City and consultants detail West Greeley entertainment‑district financing: COPs, 501(c)(3) conduit bonds and GID options

City staff and outside advisers on March 25 gave the Greeley City Council a detailed financial briefing on the proposed West Greeley entertainment district, laying out project elements, revised cost estimates, financing alternatives and a timetable for predevelopment and eventual construction.

Why it matters: The proposal would use a mix of public‑sector financing tools and project revenue to build an arena, hotel, indoor water park and related infrastructure. The plan involves significant borrowing and long amortization assumptions that could affect the city’s fiscal metrics and future borrowing costs.

John Hall introduced the project team (Northwell Securities, Butler Snow law firm and others) and summarized the scope and recent work: independent financial modeling, third‑party market studies and ongoing negotiations. Jason Simmons of Northwell and Dalton Kelly of Butler Snow walked council through the project’s core elements: an 8,600‑seat hockey arena, a youth hockey center with three sheets of ice, a roughly 350‑room hotel, a 100,000‑square‑foot indoor water park and supporting utilities, roads and parking.

Costs and phasing: Staff said value engineering and phasing reduced an earlier “preferred” cost for the core buildings from about $670 million to a reduced alternative of roughly $631 million for the arena, ice center, hotel and water park in the near term; other infrastructure costs (plaza, water features, and plazas) were modeled separately. Staff proposed a predevelopment certificate of participation (COP) borrowing up to $115 million to fund design and early site work, with the intent to take out the COPs later with longer‑term bond issues.

Financing approach explained: Advisors described four funding components: short‑term COPs for predevelopment; a 501(c)(3) conduit bond issue (project bonds structured through a nonprofit or conduit issuer) to fund the entertainment district facilities and related reserves; a General Improvement District (GID) to finance public plaza and related infrastructure paid from taxing powers within the GID area; and water/wastewater enterprise bonds for utilities. Dalton Kelly described the “moral obligation” framework that the city would adopt as a credit support mechanism to reassure investors: if a debt‑service reserve is drawn, city council would be asked to consider replenishment through annual appropriation (what staff called a replenishment resolution).

Model assumptions and risks: Staff said the financial model assumes an interest‑rate environment in the mid‑5% range for project bonds (presentation used a 5.25% modeling assumption) and modest investment earnings (around 4%). Debt service structures include multiple reserves: an operating reserve, a capitalized interest fund, and a modeled $33.2 million debt‑service reserve funded from proceeds in the plan (this number is subject to change). Advisors said a supplemental reserve will be funded from early excess cashflows rather than initial bond proceeds. Staff also modeled that, under current assumptions and the economic development payment schedule, surpluses available to the city would not begin to exceed the city’s economic development payment until the late 2030s (presentations cited 2038 as the first year when net revenues begin to flow back to the city under the modeled scenario).

Key numeric items presented (modeled estimates): - Reduced core construction estimate for arena/hotel/water park/ice center: ~$631,000,000. - 501(c)(3) conduit bond request modeled at about $790,000,000 (total uses including bond reserves and fees) in the scenario presented. - Predevelopment COPs: up to $115,000,000 (interim borrowing to be taken out by long‑term bonds). - GID infrastructure (initial phase) modeled at $112–129 million depending on scope; enterprise water/wastewater improvements roughly $54.5 million. - Modeled debt‑service reserve: ~$33.2 million (subject to change); interest‑rate assumption ~5.25% and investment earnings ~4%. - Economic development payment (city pledge used in model): $12,000,000 annually, growing at 2% (presentation said this assumption has not changed in multiple model runs).

Council and staff questions focused on assumptions, sensitivity and timing: multiple council members asked for the bond‑sizing assumptions, rationale for a 40‑year amortization used in one model run, occupancy and average daily rate assumptions for the hotel (staff noted the water‑park hotel is a destination product and cited comparable projects and operator discussions), and whether the enterprise funds would need to reprioritize capital projects to cover utility infrastructure. Staff said additional third‑party certifications of revenue forecasts and a 30% design package this summer are next steps toward bond marketing; a community meeting was scheduled and staff plans to return with a predevelopment services agreement (PDSA) for council consideration on April 15.

Ending: Staff said the materials are preliminary, further third‑party revenue and cost certification will be required before market offerings, and council members thanked staff for the analysis while raising concerns about assumptions and fiscal exposure. Presenters asked council to consider the PDSA on April 15 if the council wishes to advance predevelopment work.