Title
A Resolution of the City Council of the City of Colorado Springs, Colorado, Approving the Issuance of Limited Tax General Obligation Bonds by First and Main Business Improvement District No. 2 in an Amount not to Exceed $1,484,000.
Presenter:
Allison, Senior Planner, Planning Department
Kevin Walker, Director, Planning Department
Body
Summary:
This is a request to approve issuance of debt by the First & Main 2 Business improvement District (“District”) in the form of Series 2025 Limited Tax General Obligation Bond, to be repaid from a combination of limited property tax, Public Improvement Fees (PIF), and intergovernmental expenditures with First & Main and First and Main North Business Improvement District. The Bond will be in the approximate principal amount of $1,484,000.00 and will have an interest rate of seven (7) percent. The requested bond amount would be approximately 7% of the maximum debt amount authorized at this time. 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.
This item will be presented for action at the April 8th, 2025, City Council meeting.
Previous Council Action:
The First and Main BID No. 2 was established by election in late 2008 following approval by Council on September 9, 2008. The budget and Operating Plan for this BID has been approved annually since that time; most recently in October of 2024. In February of 2009 Council approved the issuance by this District of $2.4 Million in Limited Tax General Obligation Bonds, and those bonds were subsequently issued. On October 26, 2010, Council further approved the issuance of Public Improvement Fee Revenue Bonds, Series 2010 in an amount not to exceed $2,000,000. These bonds were issued in January of 2011. Additionally, there were changes in Governance which were approved by Council via Ordinance 14-17 in February 2014, and an inclusion in 2018 via Ordinance 18-34.
Background:
BIDs are created under Colorado Statute and City Policy to finance and/or maintain certain public improvements in non-residential areas, utilizing 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 consistent with the Operating Plan and all applicable laws. The District’s original 2008 Operating Plan and Budget and subsequent annually approved Operating Plan and Budget stipulate a maximum of $55,000,000 in indebtedness and was amended in 2009 to reduce the maximum indebtedness to $20,000,000. Per the 2025 Operating Plan, the current debt service is approximately $758,193, and when combined with the requested bond issuance is within its permitted pre-debt authorization allowance.
This BID is authorized to levy up to 50.0 mills for debt service, and 1.0 mills for operational purposes, and these mill levies are currently in place for properties within this BID.
The issuance of this debt was not anticipated in the 2025 Operating Plan and Budget for this BID (as approved by City Council in October 2024). However, the 2025 Operating Plan did anticipate pledging revenue to binds anticipated to be issued by First & Main Business Improvement District. The proposed bond issuance is to support public improvements within the district and are anticipated to include parking, drainage, landscaping, and street facilities.
The draft forms for the bond are attached. The anticipated interest rate of the Series 2025 Bond will be approximately 7.00%. The 2025 Bonds will be repaid by a mill levy of approximately 50 mills per year, subject to adjustment, and property and intergovernmental revenue sharing with First & Main and First & Main North Business Improvement District. The 2024 Bonds will have a thirty-year term with a bond maturity date of December 1st, 2055.
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.
Board/Commission Recommendation:
The City’s staff-level Special District Committee has been provided with copies of these materials. All comments received have been in support and/or with no stated concerns.
Stakeholder Process:
N/A
Alternatives:
City Council could choose to approve, deny or modify the proposed resolution.
Recommended Action
Proposed Motion:
Move to approve the Resolution of the City Council of the City of Colorado Springs, Colorado, Approving the Issuance of Limited Tax General Obligation Bonds by First and Main Business Improvement District No. 2 in an Amount not to Exceed $1,484,000.
Summary of Ordinance Language N/A