HomeMy WebLinkAbout2008-069-07/15/2008-ADOPTING A POLICY CONCERNING APPROVAL OF METROPOLITAN DISTRICT SERVICE PLANS RESOLUTION 2008-069
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ADOPTING A POLICY CONCERNING
APPROVAL OF METROPOLITAN DISTRICT SERVICE PLANS
WHEREAS, the Colorado Revised Statutes allow for the formation of a variety of entities
to finance and operate public services and infrastructure; and
WHEREAS,a metropolitan district is one of the entities authorized by Article 1,Title 32 of
the Colorado Revised Statues; and
WHEREAS, metropolitan districts have not historically been used within the City; and
WHEREAS,due to many factors,including escalating costs to construct public infrastructure
and fiscally challenged government, Colorado developers have increasingly sought approval of
metropolitan districts to assist in the costs of financing infrastructure,as shown by the growth of the
creation of metropolitan districts from 295 in 1999 to 1052 today; and
WHEREAS, the Council has requested that staff investigate the merits of metropolitan
districts and, if advisable, develop a policy concerning the formation of these entities within the
City; and
WHEREAS,staff has,after discussions with interested citizens,consultants,developers and
City Council over the last several months, developed a policy for reviewing proposed service plans
for metropolitan districts, which policy is dated July 9, 2008, and attached hereto as Exhibit "A"
and incorporated herein by this reference.
NOW THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT
COLLINS that the City Council hereby adopts the Policy for Reviewing Proposed Service Plans for
Title 32 Metropolitan Districts, City of Fort Collins, CO,dated July 9, 2008,to be used to evaluate
requests for metropolitan districts within the City.
Passed and adopted at a regular meeting of the 2Co i o the City of Fort Col ' s this 15th
day of July A.D. 2008.
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May
ATTEST:
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City Clerk
EXHIBIT "A"
POLICY FOR REVIEWING PROPOSED
SERVICE PLANS FOR TITLE 32 METROPOLITAN DISTRICTS
CITY OF FORT COLLINS, CO
July 9, 2008
Introduction.
A. The City establishes the following as its Special District policy for (i) the review
and approval or disapproval of Service Plans, including any amendment thereof, for the creation
of a Metropolitan District ("District") pursuant to Title 32, Article 1 of the Colorado Revised
Statutes (the "Act"); and (ii) for the regulation of those Districts. This Policy is intended as a
guide only. Nothing in this document is intended, nor shall it be construed, to limit the
discretion of City Council, which retains full discretion and authority regarding the terms
and limitations of all District Service Plans
B. The City generally supports the formation of a District where it is demonstrated
that a District is needed to provide public improvements to local development and will result in
enhanced benefits to existing or future business owners and/or residents of the City and the
District, whether such enhanced benefits are provided by the District or by the entity developing
the District because the District exists to provide public improvements. A District may be
permitted to conduct ongoing operations and maintenance activities where it can be
demonstrated that having the District provide operations and maintenance is in the best
interest of the City and the existing or future taxpayers of the District.
C. For a District whose primary revenue source is property taxes, and in the absence
of special circumstances, District formation will not be favorably received where the future
assessed value of all property within the District at full build-out is projected to be less than ten
million dollars ($10,000,000). The ten million dollar assessed valuation threshold, for Districts
whose primary revenue source is property taxes, will increase biennially after 2008 to adjust for
increases in the Consumer Price Index for the Denver-Boulder-Greeley statistical region as
prepared by the U.S. Bureau of Labor Statistics. Special circumstances and special cause must
be demonstrated for exceptions to be granted.
D. All Districts and all persons or entities developing property within a District must
comply with all provisions of the City Code and Land Use Code and all related standards.
E. The City generally supports the formation of a District where the projected use is
primarily commercial. The City will not approve a Service Plan proposing a residential use only.
However, mixed use may be considered as long as the Service Plan clearly identifies that the
project is predominately commercial. "Predominately commercial" as used in this Policy shall
mean that the assessed value derived from non-residential usage is no less than 90% of the
assessed value of the entire project. The actual market value of the project may differ from the
assessed value for the project.
F. A District, when properly structured, can enhance the quality of development in
the City. The City is receptive to District formation as an instrument to provide competitive
financing for projects, build better and enhanced infrastructure, and, where needed, create a
quasi-governmental entity to provide essential improvements which are otherwise not available
and could not be practically provided by the City or any other existing municipal or quasi-
municipal entity, including existing special districts, within a reasonable time and on a
comparable basis. It is not the intent of the City to create multiple entities which could be
construed as "competing governments." Formation of a District will not be favorably received if
the District will be used to fund basic infrastructure improvements normally required of new
development.
Service Plans.
