Title
A Resolution of the City Council of Colorado Springs, Colorado Approving the Proposed 2024 Operating Plan and Budget for the Creekwalk Marketplace Business Improvement District
Presenter:
Peter Wysocki, Director, Planning and Community Development
Michael Tassi, Assistant Director, Planning and Community Development
Body
Summary:
The Creekwalk Marketplace Business Improvement District (BID) is a legal entity separate from the City of Colorado Springs. However, as required by State statute, it is necessary for City Council to review and approve the proposed 2024 Operating Plan and Budget for the BID.
The Operating Plan and Budget for this BID anticipates increasing its mill levy in 2024 and provides two different mill levy and budget scenarios depending on whether Proposition HH passes or does not pass. If Proposition HH is not approved at the November 7, 2023, election and relevant provisions of Senate Bill 23-303 do not go into effect, the District anticipates imposing 10.394 mills for operations and maintenance and 51.971 mills for debt service in 2024. If Proposition HH is approved by voters, the District anticipates imposing 10.412 mills for operations and maintenance and 52.064 mills for debt service in 2024. The Operating Plan and Budget advises this BID may refund existing bonds and issue additional bonds in 2024 and continue with Creekwalk North improvements as previously anticipated which will result in additional assessed valuation as anticipated in the bond financing plans. The District does not anticipate any boundary changes in 2024 but does note that there could be inclusions and exclusions in future years.
Background:
The initial boundaries of this development-specific BID were established pursuant to an election in 2016 with additional properties added in 2017, 2018, 2019, 2021 and 2023 for total of approximately 9 acres. As stated in the Operating Plan, the BID does not anticipate any inclusion or exclusion requests in 2024, but there could be inclusion or exclusions in future years. Under State statute, any such inclusions must be approved by separate City Council ordinance. This BID has a 5-member elected board comprised of individuals associated with this redevelopment project. The District is authorized to provide the acquisition and financing of improvements, construction of improvements, operation and maintenance of parking facilities, roadways, lighting, driveways, public utilities, and landscaping.
Pursuant to the Urban Renewal Plan, the City-Authority Agreement, the Redevelopment Agreement, and the Cooperation Agreement, dated July 26, 2019, with the Colorado Springs Urban Renewal Authority ("CSURA"), the District will receive tax increment financing ("TIF") generated from the urban renewal area to be used toward the repayment of the District's bonds.
This Operating Plan and Budget is provided in a format consistent with the standard template approved by Council in August 2022 for these documents.
Previous Council Action:
City Council approved the creation of this BID in 2016 (Ordinance No. 16-18). Council subsequently approved ordinances to include additional property on September 26, 2017 (Ordinance No. 17-87), February 27, 2018 (Ordinance No. 18-10), and March 12, 2019 (Ordinance 19-19). In May 2019 Council denied a petition requesting exclusion of a property from this BID that had previously been voluntarily petitioned for inclusion. Following this decision Council approved the issuance of debt in principal amounts of approximately $18,145,000 as Series 2019A and $3,030,000 as subordinate Series 2019B Limited Tax Supported and Special Revenue Bonds (Resolution No. 51-19). In November 2021 Council approved the inclusion of certain property into the boundaries of the District (Ordinance No. 21-93), and the issuance of additional debt in principal amounts not to exceed $16,500,000 (Resolution 188-21). In August 2023 Council approved the inclusion of two parcels within the BID that are not contiguous to other parcels within the District, however, are connected to the BID based on the various redevelopment efforts along the Nevada corridor (Ordinance 23-44). The two parcels in the 2023 inclusion are not within the URA and do not have any relation to URA activities or tax increment financing.
This item was introduced in a City Council Work Session on October 9, 2023.
Financial Implications:
The District issued $24,230,000 as Series 2019A and $2,500,000 as subordinate Series 2019B Limited Tax Supported and Special Revenue Bonds with interest rates of 5.0% and 8.0% respectively (for a total of $26,730,000). These bonds were issued for the intended purpose of construction of capital improvements with a public purpose necessary for development. On December 23, 2021, the District issued Series 2021A Limited Tax Supported and Special Revenue Senior Bonds in the principal amount of $11,040,000 and its Series 2021B Tax Supported and Special Revenue Subordinate Bonds in the principal amount of $2,500,000 with interest rates of 5.0%-5.75% and 8.0% respectively. The District anticipates they may refund existing bonds and issue additional bonds in 2024.
The Operating Plan and Budget for this BID anticipates increasing its mill levy in 2024 and provides two different mill levy and budget scenarios depending on whether Proposition HH passes or does not pass. If Proposition HH is not approved at the November 7, 2023, election and relevant provisions of Senate Bill 23-303 do not go into effect, the District anticipates imposing 10.394 mills for operations and maintenance and 51.971 mills for debt service in 2024. If Proposition HH is approved by voters, the District anticipates imposing 10.412 mills for operations and maintenance and 52.064 mills for debt service in 2024. Both scenarios represent an increase from 2023 which was 50.000 mills for debt service and 10.000 mills for operations. This BID also levies a public improvement fee (PIF) of 2.5% on the sale of goods and services. For 2024, $360,000 in PIF revenues are projected. This District will also receive tax increment financing (TIF) generated from the Districts projects to be used toward the repayment of the District’s bonds. For 2024, $95,784, in CSURA TIF Revenues are projected. In 2024 the District is anticipating the collection of $153,000 in CAM (Common Area Maintenance) Revenue to offset the additional operations and maintenance expenses in 2024.
The District has estimated an outstanding developer advance balance of $6,902,171 at the end of 2023, which accrues interest at a rate of 8% for advances for operations and 6% for infrastructure. As of December 31, 2023, the accrued interest on the developer advance balance is expected to be $617,861. The 2024 budget includes an additional developer advance to fund operations of $118,651, $122,000 for common area maintenance, and $2,086,743 for capital projects for a total of $2,312,021.
Staff notes that the 2024 budget does not include Bond Principal payments as outlined in the debt schedule, and the full Bond Interest payments are underbudgeted as well. The District notes within the budget that Surplus Funds and Reserve Funds have been utilized to cover the debt service payments, and that they may refund the existing bonds and issue additional bonds in 2024.
As a separate legal entity, the financial activities of the BID are separate from those of the City. Any financial obligations are specifically associated with the properties within the BID boundaries and do not constitute an obligation of the City.
City Council Appointed Board/Commission/Committee Recommendation:
The BID Board of Directors recommends City Council’s approval of the 2024 Operating Plan and Budget.
Stakeholder Process:
N/A
Alternatives:
N/A
Recommended Action
Proposed Motion:
Move to approve the Resolution approving the proposed 2024 Operating Plan and Budget for the Creekwalk Marketplace Business Improvement District.
Summary of Ordinance Language
N/A