Title
A Resolution Approving the Issuance of Debt by Copper Ridge Metropolitan District in the form of a General Obligation and Revenue Supported Improvement Loan, series 2023 (Tax-Exempt Bank Loan) in the principal amount of up to $20,770,000.
(Legislative Item)
Presenter:
Mike Tassi, Assistant Director, Planning and Community Development
Peter Wysocki, Director of Planning and Community Development
Body
Summary:
This is a request to approve issuance of additional debt in an aggregate amount of up to $20,770,000 by the Copper Ridge Metropolitan District (“District”) in the form of a General Obligation and Revenue Supported Improvement Loan, series 2023 (Tax-Exempt Bank Loan) to be repaid primarily from the District’s share of PPRTA funding in addition to a combination of property tax and public improvement fee (PIF) revenues. The City’s Special District Policy and the District’s service plan require that City Council’s approval be obtained prior to issuing any debt.
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 Article 7-100.
This District is located in City Council District 2
Background:
Metropolitan districts are created under Colorado Statute and City Policy to finance and maintain certain public improvements primarily utilizing a property tax mill levy as the revenue source. These districts are separate legal entities from the City, but their service plans require City Council approval of all formal debt. The standard of review of the debt instruments is consistency with the Service Plan and all applicable laws.
The Copper Ridge Metropolitan District has undertaken a series of formal new debt or refinancing issuances, beginning in 2013.
This proposed issuance is anticipated to be in the form of a tax-exempt commercial bank loan of $20,770,000 to be used to construct the Voyager bridge over Powers and associated improvements (a PPRTA project). The interest rate will be formally established at the time of closing but is expected to be approximately 6.6%. The term of this additional loan will be up to 4.5 years from closing. The $20,770 is broken down as follows:
• $17,000,000 - project fund - refunded by PPRTA
• $3,000,000 - capitalized interest
• $100,000 - debt service reserve fund
• $670,000 - cost of issuance
The loan will be repaid from the District’s share of PPRTA funding ($17,000,000) existing debt service mill levy of a maximum of 50 mills along with applicable specific ownership tax revenue, and revenue from the currently established 1.00% PIF applicable to sales within the District.
The District’s Service Plan authorizes a maximum of $85,000,000 in indebtedness. With this loan, the District will exceed $85,000,000 in total outstanding indebtedness. However, for the purposes of this limit the service plan specially defines “debt” as not including bonds or loans that are not secured by property taxes. A list of the previous debt issuances is below:
• 2021 Loan - $6,000,000 Promissory Note, payable from a limited mill levy, associated SOTs, and PIF revenue.
• 2019 Bonds - $63,365,000 Tax Increment and Sales Tax Supported Revenue Bonds, Series 2019, payable from TIF and city sales tax increment revenue.
• 2018 Loan - $6,000,000 Promissory Note, payable from a limited mill levy, associated SOTs, and PIF revenue.
• 2016 Loan - $10,000,000 Tax Exempt Promissory Note and $1,250,000 Taxable/Tax Exempt Promissory Note, payable from debt service tax increment revenue, debt service base property tax revenue, SOTs associated with collection of a limited mill levy, and PIF revenue.
Financial Implications:
Pursuant to the District’s Service Plan, the City Special District Policy, and the loan 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. This debt is being arranged with a third-party financial institution, but it has not been actively marketed. A letter will be provided (at closing) by an external financial advisor with an opinion regarding the “fairness and feasibility of the interest rate and the structure of the debt”.
City Charter Article 7-100 requires that the total debt of any proposed district shall not exceed ten percent (10%) of the total assessed valuation of the taxable property within the District unless approved by at least a two-thirds vote of the entire Council.
Previous Council Action:
The District was established by an election in May 2008 following adoption by Council of a resolution authorizing creation of the District (Resolution No. 51-08). In 2010 City Council approved an urban renewal plan for the area where the District is located. In 2013, Council approved an initial debt issuance of $1,850,000 in the form of a general obligation loan (Resolution No, 111-13). In 2014, Council authorized issuance of up to $3,000,000 in debt as an additional loan (Resolution No, 63-14). On June 14, 2016, Council approved issuance of up to $11,250,000 in debt in the form of a limited tax general obligation loan (Resolution No, 61-16). On February 13, 2018, Council authorized issuance of up to $6,000,000 in additional debt in the form of another bank loan (Resolution No. 8-18).
On May 28, 2019, Council approved Resolution No, 52-19 authorizing this debt to be issued an amount not-to-exceed $61,000,000. On September 10, 2019, Council approved a request to increase that authorization to up to $70,000.000 (Resolution 84-19). Council has also approved a number of actions pertinent to the urban renewal designation for this area.
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 stated no concerns.
Stakeholder Process:
N/A
Alternatives:
City Council could choose to approve, deny or modify the proposed resolution.
Recommended Action
Proposed Motion:
Move to adopt a resolution authorizing the issuance of debt by the Copper Ridge Metropolitan District in the form of a General Obligation and Revenue Supported Improvement Loan, series 2023 (Tax-Exempt Bank Loan) in the principal amount of up to $20,770,000
Summary of Ordinance Language
N/A