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HomeMy WebLinkAbout1989-04-05 EURA MINUTES• • • I. ENGLEWOOD URBAN RENEWAL AUTHORITY April 5, 1989 CALL TO ORDER. D R A F T The regular meeting of the Englewood Urban Renewal Authority was ca 11 ed to order at 5:45 P.M. by Chairman Robert J. Voth. Members present: Voth, Byrne, Cole, Minnick Hinson, Executive Director/Executive Secretary Members absent: Keena, Mcintyre, Tatton Daugherty, Alternate Member Hanson, Alternate Member Also present: Harold J. Stitt, Assistant to the Director II. Richard S. Wanush, Director of Community Development Steve Bell, Prudential-Bache Steve Lyon, Hanifen Imhoff, Inc. Carolyn Justice, Legal Counsel (Benedetti's Office) APPROVAL OF MINUTES • February 1, 1989 Chairman Voth stated that the Minutes of February 1, 1989 were to be con- sidered for approval. Byrne moved: Minnick seconded: The Minutes of February 1, 1989 be approved as written. AYES: NAYS: ABSTAIN: ABSENT: Byrne, None Cole Keena, Minnick, Voth Mcintyre, Tatton Chairman Voth ruled the Minutes approved. III. PROPERTY TAX INCREMENT ALLOCATION Mr. Hinson introduced Steve Bell, Steve Lyon, Ms. Carolyn Justice, and Mr. Wanush. Mr. Hinson reviewed his communications with the Authority regarding discus- sions with the Arapahoe County Assessor, County Attorney, and other parties concerning the Property Tax Abatement Allocation. He referred to a mid-March meeting, during which the County Assessor stated that he will "consider" making a proportional allocation of abatements only during a general reassess- ment year. Any abatements which are approved in years which are not general reassessment years will still be applied totally against the increment, and not proportionately charged to the increment and base. Mr. Hinson stated that -1 - 9 C- • • • since 1987 and 1988 taxes have been collected and distributed, the Authority will be unable to recoup the $200,000 lost during those years as a result of the Assessor's method of allocating of abatements. However, he added that if the Authority does not secure a retroactive adjustment of the base and incre- ment proportions from 1987 to the present, the Authority will lose a minimum of $200,000 per year for the life of the bonds. Mr. Hinson stated that at one point during the meeting, the Assessor had indi- cated a willingness to consider retroactively adjusting the base and increment figures from 1987 to 1989 until County Attorney Vana advised that to do so could open a floodgate of such requests from other taxing entities . The As- sessor then changed his opinion on this adjustment. Mr. Lyon stated that with the exception of the Englewood, Littleton, and possibly Aurora Tax Increment Districts, no other entities have a "base" or "increment" figure to be con- cerned about. Discussion ensued. Mrs. Cole asked for clarification on what the retroactive adjustment of the base and increment from 1987 to 1989 would do for the Authority. Mr. Hinson discussed the ramif i cations of the adjustment at length, and concluded that the Authority would lose, at the minimum, $200,000 per year in property tax revenues it should have received if the adjustment is not made. Mr. Hinson emphasized that even if the Assessor did go back and adjust the increment and base figures from 1987 to 1989, this would aid only in preventing future revenue loss, and would not recoup the lost $200,000. Mrs. Cole asked what ramifications the Assessor's abatement apportionment pro- cedure may cause in relation to the EURA bonds. Mr. Hinson stated that this method reduces the revenues available to the Authority, witness the EURA's reliance on its Reserve Fund, and may eventually threaten the Authority's ability to meet its debt service obligations. Ms. Byrne interjected that City Council is again considering repealing the .5 cent sales tax . Mr. Hinson stated that Mr. Lyon's analysis in 1988 indicated that such an action alone would reduce the Authority's revenues to the extent that a default on bond payments would be inevitable. Mr. Hinson noted that the Authority's proposed apportionment of abatements would affect the other taxing entities within the District, such as the School District and the City. However, those entities are empowered to raise their mill levies to compensate for any revenue loss due to abatements. EURA does not have that ability. Ms. Justice pointed out that