment.
• URA may pre-pay the reimbursement at any time.
• Tax increment projection is based on County
Estimate of Value.
• Annual payment is fixed = $11,762
13
City Loan Structure
14
Thank you
Submit by Email Print Form
PROJECT NAME:
PROJECT ADDRESS / LOCATION:
APPLICANT / DEVELOPER / PROPERTY OWNER INFORMATION:
DATE:
APPLICANT DEVELOPER PROPERTY-OWNER
COMPANY NAME Prospect Station, LLC Prospect Station, LLC Prospect Station, LLC
COMPANY OWNER/CEO Connie Dohn Connie Dohn Connie Dohn
CONTACT PERSON Connie Dohn Connie Dohn Connie Dohn
TITLE Manager Manager Manager
COMPLETE ADDRESS
2642 Midpoint Drive
Fort Collins, Colorado 80525
2642 Midpoint Drive
Fort Collins, Colorado 80525
2642 Midpoint Drive
Fort Collins, Colorado 80525
PHONE 970,490.1855 970,490.1855 970,490.1855
FAX 970,490.6093 970,490.6093 970,490.6093
EMAIL cdohn@dohnconstruction.com cdohn@dohnconstruction.com cdohn@dohnconstruction.com
TYPE OF LAND USE DEVELOPMENT / REDEVELOPMENT ACTIVITY:
PROJECT ELEMENTS:
NEW OR EXISTING BUSINESSES (NON-RESIDENTIAL PROJECT ONLY):
FINANCIAL / FUNDING SUMMARY INFORMATION:
Date Modified: 09/09
TOTAL PROJECT COST $6,005,879
CURRENT ACTUAL VALUE (LARIMER COUNTY ASSESSOR) $160,000
PROJECTED ACTUAL VALUE (LARIMER COUNTY ASSESSOR) $5,451,108
PROJECTED ANNUAL PROPERTY TAX $40,841
TOTAL PROPERTY TAX INCREMENT EXPECTED $1,062,032
TOTAL TIF ASSISTANCE REQUESTED $772,879
TAX INCREMENT FINANCING (TIF) ASSISTANCE
APPLICATION
Prospect Station
223 W. Prospect Road, Fort Collins, Colorado 80526
Jun 20, 2013
Residential
Commercial/Retail
Industrial/Warehouse
Mixed-Use (Residential/Non-Residential)
Mixed-Use (Commercial/Industrial)
Other (please explain)
New Construction
Infrastructure Improvements
Land Acquisition
Site Clearance
Building Rehabilitation
Other (please explain)
New Business for URA Plan Area?
Existing Business for URA Plan Area?
Yes No
Yes No Years in Business Years
ATTACHMENT 1
TYPE OF TIF REQUESTED (include general terms & conditions):
SUMMARY OF FUNDING SOURCES AND USE OF FUNDS (for the entire project):
AMOUNT SOURCE USE
$772,879 URA TAX INCREMENT FINANCING (TIF) Hazmat, infrastructure, etc. (see attach)
$1,501,470 EQUITY Land acquisition, pre-dev costs
$3,731,530 CONSTRUCTION LOAN Remaining development costs
$
$
$
$6,005,879 PROJECT TOTAL
INFORMATION REQUESTED FOR APPLICATION
Please include:
1. A location map
2. Site plans or project drawings (please include photos of site currently)
3. Project Proforma
4. Owner/Business resume
5. Executive Summary with the following questions answered:
a. What is the nature of the project?
b. Why is TIF assistance needed; how will the funds be used?
c. What other sources of financing will the project secure other than TIF?
d. How will the project help improve/upgrade public infrastructure (streets, utilities, drainage, etc.)?
e. How will the project enhance the property tax base (and sales tax base, if applicable) of the area?
f. How will the project help achieve the goals of the Urban Renewal Plan and City Plan?
g. How will the project help eliminate slum and blight conditions?
h. How will this project help achieve the URA goals of sustainability through green building techniques?
Please be specific how this project uses energy efficiency, renewable resources, natural resource
conservation techniques, stormwater low impact design methods, or any other methods not listed.
i. Please provide documentation and quantifiable results stating the proven methods or effectiveness
of the proposed sustainable features within the project.
j. What is the proposed project timetable (what is the estimated time frame for major steps including
the City's planning decision, completion of financial commitments, start of construction, and issuance
of Certificate of Occupancy (CO)?
Please use the next page to provide this and any additional information that would be helpful to your
application.
Grant
Loan (include methods of payback in description)
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 1 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
a. Nature of the project
Prospect Station, located at 223 W Prospect Road, is a three-story, mixed-use community intended by its local development
partners to promote safety, enhance appearance and maximize rate of use at one of the most important interconnection
points between the multi-modal Mason Corridor and cross-town Transfort system. As the gateway between Old Town and
Midtown, as well as the front porch of Colorado State University, redevelopment along Prospect Road provides an ideal
opportunity to set a high standard for the type of transit-focused projects the City, Urban Renewal Authority and Fort Collins
citizens desire: progressive, iconic, safe, and built to last.
In planning and initiating work at the Prospect Station site, the development team was motivated by the following guiding
objectives and project goals:
1. Remediate a dangerous and environmentally hazardous former industrial site (brownfield) that has been
plagued for decades by underground petroleum contaminants, a derelict and unstable building, and
criminal activity including vandalism, theft of building components, drug use, and illegal camping by
transient individuals.
2. Provide 28,059 sq ft of residential space (a total of 49 bedrooms) and 1,040 sq ft of commercial space,
including two unique live-work units to allow residents to easily operate a home-based business with
Mason Corridor frontage. Enable residents, guests, commercial tenants and their customers to benefit
from immediate access to public transit including MAX, Transfort and the multi-use path, as well as from
its walkability to and from campus and the other amenities near Prospect and College.
3. Offer the highest quality construction and appropriate sustainability features for lasting durability,
retention of value and minimal environmental impact.
4. Offer thoughtful and practical liveability features such as balconies on most units, bathroom/bedroom
suites in every unit, laundry facilities in every unit, and secure, private recreation lockers for each tenant’s
bikes, skis and other lifestyle gear.
5. Provide convenience and quality of life for all tenants while keeping rental rates appropriate within the
broader Fort Collins market.
6. Provide adequate parking including electric car charging stations—despite convenience to public transit—
out of respect to residential and commercial neighbors, and in response to ongoing concerns brought
before City Council.
7. Welcome all transportation corridor patrons through seamless integration with trail system and open
public plaza, complete with seating, lighting, landscaping, dog waste and bike fix-it stations, as well as
façade-integrated and active lifestyle/trail-inspired public art.
8. Improve safety of property, trail and crossing area at night with additional lighting.
9. Help address CSU’s 15-year enrollment goals by offering self-contained housing that appeals to graduate
students and other professionals affiliated with the university—not exclusively undergraduates.
10. Involve local equity, employ at least 90% local trades, and retain local ownership and management for the
life of the development.
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 2 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
About the Prospect Station development partnership
Redeveloping an under-utilized parcel adjacent to the Mason Corridor into a transit-oriented, mixed-use community had
been a vision of local businessmen Rayno Seaser (founder of The Egg & I restaurants) and Steve Spanjer (president of Spanjer
Homes) since official plans for the bus rapid transit system were approved by the City of Fort Collins in 2000. As long-time
Fort Collins residents, Seaser and Spanjer agreed that such an undertaking could be more than just a business venture—it
would be an investment in the future growth and direction of the community. A few years later, after considering the old
Gasamat property at 223 W Prospect Road, they realized that redevelopment of this particular site would also provide an
opportunity to rehabilitate a dangerous lot into a productive one, establishing a critical gateway location between Midtown,
Old Town and Colorado State University: Prospect Station.
In 2012, Seaser and Spanjer recruited Doug and Connie Dohn of Dohn Construction, and Alex Schuman of Henderson
Property Management to partner in the construction and management of the project, arriving at a special synergy of
community involvement, awareness and responsiveness. Representing multi-generational involvement and deep roots in
Northern Colorado—as well as three BBB Torch Award-winning small business owners—the Seasers, Spanjers, Dohns and
Schumans are passionately engaged in the needs, wants and goals of Fort Collins citizens, business leaders and officials, and
are committed to acting as advocates and stewards of the community as it ushers in an exciting new era of Mason Corridor-
oriented development.
b. Why is TIF assistance needed; how will funds be used
Beginning in 2006, preliminary financing was identified, land was acquired, plans were drafted, proformas were created,
and cleanup of brownfield environmental hazards was initiated. Since that time, however, unforeseen code changes, effects
of nearby development, and the threat of eminent domain converged to turn Prospect Station from a viable privately-
funded enterprise into one that now faces project-ending financial obstacles. As of June 2013, the development is likely to
be halted unless TIF assistance can be obtained to close the economic gap created by the following factors:
• Loss of approximately 20% of original site to transit infrastructure. Prospect Station’s initial land purchase
included ample size for a building that included all amenities to meet project partners’ 10 goals listed
above, with sufficient square footage and number of units to make the project financially viable. As
plans for the Mason Corridor were finalized in fall 2009, however, developers were informed that they
would lose 5,489 sq ft of land running the entire length of the property’s eastern edge to a re-routed
pedestrian path. To ensure that the necessary land could be obtained from the site, City Council approved
the use of eminent domain, however project partners agreed to grant the City an easement instead, to
save the additional expense of legal action. The project lost additional buildable square footage to an
enhanced stormwater drainage system needed for the pedestrian path, and the new, significant setback
of underground utilities needed to accommodate the required 21’ right-of-way dedication for a bus stop
along Prospect (a constrained arterial street). While these infrastructure improvements are absolutely
necessary for safety and traffic flow on Prospect, they resulted in a fragmented lot—now too small to
accommodate the planned project at an economically viable size.
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 3 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
In September 2009 Prospect Station received $65,749 in compensation toward the easement’s land value,
however there are many other resulting out-of-pocket expenses incurred by the transit requirements that
were not considered in the settlement amount:
1. Creating and filing a lot re-plat and right-of-way vacation to convert Tamasag Dr. from a public
street to a private road. Cost to Prospect Station: $32,350
2. Purchasing an additional 1,331 sq ft of land from adjacent property owners to accommodate a
sufficiently sized building footprint. Cost to Prospect Station: $14,951
3. Granting seller 234 sq ft as a condition of purchase. Cost to Prospect Station: $3,128
4. Completing lot re-plat, relocating utilities, ordering new architectural plans and new
engineering for a new project with a smaller building footprint situated further west on the
newly assembled lot. Adjusting revenue projections and development economics based on
project’s smaller scale. Cost to Prospect Station: $16,000 to $20,000
• Abandonment of water and sewer lines by neighboring development. Prospect Station’s water and sewer
needs had been planned as—and continue to be served by—an adequately sized tie-in to lines beneath
Prospect Road via a new line under Tamasag Drive. In 2012 the construction of a nearby student housing
development resulted in the abandonment of a water and sewer line at Spring Creek (a half-mile to the
south), which had been intended to serve Prospect Station’s neighbors to the south. To enable future
development on these properties, now cut off from access to water and sewer service by an unrelated
project, it is the developers of Prospect Station who will be required to shoulder the considerable costs of
reconnecting these lots to City services by extending the main from Prospect Road, upgrading its capacity
and installing hydrants.
This issue recently and unexpectedly came to a head as a result of the MAX-related construction closure
of Prospect Road, which snarled traffic on adjacent roads, inconvenienced residents and hobbled nearby
businesses in March 2013. Project partners recognized that, although Prospect Station has not received
development approval or construction financing, it would be for the good of the community if the team
could take a leap of faith and assume the risk and expense of completing the required utility stub work
during the existing closure, rather than forcing an additional week-long closure of Prospect in August or
September. At an out-of-pocket cost of $65,000, partners ordered engineering, pulled together materials
and labor, paid overtime, and coordinated with the numerous City departments and independent
contractors involved with the MAX project to make infrastructure installation possible on immediate notice,
with little to no impact on the existing project, and with no further disruption to residents and businesses.
