Agenda Date: 04/07/2015
Subject:
Title
Ordinance on second reading authorizing the issuance of the City of Littleton, Colorado refunding development revenue note (Rocky Mountain Center for the Blind project) series 2015, in a principal amount not to exceed $1,900,000 to refinance certain facilities that provide education for blind students and training and related housing facilities; authorizing the execution and delivery by the city of a financing agreement, a note and closing documents in connection therewith; making determinations as to the sufficiency of revenues and as to other matters related to the refunding project; ratifying action heretofore taken and relating to such bond; and providing other matters relating thereto.
Body
Presented By: |
Doug Farmen, Finance Director |
POLICY QUESTION:
Does city council support the City of Littleton acting as a conduit note issuer for the refinancing of the Rocky Mountain Center for the Blind?
BACKGROUND:
Periodically, the city has issued development revenue bonds to provide financial assistance to non-profit or not-for-profit entities that serve citizens of the city. Under the County and Municipality Development Revenue Bond Act of the Colorado Revised Statutes, the City of Littleton has the authority to issue conduit bonds and use the proceeds for the purposes enumerated in the Act within the corporate limits of the city. The Act authorizes the city to loan bond proceeds to a non-governmental entity (often a 501c3); under the Act, the term "Bond" includes instruments like notes. The city also has authority under Section 90 of Article 10 of the city charter to issue revenue bonds, and has authority under Section 91 to issue refunding bonds.
This request was initiated by the Rocky Mountain Center for the Blind (RMCB). The RMCB is an IRS 501c3 organization founded in 1987; they moved to Littleton in August, 2000. In 2012, the school purchased an apartment complex on Lowell Boulevard as its primary residential facility. The RMCB serves over 200 citizens in Littleton and over 500 blind people from all over the country each year. The school's senior program has grown dramatically in the last couple of years. They especially enjoy working with the City of Littleton, the police and fire departments, and the Littleton merchants.
The center is requesting the city serve as a conduit issuer of a private placement with First Bank for the refunding revenue note, refinancing a 2008 bond and 2012 loan. The city was conduit issuer for the center's 2008 bond and for the Arapahoe Douglas Mental Health Network in 2013.
STAFF ANALYSIS:
N/A
FISCAL IMPACTS:
The bonds would be payable exclusively by the RMCB under the note documents. They would not constitute debt or indebtedness of the city within the meaning of any provision or limitation of the Colorado Constitution or statutes under the city charter nor constitute a liability of the city's general credit or taxing powers. The city will be fully reimbursed for professional services of bond counsel and financial advisor for this transaction.
In order for this transaction to be designated as a tax exempt bank qualified obligation, the total city tax-exempt issuances for the year (including capital leases) must remain under $10,000,000. After extensive review, staff is confident that, for the calendar year 2015, there are no additional financing needs that would infringe on this amount.
The city's financial advisor, George K. Baum, reviewed the center's financial statements to obtain a reasonable confidence level that the organization would not default on the note. Even though the city would not be legally responsible for default, the city's name is on the issuance and a default would garner negative attention. The scope of work included a credit analysis; the financial advisor's results show that the center has sufficient resources to repay the proposed debt.
STAFF RECOMMENDATION:
Staff recommends approving the ordinance on second reading.
PROPOSED MOTION:
Proposed Motion
I move to approve on second reading the ordinance authorizing the issuance of the City of Littleton, Colorado refunding development revenue note (Rocky Mountain Center for the Blind project) series 2015, in a principal amount not to exceed $1,900,000 to refinance certain facilities that provide education for blind students and training and related housing facilities; authorizing the execution and delivery by the city of a financing agreement, a note and closing documents in connection therewith; making determinations as to the sufficiency of revenues and as to other matters related to the refunding project; ratifying action heretofore taken and relating to such bond; and providing other matters relating thereto