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HomeMy WebLinkAbout1996-01-17 EURA MINUTES• ENGLEWOOD URBAN RENEWAL AUTHORITY JANUARY 17, 1996 STUDY SESSION I. CALL TO ORDER. The study session of the Englewood Urban Renewal Authority convened at 5:45 P.M. in Con- ference Room A of Englewood City Hall , Chairman Steve Mulhern presiding. Present: Smith, Vormittag, Graebner, Mulhern, Richmond, Havens (late) Absent: Drew Also present: Harold J. Stitt, Community Coordinator II. STUDY SESSION. Mr. Mulhern stated that Authority Legal Counsel Paul Benedetti had been invited to attend, but has telephoned staff to say that he will not be in attendance because of the severe weather conditions. Mr. Mulhern stated that Legal Counsel for the Trustee, Ms. Ginny Howsam, has also been invited to attend; staff has not been informed whether she will be present. • Mr. Havens entered the meeting, and took his seat with members of the Authority . • Mr. Mulhern stated that this study session is in response to an approach from the City Man- ager regarding the future role of the Authority, the possibility of reorganization and resolution of the bond default. Mr. Mulhern stated that this will be a "free-forum agenda" to encourage members to get their questions and concerns "on the table". What are the issues the Authority needs to be looking at as an entity, what needs to be addressed. Mr. Mulhern commented that prior to any "reorganization", there should be an in-depth study of the pros and cons; however, this study must be paid for, and the Authority has very limited funds at its disposal. Mr. Stitt referenced the latest reports submitted by the Trustee; approximately $1.5 million was distributed to bondholders on December 1. Distributions of funds to bondholders are made on June 1 and December 1 of each year. All revenues on the sales and property tax in- crements are wired to the Trustee upon receipt by the Ci ty; these funds, minus administrative fees for the Trustee, are the funds distributed. The IRS has not issued a determination on whether funds disbursed to the bondholders are payment on principal or on interest. Mr. Mulhern commented that if there is no reduction in principal owed to the bondholders, the debt is increasing; what will happen to this debt in 2005 when the district expires. Mr. Mul- hern then discussed various financial aspects for consideration, stating that restructuring of the bond issue will be expensive, and the support of the Trustee is required. Also, there is a need for 100% approval of the bondholders. 1 In response to a query from Mr. Vormittag, Mr. Stitt stated that the original total debt was • $30,000,000, which included funds for three years of capitalized interest. When the Authority defaulted on repayment in June, 1991, all bonds were called. Mr. Stitt also discussed the issue of restructuring the bonds, noting that there is no money to finance such restructuring, the conditions within the District haven't changed --what would the Authority pledge for repay- ment. The City has declined to pledge additional revenues for repayment of the bonds. The District will be "in place" for 25 years; even if a restructuring were to be accomplished, would this provide an additional 25 years for the district, or would the original 25 year cap continue in effect. Mr. Stitt acknowledged that recent state legislation has removed the 25 year cap on new bond issues. Mr. Stitt cited other taxing entities that would be affected were the length of time on the district to be extended; he questioned that these other entities, such as the School District, would be willing to forego the increased taxes due them to assist the Authority in re- payment of the bonds. Mr. Mulhern agreed it is doubtful the City would pledge additional revenues to bring the bonds out of default. Discussion ensued. Mr. Smith noted that Arvada Urban Renewal Authority has done some form of reorganization to resolve their financial problems, and that other Authorities have also resolved financial difficulties. Mr. Smith emphasized that it is up to the Englewood Authority to develop valid proposals to resolve the bond default. Further discussion ensued. Mr. Stitt noted that the City of Englewood would have to grant approval for any extension of time to repay the bonds. Formation of a new "district" was also discussed. Mr. Stitt stated that he understood a new district would have to be geographically separate from the existing district. Mr. Havens asked if a new district could include the Columbia/HealthONE/Swedish complex. Mr. Stitt re- sponded that new urban renewal districts have to show "blight". This would be difficult to do for this complex. Mr. Havens commented that if the merger with Columbia and HealthONE- Swedish does go through, this will be a "for profit" corporation and the City will realize finan- cial benefits from this. Mr. Stitt stated that the City will realize tax revenues from this change in taxing status, but the Authority will not because the urban renewal district does not encom- pass Swedish Medical Center. The status of the debt after the year 2005 was discussed. The tax increment district ends at that time; however, the "Authority" will still be in existence. There will still be outstanding debt with no collection of revenues on-going. The "separation" between the Authority and the City of Englewood was discussed at length. It was noted that the activities financed through the bond issue of the Authority has provided "benefit" to the City, and these "benefits" could possibly be viewed by bondholders as a con- nection between the two entities. Past cooperation between the City and the Authority, such as provision of office space, staff support, accounting services and the like were discussed. Mr. Mulhern pointed out that the Authority is without an Executive Director/Executive Secretary at • this point in time; where does this leave the Authority, and what are the needs for staff assis-• tance. The view of the current administration regarding staff support was also briefly dis- cussed. 2 • • • The issue of "benefits" realized by the City were discussed more fully, with note being made that the flood control project removed a good portion of the downtown business area from the Little Dry Creek flood plain. Street improvements were also part of the infrastructure ex- penditures of the Authority. Mr. Smith discussed the need for valid resolutions, such as compromise by all parties --the Authority, the City, and the bondholders --to facilitate a restructuring of the bond issue and cure the default. Mr. Graebner pointed out that restructuring requires 100% approval of the bondholders, and that only one bondholder could derail the entire process. Mr. Richmond suggested the possibility of the Trustee "polling" bondholders regarding a possible restructuring of the bond issue. Projects that the Urban Renewal Authority could be involved in include improvement of access between the Broadway business district and redevelopment on the Mall site, acquisition of properties and/or leaseholds remaining in the Mall to facilitate the redevelopment. However, these projects would require use of funds which the Authority does not have, and could not have without issuance of more bonds. In light of the default on the current bond issue, this cannot be accomplished. Mr. Richmond questioned whether the Authority should pursue a "study" or identify the bene- fits of having the Authority as a viable entity. Discussion ensued. Mr. Graebner commented that the majority of Englewood citizens have no idea what the Authority does, or projects the Authority is responsible for. Mr. Stitt commented on a popular misconception that Trolley Square was a URA project: the land was acquired by the developer, Brady Corporation, and was developed by Brady. The Authority provided assistance on leasehold condemnation only. The developer had approached the City regarding redevelopment of the downtown area. The Authority was activated in late 1981. When requests for proposals were mailed out, Brady's was the only response received. The design of Trolley Square was discussed. It was noted that neither the Authority nor the Planning Commission was required to review or approve the design of the development. Mr. Mulhern again addressed the need for an Executive Director/Secretary for the Authority. Additional discussion ensued. Mr. Mulhern stated that he would contact Ms. Howsam, legal counsel for the Trustee, and no- tify her the Authority is interested in pursuing the study. Mr. Mulhern stated that there is also need for further discussion with the City Manager regarding staff for the Authority. A brief synopsis of the issues to be addressed: What is the status of the Authority after 2005? What impact would bankruptcy have? Gains? Disadvantages? What impact would bond issue restructuring have? Gains? Disadvantages? What options are available? What costs will be incurred? 3 There being no further business to come before the Authority, the meeting was declared ad-• joumed. Gertrude G. Welty , Recording Seer • • 4