• Extraordinary costs associated with new sound mitigation requirements. Effective January 1, 2012, the
City of Fort Collins’ Green building code stipulates that all units within 1000 feet of an active railway
must meet a sound transmission coefficient (STC) rated at 40 or above. Due to the relatively small size
and close proximity of the planned building to the BNSF line forming the spine of the Mason Corridor,
the entire 360-degree exterior of Prospect Station will be armed with exceedingly soundproof wall
assemblies, window panes and building techniques. Again, because this code was adopted after initial
plans and proformas were created, this single feature has added a burdensome cost—well in excess of the
soundproofing that had been planned—which cannot be sufficiently offset or absorbed by increasing the
size of the project, the number of units, the amount of commercial space, or the rental rates.
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 4 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
• Response to ongoing parking debate within transportation overlay district. Providing adequate parking
for residents and customers of Prospect Station has been a priority and a conundrum since project start,
further compounded by ongoing land acquisition issues. Because Prospect Station is located within the
transportation overlay district, just steps from a MAX station, a Transfort stop and the pedestrian path,
no parking is required at this development. However, project partners are aware that many students and
professionals come to Fort Collins with a car—and many patrons of local businesses will drive—even
though alternative transit is available. The reality of high-density housing and mixed-use developments
without provided parking—especially those adjacent to university campuses with limited parking
resources—is that residents and customers will park in nearby neighborhoods and shopping centers.
Inconsiderate overflow parking has long been an issue near campus, and is addressed repeatedly in
Council chambers. Because of this ongoing concern, and out of respect for neighboring families and
businesses, Prospect Station’s project partners have gone above and beyond to fight for—and continue
to finance—an appropriate number of dedicated parking spaces: by purchasing and leasing additional
land, including a concealed above-ground parking structure behind the commercial space, and investing in
additional landscaping features to ensure visual appeal.
In striving to execute the community’s shared vision for high-density, transit-focused development, the project partners
have encountered unexpected and mounting costs associated with ongoing site modifications to accommodate evolving
transportation infrastructure, to provide necessary street and utility system upgrades, to fulfill newly adopted building and
sound mitigation requirements, and to relieve ongoing pain felt by campus neighbors and the general public. As a result
of the changes described above, Prospect Station’s vision for a safe, affordable, high-quality gateway community on the
transportation corridor is no longer feasible without TIF assistance.
To fulfill the planned development in accordance with the goals set forth by the City, URA and project partners, and to
provide a high-quality project at a suitable price for the market, Prospect Station seeks a total of $772,879 in TIF assistance
(73% of the property tax increment expected) to help address the following project needs. (Please refer to attached
spreadsheet for a breakdown of costs.)
• Hazardous materials mitigation. While developers are working in tandem with the State of Colorado
on brownfield cleanup, there are additional items newly required for long-term project safety including
the installation of an underground vapor barrier below the building, as well as ongoing soils testing and
monitoring. TIF dollars will also aid in hazardous materials removal, reporting and plan creation during the
deconstruction of the derelict building currently occupying the project site.
• Land assemblage. TIF dollars will help offset the considerable cost of acquiring additional land and
converting of Tamasag Drive to a private street in order to accommodate the economically-sized building
footprint following vacation of land for path realignment, bus turnout and associated infrastructure
upgrades.
• Parking. Because project partners are concerned with the impact that inconsiderate overflow parking
would have on neighboring homes and businesses, Prospect Station will provide a total of 49 non-required
parking spaces—including 19 covered garage parking spaces—for use by building residents, guests and
customers. TIF dollars will help absorb the costs associated with appropriate view cone mitigation and
visual concealment of parking facilities.
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 5 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
• Infrastructure serving future development. Stormwater drainage on the site will be upgraded from
a simple swale to an enhanced system, underground utilities will be relocated at greater setbacks from
Prospect Road, and sewer and water lines will be extended and upgraded in capacity to serve adjacent
property owners affected by the abandonment of those services at Spring Creek. As explained in the
preceding section, project partners recently shouldered the considerable out-of-pocket expense to
accelerate the development schedule for this item so that it could take place concurrently with the MAX
construction and avoid a second debilitating closure of Prospect Road during summer 2013. TIF dollars
will help recoup the $65,000 good-faith investment that made these upgrades possible in a way that
benefits surrounding businesses and the community as a whole, while also enabling cost-efficient future
development by adjacent property owners along the Mason Corridor, Tamasag Drive and on the Griffin
properties along Prospect Road.
• Sustainable features and public amenities. The equity partners have always embraced sustainability
in design and construction, despite the fact that there is no economic return for including these kinds
of features. As good stewards of the environment, partners desire to reduce one-time and ongoing
environmental impact of the project, as well as overall city utilities costs. But unfortunately, due to external
factors, the current project economics of Prospect Station no longer support features that are unable to
yield returns. TIF dollars will guarantee the inclusion of environmental quality features and enhancements
to public areas that face elimination due to budget encumbrances elsewhere in the project. With TIF
assistance, the project can once again pursue Energy Star Rating Version 3—complete with rooftop solar
panels, electric car charging stations, efficient fixtures and appliances, low-consumption plantings and
more. (Please refer to Section H for details.) In addition, TIF assistance will guarantee a public outdoor
space for all transportation corridor patrons with seating, ambient lighting, solar-powered trail-side safety
lighting, dog waste and bike fix-it stations, enhanced landscaping and public art, for which the project
requests $50,000 as a placeholder until the project scope is defined with the City’s Art in Public Places
Coordinator.
• Other. The newly required and exceedingly costly wall assemblies and building materials necessary to
achieve an STC rating of 40 have the potential to terminate the development or reduce it to a lesser-
quality product at a higher-than-acceptable price. TIF dollars will help absorb the cost of this new
requirement for the comfort of all occupants while allowing developers to maintain the total-project
quality and functionality originally envisioned.
c. What other sources of funding will the project secure other than TIF?
The project site has been owned under a private equity partnership since 2006. Since that time, the partnership has
assumed responsibility for brownfield clean-up in cooperation with the State of Colorado, and has financed architectural
drawings, multiple revisions, traffic studies, and initiated the City’s building review process. Additional private equity was
used to secure construction financing from a local lending institution, whose ability to fund the project is contingent upon
TIF award outcome.
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 6 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
d. How will the project help improve/upgrade public infrastructure?
In tandem with the Mason Corridor project, Prospect Station has already and will continue to contribute to improvements to
transit infrastructure and traffic flow by:
• enabling a safer pedestrian crossing at Prospect Road
• alleviating traffic congestion at Prospect and the MAX/BNSF line with a bus turnout
• providing safe access to adjacent properties via privately paved and maintained Tamasag Drive
• relieving parking stress on neighboring homes and businesses with guaranteed spaces
Prospect Station will also contribute to utilities improvements by:
• installing enhanced stormwater drainage system
• relocating underground utilities
• extending and increasing capacity of water and sewer from Prospect Road to compensate for losses of
service caused by abandonment at Spring Creek
• installing rooftop PV panels to offset the project’s impact on City utilities
e. How will the project enhance the property tax base and sales tax base of the area?
The property is currently occupied by a deteriorating 800 sq ft building with a total actual value of $160,000, an assessed
value of $46,400 and annual property tax amount of $4,329.68. Following the environmental clean-up already underway,
the deconstruction of the current structure, and the completion of a state-of-the-art 29,099 sq ft building, the assessed
value of land and improvements will increase to approximately $5,451,108 in year one, generating an estimated $40,841
in property taxes per year. Those numbers are expected to grow to $6,75,084 and $51,895, respectively, by the end of
the URA’s 23-year life. The total tax increment expected (with appreciation) is estimated at $1,062,032. A TIF calculation
worksheet (with figures provided by the Larimer County Assessor’s office) is provided at the end of this document.
Once occupied, Prospect Station is expected to generate an estimated $442,200 per year in taxable residential rental income
paid to local management and local ownership. Additional tax opportunities will be derived from three on-site commercial
spaces, varying along with the nature of the business tenants, as well as the patronage of neighboring businesses by
approximately 50 new Prospect Station residents.
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 7 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
f. How will the project help achieve the goals of the Urban Renewal Plan and City Plan?
The following objectives (as well as those described in Sections G and H) are shared by both the Urban Renewal Authority
and the Prospect Station development team.
• Establish public-private partnerships that facilitate redevelopment and new development within
the Midtown Urban Renewal Area
• Address and remedy conditions that impair sound growth, through infrastructure improvements
such as enhancing storm drainage, relocating utilities, extending and increasing capacity of water and
sewer service, and completing adjacent roadways
• Redevelop and rehabilitate the area in a manner compatible to its surroundings, through activities
such as remediating environmental hazards and safety concerns, establishing transit-oriented communities
along the Mason Corridor, and providing destination locations for public use
• Effectively utilize undeveloped and underdeveloped land by initiating high-intensity, mixed-use
communities within the transportation overlay district
• Improve pedestrian, bicycle, vehicular and transit-related circulation and safety, through activities
such as realigning the pedestrian path, alleviating traffic congestion with a bus turnout, providing safety
lighting, offering ample bike parking and storage, providing adequate parking, installing electric car
charging stations, upgrading adjacent intersections, and creating a seamless interface between transit
options and the development
• Contribute to increased tax revenues by increasing property value, creating sales tax generation
potential with commercial and live-work units, and establishing a higher density of quality housing options
• Eliminate blight, as described in Section G
Prospect Station also helps to support the following policies as outlined in the Fort Collins City Plan:
EH 3.3: Support Local and Creative Entrepreneurship (by offering unique live-work units)
EH 4.1: Prioritize Targeted Redevelopment Areas
EH 4.2: Reduce Barriers to Infill Development and Redevelopment
ENV 5.2: Utilize Solar Access
ENV 5.7: Offer Incentives to Substantially Exceed Minimum Code Requirements
ENV 9.1: Promote Alternative and Efficient Transportation Fuels and Vehicles
ENV 17.2: Manage Hazardous Materials and Waste
ENV 20.4: Develop Public/Private Partnerships (for Stomwater Management)
LIV 5.1: Encourage Targeted Redevelopment and Infill
LIV 5.2: Target Public Investment Along the Community Spine
LIV 5.4: Contribute to Public Amenities
LIV 7.1: Encourage Variety in Housing Types
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 8 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
LIV 7.7: Accommodate the Student Population
LIV 10.4: Incorporate Street Art
LIV 11.2: Incorporate Public Spaces
LIV 12.2: Utilize Security Lighting and Landscaping
LIV 35.1: Location (of Community Commercial Districts)
LIV 35.2: Mix of Uses
LIV 35.3: Scale
LIV 35.4: Transform through Infill and Redevelopment
LIV 43.3: Support Transit-Supportive Development Patterns
SW 2.3: Support Active Transportation
SW 2.4: Design for Active Living
T 9.2: Pedestrian, Bicycle and Transit Interface and Access
T 11.1: Bicycle Facilities
g. How will the project help eliminate slum and blight conditions?
The current condition of 223 West Prospect Road is certainly underutilized and unsightly, but it is likely also a safety concern
for neighbors and Mason Trail users. As a former industrial site, this particular brownfield suffers from environmental
hazards related to underground petroleum contaminants, and a deteriorating building that poses risks from asbestos
and other hazardous substances, as well as building systems made dangerous by illegal stripping of copper and other
components. Property crimes including trespassing, theft, vandalism, grafitti, and illegal camping, among others, have
been extensively documented by police reports, and liability issues related to use by Fort Collins’ transient population and
unsanctioned parking persist. Remediating the chemical pollutants, deconstructing the existing building, and replacing it
with a fully developed, well-lit facility— complete with active street and transit corridor frontage and a significant number of
residents and commercial customers—is expected to transform the site into a safe, productive and iconic destination where
Old Town, Midtown and CSU converge.
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 9 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
h. How will this project help achieve URA goals of sustainability through green building
techniques?
In cooperation with City staff, Dohn Construction, Inc. will oversee the multitude of environmentally-minded building
materials and techniques planned for inclusion in Prospect Station. The aforementioned Green building codes, effective
January 1, 2012, set exceptionally high standards for sustainability features in new developments in Fort Collins, however
the project partners still intend to go above and beyond requirements, pursuing Energy Star Rating Version 3. In order
to achieve this certification, the project will include numerous sustainable building features and construction practices.
