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HomeMy WebLinkAboutStudy Session Agenda Packet 02-13-17SPECIAL STUDY SESSION AGENDA CITY COUNCIL CITY OF WHEAT RIDGE, COLORADO 7500 W. 29th Ave. Wheat Ridge CO February 13 . 2017 Upon adjournment from Regular City Council Meeting Individuals with disabilities are encouraged to participate in all public meetings sponsored by the City of Wheat Ridge. Call Sara Spaulding, Public Information Officer at 303-235-2877 at least one week in advance of a meeting if you are interested in participating and need inclusion assistance. Agenda Approval .:L. Renewal of Urban County IGA with Jefferson County 2. 2E Bonding Discussion ADJOURNMENT .~·, ... City of ~Wheat&__,dge ~OMMUNITY DEVELOPMENT TO: FROM: DATE: SUBJECT: Memorandum Mayor and City Council Ken Johnstone, Community Development Director Lauren Mikulak, Senior Planner February 1, 2017 (for February 13 Study Session) Renewal of Urban County IGA with Jefferson County ;C+e~ /, Since the mid-1990s the City has partnered with Jefferson County and neighboring municipalities in the federal Community Development Block Grant (CDBG) and Home Investment Partnership (HOME) programs. This partnership is called the "Urban County," and through the partnership the City not only participates in the allocation of CDBG and HOME funds, but also is an eligible applicant for funds. The City is currently operating under an Intergovernmental Agreement (IGA) with Jefferson County that was originally approved in 2011 and was renewed and amended in 2014. Per federal Housing and Urban Development (HUD) guidelines, an Urban County designation must be requalified every three years. This requalification process triggers renewal of the IGA. The purpose of this memo is to provide background information on the Urban County partnership, to provide an update on the upcoming 201 7 renewal process, and to request confirmation of the Council's desire to continue participating in the Urban County. Background HUD's allocation ofCDBG and HOME funds is determined annually and is based on populations in eligible low-to-moderate-income census tracts. Because Wheat Ridge does not meet minimum population thresholds, the City does not receive a direct allocation of funds from the federal government. As such, Wheat Ridge participates in an IGA along with other small communities in Jefferson County and with the unincorporated areas to share the County's allocation. This partnership of jurisdictions is called the Urban County, and the municipal members are called "participating jurisdictions." The Jefferson County Board of County Commissioners (BOCC) is the designated administrator of HUD funds and the county's Human Services Department provides staff support in managing the funds. The City, along with other participating jurisdictions, community and faith-based organizations, and non-profit entities may apply to the County for CDBG funds on an annual basis. These applications are reviewed by the Community Development Advisory Board (CDAB), which includes Jefferson County citizens, county staff, and staff from participating jurisdictions. The City of Wheat Ridge is represented by Community Development staff, namely Ken Johnstone and Lauren Mikulak. Study Session Memo -Urban County Renewal February 13, 2017 Page2 The goals of the CDBG program are to ensure decent, affordable housing; to provide services to vulnerable populations in a community (low-to-moderate-income, senior, etc); and to create jobs through the expansion and retention of businesses. CDBG funds may be used for a wide variety of programs, activities, and services. In recent years, these funds have been awarded to projects and programs in the Urban County that relate to housing and are consistent with the goals of the County's Consolidated Plan and the goals of the BOCC. The CDAB makes recommendations to the BOCC for projects to be funded. The purpose of the HOME program is to fund a wide range of activities that help build, buy and/or rehabilitate affordable housing for rent or ownership and/or to provide direct rental assistance to low-income persons. HOME is the largest federal block grant to state and local governments designed exclusively to create affordable housing. Because of the unique nature and timing of HOME funds, applications are vetted by County staff as they are received so CDAB does not review and recommend. By participating in the Jefferson County partnership, the City is not eligible to compete for HUD funds from the state's allocation, but the City benefits from the partnership in both direct and indirect ways. The Fruitdale Lofts project was awarded $680,000 in HOME funds, and the Housing Authority has been awarded CDBG and HOME funds on several occasions for their single-family rehabilitation program. Because grant recipients are required to spend funds within the Urban County, many recipients offer programs and services that operate in Wheat Ridge and/or serve City residents. This includes Jefferson County Housing Authority, Brothers Redevelopment Inc, Senior Resource Center, The Action Center, Colorado Housing and Finance Authority, and Colorado Housing