Like everyone else, city officials have spent the past few months worrying about the election and their budget. That $27 million pledged to help fund the United States Olympic Committee retention deal hasn't exactly seemed a front-burner issue.
Nevertheless, Colorado Springs will need to cough up the dough very soon by Nov. 14, to meet its commitment. The developer in charge of the project, LandCo Equity Partners, has been funding construction on the USOC's new headquarters at 27 S. Tejon St., with a construction loan from United Western Bank. LandCo expects to pay off that loan with money the city gets from selling millions in certificates of participation.
COPs are "lease-purchase agreements," but work a lot like other investment tools, with many small investors buying into the project and then being paid back with interest (in this case, tax-exempt interest) by the city. Colorado Springs is committed to paying as much as $32 million (including interest, issuance expenses and an emergency reserve fund) to pay its share of the $53 million USOC project, and will need to snag investors to get money soon.
Needless to say, the city's timing could be better. The erratic economy hasn't exactly made for calm investors. Assistant City Manager Mike Anderson says a few weeks ago, the municipal bond market was "seized up. It didn't exist."
Thankfully, the markets are improving, and Anderson believes the COPs will sell, thus keeping the seven-month-old deal out of jeopardy. But, as of Monday, the city still had some kinks to work out.
First, the COPs will likely be AA-rated, which security-obsessed investors find less desirable than AAA-rated bonds.
Second, the city must pick the best day to sell the bonds to lock in the lowest interest rates. When city councilors approved the USOC deal, they were planning to pay interest rates as high as 6 percent. Anderson thinks it's possible to lock in that rate, or possibly a lower rate, but that will mean keeping an eye on the market day to day.
Third, the city must decide to whom to sell the COPs. Anderson says he'll consider both private placement and public sale.
How much the city pays on its 25-year COPs will depend on what kind of deal it can negotiate within the week. The city has been planning to make a 2009 payment on those COPs of about $1.8 million.
Meanwhile, others involved in the project seem calm. USOC spokesperson Darryl Seibel wrote in an e-mail, "The USOC is comfortable with the progress of the Headquarters project in downtown Colorado Springs, and we appreciate everything the City of Colorado Springs and LandCo are doing to see that this project remains on pace."
Says Jim Brodie, CEO of LandCo: "We're fairly optimistic that the COPs will get sold."
Meanwhile, Brodie says, much progress is being made on the project. Some USOC employees have moved into temporary office space at 19 N. Tejon St., and the new headquarters is expected to be ready by the end of summer 2009. The new home of many USOC national governing bodies, the old Gas Operations facility at 30 Cimino Drive, is scheduled for completion at the end of January. And plans for improvements at the Olympic Training Center are underway.