Item #3 – Vineyard Data Park URA Overview – Vince Colarelli and Arne Ray
Mr. Colarelli stated that he, his team and the CSURA staff had been diligently working on the draft Redevelopment Agreement for the Vineyard project. The draft document is currently being reviewed by the project partners. Mr. Colarelli then proceeded to review the project stating it was a 105 acre site with 64 acres developed for the data center campus with anticipated build out of 800,000 sq. ft. in 5-10 buildings depending on the user needs. The remainder of the site will be dedicated to the City as part of the Pikes Peak Greenway trail and open space. All the companies being courted for this project as customers are Fortune 500 companies in good standing.
The project is expected to generate $1 billion in new development in Colorado Springs as well as attract new companies to invest in our City. The project will clean up a large blighted area and implement additional parks and multi-use trails. Additional long-term revenue will be realized through the sale of large amounts of energy. The data center buildings are expected to use 22,000 watts per square foot of utilities due to the huge data banks required. This is far beyond other average commercial building energy usage.
The economic impact of this project has the potential to create 300-400 permanent jobs with the possibility of $15-20 million in annual personal income. There is an anticipated need for 700-800 construction jobs that will add as much as $40 million to the region’s economy annually. This project will attract telecom/technology jobs that are in the upper income range for our region. By developing a data center business park, Colarelli and area economic development officials have said they hope to brand the Springs as a data center magnet — attracting Fortune 500 companies and hundreds of millions of dollars worth of economic activity into the area.
Mr. Colarelli went on to state that Urban Renewal plays an important part in bringing this project to fruition. It will assist with the high cost of extraordinary infrastructure needs such as multiple power sources, updating the telecom service providers, assisting with “green” solutions within the project. The tax increment financing tool available within this urban renewal area will assist in making this project feasible and beneficial to the City of Colorado Springs and its’ citizenry.
The site was annexed into the City in 2007 and has one owner, the developer. One 75,000 sq. ft. building has been fully approved. The developer anticipates announcing his capital partner by the end of the month with construction to begin in the second quarter of 2012 for Phase 1 of the infrastructure. He is also expecting to finalize the leases of initial companies and begin structure construction this year. Occupancy of the first building is expected by the spring of 2013.
Mr. Arne Ray, financial analyst for the project on behalf of CSURA, presented the financial package for this very ambitious project. He summarized his background and experience and then explained the very complicated finance plan.
Commissioner Hente departed the meeting at 12:27 p.m.
Mr. Colarelli and his financial investor will pay for much of the $75 million in improvement costs, such as extending power lines to the site, installing telecom lines, improving roads, etc. They will be reimbursed for much of their upfront costs through tax increment financing by the Urban Renewal Authority, but will end up being responsible for about $21 million worth of the improvements.
It is expected that of the $54.2 million in remaining costs, $20.4 million will be funded by a metropolitan district (bonds) and $33.8 million will be funded by the City’s Urban Renewal Authority, which will issue bonds for its share of the improvements. There will also be a special, per-square-foot, public improvement fee (PIF) that will be assessed on property owners within the district. Revenues from the metro district property tax and public improvement fee will pay 75 percent of the $54.2 million; the increased property tax revenue generated by new development will pay the other 25 percent.
The Urban Renewal Authority won’t issue bonds until property tax revenues generated by the project have reached a point where they cover 135 percent of the Authority’s annual bond payments. This has been included in the finance plan as a safe guard for CSURA. It is anticipated that the Authority will not issue bonds until at least 2016. The Authority’s payments to cover public improvement costs incurred by the developer will end by 2036 (expiration of the URA) and perhaps before.
Commissioner Raughton asked why it was necessary to implement a PIF. It was explained that currently legislation for the metropolitan district does not provide for reimbursement for utility infrastructure and that the legislation is based on older project models. Commissioner Raughton requested that the legislation be reviewed and perhaps an initiative be made to update the legislation. CSURA staff stated that they would have the City’s legislative liaison look into the matter as well as the Colorado Municipal League, who would usually handle such a request.
Extensive discussion occurred concerning details on the sale of the project bonds. Both Arne Ray and Paul Benedetti (legal counsel for the developer) shared their insight and fielded questions by Authority members.
Item #4 - URA Impact Report - Anne Ricker
Ms. Ricker distributed copies of the final draft of the Colorado Springs Urban Renewal Authority’s Impact Report. She shared some very impressive statistics such as: over 2,000 permanent jobs have been created through the CSURA projects that generate over $90 million in annual personal income to date. There has been $60 million in public investment spent that generated $125 million in private investment; more than double the return. To date there have been 377 residential units built and over 660,000 sq. ft. of commercial space developed along with multi-use trails and parkland.
Ms. Ricker reviewed each active project sharing what the investment outcome was to date and where it will be upon build out. She also reported on the additional tax revenue generated by these projects that is received by the City at build out will be an estimated $542 million. Also, there is newly generated tax revenue for public safety, trails and open space and transportation that totals over $8 million on an annual basis right now. None of these special taxes are captured by CSURA; they go directly into supporting our City government and benefitting the citizens of Colorado Springs.
The CSURA Impact Report will be presented to City Council and the City Administration as soon as the report is in final format and ready for public distribution.
Item #5 – North Nevada Avenue Project Update
Mr. Jim Rees reported that the University Village of Colorado developers, UCCS and CSURA have all agreed to partner in paying for the contract to update the North Nevada Corridor Master Plan in the amount of $33,500. The Master Plan will outline and implement specifics concerning the development of the corridor. CSURA’s share will be $11,500.
There being no further discussion Commissioner Palermo presented: