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HomeMy WebLinkAboutMINUTES-09/22/1998-AdjournedSeptember 22,1998 COUNCIL OF THE CITY OF FORT COLLINS, COLORADO Council -Manager Form of Government Adjourned Meeting - 7:50 p.m. An adjourned meeting of the Council of the City of Fort Collins was held on Tuesday, September 22, 1998, at 7:50 p.m. in the Council Chambers of the City of Fort Collins City Hall. Roll Call was answered by the following Councilmembers: Azari, Byrne, Kneeland, Mason, Smith and Wanner. Councilmembers Absent: Bertschy. Staff Members Present: Fischbach, Roy, Krajicek. Resolution 98-133 Disapproving the Service Plan for Richard's Lake Metropolitan District, Adopted The following is staff s memorandum on this item. "Executive Summa At the September 15 City Council meeting, the Richard's Lake Metropolitan District item was continued to this date to provide an opportunityfor the Council Finance and Growth Management Committees to further discuss the implications ofa Metropolitan Service District and related public benefits. The applicant for the Richard's Lake proposal intends to utilize the Metropolitan District method of aiding in financing infrastructure requirements required for development approval. Metropolitan Districts may be organized as special districts under State law for the purpose of providing inhabitants within the district with two or more certain kinds ofpublic improvements and services, includingparks and recreational facilities, street improvements and sanitation services. State lawpermits such Metropolitan Districts to be organized and established within the boundaries of the City under certain conditions. The kinds of improvements that would be made through this proposed district would be street improvements, parks and stormwater facilities. In order to establish a Metropolitan District within the boundaries of the City, the City Council is required by State law to first approve the "Service 275 September 22, 1998 Plan "proposedfor the district. Whenpresented with such a serviceplan, the Council must consider whether to adopt a resolution which would: Approve the Service Plan without any conditions; Approve the Service Plan with conditions; or Disapprove the Service Plan. In considering the Service Plan, State law requires the Council to disapprove the Service Plan unless evidence satisfactory to the Council for each of the following is present: • There is sufficient existing and projected need for organized service in the area to be served by the district; • The existing service in the area to be served by the district is inadequate for present and projected needs; • The district is capable of providing economical and sufficient service to the area to be served; and • The area to be served by the district has, or will have, the financial ability to discharge the district's proposed indebtedness on a reasonable basis. After a significant amount of consideration, staff recommends approving conditionally the applicant's Service Plan for the Richard's Lake Metropolitan District. It is anticipated that this cooperative relationship between the City and the applicant will result in a comprehensive approach to addressing issues identified in the Mountain Vista Subarea planning process. In particular, this relationship may help to address f nancing issues for the provision of future infrastructure needs. Council's approval of the Service Plan is expressly conditioned upon an agreement being entered into with the City by the District at the District's f rst organizational meeting. The agreement will restrict the action the District may undertake until an amendment to the Service Plan, as contemplated in the agreement, is approved by the Council. If such Resolution approving and amendment is not adopted by the Council on or before June 1, 1999, then the Council's approval in this Resolution of the Service Plan shall be deemed null and void. However, the Resolution permits the City Manager to extend this June 1, 1999 deadline to December 31, 1999, if he deems it to be in the City's best interest. 276 September 22, 1998 If the Council disapproves the Service Plan, staff will bring back to Council at its next regularly scheduled meeting, a Resolution settingforth the Council's findings concerningsuch disapproval. " Darin Atteberry, Assistant City Manager, spoke concerning the history of the matter. Staff has met with the Growth Management Committee and Finance Committee to discuss the issue and is recommending conditional approval based on the prospect of future coordination of financing and construction of infrastructure in the Mountain Vista Subarea planning area. The merits of the Service Plan should be considered in accordance with State law using the four criteria set out in the agenda item summary. Three options have been prepared for Council consideration: unconditional approval of the Service Plan, conditional approval of the Service Plan, or disapproval of the Service Plan. Scott Price, Wintergreen Homes, presented general points regarding the criteria, the benefits of the special district to the Mountain Vista Subarea plan and Fort Collins, and the purposes of the special district. He stated that the revenue for a special district comes from taxes, and there are statutory obligations for the district. He spoke concerning the public benefit to the residents that will live within the district due to the better management and maintenance as well as earlier placement of infrastructure. In addition, the development costs borne by the residents will be spread out over the period of the bonds, reducing up -front costs to homeowners and making home ownership more affordable. In summary, he stated that the