Assistance Corporation, among others. In addition, as a member of CDAB, the City has a voice in the allocation of Urban County funds. Requalification Process At the end of February, county staff will briefthe Board of County Commissioners on the 2017 CDBG funding recommendations and will request BOCC support the renewal of the Urban County designation. As noted above, the Urban County partnership is renewed every three years. The 2014 IGA amendment included a provision for auto-renewal of the IGA, but all participating jurisdictions are asked to confirm their desire to participate. Typically, the requalification process begins in May and is finalized by September. The process includes formal notification from HUD to the County, formal notification from the County to participating jurisdictions, and renewal or amendment of the Intergovernmental Agreement. Next Steps At the February 13 study session, Council will be asked to confirm their continued support for participation in the Urban County. If participation is desired, staff recommends that a letter of support be signed by the Mayor and directed to the BOCC for consideration at their upcoming meeting. If the Urban County is continued, the IGA will be presented to City Council later this year. ~''" .. . City of ~Wheat~dge ~OFFICE THE CllY MANAGER TO: FROM: DATE: SUBJECT: Memorandum Mayor and City Council ~}.. Patrick Goff, City ManageisllJ' February 9, 2017 (for February 13, 2017 Study Session) 2EBonding jJern_, z . Pursuant to an election held within the City on November 8, 2016, the City authorized to increase the rate of sales and use tax levied by the City by an additional 0.5% commencing January 1, 2017 and to issue debt in the amount not to exceed $33,000,000, with a maximum repayment cost of not to exceed $38,500,000. The maximum annual repayment cost on the debt will not exceed $3, 700,000. The proceeds will be used only for certain public investments as provided for in the ballot question to include the following: 1. Anderson Park Improvements -$4,000,000 2. Wadsworth Boulevard Reconstruction, 35t11 Avenue to Interstate 70 -$7,000,000 3. Wheat Ridge-Ward Commuter Rail Station Area-$12,000,000 4. Clear Creek Crossing-Mixed Use Development Site Hook Ramps -$10,000,000 The City has contracted with the following agencies to assist with the issuance of bonds to fund these projects: Municipal Advisor FirstSouthwest Jason Simmons Luis Ramos Bond Underwriter George K. Baum & Company Alan Matlosz Bond Counsel Butler Snow LLP Sally Tasker Laci Knowles Representatives from each of these agencies will provide an update to City Council at the February 13, 2017 study session on actions taken to date, financing scenarios and future actions required to issue the bonds. Attachments: 1. Memorandum from Jason Simmons, FirstSouthwest, dated February 9, 2017 2. Financing Scenarios 3. Financing Calendar FirstSouthwest~ A Dlvlsian of Hilltop Seanities. To: Patrick Goff, City Manager City of Wheat Ridge, Colorado From: Jason Simmons, Financial Advisor Fi rstSouthwest Date: February 9, 2017 Re: Sales and Use Tax Revenue Bonds Financing Scenarios Memorandum The election question passed by voters in November of 2016 (the "2016 Election) authorized an increase in the City's sales and use tax by $0.005 and the issuance of $33 million of revenue bonds. The 2016 Election allows the City to pledge existing sales and use tax collected by the City at the rate of $0.03 in addition to the $0.005 increase. Ratings on Sales and Use Tax bonds consider a number of factors including economic and demographic characteristics of the issuer as well as bond specific factors such as debt service coverage, debt service reserve funds, and other legal covenants. In general, a pledge that leads to higher debt service coverage allows for higher bond ratings and lower interest costs. For the City this could mean a pledge of the full $0.035 collected by the City. However a pledge of less than the full $0.035 can still allow the City to execute the financing within the parameters established under the 2016 Election. The City will need to evaluate alternative structures and compare the outcomes with the overall goals for the financing and needs of the City. To assist the City in making the decision that best fits with the overall goals of the financing and other needs of the City FirstSouthwest has prepared a number of scenarios to help quantify the outcomes of different levels of the pledged sales and use tax and the outcome of the bond financing. The following is a description of three Sales and Use Tax financing scenarios attached to this memorandum: 1. Scenario 1 -'AA' Rating with 4x Coverage: This scenario assumes that the City would pledge revenues produced by a portion of the City's sales and use tax in the amount of $0.02. This $0.02 would be comprised of the $0.005 sales and use tax increase approved by voters in the 2016 Election and $0.015 sales and use tax used for general fund purposes. The pledged revenue would cover the maximum annual debt service for this scenario by over 400% or 4 times. Scenario 1 assumes that this pledge would be sufficient to obtain a 'AA' rating