HomeMy WebLinkAbout20233566.tiff EL
COUNTY
DATE: October 19, 2023
TO: Tom Parko, Director of Planning
FROM: Cheryl Pattelli, CFO
SUBJECT: Review of Kiteley Ranch Metro District Amended and Restated Service Plan
In response to the review of the amended and restated service plan for the Kiteley Ranch Metropolitan
District ("District"), I have the following to offer related to the financial plan of the service plan, primarily
to finance public improvements with a debt limit of$30,000,000.
The financial plan submitted to justify the Total Debt Issuance Limit in the service plan, $30,000,000, is
adequate; however, I do have some concerns related to the debt financing portion of the plan. The
financial plan was prepared by Piper Sandler Special District Group, who are recognized experts in
special district financing. Assessed valuation assumptions seem reasonable, assuming the build out of
the district takes place as projected. No opinion is stated as to whether the build out is realistic and
feasible given the market conditions in the timeframe stated. Areas of concern related to the debt
financing portion of the plan include the following:
• Methodology used to develop debt financing assumptions. Based on my review,the debt
financing assumptions may be overly favorable for the District, particularly as it relates to Debt
Service Coverage Ratio and interest rates. I asked staff at Piper Sandler Special District Group
about their methodology when developing the financial plan and staff indicated that the
assumptions are based on the "most favorable market conditions". Staff said the assumptions
used in the financial plan are based on 2020-2021 market conditions,which were very
favorable, and confirmed that some assumptions in the financial plan aren't currently realistic
based on today's market conditions.
I believe the financial plan should have been developed using more conservative assumptions
based on historical averages/market conditions over a period of time, not based on the most
favorable market conditions.
• Debt Service Coverage Ratio (DSCR). DSCR is a credit metric that is widely used to understand a
borrower's ability to service debt obligations. Governments calculate DSCR by taking net
operating income and dividing it by total debt service (which includes the principal and interest
payments on a loan). A higher DSCR is better than a lower one,with a typical minimum DSC
ratio being 1.25. If an entity's DSCR is too low,the entity may not qualify for a loan or may need
to pay a higher interest rate on the borrowing. DSCR is only one of many measures used when
rating agencies and investors analyze an entity.
The District's financial plan includes two debt issuances, one in 2023 and one in 2033. The
actual timing of these issuances has not yet been determined, although it is anticipated that, if
the service plan is approved,the first tranche of debt will be issued in the next 6-12 months.
The 2023 and 2023 issuances have amortization schedules indicating DSCRs of approximately
1.00.
I believe the DSCR used in the plan should have been higher than 1.00. I asked staff at Piper
Sandler Special District Group if they think 1.00 is a reasonable DSCR and they indicated that the
typical minimum DSCR is 1.20 to 1.40.
• Interest rates.The plan's 2023 and 2033 amortization schedules use financing interest rates of
5% and 3%, respectively. Investment grade BAA, 30-year GO Bonds are currently at 5.25%. The
initial bond issue will not be rated by a rating agency and is anticipated to have a 1.00 DSCR.
These factors create a higher risk for investors and will most likely result in selling the bonds at a
higher interest rate than the assumed in the financial plan. The financial plan specifies that the
2033 bonds would have a 1.00 DSCR and would be investment grade bonds; however,the plan
does not provide an expected bond rating, an important factor when estimating rates.
Regardless, based on historical averages, 3% interest rate may not be attained in the future.
I believe more conservative interest rates should be used in the financial plan. In my view, all
financial factors need to be considered when predicting interest rates including, but not limited
to, DSCR and bond rating(or lack thereof).
I asked staff from Piper Sandler Special District Group what would happen if the financial assumptions
(assessed valuation and related tax collection amounts, interest rates) were not achieved and/or a
higher DSCR was needed to attract investors and/or achieve desirable interest rates. Staff indicated that
the par amount of bonds would be lowered resulting in less bond proceeds available to fund District
improvements. To cover any shortfall,the developer would need to fund the difference either through
equity or a debt issuance. As no financial information was available on the developer in this plan, I
cannot give an opinion as to whether or not the developer could fund the difference.
