It's time for this biweekly meeting of the Finance and Business Committee of Denver City Council.

Join us for the Finance and Business Committee starting now.

All right.

Good morning, everyone.

Welcome to the Finance and Business Committee.

Today is Tuesday, February 24th.

My name is Serena Gonzalez Gutierrez, and I am your chair for our committee here, and I'm also council member at large.

We have just a briefing today and some items on consent.

I'm gonna go around and do introductions of council members first, and then we'll go into the briefing that we have scheduled.

And just making sure we don't think we have anybody virtually.

Nope.

Alright, so we'll start uh in-house here, and I will start to my right.

Chris Heinz, perfect time.

Good morning, Diana Romero Campbell, Southeast Denver District 4.

Good morning.

Paul Cashman, South Denver District 6.

Good morning, Darrell Watson, flying district nine.

Fantastic.

All right, we have some folks here from Department of Finance to talk to us about the convention center certificates of participation, updates.

Um, this is not an action item.

We uh took action some months ago, um, but there are some updates um to this plan and want to make sure that we are, you know, for the sake of transparency, making sure that this information is being presented uh as this continues to work its way through the process.

So I'm gonna turn it over um to I don't know, Jackson or who, but somebody uh one of you guys, and and please feel free to introduce all three of yourselves.

Sure, I'll take it on Ross Coon and Department of Finance.

Would you like to go over the updates or we'll go over the entire presentation?

Um why don't we do a brief overview of the presentation and then do the updates?

But if you all three want to make sure you introduce yourselves and then go from there.

Um Jackson Brockway, Capital Planning and Budget Manager, Department of Finance.

And I'm Travis Bogan, the director of the special projects and initiatives division with the Department of Transportation and Infrastructure.

So, thank you.

Good morning, Council.

Um, today we'll be talking about the series 2026 certificates of participation for the Colorado Convention Center Fire Alarm Project.

Um, there has been no material changes to this transaction since it was presented to council back in July.

But again, want to give an update on the delay, why is why the reason for the delay in the construction work to date?

The agenda for today uh is gonna be you know, go over the requested city council action, project background, financing terms, and any questions along the way, and we're at the end.

So uh BR 25-0935, uh is to authorize the city to enter a lease purchase uh where rents are based on the trust execution and delivery of the series 2026 certificates of participation and the principal amount not to exceed 108 million dollars for the purpose of funding capital costs for the replacement of the existing Colorado Fire Alarm System, reimbursing the city for uh certain preliminary expenditures and associated costs of uh of issuance.

So, for deputy today is really just to go over the the reason why it delayed.

We came back in July.

Um it really came down to the timing of the offering document and the 2026 budget.

So as we were progressing through the bond documents, um we were backing up to that 2026 budget release, and we felt it was really important to get that uh to include that 2026 budget information into the offering document uh so that the city was providing the most recent financial update and being uh uh fully transparent to radio industry's investors.

Uh we also wanted to align with the GO transaction that included the 2026 budget.

So we didn't want to go out with the COP transaction, not include 2026 budget information, have the budget information come out, and then GO comes out, and with that included the budget information.

Want to align all three of those things.

Um, so you know, we discussed the budget 2026 budget at length during the GL ratings calls.

Uh those discussions were well well received.

The city received uh triple A ratings for the GO, reaffirmed the A rating for the COPs, and Fitch upgraded the uh to excise tax bonds from double A minus to double A.

So we believe that delaying the transaction, including that 2026 budget and having those rating discussions is gonna have a positive impact when we sell these bonds.

I'll pass it over to Jackson to go over the project background.

Great.

Thanks, Ross.

And yeah, before we get into the the in the weeds details of the project itself, just wanted to give a quick uh overview of the convention center as a whole.

Obviously, this is a uh central location in in downtown Denver.

Um really an essential asset of the city from an economic development perspective.

Um, this center, through all of its various activities, generates more than $500 million dollars in annual economic impact.

Um, and if you stretch that over into 2034, that total impact is just over three billion uh dollars when you look at all of that um generated activity down there.

So when we look at the Colorado Convention Center itself, it's a it's a massive building.

It's 2.2 million square feet, um, and uh it's got about 584,000 square feet of contiguous exhibit space, as well as a 670 space parking garage.

Somewhat of the larger assets within our facilities portfolio.

Looking as well, a key piece of this project is uh the convention center expansion.

