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MEETING

SEPTEMBER 10, 2014

AGENDA

Date:

September 10, 2014

Time:

11:00 a.m.

Place

City Hall – Pikes Peak Room

107 N. Nevada Ave., Second Floor

Colorado Springs, Colorado 80903

Agenda:

1.

RESOLUTION NO. 3 : RESOLUTION BY THE COLORADO ECONOMIC DEVELOPMENT COMMISSION CONCERNING THE ALLOCATION OF STATE SALES TAX INCREMENT REVENUE FOR THE COLORADO SPRINGS CITY FOR CHAMPIONS PROJECT

2.

Annual Renewal of the Public Entity Liability Insurance Policy

3.

Adjournment

Documents:

COC EDC Resolution Draft — September 14, 2014

Open PDF

CSURA Board Resolution — September 14, 2014

Open PDF

Exhibit A to Draft Resolution

Open PDF


 

THE COLORADO SPRINGS URBAN RENEWAL AUTHORITY

HELD ITS SPECIAL MEETING ON WEDNESDAY SEPTEMBER 10, 2014

AT CITY HALL, PIKES PEAK ROOM

107 NORTH NEVADA AVENUE, COLORADO SPRINGS, CO 80903

In attendance were:

COMMISSIONERS:

Merv Bennett

Tiffany Colvert

Valerie Hunter

David Neville

Robert Shonkwiler

Nolan Shriner

Peter Scoville

Also in attendance:

Carrie Bartow

CliftonLarsonAllen, CPA

Elenna Elliott

Dan Hughes

CSURA Legal Counsel

Anita Miller

Councilman Joel Miller

Jim Rees

Deborah Spout-Meininger

Peter Wysocki

Chairman Neville explained that the purpose of the special meeting was to review the Resolution #3 of the Economic Development Commission regarding City for Champions as well as review the renewal of the CSURA Board’s Liability Insurance Policy which will become due before the next regularly scheduled Board meeting on September 24th. No other business will be discussed.

ITEM 1 – Resolution No.3: Resolution by the Colorado Economic Development Commission Concerning the Allocation of State Sales Tax Increment Revenue for the Colorado Springs City for Champions Project

David Neville reviewed the proposed EDC Resolution (9-4-14) which replaces the July 23rd draft already circulated. The purpose for bringing this to a special meeting is to review the state resolution and acknowledge the terms and conditions of the resolution prior to the EDC final review on Thursday.

David then highlighted the differences between the 7/23 draft and the most current version: A key revision is in section 1. V. shows that the total revenue is capped at 120.5 million and that the financing term for bonds were limited to be maximum of 30 year terms with up to 50 years possible if the bonds are refinanced (the cap remains the same).

A slight change was made to 1.Y. regarding the minimum element allocation percentages (MEAP) for each project element: The US Olympic Museum = 42%, Colorado Sports & Events Center = 23%, UCCS Sports Medicine and Performance Center = 14% and USAFA Visitor’s Center = 5%. Bob Cope indicated that the Office of Economic Development (OED) staff revised the percentages to emphasis that the Olympic Museum is a high priority of the Commission.

Section 4 addresses the role of CSURA as the Financing Entity. Several cash flow diagrams were prepared by the OED staff were passed out to the Board to illustrate how the funds will flow. A Special fund will be established by CSURA to receive the tax increment revenue from the state. Four subaccounts based on the MEAP percentages will then be established to pay expenses incurred by each of the entities. However, since CSURA will incur expenses in establishing and managing the finances, an administrative account will also be established that will cover such costs such as accounting, legal, overhead staffing and administration. The revision to section 4.A. Allows for the funds to be placed in the administrative account prior to going into the subaccounts. Mr. Shonkwiler asked that if something goes wrong with an element are CSURA overhead costs covered regardless? Mr. Bennett asked if there is a cap set on administrative costs. Mr. Neville responded that the purpose of the administrative account is to make sure CSURA is protected from paying the overhead costs without having to wait for reimbursement and that the Resolution does not place a cap on administrative costs. Ms. Colvert wanted to know how much this program is going to cost in administrative costs and will CSURA need to hire additional staff or consultants. At this point it is impossible to tell. It was suggested that CSURA staff confer with Pueblo (previous RTA grant recipient) to see what expenses they have incurred.

