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 Creekwalk Marketplace Business Improvement District in an amount not to exceed $65,000,000
(Legislative)
Presenter:
Kyle Fenner, Senior Planner, Planning and Neighborhood Services
Body
Summary:
This is a request to approve issuance of debt by the Creekwalk Marketplace Business improvement District (“District”) not to exceed $65,000,000, to be repaid from a combination of limited property tax, public improvement fee (PIF) and property and sales tax increment financing (TIF) revenues. 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. 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.
On October 7, 2024, this item was introduced at a Council Work Session at which time Council was apprised of a request to exclude four (4) parcels currently included in the BID boundaries, to include four (4) parcels into the district and to increase the District’s maximum debt limit from $50,000,000 to $65,000,000 and to issue debt. There is a separate and discrete statutory process Council needs to follow for those requests.
Previous Council Action:
The BID was established pursuant to Ordinance 16-18 adopted by Council on February 23, 2016, which Ordinance approved the initial operating plan and budget ("Operating Plan") for the BID. An additional Council- approved an inclusion of property occurred on September 26, 2017 (Ordinance 17-87). On February 27, 2018 City Council approved an Ordinance 18-10 including more property into this BID. The most recent inclusions of property were approved by Council on March 26, 2019 (Ordinance 19-19). Council approved a debt issuance of $14,300,000 in 2021. The BID's Operating Plan has been approved annually since that time in accordance with Section 31-25-1211, C.R.S., and most recently in October 2023. Council has not approved issuance of any other debt by this BID. The Urban Renewal Authority has reviewed and approved this request.
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 Plan requires City Council approval of all formal BID debt. The standard of review of the debt instruments is consistent with the Operating Plan and all applicable laws. The District’s original 2016 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 which is being requested at this time in a separate resolution.
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 issuance of this debt is generally anticipated in the 2024 Operating Plan as amended and restated and Budget for this BID (as approved by City Council in conjunction with this request.
The draft forms of the bonds are attached. The anticipated interest rate of the Senior Bonds will be approximately 5.75% and the anticipated interest rate of the Subordinate Bonds will be approximately 8.00%. The 2024 Bonds will be repaid by a mill levy of approximately 50 mills per year, subject to adjustment, a 2.5% public improvement fee, and property and sales tax increment revenues. The 2024 Bonds will have a thirty-year term with a maximum repayment period of forty years.
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 and PIF requirements, will not accrue to the property owners or the City.
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 September 24, 2024.
Because there is an overlapping urban renewal area and a pledge of tax increment financing (TIF) revenues, the Urban Renewal Authority Board has been involved in this process. On September 25, 2024, this Board took action to approve the urban renewal TIF pledge subject to the provisions of their cooperation agreement and with the further understanding that the funding of the priority projects subject to that agreement will be funded in total in the event revenues were less than anticipated (for example in the case of a property exclusion).
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 Creekwalk Marketplace Business Improvement District to issue debt in the form of Series A Limited Property Tax and Public Improvement Fee Revenue Bonds not to exceed $65,000,000.
Summary of Ordinance Language: N/A