Agenda Date: 05/19/2026
Subject:
Title
Ordinance 13-2026: An ordinance on second reading authorizing the issuance of Certificates of Participation (COPs) to finance the construction of certain public improvements of the city
Body
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From: |
James L. Becklenberg, City Manager |
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Prepared by: |
Laurie Matta, Finance Director |
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Presentations: |
N/A |
PURPOSE:
Council consideration of an ordinance approving issuance of Certificates of Participation (COPs) to fund the Main Street Improvement Projects component of Project Downtown.
LONG-TERM OUTCOME(S) SERVED:
High-Quality Governance
DISCUSSION:
This ordinance provides authorization for the City to move forward with the process to issue COPs, in an amount not-to-exceed $30,000,000 (approx. $32,000,000 with anticipated premium) to provide funding for our Main Street Improvement project. While this amount is greater than the $27,500,000 originally envisioned for COPs funding this project, authorizing a higher amount will provide maximum flexibility for the City Council to accommodate its ultimately desired design for the project and construction market inflation that has occurred since the concept planning phase of the project. Any unused proceeds from this COP issuance can be expended for other City projects, such as the service center, which would effectively reduce the amount of COPs that would need to be issued (currently planned for 2027) for that project.
COPs are a financial obligation backed by the City’s facility assets, commonly used by municipalities to finance capital improvements. Staff has engaged US Bank as its Trustee. Since this is the first time the City has gone to market for financing in 20 years, staff recommends using the negotiated sale approach to selling the COPs. Based on the typical process required to prepare for sales of the COPs and the design process for the project, staff anticipates the sale to take place this summer.
Important, the documents presented are drafted to authorize the maximum parameters for issuance. For instance, they contemplate a 30-year repayment term. Based on Council direction so far, staff anticipates a 20-year term of issuance. All cost figures presented anticipate 20-year repayment term. Should Council direct a 30-year repayment term, the annual debt service costs would be less.
Explanation of documents attached for consideration:
- Authorization Ordinance provides for the following parameters: Site Lease Termination no later than 12/31/66, Lease term not to exceed 12/31/56, the aggregate principal amount not to exceed $30 million, the maximum annual repayment of base rentals not to exceed $2.6 million, the total maximum repayment shall not exceed $65 million, lease is not subject to prepayment prior to 12/1/36 and the maximum net effective interest rate on the base rentals shall not exceed 5.25%. This document also authorizes the City to lease the leased property to the Trustee under a site lease, approves the City leasing the property back under a lease, approves the form of the continuing disclosure undertaking and official statement, and delegates to certain city officials to make final pricing determinations subject to the defined parameters.
- Continuing Disclosure Certification - to provide compliance requirements with Rule 15c2-12(b)(5) of the SEC (Securities and Exchange Commission). This is the responsibility of the Finance Director.
- Indenture of Trust - Document executed by the Trustee relating to the issuance of the certificates of participation. Provides for the terms and repayment provisions of the certificates. The certificate proceeds will be used by the Trustee to “prepay” the Trustee’s lease obligation under the site lease (pursuant to which the Trustee leases the leased property from the City) and the City repays that lump sum back to the Trustee on an annual basis under the lease.
- Lease Purchase Agreement - Between US Bank and the City related to the assets the city is leasing. The document under which the City leases the leased property back from the Trustee. Provides for annually appropriated rental payments, sets the terms of the lease and rental payments, insurance requirements and other matters.
- Site Lease Agreement - Between US Bank and the City defines what the funds can be used for - Main Street project downtown, and should any funds be remaining, the funds can be used for the Belleview Service Center project. The City Council has previously given direction for use of COP’s to fund the service center. This will allow the Council to have maximum flexibility when selecting the design of the Main Street project.
The finalized documents were revised to add US Bank as the Trustee, no other items have been amended since first reading.
BACKGROUND:
Littleton faces a substantial backlog of capital needs that must be addressed to maintain high service standards for our residents. Maintaining the quality of life our citizens expect requires a renewed commitment to our city's infrastructure.
For 20 years, the city has not issued debt for infrastructure and facility upgrades. The cost of delaying facility upkeep continues to rise. Over the past year, the Council has held discussions regarding near-term projects and potential long-term financing solutions.
Prior Actions or Discussions
In September, 2025, Council expressed support for using COPs to fund Main Street improvements, service center facility replacement, and Town Hall Arts Center renovation. At its March 10, 2026 study session, Council directed staff to proceed with the documents necessary to issue COPs. At its April 28, 2026 study session, Council expressed support for a long-term debt framework that assumed the use of COPs for Man Street improvements issued during the summer of 2026.
This ordinance passed on first reading on May 5, 2026.
FISCAL IMPACTS:
Authorization of this ordinance allows the City to formally begin the process to issue COPs. Once issued the financial impact is a 30-year commitment to repay this financial obligation. COP lease payments are planned to be made from the Capital Sales Tax Funds. Annual payments amounts will vary over time, but will not exceed $2.6 million.
STAFF RECOMMENDATION:
Approval of the ordinance authorizing issuance of Certificates of Participation in order to provide funding for the Main Street Capital Improvement Project.
ALTERNATIVES:
Delcine approval to issue COPs. The City would need to determine another funding strategy for the Main Street Improvements project.
PROPOSED MOTION:
Proposed Motion
I move to approve Ordinance 13-2026 authorizing the issuance of Certificates of Participation (COPs) to finance the acquisition and construction of certain public improvements of the city.