and therefore the financing would use bond insurance and could be marketed without a cash funded debt service reserve fund. 2. Scenario 2-'AA-' Rating with 4x Coverage: This scenario also assumes that the City would pledge revenues produced by a portion of the City's sales and use tax in the amount of $0.02 and be comprised of $0.005 sales and use tax increase approved by voters in the November election and $0.015 sales and use tax used for general fund purposes. While the pledged revenue generates the same coverage as Scenario one, it is assumed that the coverage along with other factors would only result in a AA-rating. Due to the 'AA-' rating this scenario assumes the use of Bond Insurance and purchasing of a surety bond which would take the place of a cash Attachment· 1 pg. 1 FirstSouthwest~ A Division of HiHtop Securilie!.. funded debt service reserve fund and lowers the par amount and total repayment costs allowing the financing to fit under the election parameters approved by voters. The surety bond in this scenario is assumed to cost less than insurance and a surety bond in Scenario 3 due to the higher rating. 3. Scenario 3-'A' Rating with 2x Coverage: This scenario assumes that the City would pledge revenues produced by a portion of the City's sales and use tax in the amount of $0.01. This $0.01 would be comprised of $0.005 sales and use tax increase approved by voters in the 2016 Election and $0.005 sales and use tax used for general fund purposes. The pledged revenue would cover the maximum annual debt service for this scenario by over 200% or 2 times. Scenario 2 assumes that the credit would be rated 'A' by the rating agency and therefore the financing could benefit from bond insurance. With the lower coverage ratio and rating, this scenario assumes the purchasing of a surety bond to take the place of a cash funded debt service reserve fund and lowers the par amount and total repayment costs allowing the financing to fit under the election parameters approved by voters. pg. 2 ** PRELIMINARY, For Discussion Purposes Only*** City of Wheat Ridge, Colorado Sales and Use Tax Revenue Bonds, Series 2017 Rating and Pledged Revenues Financing Scenarios GKB Market Rates as of February 1, 2017 Debt Service Cashflows Bonding Sources Summary Par Amount Premium Total Use of Funds Uses of Funds Summary Project Fund Cost of Issuance Underwriter Discount Bond Insurance* Surety Bond* Additional Proceeds Total Use of Funds Finance Statistics Dated Date NIC All-in-TIC Total Debt Service MADS Sales Tax Pledge Rates Sales Tax Pledge $ Debt Service Coverage Debt Service Cashflows 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 SCENARIO 1 'AA'/ 4x Coverage Series 2017 $30,830,000 $2,452,520 $33,282,520 $33,000,000 125,000 154,150 - - 3,370 $33,282,520 5/2/2017 2.702% 2.637% $38,023,559 $3,458,800 $0.020 $14, 776,664 4.27x 'AA'/ 4x Coverage Series 2017 3,456,159 3,458,800 3,458,000 3,455,800 3,454,800 3,454,800 3,455,600 3,457,000 3,458,800 3,455,800 3,458,000 - $38,023,559 2/8/2017 SCENARI02 ~---~q:~_MU9-3_=-~- 'AA-'/ 4x Coverage 'A'/ 2x Coverage Series 2017 Series 2017 $31,035,000 $31,215,000 $2,390,181 $2,283,173 $33,425,181 $33,498,173 $33,000,000 $33,000,000 125,000 125,000 155,175 156,075 76,552 114,866 66,850 100,495 1,604 1,737 $33,425,181 $33,498,173 5/2/2017 5/2/2017 2.745o/o 2.775o/o 2.765o/o 2.847o/o $38,275,766 $38,288,785 $3,481,200 $3,585,800 $0.020 $0.010 $14,776,664 $7,388,332 4.24x 2.06x 'AA-'/ 4x Coverage 'A'/ 2x Coverage Series 2017 Series 2017 3,480,716 3,583,735 3,481,050 3,583,250 3,479,800 3,584,000 3,477,000 3,582,000 3,480,400 3,581,000 3,479,600 3,585,800 3,479,600 3,581,000 3,480,200 3,581,800 3,481,200 3,582,800 3,477,400 3,583,800 3,478,800 2,459,600 -- $38,275,766 $38,288,785 *'A' Rated Bond Insurance Premium at 30bps and Surety at 300 bps. 'AA-' Rated Bond Insurance Premium at 20bps and Surety at 200bps. RrstSouthwest~ Attachment 2 Al>Msiooa(-- ~ .. ~ii)'O W heatR!9ge January s M T w T F s s 1 2 3 4 5 6 7 8 9 10 11 12 13 14 5 15 16 17 18 19 20 21 12 22 23 24 25 26 27 28 19 29 30 31 26 DATE 1/9/2017 1/24/2017 1/31/2017 2/7/2017 2/10/2017 2/13/2017 2/14/2017 2/16/2017 2/17/2017 2/27/2017 3/7-3/8/2017 3/13/2017 3/14/2017 3/14/2017 3/21/2017 3/23/2017 5/2/2017 ArslSouthwest~ •-of-- M 6 13 20 27 CITY OF WHEAT RIDGE, COLORADO Sales & Use Tax Revenue Bonds, Series 2017 TIMETABLE February March T w T F s s M T w T 1 2 3 4 1 2 7 8 9 10 11 5 6 7 8 9 14 15 16 17 18 12 13 14 15 16 21 22 23 24 25 19 20 21 22 23 28 26 27 28 29 30 EVENT Organizational Call First Draft of Ordinance and POS Distributed F s s 3 4 10 11 2 17 18 9 24 25 16 31 23 30 Document Session -at City offices or Conference Call (3:30 pm) Revised Documents Distributed Second Document Session -at City offices of Conference Call Bond Financing Study Session with City Council Updated Documents Distributed Final Comments due on Documents Documents submitted to City Council and Rating Agencies City Council First Reading Rating Calls City Council Second Reading Receive Ratings Post POS Pricing Post OS Closing Attachment 3 April M T w T F s 1 3 4 5 6 7 8 10 11 12 13 14 15 17 18 19 20 21 22 24 25 26 27 28 29 1/10/2017