the EURA and the Riverfront Project in Littleton are bearing the burden of a 11 abatements granted in Arapahoe County. This procedure is contrary to the philosophy behind Tax Increment Financing, which is to make public projects pay for themselves. She asserted that the present procedure of abatement application is guaranteeing the bankruptcy of Tax In- crement Districts. Ms. Justice stated that Arapahoe County Assessor Marceny, supported by County Attorney Vana, has taken the position that adjustments to the tax base may occur only during a general reassessment year, and that abatements are not part of that adjustment process. EURA staff and counse 1 have taken the position that abatements are part of the general reassessment process, and that adjustments can and should be made to the base and incre- ment. If abatements result from requests initiated in general reassessment years, then those abatements should be proportionally applied to the base and increment, even in non -general reassessment years. - 2 - • • • Mr. Hinson stated that Mr. Stitt had called the Assessor's office in several counties to determine the process followed for application of abatements . Adams County uses the proportional adjustment method for abatements; Larimer County said it applies the adjustments on a proportional basis. Boulder Coun- ty said it has not had any tax abatements, but if it did, it would probably apply the abatements to the increment value and not the base. Jefferson Coun- ty is also applying abatements to the increment value and not the base, as is being done in Arapahoe County. Mr. Hinson stated that this points up the fact that there is no consistency in the interpretation of the law, and there is a need for a statewide standard procedure. With regard to the Authority's responsibility in resolving the situation, Mr. Hinson referenced a letter from Bond Counsel Greg Johnson, of Kutak, Rock & Campbell. Mr. Johnson pointed out that the Arapahoe Assessor signed a letter of cooperation with the Authority at the time the bonds were issued, and that it appears that the Assessor is in violation of that agreement by virtue of the manner in which he is interpreting the tax increment laws. Mr. Johnson added that EURA has an obligation under the Indenture of Trust to notify the Trustee, Central Bank, and suggest a course of action, or ask that the Trustee suggest a course of action. Mr. Hinson stated that the Indenture is a con- tract between EURA and the Trustee, who represents the bond holders, and that Mr. Buckius of Central Bank will be notified immediately of this situation. Mr. Hinson suggested that there are some options that may be explored. If the Authority feels that it is not receiving fair treatment from the County Asses- sor and that the Tax Increment Laws are not being interpreted properly, the Authority is obligated, by the terms of the Indenture, to do whatever is necessary to protect the interest of the bondholders. Mr. Minnick asked if there was a possibility that the Authority could gain the cooperation of the Riverfront Authority in Littleton in pursuing this matter. Mr. Hinson stated that if it is the determination of EURA to proceed, staff will contact other Tax Increment bodies to see if they would be interested in joining the EURA in requesting a declaratory judgment. Ms. Justice stated that she had spoken to Ms. Kathy Haddock, legal counsel for the Riverfront Authority. Ms. Haddock had indicated she would have to talk to the Riverfront Board before making any financial commitment on their behalf. Mr. Hinson ad- vised the Authority that there is no guarantee that a request for a declara- tory judgment of the law would be successful. Mr. Hinson stated that a second option that should be pursued regardless of any other action taken, is to request the legislature to clarify the Tax In- crement Law as it applies to the application of abatements. This could be an extended process. Mrs. Cole asked if it was a given fact that abatements would continue to be granted. Mr. Hinson stated that we have no reason to believe that abatements will not continue, and pointed out that Arapahoe County st i 11 has abatement requests from 1987 that have not been resolved, and that the Assessor has asked for an increase in staff to handle the workload. Mrs. Cole suggested that perhaps with the decrease in property values, the number