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Eagle County will provide the land for Two10 as well as financing the construction. On March 5, the county commissioners looked at the various options available for them to pay for the project.<\/p>\n
\u201cI will say that while we think this is a good project \u2026 it is not a financial win for the county,\u201d Eagle County Finance Director Jill Klosterman said.<\/p>\n
Two10 will not generate dollars for Eagle County, but it will partially address one of its major goals by bringing new workforce housing units to the area. Commissioner Jeanne McQueeney noted that the costs of Two10 illustrate how difficult it is to build affordable housing in the county.<\/p>\n
\u201cThis is 22 units and we are losing money on them. But this is our investment in the community,\u201d McQueeney said.<\/p>\n
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While the county commissioners are committed to bringing the project out of the ground this year, they also indicated they wanted to make the best financial deal to do it. At the March 5 meeting they looked at three scenarios for financing Two10 construction.<\/p>\n
Cash<\/h2>\n
Eagle County could pay cash for the Two10 project. Klosterman said the county contemplates that it will have $24.6 million in reserves at the end of 2019. However, the county has also identified $23 million of strategic priority projects. That means if it spends nearly half of its reserves on Two10, there won\u2019t be money for other projects.<\/p>\n
\u201cThat\u2019s a pretty big con, because you are limiting yourself on what you are doing in the future,\u201d Klosterman said.<\/p>\n
The other big con is the nature of the Two10 project. Because it is an actual bricks and mortar effort, there are other financing options available to make it happen. Other county priorities cannot be financed and require cash payment.<\/p>\n
Bank Financing<\/strong><\/h2>\nThe second alternative for Two10 financing is a bank loan.<\/p>\n
\u201cThe pro is it is tied directly to the project,\u201d Klosterman said. She added that this alternative might even involve a local lender.<\/p>\n
\u201cUnfortunately, it does have the highest cost of capital,\u201d she continued.<\/p>\n
A bank loan could also include other stipulations including control of how much rent is charged to tenants or project changes. Additionally, Klosterman said a bank would likely limit the amount it lends on the project to around $3 million. That would mean the county would still have to pay a substantial sum from its cash reserves.<\/p>\n
Certificates of Participation<\/strong><\/h2>\nCertificates of Participation are tax-exempt lease-financing agreements that are sold to investors as securities resembling bonds. Colorado courts have approved use of COPs and ruled they are exempt from the regulations of Colorado\u2019s TABOR Amendment.<\/a> The county has used certificates of participation to finance construction in Gypsum of the justice center addition and the maintenance service center.<\/p>\n\u201cFrom a staff perspective, we believe certificates of participation are the way to go with this project,\u201d Klosterman said. \u201cWe are in a market today where interest rates are low and I don\u2019t see them going down. This is a good time to finance projects.\u201d<\/p>\n
She added it is a doubly good time to look at certificates of participation for Two10 because the county just made its final payment on the maintenance service center in Gypsum. That means the county isn\u2019t carrying much debt, Klosterman said. She added that spending down the cash reserves would actually have a bigger impact on the county\u2019s credit rating than issuing certificates of participation for Two10.<\/p>\n
Given the three alternatives, the commissioners agreed that certificates of participation is the preferred Two10 financing option.<\/p>\n
\u201cI am very comfortable with COPs and we are legally allowed to use them,\u201d McQueeney said. \u201cThis would be the most fiscally responsible choice for us.\u201d<\/p>\n
Commissioner Matt Scherr asked if issuing certificates of participation would hold up the project. Tori Franks from the county\u2019s housing department said it may be a stretch to plan a May 1 groundbreaking, but the project is still on track to break ground sometime that month.<\/p>\n
Franks noted the Two10 architects are meeting with the Eagle Ranch Design Review Board this week and the team hopes to have a building permit in hand by April. Franks added that one year after construction starts, the project should be ready for tenants.<\/p>\n
\u201cI am a little concerned you are going to start getting phone calls (from prospective tenants) now,\u201d said McQueeney.<\/p>\n
\u201cWe will start a list,\u201d Franks responded.<\/p>\n
Certificates of Participation are tax-exempt lease-financing agreements that are sold to investors as securities resembling bonds. Colorado courts have approved use of COPs and ruled they are exempt from the regulations of Colorado\u2019s TABOR Amendment.<\/a> The county has used certificates of participation to finance construction in Gypsum of the justice center addition and the maintenance service center.<\/p>\n \u201cFrom a staff perspective, we believe certificates of participation are the way to go with this project,\u201d Klosterman said. \u201cWe are in a market today where interest rates are low and I don\u2019t see them going down. This is a good time to finance projects.\u201d<\/p>\n She added it is a doubly good time to look at certificates of participation for Two10 because the county just made its final payment on the maintenance service center in Gypsum. That means the county isn\u2019t carrying much debt, Klosterman said. She added that spending down the cash reserves would actually have a bigger impact on the county\u2019s credit rating than issuing certificates of participation for Two10.<\/p>\n Given the three alternatives, the commissioners agreed that certificates of participation is the preferred Two10 financing option.<\/p>\n \u201cI am very comfortable with COPs and we are legally allowed to use them,\u201d McQueeney said. \u201cThis would be the most fiscally responsible choice for us.\u201d<\/p>\n Commissioner Matt Scherr asked if issuing certificates of participation would hold up the project. Tori Franks from the county\u2019s housing department said it may be a stretch to plan a May 1 groundbreaking, but the project is still on track to break ground sometime that month.<\/p>\n Franks noted the Two10 architects are meeting with the Eagle Ranch Design Review Board this week and the team hopes to have a building permit in hand by April. Franks added that one year after construction starts, the project should be ready for tenants.<\/p>\n \u201cI am a little concerned you are going to start getting phone calls (from prospective tenants) now,\u201d said McQueeney.<\/p>\n \u201cWe will start a list,\u201d Franks responded.<\/p>\n