Larimer County commissioners on Aug. 25 reviewed a plan to issue $110 million in certificates of participation, or COPs, to finance Phase 2a of the Ranch Master Plan and heard lender, bond counsel and underwriting teams describe the proposed structure, security, tax treatment and schedule.

The proposal, presented by Lori Lopez, Larimer County finance director, and municipal advisor Stacy Mast of Stifel, would pledge selected Ranch facilities as collateral and use a mix of tax-exempt and taxable COPs to limit tax risk while aligning final maturity with the existing sales-tax stream that supports the Ranch.

Why it matters: The financing would enable construction and improvements at the Ranch — including event-lawn, amphitheater and arena upgrades discussed elsewhere — while relying primarily on the county’s 0.15% Ranch sales-and-use tax to support annual debt service. Commissioners scrutinized which facilities would be encumbered, the tax analysis that determines how much of the borrowing must be taxable, and the timeline for rating, marketing and closing.

Stacey Mast, Stifel municipal advisor, said COPs are commonly used in Colorado and “are allowed under TABOR because it's an annually appropriated” obligation. Mast explained that, unlike general obligation bonds, COPs depend on annual appropriation and typically carry a one-notch rating differential from issuer credit.

Ashley Dennis, partner at QTAC and bond counsel on the transaction, said the county has identified the specific components of the leased property that would secure the COPs and that those facilities “will be named in the leasing documents” provided to the Board. Dennis said the targeted collateral valuation is approximately $110 million, with an approximate 10% buffer around that target; valuation methods under consideration include replacement value and insurance value. “What we're trying to aim for here is the County's ability to reasonably state on an annual basis that the rental payments ... are reasonable in connection with the lease property,” Dennis said.

The preliminary structure modeled a 15-year repayment schedule with final maturity of Dec. 1, 2039 to match the sales-tax expiration that supports the Ranch. Under the scenario shown to the Board, Larimer County would issue $110 million of COPs and, after considering premium, receive net proceeds of about $117 million for project costs. The presenters cited an all-in borrowing cost in the scenario of about 4.15%, annual debt service of roughly $11 million, and a total repayment obligation near $155 million.

Because portions of the Ranch, particularly Blue Arena, have private uses (sponsorships, concessions, team leases and naming rights), the county’s tax counsel and bond counsel are recommending a mix of taxable and tax-exempt paper. The team ran a sample scenario of 25% taxable and 75% tax-exempt COPs; the taxable portion in that scenario would amortize faster (roughly within six years) to reduce long-term cost while limiting private-use exposure. Dennis told commissioners the presented allocation is a conservative, “worst case” estimate and that further analysis is expected to reduce the taxable share.

Connor McGrath, director of the Ranch, told the Board the Ranch’s 0.15% sales-and-use tax currently averages about $14.5 million a year and that staff used conservative, flat sales-tax projections when modeling capacity to pay debt service. McGrath said facility stabilization typically requires three to five years, after which the Ranch intends to build reserves and pursue pay-as-you-go projects funded from operating cash and reserves.

Nate Echloff of Piper Sandler, the underwriting firm engaged for the sale, said the county’s financial strength supports a favorable sale and that the underwriting team “see[s] nothing here that would impair your rating.” Presenters noted Larimer County currently carries a AAA issuer credit rating from Standard & Poor’s and that COPs typically receive a one-notch differential; the team expects an AA+ outcome for the COPs given the appropriation risk.

Presenters walked through the near-term schedule: a rating call with Standard & Poor’s is scheduled this week; staff expect to ask the Board to consider a parameters resolution at the Sept. 2 administrative-matters meeting that would set sale parameters and delegate execution authority to the finance director; the preliminary official statement would be posted to investors around Sept. 25; pricing was targeted for Oct. 7; and closing for Oct. 14 if market conditions permit. Presenters cautioned that market volatility could delay pricing; the authorization period in the parameters resolution would allow the county up to one year to execute the sale if the Board adopts the resolution.

When commissioners raised market and policy risks, presenters described safeguards: conservative structuring, a recommended tax-compliance certificate and other closing documents to memorialize tax limitations, and continuing counsel availability to advise on future leases or private-use arrangements. Dennis said the tax analysis will “live for the duration of the COPs” and that counsel will document compliance steps so future county officials will have clear guidance.

No formal vote or final approval was requested at the Aug. 25 work session; the presentation was informational. The Board and staff said they would return with the parameters resolution and related documents for formal consideration at the administrative meeting in early September.

Next steps: staff expect to return to the Board on Sept. 2 with a parameters resolution and, if adopted, to proceed with marketing, pricing and closing consistent with the schedule described at the work session.