Loading...
09172008CouncilMinutes - Work Session CITY OF AMMON CITY COUNCIL MINUTES AGENDA – SPECIAL WORK SESSION WEDNESDAY, SEPTEMBER 17, 2008 AGENDA: CITY OF AMMON 2135 SOUTH AMMON ROAD CITY COUNCIL AGENDA – SPECIAL WORK SESSION WEDNESDAY, SEPTEMBER 17, 2008 - 2:30 P.M. Discussion Items: 1.CID discussion – Dove’s Landing, Hawks Landing, Quail Ridge 2 and Founders Point 2.Offsite Sewer Improvements 3.Misc. MINUTES The meeting was called to order by Mayor Bruce Ard at 2:35 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 Councilmember D. Ray Ellis Councilmember Rex Thompson (arrived 2:50 pm) City Clerk Leslie Folsom City Engineer Lance Bates City Planning Director Ron Folsom City Attorney Scott Hall City Officials Absent: Councilmember Randy Waite Councilmember Brian Powell Councilmember Lee Bean DISCUSSION ITEMS: 1. CID Discussion - Dove’s Landing, Hawks Landing, Quail Ridge 2 and Founders Point: Jeremy Pisca, Attorney with Evans Keane Law Firm, 1401 West Main, Boise, Id. and Carter Frolick, Development and Planning Financing Group, 3302 East School Road, Phoenix AZ. who were responsible for drafting the CID statute. Carter is here to advance the discussion of the CID and to help with ideas and answer any questions. Carter Frolick introduced himself and handed out a document with financing guidelines. His company works primarily with the private sector and helps to set up the special taxing districts which in Idaho would be the LID’s and CID’s. They are here to advance the four entities, Founders Point, Hawks Landing, Dove’s Landing and Quail Ridge 2 of approx. 412 acres, which will include 729 residential units and 23 acres of commercial uses. The project requires regional and interactive improvements of approximately $32 million dollars. They are asking the City to corporate in the project in the amount of $4.3 million through the CID. The district can issue three different kinds of bonds - revenue, general obligation and special assessment bonds. They ask that only special assessment bonds be issued. The bonds will make a 3-1value-to-lien ratio, which is the industry standard for issuing the bonds. Mayor Ard inquired what the 3 to 1 ratio is based on. Carter said it is like a loan to value. If property is appraised at $300,000 in an area, then we could issue a bond of $100,000. The City will be administering the district. Based on the average of $165 assessment per lot, then the annual payments of a single family home will be $491. At some point, the districts have the ability to annex other lands into the bond. To the extent that they are funding infrastructure for other areas, they would anticipate that they contribute their fair share and pay the district, City or st developer. Councilmember Kirkham asked if there has been a CID in the works anywhere in the State. It became law July 1. The City of Meridian has contacted them, as well as Eagle. Carter has been involved in over 2000 throughout the United States. Carter stated this is not unusual for communities experiencing growth. Councilmember Kirkham asked what the time frame would be. Carter said a petition would need to be of 100% of the landowners for the CID, provide a general plan for what will be financed and how to do it. Mayor Ard asked why Founders Point would not be included. Jeremy said there are 9-17-08 Council Minutes – Work Session Page 1 of 5 some transfers of ownership issues. The Statute allows the inclusion later in time. General obligation would be secured by property taxes spread evenly throughout – if one defaults then all would have to pay the difference but they aren’t allowed here. Special assessment requires the owner to agree to the assessment against the property and recorded, then future owners are informed. If a homeowner defaults, the only recourse is against the property itself which is really the only one to be used on this project. Councilmember Ellis asked if the special assessment give them enough money to do what they need to do. Carter answered yes. Scott asked for clarification on the assessments. For example: Founders Point is not in the mix, so they ultimately must pay the City, district or developer, whichever source the money came from. Councilmember Ellis asked if Founders Point joins the district in two years and they assess their property, when that money comes in then will it be used to pay back the other three developments portions? Carter stated it could be it but it would depend on how it gets set up. Jeremy stated the construction can be incurred by the district, then they can hire the construction out, or the owner can go out and purchase it, or they can acquire it. The district does not have to pay anything until such time as the bond money is there. Councilmember Kirkham asked concerning the time frame if they’re not required to pay until the funds are there how this helps the developer. Carter said it’s beneficial for the developers to fund through the CID funds. Councilmember Ellis inquired if this assessment can be made on raw land. Carter answered it depends, it’s the fair market value of the property assuming that the added value from the improvements to be financed has been