The financial plan calls for the Kiteley Ranch Metropolitan District to have a maximum of 50 mills for the
debt limit cap.The debt mill levy limit cap is within the standard of a maximum debt mills in the Weld
County Metro District Policies County Code Section 2-14-30,with the permitted assessed valuation ratio
adjustment per County Code Section 2-14-20 H from the base year of 2006 to the current year's
residential ratio of 6.765%,to allow a maximum debt mill levy of 57.266. As proposed,the financial plan
has a reasonable debt mill levy and a reasonable debt tax burden on all properties within the District.
The service plan calls for a maximum of 30 years for the length of bond debt, which conforms to the
county's metro district policy(County Code Section 2-14-30 B.). The district can issue new debt within
15 years from the date of the district's first debt authorization election. Upon written notice to the
county,the district may issue debt after 15 years in order to provide service provided in the service plan
if development phasing is of a duration that makes it impractical to issue all debt within the 15-year
period.
Th Aggregate Mill Levy Cap, which is the maximum mill levy the District is permitted to impose on the
properties in the District for debt and operations and maintenance function, is sixty-five (65) mills with
the permitted assessed valuation ratio adjustment per County Code Section 2-14-20 H from the base
year of 2006 to the current year's residential ratio of 6.765%.This adjustment allows a maximum debt
mill levy of 57.266 plus 15 mills for operations and maintenance functions,totaling 72.266 mills. Initial
operating costs including land acquisition, engineering services, legal services, and administrative
services, anticipated at $50,000,will be eligible for reimbursement from debt proceeds.The first year's
operating costs, estimated at $75,000, are anticipated to be derived from property taxes and other
revenue. Subsequent year's operating costs are anticipated to be derived from property taxes and other
revenue as well.
The District may rely upon various other revenue sources authorized by law.These will include the
power to assess fees, rates,tolls, penalties, or charges provided in Section 32-1-1001 (1), C.R.S.All bonds
and other debt issued by the District may be payable from any and all legally available revenues of the
District. In no event shall the debt service mill levy in the district exceed the Maximum Debt Mill Levy.
The District shall not apply for or accept Conservation Trust Funds, Great Outdoors Colorado Funds
other funds available from or through governmental or nonprofit entities for which the county is eligible
to apply, except pursuant to an intergovernmental agreement with the County.
The financial plan submitted is adequate. Although I have some concerns regarding the financial plan,
there is no financial risk to the County if assumptions and/or other aspects of the financial plan do not
hold true. Therefore,from review of the service plan, I have no objections in approval of the service
plan with the Total Debt Issuance Limit in the service plan of 30,000,000,Total Debt Mill Levy Limit Cap,
and Total Aggregate Mill Levy Limit cited in the service plan based upon my conclusion that the financial
matters in the service plan appear to be in conformance with the county's metro district policies.
Submit by Email
Weld County Referral
October 3, 2023
The Weld County Department of Planning Services has received the following item for review:
Applicant: Anadarko E&P Onshore, LLC, c/o Case Number: MET23-0001
Kiteley Ranch Metropolitan District
Please Reply By: October 17, 2023 Planner: Maxwell Nader
Project: KITELEYRANCH METROPOLITAN DISTRICT, AMENDED AND RESTATED SERVICE PLAN
Parcel Number: 120727200004-R8946744 Legal: PART LOT B REC EXEMPT RE-843; PART NW1/4 OF
SECTION 27,T3N, R68W of the 6th P.M.,Weld County, Colorado.
Location: SOUTH OF AND ADJACENT TO HWY 66; EAST OF AND ADJACENT TO COUNTY ROAD 7.
The application is submitted to you for review and recommendation. Any comments or
recommendation you consider relevant to this request would be appreciated. Please reply by the
above listed date so that we may give full consideration to your recommendation. Any response not
received before or on this date may be deemed to be a positive response to the Department of
Planning Services. If you have any further questions regarding the application, please call the Planner
associated with the request. Please note that new information may be added to applications under
review during the review process. If you desire to examine or obtain this additional information,
please call the Department of Planning Services.
❑ We have reviewed the request and find that it does/does not comply with our
Comprehensive Plan because:
❑ We have reviewed the request and find no conflicts with our interests.
ESee attached letter.