Highlights include:
• High-efficiency HVAC systems
• Enhanced building envelope
• Low-flow water-conserving plumbing fixtures
• Water-reducing landscape design
• Diversion of construction waste from landfill deposits
• Use of high recycled-content and locally produced construction materials
• Restoration of previously developed, polluted site
• High connectivity of public transportation and resources to reduce the need for driving
• Practices to reduce dust and air pollutants to create a cleaner indoor air quality
i. Please provide documentation and quantifiable results stating the proven methods or
effectiveness of the proposed sustainable features.
The features and techniques listed in Section H generally adhere to the already stringent environmental standards set forth
by Fort Collins’ Green building code, with extra measures taken as needed to pursue Energy Star Rating Version 3.
With the above improvements, project coordinators expect water, heating/cooling, and electricity savings of at least 10.12%
over comparably sized projects where only basic energy codes have been met.
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
EXECUTIVE SUMMARY: page 10 of 10
Tax Increment Financing (TIF) Assistance
APPLICATION
j. What is the proposed project timetable?
Development Activities/Milestones start completion
Entitlement 1/21/13 8/30/13
Site plan base complete 1/21/13 1/21/13
Start preparation of submittal documents 1/21/13 2/13/13
Neighborhood meeting (optional) 2/12/13 2/12/13
Preliminary Development Plan Submittal to City (PDP) 2/13/13 2/13/13
Submit URA application 2/22/13 2/22/13
Development Review Meeting/Comments from City (1st Round) 2/13/13 3/06/13
Work with adjacent property owners on off-site easements 3/06/13 3/13/13
Re-submittal to City (est. 3-week turnaround) 3/06/13 3/27/13
Development Review Meeting/Comments from City (2nd Round) 3/27/13 4/10/13
Re-submittal of URA TIF Assistance application 4/3/13 4/3/13
Re-submittal to City 4/10/13 5/01/13
Development Review Meeting/Final Comments from City 5/01/13 5/10/13
Re-submittal to City (PDF) 5/15/13 5/22/13
City schedules Type I Public Hearing 5/22/13 5/22/13
Hearing held 5/22/13 6/20/13
Re-submittal of URA TIF Assistance application 6/14/13 6/14/13
14-day appeal period 6/20/13 7/03/13
Hearing officer issues final decision 6/20/13 7/03/13
Final Plan Submittal to City 6/20/13 7/10/13
Development Review Meeting/Comments from City 7/10/13 8/07/13
Re-submittal to City (PDF or mylar) 8/07/13 8/14/13
Record mylars, sign development agreement 8/14/13 8/30/13
DCP Meeting held 9/04/13 9/04/13
Construction 9/04/13 8/15/14
Occupancy 8/15/14
ATTACHMENT 1
PROJECT NAME: Prospect Station DATE: Revised June 20, 2013
PROJECT ADDRESS: 223 W. Prospect Road
PROJECT STATUS UPDATE
Prospect Station’s PDP hearing took place May 30, at which time the project gained initial approval
as a four-story, 40,000 square foot mixed-use development.
Following the hearing, project partners became aware that current construction cost estimates
and revenue projections no longer support a project of the size submitted to the City in February.
Because of the ownership group’s desire to see the project through, the project has been scaled
back a second time, resulting in a three-story, 30,000 square foot building with 49 beds instead of
69. The commercial space, live-work units, parking and public interface remain unchanged.
Yet even at this smaller scale, the project will not be feasible without the URA’s help.
Fortunately our revised submittal also contains good news. While the overall cost of the project
has decreased slightly, from $6,095,789 to $6,005,879, its projected actual value, and therefore
the overall tax increment expected, has increased—from $4,839,714 to $5,451,108 and from
$933,004 to $1,062,032, respectively. Assistance requested for Prospect Station is now at 73% of
the expected total increment, as opposed to the 80% requested in our April submittal. Relevant
figures (such as project cost, amount requested, allocation details, and proformas) have been
updated in this revision to reflect the new project scale, while much of the narrative that describes
the nature of the project, its objectives and benefits, and how TIF funds will be used is largely the
same as it was in earlier drafts.
Next steps:
Simultaneously to submitting our revised TIF application, we are also pursuing an amendment
with Planning and Zoning for the smaller project (once a final decision has been issued by
the department on June 13). Approval on the amendment is expected by mid-July. Assuming
favorable outcomes on both planning and financing decisions, we will be able to secure our
construction loan and break ground as scheduled, in August 2013.
Tax Increment Financing (TIF) Assistance
APPLICATION
ATTACHMENT 1
LOCATION MAP ATTACHMENT 1
SITE PLAN ATTACHMENT 1
PROJECT DRAWINGS
ATTACHMENT 1
PROJECT DRAWINGS
ATTACHMENT 1
PROJECT DRAWINGS
ATTACHMENT 1
PROJECT DRAWINGS
ATTACHMENT 1
PROJECT DRAWINGS
ATTACHMENT 1
[Prospect Station
Ullit0 Type Number Bf'ds ~. cIUniu 8d.ooms AV(; Sf Rent! 8ed.oom Pel" Unil 101<0 SF "'VMo Rtnt!Sf
Studio
1 aORM
, ,
" , " , <SO
'"
,, 950
',050
,, 950
',050
><00
""
, ,11.400
5,250
, ,2.11
,...,. 1.83
1 .....
,
1 " , "6
900
USO
,, 6SO
'SO
>.300
1,650
11700
''''
,, 16,900
1,lOO
,,
'" 1.43
FIrst Year StlIbllbed· Ope",tln, Statement
Effective POltnual ~~: ViICOi Gross Annual I\CY, L01.Income Rent;Sts, ei ll C lncomt , , ,
TOlaf AddltloNl ln(OPIe S
Adlu$led G.cS!O Rernallncome $
Elfeaive Income S
TClal Operating Ekptn~ 5
AntIual Het 0peI3IlIIt tl'\C:Ol'l'le 15
36.1~6
456,836
456,836.00
116,021.00
m ,'09.00 I
..,,'" 12 ., 22,275 , 36,SSO , 'OS
U,110 5·0%1
420,090
,..,
'"
ATTACHMENT 1
IProspect Station
36,746
ATTACHMENT 1
c. , 'I
o ,
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ATTACHMENT 1
IProspect Station
ITOTAl PROJEtr COST SUMMARY
Gross Building Square Footage 29,099 Square Feet
Net R~1able Square Footage 20% for hallw"vs, stailWeUs, circulation 29,099 Square Feet
Gross Partting 47 Spaces
Land Size 0.83 Acres
Tot"l8eds 49 Bedrooms
Tot,,1 Units 32 Units
PlanninalDe$i&,n/£n£I~rif!J $ 275,000
Planning $ $
Architectur,,1
Civil Engineeril18:
ALTA Survey
Utility locates
Plat
Lan(ls<:aping
Structural Engineering
Mechanical Engineering
Electrical Engineering
lEED Consultation
Environmental Survey - Phase 1
Environmental Survey - Phase 2
Soils Report
Traffic Study
Asbestos Survey
Reimbursable Expenses (not above) $%
Preconstruction Servkes
Design EntWement Contingency Consultants '"
Munlcip"I/State Fees $ 596,260 $ 20.49
Building Permit Fees $ $
City/County Sales & Use Taxes $ $
City/County Oevelopment Review Fees $ $
City/County ~velopment Fees $ 596,260 $18,633
Affordable Housing -cash in lieu $ $
Utility Service and Relocation Fees $ $
City Bonding/letter of Credit $ $
SWMP Fees $ $
Dust Control Permit $ $
Fee Contingency 0% $ $
Core & Shell Construction $ 4,101,798 $ 127.21
Off,Site Improvements $ $
Site Development $ $
Core & Shell, Garage and TI Costs $ $
BaSement $ $
Parking Structure $ $
Phone/Data/Security $ $
FF&E $ $
VE Items $ $
ATTACHMENT 1
ConStrtl(COtIstruction tion Cost Estimating Contingency '" $ $ 3,982,119,470 328 $ $ 124.3.00 21
Tenint Improvements $ 18,000 $ 0.62
TI • Design $ $
TI • Construction $ $
TI • Signage $ $
TI • Phor"lE!/Data/Security $ $
fl · ff&E $ $
Brokerage Commissions $ $
$ $
Construction Period HoIdl", COSts $ 100,000 $5.00
Construction Period Financing Cost $
Construction Period Interest $
Construction Period Payments $
Appraisal $
tender Site lnspectlOtl Fees $
Loan Title Insurance $
Recording and Misc. Closing COst $
ConStruction Surveying $
Material Testing $
AsbestOs Abatement $
Real Estil le Taxes During Construction $
Pennanent loan Costs $ $
ht Mortgage loan Points $ $
1st Mortgage tender Inspect ion Fees $ $
1st Mortgage Title Insurance $ $
lst Mortgage Closing Cost $ $
OtMrfees $ ...... $ ....
DevelOpment Management Fee 1.SS $ 74,866
Marketing Material During Construction $ 5,000 $ 0.17
carrying Costs Through Leas.e·up $ $
$
$
TOTAL PROJECT COST $ 5,980,924 $ 205.54
$ 122,060 Per Bed
$ 186,904 Per Unit
$ 205.54 Per Rentable Square Foot
ATTACHMENT 1
REDEVELOPMENT AGREEMENT
PROSPECT STATION
This Agreement is made and entered into effective as of the ___ day of _________, 2013,
by and between the Fort Collins Urban Renewal Authority, a body corporate and politic of the
State of Colorado (the “Authority”), and Prospect Station, L.L.C., a Colorado limited liability
company (the “Developer”).
RECITALS
WHEREAS, the Developer is the owner of the property that is the subject of this
Agreement (the “Property”) described as follows:
LOT 1 PROSPECT STATION SUBDIVISION
BEING A REPLAT OF LOT 10, GRIFFIN PLAZA SUBDIVISION, AND A PORTION OF
VACATED TAMASAG DRIVE, SITUATE IN THE NORTHEAST QUARTER OF SECTION 23,
TOWNSHIP 7 NORTH, RANGE 69 WEST OF THE 6TH P.M., CITY OF FORT COLLINS,
COUNTY OF LARIMER, STATE OF COLORADO; and
WHEREAS, the City of Fort Collins, Colorado (the “City”) is a home rule municipality
and political subdivision of the State of Colorado (the “State”) organized and existing under a
home rule charter (the “Charter”) pursuant to Article XX of the Constitution of the State; and
WHEREAS, on June 6, 1978, the City Council adopted Resolution 78-49, adopting
findings and establishing the Fort Collins Urban Renewal Authority (the “Authority”) as an
urban renewal authority pursuant to Colorado Revised Statutes, Part 1 of Title 31, Article 25, as
amended (the “Act”); and
WHEREAS, by Resolution 2011-080, adopted and approved on September 6, 2011, the
City Council found and declared that the area described in such Resolution (the “Midtown
Area”) is a blighted area as described in the Act and appropriate for an urban renewal project;
and
WHEREAS, by Resolution 2011-081, adopted and approved on September 6, 2011, the
City Council adopted an urban renewal plan for the Midtown Area in Fort Collins, which area
includes the Property; and
WHEREAS, by Resolution 2013-043, adopted and approved on May 7, 2013, the City
Council adopted amendments to the previously adopted urban renewal plan for the Midtown
Area (as amended, the “Urban Renewal Plan”); and
9/4/13
Page 2
WHEREAS, the purpose of this Agreement is to eliminate blight and otherwise
implement and further the above-referenced Resolutions, and the purposes, policies, goals, and
objectives of the Authority and the Plan, pursuant to the Colorado Urban Renewal Law, Part I
of Article 25 of Title 31, C.R.S. (the “Act”); and
WHEREAS, the Property is within the Urban Renewal Area described in the Plan, and is
within the Prospect South Tax Increment Financing District, in which property taxes have been
divided pursuant to the Act and the Plan, establishing a property tax increment to fund
redevelopment and public improvement projects of the Authority; and
WHEREAS, the Developer will pursue certain undertakings and activities to eliminate
and prevent blight, by clearing, rehabilitating and redeveloping the Property, within the
meaning of the term “urban renewal project,” as set forth in the Plan and as defined in the Act;
and
WHEREAS, the Authority and the Developer wish to cooperate in the redevelopment of
the Property in furtherance of the Plan by entering into this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the promises and the mutual obligations of the
Parties and other good and valuable consideration, the receipt and adequacy of which are
acknowledged, the Parties agree as follows.
