MEETING OF THE BOARD OF DIRECTORS OF THE SALIDA NATURAL RESOURCE CENTER DEVELOPMENT CORPORATION A COLORADO NON-PROFIT CORPORATION City Council Chambers 448 East 1 st Street City of Salida, Colorado Tuesday, July 21, 2015 11:00 a.m. The NRCDC Board may take action on and of the following agenda items as presented or modified prior to or during the meeting, and items necessary or convenient to effectuate the agenda items. I. MEETING CALLED TO ORDER II. PUBLIC COMMENT III. APPROVAL OF MINUTES July 7, 2015 IV. TREASURER S REPORT V. SCHEDULED ITEMS 1. Economic decision tool 2. Updates on potential property sales a. Colorado Parks & Wildlife b. Workforce Housing c. Light Industrial 3. Music Festival General update VI. VII. UNSCHEDULED ITEMS EXECUTIVE SESSION: For the purpose of determining positions relative to matters that may be subject to negotiations, developing strategy for negotiations, and/or instructing negotiators, under C.R.S. Section 24-6-402(4)(e). AND THE FOLLOWING ADDITIONAL DETAILS ARE PROVIDED FOR IDENTIFICATION: To discuss negotiations for the possible disposition of land and development opportunities related to Colorado Parks & Wildlife, affordable housing and light industrial uses. VIII. REPORT/ACTION ON EXECUTIVE SESSION MATTERS IX. ADJOURN Agenda July 7, 2015 1 Regular meetings of the SNRCDC are held on the 1 st and 3 rd Tuesday of each month at 11:00 a.m.
MINUTES OF THE BOARD OF DIRECTORS OF SALIDA NATURAL RESOURCE CENTER DEVELOPMENT CORPORATION A COLORADO NON-PROFIT CORPORATION A meeting of the Corporation was held July 7, 2015, at 448 E. 1 st Street, Salida, Colorado 81021 beginning at 11:00 a.m. Directors present were Ray Kitson, Jim McConaghy, Tim Glenn, Rusty Granzella, and Bob Grether. Ron Mazzeo, Walt Harder and Susan Hughes were absent. Dara MacDonald and was also in attendance. Public Comment: None Approval of Minutes: Minutes of June 2 nd were unanimously approved. Treasurer s Report: Granzella updated the Board on April and May expenses. Scheduled Items: 1. School District request for cross-country meet Kenny Wilcox presented the request for use of the Vandaveer Ranch to the Board. The location would utilize property between CR 104 and CR 107. Glenn inquired about insurance and liability issues. If that can be solved, Glenn supports the proposal. There was discussion about creating the eventual trail system to accommodate cross country meets long-term. Motion to approve use of the property for this purpose subject to provision of insurance was unanimously approved. 2. Updates on potential property sales a. Colorado Parks & Wildlife MacDonald updated that the Board should expect a purchase offer in the next 3-4 weeks. b. Workforce Housing MacDonald updated that discussions with Housing Options are ongoing. c. Light Industrial - Kitson updated the Board on recent discussions with Fred Lowry and Larry Sherwood. There was discussion about the land they are interested in obtaining and what uses they are interested in on various portions of the property. 3. Music Festival Event Plan MacDonald provided a general update on progress for planning the festival and site preparation work. Unscheduled Items: 1. McConaghy updated the board on his efforts to create a comprehensive financial forecasting tool that can help project internal rate of return. Based on the assumptions so far it looks like a reasonable investment for the community. Further discussion of this tool will be on the next agenda. 2. Glenn asked that the property be mowed between Hwy 50 and CR 105. Executive Session: None Adjourn: NRCDC Minutes 07.07.15
The meeting was adjourned at 11:43 a.m. The undersigned have executed these minutes effective this 21 st day of July, 2015. RAY KITSON, PRESIDENT DARA MACDONALD, SECRETARY NRCDC Minutes 07.07.15