A. Any Service Plan submitted to the City for approval must comply with all state,
federal and local laws and ordinances, including the Act.
B. The Service Plan must include all information required by the Act.
C. The Service Plan must enumerate and describe all powers requested on behalf of
the District. Demonstration of the need or benefit of each power is required. Powers which are
not clearly needed will not be approved in the Service Plan.
D. Any intergovernmental agreement which is required, or known at the time of
formation of the District to likely be required, to fulfill the purposes of the District, must be
described in the Service Plan, along with supporting rationale. The Service Plan must provide
that execution of intergovernmental agreements which are likely to cause a substantial increase
in the District's budget and are not described in the Service Plan will require the prior approval
of City Council.
E. The Service Plan must include the description of any planned inclusion into, or
exclusion of property from, the District's boundaries known at the time of the submittal of the
Service Plan. The Service Plan must provide that inclusions or exclusions by the District that are
not described in the Service Plan will require the prior approval of City Council.
F. The Service Plan must describe any planned extraterritorial service agreement.
The Service Plan must provide that any extraterritorial service agreements by the District that are
not described in the Service Plan will require the prior approval of City Council.
G. The Service Plan must contain language that prohibits the District from using
powers of eminent domain. However, the City may choose to exercise its powers of eminent
domain to construct public improvements within the District in which case the District and City
will enter into an intergovernmental agreement concerning the public improvement and funding
for the use of eminent domain.
H. The Service Plan must restrict the District's total mill levy authorization for both
debt service and operations and maintenance to forty (40) mills (the "Maximum Mill Levy"),
subject to adjustment as provided below. It is anticipated that a portion of the Maximum Mill
Levy may be utilized by the District to fund operations and maintenance functions, including
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customary administrative expenses incurred in operating the District such as accounting and
legal expenses and otherwise complying with applicable reporting requirements. The District's
Board of Directors will have full discretion to determine what portion of the Maximum Mill
Levy may be levied for debt service and what portion for operations and maintenance. For
example, a District levying 30 mills for debt service and 5 mills for operations would be in
compliance, as would a District levying 20 millsfor debt service and 15 mills for operations. In
both examples, the total mill levy of the Districts would be 35 mills, which is within the
Maximum Mill Levy. The Maximum Mill Levy may be adjustable from the base year of 2008;
provided, however, that in the event the method of calculating assessed valuation is changed
after the base year of 2008, the mill levy limitation applicable to such debt may be increased or
decreased to reflect those changes, the increases or decreases to be determined by the District
Board in good faith (that determination to be binding and final), so that to the extent possible, the
actual tax revenues generated by the District's mill levy, as adjusted, for changes occurring after
January 1, 2008, are neither diminished nor enhanced as a result of the changes. For purposes of
the foregoing, a change in the ratio of actual valuation to assessed valuation will be a change in
the method of calculating assessed valuation.
I. The Service Plan must include Debt and operating financial projections prepared
by an investment banking firm or financial advisor qualified to make such projections (the
"Financial Plan"). The financial firm must be listed in the Bond Buyers Marketplace or, in the
City's sole discretion, other recognized publication as a provider of financial projections. The
Financial Plan must include debt issuance and service schedules and calculations establishing the
District's projected maximum debt capacity (the "Total Debt Limitation") based on assumptions
of(i)the projected interest rate on the debt to be issued by the District; (ii) the projected assessed
valuation of the property within the District; and (iii) the projected rate of absorption of the
assessed valuation within the District. These assumptions must use market-based, market-
comparable valuation and absorption data and may use an annual inflation rate of three percent
(3%) or the Consumer Price Index for the preceding 12 month period for the Denver-Boulder-
Greeley statistical region as prepared by the U.S. Department of Labor Statistics, whichever is
greater. The Total Debt Limitation set forth in the Service Plan must not exceed 100% of the
projected maximum debt capacity as shown in the Financial Plan. The Financial Plan must also
include foreseeable administrative and operation and maintenance costs.
J. If, after the Service Plan is approved, the State Legislature includes additional
powers or grants new or broader powers for Districts by amendment of Part 10 of Article 1, Title
32, C.R.S., no such powers will be available to or exercised by an existing District without the
prior approval of the City Council.
K. Every Service Plan must include, in addition to all materials, plans and reports
required by the Act, an Infrastructure Preliminary Development Plan ("PDP"). This PDP must
include, at a minimum, a map or maps, and construction drawings of such scale, detail and size
as required by the Planning Department, providing an illustration of public improvements
proposed to be built, acquired or financed by the District, along with a written narrative and
description of those items and a general description of the District's proposed role with regard to
the same. Due to the preliminary nature of the PDP, the Service Plan must indicate that the
City's approval of the PDP shall not bind the City's reviewing and making land use approvals.