SECTION 1. DEFINITIONS
In this Agreement, unless a different meaning clearly appears from the context:
Act means the Colorado Urban Renewal Law, Part I of Article 25 of Title 31, C.R.S.
Agreement means this Agreement, as it may be amended or supplemented in writing.
References to Sections or Exhibits are to this Agreement unless otherwise qualified.
Building means the building identified in Exhibit A.
Category means one or more of the three (3) Categories of Eligible Costs set forth on Exhibit B
Certificate of Occupancy shall mean a final, unconditional certificate of occupancy issued by the
City’s Building Official under Chapter 5 of the City Code, or a conditional certificate of
occupancy, provided that the Authority, in its sole discretion, determines that the conditional
certificate of occupancy is sufficient given the circumstances and purposes of the Authority.
9/4/13
Page 3
Certificate of Valuation means the certification by the Larimer County Assessor’s Office to
determine predicted valuation of the Project once complete that is attached as Exhibit C.
Charter means the Municipal Charter of the City of Fort Collins.
City means the City of Fort Collins, Colorado.
City Code means the Municipal Code of the City of Fort Collins.
Commence Construction and Commencement of Construction mean to obtain a building permit
to construct the Building, if the Developer diligently pursues the construction of the Building
under the permit in a manner necessary to Complete Construction of the Project.
Complete Construction and Completion of Construction with mean that: 1) construction of the
Building is complete under applicable laws, ordinances and regulations; and 2) Certificate of
Occupancy has been issued for the Building for its intended permitted use without restrictions.
Control or Controlled by, with respect to any entity, means possession of the power to direct or
cause the direction of the management and policies of the entity, whether through the ownership
of the majority of voting securities, by contract, or otherwise.
Covenant Not to Protest means the Covenant Not to Protest the valuation of the Property for
real property tax purposes by the Larimer County Assessor required under Section 2.11.
Developer means Prospect Station, L.L.C., a Colorado limited liability company, and any
successors and assigns as permitted under Section 2.9 of this Agreement or as approved by the
Authority.
Developer Financing means the financing described in Section 2.1.
Development Agreement means the Development Agreement for the Project, once the same has
been approved by the City and recorded against the Property.
Eligible Costs means the reasonable and necessary expenditures to design and carry out the
Funded Improvements as identified on Exhibit B incurred by the Developer subsequent to the
date of this Agreement, as certified by the Developer and, at the Authority’s option, verified by
an appropriate expert. Certain costs for water and sewer line extension work identified
on Exhibit B, up to a total maximum amount of $10,000, that were incurred after the filing by
Developer with the Authority of an application for reimbursement, but prior to the date of this
Agreement, are deemed to be Eligible Costs. Eligible Costs shall not include interest paid or
accrued on any such expenditures.
9/4/13
Page 4
Final Development Plan means the Final Development Plan for the Project, once the same has
been approved by the City.
Funded Improvements means the improvements or activities and undertakings listed in Exhibit
B that the Developer will construct as part of the Project, for design and completion of which
the Eligible Costs will be incurred.
Land Use Code means the Land Use Code of the City of Fort Collins.
Party or Parties means a party or the parties to this Agreement, as first identified above.
Plan and Urban Renewal Plan mean the Midtown Urban Renewal Plan described in the
Recitals.
Pre-Project Tax Base Amount means the amount representing the taxes paid on the Property in
2013 before the construction of the Project and certified as such by the Larimer County
Assessor’s Office as shown on Exhibit C, which the Parties agree for the purpose of this
Agreement is$4,329.68
Project means the design, construction and reconstruction of all improvements, infrastructure,
parking, streets, rights-of-way, buildings, structures, signage, and landscaping to be constructed
on the Property pursuant to the Final Development Plan and Development Agreement, and
includes, but is not limited to, the Funded Improvements and Building.
Property means the real property legally described as follows:
LOT 1 PROSPECT STATION SUBDIVISION
BEING A REPLAT OF LOT 10, GRIFFIN PLAZA SUBDIVISION, AND A
PORTION OF VACATED TAMASAG DRIVE, SITUATE IN THE NORTHEAST
QUARTER OF SECTION 23, TOWNSHIP 7 NORTH, RANGE 69 WEST OF THE
6TH P.M., CITY OF FORT COLLINS, COUNTY OF LARIMER, STATE OF
COLORADO
Outside Date means the date by which the parties agree a certain event must have occurred in
order for the Developer to be in compliance with the terms of this Agreement, as set forth in the
Schedule of Performance.
Reimbursement Cap means the maximum Reimbursement Obligation of Four Hundred and
Ninety Four Thousand Dollars ($494,000.00), subject to the conditions and limitations as
provided in Section 3.1.
Reimbursement Obligation means the obligation of the Authority to reimburse the Developer
for the Eligible Costs under Section 3.1, up to the Reimbursement Cap.
9/4/13
Page 5
Related Entity means any entity wholly owned or Controlled by the Developer. For this
definition, the term “owned” means the ownership of 100% of the ownership interests in the entity;
and the term “Controlled” shall have the meaning hereinabove set forth.
Schedule of Performance means the schedule that governs the times for the performance by the
Developer and the Authority attached hereto as Exhibit D.
Target Date means the date by which the parties agree a certain event is reasonably expected to
have occurred, as set forth in the Schedule of Performance.
Urban Renewal Area means all of the area of real property, including public rights of way
within the boundaries of the Urban Renewal Project as described and delineated in the Plan.
SECTION 2. DEVELOPER OBLIGATIONS
2.1 Developer Financing. The Developer agrees to provide the Developer Financing
expected to comprise approximately $1.5 million of Developer equity and $4.5 million in
construction loans. The terms of the Developer Financing must be consistent with the
requirements of this Agreement and adequate to Complete Construction of the Project under
this Agreement and by the date specified in the Schedule of Performance. Subject to obtaining
Developer Financing, the Developer represents and agrees it has the financial and legal ability
and can bear the economic risk of financing and achieving Completion of Construction of the
Project, the costs of which are to be paid under the terms and conditions of this Agreement and
the approved construction documents. The Authority acknowledges that the terms and
conditions of the Developer Financing will be determined by separate agreements and
instruments to which the Authority will not be a party, which agreements and instruments shall
not alter or affect the respective rights and obligations of the Developer and the Authority
under this Agreement. The Authority acknowledges, subject to the foregoing, that the
Developer and other parties to the Developer Financing are entitled to establish, modify or
amend the Developer Financing, without the consent of the Authority.
2.2 Demolition, Clearance and Preparation of the Property. The Developer will demolish
and clear any existing improvements from the Property and prepare the Property for
construction of the Project. This work shall be performed in accordance with the requirements
of all laws, rules, and regulations, including those of the City.
2.3 Design and Construction of the Project. The Developer is responsible for obtaining and
reviewing all information that the Developer believes is necessary or desirable to fulfill its
obligations under this Agreement. Subject to obtaining the Developer Financing, the Developer
agrees to construct the Project in accordance with this Agreement. The Schedule of Performance
sets forth the Target Dates and Outside Dates for obtaining Developer Financing and
Completion of Construction of the Project, and other deadline dates. The Developer, subject to
the approval of the Authority, which approval shall not be unreasonably withheld, conditioned
9/4/13
Page 6
or delayed, shall have sole responsibility for the design, development and construction of the
Funded Improvements, the Building, and the Project, including without limitation, design,
construction, selection, and supervision of any architects, engineers, and consultants. For
construction of the Project, the Developer agrees to select contractors that the Developer’s
architect deems qualified by experience to construct a Project of this quality and caliber.
Regardless of the costs incurred by the Developer for the Project, the Authority’s
Reimbursement Obligation shall not exceed the Reimbursement Cap.
2.4 Approval of the Construction Documents and Modifications to the Final Development
Plan. The Developer shall prepare and obtain the approval of the City and the Authority,
including, but not limited to, the City’s development review process and independent review
by the Authority, of all construction documents related to construction of the Project and the
Final Development Plan. Approval by the Authority shall not be unreasonably withheld,
conditioned or delayed.
2.5 Construction of the Project. Subject to obtaining the Developer Financing, the Developer
shall Commence Construction and Complete Construction of the Project in accordance with the
City’s applicable standards and requirements. These activities will occur on or before the dates
specified in the Schedule of Performance. All construction activities shall conform to all laws,
codes, ordinances, and policies, including, but not limited to, those of the City.
2.6 [Paragraph omitted.]
2.7 Books and Accounts; Financial Statement. The Developer will keep, or cause to be kept,
proper and current books and accounts in which complete and accurate entries shall be made of
amounts paid out, and such other calculations, allocations and payments to construct the
Project.
2.8 Inspection of Records. All books, records and reports in the possession of the Developer
relating to the Project shall at all reasonable times and subject to twenty-four (24) hours advance
notice be open to inspection (at Authority expense) by such accountants or other agents as the
Authority may from time to time designate.
2.9 Restrictions on Assignment and Transfer. Except as hereinafter permitted, prior to
Completion of Construction of the Project the Developer shall not assign or transfer all or any
part of or any interest in this Agreement or the Property without the prior written approval of
the Authority, which approval shall not be unreasonably withheld, conditioned or delayed. For
this Agreement (a) an assignment or transfer shall include a change of the parties in Control of
the Developer, and (b) unreasonably withheld, conditioned or delayed shall mean failing to
approve within ten business days without identifying legitimate concerns of the Authority
related to, but not limited to, the generation of tax increment, the capacity of the assignee or
transferee to Complete Construction, and the preservation and promotion of the Plan. The
Developer shall, upon the Developer’s gaining of knowledge thereof, promptly notify the
9/4/13
Page 7
Authority of any and all changes in the identity of the parties in Control of the Developer, or the
degree thereof. No voluntary or involuntary successor in interest of the Developer shall acquire
any rights or powers under this Agreement except as expressly set forth herein. Approval of an
assignment or transfer by the Authority shall not relieve the Developer of its obligations to
Complete Construction of the entire Project, unless the Authority agrees in writing. The
foregoing Restriction on Assignment and Transfer shall terminate upon Completion of
Construction of the Project.
Notwithstanding the foregoing, subject to receipt and approval of all relevant
documents confirming such transfer or assignment, the Developer may: (i) assign this
Agreement and transfer the Property to a Related Entity of the Developer; (ii) collaterally assign
its right to receive reimbursement under this Agreement to any lender that provides all or any
portion of the Developer Financing, provided that any document assigning the Developer’s
right to receive reimbursement hereunder shall expressly provide that no reimbursement will
be made by the Authority unless and until Completion of Construction of the entire Project by
the Developer under the terms of this Agreement; (iii) enter into a contract to sell all or a portion
of the Project upon Completion of Construction of the entire Project, provided that no such sale
may occur prior to Completion of Construction of the entire Project by the Developer without
the Authority’s consent. Except when a permitted assignee expressly assumes such obligation,
no permitted assignment of this Agreement or transfer of the Property shall relieve the
Developer of its obligation to complete Construction of the entire Project under this Agreement.
2.10 Progress Reports. Until Completion of Construction of the Project the Developer shall
make reports in such detail and at such times as the Authority may reasonably request as to
Developer’s progress with respect to the Commencement of Construction, the progress of
construction and the Completion of Construction as described in the Schedule of Performance.
2.11 Protesting the Actual Value Determined by the Larimer County Assessor/Condition
Precedent. The Developer, including any assignees and successors, agrees and acknowledges
that the Reimbursement Obligation is funded by the Larimer County Assessor’s collection of
property taxes. Consequently, Developer, and any assignees or successors, agrees that from the
date of this Agreement through December 31, 2036, if the Actual Value determined by the
Larimer County Assessor is at or below the value set forth in the Certificate of Valuation (the
“Valuation”) relied on by the Authority, and attached to this Agreement as Exhibit C, it will not
protest the Actual Valuation of the Property determined by the Larimer County Assessor to
reduce the property tax for the Property. If Developer, or any assignee or successor, either (i)
protests the Actual Value when it is at or below the value in the Valuation, or (ii) protests the
Actual Valuation and succeeds in reducing it to an amount less than the Valuation, the
Authority’s Reimbursement Obligation will be reduced proportionally commensurate with the
reduction in Actual Value. The Developer will file a covenant with the Larimer County Clerk
and Recorder in a form satisfactory to the Authority, reflecting this representation and
agreement (“the Covenant Not to Protest”) upon the execution of this Agreement. The
Authority shall have no obligation arising under this Agreement until the Covenant Not to
9/4/13
Page 8
Protest has been so recorded. The Covenant Not to Protest shall provide that the URA Executive
Director may terminate the Covenant at any time in his or her discretion by recording a notice
of termination and providing a copy of the same to the then owner of record of the Property.