Signature �G��tZ��it /� Ut� Date 10/12/2023
Agency
Weld County Oil and Gas Energy Department(OGED)
Weld County Planning Dept. PO Box 758, Greeley, CO 80632 Tel:(970)-400-6100 Fax:(970)-304-6498
Weld County
•r�
Oil &Gas Energy Department -11
Referral Comments J
ILTEIJ 11
Referring Agency: Weld County Department of Planning Services
Reference Number: MET23-0001
Associated Parcel: 120727200004-R8946744
OGED Reviewer: Jennifer Teeters
Review Date: October 12,2023
The Staff of the Weld County Oil and Gas Energy Department (OGED) appreciates the opportunity to
comment on the captioned planning case. Staff has completed review of the proposal and have no
conflicts with the proposed activity. We have included additional comments below:
1. There is one (1) active or proposed 1041 WOGLA Permits on the associated parcel permitted
by Kerr McGee Oil & Gas Onshore LP as WOGLA17-0040. There are several oil and gas well
sites in the area surrounding the parcel.
2. The parcel includes fourteen (14) active oil and gas wells, listed in Table 1 below. OGED
requests that the Applicant coordinate operations in proximity to existing wells and
production facilities with the operator(s) of these wells.
API Operator Well Title Well Status
05-123-45131 Kerr McGee Oil &Gas Onshore LP Putter 27-1HZ SI
05-123-45133 Kerr McGee Oil &Gas Onshore LP Putter 27-2HZ PR
05-123-45103 Kerr McGee Oil &Gas Onshore LP Putter 27-3HZ SI
05-123-45135 Kerr McGee Oil &Gas Onshore LP Putter 27-4HZ PR
05-123-45134 Kerr McGee Oil &Gas Onshore LP Putter 27-5HZ SI
05-123-45129 Kerr McGee Oil &Gas Onshore LP Putter 27-6HZ PR
05-123-45128 Kerr McGee Oil &Gas Onshore LP Putter 27-7HZ PR
05-123-45136 Kerr McGee Oil &Gas Onshore LP Putter 27-8HZ PR
05-123-45132 Kerr McGee Oil &Gas Onshore LP Putter 27-9HZ PR
05-123-25617 Kerr McGee Oil & Gas Onshore LP Kiteley 5-27 SI
05-123-28187 Kerr McGee Oil & Gas Onshore LP Kiteley 3-27 SI
05-123-29154 Kerr McGee Oil & Gas Onshore LP Kiteley 22-27 SI
05-123-29155 Kerr McGee Oil & Gas Onshore LP Kiteley 21-27 SI
05-123-28180 Kerr McGee Oil & Gas Onshore LP Kiteley 6-27 SI
3. The parcel includes three (3) plugged and abandoned (PA) wells listed in Table 2 below and
three Abandoned Locations (AL). Additional information regarding these plugged and
abandoned wells and abandoned locations are available from the Energy & Carbon
Management Commission (ECMC). OGED recommends that the Applicant review this
information and contact the responsible operator regarding well infrastructure that may have
been abandoned in place prior to conducting operations in proximity to the wells.
API Operator Well Title Well Status
05-123-26693 Kerr McGee Oil & Gas Onshore LP Kiteley 4-27 AL
05-123-26692 Kerr McGee Oil & Gas Onshore LP Kiteley 3-27 AL
05-123-28184 Kerr McGee Oil &Gas Onshore LP Kiteley 4-27 PA
05-123-29153 Kerr McGee Oil &Gas Onshore LP Kiteley 31-27 PA
05-123-10032 Kerr McGee Oil & Gas Onshore LP Valley 66 Unit 2 PA
05-123-26994 Kerr McGee Oil & Gas Onshore LP Kiteley 6-27 AL
4. The MET lands may include additional oil and gas related infrastructure, such as off-location
flowlines or pipeline which are a use by right and not regulated by Weld County. OGED
requests that the applicant reviews flowline data available from the ECMC map viewer and
utilize Colorado 811 prior to any excavation activities.
These comments and recommendations are based upon the review of the application materials
submitted by the applicant and other relevant information available on the E-Permit site.
MEMORANDUM
TO: Maxwell Nader, Planning Services
1861
FROM: Dawn Anderson, Development Review
DATE: October 18, 2023
1_ G oU N r Y _ SUBJECT: MET23-0001 Anadarko E&P Onshore, LLC, c/o Kiteley Ranch
Metropolitan District
The proposal has been reviewed by the Development Review Division on behalf of the Weld County
Department of Public Works and the Department of Planning Services. Staff comments made during this
phase of the application process may not be all-inclusive, as other issues may arise during the remaining
application process.
