The city of Durango and Durango Fire Protection District are considering financing options should the two entities reach an agreement on building a new fire station, and possibly joint police station, at River City Hall.
DFPD’s preferred option for financing a downtown police and fire station at River City Hall is an agreement that would allow the fire district to avoid Taxpayer’s Bill of Rights’ restrictions on long-term debt bonds.
Durango City Council and DFPD explored such an agreement during a joint study session Wednesday at Durango Public Library.
Mattie Prodanovic, vice president of Hilltop Securities, a financial adviser to the city, broke down the concept of “certificates of participation” for councilors and fire board members.
Certificates of participation, or COPs, allow investors to purchase a share of lease revenue. A major benefit of COPs is that they do not require voter authorization because they are not considered multiyear obligations under TABOR, which restricts entities such as fire districts from entering into long-term debt commitments without voter approval, she said.
General obligation bonds and sales tax revenue bonds are other options for the city and fire district, she said.
Fire Chief Hal Doughty said the easiest way to understand the function of COPs in regard to the fire district’s needs is that such an agreement would allow the fire district to lease-to-own a new facility at River City Hall at 1235 Camino del Rio. TABOR restricts the fire district from having long-term debt commitments, and a COP is one of the simplest alternatives, he said.
“It just is the way that entities like ours have to borrow money across the long term without getting long-term voter approval,” he said.
The potential for tax increases was chief among questions asked of Doughty by residents about how a potential new facility at River City Hall would be financed, he said. The fire district believes the capital funds it has set aside since voters approved a mill levy increase in 2017 are sufficient to cover a new facility.
“We’ve made it clear that we believe that we’ve got funding mechanisms in place as far as revenue goes to cover this,” he said. “However, we don’t have the cash to cover it. So for us, we believe that our best opportunity here is to do the certificate of participation.”
Hilltop Securities representatives said COP agreements of 20 to 25 years are pretty typical among its other clients and across the state of Colorado.
Doughty said the total project cost for a joint police and fire station at River City Hall facility remains unknown; if costs end up being higher than predicted, a COP agreement allows both parties to arrange payments with flexibility by lengthening the term of the agreement.
Durango City Manager José Madrigal said city staff members and DFPD have met on a biweekly basis since late May or early June. He and Doughty agreed that discussions are going well so far.
Madrigal said the two parties are close to completing a draft of a design cost sharing memorandum of understanding. Under that MOU, the city and fire district would split design costs down the middle. Drafting that document has consumed much of the two parties’ time in meetings so far.
The fire district already has a design consultant on board, he said. The city would like to bring on an architect specializing in construction of police facilities in addition to a landscape architect. So far, the fire district welcomes those plans.
Madrigal said a landscape architect is important to have because the sooner one is brought on board, the sooner the city and fire district can organize public input hearings where residents can voice their thoughts and concerns and ask questions.
In the coming weeks, city staff members and the fire district will dive deeper into financing options such as an exchange of properties or an exchange of leases for both entities; “all options are on the table,” he said. Whatever might be chosen, it has to work for the city and the fire district.
“We’ve had some pretty good preliminary discussions on where we stand in regard to what we’d like to do,” Madrigal said. “… We’d rather just exchange leases since the River City Hall is our property now.”
He said building a brand-new building on city property just to give it away doesn’t make sense from the city’s perspective – but that doesn’t mean the idea is completely off the table. It’s just another option under consideration.
The city is also interested in the prospect of moving 25 city staff members from River City Hall’s existing building to the Big Picture High School building at 215 East 12th St. The city isn’t particularly interested in occupying the historic 9-R Administration Building, he said. DFPD previously purchased both buildings from Durango School District 9-R in December.
“So we’re taking a look at what opportunities we may have to find some more facilities and make it work,” he said.
Doughty, who previously said he is “cautiously optimistic” about joint city and fire district efforts to hash out a plan for River City Hall, said he is impressed with the pace set by the joint working group.
He said establishing a timeline and sticking to it is imperative to the fire district board of directors.
“It’s so important,” he said. “From the fire district’s standpoint we feel compelled to make sure we keep on moving along.”
He said the fire district staff members at the downtown fire station are working in “substandard conditions” every day and the Durango Police Department’s employees are under similar conditions.
The fire district entered into an agreement with Hilltop Securities and wants to work with the bond council the city works with so the two parties can develop synergy by consulting with the same or similar advisers.
“The more decisions we can make like that where we are similarly aligned … is really going to help from a time-frame standpoint,” Doughty said.
cburney@durangoherald.com
Durango Herald
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