If this Agreement is terminated for any reason whatsoever, the Covenant Not to Protest
shall immediately and automatically terminate, become null and void, and be of no further
force or effect. Upon termination of this Agreement, the Authority shall execute, acknowledge
and deliver to the Developer such documents or instruments as may be necessary or reasonably
required by a title company to delete and remove the Covenant Not to Protest from the chain of
title to the Property.
SECTION 3. AUTHORITY OBLIGATIONS
3.1 Reimbursement Obligation/Reimbursement Cap. The Authority agrees to reimburse the
Developer for the Eligible Costs incurred and certified by the Developer, to the extent provided
herein (the “Reimbursement Obligation”). If, as contemplated by the parties, the contingencies
and requirements described in this Agreement are satisfied, the Authority will reimburse to the
Developer One Hundred Percent (100%) of the Eligible Costs incurred, up to the total amount of
Four Hundred and Ninety Four Thousand Dollars ($494,000.00) (the “Reimbursement Cap”).
3.2 Conditions for Reimbursement.
3.2.1 The Reimbursement Obligation is contingent upon Completion by the Developer
of the Project. If this requirement is not met by the Outside Date specified in the
Schedule of Performance attached hereto as Exhibit D, the Authority shall have
no Reimbursement Obligation to the Developer and this Agreement shall be
deemed null and void.
3.2.2 The Reimbursement Obligation and any payment required to be made hereunder
is further contingent upon verification by the Authority that all of Developer’s
representations and warranties, as set forth in Section 5.1, below, have been met
and kept current. The Authority may delay payment of any Reimbursement
Payment (as defined below) due, until the Developer provides reasonable
evidence of full compliance with said representations and warranties, if
requested by the Authority in its discretion.
3.2.3 The Reimbursement Obligation is limited to reimbursement for Eligible Costs for
the specified Funded Improvements, as set forth in Exhibit B. The Developer
shall provide documentation of the Eligible Costs using forms provided by the
Authority. If this requirement is not met by the Outside Date specified in the
Schedule of Performance attached hereto as Exhibit D, including lien waivers
and releases for labor and materials provided for the Project for or related to the
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Page 9
Funded Improvements, the Authority shall have no Reimbursement Obligation
to the Developer and this Agreement shall be deemed null and void. After the
Developer has submitted all required documentation of the Eligible Costs, the
Authority shall, within no more than 45 business days, including such
verification and review of costs by an appropriate expert as the Authority
determines to be appropriate, notify the Developer of the Authority’s
determination of eligibility, the costs determined to be Eligible Costs
reimbursable, and the total of the Reimbursement Obligation.
3.3 Payment of Reimbursement. After the Developer has completed performance of the
Conditions for Reimbursement as described in Section 3.2, and the Authority has determined
the Reimbursement Obligation, the Authority shall pay to the Developer the Reimbursement
Obligation, as follows:
3.3.1 Fifty percent (50%) of the total Reimbursement Obligation will be paid by the
Authority to the Developer in a single payment no later than 45 days after the
Conditions for Reimbursement have been met. The remaining fifty percent (50%)
of the Reimbursement Obligation shall be paid according to Sec. 3.3.2 below.
3.3.2 Fifty percent (50%) of the total Reimbursement Obligation will be paid by the
Authority to the Developer over a twenty-one year period, commencing in 2016
and terminating in 2036. During that period, no later than each January 31st the
Authority shall pay to the Developer from the property tax increment
determined by the Authority to have been generated by the Project on the
Property and paid during the preceding calendar year, the amount of Eleven
Thousand Seven Hundred and Sixty-Two Dollars ($11,762.00), or such portion of
that amount remaining due within the Reimbursement Cap limitation in Section
3.3.3, if less than $11,762.00. The tax increment generated by the Project on the
Property and paid in the preceding calendar year shall be calculated by
subtracting the Pre-Project Tax Base Amount from the total property taxes paid
in that year.
3.3.3 The total of all Reimbursement Payments shall not exceed the Reimbursement
Cap. The Authority shall continue to annually pay to the Developer a
Reimbursement Payment until the earlier of either: 1) the full payment of the
Reimbursement Obligation up to the Reimbursement Cap; or 2) February 1, 2036.
Upon the occurrence of either of these events, the Authority shall have no further
obligation to the Developer for reimbursement hereunder.
3.4 Authority Right to Pre-Pay. The Authority reserves the right to pre-pay any amount
due hereunder without penalty, in its discretion.
9/4/13
Page 10
3.5 Limitation. The Authority shall not enter into any agreement or transaction that impairs
the rights of Developer under this Agreement, including, without limitation, the right to receive
reimbursement for the Eligible Costs allocated to it under the procedures established in this
Agreement; provided, however, nothing herein shall preclude the Authority from entering into
other financial obligations, or other financial obligations regarding the Project, so long as the
Authority in its reasonable discretion concludes its actions do not and will not in the future
interfere with its obligations.
SECTION 4. INSURANCE AND INDEMNIFICATION
4.1 Insurance. At all times after the date of this Agreement during which the Developer is
engaged in preliminary work on the Property or adjacent streets and during the period from the
Commencement of Construction until Completion of Construction of the Project, the Developer
shall carry, or cause its general contractor to carry, and, upon request, will provide to the
Authority certificates of insurance as follows:
a. Builder’s risk insurance (with a deductible not to exceed $5,000) in an
amount equal to 100% of the projected replacement value of the Improvements at
the date of Completion of Construction;
b. Comprehensive general liability insurance (including operations,
contingent liability, operations of subcontractors, completed operations, and
contractual liability insurance) and umbrella liability insurance with a combined
single limit for both bodily injury and property damage of not less than
$1,000,000. Such insurance may carry a deductible in an amount not to exceed
$10,000 per claim for property damage and $5,000 per claim for employee
benefits; and
c. Worker’s compensation insurance, with statutory coverage, including the
deductible permitted by statute.
All such insurance policies shall be issued by responsible companies selected or approved by
the Developer, subject to the reasonable Approval of the Authority and the City. Prior to
Commencement of Construction, the Developer shall deliver to the Authority and the City
policies or certificates evidencing or stating that such insurance is in force and effect. Each
policy shall contain a provision that the insurer shall not cancel or modify it without giving
written notice to the Developer and to the Authority and the City at least 30 days before the
date the cancellation or modification becomes effective and shall name the Authority and the
City as additional insureds, specifying that the insurance shall be treated as primary insurance.
4.2 Indemnification. The Developer shall defend, indemnify, assume all responsibility for
and hold the Authority, the Authority’s commissioners, the City, the City’s council members,
and the officers and employees of the City and the Authority harmless (including, without
9/4/13
Page 11
limitation, for attorneys’ fees and costs) from all claims or suits for and damages to property
and injuries to persons, including accidental death, that may be caused by acts or omissions of
the Developer under this Agreement or in connection with the Project, whether such activities
are undertaken by the Developer or anyone directly or indirectly employed by or under
contract to the Developer and whether such damage shall accrue or be discovered before or
after termination of this Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1 The Developer represents and warrants, as of the Effective Date, as follows, with a
continuing obligation to notify the Authority of changes to the same through the completion of
payment of the Reimbursement Obligation by the Authority:
a. The Developer is a limited liability company under no disability that is
qualified to do business in the State of Colorado, and has the legal capacity and
the authority to enter into and perform its obligations under this Agreement. The
Developer has duly authorized the execution, delivery and performance of this
Agreement;
b. The execution and delivery of this Agreement and such documents and
the performance and observance of their terms, conditions and obligations have
been duly and validly authorized by all necessary action to make this Agreement
and such documents and such performance and observance are valid and
binding upon the Developer;
c. To the Developer’s current, actual knowledge, after reasonable inquiry,
the execution and delivery of this Agreement and the documents required
hereunder and the consummation of the transactions contemplated by this
Agreement will not:
i. conflict with or contravene any law, order, rule or regulation applicable
to the Developer or to its governing documents,
ii. result in the breach of any terms or provisions of, or constitute a default
under, any agreement or other instrument to which the Developer is a party
or by which the Developer may be bound or affected, or
iii. permit any party to terminate any such agreement or instruments or to
accelerate the maturity of any indebtedness or other obligation of the
Developer;
d. To the Developer’s current, actual knowledge, after reasonable inquiry,
there is no litigation, proceeding, initiative, referendum, or investigation or any
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Page 12
threat of the same contesting the powers of the Authority, the City, the
Developer with respect to this Agreement not disclosed in writing to the
Authority; and
e. The Developer has the legal ability to perform its obligations under this
Agreement and has the financial ability, through borrowing or otherwise, to
complete the Funded Improvements, the Building and the Project, subject to the
terms and conditions of this Agreement. This Agreement constitutes a valid and
binding obligation of the Developer, enforceable according to its terms, except to
the extent limited by bankruptcy, insolvency and other laws of general
application affecting creditors’ rights and by equitable principles, whether
considered at law or in equity.
5.2 The Authority represents and warrants as follows:
a. The Authority is an urban renewal authority duly organized and existing
under applicable law and has the right, power, legal capacity, and the authority
to enter into the Agreement and has authorized the execution, delivery and
performance of this Agreement by proper action of its Board of Commissioners;
b. To the Authority’s current, actual knowledge, after reasonable inquiry,
the Authority knows of no litigation or threatened litigation, proceeding or
investigation contesting the powers of the Authority or its officials with respect
to the Project, this Agreement, or the Funded Improvements not disclosed to the
Developer;
c. To the Authority’s current, actual knowledge, after reasonable inquiry,
the execution and delivery of this Agreement and the documents required
hereunder and the consummation of the transactions contemplated by this
Agreement will not:
i. conflict with or contravene any law, order, rule or regulation applicable
to the Authority or to its governing documents,
ii. result in the breach of any terms or provisions of, or constitute a default
under, any agreement or other instrument to which the Authority is a
party or by which it may be bound or affected, or
iii. permit any party to terminate any such agreement or instruments or to
accelerate the maturity of any indebtedness or other obligation of the
Authority; and
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Page 13
d. This Agreement constitutes a valid and binding obligation of the
Authority, enforceable according to its terms, except to the extent limited by
bankruptcy, insolvency and other laws of general application affecting creditors’
rights and by equitable principles, whether considered at law or in equity. The
Authority will defend the validity of this Agreement in the event of any litigation
arising hereunder that names the Authority as a party or which challenges the
authority of the Authority to enter into or perform its obligations hereunder.
SECTION 6. DEFAULT AND REMEDIES
6.1 Default by Developer. Default by Developer under the Agreement shall mean one or
more of the following events:
a. The Developer fails to obtain the Developer Financing as required and set
forth in the Schedule of Performance;
b. The Developer, in violation of Section 2.9 of this Agreement, assigns this
Agreement or transfers any part of the Property, or any rights in the same;
c. There is any change in Control of the Developer or in the identity of the
parties in Control of the Developer that violates this Agreement;
d. The Developer fails to provide approved construction documents as
required by this Agreement;
e. The Developer fails to Commence Construction within a reasonable
period of time after: (i) approval of the Final Development Plan, final
construction drawings and issuance of permits by the City and (ii) funding of the
Developer Financing; or the Developer fails to Commence Construction later
than the Outside Deadline required by the Schedule of Performance;
f. The Developer fails to complete its obligations by the Outside Deadlines
in the Schedule of Performance;
g. The Developer fails to materially observe or perform any other covenant,
obligation or agreement required of it under this Agreement; or
h. The Developer attempts to protest the actual value of the Property with
the Larimer County Assessor in violation of the Covenant Not to Protest
required under Section 2.11.
If any Default is not cured within the time allowed in Section 6.3 then the Authority may
exercise any remedy available under this Agreement.
