Accountant s Compilation Report

CliftonLarsonAllen LLP www.claconnect.com Accountant s Compilation Report Board of Commissioners Fountain Urban Renewal Authority El Paso County, Colorado Management is responsible for the accompanying budget of revenues, expenditures, and fund balances of Fountain Urban Renewal Authority for the year ending December 31, 2016, including the estimate of comparative information for the year ending December 31, 2015 and the actual comparative information for the year ending December 31, 2014, in the format prescribed by Colorado Revised Statutes (C.R.S.) 29-1-105. We have performed a compilation engagement in accordance with Statements on Standards for Accounting and Review Services promulgated by the Accounting and Review Services Committee of the American Institute of Certified Public Accountants. We did not audit or review the budget nor were we required to perform any procedures to verify the accuracy or completeness of the information provided by management. Accordingly, we do not express an opinion, a conclusion, nor provide any form of assurance on the accompanying budget. We draw attention to the summary of significant assumptions which describe that the budget is presented in accordance with the requirements of C.R.S. 29-1-105, and is not intended to be a presentation in accordance with accounting principles generally accepted in the United States of America. We are not independent with respect to Fountain Urban Renewal Authority. Colorado Springs, Colorado January 22, 2016

SUMMARY 2016 BUDGET AS ADOPTED WITH 2014 ACTUAL AND 2015 ESTIMATED For the Years Ended and Ending December 31, ACTUAL 2014 ESTIMATED 2015 1/22/2016 ADOPTED 2016 BEGINNING FUND BALANCES $ 198,710 $ 4,025,191 $ 16,555,299 REVENUES General Property taxes 92,490 94,545 106,871 Sales tax - US 85 37,102 65,000 65,000 Use tax 217,457 200,000 200,000 CDBG Grant 2,000 12,533 - Grant revenue - - 144,000 RBD - Loan - 37,000 - Reimbursement - 3,650 - Sales tax admin revenue - 7,421 82,517 Net investment income 352 600 600 Debt Service Public improvement fees - 166,517 423,163 Sales taxes - 247,382 2,750,556 Net investment income 1,195 4,500 11,000 Bond proceeds - 36,500,000 - Capital Projects Bond proceeds - Series 2014A 26,425,000 - - Bond proceeds - Series 2014B 4,075,000 - - Bond proceeds - Series 2014C 2,500,000 - - Bond proceeds - Series 2014D 355,000 - - Bond proceeds - Series 2015A - 10,500,000 - Reimbursed expenditures 80,000 - - Net investment income 5 5,000 10,000 Total revenues 33,785,601 47,844,148 3,793,707 TRANSFERS IN 3,614,518 9,428 - Total funds available 37,598,829 51,878,767 20,349,006 EXPENDITURES General 132,595 91,040 66,948 SAH - Administration Funds 9,424 97,113 97,375 Regional Building Department Loan - 16,650 - Old Town Funds - 2,350 266,650 Incentive Projects - 8,340 6,000 Debt Service - 35,098,547 4,207,000 Capital Projects 29,817,101-10,513,395 Total expenditures 29,959,120 35,314,040 15,157,368 TRANSFERS OUT 3,614,518 9,428 - Total expenditures and transfers out requiring appropriation 33,573,638 35,323,468 15,157,368 ENDING FUND BALANCES $ 4,025,191 $ 16,555,299 $ 5,191,638 EMERGENCY RESERVE $ 10,500 $ 12,700 $ 18,000 Administration Funds 227,576 137,884 123,026 Old Town Funds 125,000 122,650 - CDBG Gateway Funds 13,000 - - TOTAL RESERVE $ 376,076 $ 273,234 $ 141,026 These financial statements should be read only in connection with the accompanying summary of significant assumptions. 2

PROPERTY TAX SUMMARY INFORMATION US HIGHWAY 85 PROJECT AREA For the Years Ended and Ending December 31, 1/22/2016 ACTUAL 2014 ESTIMATED 2015 ADOPTED 2016 ASSESSED VALUATION - EL PASO COUNTY TIF Increment $ 1,650,620 $ 1,679,870 $ 1,898,880 Total TIF Certified Assessed Value $ 1,650,620 $ 1,679,870 $ 1,898,880 MILL LEVY General 56.281 56.281 56.281 Total mill levy 56.281 56.281 56.281 PROPERTY TAXES General $ 92,899 $ 94,545 $ 106,871 Levied property taxes 92,899 94,545 106,871 Adjustments to actual/rounding (400) - - Refunds and abatements (9) - - Budgeted property taxes $ 92,490 $ 94,545 $ 106,871 BUDGETED PROPERTY TAXES General $ 92,490 $ 94,545 $ 106,871 $ 92,490 $ 94,545 $ 106,871 These financial statements should be read only in connection with the accompanying summary of significant assumptions. 3