of abatements would also decrease. Mr. Voth stated that in his opinion, any time there is a general reassessment, you could expect that requests for abatement wi 11 be filed. He stated that he felt there is a need for the Assessor to adjust the figures for the base and increment for 1987 and 1988, even though it does not recoup the lost income during those years for the Authority. He pointed out - 3 - • • • that the projected loss of revenue to the Authority under the Assessor's meth- od of abatement allocation could be as much as $4,000,000 over the life of the bonds. Mr. Voth referenced a letter to the City Council from Mr. Tot ton regarding the allocation of tax abatements. Further discussion ensued. Mr. Minnick stated that any potential legal action would have greater impact if more than one Authority were to join in the action. Cole moved: Minnick seconded: The Englewood Urban Renewal Authority finds that the pro- cedures followed by the Arapahoe County Assessor based upon its interpretation of the law regarding tax abatements is contrary to the best interests of the EURA Tax Increment District, and contrary to the spirit of Urban Renewal Au- thority and Tax Increment District laws. The staff is hereby directed to contact the Trustee for the EURA bonds, Central Bank, to discuss the course of action to be pursued to reach an equitable determination of this issue. AYES: NAYS: ABSENT: ABSTAIN: Cole, Minnick, Voth, Byrne None Keena, Mcintyre, Tatton None The motion carried. Mr. Bell stated that he would write a letter urging the Trustee to take steps to rectify the situation, and expressing the feeling of the Authority that the County Assessor is misinterpreting the law, and in is violation of the Inden- ture. Ms. Byrne asked if Mr. Bell would send a copy of that correspondence to the City Council. Mr. Bell stated that he would do so. Mr. Hinson stated that this situation has been discussed with the City Coun- cil, and a concern was expressed regarding EURA instigating legal action against Arapahoe County because it could negatively affect other taxing enti- ties within the City if the suit is successful. City Council has indicated its support of the Authority in securing the revenues necessary to meet the bond obligations. However, the Authority cannot stand idly by when it feels that revenues which are dedicated to bond service payments are being inap- propriately diverted to other uses. Mr. Hinson emphasized that the Authority and City have a different set of obligations. The Authority has a contractual obligation to the bond holders to see that the principal and interest payments on its bonds are met. The City is obligated to protect the interest of its citizens. Further brief discussion ensued. * * * * * * * * * * Mr. Bell, Mr. Lyon, Mr. Wanush, and Ms. Justice excused themselves from the meeting. * * * * * * * * * * - 4 - • • • IV. AMENDMENT TO 1988 BUDGET Resolution #2, Series of 1989 Mr. Hinson stated that the action of amending the budget to reflect the actual amounts realized, and the actual amounts expended, is required by State Law. This is a housekeeping procedure only. Minnick moved: Byrne seconded: The Englewood Urban Renewal Authority adopt Resolution #2, Series of 1989, A RESOLUTION OF THE ENGLEWOOD URBAN RENEWAL AUTHORITY AMENDING THE 1988 BUDGET. AYES: NAYS: ABSENT: ABSTAIN: Minnick, Voth, Byrne, Cole None Keena, Mcintyre, Tatton None The motion carried. V. TRAMMELL CROW/ENGLEWOOD MARKETPLACE Amendment of Performance Schedule Mr. Hinson stated that Ms. Ann Sperling, of Tramme 11 Crow, has submitted a request that the Performance Schedule contained in the Disposition and Development Agreement be amended to change the date of completion from January 20, 1989 to May 31, 1989. The last e 1 ement of the improvements planned by Tramme 11 Crow is under construction and should be comp 1 eted we 11 before the May 31 deadline, but technically they are in default of the DDA and their finance company asked that the Performance Schedule be amended. Mr . Hinson recommended approval of the request. Cole moved: Minni ck seconded: The Englewood Urban Renewa 1 Authority approve and adopt Resolution #3, Series of 1989, A RESOLUTION OF THE ENGLE- WOOD URBAN RENEWAL AUTHORITY TO AMEND THE PERFORMANCE SCHEDULE OF THE DISPOSITION AND DEVELOPMENT AGREEMENT WITH ENGLEWOOD MARKETPLACE ASSOCIATES, LTD. AYES: NAYS: ABSENT: ABSTAIN: Minnick, Voth, Byrne, Cole None Mcintyre, Tatton, Keena None The motion carried . VI. FINANCIAL REPORTS In vestment Report Expenditure Report Mr. Hinson reviewed the Investment Report with the members of the Authority. In conjunction with the Investment Report, Mr. Hinson presented a contract for consideration between the EURA and Investment Resources Network, Inc .. Prin- cipals of this company are Mr. Charles Langhoff and Ms. Sue Brooks, who were formerly with Managed Financial Services. Managed Financial Services reor- ganized, and Mr. Langhoff and Ms. Brooks formed the new company, Investment - 5 - • • • Resources Network, Inc .. The proposed contract is the same as that which the Authority had with Managed Financial Services; there is no change in the ser- vices to be provided, and no increase in the fee to be charged for management of the EURA funds. Mr. Hinson recommended approval of this Contract for in- vestment services. Ms. Daugherty entered the meeting during the above discussion, and took a seat with members of the Authority. Minnick moved: Byrne seconded: The Englewood Urban Renewal Authority approve the contract for investment services with Investment Resources Network, Inc. AYES: NAYS: ABSENT: ABSTAIN: Minnick, Voth, Byrne, Cole None Tatton, Keena, Mcintyre None The motion carried . The Expenditure Report was reviewed. Mr. Hinson pointed out the change in format which had been requested previously by Mr. Tatton. VII. PROGRESS REPORTS I Ms. Byrne asked how Phar-Mor was doing since they opened. Mr. Hinson stated that it appears they are doing well. Ms. Daugherty stated that the competi- tion between Phar -Mor and King Soopers has been very good. Home Club continues to do a good volume of business. Mr. Hinson stated that he had checked out a rumor regarding the sa 1 e of Buyer's Club, and was told by its Corporate Counsel that this was not true. Other rumors have it that Buyer's Club is interested in expanding this par- ticular store. Ms. Byrne stated that she had heard a lot of concern because of the lack of stock in Buyer's Club, and checked it out. She was informed that during inventory they had let their stock get very low, but would be res- tocking shelves after inventory. Mr . Hinson stated he felt we are very close to reaching an agreement with CleveTrust on the right-of-way issue for Englewood Parkway. He will keep the Authority i nformed of progress on this matter. Mr. Hinson stated that he has been notified that Mr. H. Carl Ryberg, who con- tracted to relocate and rehab a house from South Clarkson Street to 4702 South Washington in 1983, has given notice of intent to file suit against the Au- thority. Mr. Hinson reviewed the case for members of the Authority, pointing out that work done by Mr. Ryberg did not meet the minimum code, and that he did not complete the job on time. Therefore, the amount of $4,800 in liqui- dated damages and $4,100 i n damages for work that was not corrected by Mr. Ryberg, was withheld from the contract amount. Mr. Ryberg has now given notice of intent to file suit to obtain those funds, plus interest, court costs, and attorney fees. Mr. Hinson emphasized that a suit has not been filed to this point in time, but only notice of intent to sue. He stated that he will keep members of the Authority informed. -6 - • • • Mrs. Cole asked if any additional leases had been signed in Phar-Mor Plaza. Mr. Hinson stated that he has not heard of any additional leases. He stated that he understood from one source that even with the directional sign, Phar- Mor Plaza still has problems because of the lack of visibility from U.S. 285, and prospective tenants want that visibility. Mrs. Cole asked about leasing progress in Trolley Square. Mr. Hinson stated that he has been to 1 d that new 1 eases are being worked on. The owner was granted a variance to create a walk-through area between Kaufman's Mens Store and Anita's Coffee Shop. Ms. Byrne stated that the lower level parking lot at the Trolley Square King Soopers is always full, and she has been told that employees of that store do not want to park their vehicles on the top level because of vandalism. Mrs. Cole agreed that parking for this development is a big problem. Discussion ensued. There being no further business to come before the Authority, the meeting was adjourned at 7:00 P.M. Gertrude G. Welty Recording Secretary - 7 -