USOC deal financing might not be as good as touted

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The city is touting its success in selling $32.48 million in certificates of participation that will fund the U.S. Olympic Committee deal, which it claims is a price considerably below original estimates.

But as with any complex financial deal, the devil is in the details — and the deal might not be as sweet as the city is spinning.

“The debt service schedule provided to the City of Colorado Springs by financial advisers and underwriters will save some $9 million over the 30-year life of the certificates of participation issued recently to provide a downtown headquarters building for the United States Olympic Committee,” according to a news release.

And Mayor Lionel Rivera’s claim that the antcipated “$1.7 million a year payment … will end up being $1.5 million, well below the estimate,” appears to conflict with the final offering statement for the securities, which were issued Oct. 13.

In a “table of base rentals,” which breaks down the payments that certificate holders will receive into principal and interest components, the total payments during the 30-year term of the certificates amount to $64,649,203.

Payments for the first full year total $1.53 million, rising to $1.74 million after five years, and increasing by about $50,000 annually thereafter. The average payment during the 30 years, assuming “no optional redemptions prior to maturity” is $2.15 million.

Net proceeds to the city’s Public Facilities Authority from the sale of the certificates amounted to $31.47 million. In addition, the PFA paid issuance costs of $1.03 million, which included “rating agency fees, 2009 insurance policy premium, professional fees, reserve policy premium, underwriters’ discount, printing costs, and title insurance.”

Although the individual items were not broken out, the cost of issuance amounts to 3.26 percent of the net proceeds received by the PFA.

The city’s press release also stated that “the issuance of the COPs is one step in a complex, multi-party agreement in which the city’s Public Facilities Authority issues COPs and purchases the Headquarters Building at 27 N. Tejon St. for $18.8 million from LandCo Equity Partners LLC. The PFA will then lease the building to the city, which will sub-lease the top five floors to the USOC for $1 a year. The city will pay $2.7 million to complete the building’s interior by March 31, 2010.”

LandCo Equity Partners, the city’s partner in the original USOC deal, will retain ownership of the building’s first floor and basement.

One Response to USOC deal financing might not be as good as touted

  1. The city and city council better spend some of that COPS money and get somebody who can read, and then actually tell the truth about the deal.

    The only thing for sure is that the building is done and the city has gone into debt.

    And now they tell us they got a really good deal on the financing. It appears they don’t know what they have, but they’re covinvced they got a good deal. Maybe council is hoping nobody will read the documents. I think they were so desperate to get the deal done, that they would have signed anything…….

    Maybe Mr. Paige will shed some light on the deal, but I’m not hopeful……..

    Has anyone asked MayorLionel how his fundraising is going? Somebody should ask him if Mr. Paige’s appointment to the council had any effect on it…………but he’d probably just refuse to answer the questions, as usual.

    Maybe Ms. Streeter could help the mayor……….or maybe not……….

    Now we can focus on the next big city crisis: credability.

    Jerry Heimlichmanuever saw the writing on the wall….and took off. MayorLionel should do the honorable thing, and do the same.

    In think we should give the COPS documents to the firefighters and police officers who will be laid off, and ask them what THEY think…….

    John Whitten
    October 15, 2009 at 4:03 pm