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Page 14
6.2 Default by the Authority under the Agreement shall mean one or more of the following
events:
a. The Authority fails to pay the Reimbursement Obligation in violation of
this Agreement; or
b. The Authority fails to materially observe or perform any covenant,
obligation or agreement required of it under the Agreement.
6.3 Grace Periods. Upon a Default by either Party, that Party shall, upon written notice from
the non-defaulting Party, proceed diligently to cure or remedy the Default and shall have cured
the Default within 30 days (60 days if the Default relates to the Outside Date for Completion of
Construction) after receipt of such notice, or shall have commenced the cure and diligently
pursued it to completion within a reasonable time if the cure cannot reasonably be
accomplished within 30 days (or 60 days if the Default relates to the Outside Date for
Completion of Construction). There shall be no grace period for the Submission of
Documentation for Eligible Costs to URA by the Outside Date, as set forth on Exhibit D.
6.4 Remedies on Default. Whenever any Default occurs and is not cured under Section 6.3,
the non-defaulting Party may take any one or more of the following actions:
a. Suspend performance under this Agreement until it receives assurances
from the defaulting Party, deemed reasonably adequate by the non-defaulting
Party, that the defaulting Party will cure its default and continue its performance
under this Agreement;
b. Cancel and rescind the Agreement; or
c. Take whatever legal or administrative action or institute such
proceedings as may be necessary or desirable in its opinion to enforce observance
or performance of this Agreement, including, without limitation, specific
performance or to seek any other right or remedy at law or in equity, including
damages.
6.5 Delays; Waivers. Any delay by either Party in instituting or prosecuting any actions or
proceedings or otherwise asserting its rights under the Agreement shall not operate as a waiver
of such rights or deprive it of or limit such rights. No waiver in fact made by a Party with
respect to any specific default by the other Party under the Agreement shall be considered or
treated as a waiver of the rights with respect to any other defaults by the other Party under the
Agreement or with respect to the particular default except to the extent expressly waived in
writing. The Parties intend this provision will enable each Party to avoid the risk of being
limited in the exercise of a remedy provided in the Agreement by waiver, laches or otherwise in
9/4/13
Page 15
the exercise of such remedy at a time when it may still hope to resolve the problems created by
the default involved.
6.6 Enforced Delays. Any delays in or failure of performance by any Party of its obligations
under this Agreement shall be excused if such delays or failure result from acts of God, fires,
floods, strikes, labor disputes, accidents, regulations, order of civil or military authorities,
shortages of labor or materials, or other causes, similar or dissimilar, that are beyond the control
of such Party.
6.7 Rights and Remedies Cumulative. The rights and remedies of the Parties to the
Agreement are cumulative, and the exercise by either Party of any one or more of such remedies
shall not preclude the exercise by it, at the same or different times, of any other such remedies
for any other default or breach by any other Party.
SECTION 7. MISCELLANEOUS
7.1 Conflicts of Interest. None of the following shall have any personal interest, direct or
indirect, in the Agreement: A member of the governing body of the Authority or of the City; an
employee of the Authority or of the City who exercises responsibility concerning the Project, or
an individual or firm retained by the City or the Authority who has performed consulting
services for the Project. None of the above persons or entities shall participate in any decision
relating to the Agreement that affects his or her personal interests or the interests of any
corporation, partnership or association in which he or she is directly or indirectly interested.
7.2 Antidiscrimination. The Developer, for itself and its successors and assigns, agrees that
in the completion of the Funded Improvements, the Building and the Project provided for in the
Agreement and in the use and occupancy of the Property, the Developer will not discriminate
against any employee or applicant for employment otherwise qualified because of race, color,
creed, religion, sex, sexual orientation, age, disability (subject to the availability of a reasonable
accommodation of the disability), marital status, ancestry, or national origin.
7.3 Title of Sections. Any titles of the several parts and sections of the Agreement are
inserted for convenience of reference only and shall be disregarded in construing or interpreting
its provisions.
7.4 No Third-Party Beneficiaries. No third-party beneficiary rights are created in favor of
any person not a party to the Agreement. The parties acknowledge that rights hereunder may
be assigned or transferred pursuant to under an Authority-approved full or partial assignment
of this Agreement.
7.5 Venue and Applicable Law. Any action arising out of the Agreement shall be brought in
the Larimer County District Court and the laws of the State of Colorado shall govern the
9/4/13
Page 16
interpretation and enforcement of the Agreement, without giving effect to its conflicts of laws
provisions.
7.6 Non-liability of Officials, Agents and Employees. No council member, board member,
commissioner, official, employee, consultant, attorney or agent of the Authority or the City shall
be personally liable to the Developer under the Agreement or in the event of any default or
breach by the City or Authority or for any amount that may become due to the Developer under
the Agreement. No official, employee, consultant, attorney or agent of the Developer shall be
personally liable to the Authority or the City under the Agreement or in the event of any default
or breach by the Developer or for any amount that may become due to the Authority or the City
under the Agreement.
7.7 Authority or City Not a Partner. Notwithstanding any language in this Agreement or
any other agreement, representation, or warranty to the contrary, neither the Authority nor the
City shall be deemed or represented as a partner or joint venturer of the Developer or any
contractor or subcontractor performing work on the Property or the Funded Improvements, the
Building or the Project. Neither the Authority nor the City shall be responsible for any debt or
liability of the Developer, or its managers or members, or such contractor or subcontractor.
7.8 Integrated Contract. This Agreement is an integrated contract and invalidation of any of
its provisions by judgment or court order shall in no way affect any of the other provisions,
which shall remain in full force and effect unless the Parties otherwise agree to an amendment.
7.9 Counterparts. The Agreement may be executed in counterparts, each of which shall
constitute one and the same instrument.
7.10 Notices. A notice, demand, or other communication under the Agreement by any party
to the other shall be in writing and sufficiently given if delivered in person or if it is delivered
by overnight courier service with guaranteed next-day delivery or by certified mail, return
receipt requested, postage prepaid, and:
a. In the case of the Developer, is addressed to or delivered to the Developer,
with a copy to XXX Bank, as follows:
Prospect Station, LLC
Attn: Connie Dohn
2642 Midpoint Drive.
Fort Collins, CO 80525
And
XXX Bank
Attn: ________
9/4/13
Page 17
[ADDRESS]
b. In the case of the Authority, is addressed to or delivered to the Authority as
follows:
Executive Director
Fort Collins Urban Renewal Authority
300 LaPorte Avenue
PO Box 580
Fort Collins, CO 80522
And
City Attorney
City of Fort Collins
300 LaPorte Avenue
PO Box 580
Fort Collins, CO 80522
or at such other substituted address as the affected party may, from time to time, designate in
writing and forward to the other as provided in this Section. Notice provided by in-person
delivery or by overnight courier shall be considered delivered as of the verified date of delivery.
Notice provided by regular U.S. Mail shall be considered delivered three (3) days after the date
of deposit with the U.S. Postal Service.
7.11 Good Faith of Parties. In performance of the Agreement or in considering any requested
extension of time or in giving any approval, the Parties agree that each will act in good faith and
will not act unreasonably, arbitrarily, capriciously or unreasonably withhold, condition or delay
any approval required by the Agreement.
7.12 Exhibits Merged. All Exhibits attached to the Agreement are expressly integrated
herein.
7.13 Days. If the day for any performance or event provided for herein is a Saturday, Sunday
or other day on which either national banks or the office of the Clerk and Recorder of Larimer
County, Colorado, is not open for the regular transaction of business, the day for performance
shall be deemed to be the next day on which the banks or Clerk and Recorder are open for the
transaction of business.
7.14 Further Assurances. Each Party agrees to execute such documents and take such action
as shall be reasonably requested by the other Party to confirm, clarify or effectuate this
Agreement.
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7.15 Certifications. Each Party agrees to execute such documents as the other Party may
reasonably request to verify or confirm the status of this Agreement and of the performance of
the obligations hereunder and such other matters as the requesting Party may reasonably
request.
7.16 Amendments. This Agreement shall not be amended except by written instrument.
Each amendment, which shall be in writing and signed and delivered by the Parties, shall be
effective to amend the provisions hereof.
7.17 Survival of Representations, Warranties and Covenants. No representations or
warranties whatever are made by any Party except as expressly set forth in this Agreement.
The representations, warranties and indemnities made by the Parties and the covenants and
agreements to be performed or complied with by the respective Parties shall be deemed to be
continuing. Nothing in this Section shall affect the obligations and indemnities of the Parties
with respect to covenants and agreements in this Agreement that are permitted or required to
be performed in whole or in part after issuance of a Certificate of Occupancy.
7.18 Minor Changes. This Agreement has been approved in substantially the form submitted
to the governing bodies of the Parties. The officers executing the Agreement have been
authorized to make, and may have made, minor changes in the Agreement and the attached
Exhibits as they have considered necessary. So long as such changes followed the intent and
understanding of the Parties at the time of Approval by the governing bodies, the execution of
the Agreement shall constitute conclusive evidence of the approval of such changes by the
respective Parties.
7.19 Joint Draft. The parties agree they drafted this Agreement jointly with each having the
advice of legal counsel and an equal opportunity to contribute to its content.
IN WITNESS WHEREOF, the Authority and the Developer have caused the Agreement
to be duly executed as of the day first above written.
DEVELOPER:
PROSPECT STATION, LLC,
A Colorado limited liability company
By: ______________________________________
Name: _____________________________________
Title: _______________________________________
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Page 19
AUTHORITY:
THE FORT COLLINS URBAN RENEWAL AUTHORITY
By:_____________________________________________
Darin Atteberry, Executive Director
ATTESTED: APPROVED AS TO FORM:
By: __________________________ By: ____________________________
City Clerk Authority Legal Counsel
Midtown URA
Prospect Station
Reimbursement Agreement to City from the URA
Reimbursement Amount 247,000.00 Start Date 31-Dec-15
Interest Rate 5.250% Matures 31-Dec-37
$19,194.75 Payment Years 22
Time in
Years Date Payment Interest Principal Balance
- 31-Dec-15 (247,000.00)
1.000 31-Dec-16 ($19,194.75) ($12,967.50) ($6,227.25) (240,772.75)
2.000 31-Dec-17 (19,194.75) (12,640.57) (6,554.18) (234,218.57)
3.000 31-Dec-18 (19,194.75) (12,296.47) (6,898.28) (227,320.29)
4.000 31-Dec-19 (19,194.75) (11,934.32) (7,260.43) (220,059.86)
5.000 31-Dec-20 (19,194.75) (11,553.14) (7,641.61) (212,418.25)
6.000 31-Dec-21 (19,194.75) (11,151.96) (8,042.79) (204,375.46)
7.000 31-Dec-22 (19,194.75) (10,729.71) (8,465.04) (195,910.42)
8.000 31-Dec-23 (19,194.75) (10,285.30) (8,909.45) (187,000.97)
9.000 31-Dec-24 (19,194.75) (9,817.55) (9,377.20) (177,623.77)
10.000 31-Dec-25 (19,194.75) (9,325.25) (9,869.50) (167,754.27)
11.000 31-Dec-26 (19,194.75) (8,807.10) (10,387.65) (157,366.62)
12.000 31-Dec-27 (19,194.75) (8,261.75) (10,933.00) (146,433.62)
13.000 31-Dec-28 (19,194.75) (7,687.77) (11,506.98) (134,926.64)
14.000 31-Dec-29 (19,194.75) (7,083.65) (12,111.10) (122,815.54)
15.000 31-Dec-30 (19,194.75) (6,447.82) (12,746.93) (110,068.61)
16.000 31-Dec-31 (19,194.75) (5,778.60) (13,416.15) (96,652.46)
17.000 31-Dec-32 (19,194.75) (5,074.25) (14,120.50) (82,531.96)
18.000 31-Dec-33 (19,194.75) (4,332.93) (14,861.82) (67,670.14)
19.000 31-Dec-34 (19,194.75) (3,552.68) (15,642.07) (52,028.07)
20.000 31-Dec-35 (19,194.75) (2,731.47) (16,463.28) (35,564.79)
21.000 31-Dec-36 (19,194.75) (1,867.15) (17,327.60) (18,237.19)
22.000 31-Dec-37 (19,194.64) (957.45) (18,237.19) 0.00
(422,284.39) (175,284.39) (247,000.00)
Payment
* Dates and rates are preliminary.