Approval of the PDP must precede or be concurrent with approval of the Service Plan.
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L. Development Fees must not be imposed by the District unless the Development
Fees are identified with particularity in the Service Plan and the Financial Plan.
Bonded Indebtedness.
A. Original issuance of bonded indebtedness by the District prior to build-out is
limited to that debt which can be sized, serviced and defeased with no more than the Maximum
Mill Levy as described in Paragraph H of the Service Plans Section above.
B. The District will be limited to issuing new debt as provided in the Financial Plan.
In the absence of evidence that development phasing will be of a duration that makes it
impracticable to issue all debt within a fifteen-year period, or other special circumstances, the
Service Plan must provide that all new debt will be issued within a period of fifteen (15) years
from the date of the District's formation. Debt issued by the District will have a maximum
maturity of thirty (30) years for each series of debt. The restrictions on issuance will not pertain
to refundings, but the thirty-year maximum maturity does apply to refundings unless such
refundings result in a net present value savings asset forth in Section 11-56-101, et seq., C.R.S.,
and are otherwise permitted by law.
Multiple-District Structures.
A. It is the intent of the City that citizen/resident control of Districts is encouraged to
occur as early as possible.
B. Multiple-District structures may be proposed in the following situations:
1. The projected absorption of the project and the public improvements to be
financed are reasonably projected to occur over an extended period of time after the date of
organization of the District.
2. The project has varying projected uses, such as residential and
commercial. Service Plans proposing mixed use must, at a minimum, reflect that 90% of the
assessed value is derived from non-residential usage. The actual market value of the project may
differ greatly from the 90% assessed value for non-residential.
C. The Service Plan must fully describe the need, reasoning and mechanics if a
Multiple-District structure is proposed.
Dissolution of District.
The Service Plan must provide for dissolution of the District, and all debts and financial
obligations of the District must be defeased as well, no more than 40 years after the Service Plan
is initially approved. Additionally, the Service Plan must provide that the District is obligated to
obtain the approval of the City Council 20 years after organization of the District (and every ten
(10) years thereafter) in order to continue providing operations and maintenance services;
provided, however, that failure to obtain such approval shall not be considered a material
modification unless such approval is not obtained forty-five (45) days after written notice to the
District by the City of the need to request such approval.
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Default of District.
A. In the event that a District fails to pay its debt when due or defaults in the
performance of any obligation that has been agreed to between the District and the City, which
obligation has been identified by the City in writing as a material obligation, and such default is
continuing after the delivery of notice thereof to the District and the expiration of any cure
periods, the District shall be precluded from issuing additional debt except refunding bonds
issued to avoid or to cure a payment default, without the prior approval of the City Council.
B. In the event that a court of competent jurisdiction has made a final, unappealable
determination that a District has defaulted on any of its financial obligations, the District will be
precluded from issuing additional debt, except to refund or refinance a financial obligation for
the purpose of avoiding or curing a default, without receiving written permission from the City
Council following a public hearing on the matter.
C. In the event of a material modification of the Service Plan, the City and the
electors of the District will be entitled to exercise their respective rights under the Act.
Departures from the Service Plan that constitute a material modification include without
limitation:
1. actions or failures to act that create greater financial risk or burden;
2. performance of a service or function or acquisition of a major facility that
is not closely related to a service, function or facility authorized in the Service Plan; and
3. failure to perform a service or function or acquire a facility required by the
Service Plan.
Actions that are not to be considered material modifications include without limitation changes
in quantities of facilities or equipment, immaterial cost differences, and actions expressly
authorized in the Service Plan. Following formation of the District, the District's Board of
Directors may, from time to time, submit a letter to the City Manager, or designee, outlining the
proposed actions of the District for which the Board of Directors is unclear as to whether a
Service Plan amendment is required. The City Manager, or designee, will determine whether an
amendment to the Service Plan is required under the provisions of this Policy and Section 32-1-
207, C.R.S., and then provide a copy of the determination to the District's Board of Directors.
Annual Report.
A. The Service Plan must obligate the District to file an annual report not later than
September 1 of each year with the City Clerk for the year ending the preceding December 31, the
requirements of which may be waived in whole or in part by the City Council or the City
Manager.
