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Home My WebLink About1989-036-02/07/1989-MODIFYING THE POLICIES FOR SPECIAL IMPROVEMENT DISTRICTS RESOLUTION 89-36 OF THE COUNCIL OF THE CITY OF FORT COLLINS MODIFYING THE POLICIES FOR SPECIAL IMPROVEMENT DISTRICTS WHEREAS, the Council of the City of Fort Collins has previously approved, by Resolution 84-91, certain policies pertaining to those special improvement districts which are created by the Council upon petition of property owners within the proposed districts; and WHEREAS, the Council is desirous of modifying its current policies for such districts so as to ensure that the review and approval of property owners' petitions is consistent with the public interest. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the policies established by City Council pertaining to voluntary Special Improvement Districts shall be and hereby are modified as follows: 1 . All public improvements as described in Chapter 22 of the City Code shall be eligible for inclusion in an improvement District. However, the City may exclude certain improvements if it decides that such improvements are not in the best interests of the City. 2. Nothing herein shall be construed to inhibit the City's right to approve or deny the creation of any District. 3. Districts shall be consistent with the Master Street Plan and other planning documents of the City. Each District shall have an approved Master Plan. An approved Preliminary Plan may be required if local street or utility improvements are to be included within the District. The City may also require a Storm Drainage Plan to be submitted. 4. The acceptability of a District shall be determined according to both the general benefits to the City and the special benefits to the property owners to be assessed. Such general benefits shall include, without limitation, the public need for the proposed improvements; the extent to which the proposed District improvements will constitute a logical extension of existing infrastructure; the consistency of the proposed improvements with relevant City policies and priorities; and the extent to which the proposed project will promote the economic development of the City. The proposed District improvements should be of general benefit to the City within a reasonable period of time. 5. Any financial risk to the City from the proposed District shall be evaluated according to the following criteria as defined in Standard and Poor's debt ratings criteria as attached hereto and incorporated herein by reference: a. Project essentiality b. Project feasibility (based on independent market study and projection of buildout) c. Project risk in terms of technology and management skill d. District make-up and economic base e. Assessment formula f. Value to debt ratios g. Amount of debt service reserve h. Adequacy of cash flow i . Financial strength of property owners 6. In the event that the ratio of assessable costs to property value within the District is permitted to exceed the limitations contained in Section 22-90 of the Code, by reason of the consent of the property owners, the assessments shall in no event be permitted to exceed 100 percent (100%) of the combined value of the assessed property and the proposed District improvements. 7. The total amount of encumbrances upon property within the District at the time of the creation of the District, including the amount of the proposed assessments, shall not exceed ninety percent (90%) of the combined value of the land and the proposed District improvements, unless all subordinate lien holders have acknowledged such fact in writing and/or adequate credit enhancements have been obtained by the City to cover the construction cost of the District improvements. 8. Any amount to be expended by the City in connection with the District must be currently budgeted and available for appropriation and expenditure. 9. The City shall retain the right, in its discretion, to require property owners within the District to manage the construction of the improvements themselves or through professional engineers, so long as the proposed managers can demonstrate sufficient experience and competence. 10. Privately managed Districts shall bid and award contracts for construction of the public improvements in the District, in conformance with the City Charter. 11. In reviewing and approving any District, the City shall consider any extraordinary inconvenience to non-participating property owners which may result from construction activities within the District. 12. In the event of any default in the payment of assessments for a property within the District, the City shall pursue all legal remedies permitted by law, including foreclosure and sale of the affected property. 13. The City Manager may establish administrative policies and procedures as well as and appropriate fees, for the Improvement District process. Passed and adopted at a regular meeting of the Counci f the City of Fort Collins held this 7th day of February, A.D. Mayor ATTEST: yeo � .� City Clerk ` STANDARD & POOR'S DEBT RATINGS CRITERIA Major viterio consklofOtions •Project essentiality—The Project's degree of im- quirements,so that there are no legal challenges portance to assessment payers is an influential fac. possible once bonds are offered.All rights to legal for in determining whether those benefitting from challenges,claims and adjudication should have the project will pay their required amount.Most ended before the municipal entity attempts to issue special assessment issues should be able to meet the bonds. test of essentiality since bonds are commonly used •Term and redemption of bonds—The debt-service for water,sewer,and street improvements.How- schedule is usually flat or declining over time and ever,less essential projects,such as parks or land- should be within the useful life of the project and scaping,may be looked upon negatively. improvements. Most special assessment bonds will e Project risk—Generally,projects utilizing a known have maturities of 15 years or less. technology and developed by experienced personnel •Debt-service reserve—It is essential that there be a would mitigate S&P's concerns. reserve fund or other security feature that will pro- •District make-up and economic base—A district vide for payment of debt service in the event assess- which is largely undeveloped or concentrated in one ments are not received on a timely basis.The type of industry or assessment base is looked upon amount of the debt-service reserve and the way in negatively. A special assessment district tied to a which it is funded are important as well since it is stable and diversified economic base is desirable. expected that there will be funds on hand at all The effects of employment levels,wealth indicators, times to cover any revenue shortfall.Additionally, and regional trends on payment of assessments are debt-service reserve investments should be in securi- evaluated. ties with a high degree of safety and liquidity. e Assessment basis—The basis for establishing as- .Cash-fim runs—Sensitivity tests which demon- sessments should be objective and equitable. strate the strength of the bond structure in the •Method of assessment collection—A collection sys- event of nonpayment,prepayment,and anticipated tem which is tied to ad valorem taxes is preferred. payment are necessary in evaluating the ability of S&P may also regard incentives for early payment and disincentives for late payment as positive fea- Assthe bond structure to withstand unexpected events. tures.For example, and debt regarding interest rates on the bonds p penalties for late payment and and debt service reserve investments should be discounts for early payment may be worthwhile de- tested as well. pending on their effect on cash flows. a Active monitoring—Active administration and • Value-to-debt ratios—High property value-to-debt monitoring ratios indicate a likelihood of making assessment e t o municipal entity is an important payments on a timely basis.Also,the marketability enhancement t the structure i the credit l munic- of property in the district points to added security in or r entity—often the county,city,municipal utility, the event properties must be sold as a result of fore- or redevelopment authority—should be charged with the responsibility of administering the assess. closure or bankruptcy on the owner. Pit of the property ment collection process and successful completion of •Lien position—A lien on parity with or ahead of ad the project. valorem taxes is desirable. •Treatment of property sales—Liens should remain in place upon transfer of property or be extinguished by an immediate acceleration of all outstanding, current and future speeW assessments on the prop. erty. •Foreclosure/bankruptcy provisions—Assessment collections should not be hindered by foreclosure, bankruptcy or sales of tax certificates or tax deeds. Action should be taken on a timely basis to ensure that sufficient funds are available to make sched- uled debt-service payments.The marketability of property is also a concern here;a detailed property market study would help in determining the demand for property which has entered into foreclosure or bankruptcy proceedings. •Clear right to issue—Public hearings and a dead- line for discussion are necessary,within legal re-