Specifics will be set after the loan is authorized.
ATTACHMENT 3
TIF Growth Rate 0%
TIF for Obligations 669,284
% of TIF pledged
for Obligations 77%
TIF Net Income 196,056
0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 TOTALS
Cash Inflows
TIF - 3,916 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 865,340
Loan from City 247,000 247,000
Total Cash Inflows - 250,916 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156 39,156
1,112,340
Cash Outflows
Lump Sum to Developer (247,000) (247,000)
Debt / Dev Pay Back Prin (to the City) (6,227) (6,554) (6,898) (7,260) (7,642) (8,043) (8,465) (8,909) (9,377) (9,870) (10,388) (10,933) (11,507) (12,111) (12,747) (13,416) (14,121)
(14,862) (15,642) (16,463) (17,328) (18,237) (247,000)
Interest (to the City) (12,968) (12,641) (12,296) (11,934) (11,553) (11,152) (10,730) (10,285) (9,818) (9,325) (8,807) (8,262) (7,688) (7,084) (6,448) (5,779) (5,074) (4,333) (3,553)
(2,731) (1,867) (957) (175,284)
Dev Pay over Time - (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762) (11,762)
(11,762) (11,762) (11,762) - (247,000)
Total Cash Outflows - (247,000) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957) (30,957)
(30,957) (30,957) (30,957) (30,957) (19,195) (916,284)
-
Net Cash Flow - 3,916 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 8,199 19,961 196,056
Obligations to the Developer
% of
Total TIF
Lump Sum Payment 247,000 28.54%
Payments to Developer 247,000 28.54%
Loan Interest 175,284 20.26%
Total Obligations 669,284 77.34%
TIF Collections 865,340
Total Revenue 865,340
Net Income 196,056 22.66%
Obligations to the City
Obligations
Revenue
Midtown URA Prospect Station
(50% Loan and 50% Payback)
Assumptions
TIF Growth
ATTACHMENT 4
EXHIBIT B - ELIGIBLE COSTS
1 Environmental Mitigation
Installation of underground environmental vapor barrier
$15,000
Hazardous materials testing, removal, reporting and plan creation $8,750
Deconstruction of existing structure and improvements
$32,000
plus phase one environmental report
Removal of soil at old tank locations,
$62,000
replaced with new structural fill compacted
Subtotal
$117,750
2 Infrastructure Upgrades
Upgrade of stormwater handling from swale to enhanced system $72,124
as a result of the Mason Corridor pedestrian/ bike path
Modification of Prospect Road/ Max transportation pullout
$63,472
Extension and upgrade of water and sewer line
$93,778
to south property line to service adjoining properties
Subtotal
$229,374
3 Public Amenities
Enhancement to public plaza adjacent to transportation corridor $137,500
including seating, lighting, dog waste station, bike fix it station,
and enhanced
landscaping
Subtotal
$137,500
4 Façade Enhancements
Enhancements to façade to address four-sided architecture
$9,376
Subtotal
$9,376
Total Eligible Costs $494,000
I
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I I
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EXHIBIT C - VALUATION
PU.~ t£ AWAM Tl<l.T TWl$ I.5 'ONl,.Y' AN Ul'l.II.olTt", >II.5TOlUCAl VALUATION 17 A CO_8'ICLO.IJ~ARTO\&I'f lI\.lN fllO.OI INI'ORIol.\TION ~~!If ALfX~"""" ,1_ lO1J
INCOME APHtOACH
611/2013
97231-I..IVElWOIU:10-010 : HOUSLNG WITH [I]
~TI·'AMJlfPOfl11ON I
UNIT 32 Unot$ COUNT seze (UNITS) 100,• 00'10
TOTAl Sf " 32 100,00'4
BASEO ON ACTUAl. P6[ SUBMITTEO (MU ONlY)
1'OT&lTIAl GflOSS INCOME INCf !Jrd Sf NET
32 Units $1,366,72 " $ ~Z4,819
TOTAl " $5Z-4,819
LESS VACANCY & COLLECTION LOSS ~,oo'1o $26,2 41
INCOME Ie$J V6. C $498.~78
AOOTTIONA\..INCOME $.
B'FECTlV'E ~INCOME' $-498,578
OPERATlN6 EXPENSES
TotQIExf"E~ J07, $1-49,m
EfFecTIVE GROSS INCOME
ius OPERAT'IJooiG D7ENSES
NET oPERAl»* INCOME
$498 ,!l7Il
SJ49.~73
IVALUE (NeT INCOME/OAR) $l49))04 di...;de.d by 7.001. , ..$.).49....771 004
VAWE PER. UNIT $1515.806
EXHIBIT C - VALUATION
...... R ~WMf l'MAT TW[$ U '(N.r .v.I UTUUoTl'a ~VAWAT1(IH (JI' A c.o"Y~·· '»NKrI08lf /'\.AN I'IIOoOllN'00000TWN ~I 4O&!.!IMN ~ m.t.
INCOME APfI'ROACH
312UZOl3
Pcr«III: 97231-100·0010
LIVElWotIIt HOVSlN6 WITH
COMMaCUI. f'ORTtON
IIIJILO.IN6 ARCA. • Sf
Refll'] • Ground FIooI"
rOTAL Sf
POTCNrIAL GROSS INCOME
R.t . 1I • Ground F~
rorAt.
LESS VACANCY 6. COLLECTION ~OSS
I NCOME less V& C
AODlnONlll INCOME
EFFECTIVE 6ROSS INCOME
oPERA.ITNG EXPENSES
M'''.'. ... M " $989
I~. $0,30 $312
RescrvltS for ~ploctl1'lf!n l " $~93
TOTal Expenses '0' $1,895
EfFECnVE 6AOSS INCOME $19.779
las Of'BlATINS EXPENSES $1.895
NET oPERAITNG INCOME $17.884
IV4LUE (NET INCOIt4EIO.ilR) S I7 ,BfA divided tr)' 7,501. 1 $238.'"' I
.2013 -TlF -' I
SIZE (S F) , 1001. CompIeT.
1,041 IOO.OO\.
1,041 IOO,OO'%.
INC/SF NET
$ZO.OO U" )4 1 $20,820
SW ,OO 1.0041 $lO,820
~,oo,. R041
$19.779
, '0
$19.n9
IV4LUE I'fA SQUARE FOOT·c- I .... I
EXHIBIT C - VALUATION
19£'I$ :NVl<l3W
N , , N 0 L9(' I$ 1661 n W 113~1I S()dWII,
N , , N 0 9~tli 6961 '" " " " 113~1I SI1dWII'
N , , N 0 66['1$ "., '" "" " " " " " " " " '" '" II:RJY Sn.!'N'f'J
(!9~""9 lAlIQN1 ( SH1I'1:) l1004 0 .." liNn
'"
'" J.>O "'" J.>O J.>O "" n
" 0" 0" • 0" , 0" , 0" , # .ffi>US
"'''' = OdNl3WOONI
"'v A1IWV;:I-I,l1nw
EXHIBIT C - VALUATION
EXHIBIT D
SCHEDULE OF PERFORMANCE
Action Responsible Party Target Date Outside Date
Developer Financing Developer 10/15/2013 12/15/2013
Final Plan Approval Developer 9/30/2013 11/30/2013
Execution of Development Agreement Developer 9/30/2013 11/30/2013
Deliver Proof of Insurance Developer 10/15/2013 12/15/2013
Commence Construction of Project Developer 9/30/2013 12/31/2013
Complete Construction of Project Developer 9/30/2014 12/31/2014
Submit Documentation for Eligible Costs
to URA
Developer 10/31/2014 1/31/2015
1
Finance Committee
Staff: Tom Leeson, Redevelopment Program Manager
John Voss, Assistant Financial Officer
Megan Bolin, Redevelopment Specialist
Chris Donegon, Financial Analyst
SUBJECT FOR DISCUSSION
Items related to the execution of the URA’s tax increment reimbursement obligation for The
Summit on College.
EXECUTIVE SUMMARY
In September 2011, the Fort Collins Urban Renewal Authority (URA) approved a
Redevelopment Agreement with Capstone Development Corp (Developer) for The Summit on
College, a mixed-use student housing project in the Prospect South Tax Increment Financing
(TIF) District. The Agreement obligated the URA to reimburse the Developer for up to $5
million of eligible costs upon completion of the project. The Developer obtained a Certificate of
Occupancy for the project in August 2013 and subsequently submitted their reimbursement
request to the URA. Since the URA does not have sufficient balance to pay the reimbursement
outright, a loan is requested from the City of Fort Collins. The loan between the City and URA
deviates from the City’s existing investment policy in terms of the interest rate, and staff seeks
feedback on the proposed terms before the loan is brought to City Council and the URA Board
for formal consideration.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. Does the Finance Committee have any questions or concerns regarding the proposed
terms of the Loan Agreement?
2. Should staff proceed in bringing the Ordinance and Resolutions to execute the
reimbursement obligation to City Council and the URA Board for respective
considerations?
BACKGROUND/DISCUSSION
In September 2011, the Fort Collins Urban Renewal Authority (URA) approved a
Redevelopment Agreement with Capstone Development Corp (Developer) for The Summit on
College, a mixed-use student housing project in the Prospect South Tax Increment Financing
(TIF) District. The Agreement obligated the URA to reimburse the Developer up to $5 million
for eligible project costs upon completion of the project. The Developer obtained a Certificate of
Occupancy for the project in August 2013, and subsequently submitted their reimbursement
request to the URA. Although URA staff is awaiting additional documentation from the
Developer to verify several of the costs, we anticipate the need to provide the reimbursement
obligation within the next two months.
Per the Redevelopment Agreement, the reimbursement obligation is to be a lump sum payment
to the Developer. Knowing that the URA would not have sufficient fund balance to make this
2
payment outright, it had been anticipated that the URA would seek a loan from the City of Fort
Collins, repaid using tax increment revenue generated by the project over the life of the Prospect
South TIF District. However, several estimates made at the time of the Redevelopment
Agreement have proved inaccurate, resulting in the need to evaluate financing mechanisms that
deviate from the City Policy in the short term, while making a concerted effort to uphold the
City’s interagency loan policy in the long term.
Estimates v. Actuals
When the amount of tax increment generated by The Summit was estimated in 2011, the URA
used a methodology based on project costs and assumed 1% appreciation each year, for a total of
approximately $8 million. It was anticipated that the URA would have to borrow from the City
to pay the reimbursement to the Developer, and at the time, the financing charge on a $5 million
loan was estimated to be $2 million.
Based on the most recent August 2013 preliminary valuation from Larimer County, the project is
estimated to generate $7 million, creating a $1 million shortfall from the original projection.
Additionally, the City has adopted a new interagency loan policy which increased the interest
rate from the 2011 estimate, making the financing charge $3.9 million. Table 1 summarizes the
difference between the original estimates and actual numbers:
Table 1
2011 Estimates 2013 Actuals
Total Tax Increment $8 million $7 million
Reimbursement Obligation $5 million $5 million¹
Financing Cost to URA $2 million $3.9 million
Balance $1 million ($1.9 million)
¹ Subject to final verification by URA staff.
Between the decrease in tax increment revenue and increase in financing charge, the URA would
be unable to afford the full debt obligation of a $5 million loan from the City under current
investment policy interest rates. Consequently, City and URA staff have negotiated a
compromise that allows the URA to uphold its reimbursement obligation to the Developer and
remain financially solvent, while making a concerted effort to uphold the City’s interagency loan
policy.
Proposed Loan Agreement Terms
Knowing that the URA would be unable to afford a $5 million loan from the City based on the
current interagency loan policy, a new loan structure was developed. This loan backs into an
affordable interest rate based on the known revenue stream and term, which turns out to be
2.68%. Since City policy would require 5.15% interest, this leaves a gap of $1.94 million. To
fill this gap, the Loan Agreement would commit the URA to pledge 50% of future
unencumbered revenue from the Prospect South TIF District to the City.
