City Council and DFPD explore funding options that avoid TABOR restrictions
The City of Durango and the Durango Fire Protection District are considering funding options if the two entities reach an agreement to build a new fire hall, and possibly a joint police station, in River City Hall.
DFPD’s preferred option to fund a downtown police and fire station at River Town Hall is a deal that would allow the fire district to avoid the Taxpayer Bill of Rights restrictions on long-term bonds.
Durango City Council and the DFPD explored such an agreement during a joint study session Wednesday at the Durango Public Library.
Mattie Prodanovic, vice president of Hilltop Securities, a city financial adviser, broke down the concept of “participation certificates” for advisers and fire board members.
Participation certificates, or COPs, allow investors to buy a share of rental income. A major advantage of COPs is that they do not require voter approval because they are not considered multi-year obligations under TABOR, which prevents entities such as fire districts from incurring debt commitments to long term without voter approval, she said.
General 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 relation to the needs of the fire district is that such an agreement would allow the fire district to lease a new facility. at River City Hall at 1235 Camino del Rio. TABOR prevents the fire district from having long-term debt commitments, and a COP is one of the simpler alternatives, he said.
“It’s just how entities like ours have to borrow money long-term without gaining long-term voter approval,” he said.
The potential for tax increases was at the forefront of questions asked of Doughty by residents about funding for a potential new facility at River Town Hall, he said. The fire district believes the capital funds it has set aside since voters approved a factory tax increase in 2017 are enough to cover a new facility.
“We’ve made it clear that we believe we have funding mechanisms in place with respect to revenue to cover that,” he said. “However, we don’t have the money to cover it. So for us, we think our best opportunity here is to do the certificate of participation.
Representatives from Hilltop Securities said COP deals of 20 to 25 years are fairly 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 Town Hall remains unknown; if costs end up being higher than expected, a COP agreement allows both parties to arrange payments flexibly by extending the term of the agreement.
Durango City Manager José Madrigal said city staff and the DFPD have been meeting every two weeks since late May or early June. He and Doughty agreed the talks were going well so far.
Madrigal said the two parties are close to completing a draft memorandum of understanding to share design costs. Under this memorandum of understanding, the city and fire district would split design costs between the two. So far, the drafting of this document has consumed much of the time of the meetings of both parties.
The fire district already has a design consultant on board, he said. The City would like to hire an architect specializing in the construction of police installations in addition to a landscape architect. So far, the fire district is hosting these plans.
Madrigal said it’s important to have a landscape architect because the sooner he’s hired, the sooner the city and fire district can hold public hearings where residents can voice their thoughts and concerns and ask questions. Questions.
Over the next few weeks, City staff members and the Fire District will explore financing options such as a property swap or lease swap for the two entities; “All options are on the table,” he said. Either way, it has to work for the city and the fire district.
“We had very good preliminary discussions about our position in relation to what we would like to do,” Madrigal said. “…We’d rather just swap leases since River Town 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 from the existing River City Hall building to the Big Picture High School building at 215 East 12th St. The city is not particularly interested in occupying the historic 9-R Administration Building, he said. DFPD previously purchased the two Durango School District 9-R buildings in December.
“So we’re looking at what opportunities we might have to find other facilities and get them working,” he said.
Doughty, who previously said he was “cautiously optimistic” about joint city and fire department efforts to come up with a plan for River Town Hall, said he was impressed with the pace set by the group of joint work.
He said it was imperative for the fire district board to set a schedule and stick to it.
“It’s so important,” he said. “From a fire district perspective, we feel obligated to make sure we keep moving forward.
He said fire district personnel at the downtown fire station were working in “substandard conditions” every day and Durango Police Department employees were in similar conditions.
The Fire District has reached an agreement with Hilltop Securities and wants to work with the bond council the city works with so that both parties can develop synergy by consulting with the same or similar advisers.
“The more decisions we can make like this where we’re lined up the same way…that’s going to really help from a schedule perspective,” Doughty said.