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Department of Community Development
Reference: Prairie Center Metro District Mill Levy Adjustment
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 Prepared: August 7, 2017
PURPOSE
A proposal has been submitted to the City that requests to adjust the Combined Mill Levy in each of the existing Service Plans for Prairie Center Metropolitan Districts Numbers 2, 3, 4, 5, 6, 7, 8, 9, and 10 to account for the Gallagher Amendment.
BACKGROUND
Due to the Gallagher Amendment 55% of all tax revenue collected statewide should be paid by commercial property owners, and the remaining 45% should be paid by residential property owners. The assessment ratio for commercial properties is set in the Colorado Constitution at a constant of 29%. In order to maintain the 55% / 45% split the residential assessment ratio needs to be adjusted each reassessment cycle (every two years). In 2017, the Colorado Division of Property Taxation determined that the residential assessment will be set at 7.20%. It has been at 7.96% for the last several cycles. The new ratio will be in place for the 2017 and 2018 tax years.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
Each Service Plan provides that written consent shall be obtained by the City Council if the Combined Mill Levy is to exceed 60 mills.
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.
SUMMARY OF FINDINGS
The Service Plans provide in Section VI, C. (1) that the Maximum Debt Service Mill of 50 mills is subject to the Gallagher adjustment. With the residential assessment ratio of 7.20%, the applicable Debt Service Mill Levy is approximately 55 mills. Additionally the Service Plans provide in Section VI.F that the combined Mill Levy for Debt Service and Operation and Maintenance (O&M) cannot exceed 60 mills without the prior written consent of the City Council. The issue of concern is that the combined Mill Levy limit is not written to be subject to the Gallagher adjustment, just the Debt Service Mill Levy portion is subject. If the subject District’s mill levy for Debt Service is adjusted to 60 mills and the Maximum Combined Mill Levy of 60 is not similarly adjusted, the District will not be able to impose a mill levy to pay for its operation and maintenance costs. City Staff and the City’s Special Bond Counsel, Sally Tasker of Butler Snow, LLP., have reviewed the request and have determined that the adjustment of only the Debt Service Mill Levy was not the intent as it creates an inconsistency in each of the original Service Plans.
FINANCIAL IMPACT
Consenting to the adjustment for the Combined Mill Levy will ensure that each subject District has the ability to impose a mill levy to cover its operation and maintenance expenses.
STAFF RECOMMENDATION
Staff is recommending adoption of the resolution consenting to the adjustment of the Combined Mill Levy in each of the Service Plans.
OPTIONS FOR COUNCIL CONSIDERATION
• Approve the Resolution as drafted;
• Approve the Resolution with changes;
• Continue the Resolution to a date certain; or
• Deny the Resolution as drafted.
ATTACHMENTS
• Resolution (Draft)
• First Amended and Restated Service Plan for Prairie Center Metropolitan District No. 5