GENERAL FUND 2016 BUDGET AS ADOPTED WITH 2014 ACTUAL AND 2015 ESTIMATED For the Years Ended and Ending December 31, ACTUAL 2014 ESTIMATED 2015 1/22/2016 ADOPTED 2016 BEGINNING FUND BALANCES $ 198,710 $ 640,873 $ 846,129 REVENUES Property taxes 92,490 94,545 106,871 Sales tax - US 85 37,102 65,000 65,000 Use tax 217,457 200,000 200,000 CDBG Grant 2,000 12,533 - Grant revenue - - 144,000 RBD - Loan - 37,000 - Reimbursement - 3,650 - Sales tax admin revenue - 7,421 82,517 Net investment income 352 600 600 Total revenues 349,401 420,749 598,988 TRANSFERS IN Debt Service Fund 237,000 - - Total transfers in 237,000 - - Total funds available 785,111 1,061,622 1,445,117 EXPENDITURES General Bank fees 13 600 600 CDBG redevelopment expenses - 54,364 - Contingency - 5,223 4,762 County Treasurer's fees 1,403 1,418 1,586 Debt service payment - interest 3,029 - - Debt service payment - principal 63,742 - - Legal 17,849 15,000 10,000 Miscellaneous - 100 500 Other professional services 23,321 5,000 10,000 Best and Brightest - 9,335 17,500 Redevelopment expenses 23,238 - - Old Town - - 18,000 Website - - 4,000 SAH - Administration Funds Accounting 8,686 47,375 47,375 Audit - 7,000 7,500 Legal 738 12,960 10,000 Other professional services - 11,778 10,000 PIF collections - 4,500 9,000 Trustee fees - 13,500 13,500 Regional Building Department Loan Demolition - 13,000 - Loan Repayment - 3,650 - Old Town Funds Pedestrian enhanced corridor - 2,350 - BNSF land purchase - - 205,000 Contingency - - 61,650 Incentive Projects Excell Fountain - 8,340 6,000 Total expenditures 142,019 215,493 436,973 TRANSFERS OUT Capital Projects Fund 2,219 - - Total transfers out 2,219 - - Total expenditures and transfers out requiring appropriation 144,238 215,493 436,973 ENDING FUND BALANCES $ 640,873 $ 846,129 $ 1,008,144 EMERGENCY RESERVE 10,500 12,700 18,000 Administration Funds 227,576 137,884 123,026 Old Town Funds 125,000 122,650 - CDBG Gateway Funds 13,000 - - TOTAL RESERVE $ 376,076 $ 273,234 $ 141,026 These financial statements should be read only in connection with the accompanying summary of significant assumptions. 4

DEBT SERVICE FUND SERIES 2015 2016 BUDGET AS ADOPTED WITH 2014 ACTUAL AND 2015 ESTIMATED For the Years Ended and Ending December 31, 1/22/2016 ACTUAL 2014 ESTIMATED 2015 ADOPTED 2016 BEGINNING FUND BALANCES $ - $ 3,376,495 $ 5,205,775 REVENUES Public Improvement Fees - 166,517 423,163 Sales taxes - 247,382 2,750,556 Net investment income 1,195 4,500 11,000 Bond proceeds - 36,500,000 - Total revenues 1,195 36,918,399 3,184,719 TRANSFERS IN Capital Projects Fund 3,375,300 9,428 - Total transfers in 3,375,300 9,428 - Total funds available 3,376,495 40,304,322 8,390,494 EXPENDITURES Bond discount - 501,725 - Bond interest - Series 2014A - 1,420,068 - Bond interest - Series 2015A - - 2,621,689 Bond principal - Series 2015A - - 1,020,000 Bond interest - Series 2014B - 235,331 - Bond interest - Series 2015B - - 432,017 Bond principal - Series 2015B - - 130,000 Contingency - - 3,294 Cost of issuance - 1,724,800 - Payment to refund agent - 31,216,623 - Total expenditures - 35,098,547 4,207,000 TRANSFERS OUT General Fund - - - Total transfers out - - - Total expenditures and transfers out requiring appropriation - 35,098,547 4,207,000 ENDING FUND BALANCES $ 3,376,495 $ 5,205,775 $ 4,183,494 These financial statements should be read only in connection with the accompanying summary of significant assumptions. 5

