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03262008CouncilMinutes - Special CITY OF AMMON CITY COUNCIL SPECIAL SESSION MINUTES WEDNESDAY, MARCH 26, 2008 AGENDA : CITY OF AMMON 2135 SOUTH AMMON ROAD CITY COUNCIL AGENDA – SPECIAL SESSION WEDNESDAY, MARCH 26, 2008 - 3:00 P.M. Discussion Items: 1.LID Question and Answer Conference Call with Tammy Zokan 2.Misc. MINUTES The meeting was called to order by Mayor Ard at 3:00 p.m. in the City Building, 2135 South Ammon Road, Ammon, Idaho, with the following City Officials present: City Officials Present: Mayor Bruce Ard Councilmember Dana Kirkham (arrived late) Councilmember Lee Bean Councilmember Rex Thompson Councilmember D. Ray Ellis City Engineer Lance Bates City Planning Director Ron Folsom City Officials Absent: Councilmember Randy Waite Councilmember Brian Powell City Clerk Leslie Folsom MINUTES DISCUSSION ITEMS : 1. LID Question and Answer Conference Call with Tammy Zokan: Mayor Ard started the conference call by asking Tammy what things they could expect to encounter or any hoops they would have to jump through to make everything work. Tammy explained it can be started by a petition with 60% of the resident landowners or by a resolution initiating the process which would be adopted by the City Council. She stated most of the time it is done by a resolution from the governing body. Once the process is initiated, the City Council would have to adopt a resolution expressing its intent to create an LID. The resolution should explain the project, provide an estimated project amount, and schedule a public hearing on whether or not to create an LID. There are very specific notice requirements both by publications and mailing to each and every landowner of record. The requirement for publication is very strict and must be complied with, if the LID is going to be legal once it’s created. Because there is no election of the people, the code has provided very specific public participation requirements. At the hearing on whether or not to create the LID, folks can submit a comment in the form of testimony or in writing before and/or during the hearing. Most of the time, you will not hear from anyone unless they object. When the City closes the Public Hearing, it does not have to create an LID at that time but it cannot create the LID until it has the Public Hearing. She explained after deliberation if the Council wants to create the LID, the Council would adopt an ordinance creating the LID. The ordinance would describe the project, the project amount, appoints the engineer, and authorizes the issuing of interim financing and/or file financing to pay for the project. This is Phase I of the process. She explained once the City has created the LID, it has the authority to incur indebtedness to acquire and/or construct the improvements it has determined to benefit the property owners. The creation of an LID can be appealed by petition for judicial review, if the petition is filed within 30 days of the publication of the ordinance creating the LID. What happens most often, the governing body enters into some sort of loan agreement on an interim basis with DEQ or private financer, etc. and then the City constructs the project. When the project is complete and the governing body knows what the cost of the project actually is, then it would begin the assessment role process. City Council Special Session Minutes 03/26/2008 -- 1 Tammy talked about the City of Eagle’s LID project and the objections against it. Lance Bates inquired about when the adoption of the resolution happens how close the costs have to be to real numbers. Tammy stated you can hire an engineer, the LID law allows for pre-LID creation expenses to be wrapped into the LID. You are not allowed to go and start the project and include that in the LID. The governing body is authorized to pay an attorney, to pay an engineer, to hire other people to make a determination of what the project might consist of and about how much it will cost. You don’t need a breakdown of costs, you need an overall project cost that would include construction, legal cost, financing cost, etc. That number is normally generated by the engineer. They normally ask us for our legal cost information. If going through the process the number ends up being substantially higher, they recommend that the City go through the hearing process again. She stated it would need to be substantially higher to go through it again. She stated if it is within 10-15% and even up to 20%, depending on what your numbers look like, we would be okay if it proceeded without holding an additional hearing. Tammy talked about the assessment role process and that it is started once you know what your actual cost is. You do not have to wait until your project is completed, but often times that is what happens. You have an engineer prepare an engineer cost report which breaks down the cost of the project and then the engineer prepares a preliminary assessment role based on the best available information and apportions the benefits along the property within the LID. When the City creates the LID, it designates the method it is going to use for apportioning benefits, either by linear footage, square footage, a combination of both, or by a benefits derived method. The benefits derived method is your determination that we’re going to apportion benefits based on each individual benefit achieved by the project. Councilmember Bean stated the project they are talking about runs more in streets. He inquired if she had seen a LID done for streets and how would the apportiontionment go. Tammy stated it really depends on the actual project. She stated with a street, in an example she recently saw, they used a combination of front footage and benefit derived. They determined a person on a corner residential street, that person should not have to pay twice because they have a corner property. That is why they used the combination. She knows a little