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