At a brief and sparsely attended meeting this afternoon, City Council approved the new economic development agreement with the U.S. Olympic Committee and agreed to settle the lawsuit that LandCo Equity Partners filed against the city in federal court.
Assistant City Manager Mike Anderson made a brief presentation. Noting that council and the public had received complete presentations during council meetings on July 31 and Aug. 6, and that the complete text of the agreements had been posted on the city’s Web site, he simply summarized and yielded the floor to any residents who wanted to comment.
In response to a question posed at an earlier meeting, Anderson said that it would be possible to reduce the first year’s interest payment on the certificates of participation that will finance the deal from $1.8 million to $900,000 “by extending capitalized interest by six months, which of course would mean borrowing $900,000 more.”
Attorney Lindsay Fischer asked whether the city had changed the COPs structure from when the deal was first proposed.
Bob Irwin, a partner with the Denver firm of Kutak Rock who has long been the city’s bond counsel, said that the structure, like that of all COPs, was that of lease/purchase.
“I’ve been associated with COPs offerings since 1978,” he said, “We’re comfortable with this particular structure. We’ve done about 15 of these.”
Responding directly to a question from City Attorney Pat Kelly, Irwin said, “I’m comfortable that these are COPs, not bonds.”
USOC interim CEO Stephanie Streeter did not attend the meeting. The organization’s COO, Norm Bellingham did.
Only half a dozen city residents took the opportunity to comment.
Frank Martinez expressed concern about the budgetary impact of the proposed deal, especially upon the city’s ability to fund public safety.
“I understand that 30 firefighters got letters this week, and they’ll be going away,” he said. “That puts citizens in jeopardy.”
In response, Councilman Jerry Heimlicher said that the economic impact of the USOC is such that, if it were to leave, the city’s budget would be even more strapped.
“We’ll be paying $1.8 million annually (to fund the project),” he said, “but the amount of tax revenue that the city receives as a consequence of the USOC is more than $4 million.”
Councilwoman Jan Martin also cited the USOC’s economic impact as a factor in her decision to support the economic development agreement.
“I’m not sure that we’ve handled this in the most open and transparent way,” she said, “and if not signing this agreement would solve our budget problems, I would be the first to say no.”
Randy Purvis, an attorney who has served intermittently on council since 1987, gave a very different reason for supporting the agreements.
“I wasn’t at the meeting 18 months ago when we approved the original deal, and I’ve had a lot of heartburn over that,” he said. “I probably would have voted against it. But now the question is different: How do we get out of the situation we find ourselves in? ”
Purvis echoed the sentiment of Kelly who, when asked what the legal consequences of refusing to settle the LandCo lawsuit might be, gave a notably bleak assessment of the city’s prospects.
“We would be tied up in court for two years or more, and we would incur very substantial expenses defending the (LandCo) suit,” she said. “If we lost the suit, we would be liable for accrued interest, as well as for the amount at issue. ”
The city’s position is weak, she said, because the original agreement did not include an explicit “force majeure” clause with regard to the issuance of the COPs. The city’s failure to issue them as scheduled was, she said, the result of frozen financial markets, a situation over which the city had no control.
“We were surprised,” she said “when LandCo filed the suit.”
Councilman Darryl Glenn cast the only “no” vote.
He cited several “areas of concern.”
“There’s no provision for compensatory damages if (LandCo CEO Ray Marshall) is convicted of any criminal act,” he said. “I’m also concerned that the USOC is not coming forward with participation. I’m uncomfortable with relying on community fundraising, and with encumbering vital city assets, like the Police Operations Center.”
The city must now meet the following deadlines:
Also included in the construction will be the renovation and expansion of the existing Athlete Center and the Visitors Center and related infrastructure.