Section 5.A. Conditions outlines requirements and time constraints that must be reached and includes a formula as to how the state funds are adjusted if an element isn’t commence or completed. The allocated revenues will be reduced by the MEAP for each project that isn’t started on time. Any funds not spent in the subaccount must be returned as well. Special attention was called to the Olympic Museum which would create an overall reduction of 58% to City for Champions funding (including the 16% flexible account). The other entities are less.

Section 5.E. Notes that CSURA will need to enter into development agreements with entities and the city. Jim Rees indicated that these would be similar to CSURA’s Redevelopment Agreements that are currently used with developers in urban renewal areas. One of the next steps will be to develop these agreements which require legal services to be paid from administrative funds.

Section 5.K. explains that final completion of the Museum and the Event Center will not be considered accomplished until required southwest downtown infrastructure has been completed. The “Required Eligible Improvements” listed in Exhibit B (5) must be completed within the 20 year project period. Both of these downtown projects will require the infrastructure in order to function including the Pedestrian Bridge, appropriate parking facilities, streetscape improvements, utility upgrades and vacation of appropriate right-of-ways. Bob Cope noted that although these are now mandatory there is now flexibility in how to spend money from the 2 projects to pay for infrastructure. Exhibit B must be done as part of the museum project as a practical matter. Jim Rees noted that the space on the list is a formatting issue since the traffic signals were moved to the “Approved but not Required, Eligible Improvements list.

5. L. Describes consequences for noncompletion including the modification of the MEAP formula. It is a complicated formula in regards to bond funds and includes a mandatory redemption to the bond holders. There is no requirement to return any funds that were spent, just the unspent balance. This will make the bonds more saleable and maintains the interest coverage ratio that was set when the bonds were sold. A 6 month grace period will be allowed for final certification before executing the extraordinary bond redemption requirement for the remaining bond proceeds.

6. Reporting and Meetings: The obligations in this section remain unchanged from last draft. Mr. Shonkwiler inquired as to if the Board Chairman and Staff is comfortable that our costs will be compensated for admin, accounting because CSURA’s operating budget can’t absorb these expenses. Chairman Neville returned to section 4A and reiterated that the last part of this section addresses an admin account (this was added at CSURA’s request). As an example an Economic analysis is required and CSURA will need to be contract for this as we don’t have the ability to do this in house. A comment was made that a lot of money will be spent on reports that could be used on projects.

7.0 Bonds: A recent change that OED staff is suggesting be made is that the last paragraph will be removed and a new section added to section 8. This will most likely occur during the Commission meeting on Thursday. 7D may be revised because it doesn’t make sense from a bond standpoint. The Commission could make additional changes at the EOC meeting as well.

8.C. Certification: The finance entity is required to certify that construction costs are reasonable. The section was revised to allow the financing entity to rely on a statement by the project element sponsor’s engineer to certify to the URA Board regarding costs. It was suggested that CSURA require this as part of development agreements between URA and the entities.

Board Discussion

Mr. Bennett inquired as to the requirement to complete the southwest URA infrastructure requirements. Are these expenses part of the museum budget or who pays for it? Bob Cope responded that the museum is aware that they will be responsible for it (this will add the 5 bullet points from exhibit B to the museum budget). A redevelopment agreement between CSURA and the Museum Board will need to address this. Mr. Bennett insisted that the Board doesn’t want CSURA to be responsible for completing these. Chairman Neville responded that the Southwest Downtown URA infrastructure is separate from these requirements and that there will be additional improvements made through local tax increment financing generated from the redevelopment area. The boundaries of the Southwest Downtown URA may change from the currently adopted plan.This will require Council action along with resetting of the tax increment period(s). Mr. Shonkwiler asked whether the City Parking Authority would be involved with developing parking in the area. It was noted that The Resolution doesn’t specify who is required to build parking. 25% of the allocation of the event center and the museum can be used for it but is not required.