special district is a useful financing and organizational structure tool that can also be used for the larger public good throughout the Mountain Vista Subarea or throughout the City. Bob Blanchard, Current Planning Director, stated that an Overall Development Plan was approved for this property several years ago, and a vested rights application for the property is pending at this time. The ODP remains in effect only for Phase I, and the ODP for the remainder of the property expired under the transitional ordinance. The final application is currently in the second round of review under the LDGS as a transitional project. All infrastructure must be provided before the Planning and Zoning Board would grant final approval for a P.U.D., and phasing and timing of improvements is negotiated through a development agreement which must be completed before any site development permits can be obtained. Alan Krcmarik, Finance Director, spoke of discussions with the developer concerning different scenarios for the rate of build -out and the project's cash flow. The developer has pledged to be the buyer ofthe bonds to bear the risk for nonpayment in the early years, which removes some of the risk to the City. Mr. Price spoke concerning the work that has been done on the matter and emphasized that the special district is a tool. He stated that the financial model that has been developed meets financial obligations and needs and is viable. 277 September 22, 1998 Councilmember Smith noted that if this project was to be done under standard development mechanisms, the developers would be financing the project. He asked about the implications of the developer buying the bonds, which means that the developer is financing the project anyway. Krcmarik stated that the advantage is that these would be tax exempt bonds, and there would be a lower interest rate. City Manager Fischbach stated that this mechanism would also lower the up- front costs for the home buyers Mr. Price stated that this mechanism would provide an earlier return on the capital investment, would provide management benefits, and would add to the ability of the developer to obtain additional financing. Councilmember Smith asked why most developments are not done this way. Krcmarik stated that there are many metro districts in other parts of the state, and there were some defaults on bonds in the late 1980's, although in some cases the mechanism has been very successful. Councilmember Smith asked about the risks. Krcmarik stated that if there is a real estate slump, the district may not build out and the developer may end up holding the bonds for a longer period of time. In other jurisdictions, defaults on metro districts have indirectly affected the credit ratings of surrounding areas. Councilmember Kneeland asked about the original intent of metropolitan districts. Atteberry stated that there are potential benefits in coordination of financing and construction of infrastructure in the northeast area, and conditional approval would allow time for an in depth discussion of the issue. Deputy City Attorney John Duval stated that metro districts are a type of special district authorized to provide two or more services in an area where the infrastructure is not in place to provide those services. Mayor Azari asked about developments in the surrounding area and if there is infrastructure already in place to serve those developments. Blanchard spoke concerning the infrastructure for other developments in the area. Mayor Azari asked if housing would be more affordable because of this mechanism and asked if the development would proceed if the district is not put into place. Mr. Price stated that a special district would allow the developer to defer rather than reduce some of the costs and the project will proceed whether or not the district is approved. Councilmember Smith asked about the process to be followed subsequent to the granting of conditional approval. City Attorney Roy outlined the process that would ensue. Councilmember Wanner asked for clarification that the Council could turn this down for any reason at a future date if conditional approval is granted. 278 September 22, 1998 Councilmember Kneeland asked if there are guarantees concerning affordability with this mechanism. Blanchard stated that this project would not be approved without affordable housing points. Councilmember Byrne made a motion, seconded by Councilmember Mason, to adopt Resolution 98-133 disapproving the service plan for Richard's Lake Metropolitan District. Steve Metz, attorney from the firm of White and Associates representing the developer, refuted the disapproval. Councilmember Mason spoke in support of the motion and stated that the projected build -out rate is too optimistic, and the tax revenues needed to service the bonds and maintain the parks and stone drainage improvements will prove adequate only if the development builds out according to its projections. Mayor Azari stated that the risk on this metropolitan district does not seem great because it will be self-financing. She stated that the project meets some of the criteria, and she would support conditional approval. The vote on the motion was as follows: Yeas: Councilmembers Byrne, Kneeland, Mason, Smith and Wanner. Nays: Mayor Azari. Adjournment into Executive Session Councilmember Mason made a motion, seconded by Councilmember Smith, to adjourn into Executive Session for the purpose of conducting the quarterly performance review of the City Manager. The vote on the motion was as follows: Yeas: Councilmembers Azari, Byrne, Kneeland, Mason, Smith and Wanner. Nays: None. THE MOTION CARRIED. The meeting reconvened at the conclusion of ATTEST: City Clerk—� 279