COMMENTS
GENERAL PROJECT INFORMATION/LOCATION
Project description: Proposed Amended Service Plan for the Kiteley Ranch Metropolitan District, originally
approved by the Board of County Commissioners on August 30, 2006.
This project is south of and adjacent to SH 66 and is east of and adjacent to CR 7.
Parcel numbers: 120727200004.
Referral Comments:
Development Review has reviewed the proposed Metropolitan District application for an amended and
reinstated Service Plan. The purpose of the Metro District is to finance the construction of public
improvements and to provide ongoing maintenance of the public improvements. Development Review
strongly encourages dedicated financing specific to transportation.
Development Review has no other comments regarding the financial aspects of the proposed District.
However, Development Review will provide comments in the future regarding land use items such as, but
not limited to, drainage, grading, access, and traffic related items.
Maxwell Nader
From: Dave Cross <Dave@StSan.com>
Sent: Monday, October 16, 2023 3:46 PM
To: Maxwell Nader
Subject: RE: Referral Agency Email
Follow Up Flag: Follow up
Flag Status: Flagged
Caution:This email originated from outside of Weld County Government.Do not click links or open attachments unless you recognize the
sender and know the content is safe.
Mr. Nader,
The District is returning the following comment in regards to case# MET23-0001 :
"An intergovernmental agreement will be required with the St.Vrain Sanitation District as the provider of sanitary sewer
service to the area."
Thank you,
Dave Cross
St.Vrain Sanitation District
303-682-4692
dave@stsan.com
From: Maxwell Nader<mnader@weld.gov>
Sent: Monday, October 9, 2023 12:52 PM
To: Dave Cross<Dave@StSan.com>
Subject: RE: Referral Agency Email
Dave,
You can just respond with your comments via email, directly to this chain!
Best,
Maxwell Nader
Planning Manager
Dept.of Planning Services
1402 N 17th Ave
Greeley,CO 80631
mnader@weld.gov
Phone: (970)-400-3527
i#TID
WELD COUNTY,CO
1
Confidentiality Notice:This electronic transmission and any attached documents or other writings are intended only for the person or entity to
which it is addressed and may contain information that is privileged,confidential or otherwise protected from disclosure. If you have received this
communication in error,please immediately notify sender by return e-mail and destroy the communication.Any disclosure,copying,distribution or
the taking of any action concerning the contents of this communication or any attachments by anyone other than the named recipient is strictly
prohibited.
From: Dave Cross<Dave@StSan.com>
Sent: Monday, October 9, 2023 12:33 PM
To: Maxwell Nader<mnader@weld.gov>
Subject: FW: Referral Agency Email
Caution:This email originated from outside of Weld County Government.Do not click links or open attachments unless you recognize the
sender and know the content is safe.
Maxwell,
I followed the path to the documents referenced below, but don't see a referral form to complete and return. Can you
help?
Thank you,
Dave Cross
St.Vrain Sanitation District
303-682-4692
dave@stsan.com
From: noreply@weld.gov<noreply@weld.gov>
Sent:Tuesday, October 3, 2023 1:36 PM
To: Rob Fleck<Rob@StSan.com>
Subject: Referral Agency Email
The Weld County Planning Department has received a Metro District application, case# MET23-0001, in which your
agency may have an interest. Planning staff requests you review the application materials, and return the Referral Form
to Maxwell Nader by the date specified on the Referral Form attached in the online permitting center.To view
application materials,visit https://accela-aca.co.weld.co.us/CitizenAccess/Default.aspx or navigate to weldgov.com >
departments > planning and zoning>online e-permitting.Then,
* Click on "Planning" tab on the menu bar
* Under General Search,type case# MET23-0001, into the Record Number box and search
* Click on the "Record Info" arrow drop-down menu
* Click on "Attachments" to review the application materials
If you have any questions, please contact your assigned planner: Maxwell Nader at 970-400-6100
Thank you,
Maxwell Nader
1402 North 17th Ave
Greeley, CO 80631
970-400-6100
mnader@weld.gov
2
Hello