Department of Community Development
Reference: Brighton Ridge Metropolitan District No. 1 Boundary Adjustment / Property Exclusion & Amended IGA
To: Mayor Gregory Mills and Members of City Council
Through: Michael Martinez, City Manager
Marv Falconburg, AICP, Deputy City Manager
Holly Prather, AICP, Community Development Director
Prepared By: Mike Tylka, AICP, Assistant Director of Community Development
Date Prepared: April 22, 2022
PURPOSE
Section IV.A.12 of the Brighton Ridge Metropolitan District No. 1 Service Plan (attached), adopted by City Council on September 7, 2021 (see attached Resolution #2021-66), states that “the District shall not exclude any property from its boundaries without the prior consent of the City Council, which consent shall be evidenced by resolution.” The Brighton Ridge Metropolitan District No. 1 (the “District”) desires to exclude an approximately 17.782 acre property located adjacent to the southern side of 120th Avenue generally between Southgate Boulevard and Potomac Street (see attached Exhibit A) (the “Property”) from its current boundaries.
As this request is not one that is frequently made to City Council, at the April 12th Study Session Meeting, City staff and Special District Counsel from Butler Snow introduced the request, provided background information, and were available to answer questions from the Council. At this time, the formal request to approve a resolution excluding the Property is before the City Council for consideration.
STRATEGIC FOCUS AREAS
● Recognizable and Well-Planned Community
● Strong Regional Relationships and Partnerships
BACKGROUND
The land owner of the properties in the District is Walk Off, LLC (the “Developer”). The Developer currently has two applications in process with the City. One is for a Zoning Map Amendment and the other is for a Subdivision Plan. Both of these applications include the subject Property and will come before the Planning Commission and City Council for future consideration. The current size of the District is approximately 83.145 acres. If the subject Property is excluded, the new size of the District would be 65.363 acres.
STAFF ANALYSIS / SUMMARY OF FINDINGS
The Developer desires that the subject Property be developed by a tax-exempt entity. The Developer would like to exclude the subject Property so that it will not be subject to the District’s mill levy, once it is imposed. The original financial plan for the District, did not anticipate collecting a mill levy from the subject Property as the Developer intended this parcel to be developed by a tax-exempt entity at the time the District was organized. In short, the Developer never intended for the Property to contribute financially to the District via mill levy.
When it comes time for the District to issue debt for its public infrastructure improvements, the District will have to show adequate debt capacity and cash flow based on its then current assessed value projections in its financial plan in order to issue tax-exempt bonds. Additionally, the market will not purchase said bonds if there is not a proven capacity at the time of issuance, thus the District can only issue as much as it can support. To reiterate, the Developer never intended for the Property to contribute financially to the District via mill levy.
Members of the Developer’s team have communicated to City staff that they have a contract with a company known as Pedcor to develop affordable housing on the Property. Per the Developer’s team, a condition of said contract is that the Property is excluded from the District as Pedcor does not want to be subject to the District’s mill levy.
The in-process Subdivision Plan, that includes the subject Property, will come before the City Council for consideration, and City staff has been working with the Developer to ensure that the proper infrastructure items are included to serve the subject Property. A Council decision on the Subdivision Plan must take place before any development can occur on the Property and within the District. Excluding the subject Property from the District, will not reduce, lessen, or negate any improvement found to be necessary to serve the future use and residents of the subject Property, District, and City at large. Additionally, excluding the subject Property from the District does not bind the City to take any action regarding the Subdivision Plan or any other approvals necessary for development in the District or on the subject Property. Any proposed development in the District and on the subject Property would need to go through the City’s normal land use approval process.
Per the Developer’s team, Pedcor is required by contract to finance and construct the Public Improvements on the subject Property. However, as part of the exclusion request, City staff has asked that an amended and restated intergovernmental agreement (IGA) be included for consideration to ensure that if Pedcor does not build the Public Improvements associated with the Property, the District will be allowed to do so if necessary. In the previous item, City Council was asked to approve the amended IGA, where language is included so that the District agrees that it will complete or will cause the completion of the required Public Improvements that are reflected in the City Approvals in accordance with the timing and phasing requirements of the City Approvals regardless of whether those Public Improvements are located within or without the District’s boundaries. The parties also agree that the IGA can be enforced by injunction, so it would be possible for the City to enjoin vertical construction if it was not done in accordance with the City Approvals. The amended IGA makes clear that the District can construct the right-of-ways, even if they are not located in the District, makes clear that the District can finance the right-of-ways, even if they are not located in the District, and in the IGA the District agrees that it will complete or will cause the completion of the Public Improvements required by the City Approvals in accordance with all requirements in the City Approvals, including timing and phasing, regardless of whether the improvements are within the District.
If for any reason the Pedcor proposal or another tax-exempt project falls through at the site, the Property would not automatically rejoin the District. Once excluded, the Property remains excluded. Staff finds that a future additional assurance that the necessary Public Improvements will be built is to have the first phase of the Brighton Ridge Subdivision Plan be approved with the Property and its associated Public Improvements designated as the first phase. With this, no other land within the District would be able to be developed until the Property and its associated Public Improvements are in place. This will provide an additional assurance on top of the IGA that the Property’s associated Public Improvements will be constructed, and it would ensure that either the Property’s owner or future developer or the District would fund them. It would be in the District’s interest to ensure that the Property’s Public Improvements are constructed as the land within the District would not be able to develop without them.
STUDY SESSION FOLLOW UP
In response to a question from a member of City Council at the recent Study Session, the Property is within the South Brighton General Improvement District “(GID”) (see attached map). The GID has the power to levy property taxes against all taxable property within the GID. So, if the Property became taxable property due to the entity or use no longer qualifying for an exemption under the property tax statute, then it would be subject to the GID’s mill levy. If the entity and use are currently exempt under the property tax statute, then they would remain exempt absent a change in circumstances or a change to the statute.
CRITERIA BY WHICH COUNCIL MUST CONSIDER THE ITEM
Per the District’s adopted Service Plan, the City Council needs to grant, via Resolution, its consent to any exclusion of land from current district boundaries.
PUBLIC NOTICE AND INQUIRY
No public notice is required for action taken on this request by the City Council, but the District will be required to hold a public hearing before the exclusion is finalized. Even though not required, City staff has provided notification on the City’s website.
STAFF RECOMMENDATION
Staff finds that the exclusion request, if approved, does not impede the ability to have the Public Improvements associated with the Property constructed, as long as the provided amended IGA is approved. As demonstrated in Pages 2 through 7 of Exhibit D, Financial Plan, of the District’s Service Plan (see attached) as approved by City Council last year, the Developer did not intend for the subject Property to contribute to the District via mill levy, and as such, the exclusion does not impact the remaining properties or future taxpayers. Staff has drafted two resolutions for approval if the City Council agrees with this recommendation. Staff has scheduled the resolution to amend the IGA before the resolution for exclusion. This is due to the fact that if the amended IGA is not approved, staff recommends that the exclusion not proceed.
OPTIONS FOR CITY COUNCIL CONSIDERATION
The City Council has the following four (4) options before it for consideration for the resolution to approve the exclusion, to:
● Approve the request as submitted via resolution;
● Approve an amended request via resolution;
● Deny the request; or
● Continue the item should more information be desired.
ATTACHMENTS
● Draft Exclusion Resolution
● Potential ROWs for Subject Property Aerial Map by Staff
● City Council Resolution #2021-66
● Brighton Ridge Metropolitan District No. 1 Service Plan
● South Brighton GID Map
● Draft City Staff Presentation