Um so this was um finalized and opened early in 2024.

Um it's about a 250,000 square foot addition with multi-function ballroom, pre-function space, uh, lobby improvements, and then um improved interior and exterior wayfinding.

Uh, this is a huge benefit to the convention center because it really expands the different types of conventions and events you can host.

Um, and since that opening in 24, uh there's been 30 different or individual bookings that really couldn't have been hosted in Denver uh but for this edition, which represented about um those 30 bookings represented about 453 million in overall economic impact.

Um so just a little bit overall about the convention center.

It's a really large um economic engine for for the downtown area.

And I'll go ahead and pitch it over to Travis here for for some project details.

So uh we did an assessment of uh the fire alarm system in the convention center and identified a need to replace the system.

The existing system is reaching the end of its useful life and components will be get harder to replace as they fail.

Uh we also need to invest in this fire alarm system to obtain our certificate of occupancy for the expansion.

So we constructed the expansion, we installed a new fire alarm system into the expansion, and then a portion of the scope was to integrate that fire alarm system with the existing facility system.

However, this new assessment showing replacement led us to do this project, and we will then do the integration once uh portion of the existing system is reconstructed.

Um, so right now we have a temporary certificate of occupancy that the expansion is operating under, and that's renewed every six months.

And uh we really are following the same requirements that uh you know we would expect of a private facility, and um, you know, we are partnering with DFD and CPD on this, and the facility is inspected and the fire alarm is tested on a regular basis.

Um we've worked closely to make sure that we can continue to have these great events, uh, and this work is planned and sequenced to minimize disruptions so that we don't have fire alarms going off during all the great events uh that we have.

So that's a little bit of the rationale.

Just uh real quick, the scope is kind of three components.

It's installing this system backbone that's really the the um uh yeah, backbone of the system.

We're going to integrate some of the smoke control elements from uh the building automation system into this new fire alarm backbone.

We're going to uh install uh new um devices in the different zones.

We will test them, uh commission them, and then we will uh take out the old uh devices and pieces once we have the new system installed.

Um so this is a lot of work again doing this work uh much of it off hours so that we are not impacting events, and so it takes time.

Um we developed uh had had RLB uh national international consulting construction firm developed an independent cost estimate and uh we had that independent cost estimate submitted to us blind uh when we received Hensel Phelps' a hundred percent bid, and we compared those and reconciled them, and we were within uh 3% of totals indicating that we had good alignment of the scope and we had validation of competitive pricing.

Um Hensel Phelps, the existing contractor has been working in this facility um since about 2020 with the expansion.

They actually did the expansion in the 90s that we're we're we're in right now.

Um they've been great partners and um have really been uh working very well to ensure seamless operations of the facility and keep the construction moving.

Um so they have the expertise, knowledge, skills, and abilities, and they were able to move quickly, being efficient.

Um that also allowed us to save a little bit of money, and I'll tell you about that uh just real quick.

This is really a terrible slide to look at.

Uh apologies for the tiny font, but they're the four rows uh kind of talking to the elements I talked about.

The first one is permitting.

We've received our building permit and our admin modification and we're going.

The next one is installing the backbone that I talked about.

The uh third one from the bottom is installing those branch devices and the other zones, and the bottom one is transferring the smoke control over.

So we're approximately 20% finished uh with the work.

So we're really at the beginning getting started.

But one of the things we did is an analysis of uh, you know, what if we would have waited until February now to execute that change order?

What would the cost be?

And uh our estimate is that it would have been about three million dollars more than uh we were able to uh get the change order for, and that's really because of escalation and inflation, about uh three and uh 3.75% uh over the last three quarters in uh the city based on you know uh construction market.

So um we are doing great work.

We're proud of the work we're doing.

We're collaborating and uh delivering on our commitments to the fire department and really helping ensure that we have this tremendous economic engine uh to operate for a long time to come.

Next slide.

Yep.

This one yours.

Um I knew this one for like two.

Um, I'm yeah, I can I can talk.

Yeah, sorry.

Um, sorry for the uh the the handoff over here, but um just want to talk about the convention center just from the CIP perspective as a whole.

Um obviously this fire alarm project is is really where one of our first priority projects out the door.

Um we have worked with Arts and Venues team, um, as well as their partners, um, uh Legends Global is their new is their new name.

Uh thank you, Jen.