CAPITAL PROJECTS FUND SAH - PROJECT AREA 2016 BUDGET AS ADOPTED WITH 2014 ACTUAL AND 2015 ESTIMATED For the Years Ended and Ending December 31, 1/22/2016 ACTUAL 2014 ESTIMATED 2015 ADOPTED 2016 BEGINNING FUND BALANCES $ - $ 7,823 $ 10,503,395 REVENUES Bond proceeds - Series 2014A 26,425,000 - - Bond proceeds - Series 2014B 4,075,000 - - Bond proceeds - Series 2014C 2,500,000 - - Bond proceeds - Series 2014D 355,000 - - Bond proceeds - Series 2015A - 10,500,000 - Reimbursed expenditures 80,000 - - Net investment income 5 5,000 10,000 Total revenues 33,435,005 10,505,000 10,000 TRANSFERS IN General Fund 2,218 - - Total transfers in 2,218 - - Total funds available 33,437,223 10,512,823 10,513,395 EXPENDITURES Capital projects Capital projects 24,930,513 - - Road improvements - - 4,000,000 Phase II - - 6,500,000 Cost of issuance 1,362,101 - - Development fees 2,855,000 - - Extraordinary project costs 600,000 - - UTW costs 69,487 - - Contingency - - 13,395 Total expenditures 29,817,101-10,513,395 TRANSFERS OUT Debt Service Fund 3,375,299 9,428 - General Fund 237,000 - - Total transfers out 3,612,299 9,428 - Total expenditures and transfers out requiring appropriation 33,429,400 9,428 10,513,395 ENDING FUND BALANCES $ 7,823 $ 10,503,395 $ - These financial statements should be read only in connection with the accompanying summary of significant assumptions. 6

2016 BUDGET SUMMARY OF SIGNIFICANT ASSUMPTIONS Services Provided The Fountain Urban Renewal Authority (Authority) was formed by resolution passed by the City Council of the City of Fountain, Colorado (the City) pursuant to the Colorado Urban Renewal Law, Colorado Revised Statutes. The purpose of the Authority is to acquire and develop certain blighted areas in the City to maintain the public welfare. The Authority is considered a component unit of the City since the Authority s tax increment financing indicates financial accountability with the City, due to the benefits redevelopment will provide the City. The City Council approves appointments to the Authority board and the City Council reviews the Urban Renewal Plans and any changes thereto. Legal counsel is of the opinion that under state statues, the City is not liable with respect to the bonds issued by the Authority. The Authority has no employees and all administrative functions are contracted. The Authority prepares its budget on the modified accrual basis of accounting in accordance with the requirements of Colorado Revised Statutes C.R.S. 29-1-105. Property Taxes Revenues The Authority receives incremental property tax revenue for all active Urban Renewal areas. Incremental property tax revenues are the property tax revenues in excess of an amount equal to the ad valorem property taxes produced by the levy at the rates fixed for such year by or for the governing bodies of the various taxing jurisdictions within or overlapping the Urban Renewal area upon a valuation for assessment equal to the property tax base amount. The property tax base amount is certified by the County Assessor as the valuation for assessment of all taxable property within the Urban Renewal area last certified by the County Assessor prior to the adoption of the Urban Renewal plan. The base amount may be proportionately adjusted for general reassessments in accordance with Colorado law. The calculation of the incremental property taxes budgeted is displayed on page 3 of the budget at the estimated mill levy for the project area. Sales Tax The Authority receives incremental sales tax revenue generated from the following project areas from the City s general sales tax of 3.0%, in excess of a certain sales tax base amount, as displayed on pages 4 and 5 of the budget: Use Tax U.S. Highway 85 Corridor project area sales tax shared at 0.25% South Academy Highlands project area sales tax shared at 2.50% The Authority receives incremental use tax revenue generated from each project area from the City s general use tax as displayed on page 4 of the budget. 7

