To: Honorable Mayor and Members of Town Council
From: Robert J. Slentz, Town Attorney
Title
Town Attorney’s Report: Castle Oaks Metropolitan District No. 3 Bond Issuance
Body
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This matter is presented to Town Council pursuant to 11.02.110 of the Castle Rock Municipal Code. This provision requires that metropolitan districts submit proposed financing to the Town for review and comment.
Earlier this year the Town Council approved the service plan for the District which authorized issuance of up to $36 million in limited tax obligation bonds. The District issued $17.8 million in bonds earlier and this issue of $13,370,000 was contemplated in the service plan amendment. The two issues are on parity in terms of right to District revenue, consisting principally of a projected 46 mill levy (capped at 67) and capital fees. We have inquired of the District as to the interest rate on the bonds and are informed that this rate reflects market for this type of issuance.
District counsel has provided the following summary of the Completion Bonds:
Castle Oaks Metropolitan District No. 3 (the “District”) is planning on issuing its General Obligation Limited Tax Bonds, Series 2015 in the aggregate principal amount of $13,370,000 (the “Completion Bonds”) in order to finance and construct public improvements within and without its boundaries, as authorized by the District’s Service Plan. On April 16, 2015, the District previously issued its General Obligation Limited Tax Bonds, Series 2015 in the principal amount of $17,800,000 (the “Earlier 2015 Bonds”). At the time of issuance of the Earlier 2015 Bonds, the Town approved a First Amendment to the Service Plan of the District which authorized the District to issue up to $36,000,000 in debt. The size of the Earlier 2015 Bonds was limited by the District’s existing voter authorization, which did not allow for the District to issue bonds reflecting the total debt capacity of the District. At the time of issuance of the Earlier 2015 Bonds, it was anticipated and drafted into the bond documents that completion bonds would be issued by the District as soon as practicable after the District held a TABOR election on November 3, 2015. At the election on November 3, 2015, the eligible electors of the District voted in favor of the District incurring additional debt above the Earlier 2015 Bonds. The Completion 2015 Bonds are the “completion bonds” referenced in the District’s Earlier 2015 Bonds and will be issued under substantially the same terms as the Earlier 2015 Bonds. Both the Earlier 2015 Bonds and the Completion Bonds are backed by a guaranty from the Developer, Starwood Land Ventures, LLC, who has guaranteed debt service payments on the District’s Earlier 2015 Bonds and Completion Bonds, pursuant to the terms of an agreement with the District and the bond trustee. The Completion Bonds are being issued on parity with the Earlier 2015 Bonds and the primary sources of revenue to repay the Completion Bonds are the District’s debt service mill levy, facilities fees imposed by the District at the time of building permit, and specific ownership taxes related to the debt service mill levy. The Completion Bonds are expected to be issued at a rate of 6.25% with a 30 year maturity. The Completion Bonds are being issued in compliance with the District’s Service Plan, as amended, and when combined with the Earlier 2015 Bonds, are below the District’s maximum debt authorization in the Service Plan.
Attachments
Attachment A: District boundary map
Attachment B: Certification