Mr. Shonkwiler noted that a huge amount of work has been done to reach this point. He offered kudos to those involved from the City, David, Jim, Bob, Dan, the City Attorney and others. Nolan reminded the board that this is a starting point and there are more details to work out since we don’t have a plan yet. Mr. Shonkwiler wanted to know if the CSURA Board will see final changes made by commission. Jim explained that The Board will receive the final signed version if it is approved on Thursday.

Chairman Neville stated that the CSURA resolution to be considered at this meeting allows the Chair to sign the EDC Resolution based on the final changes. He reaffirmed that he won’t sign the resolution until we are satisfied with the final changes. Some other possible changes include: 7B requirement on private placement financing that requires the external financial advisor opinion is not the bond underwriter but someone totally independent. The opinion is required to insure that the interest rate for the loan is a reasonable interest rate and not a windfall; a new section 8F which hasn’t been finalized at this time.

Public Comments

1) Joel Miller: Commented that today’s discussion was not a lot of time for the Board to discuss this important agreement. He stated that the Mayor and URA are the publics’ representative and the board should make sure it’s a fair deal before they sign. He noted that 25% of the museum and stadium goes to pay for infrastructure estimated at $130 million with no requirement for state to pay it. The City must come up with any shortfall. Mr. Miller said that the Resolution allows URA to be owner of improvements and wondered whether the Board was aware that it could own assets.

2) Deborah Spout-Meininger: Asked about paying for other upfront costs including the mitigation of contamination around the old gas building area. Nothing about that appears in the Resolution. She stated that the contamination extends for 5 city blocks according to a 2011 study. She wanted to know if the project involves moving the train tracks. Denver spent $700-800 million to do that in downtown. She indicated that she didn’t see that listed as a cost. All the mitigation should be in upfront costs.

Chairman Neville clarified that URA ownership of property is allowed under the law but probably not desired by the Board.

Jim Rees explained that any required environmental mitigation would be part of any project cost not a separate project and could be hauled off to an approved waste management site. Mr. Bennett had read the environmental report and stated that the contamination is only on the west side of tracks where coal tar was deposited. The museum and event center projects aren’t near there.

Anita Miller (public comment) asked at what meeting was the decision about URA only handling state increment made? Mr. Neville responded that it had been decided at an Advisory Board meeting. The handling of any local funds has not yet been decided.

The Board asked what the next steps were for adoption of the EDC Resolution. Bob Cope indicated that the Commission is scheduled to meet on Thursday and will do a page by page review and may approve it with changes as discussed. After approval the document will be redrafted to include the approved changes and it will be signed by the State, City and CSURA. MS Hunter requested that in addition to the final Resolution a breakdown of the changes as bullet points to highlight changes be provided to the Board. Mr. Rees will do that after he receives the revised document.

There being no further discussion, a motion to adopt the Resolution of the Colorado Springs Urban Renewal Authority approving the resolution by the Colorado Economic Development Commission concerning the allocation of state sales tax increment revenue for the Colorado Springs City for Champions Project was made by Mr. Shriner and seconded by MS Colvert, The motion was approved unanimously.

Item 2 - Annual renewal of the Public Entity Liability Insurance Policy

Director Rees explained that the policy coverage is the same as the last year but the premium is lower. The coverage remains $2million based on $300,000 operating budget. The insurance agent tried to get quotes for higher coverage but was unable to. City for Champions may increase the operating budget and CSURA can renegotiate the rate when that occurs. Mr. Shonkwiler requested that we not wait until 2015 renewal if the budget increases before that. Administrative funds from City for Champions (see item #1 above) can pay for the increased insurance costs attributable to the RTA project. No motion was made.

There being no further business:

A Motion to adjourn was made by Mr. Shonkwiler and a second provided by Mr. Scoville. The Motion Carried 7-0

Meeting adjourned at 12:55 PM

Next meeting: September 24, 2014

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