Title
A Resolution approving the issuance of debt by the Old Ranch Metropolitan District of a Privately Placed Revenue Bond, Series 2025, in the estimated principal aggregate amount of $40,000,000
Related Items: N/A
Council District #2
Presenter:
Allison Stocker, Senior Planner, City Planning Department
Kevin Walker, Planning Director, City Planning Department
Body
Summary:
This is a request to approve an issuance of formal debt in an aggregate amount not to exceed $40,000,000 by the Old Ranch Metropolitan District (“District”). 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. The issuance of this debt will be in the form of a privately placed revenue bond to be issued through the District’s Old Ranch Park and Recreation Activity Enterprise (“the enterprise”). The timing of the proposed bond is to support the funding of a new recreational facility within the Wolf Ranch community.
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.
Background:
The Old Ranch Metropolitan District was created in 2002 and has since amended and restated the Service Plan in 2006. The purpose of the District is to finance site improvements such as park and recreation, stormwater, landscaping, snow removal, etc. The District was created simultaneously with the Upper Cottonwood Creek Metropolitan District. Since that time, there have been further amendments to the Upper Cottonwood Creek Metropolitan District including the consolidation of Upper Cottonwood Creek Metropolitan Districts Nos. 2, 3, 4, and 5.
Since the District’s service plan was adopted in 2006, it follows different maximum mill levy limits than the City’s current Model that was adopted in 2022. As such, the maximum debt mill levy for residential land uses was limited to 16.5 mills and the operations and maintenance mill levy was limited to 3.5 mills per the policy at the time. Both mill levies are to be calculated based on the assessment values from on or after January 1st, 2006. The maximum pre-authorized debt for the Old Ranch Metropolitan District is $72 million dollars, which the District has already utilized.
The Old Ranch Metropolitan District is somewhat unique in that it acts primarily to the benefit of the Upper Cottonwood Creek Metropolitan Districts and does not presently have any development of its own within its boundaries. The District was organized to manage and facilitate functions and amenities that are shared broadly across the various Upper Cottonwood Creek Metropolitan Districts. For instance, the District manages the shared parks and recreation, landscape installation and maintenance, community-wide snow removal, and development wide stormwater facilities. This arrangement simplifies the acquisition of services and coordination of maintenance across Wolf Ranch. In return, the Upper Cottonwood Creek Metropolitan Districts transfer their property tax revenue to the Old Ranch Metropolitan Districts to fund these activities. This relationship between the Districts is managed through an intergovernmental agreement (IGA).
The proposed debt issuance in the form of a privately placed revenue bond will be completed through the District’s Old Ranch Parks and Recreation Activity Enterprise (“the enterprise”). Similar to how enterprises operate within the City (ex. the Development Review Enterprise or Colorado Springs Utilities), the enterprise can take on debt that can be repaid through service fees. The enterprise’s issuance of debt does not count toward the maximum general obligation debt authorization that the District is held too, but the enterprise does require City Council’s consent to issue the requested debt.
The proposed Recreation Center received development plan approval on November 27th, 2023 (refer to Attachment F - PUDD-23-0049 extracted pages), and has since gone on to building permit processing. At this time, the construction drawings are at 50% completion and will be submitted to Pikes Peak Regional Building Department to continue that process. The Recreation Center will consist of a 30,600 square foot facility and a 4,900 square foot leasing center. Other improvements include a lap pool, splash pad, a terraced amphitheater, pickleball and volleyball courts, and other outdoor amenity areas. The Recreation Center will be funded through fees imposed on landowners within the District.
All landowners were notified or will be notified of the associated fees when they purchase homes within Wolf Ranch. These fees are detailed in the Community Charter and Community Covenant, so any potential landowner will be made aware at time of purchase and the information would be further included in their property’s title work. Some properties within Wolf Ranch already pay fees that go toward existing recreational facilities, and in the case of those property owners, they have been notified that upcoming fee increases will begin in order to fund this new facility. All the recreation fees imposed on the landowners will be paid to the Homeowner’s Association, who will remit these fees to the enterprise for payment toward the revenue bonds.
Since the Old Ranch Metropolitan District does not have any residents within its boundaries, there is no resident representation on the District’s Board. However, Upper Cottonwood Creek Metropolitan District No. 2 does have resident board members and there is additional resident participation through the various Homeowner’s Associations affiliated with the Metropolitan Districts. The addition of this new recreation facility within the Wolf Ranch Community is expected to positively impact property valuation and will provide better access to outdoor community spaces and recreation opportunities in a part of town that is still developing.
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 “limited default” provisions required by the City’s Special District Policy. These bonds will be marketed to third party investors.
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.
Board/Commission Recommendation:
N/A
Stakeholder Process:
The staff-level Special District Committee has been provided with access to these materials associated with this request. As of the date of this staff report, there have been no comments or questions from the Committee on this request.
Previous Council Action:
The Wolf Ranch Master Plan was approved in 2001. In 2002, City Council first approved a joint service plan for the Upper Cottonwood Creek and Old Ranch Metropolitan Districts (Resolution 144-02). Council approved a consolidated service plan for the Upper Cottonwood Creek Metropolitan District Nos. 2, 3, 4 and 5 on March 28, 2006 (Resolution 38-06). On March 22, 2016, Council approved an Amendment to Service Plan to increase the Maximum Operating Mill Levy for Upper Cottonwood Creek Metropolitan District Nos. 3, 4, and 5 from 10.0 mills to 20.0 mills for so long as District Nos. 3, 4, and 5 continue to provide their respective current levels of service (Resolution 30-16). On March 9, 2021, Council authorized issuance of $5,095,000 in debt by this District (Resolution 31-21). On October 26, 2021, Council approved a second service plan amendment which modified the structure of these Districts and reallocated maximum debt limits among the Districts. In 2022 Council authorized as second issuance of $5,530,000 in debt by the District (Resolution 31-22). A subsequent debt issuance for $4,115,000 for Upper Cottonwood Creek Metropolitan District No. 3 (Resolution No. 40-23) and approval of $23,375,000 for Upper Cottonwood Creek Metropolitan District No. 4 was approved in 2023 (Resolution No. 41-23).
Alternatives:
City Council has the options of approving or denying the issuance of debt. Council could also continue the item with specific directions provided to staff and the petitioners.
Recommended Action
Proposed Motion:
Move to adopt a resolution approving the issuance of debt by the Old Ranch Metropolitan District Privately of a Placed Revenue Bond, Series 2025, in the estimated principal aggregate amount of $40,000,000