Title
A Resolution of the City Council of the City of Colorado Springs, Colorado approving the issuance of tax supported and special revenue bonds by the Gold Hill North Business Improvement District
(Legislative)
Presenter:
Kyle Fenner, Senior Planner, Planning and Neighborhood Services
Kevin Walker, Interim Director, Planning and Neighborhood Services
Body
Summary:
This is a request to approve issuance of debt by the Gold Hill North Business Improvement District (“District”) in the form of Series A and Series B 2024 bonds, to be repaid from a combination of property tax and tax increment financing (TIF) revenues. The Series A bonds will be in the approximate principal amount of $18,110,000 at 6.5% and the Subordinate Series B bonds will be in the approximate principal amount of $2,996,000 and an anticipated rate of 8.75%.
The 2024 Bonds will be repaid by a debt service mill levy not to exceed 50.0 mills per year, subject to adjustment, and Tax Increment Financing (TIF) revenues from the Colorado Springs Urban Renewal Authority (“CSURA”). The 2024 Bonds will have a 30-year term and will mature in 2054.
The City’s Special District Policy and the District’s approved Operating Plan and Budget require that City Council’s approval be obtained prior to issuing any debt that exceeds 10% of the District’s assessed valuation. Approval of this debt issuance will require a 2/3rds majority of the entire City Council (at least six affirmative votes) pursuant to City Charter Section 7-100.
This item will be presented for review at the September 9, 2024, City Council work session.
This item will be presented for action at the September 24, 2024, regular City Council meeting.
Previous Council Action:
The Business Improvement District (BID) was established pursuant to Ordinance 21-62 adopted by Council on August 10, 2021, which approved the initial operating plan and budget ("Operating Plan") for the BID.
Background:
BIDs are created under Colorado Statute and City Policy to finance and/or maintain certain public improvements in non-residential areas, utilizing a property tax mill levy as the revenue source. BIDs are separate legal entities from the City, but their Operating Plans and the Special District Policy require City Council approval of all formal BID debt. The standard of review of the debt instruments is consistency with the Operating Plan and all applicable laws. The District’s original 2021 Operating Plan and Budget and subsequent annually-approved Operating Plan and Budget stipulate a maximum of $50,000,000 in indebtedness unless the District obtains City Council’s approval of an amendment to the Operating Plan.
This BID is authorized to levy up to 50.0 mills for debt service, and 10.0 mills for operational purposes, and these mill levies are currently in place for properties within this BID.
The draft forms of the bonds are attached.
The term of these bonds will be 30 years, with a final maturity date of 2054. The improvements to be financed have been selected from among a larger list of costs determined by the District to be eligible for reimbursement. These costs predominantly consist of parking, street, sidewalks and curb, streetlights, landscaping, pavement, and water line improvements. In determining eligibility of public improvements for reimbursement, it is noted that a cooperation agreement is place which requires, giving the Urban Renewal Board authority to sign off on each requisition.
Financial Implications:
Pursuant to the District’s operating plan, the City Special District Policy, bond documents, the issuance of this debt does not constitute a financial obligation of the City. The documents will contain the limitations required by the City’s Special District Policy. City Charter Section 7-100 provides that the total debt of any special district may not exceed ten percent (10%) of the total assessed valuation of the taxable property within the district unless such debt is approved by at least a two-thirds vote of the entire Council.
The bond documents are structured so that any risk beyond the maximum capped mill levy, the associated specific ownership tax as well as the TIF requirements, will not accrue to the property owners.
Board/Commission Recommendation:
The City’s staff-level Special District Committee has been provided copies of these materials. All comments received have been in support and/or with no stated concerns.
This item was presented to the City Council Budget Committee on August 27, 2024.
Because there is an overlapping urban renewal area and a pledge of TIF revenues, the Urban Renewal Authority Board must be involved in this process.
Stakeholder Process:
N/A
Alternatives:
City Council could choose to approve, deny or modify the proposed resolution.
Recommended Action
Proposed Motion:
Approval - Move adoption of the resolution authorizing the Gold Hill North BID General Obligation Bonds, Series 2024A and Subordinate Bonds, Series 2024B in the approximate amounts of $18,110,000 and $2,996,000.
Denial - Move denial of the resolution authorizing the Gold Hill North BID General Obligation Bonds, Series 2024A and Subordinate Bonds, Series 2024B in the approximate amounts of $18,110,000 and $2,996,000.
Summary of Ordinance Language N/A