Fort Collins mall amendment tabled until May 6

FORT COLLINS – Fort Collins City Council Tuesday voted 5-1 to table until May 6 the matter of an amendment to the public financing agreement for the redevelopment of the Foothills mall, which would allow developer Alberta Development Partners to issue bonds earlier than previously agreed upon, signed in January.

Councilmember Bob Overbeck voted against the motion, with Mayor Karen Weitkunat abstaining from the mall discussion, citing conflict of interest.
The agreement includes $53 million in public financing for the $313 million project to revitalize the aging mall.

The modification would allow Alberta Development Partners LLC, the Denver-based company in charge of redeveloping the mall, to issue $71 million in nonrated bonds sooner, an important matter as the deadline for issuing the bonds approaches.

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The agreement between the city and Alberta can be terminated if the bonds are not issued by June 30, according to Josh Birks, economic health director for the city. The bonds are projected to include an interest rate around 7 percent, Birks said, but the precise interest rate will not be known until the bonds are issued.

The modification relates to the amount of space that must be leased before the bonds can be issued. In the original agreement, the developer was required to have signed leases on 240,000 square feet before the bonds could be issued. The modification would allow the developer to issue bonds with to 155,000 square feet leased, according to a presentation by Fort Collins CFO Mike Beckstead.

Additionally, the developer would decrease the total square footage occupied by tenants new to Fort Collins from the previously agreed-upon 120,000 square feet to 90,000.
Councilmember Gino Campana made the motion to table the matter, due to the hastened nature of the discussion within city staff and council on the modification. Council was only able to begin reviewing materials beginning late last week, according to several councilmembers.

The agenda item also states that if the requested alterations are made, only $23 million of the $53 million in bond proceeds would be released to the project. The remaining $30 million would be released in segments to the project as additional leases are executed by the developer.

Approving the changes to the agreement poses no additional risk to the city and will not result in additional financial gain for the developer, according to Beckstead. Alberta currently has about 90,000 square feet of space in the new mall leased, according to the document, and expects to have 195,000 square feet leased by the end of May.

Robby Schwindt of Walton Street Capital, the Chicago-based equity partner on the project was present at the meeting to speak on behalf of the changes.
“We would not be here if it wasn’t absolutely critical to this project,” Swint said. Later in the meeting, Swint stressed that meeting the projected completion date of fall 2015 was imperative to securing leases for the mall.

If the deadline is missed, leases that have been signed can be terminated and tenants who are in negotiation will push the Foothills project back on their priority list, Swint said.
Councilmembers Overbeck and Ross Cunniff raised concerns about the trajectory of bricks-and-mortar retail as consumers shift to online shopping, as well as the potential for increased risk to the city.