HomeMy WebLinkAboutTB Study Session 2013-01-09
Town of Estes Park, Larimer County, Colorado, January 9, 2013
Minutes of a Study Session meeting of the TOWN BOARD of the Town
of Estes Park, Larimer County, Colorado. Meeting held in Rooms 202
& 203 in said Town of Estes Park on the 9th day of January, 2013.
Board: Mayor Pinkham, Mayor Pro Tem Blackhurst, Trustees, Elrod,
Ericson, Koenig, Norris and Phipps
Attending: All
Also Attending: Town Administrator Lancaster, Assistant Town Administrator
Richardson, Attorney White, Finance Officer McFarland and
Town Clerk Williamson
Absent: None
Mayor Pinkham called the meeting to order at 5:00 p.m.
MUNICIPAL FUNDING OPTIONS
Jim Manire/BLX Group LLC provided the Town Board with a capital financing update.
The financing options presented to the Board included cash (pay-as-you-go), debt
financing (Enterprise Revenue Bonds, General Obligation Bonds, and Sales Tax
Revenue Bonds) and lease financing.
Debit Financing Options
General Obligation Bonds require voter approval for debt and increased property taxes
and are secured by the right to levy an unlimited property tax levy. The bonds are
subject to statutory debt limits, readily marketable, and require a debt service reserve.
The credit available to the municipality would be determined by the size and breadth of
the tax base. These bonds are used most commonly by School Districts and not
municipalities because of the need to raise property taxes.
Sales Tax Revenue Bonds require voter approval for debt and new sales tax. The
bonds are secured by the pledge of sales tax collections and sometime use taxes,
frequently require a debt service reserve fund, marketable when existing rate structure
demonstrates adequate debt service coverage, and credit available is determined by
the size and breath of the tax base. Colorado voters have approved a number of Open
Space sales tax revenue bonds and are a good source for funding projects. A portion of
a sales tax (i.e. 1% of a 4% sales tax) could be pledged. Sales tax bonds are more
attractive to investors when the sales tax base is diversified.
Enterprise Revenue Bonds are secured by water, sewer, or electric system’s net
operating revenues and do not require voter approval. The bond requires the Enterprise
to set rates and charges annually to generate a minimum amount of net revenue or debt
service coverage and frequently requires a debt service reserve fund. The credit quality
and debt capacity are determined by the coverage ratios. The bonds are marketable
when the existing rate structure demonstrates adequate debt service coverage. These
bonds are an excellent mechanism for funding improvements to utilities.
Lease Financing Options
A lease requires an asset to be used as collateral for financing. The lease payments
are subject to annual appropriations, and therefore, are not considered debt and do not
require voter approval. A lease would be marketable if the entity’s credit is secure. The
lease frequently requires a debt service reserve fund, and the credit is determined by
the nature of the leased asset(s) and the financial strength of the lessee. Lease
financing usually fall into two categories: direct lease or Certificates of Participation
(COPs). Lease financing utilizing assets such as municipally owned facilities rather
than assets such as roads, provides a feasible method for financing real property,
vehicles and other goods. COPs would be marketable to individual investors who have
an interest in funding a smaller portion of a project and their investment is liquid.
Town Board questions have been summarized: questioned whether 10 to 20 year
leases were typical for lease financing; could a combination of methods be utilized to
finance projects, would BLX Group review the Town’s current land assets and provide a
recommendation on what properties to use for funding options or properties that should
be sold; would leasing obligate future Town Boards; lease financing or COPs would not
be an option for the Stanley Park property due to the deed restrictions; and could the
Town complete financing as a joint venture with another local taxing district
Mr. Manire stated lease option terms are commonly 10 to 20 years; financing can be a
combination, however, voter approval is never a guarantee, most municipalities lean
toward other options that do not require voter approval; taxing questions must be
presented to the voters at a November election or a regular municipal election, not a
special election, which limits timing of projects; bonds and COPs could be issued in 90
to 120 days; would suggest the Town consider a competitive sale or complete an RFP
to hire an underwriter; BLX does not provide a facilities review process; joint financing
could be completed, however, they are more complex, require an IGA and place burden
on entity that becomes the lead borrower.
Town Administrator Lancaster stated staff would be discussing a Town owned property
policy that would outline what properties should be retained and those that should be
sold. Trustee Elrod commented the sale of Town properties would be a good option for
raising capital to complete projects. He requested staff provide a review for the Board
on the restrictions related to the sale of Town owned property such as Lot 4.
Mr. Manire stated the Town does not have time to consider sending questions to the
electorate in November but could begin a campaign for the April municipal election. He
commented an opinion poll can provide the Board with some insight to whether or not
the electorate would approve a financing question. He suggested the Board consider
clearly earmarking the funds and a sunset tax, which is favorable to voters.
FUTURE AGENDA ITEMS.
The March 12, 2013 study session would include a review of the draft economic report
by the Economic Task Force and an update from the community meetings. A brief
weekly update on the Task Force meetings would be provided by Administration.
Mayor Pro Tem Blackhurst requested a discussion on the re-establishment of the
Catastrophic Loss Fund due to the recent loss not covered by insurance.
The Board requested additional discussion of the transportation grant opportunities at
the January 22nd study session.
Trustee Koenig requested staff prepare a list of items that could be bundled for a voter
approved financing option. Administration would hold discussions with the Recreation
and Park District to coordinate efforts and forwarded items in April to the Board.
MISCELLANEOUS
Town Administrator Lancaster informed the Board that staff has received a number of
comments regarding the mission of the newly formed Transportation Advisory
Committee. Staff recommends postponing advertising for Committee members until the
Town Board has approved a mission statement. The Board agreed to postpone
advertisement for Committee member as proposed by staff.
There being no further business, Mayor Pinkham adjourned the meeting at 6:37 p.m.
Jackie Williamson, Town Clerk