Um that's been completed in 2025, and so we've been working on the project prioritization process for um what happens, how do we take care of the convention center?

Not just our first and foremost um life safety need, but also looking at what are what are the next projects coming up that we need we need to work on.

Um the convention center does have a dedicated uh fund within the CIP, and and that we go through that each and every budget process.

Um, those are available um appropriated uh funds for those uh those projects, and so um really again that first priority is that fire alarm system.

Um we continue to work with our partners in DOTI as well as Arts and Venues and Legends Global to track kind of that those next round of projects.

And so um looking ahead at the for the CIP, there are projects um within our uh the parking garage, the dry pipe fire suppression system.

So uh this is the actual piping, not necessarily the alarm, but speaks to the garage itself.

Um we are in conversations um about assessing the current roof membrane, uh making sure that we can prevent leaks and any um weather damage events, um, and then also working through and assessing the highest and most pressing needs within the building systems, um, things like conveyance systems, your escalators, your elevators, um, things like carpets, which you wouldn't think are necessarily a huge deferred maintenance expense.

But when you think about um all the different events they have in there and and all the the different groups, it actually is a it's a very important need in terms of making the the center look fresh and updated and helps us attract different events.

So we do continue to work with that group pretty frequently.

Um it's work being worked into our six-year capital planning process, um, but we're excited to take the next step ahead with the Spire Alarm system.

Skip ahead.

I think back to you, Ross, on the certificates pretty soon, so a little general background on CLPs.

This transaction will be in the form of a lease lease back agreement.

Uh that means certificates represent an interest in lease payments to a trust who hold leasehold interest in the finance uh assets on behalf of the investors.

Um COPs are typically used to purchase and uh uh purchase or construct real property.

In this case, it would be the fire alarm system.

Um COPs are not considered debt due to the annual annual proportion, and they said in uh not a multi-year fiscal obligation.

Uh city must have a city owned asset as a lease property.

Uh the lease is released when the COP is retired.

Uh the city fails if the city fails uh to appropriate the annual COP payment, trustee can take possession of the property.

As for the financing terms, this is going to be a competitive tax exempt uh deal, not to exceed a power amount of 108 million dollars, the interest rate not to exceed 5.5 percent.

Uh, we do expect rent rates to be lower coming lower than that, but we always put a little buffer in there.

Um, estimated annual lease payment is around $7.8 million dollars.

Uh term is not to exceed 20 uh 20 years with a final maturity of December 2045.

The lease property uh can uh consists of conventions, the convention center parking garage and a performing arts uh center parking garage.

Um cost of missions will be paid from it from proceeds.

The source repayment will not come from the general fund, uh, but from the three sources uh convention center capital fund, capital improvement fund, and the emissions facilities fund, which is C tax.

Um again, rental payments are subject to annual appropriation, and as for lease property, again, the they can take possession of it if fail to appropriate it.

Uh the 2025 financing objectives, we wanted to meet the city's debt policy guidelines.

In this case, it's you know, constructing that essential life safety improvements and preserving that critical critical revenue source of the convention center provides.

Again, no contribute contribution from the general fund.

Uh rental payments are fully funded with a direct nexus to the convention center and source of repayment.

Um the timing prevents the convention center operate uh prevents impact to the convention center operations, including risk of losing that revenue and economic activity generated from the convention center events.

We will have a flexible structure.

You know, typically a 10-year call, so if rates drop at 10 years, we can refinance, get a lower uh average annual uh payment.

And we do expect to reimburse all funds uh to date on the construction costs.

As for the financing timeline, uh we do anticipate submitting uh documents, filing documents for city council on March 17th.

Uh Finbiz, we're here today.

Uh first meet, first reading is March 23rd, second reading March 31st with a pricing on the week of April 12th.

It's usually on that Tuesday, depending on the market, but typically it is on a Tuesday.

Um, and then we expect to close and fund on April 30th.

So with that said, the project completion is on track to meet DFD uh uh accepted completion dates to obtain that certificate often.

You know, I think open up for questions.

Perfect.

Um, thank you so much for doing that.

Um, I think we have Councilman Cashman setting this off.

Well, thank you thank you, Madam Chair.

Uh, thanks for the presentation.

I got a picture from a friend uh this week.

Uh his garage had caught fire.

And you know, fully engulfed.

And uh so uh, you know, when I first saw this presentation, I'm thinking I would discuss it.