To: SNRCDC board members and City of Salida City personnel From: Jim McConaghy, SNRCDC Board Member Date: July 14, 2015 Subject: SNRCDC Economic Decision Tool base case notes The EXCEL spreadsheet (filename: SNRCED EDT Vandaveer Base v1.00 ) for the Vandaveer property base case economic analysis is offered for review by the Board members and City of Salida personnel. This is version 1.00 and is open for corrections and additions. The measure of economic impact used is the Internal Rate of Return (IRR) highlighted in yellow in cell C3. The IRR can be defined as: Internal Rate of Return (IRR) The discount rate often used in capital budgeting that makes the net present value of all cash flows from a particular project equal to zero. Generally speaking, the higher a project's internal rate of return, the more desirable it is to undertake the project. As such, IRR can be used to rank several prospective projects a firm is considering. Assuming all other factors are equal among the various projects, the project with the highest IRR would probably be considered the best and undertaken first. IRR is sometimes referred to as "economic rate of return (ERR)." You can think of IRR as the rate of growth a project is expected to generate. While the actual rate of return that a given project ends up generating will often differ from its estimated IRR rate, a project with a substantially higher IRR value than other available options would still provide a much better chance of strong growth. IRR s can also be compared against prevailing rates of return in the securities market. If a firm can't find any projects with IRR s greater than the returns that can be generated in the financial markets, it may simply choose to invest its retained earnings into the market. This Economic Decision Tool is intended to allow the Board to put a quantitative value on development decisions. It does not consider other general economic benefits to the City of Salida such as increased sales or property tax revenue realized as result of development decisions. No value is assign to parkland that may be developed within the South Arkansas floodplain. Other aesthetic values that may exist are not included. 1
Notes and assumptions made in developing the base case: 1. The base economics are run to include the 20 full year period from January 1, 2015 to December 31, 2034. The IRR calculation uses the period back to 2004, when the Vandaveer ranch was purchased, to properly account for the time value of money from the date of initial investment. 2. Capital investment, income, expense and cash flow are summarized in Lines 6 through 9 with detail given below Line 11. 3. Capital investment, income, expense values from 2004 through 2012 were provided by Dara MacDonald. Minor changes in these years do not have a significant effect on IRR but if others have a more detailed accounting available, revised values can be added. 4. For years 2013 and 2014, the SNRCDC audit values for income and expense are used. 5. For 2015 and beyond, income and expense are generally carried forward from 2014 and are shown in green type to indicate they are only projections. 6. An assumption is made, that on September 1, 2023 when the High Country Bank balloon payment is due, a 1,000,000 cash payment will be made from available funds and the loan refinanced at 5.19% for a 10year term to payoff. 7. Starting at cell B113, speculative land sale values are calculated: a. Available land remaining for development is estimated as 119.3 acres. The available area calculation is provided on the Plotplan tab of the spreadsheet and is subject to revision as needed. b. The estimated unimproved net sale price of land is assumed to be 28,000/acre. c. For simplicity, six equal value land sale events are shown in 2019, 2022, 2025, 2028, 2031 and 2034. Of course, sales of land will be updated as they occur. Earlier income will increase the project IRR. 8. No income or expense is shown for worksinprogress (Parks & Wildlife, Light Industrial and Workforce Housing). 2