determined and/or performance guarantees have been received as of the date of valuation. Councilmember Ellis asked if you mean streets, sewer and water are in but the property isn’t built on. Carter answered that is correct. Carter said these bonds are sellable but at a higher interest rate. The buyers they see are interested in big bond funds and they are looking at diversification of risk and Idaho is definitely in there. Carter gave an example: there are four Founders Point landowners and their prorate share of the $1million is $200,000 and the others financed the balance through the CID. When Founders Point comes in, it would pay the $200,000 to the owners. Councilmember Ellis asked if this $200,000 could come in over 2 – 3 years. Carter would prefer that it is 100% due and payable immediately. Jeremy stated there are two points that are unique in this case – one would be it would come into a reimbursement agreement that is yet to be defined and two the annexation issue. The statute states that all of the initial district must be contiguous with each other but other non-contiguous areas can come in at a later date. Scott asked if they are basing this on 30 years bond. Carter answered that is correct. Carter said the City can decide what they want to do and you will get paid for it. Carter stated three members from the Council would be on the district. The district would determine to issue bonds, would determine an annual budget, and would be audited. Most of the work is to issue the bonds, and then you will have to meet once a year to accept the budget. Mayor Ard commented it’s basically like an Urban Renewal. Jeremy stated there is a statute that says you are allowed to assess the tax. Councilmember Ellis asked if it is 101% over the life of the bond. Jeff Hawkes said it would be about $23,000 per year to the City. Scott asked if the City uses their own personnel then could the City charge the district to offset the costs? Carter said it depends on how you structure your agreement. Scott asked if your management fees are all upfront costs. Carter said yes and rolled into the cost of the bond. Mayor Ard asked when this goes against the property. Carter stated the assessments would be laid down approx. 2 weeks ahead of the bond. The assessments are the security for the bond. Mayor Ard asked if everything needs to be platted. Carter answered no. Some of the lots may be platted, they could create the CID based upon anticipated lots, and when plat comes in then it would be fixed. It’s a fairly simple process. It’s applied strictly to the lots, not streets. Smaller lots will generate a lesser amount. Councilmember Ellis asked Jeff if he was going to finance it up front. Jeff Hawkes responded we are doing the infrastructure now with the widening of our frontage on Sunnyside. We would hope to be reimbursed but we are paying for it up front now. Scott asked if this goes to the assessor’s office, then does the assessor put it onto the tax rolls? Jeremy answered that is correct. Scott asked Jeremy if this is a rough draft of the proposed documents. Jeremy stated the district paper is pretty firm but the items that are fluid are where it is located, metes and bounds, maps, etc. This is a just a starting point. The general plan will be more detailed and you will feel better about it. Nothing is set in stone. He would draft a petition, there would be a City Council hearing drafting a Resolution, and then a district development agreement would be attached. Mayor Ard stated I’m back to Founders Point again. Why would we not put it in upfront? Carter stated we can’t find anyone to sign at this time because the LLC cannot sign at this time. Scott said it would have to go through probate but he doesn’t know how many owners there are. Scott said it’s feasible. Jeremy said he was told George was the only one. Scott said then he might get it signed through the court since George and his wife was the soul owners. Per Wendy, appointed representative for the estate, the property was George’s sole and separate property. Councilmember Ellis asked if there was a will. She stated yes there was but it was before all these entities were created. Mayor Ard feels it would be simpler to do it now but he understands. Councilmember Ellis asked how difficult it is to add it later. Jeremy stated he doesn’t feel it would be difficult. Mayor Ard stated he understands this is not an Urban Renewal, which is a nightmare, but he is trying to get there on this. Mayor Ard asked when they come in, and before the bonds were used could we redo the calculations and go forth from there? Scott further asked when you are using special assessment bonds what is the difference between this and an LID? Jeremy said they are very similar. An LID is much more open. Councilmember Kirkham stated she was reading concerning the reimbursement of the district and with an LID you have to show a specific plan where this is much broader. If you can show any advantage to the district, then you can assess for it. Leslie stated that in Nevada there were signs in all of the developments with either LID, SID or both. Jeremy presented a sample financial disclosure that says the district shall record a notice setting forth 9-17-08 Council Minutes – Work Session Page 2 of 5 current obligations to the property owner, notice that there obligation to retire the bonds, the estimated tax for special assessment rate and whether it is being maintained as part of any district development agreement and has to say CID tax and special assessment disclosure notice, and that they have repayment liabilities. Mayor Ard asked if someone comes in and buys a lot, is this included in the total of the purchase price? Jeremy said no, it would be included in the property tax. It becomes a consumer marketing decision. They can prepay at any point in time but ultimately most people pass it on with the property. Scott said it will be prorated upon the sale. Councilmember Kirkham said let’s talk the worst case scenario and you can’t sell the bonds or the lots. At what point is the district liable to pay the developer back. Jeff said it would be whatever development agreements the City has entered into but under your scenario there would be no lien on the property because there were no bonds issued on the property so the only tax on the property would be the 101%. If the developers wanted to fund their area, they would have to come up with the money. Councilmember Kirkham asked Jeff if he was willing to put the infrastructure in, and then be reimbursed after the bonds were sold. Mayor Ard stated that with the Urban Renewal the City has a developer who put money in but he won’t get paid because at the end of the bonds he would get paid but there won’t be anything there. Carter stated when the bonds are sold, the bond money will be held by a bond trustee for up to 3 years then it has to be used for the purpose for which it was intended, or used to call the bonds. Carter stated to get reimbursed you have to go before the district board and ask to be reimbursed. Your documentation must be in order stating the infrastructure is in and that all the bills balance, then you present all the lien waivers and ask the district board to instruct the trustee to release the funds to the developer. Mayor Ard stated that helps explain the difference between the CID and Urban Renewal. The Mayor reiterated they would still put the infrastructure in, and then we would go for the bonds. Carter stated there is another way to do it and that is with a construction district which is set up to allow two different types of activities - one is a reimbursement district the developer has built, and the second is the construction of the improvements by the district, then the bonds are issued to pay the constructor back. Councilmember Ellis inquired if we form the construction district then do they have to go through a bidding process? Jeff stated yes, however, this is developer driven and if they overbid then the developer might not use them in the future. The City could consider creating a construction district but we are going to assign the developer to be our agent. We try to set up the documents for flexibility. Councilmember Ellis asked concerning the part of this project that is the oversize, do we have to deal with this separately, or can it be part of the CID? Carter stated you can or you can’t. Councilmember Ellis asked about a district where some of this over sizing is outside the district boundaries. Carter stated generally the City will determine whether the sewer line will serve this area, and the cost is “x” then the City will charge whoever applies for a permit in this area for their prorate share of this project. The Council would then pass an ordinance to this effect and then the money would go the developer, district or the City depending on who paid for the project. Mayor Ard asked if we would still have front footage fees. Scott stated the developer just puts it in. This really solves the City’s problem since the City doesn’t have the money to do the oversize. Carter stated the bookkeeping can be really challenging. It would be best if the City funds the oversize and then the bonds pay the City. Scott asked if you could include the oversize into the 729 properties. Councilmember Ellis asked if the City collects $400,000 in fees to oversize this project, however we collect our fees and it ends up being $500,000, what happens? Carter stated I would look away from depreciation and say that we need to have a reasonable return on our investment. Scott asked why the City couldn’t say if it wasn’t for this development we wouldn’t need to oversize, and just pushes it into the CID. Scott stated that future developments might have to come in and pay for a new well which benefits your development. Scott Tallman, 455 Cabana stated let’s say they only need a 12 inch line but the City says it needs a 30 inch line for future use. Scott Hall said you would have to look at the benefits for both parties. Scott Tallman said the well wouldn’t benefit us since our development already had enough water. Mayor Ard stated we are putting in the wells now that will be benefiting your development and you aren’t paying into that. Councilmember Thompson stated but widening Sunnyside would. Councilmember Ellis said you will be tying into existing infrastructure so it will never be dollar for dollar. Jeff stated that we don’t want to overburden the project and the taxes on the property. Leslie stated you do benefit from the additional well. When the City added the newer wells, it did benefit my division, which is an older division. This is like paying money into the school system, even though you don’t have children, in the long run you benefit from the educated working group. Mayor Ard stated the one advantage with the CID is we go in and get it done and assess it now. We didn’t have that option on urban renewal. Jeff stated that if we don’t use all the bond money, then it doesn’t get used. Leslie said the future developers and their costs will be higher than yours which will balance this out. Councilmember Ellis stated he would like to move forward with it. Mayor Ard questioned Wendy, concerning the probate, how soon would she come into this. Mayor Ard asked Scott Hall if they go forward, is this a viable item on the estate. Scott stated it sounds like there is commingled community and separate property and until it is solved he doesn’t feel we will get approval from the court to move forward. Councilmember Ellis asked if we proceed with the district, are they going to wait to develop for a year? Could this portion be included in a CID but then wait 2-3 years to build? Jeff stated it works like a construction loan, so they wouldn’t have to pay for the next 18-24 months. Mayor Ard inquired if you are just talking the $4 million amount. Jeff answered we need to finalize the capital improvements and allocate those properly to each development, our portion is 30%. Councilmember Ellis asked are you going the construction route? Jeff stated our preference is the construction route and we would like to have this in place by spring. Jeff stated it will cost more but it’s fairly cost effective financing. Mayor Ard asked if we have to bring in a trustee. Carter stated yes but it could be a local bank and it has to be a 9-17-08 Council Minutes – Work Session Page 3 of 5 separate account. Mayor Ard asked whether whoever is on the board could watch over it? Carter stated yes. Essentially, the City Clerk becomes the District Clerk. Mayor Ard advised them that they have answered a lot of questions and it has eased his Urban Renewal District related worries. He can see that it could be a helpful item. Scott stated we would have to redo the current agreement. Councilmember Ellis stated we would have to redo it anyway, since Founders isn’t on board. Jeff stated he feels we need a plan A and B because of George’s passing. Mayor Ard stated he thinks Jeff has half the council willing to look at it. Scott said there is essentially no cost to the City but they have to set up the board from three councilmembers. Councilmember Thompson asked how much extra time will this burden the engineer. Carter stated that can be outsourced by the district. Jeff reminded the council that the 1% management fee is a net, net to the City. Mayor Ard stated then you have to put some real numbers together. Jeff stated he will have to know before Feb. or March so he can proceed. He is putting in 700 feet of sewer line right now but he can cut his losses. Mayor Ard said it will save the City, if it can be in by spring. He can’t see anything but an advantage to the City. Councilmember Ellis asked if the district can pay back the investment that was done previously. Councilmember Kirkham said the question is whether or not we go ahead and pay the upsize now. Jeff stated it could be argued that the 30 inch on Crowley is not needed to reach capacity. Jeff needs a second plan. Lance stated Jeff’s number is saying they run an 8” line from Majestic across Crowley Road down Sunnyside close to Ammon Road. This doesn’t work. Councilmember Thompson asked how many connections you can get on an 8” line. Lance stated on a 12” line at 80% full with a density of 3 dwelling units per acre, you can get approx. 1300 connections. Then an 8” line would be close to 215 acres versus 12” doing 446 acres. Dove’s Landing is less than 3 per acre. Jeff Hawk’s is 2.3 per acre. Hydraulically you can’t do an 8” line because you already have a 12” line in the Cottages. Lance stated you have to decide how far north and east you want to go. Councilmember Ellis stated he is not willing to back off the 30 inch line. Lance stated a 24 inch pipe will service approx. 2.8 square miles 80% full with 3 dwelling units per acre. The same pipe with 4 dwelling units will only serve 2 square miles. This area is 1785 acres. Even after the Regional Sewer comes online, we will still have a bottleneck with the biggest line in the City being 30” or we will have to run another trunk line. Councilmember Ellis asked what funds make up the sewer reserves? Mayor Ard stated this was earmarked for the Regional line. Mayor Ard said if we use the reserves, how do we recover it in time and if development goes through then it will pay for itself. Councilmember Kirkham asked Jeff if we do this can you can sell the lots right now. Jeff stated Destination Homes plan is to presale. They have put under contract all of our Mansion Homes and they feel they can sell 3- 4 a month. Councilmember Ellis stated that’s key for us, if they can presale it. Jeff said that’s why we are phasing it – we are looking at 55 lots. Councilmember Thompson mentioned even at four years, some of it will come back to us. Councilmember Kirkham said I want your development to go. Councilmember Ellis stated there is a letter from the Idaho Attorney General’s office dated Feb 26, 2008 Bruster versus City of Pocatello which was a street fee that was imposed for maintenance of a street and the court threw it out as an illegal tax. Then the other one was against the City of Haley. His conclusion is because the funds collected from connection fees are specifically allocated in accordance with the Idaho Revenue Bond Act the fees are not collected for general revenue raising purposes, and therefore are not taxes. We hold that under these circumstances a City may collect fees, rates or charges to pay for maintenance, depreciation and replacement of system components. So can we use this reserve since we don’t know how much is connection fees for capital expansion of the system? Councilmember Thompson said we can say that we have done 400 connections in the last year and a half. Mayor Ard said he thinks its semantics, we can take our monthly user fees and pay the City of Idaho Falls out of those funds and take our monthly fees and use them for something. Councilmember Ellis said it is semantics but it’s important that we comply. Jeff said the City has agreed to pay the upsize. Jeff said the only reason he is here is because George died. The FDIC has Quail Ridge now. Russ Mickelson has ownership of Dove’s Landing, so it’s new found money. He has a profit sharing agreement with Foothill and Tallman to develop it. Ron stated from the City’s standpoint, I don’t see any hope of building permits anywhere else, so if we have $400,000 it would worth it for this new development. Councilmember Ellis thinks the turnaround will be slow but hopes that we position our City to be ready when the turnaround comes for Ammon. We can’t be scrambling at that point to be installing infrastructure and $400,000 is worth the risk. Councilmember Kirkham feels $200,000 is worth the risk. Councilmember Thompson stated he can go $400,000. Councilmember Kirkham asked Jeff how about $300,000. Jeff stated honestly he doesn’t think he can do that. He feels we have a wonderful opportunity. Councilmember Ellis stated he likes the $400,000 because it gets us out of the reimbursement cycle. Lance stated you can’t just look at connections for Hawks, if you do this you will be cutting off Dove’s Landing. You will have to run two sewer lines. Councilmember Thompson asked how about no round-a-bout and stop signs. Councilmember Thompson we shouldn’t stop Sunnyside, just the side streets. Jeff stated he feels the round-a-bout is the best solution to do even though the stop signs are more cost effective. Councilmember Kirkham asked what we say to the constituents who will state “you pulled $400,000 out to fund growth”. Councilmember Ellis stated growth will replace the amount paid out. Ron stated the City is only paying for the portion we would fund anyway. Jeff stated we would still hope to recover our portion from Quailridge Ridge 2, etc. Councilmember Ellis stated absolutely. Councilmember Kirkham stated we will support you but we don’t want to be involved in it. Scott stated there is a problem here because you can’t make a decision since there are only three members. How do we get out of the current agreement with it in probate? Scott stated he’s not sure how to front the $400,000 because we are under a current agreement. Ron asked how if the developer doesn’t put money into 9-17-08 Council Minutes – Work Session Page 4 of 5 the improvements, how could they come back and ask for reimbursement? Councilmember Ellis stated the only way this can work is with a CID and feels we can do this fairly fast. It’s in the City’s best interest. Scott stated he thinks it’s possible, since it’s statutory. Jeff queried can’t you give me some connections while we aggressively pursue the CID? Lance stated that he can’t support this since we have already overflowed the houses on Mason. Jeff stated if we can’t do it, we can’t do it. Lance stated he doesn’t want to make the problem worse. Councilmember Kirkham stated let’s go forward with the CID, with the attempt to expedite it. Jeff asked if the City coming up with the $400,000 is this off the table. The council stated if you can find a legal way to do it, they would be OK with it. Councilmember Ellis stated the hurdle is, if Wendy can legally sign it. Jeff stated he doesn’t want to load too much into the CID, he wants to keep his tax rated down to 1.25 – 1.28%. 3. Misc.: None Councilmember Kirkham motioned to adjourn. Councilmember Ellis seconded. Roll call vote: Councilmember Kirkham – Yes, Councilmember Ellis – Yes, and Councilmember Thompson – Yes. The motion passed. The meeting adjourned at 5:57 pm. ________________________________________ C. Bruce Ard, Mayor __________________________________ Leslie Folsom, City Clerk 9-17-08 Council Minutes – Work Session Page 5 of 5