about our project and her understanding is it would include residential and commercial. She feels the City needs to look at the nature of the street improvement and what good is going to come out of constructing that. Then have a discussion with your engineer and staff as to what is the most fair, it does not have to be exact – it just has to be reasonable. Councilmember Bean talked about the roads we are considering and that they are in undeveloped areas. He explained there will be property owners that will benefit from them but not necessarily contiguous with them. He inquired if you could assign a benefit to those who will benefit but not be contiguous with the streets. Tammy stated what the City of Moscow did. She stated their case actually went to the Supreme Court who said they did that okay. She explained they used the benefits derived method. It is possible to come up with a method, possibly through benefits derived to apportion benefits, in the situation. Tammy explained the assessment portion. The role process for the assessment portion is very similar to the creation process, but the notice requirements are a little bit longer. The publication mailing is 15 days prior, whereas in creation it is 10 days prior. Otherwise the process is identical. When the City adopts its ordinance confirming the assessment role; the time to pay the assessments begins to run. As soon as the ordinance is adopted, folks within the community within the LID, have the option of paying off the entire principal amount in full without interest without any other fees attached to it. The folks who choose not to pay within that 30 day period are given an option to pay in installments. The City decides the terms of the installments which can be no more than 30 years. LID’s are usually shorter, more like 10 or 20 years. The first annual installment would be due, one year from the date of adoption of the ordinance, confirming the assessment role. Mayor Ard inquired then it is not a portion of their property tax, it is a separate assessment. Tammy agreed it is not a tax. It is a lien on the property until paid and is an assessment, not a tax. Mayor Ard inquired who would do the billing on that. Tammy stated the City would. Tammy talked about the financing. You will need to have a good idea when your project will be completed and when your assessment role will be confirmed. The assessment role can be challenged. She needed to back up a little to explain. She explained in regard to the assessment role, folks have 30 days to pay in full without interest they also have 30 days to appeal the ordinance confirming the assessment role. There is a separate provision in the LID code regarding appeals of the assessment roles. It provides a different process than the petition for judicial review process. This assessment role appeal procedure is supposed to be abbreviated and expedited as a matter of law. She has not been involved in an assessment role challenge. She thinks the most recent was 2006 and before that was 2002. It is another opportunity for folks to go to court. Tammy stated once the assessment role has been confirmed and once the 30 day prepayment period has expired, the City will know how many people have paid up front. Councilmember Bean inquired where the long term financing would come from. Tammy stated the City would issue a Global Improvement District Bond to a lender. She would urge the City to explore financing through the Idaho Bond Banks Authority. The benefit of the Idaho Bond Bank Authority is that your costs are spread out. She is guessing with street improvements you will not be eligible for DEQ, USDA or other government financing, City Council Special Session Minutes 03/26/2008 -- 2 which is the cheapest way to go. The next best thing is the Idaho Bond Banks because of the sharing of issuance costs and you also have the option to go through another underwriter and lender. Councilmember Ellis inquired how often in her experience are these LID’s overturned. She has only had one challenged. In her experience they are not challenged. She has not seen an LID ever undone in court decisions; however, most folks don’t challenge to the creation, most folks challenge the assessment role. Councilmember Bean inquired if you had a tiered assessment saying that those closer to the project benefit more, you really need to establish zones. Tammy agreed. The court has decided when looking at assessments, it does not have to be exact. It has to be reasonable. We need to make sure the engineer has gone through some analysis and that analysis is included in the record before the City. Ron Folsom inquired about the Eagle case and if that was the reason for the legislation this year. She stated it was. Lance Bates inquired if things go smooth with the LID, how long does it usually take. Tammy stated if the creation part goes pretty much without a hitch, probably about two months. She explained you have to get your notice documents together and get things published and mailed on time. She stated it also depends on how long it takes your project to get constructed when you get to the assessment role process. The assessment role process can be completed in a span of about two months, so long as you know your costs and your engineering report and preliminary assessment role are prepared. She has seen LID’s created and nothing has ever been done with them. She has seen LID’s created and the project has not been completed for six years out, even though the project has been started. Councilmember Bean inquired in a scenario where you go through the process of creating it and then passing your assessment role ordinance, it is all based on estimated costs. He wants to know what you do if your project takes longer and ends up costing more, do you need to go back for another assessment hearing. Tammy stated once your assessment role ordinance is adopted and your assessment role is confirmed, she thinks the only option for increasing the assessment would be to go through something called the reassessment process. She explained you do not have to have another public hearing, if they do not go up more than 20%. You can go ahead and adopt an assessment role that is amended which is different from the preliminary assessment role, as long as no one assessment goes up more than 20%. She has not had to go through one for a client. Councilmember Thompson inquired how you get the public support to create the LID, if they do not know how much each person is going to pay. Tammy stated people love to ask how much they are going to have to pay during the creation process and there is no way for a governing body to guess what that is going to be. She stated often times her clients do get wrapped up and try to make those estimates. She advises against it because those estimates often times turn out to be incorrect. She explained the LID law is a great tool for the sorts of projects that only benefit part of an area within a city. If you have a revenue bond election, everyone gets to vote on it but not everyone is going to be benefited. Councilmember Bean inquired when you go through the creation project of the LID is that when they establish the boundaries of the benefit. Tammy agreed. Ron inquired if it is reasonable, if we are doing it within one square mile, and there is benefit derived by residences that are existing - if we said those are really low, we could assess them a low percentage – would that be okay as far as benefit derived method. Tammy talked about examples of what types of benefits residents would receive and that would be okay. Ron inquired about a school and that it will derive more benefit from these roads than the people that live around them. Tammy inquired if the school is private or public. Ron explained it is a charter school. Tammy stated you cannot assess government property. That includes cities, school districts, water districts, sewer districts, or any other federal property. You can enter into an agreement with that entity for them to pay a fair share. The reasoning is because they cannot enter into long term financing agreements unless they hold an election. 2. Misc.: Council talked about what would be the first step to get started. It was discussed whether we need outside engineering. Lance stated he feels we do. Councilmember Bean stated if we have the ability to add it in to the LID, he does not see a problem with that. It was discussed if the engineering firm that does the LID creation would do the project also. Councilmember Bean talked about establishing the LID boundaries and see where we are at that point. Councilmember Thompson inquired if we have an agreement not to charge the people on the south side of st 1 Street to widen the road. Ron stated he is not sure about the widening, he knows the water line is that way. Ron stated he will check on it. Councilmember Thompson talked about developers getting double benefits with the LID. Council discussed the benefits and disadvantages of the LID. It was discussed who benefits and by how much they benefit from the possible LID. Councilmember Kirkham talked about being okay with the properties that are contiguous to the LID project, but she doesn’t feel right about placing the LID on existing residents. Council discussed where the boundaries could be. Councilmember Bean feels we need to complete John Adams. Councilmember Kirkham inquired about the school, and if we can ask them to pay a portion when they City Council Special Session Minutes 03/26/2008 -- 3 come in for their Conditional Use Permit. It was discussed the school only had to put in 100 feet of John Adams. We usually do not bring back schools for the CUP’s unless it is a modular request. If they came and asked to expand, then at that point we could ask them. Councilmember Kirkham inquired how serious we are about this. Councilmember Bean stated he feels we are serious and we need to move forward. He stated we have major problems with our roads and the longer we wait the worse it will get and become more expensive. Councilmember Thompson stated if no other development goes in there, we can limp along with what we have; but if there is any other development at all we are in trouble. Councilmember Ellis thinks it is worth pursuing further. Councilmember Kirkham feels we should at least pursue Phase I. Council discussed the professional fees that will be involved. Councilmember Kirkham inquired if this is better than bonding for all of our roads for the whole City. Councilmember Bean commented we have no way of paying the bond back. It becomes a general obligation bond for the City which is paid out of tax funds and you don’t have the tax funds. Mayor Ard stated you would then need th a levy increase. Councilmember Kirkham talked about doing a LID on 17 Street. Council discussed which areas of the City need attention. Councilmember Ellis suggested we need to decide if a LID is a tool we want to use. After that, then move to the different areas that may require the use of a LID. Councilmember Thompson commented that the simplest LID you could do is to build Curlew and John Adams and assess the property around that for just that project. First st Street will come in later. It was discussed that the light could be included for 1 Street. Council discussed the levy rates. Councilmember Kirkham suggested comparing the increase with the LID rate with the increase in levy rates. She stated that might also be a way to sell it. Councilmember Bean stated it is really hard to commit to a 20 year period of time for tax revenues. It was discussed the County needs to join with us on this. Councilmember Kirkham will talk to Roger. Councilmember Ellis stated he will talk to Dave. The meeting adjourned at 5:00 p.m. ___________________________________________ C. Bruce Ard, Mayor ______________________________________ Leslie Folsom, City Clerk City Council Special Session Minutes 03/26/2008 -- 4