The estimate used for available land for sale is given below, again subject to revision. Roadway Length ft Width ft Area ft2 Area acres Road A 3,043 60 182,580 4.19 Road B 883 60 52,980 1.22 Road C 1,054 60 63,240 1.45 Road D 3,052 60 183,120 4.20 Road E 5,275 60 316,500 7.27 18.3 WEST OF US HIGHWAY 50 Area acres Total Westside area 160.0 + Road/utility allowance factor = 10% (20.2) Wetlands/parkland (23.5) Fire & police facility (5.0) Potential additional land sale or lease westside 111.3 EAST OF US HIGHWAY 50 Total Westside area 36.0 Pinto Barn property 16.0 USFS/NRCS Building Parks & Wildlife building Outlots Potential additional land sale or lease eastside 8.0 Total 119.3 Jim McConaghy Member, SNRCDC Board Salida, Colorado (719) 530-0955 Caveats This document and associated spreadsheet are first drafts of an economic evaluation tool. They are not intended to adhere to any specific accounting or legal standards and should not be construed as doing so. 3
SNRCDC ECONOMIC DECISION TOOL Asthen and current dollars with no escalation except where noted Updated: 7/7/2015 Base Case July 2015 v1.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 IRR = 7.25% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 31 yr terminal SNRCDC TIN: 272963367 Year ==> 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Line Sums SUMMARY Type ANNUAL CAPITAL INVESTMENT 309,375 63,490 66,030 68,671 71,418 1,621,016 31,330 94,141 99,314 104,596 110,159 116,018 122,188 128,687 135,531 142,739 1,164,051 200,937 210,712 220,963 231,712 242,985 254,805 267,201 280,200 293,831 308,125 177,839 7,138,064 INCOME 300,000 252,589 399,532 403,048 406,893 410,577 414,262 974,857 421,952 425,797 985,792 383,703 387,067 946,701 394,117 397,641 958,076 405,011 408,536 969,291 416,065 400,000 10,956,910 22,418,417 EXPENSES 75,625 73,085 70,444 71,418 50,984 288,480 291,457 291,507 286,347 280,907 275,173 269,128 262,756 256,040 248,962 224,186 180,242 170,601 160,485 149,871 138,737 127,055 114,800 101,943 88,455 74,305 60,825 4,683,820 CASH FLOW (309,375) (139,115) (139,115) (139,116) (142,836) (1,672,000) 300,000 (67,221) 13,934 12,227 15,950 19,511 23,072 583,541 30,509 34,226 594,091 (1,004,534) 5,888 565,388 12,669 16,057 576,355 23,151 26,535 587,149 33,780 17,570 10,718,246 10,596,533 DETAIL Type Per 2013 Audit Per 2014 Audit CAPITAL INVESTMENT Purchase Land+water 3,200,001 <== Per Dara MacDonald 5/2015 3,200,001 Water rights Water (967,537) <== Per Dara MacDonald 5/2015. Moved to Water Fund accounting (967,537) Net Land 2,232,464 2,232,464 Infrastructure Road + Util. USDAUSFSNRCS Bldg+ 2,498,441 2,498,441 Total Year CAPEX Committed 2,232,464 2,498,441 4,730,905 CAPEX Financed or paid 2,498,441 2,498,441 Vandaveers Land 309,375 63,490 66,030 68,671 71,418 1,621,016 <== Per Dara MacDonald 5/2015 2,200,001 Loan Date 8/29/2013 High Country Bank 8/2013 5.25% 25yr 31,330 94,141 99,314 104,596 110,159 116,018 122,188 128,687 135,531 142,739 99,353 Loan reduction 2023 1,000,000 Refinance 2023 64,698 200,937 210,712 220,963 231,712 242,985 254,805 267,201 280,200 293,831 308,125 177,839 Net Annual CAPEX Expended 309,375 63,490 66,030 68,671 71,418 1,621,016 31,330 94,141 99,314 104,596 110,159 116,018 122,188 128,687 135,531 142,739 1,164,051 200,937 210,712 220,963 231,712 242,985 254,805 267,201 280,200 293,831 308,125 177,839 7,138,064 LOAN BALANCES (YR END) Vandaveers Land 1,923,089 1,859,598 1,793,568 1,724,897 1,653,479 32,463 32,463 2,047,400 Construction loan Const. USFS 2,498,441 Year end balance per 2014 audit in black High Country Bank 10 yr Land + imp. Loan collateral account #0418102100 minumum balance require = 140,000 4,722,000 4,596,529 4,494,098 4,389,502 4,279,344 4,163,326 4,041,138 3,912,451 3,776,920 3,634,180 3,534,828 baloon payment due 9/1/2023 Refinance 2023 10 yr Land + imp. 2,475,013 1,877,525 2,080,509 1,877,525 1,664,667 1,441,454 1,207,381 961,922 704,522 434,600 151,547 Total Loan Balance 12/31 of yr 1,923,089 1,859,598 1,793,568 1,724,897 1,653,479 32,463 32,463 4,545,841 4,690,670 4,596,529 4,494,098 4,389,502 4,279,344 4,163,326 4,041,138 3,912,451 3,776,920 3,634,180 6,009,841 1,877,525 2,080,509 1,877,525 1,664,667 1,441,454 1,207,381 961,922 704,522 434,600 151,547 Total paid P +I per values entered ==> 2,541,558 2,537,837 <== Per total supplied, Total Water fund, P+I EXPENSES Per 2013 Audit Per 2014 Audit Advertising & Promo. 109 221 109 109 109 109 109 109 109 109 109 109 109 109 109 109 109 109 109 109 109 109 2,504 Bank Service Charges 8 221 221 221 221 221 221 221 221 221 221 221 221 221 221 221 221 221 221 221 221 4,424 Insurance 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 40 General Liability 750 3,495 4,245 Debt service 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 3,954 79,080 Vandaveers 75,625 73,085 70,444 71,418 50,984 <== Per Dara MacDonald 5/2015 High Country Bank 230,189 236,842 236,201 230,919 225,356 219,498 213,327 206,828 199,984 192,776 124,324 Refinance 2023 43,545 123,793 114,018 103,768 93,018 81,746 69,926 57,530 44,531 30,900 16,606 2,981 Other Janitorial fees 7,700 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 14,757 317,595 Legal fees 29,594 979 979 979 979 979 979 979 979 979 979 979 979 979 979 979 979 979 979 979 979 979 50,163 Licenses & Permits 3,529 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 10 3,739 Management fees 6,000 12,080 12,201 12,323 12,446 12,570 12,696 12,823 12,951 13,081 13,212 13,344 13,477 13,612 13,748 13,886 14,025 14,165 14,306 14,449 14,594 14,740 286,729 Professional fees 1,646 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 6,510 138,361 Office supplies 150 150 Poatage & delivery 34 34 Repairs & maint. 47 47 Utilities Electricity 5,263 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 8,973 193,687 Gas 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 1,847 38,783 Water & sewer 3,018 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 3,445 75,370 Utilities other 443 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 2,298 48,703 Total Expenses 75,625 73,085 70,444 71,418 50,984 288,480 291,457 291,507 286,347 280,907 275,173 269,128 262,756 256,040 248,962 224,186 180,242 170,601 160,485 149,871 138,737 127,055 114,800 101,943 88,455 74,305 60,825 4,683,820 INCOME Rents & Leases Grazing leases 1,171 1,548 600 600 600 600 600 600 600 6,919 USDAUSFSNRCS Lease 250,844 397,963 402,447.52 406,293 409,977 413,662 417,347 421,352 425,197 428,882 383,703 387,067 389,791 394,117 397,641 401,166 405,011 408,536 412,381 416,065 400,000 400,000 8,769,443 Parks & Wildlife Light Industrial Workforce Housing Land Sales Pinto Barn Land Sale 300,000 574 300,574 Interest 21 21 Misc. income Taxes 556,910 556,910 556,910 556,910 556,910 556,910 3,341,461 Events Fees?? TERMINAL VALUE OF ASSETS After loan payoff ==> 10,000,000 Total Income 300,000 252,589 399,532 403,048 406,893 410,577 414,262 974,857 421,952 425,797 985,792 383,703 387,067 946,701 394,117 397,641 958,076 405,011 408,536 969,291 416,065 400,000 10,956,910 22,418,417 CASH FLOW (309,375) (139,115) (139,115) (139,116) (142,836) (1,672,000) 300,000 (67,221) 13,934 12,227 15,950 19,511 23,072 583,541 30,509 34,226 594,091 (1,004,534) 5,888 565,388 12,669 16,057 576,355 23,151 26,535 587,149 33,780 17,570 10,718,246 10,596,533 ACCOUNT BALANCES Restricted 143,020 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 Unrestricted 96,272 108,499 124,448 143,959 167,031 750,572 781,081 815,307 1,409,398 404,864 410,752 976,140 988,808 1,004,866 1,581,220 1,604,371 1,630,906 2,218,055 2,251,835 2,269,405 13,127,651 OTHER ITEMS NOT USED IN IRR CALCULATION Capital assets Per 2014 Audit Land not depreciated 2,699,848 2,699,848 Depreciable assets NRC Building 4,060,544 4,060,544 Depreciation 10,417 Depreciated value 4,060,544 4,050,127 Total asset value 6,760,392 6,749,975 Amortization 927 Notes: 1 1/12/2010 NRCDC Org. mtg. 2 Saleable/leaseable land area acres = 119.3 acres at 28,000.00 per acre starting in 2019 Total value 3,341,461 Sales events 6 Yielding 556,910 per sales event