To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Michael J. Hyman, Town Attorney
Title
Update: Bella Mesa Metropolitan District Bond Refunding
Body
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Executive Summary
Bella Mesa Metropolitan District (the “District”) intends to issue bonds as authorized by its Service Plan (the “Service Plan”). Specifically, the District is proposing the issuance of its Subordinate Limited Tax General Obligation Bonds, Series 2024B, in the estimated amount of $9,780,000 (the “2024 Bonds”). The proceeds of the 2024 Bonds will be used to pay for public improvement associated with the development of the remaining undeveloped property within the District. As a reminder, the development of such property will be subject to the future approval of site development plans by the Town Council.
The District has submitted documentation to the Town Manager, Town Attorney and Director of Finance showing that the District will be able to repay the 2024 Bonds within the debt and mill levy parameters authorized by the Service Plan. Under the Castle Rock Municipal Code (the “Town Code”), the proposed transaction is presented for review and comment by the Town Council, but no formal approval is required or authorized.
Background
Organization and Service Plan. The District was organized pursuant to a service plan approved by the Town Council on August 24, 2004, which plan was amended in 2006, 2018, and 2020.
Under the Service Plan, the District has a debt mill levy cap of 55.664 mills, subject to future adjustments in assessed valuation in order to prevent the diminution of actual tax revenues. District bonds shall discharge no later than 40 years from the date of issuance.
Section 11.02.110 of the Town Code. Section 11.02.110 of the Town Code provides that metropolitan districts must submit a proposed financing for the issuance or refinancing of debt, including certain information and documents related to the proposed debt, such as the interest rate, financing costs, the type of revenues pledged, the amount of the mill levy pledged, and the offering statement (the “Proposed Debt Documents”), to the Town for review and comment before issuing or refinancing the proposed debt. Such submission must include a certification by the District that the proposed issuance is authorized by and in compliance with the Service Plan.
Proposed Bonds. The District’s current Financing Plan proposes the issuance of its 2024 Bonds in the estimated amount of $9,780,000. The interest rate currently assumed is 8.25% and is based upon a 30-year maturity.
District Submission of Proposed Debt Documents. The District has submitted various Proposed Debt Documents to the Town, including a draft term sheet and a Preliminary Limited Offering Statement, which show that the District can repay the 2024 Bonds.
Staff Recommendation
Based on the Proposed Debt Documents that the District has submitted, Town Staff finds that the proposed bond issuance complies with the Service Plan and Section 11.02.110 of the Town Code. Town Staff further recommends that the District be allowed to move forward with the issuance of the 2024 Bonds as proposed.
Attachments
Attachment A: Certification Concerning District Financing
Attachment B: Term Sheet
Attachment C: Preliminary Limited Offering Statement