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Piper Sandler: COPs could back about $151 million under a 1% sales tax; sales-tax bonds offer lower capacity
Summary
Piper Sandler summarized financing scenarios for a potential Wheat Ridge sales tax: COPs (lease financing) could yield up to about $151 million under a 1% sales-tax scenario (based on current market rates), while sales tax revenue bonds would produce materially less borrowing capacity (approximately $121 million under a 1% scenario) because of coverage requirements.
Andrew Ma of Piper Sandler explained financing instruments and borrowing capacity for council as staff and the pollster outlined a potential sales-tax ballot question. Ma said COPs (certificates of participation) are a common Colorado financing tool and, under current market assumptions, a 1% sales-and-use tax could support roughly $151 million of COPs borrowing capacity if issued in 2027.
Ma contrasted COPs with sales tax revenue bonds, which require voter authorization but do not require collateral. Because sales-tax bonds must demonstrate higher debt-service coverage to rating agencies, Ma estimated a materially lower borrowing capacity for the same tax rate (approximately $121 million at 1% under a 1.5x coverage assumption). He noted current true interest cost examples — COPs shown at about 4.81% and sales-tax bonds slightly lower — and cautioned council to plan for less-favorable market conditions (e.g., adding 100–150 basis points to current rates) when setting project lists and tax rates. "If we issued $151,000,000 of COPs, the city would need to put up $151,000,000 of physical collateral," Ma said, explaining the collateral feature of COP financings and common phased issuance strategies to increase capacity over time.
Councilors asked whether phased issuances could hurt credit ratings and how competing ballot measures might influence voter choices; Ma and staff said phased issuances are commonly used and are not in themselves credit negative, and the pollster cautioned that competing sales-tax asks can reduce support but that the presented polling showed a cushion of support.
Staff will run additional scenarios and return to council with refined cost estimates and timeline options before finalizing ballot language.