Unless waived by the City the Service Plan must require the annual report to include the
following:
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1. A narrative summary of the progress of the District in implementing its
Service Plan for the report year;
2. Except when exemption from audit has been granted for the report year
under the Local Government Audit Law, the audited financial statements of the District for the
report year including a statement of financial condition (i.e.,balance sheet) as of December 31 of
the report year and the statement of operations (i.e., revenues and expenditures) for the report
year;
3. Unless disclosed within a separate schedule to the financial statements, a
summary of the capital expenditures incurred by the District in development of improvements in
the report year;
4. Unless disclosed within a separate schedule to the financial statements, a
summary of the financial obligations of the District at the end of the report year, including the
amount of outstanding indebtedness, the amount and terms of any new District indebtedness or
long-term obligations issued in the report year, the amount of payment or retirement of existing
indebtedness of the District in the report year, the total assessed valuation of all taxable
properties within the District as of January 1 of the report year and the current mill levy of the
District pledged to debt retirement in the report year; and
5. Any other information deemed relevant by the City Council or deemed
reasonably necessary by the City Manager.
B. In the event the annual report is not timely received by the City Clerk or is not
fully responsive, notice of such default shall be given to the District Board at its last known
address. The failure of the District to file the annual report within forty-five (45) days of the
mailing of such default notice by the City Clerk may constitute a material modification of the
Service Plan, at the discretion of the City.
Sanctions.
Should any District undertake any act which constitutes a material modification to the
Service Plan, the City Council may impose one (1) or more of the following sanctions, as it
deems appropriate:
1. Exercise any applicable remedy under the Act;
2. Withhold the issuance of any permit, authorization, acceptance or other
administrative approval, or withhold any cooperation, necessary for the District's development
or construction or operation of improvements or provision of services;
3. Exercise any legal remedy under the terms of any intergovernmental
agreement under which the District is in default; or
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4. Exercise any other legal remedy, including seeking injunctive relief
against the District, to ensure compliance with the provisions of the Service Plan or applicable
law.
Review and Approval Process.
A. Once the City Manager has established compliance with this Policy, the City
Manager will, within a reasonable time, place before the City Council for its consideration a
resolution approving the Service Plan. The resolution will be processed and governed by the
City Charter and the City Code.
B. The proponents of the District must cause a notice of the public hearing at which
the proposed resolution is to be considered by the City Council to be mailed by first class mail to
the owners of record of all property within the proposed District and within any inclusion area
specifically identified in the Service Plan, as such owners of record are listed on the records of
the County Assessor. The mailed notice must be made at least ten (10) days prior to the public
hearing on the resolution. The notice shall include the following:
1. A description of the general nature of the proposed services and public
improvements to be provided by the District;
2. A description of the property to be included in the District and the
inclusion area (if any), which description will be by street address, by reference to lots or blocks
on any recorded subdivision plat thereof, or by metes and bounds if not subdivided, by tax
identification number or by any other method reasonably calculated to apprise owners of the
property to be included in the District;
3. The place at which a copy of the Service Plan may be examined;
4. The date,time and place of public hearing on the Service Plan;
5. A statement that all protests and objections must be submitted in writing to
the City Manager at or prior to the public hearing, in order to be considered; and
6. A statement that all protests and objections to the District, as proposed,
will be deemed to be waived unless presented in writing at the time and in the manner specified
in this subsection.
C. The resolution will be conclusive of the City's determination on the Service Plan.
No action or proceeding, at law or in equity, to review any acts or proceedings or to question the
validity of the Council's determination pursuant to this Policy, whether based upon irregularities
or jurisdictional defects, will be maintained unless commenced within 30 days after the adoption
of the Council's ordinance, or else be thereafter perpetually barred. In the manner and to the
extent provided in this Policy, City Council will maintain continuing jurisdiction over the
operations and affairs of the District and will exercise its rights in relation thereto, as deemed
appropriate by City Council, pursuant to the Act and as consistent with this Policy.
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Fees.
With the submittal of a Service Plan, the entity proposing the District must also submit to
the City Clerk the following amounts:
1. a non-refundable application fee not to exceed$2,000; and
2. a $10,000 deposit to reimburse the City for staff, legal, and consultant
time.
A request for an amendment or modification to a Service Plan must be submitted to the
City Clerk and be accompanied by the following:
1. a non-refundable application fee not to exceed $250; and
2. a$1,500 deposit to reimburse the City for staff, legal, and consultant time.
The City may draw against the deposits referred to above based upon then current hourly
rates (including benefits) of employees working on the Service Plan and the applicable rates for
legal and other consultants. If the reimbursed amount exceeds the deposit, the balance shall be
due to the City immediately and prior to consideration of the Service Plan or amendment by the
City Council. Any deposit amounts remaining upon Council consideration of the Service Plan or
amendment will be returned. The purpose of staff, legal, and consultants' review is to provide
the City Council with expert advice in considering the adequacy of the Service Plan and in
forming a basis for adopting an ordinance approving, disapproving, or conditionally approving
the Service Plan for the District. The fees set forth in this Section may be waived by City
Council.
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