For example, assume the URA collects $1 million in revenue in a given year and owes the City a
$400,000 payment on the Capstone loan; 50% of the remaining $600,000, or $300,000, would be
paid to the City to help pay down the $1.94 million interest rate gap. This revenue share
structure would continue for the life of the Prospect South TIF District, or until the $1.94 million
3
is paid in full, whichever happens first. See Attachment 2 for a summary of the proposed loan
terms.
Next Steps
If the revised structure for the URA’s loan from the City is supported, staff will proceed with the
final steps required to execute the Loan Agreement and pay the Developer the reimbursement
obligations. Three separate actions would be required:
1. City Council Ordinance approving the Loan Agreement
a. First Reading, October 15, 2013
b. Second Reading, November 5
2. URA Board Resolution approving the Loan Agreement
a. November 5
3. URA Board Resolution appropriating loan revenue to repay the Developer
a. November 5
ATTACHMENTS
1. Cash Flow Comparison
2. Proposed Loan Agreement Terms
3. Revenue Sharing Template
1
The Summit
URA-City Loan Agreement
Council Finance Committee
September 16, 2013
2
The Summit – A Summary
• Redevelopment Agreement approved Sept. 2011
• URA agreed to a $5 Million lump sum payment
upon completion of Eligible Costs
• Developer has obtained Cert. of Occupancy and
submitted reimbursement request
3
Estimates v. Actuals
2011
Estimates
2013
Actuals
Total Tax
Increment
$8M $7M
Reimbursement
Obligation
$5M $5M
Financing Cost
to URA
$2M $3.9M
Balance $1M ($1.9M)
Original Estimate:
• Based on Project Cost
• 1% annual appreciation
• $2M Interest Costs
Actuals:
• Based on County Values
• 0% appreciation
• Interest based on City Investment
Policy
4
Proposed Terms
Example*:
Prospect South Revenue $500,000
Capstone Payment $300,000
Other Prospect South Obligations $50,000
Unencumbered Revenue $150,000
50% to City $75,000
50% to URA $75,000
*For Illustrative purposes only
• Interest and principal based on known revenue
• Interest = 2.68%
• 50% of future unencumbered revenue paid to City
5
Questions
1. Does the Finance Committee have any questions or
concerns regarding the proposed terms of the Loan
Agreement?
2. Should staff proceed in bringing the Ordinance and
Resolutions to execute the reimbursement obligation to
City Council and the URA Board for respective
considerations?
6
Thank you
Urban Renewal Authority
Propect South TIF District - The Summit project
Loan from City General Fund to URA
Cashflow comparison
Loan Agreement Policy Payment Schedule
Year of
Loan Date Interest Principal Total Payment
Difference
from TIF Interest Principal Total Payment
Difference from
TIF
Est. TIF
Capstone
- 6-Nov-13 - - - - - -
0.17 31-Dec-13 - - - - - -
1.17 31-Dec-14 134,000.00 (75,732.31) 58,267.69 - 300,502.50 - 300,502.50 (242,234.81) 58,268
2.17 31-Dec-15 136,029.63 132,916.44 268,946.07 - 257,500.00 118,442.69 375,942.69 (106,996.62) 268,946
3.17 31-Dec-16 132,467.47 141,857.52 274,324.99 - 251,400.20 124,542.49 375,942.69 (101,617.70) 274,325
4.17 31-Dec-17 128,665.68 145,659.31 274,324.99 - 244,986.26 130,956.43 375,942.69 (101,617.70) 274,325
5.17 31-Dec-18 124,762.01 155,049.48 279,811.49 - 238,242.01 137,700.68 375,942.69 (96,131.20) 279,811
6.17 31-Dec-19 120,606.69 159,204.80 279,811.49 - 231,150.42 144,792.27 375,942.69 (96,131.20) 279,811
7.17 31-Dec-20 116,340.00 169,067.72 285,407.72 - 223,693.62 152,249.07 375,942.69 (90,534.97) 285,408
8.17 31-Dec-21 111,808.98 173,598.74 285,407.72 - 215,852.79 160,089.90 375,942.69 (90,534.97) 285,408
9.17 31-Dec-22 107,156.54 183,959.34 291,115.88 - 207,608.16 168,334.53 375,942.69 (84,826.81) 291,116
10.17 31-Dec-23 102,226.43 188,889.45 291,115.88 - 198,938.93 177,003.76 375,942.69 (84,826.81) 291,116
11.17 31-Dec-24 97,164.19 199,774.01 296,938.20 - 189,823.24 186,119.45 375,942.69 (79,004.49) 296,938
12.17 31-Dec-25 91,810.25 205,127.95 296,938.20 - 180,238.09 195,704.60 375,942.69 (79,004.49) 296,938
13.17 31-Dec-26 86,312.82 216,564.14 302,876.96 - 170,159.30 205,783.39 375,942.69 (73,065.73) 302,877
14.17 31-Dec-27 80,508.90 222,368.06 302,876.96 - 159,561.46 216,381.23 375,942.69 (73,065.73) 302,877
15.17 31-Dec-28 74,549.44 234,385.06 308,934.50 - 148,417.82 227,524.87 375,942.69 (67,008.19) 308,935
16.17 31-Dec-29 68,267.92 240,666.58 308,934.50 - 136,700.29 239,242.40 375,942.69 (67,008.19) 308,935
17.17 31-Dec-30 61,818.05 253,295.14 315,113.19 - 124,379.31 251,563.38 375,942.69 (60,829.50) 315,113
18.17 31-Dec-31 55,029.74 260,083.45 315,113.19 - 111,423.80 264,518.89 375,942.69 (60,829.50) 315,113
19.17 31-Dec-32 48,059.51 273,355.94 321,415.45 - 97,801.07 278,141.62 375,942.69 (54,527.24) 321,415
20.17 31-Dec-33 40,733.57 280,681.88 321,415.45 - 83,476.78 292,465.91 375,942.69 (54,527.24) 321,415
21.17 31-Dec-34 33,211.29 294,632.47 327,843.76 - 68,414.79 307,527.90 375,942.69 (48,098.93) 327,844
22.17 31-Dec-35 25,315.14 302,528.62 327,843.76 - 52,577.10 323,365.59 375,942.69 (48,098.93) 327,844
23.17 31-Dec-36 17,207.37 317,193.27 334,400.64 - 35,923.77 340,018.92 375,942.69 (41,542.05) 334,401
24.17 31-Dec-37 8,706.59 324,872.94 333,579.53 821.11 18,412.80 357,530.03 375,942.83 (41,542.19) 334,401
2,002,758.21 5,000,000.00 7,002,758.21 821.11 3,947,184.51 5,000,000.00 8,947,184.51 (1,943,605.19) 7,003,579
Attachment 1
Draft August 29, 2013
Interagency Loan Agreement – between the City of Fort Collins and the Fort Collins Urban Renewal
Authority
Developer: Capstone
Project: The Summit
Plan Area: Midtown
TIF District: Prospect South
Estd. TIF rev.: $7,003,000 (includes $58,000 of the 2014 revenue)
Loan Amount: $5,000,000
Term: 11/6/13 through 12/31/2037, about 24 years
Interest Rate: 2.68% - reflects the maximum interest that can be charged on a $5M loan supported by the
current estimated TIF revenue – based on the County estimate of value with 2% growth every
other year. Total interest is $2,003,000.
Policy Interest: 5.15% (used in the calculation of the revenue sharing) The total interest cost is $3,947,000. The
Policy interest is the higher of the Treasury rate or Muni rate plus .5%, subject to a minimum
floor. The current 20 year Muni rate with a rating of AA is 4.65%.
Payments: Schedule to match the estimated TIF revenue flow from this project. First payment on 12/31/14
is applied 100% to interest. The unpaid interest is compounded, added, to the outstanding
balance owed. Remaining annual payments will follow the attached payment schedule, which
included both principal and interest.
Rev Pledged: All TIF generated by The Summit project and all other TIF revenue generated by the district that
is not specifically tied to a pledge of TIF support for similar future projects within the district.
For example, if 60% of estimated TIF on another project is pledged to that deal, only the 40% is
pledged to repay this loan obligation and revenue sharing component.
Rev. Share: 50% of revenue remaining from the total Prospect South TIF district revenue after paying other
FC URA Prospect South TIF district interagency loans, other debt obligations pledged or TIF
pledges to developers will be will be shared with the City on an annual basis.
Cap on Share: The Revenue shared with the City will be limited to the difference between cumulative interest
from the agreed upon interest rate and the cumulative interest if the agreement had used the
interest rate as determined by the City’s Investment Policy. The cap on the revenue sharing is
$1,944,000 = 3,947,000 – 2,003,000.
Refinancing: If the URA refinances this loan to external investors, the unpaid balance on the Revenue Share
must be paid to the City at the time of the close of the refinancing.
Attachment 2
Urban Renewal Authority
Propect South TIF District - The Summit project
Loan from City General Fund to URA
Revenue Sharing - Ongoing Tracking
Year of
Loan Date Agreed Interest Policy Interest
Difference
Owed
50% Revenue
shared
Unpaid Rev
Share Balance
0 6-Nov-13 -
0.17 31-Dec-13 - - - -
1.17 31-Dec-14 134,000.00 300,502.50 166,502.50 166,502.50
2.17 31-Dec-15 136,029.63 257,500.00 121,470.37 287,972.87
3.17 31-Dec-16 132,467.47 251,400.20 118,932.73 406,905.60
4.17 31-Dec-17 128,665.68 244,986.26 116,320.58 523,226.18
5.17 31-Dec-18 124,762.01 238,242.01 113,480.00 636,706.18
6.17 31-Dec-19 120,606.69 231,150.42 110,543.73 747,249.91
7.17 31-Dec-20 116,340.00 223,693.62 107,353.62 854,603.53
8.17 31-Dec-21 111,808.98 215,852.79 104,043.81 958,647.34
9.17 31-Dec-22 107,156.54 207,608.16 100,451.62 1,059,098.96
10.17 31-Dec-23 102,226.43 198,938.93 96,712.50 1,155,811.46
11.17 31-Dec-24 97,164.19 189,823.24 92,659.05 1,248,470.51
12.17 31-Dec-25 91,810.25 180,238.09 88,427.84 1,336,898.35
13.17 31-Dec-26 86,312.82 170,159.30 83,846.48 1,420,744.83
14.17 31-Dec-27 80,508.90 159,561.46 79,052.56 1,499,797.39
15.17 31-Dec-28 74,549.44 148,417.82 73,868.38 1,573,665.77
16.17 31-Dec-29 68,267.92 136,700.29 68,432.37 1,642,098.14
17.17 31-Dec-30 61,818.05 124,379.31 62,561.26 1,704,659.40
18.17 31-Dec-31 55,029.74 111,423.80 56,394.06 1,761,053.46
19.17 31-Dec-32 48,059.51 97,801.07 49,741.56 1,810,795.02
20.17 31-Dec-33 40,733.57 83,476.78 42,743.21 1,853,538.23
21.17 31-Dec-34 33,211.29 68,414.79 35,203.50 1,888,741.73
22.17 31-Dec-35 25,315.14 52,577.10 27,261.96 1,916,003.69
23.17 31-Dec-36 17,207.37 35,923.77 18,716.40 1,934,720.09
24.17 31-Dec-37 8,706.59 18,412.80 9,706.21 1,944,426.30
2,002,758.21 3,947,184.51 1,944,426.30 -
Attachment 3
detrimental
• Parking limitations
• Future Threat; plan well enough or is building obsolete when it
opens? Is this enough space to provide a functional building?
• Future Threat; if we do not create crew space, we lost our
original vision for the effort
LIMITATIONS:
• New construction will have an immediate impact on air and water
quality, and will utilize fossil fuel resources at a higher short-term
rate
• Limited parking forces people to use more fossil fuels while
searching for parking space
• Future Threat; Do not want to lose commitment to
renovating the USC as part of the master plan
•
LIMITATIONS:
• Larger building than originally planned costs more in new
construction
• Utilities will fund project without a rate increase
• Public perception of use of funds for employee building
can be detrimental
• Charge to build an efficient and responsible building
comes with a higher price
• Parking – immediate needs
• Future Threat; plan well enough or is building obsolete
when it opens? Can we afford the building we will need?
• Future Threat; Do not want to lose commitment to
renovating the USC as part of the master plan
• Future Threat; if we do not create crew space, we lost
our original vision for the effort
NOTES: