Body
Department of Community Development
Reference: Metro District Model Service Plan
To: Mayor Richard N. McLean and Members of City Council
Through: Holly Prather, AICP, Community Development Director
Marv Falconburg, AICP, Assistant City Manager of Development
Clint Blackhurst, Acting City Manager
Prepared By: Mike Tylka, Associate City Planner
Date Presented: July 18, 2017
PURPOSE
Pursuant to Article 1, Title 32, Colorado Revised Statutes, as amended, the City of Brighton has the authority to approve service plans for special districts (also known as metropolitan or simply metro districts) that are organized within the City’s boundaries and now has before it a proposal to create a model service plan to be used as a template for the approval of new special districts.
BACKGROUND
In 2005 the City Council approved certain procedures and guidelines as set forth in its policy statement with respect to the creation of special districts. As time has passed, the City has seen several requests made for new special districts where each developer proposes unique model service plans that have to be reviewed on a case by case basis. City staff finds it prudent to replace the prior guidelines with a model service plan to be used as a template by those proposing new special districts. A model service plan will allow the City and developers to have similar expectations of what will be required and provide a level of consistency in the review process.
Direction from City Council came during two Council Study Sessions earlier this year; one by the City’s special bond counsel, and the other by the Community Development leadership team. These sessions covered the formation, organization, abilities, and requirements of special districts. Additionally City staff sought, and was provided with, policy direction from City Council regarding the drafting of a model service plan. The model service plan document attached herein is the product of Council’s direction, multiple discussions amongst City staff from development, operational, legal, and financial focused areas, and from the City’s legal advisor and special bond counsel, Sally Tasker of the law firm of Butler Snow LLP with assistance from her colleague Monica Rosenbluth.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
Per the Special District Act, Article 1, Title 32 of the Colorado Revised Statues, service plans must include the following items:
• Description of services,
• Financial information,
• Preliminary engineering or architectural survey showing how the services, are to be provided,
• Map of boundaries,
• Estimated population at build-out,
• Estimated assessed valuation at build-out,
• General description of facilities to be constructed,
• Estimated costs of land acquisition, engineering, legal and administrative costs, and costs related to the organization and initial operation of the district,
• Description and form of any proposed Intergovernmental Agreements (IGAs), and
• Other information set by State Statutes or required by the approving jurisdiction(s).
PUBLIC NOTICE AND INQUIRY
As this item is not a public hearing, no notice other than the posting of this item within the official Council agenda was provided. Two representatives of interested developers have reached out to inquire as to the timeline of passage of this model service plan as they wish to propose new districts this year.
SUMMARY OF FINDINGS
The use of a model service plan will provide uniformity in the creation of special districts and facilitate the review of service plans by City staff and approval by the City Council. Developers and their counsels will have clear guidance as to what the City expects.
During the drafting and consulting process, staff and the special bond counsel to the City worked with other City departments to determine how the new model service plan might be best written and applied. Discussions focused on how best the residents of Brighton could be served by the items the document would put into place and its far reaching effects on new developments and the long term maintenance of our neighborhoods. In addition, staff compared our multiple draft model service plans with those of our peer communities in the Front Range. The model service plan shall be a template document where the information required by state statute is provided. The further specifics of the district that go above and beyond the state statute requirements will be outlined in depth in the Inter-Governmental Agreement (IGA). An IGA is envisioned to be an exhibit to each and every approved service plan going forward and this model service plan provides a template IGA as well.
The current special district guidelines are compiled as a list of required documentation that leaves many policy areas open for debate. Additionally the current guidelines do not provide a format to be used in the submission of a service plan leaving the developer and their counsel to determine how to organize their submission. With the proposed model service plan, the City’s preferred format is set, all requirements are laid out, space for the necessary information, attachments, and reports is provided, and responsibilities are clearly delineated.
Below is a general outline of the proposed model service plan with a brief summary of each section and subsection. (Please refer to the attached draft resolution and model service plan for the documents in their entirety):
I. Introduction
a. Purpose and Intent
- Sets up the City’s objective and the plan’s intention
b. Need for the District
- States that the district is necessary for certain items to be carried out
c. Organizers and Consultants
- Lists the parties involved from the district’s side
II. Definitions
- Defines important terms used in the agreement
III. Property Information; Estimated Public Improvement Costs
a. Property Information
- Sets the district boundaries, the estimated population at build out, the current assessed valuation of the property, and makes clear that the approval of the service plan does not opt the district out of City approvals
b. Preliminary Engineering Survey
- Ensures that the list of public improvements the district anticipates are included and outlines the costs of such improvements
IV. Description of Powers, Improvements and Services; Service Plan Amendment
a. Powers of the District and Limitations
- Provides outline of public improvement activities and twenty-two areas of further clarification with those being:
• Operation and Maintenance - Sets that the district may own interior streets, local drainage facilities, and local parks. Sets that other items may be outlined in the IGA for maintenance and that dedications may occur to the City. Sets that the district may have covenant enforcement and design review services.
• Fire Protection Limitation - Sets that the district is not authorized for these services.
• Television Relay and Translation Limitation - Sets that the district is not authorized for these services
• Limitation on Extraterritorial Service - Sets that the district is not authorized for services outside their boundaries unless set forth in their City approvals.
• Telecommunication Facilities - Sets that all such facilities are subject to City approvals.
• Construction Standards Requirement - Sets that all such facilities are subject to City approvals.
• Zoning and Land Use Requirements - Sets that all such facilities are subject to City approvals.
• Growth Limitations - States that the City’s authority to implement growth limitations will not limited by the district.
• Conveyance - States that the district will provide any property necessary for City capital improvement projects for transportation, utilities, or drainage.
• Eminent Domain - District must get approval from City Council to use it.
• Water Rights/Resources Limitation - District won’t manage these items unless agreed to in the IGA.
• Inclusion and Exclusion Limitation - States that a City Council Resolution is the only way district boundaries can be changed.
• Overlap Limitation - States that the district will not overlap with others unless agreed to by City Council.
• Sales and Use Tax - States that the district shall not exercise its City sales and use tax exemption.
• Monies from Other Governmental Sources - States that the district will not compete for particular funding sources that the City itself is eligible for except as outlined in the IGA.
• Consolidation Limitation - States that the district will not consolidate with another without approval by City Council.
• Subdistrict Limitation - States that the district will not create any Subdistrict without the consent of City Council.
• Fees - Sets guidelines for fee collection by the district and outlines how Public Improvement Fees can be used.
• Special Assessments - States that, if outlined in the IGA, special improvement districts can be formed within the boundaries of the district.
• Bankruptcy Limitation - Outlines bankruptcy limitations pertaining to the levies associated with the district.
• Reimbursement Agreement - Sets guidelines for the district’s use of reimbursements from third-parties.
• Major and Minor Arterial Streets - States that the district will be required to build full width of all major and minor arterial streets within the district and around the perimeter unless otherwise provided in the IGA.
b. Service Plan Amendment
- Provides an outline for amendments and the process for addressing violations.
V. Financial Provisions
a. General
- Authorizes the district to provide for planning, design, acquisition, construction, installation, relocation, and/or redevelopment of Public Improvements from its revenue by and through the proceeds of debt to be issued. Additionally it grants the district operation and maintenance abilities as outlined in the IGA. Outlines that the district will issue no more debt than the district can reasonably expect to pay from revenues.
b. Maximum Voted Interest Rate, Maximum Underwriting Discount and Maximum Term of Debt
- States that the interest rate of debt is expected to be the market rate at the time of issuance. Outlines a maximum default interest rate of 15% and that the maximum underwriting discount is 5%. Sets the maximum term of any debt issued by the district to 40 years. Outlines the debt issuance process.
c. Debt Service Mill Levy and Operation and Maintenance Mill Levy; Maximum Combined Mill Levy
- Outlines that the district may impose an ad valorem debt service mill levy at a maximum of 50 mills upon the taxable property within the district, subject to the Mill Levy Adjustment without further approval by Council. States that the district can request that the City increase the maximum mill levy for debt service. All City approvals must occur prior to any debt service mill levy being imposed. Outlines manner in which the payment of the first issuance of debt can go beyond 40 years if the majority of the district board is comprised of end users and the board has voted in favor of refunding all or part of the outstanding debt and such refunding will result in a net present value savings. Outlines the process for the district imposing an operation and maintenance mill levy after the IGA has been approved. The maximum combined mill levy of debt service and operation and maintenance shall not exceed 60 mills, subject to the Mill Levy Adjustment, without the prior approval of City Council.
d. Debt Parameters
- Outlines that all debt issued must meet the requirements of the applicable state statutes and laws. Provides space for the total aggregate principal amount that debt cannot be issued over without approval by City Council. States that the City is not subject to obligations of the district.
e. Debt Instrument Disclosure Requirement
- Sets district debt disclosure requirement.
f. Privately Placed Debt Limitation
- Requires the district to obtain the certification of an external financial advisor.
g. TABOR Compliance
- Outlines the district’s compliance with TABOR.
h. District’s Organizational Costs and Operation and Maintenance Costs
- Provides space for the district to include their organization costs and the anticipated first year’s operating budget.
VI. Audit and Annual Report
- Requires the City to obtain an annual audit and annual report from the district.
- The annual report shall include the ten following items from the past year:
• Proposed or made boundary changes
• District’s rules and regulations
• Documentation of any resolutions or fee schedules
• Summary of any litigation involving public improvements
• Status of the district’s construction of public improvements
• List of all the public improvements constructed that have been dedicated to and accepted by the City
• List of all the public improvements that are owned, operated, and/or maintained by the district, including an itemization of the standards by which the public improvements are required to be operated and maintained.
• Notice of any defaults by the district
• Inability of the district to pay its obligations.
• Changes to the proposed schedule of debt service
VII. Dissolution
- Sets process for dissolution that can occur after all debt has been retired.
VIII. Meeting Locations and Disclosure Notices
- Outlines notice and meeting requirements. Includes that the meetings must take place in City limits within twenty miles of the district itself. Sets that a public disclosure shall be required to be given to potential purchasers of property within the district.
IX. Intergovernmental Agreement
- Outlines that the IGA will include additional details and requirements as deemed necessary and that it shall be approved at the first district board meeting.
X. Conclusion
- Outlines that the requirements of Section 32-1-203(2) C.R.S. have been met.
Exhibit A Vicinity Map
Exhibit B Legal Description and Detailed Boundary Map
Exhibit C Financial Plan
Exhibit D List of Public Improvements
Exhibit E Intergovernmental Agreement
- Outlines 10 areas including incorporation, maintenance of public improvements, enforcement, entire agreement of the parties, amendments, governing law, beneficiaries, effect of invalidity, assignability, and successors and assigns.
FINANCIAL IMPACT
A service plan will outline public improvements for which the district will issue debt and maintain independently from the City. This saves the City in staff time, salaries, and capital expenses. Property owners will in effect be paying for certain public improvements necessary for their neighborhood to function. A model service plan will save the City, developer, and legal counsel countless hours of work time by creating a common service plan process with similar expectations. Metro districts are a common tool used by developers and the model service plan is an example of how City staff is working to streamline the processes for new development in Brighton.
STAFF RECOMMENDATION
Staff is recommending adoption of the resolution approving a model service plan for special districts within the City of Brighton. Staff and the special bond counsel have created a document that is unique to Brighton, but is also similar to our peer communities in terms that developers will be able to easily understand the City’s positions up front when a district is first contemplated.
OPTIONS FOR COUNCIL CONSIDERATION
• Approve the Resolution as drafted;
• Approve the Resolution with changes; or
• Deny the Resolution as drafted.
ATTACHMENTS
• Resolution (Draft)
• Model Service Plan with exhibits including IGA (Draft)