2016 BUDGET SUMMARY OF SIGNIFICANT ASSUMPTIONS Revenues (continued) PIF Fees The Authority anticipates receiving $423,163 in Public Improvement Fees (PIF) during 2016. Pursuant to the PIF Covenant, these fees are pledged revenue to be used toward the repayment of the Series 2015B Bonds. Net Investment Income Interest earned on the Authority s available funds has been estimated based on an average interest rate of approximately 0.25%. Administration Fees The Authority imposes an administration fee to the project area. The budget anticipates total administration fees of $82,517 during 2016 which will be paid directly from the increment. Administrative Expenditures Expenditures Administrative expenditures include the services necessary to maintain the administrative viability such as, legal, accounting, audit, contractual services and other administrative expenses for the Authority. County Treasurer s Fees County Treasurer s collection fees have been computed at 1.5% of the incremental property taxes. TIF Reimbursement Upon collection of incremental sales taxes in certain agreements with the Authority, the Authority submits a portion of the sales taxes received per the requirements in the redevelopment and reimbursement agreement. Redevelopment Expenditures The Authority participates in various redevelopment projects within the project areas and funds the expenditures with the unpledged TIF revenues received. Debt Service Principal and interest payments are provided based on the attached debt amortization schedule. 8

2016 BUDGET SUMMARY OF SIGNIFICANT ASSUMPTIONS Debt and Leases South Academy Highlands Project Bonds, Series 2014A - D On September 10, 2014, the Authority issued the following bonds (collectively, the Bonds): (1) $26,425,000 Tax Increment Revenue Bonds, Series 2014A; (2) $4,075,000 Public Improvement Fee Taxable Revenue Bonds, Series 2014B; (3) $2,500,000 Tax Increment and Public Improvement Fee Taxable Revenue Bonds, Series 2014C; and (4) $355,000 Public Improvement Fee Taxable Revenue Bonds, Series 2014D. The Bonds were issued for the purposes of (i) financing a portion of the public improvement costs and other costs associated with the construction of the South Academy Highlands project; (ii) provide capitalized interest; and (iii) paying costs of issuance of the Bonds. The 2014A Bonds bear interest at 8.375%, payable semi-annually on May 1 and November 1, beginning on May 1, 2015. Annual mandatory sinking fund principal payments are due on May 1, beginning on May 1, 2016. The 2014A Bonds mature on November 1, 2039. These Bonds were refunded with the August 11, 2015 issuance of the Tax Increment Revenue Refunding and Improvement Bonds Series 2015A. The 2014B Bonds bear interest at 9.000%, payable semi-annually on May 1 and November 1, beginning on May 1, 2015. Annual mandatory sinking fund principal payments are due on May 1, beginning on May 1, 2016. The 2014B Bonds mature on November 1, 2044. These Bonds were refunded with the August 11, 2015 issuance of the Taxable Public Improvement Fee Refunding Bonds Series 2015B. The 2014C Bonds bear interest at 9.000%, payable semi-annually on May 1 and November 1, beginning on May 1, 2015. Annual mandatory sinking fund principal payments are due on May 1, beginning on May 1, 2016. The 2014C Bonds mature on November 1, 2044. The 2014C Bonds are secured and payable from the Pledged Revenue, consisting of monies derived by (1) the Outparcel Incremental Sales Tax Revenues; (2) the Outparcel Add-On PIF Revenues, and (3) all income from the investment and reinvestment of the Series 2104C Trust Funds. The 2014D Bonds bear interest at 9.000%, payable semi-annually on May 1 and November 1, beginning on May 1, 2015. Annual mandatory sinking fund principal payments are due on May 1, beginning on May 1, 2016. The 2014D Bonds mature on November 1, 2044. The 2014D Bonds are secured and payable from the Pledged Revenue, consisting of monies derived by (1) the remaining Outparcel Add-On PIF Revenues and (2) all income from the investment and reinvestment of the Series 2104D Trust Funds. A debt service schedule for the Series 2014C and D Bonds cannot be determined as interest and principal are being paid based on the availability of funds from Pledged Revenue of development that is not anticipated during this budget period. 9

2016 BUDGET SUMMARY OF SIGNIFICANT ASSUMPTIONS Debt and Leases (continued) South Academy Highlands Project Bonds, Series 2015A - B On August 11, 2015, the Authority issued the following bonds (collectively, the Bonds): (1) $41,930,000 Tax Increment Revenue Refunding and Improvement Bonds, Series 2015A and (2) $5,070,000 Taxable Public Improvement Fee Refunding Bonds, Series 2015B. The Bonds were issued for the purposes of (i) financing a portion of the public improvement costs and other costs associated with the construction of the South Academy Highlands project; (ii) provide capitalized interest; (iii) paying costs of issuance of the Bonds; and (iv) refund the Series 2014A and 2014B Bonds. The 2015A Bonds bear interest at 4.5% to 5.5% payable semi-annually on May 1 and November 1, beginning on May 1, 2016. Annual mandatory sinking fund principal payments are due on November 1, beginning on November 1, 2016. The 2015B Bonds mature on November 1, 2044. The 2015A Bonds are secured and payable from the Pledged Revenue, consisting of monies derived by (1) the Anchor Sites Incremental Sales Tax Revenues, (2) the remaining Outparcel Incremental Sales Tax Revenues (if any), and (3) all income from the investment and reinvestment of the Series 2015A Trust Funds. The 2015B Bonds bear interest at 7.0%, payable semi-annually on May 1 and November 1, beginning on May 1, 2016. Annual mandatory sinking fund principal payments are due on May 1 and November, beginning on May 1, 2016. The 2015B Bonds mature on November 1, 2044. The 2015B Bonds are secured and payable from the Pledged Revenue, consisting of monies derived by (1) the Anchor Sites Add-On PIF Revenues, (2) the remaining Anchor Sites Incremental Sales Tax Revenues (if any), (3) the remaining Outparcel Incremental Sales Tax Revenues (if any), (4) the remaining Outparcel Add-On PIF Revenues (if any), and (5) all income from the investment and reinvestment of the Series 2104B Trust Funds. The Authority does not have any capital or operating leases. Emergency Reserves Reserves The Authority has provided for an emergency reserve fund equal to at least 3% of fiscal year spending for 2016, as defined under TABOR. This information is an integral part of the accompanying budget. 10

SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY $5,070,000 $41,930,000 Taxable Public Improvement Fee Tax Increment Revenue Bonds Revenue Bonds Bonds and Interest Maturing in the Year Ending Series 2015A Dated August 11, 2015 Interest Rate of 4.50% to 5.50% Principal Due Annually November 1 Interest Payable May 1 and November 1 Series 2015B Dated August 11, 2015 Interest Rate of 7.00% Interest and Principal Payable May 1 and November 1 December 31, Principal Interest Total Principal Interest Total 2016 $ 1,020,000 $ 2,621,689 $ 3,641,689 $ 130,000 $ 432,017 $ 562,017 2017 1,365,000 2,093,125 3,458,125 185,000 343,000 528,000 2018 1,670,000 2,028,213 3,698,213 240,000 329,000 569,000 2019 1,945,000 1,949,688 3,894,688 280,000 311,500 591,500 2020 1,930,000 1,859,237 3,789,237 325,000 291,025 616,025 2021 1,855,000 1,775,538 3,630,538 355,000 267,750 622,750 2022 1,995,000 1,690,600 3,685,600 390,000 242,375 632,375 2023 2,145,000 1,595,444 3,740,444 425,000 214,375 639,375 2024 2,320,000 1,480,825 3,800,825 465,000 183,925 648,925 2025 2,495,000 1,356,794 3,851,794 510,000 150,500 660,500 2026 2,690,000 1,223,313 3,913,313 560,000 114,100 674,100 2027 2,890,000 1,079,462 3,969,462 605,000 74,200 679,200 2028 3,105,000 924,981 4,029,981 600,000 21,000 621,000 2029 3,340,000 752,950 4,092,950 - - - 2030 3,585,000 565,950 4,150,950 - - - 2031 3,850,000 365,200 4,215,200 - - - 2032 3,730,000 102,575 3,832,575 - - - $ 41,930,000 $ 23,465,583 $ 65,395,583 $ 5,070,000 $ 2,974,767 $ 8,044,767 This financial information should be read only in connection with the accompanying accountant's compliation report and summary of significant assumptions. 11

SCHEDULE OF DEBT SERVICE REQUIREMENTS TO MATURITY Bonds and Interest Maturing in the Year Ending December 31, Principal Totals Interest Total 2016 $ 1,150,000 $ 3,053,706 $ 4,203,706 2017 1,550,000 2,436,125 3,986,125 2018 1,910,000 2,357,213 4,267,213 2019 2,225,000 2,261,188 4,486,188 2020 2,255,000 2,150,262 4,405,262 2021 2,210,000 2,043,288 4,253,288 2022 2,385,000 1,932,975 4,317,975 2023 2,570,000 1,809,819 4,379,819 2024 2,785,000 1,664,750 4,449,750 2025 3,005,000 1,507,294 4,512,294 2026 3,250,000 1,337,413 4,587,413 2027 3,495,000 1,153,662 4,648,662 2028 3,705,000 945,981 4,650,981 2029 3,340,000 752,950 4,092,950 2030 3,585,000 565,950 4,150,950 2031 3,850,000 365,200 4,215,200 2032 3,730,000 102,575 3,832,575 $ 47,000,000 $ 26,440,350 $ 73,440,350 This financial information should be read only in connection with the accompanying accountant's compliation report and summary of significant assumptions. 12