I mean, this is just a yes, of course, need to take care of it, but I I appreciate the presentation.

All I'm wondering is, um, I'd love to know the the miles of uh cable or whatever, how many you know uh fire?

I got that for you, sir.

It's about a hundred and twenty miles of conduits and conductors in the facility and over 6,000 devices.

If you think about all the different alarms and things, it's a lot.

Yeah, thank thank you for that.

You know, when you were I think you the main display space, 564,000 square feet.

I live in 903 square feet.

So yeah, you know, six six, seven hundred of those could fit in this building, it it takes on a whole different scope.

Um, but thank you.

That's all I had to appreciate that information.

Thank you, Madam Chair.

Of course, thank you, sir.

Uh Councilman Heights.

Yeah, thank you, uh, committee chair.

Uh, thank you, Councilmember Cashman.

I too am interested in I I just I like to collect copper just for fun.

How much copper?

I'm I'm just the state secret.

That'd be a little harder to collect the copper because the roof, you know, the ceilings are pretty high up there.

But um, I do want to thank you for the briefing.

Um, just because I don't have questions now, it's because I asked them in the briefing in advance.

So uh thank you for being um uh forward and uh and and being willing to give us a briefing.

Uh we also had uh just a couple months ago the largest fire that Denver's had in um you know in decades, and uh we certainly wouldn't want to have a uh big volleyball tournament um and uh and have something similar happen in the convention center, which you know we do host among the many many things that we host in our convention center volleyball tournaments one of them.

So just happy to pick that out of a out of a hat.

But um, so yeah, thank you.

And if if not for the um nine figure price tag, I think this would have just moved forward through our consent.

So thank you.

Thank you.

Thank you.

Councilman Watson.

Uh thank you, committee chair.

Uh first one to say that I mean the utility of the presentation is about fire, fire prevention, fire suppression.

Those are the facts of what we're looking at, but I think the underlying piece that's most important to me is how do you finance these things?

And the city has many options as to what we do as far as the management of our direct funds and what kind of innovative ways we use for financing and the COP process that you all described, the three million um in savings based on your due diligence to make sure you began the process prior to the quarter over quarter um increasing costs, tariff nonsense, and all of the other stuff.

I mean, I think that's brilliant, and DOF oftentimes I mean you're magicians behind the scene.

And I think what's important with this presentation is that folks get to see that the work that you do, the big nerd finance stuff that you do, um, has direct impact on the city.

Um, and so yeah, and I'm looking right at you.

Um, and so yes, let's protect the building, let's make sure the fire um retardant stuff and all of the fire suppression systems are in place and that we end within the 10 year cycle, but then also when you think of a city that's looking at ways to make sure that we are doing um uh our best to manage the monies and demonstrating fiscal responsibility, the $3 million plus savings because of a decision made, not a directive given to you by a legislative or executive branch, but decision made by professionals who know the finance market.

Um, I think it's important that we elevate that and that you do this on a daily basis without anyone knowing, um, and saving the city lots of time, energy, and money.

So thank you all for that work um uh usually on heard if it didn't come to committee, but it's fantastic uh to our city, and we're proud to have you all as our leaders, thank you, committee chair.

Thank you so much, and thank you, council members, um, for all of your words.

I don't think I need to repeat any of it, and so I'll spare everyone.

Um, but really I do really thank Department of Finance um for you know, obliging so kindly um because I said look, like I think this is important, we need to keep um you know have public record of some of the things that are happening and why it was delayed and all of these things, it's just good governance, right, to make sure people know what's happening.

Um, but yeah, councilwoman uh council pro tem.

Did you have something else?

Yeah, I just I did have a.

Oh, I'm so sorry, I forgot you.

You were in the queue.

Council Pro Temer Mara Campbell, please.

Thank you, Madam Chair.

Um, I would I just uh again thank you for the presentation.

Um can you remind me again is the financing does that correlate with the length of the project?

How long will it take to complete this or will the financing continue beyond when the uh project would be completed?

We'll be fully complete with the fire alarm project in 2028.

2028, and finances it will have proceeds on April 30th, so then they can fund the rest of construction through the completion date.

Okay, thank you.

That's all I had a question about.

Thank you.

No, it's okay.

Well, with that said, we have three items on consent.

Seeing that no one has called those off, those will uh move forward to the full council and as this will continue down its process as well.

So thank you, everyone, and have a good day.

We are adjourned, and uh,