HomeMy WebLinkAbout032077 RES - 03/31/2020 Resolution adopting a Public Improvement District Policy offering an
alternative development financing tool to developers and amending City
Council Policies
WHEREAS, per Texas Local Government Code Chapter 372, Public Improvement
Districts provide the City of Corpus Christi an economic development tool that permits the
financing of qualified public improvement costs that confers a special benefit on a
definable part of the City, including both its corporate limits and its extra-territorial
jurisdiction.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS, THAT:
Section 1. The City Council Policies is amended to add City Council Policy 30 to
read as follows:
30. - Public Improvement District Policy.
OVERVIEW
Public Improvement Districts ("PIDs"),per the Texas Local Government Code Chapter 372 (the
"Code"),provide the City of Corpus Christi (the"City") an economic development tool that
permits the financing of qualified public improvements which confer a special benefit on a
definable part of the City, including both its corporate limits and its extra-territorial jurisdiction.
A PID can finance capital costs and fund supplemental services to meet community needs which
could not otherwise be constructed or provided. The costs of the capital improvements and/or
supplemental services are paid entirely by property owners within the PID who receive special
benefits from the capital improvements or services.
A PID is a defined area of properties, whose owners1 have signed and submitted a petition to the
City to form a PID. The City Council establishes a PID by adoption of a resolution after a public
hearing. The public hearing is publicized per the Code and written notification of the hearing is
published in a newspaper of general circulation in the municipality, or a newspaper of general
circulation in the part of the extraterritorial jurisdiction in which the district is to be located or
improvements undertaken. Written notice must also be mailed to all property owners in the
proposed PID. By petition, the owners understand that they will be paying an assessment to
receive enhanced services and/or improvements within the PID. A PID must grant a special
benefit to the properties within the PID and a general benefit to the "public" which includes the
City.
The purpose of this PID policy (the "Policy") is to outline the issues to be addressed before the
City Council can support the creation(or consent to creation) of a PID. This Policy outlines such
things as petition requirements, qualified costs, financing criteria, information disclosures to
property owners, and the determination of annual plans of services, budgets and assessments. To
the extent of a conflict between the terms of this Policy and the Code,the Code shall prevail.
GENERAL
1. Proposed PIDs must be located entirely within the City limits or in the City's
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extraterritorial jurisdiction(ETJ) before consideration will be given to establish the PID.
The City will only consider the creation of a PID that consists of, or includes, land in the
City's ETJ if such property is subject to a development agreement or other concrete and
binding plan for the voluntary annexation of all land within the PID with a schedule for
annexation agreed to by the City.
2. PIDs must be financially self-sufficient and not require the City to incur any costs
associated with the formation of the PID, bond issuance costs, PID administration, or the
construction of PID improvements.
3. PID petition signatures should reflect that a reasonable attempt was made to obtain the
full support of the PID by the majority of the taxable property owners located within the
proposed PID.
4. PID petitions will be more likely to be approved if the petition includes projects which
provide one or more of the following benefits:
a. new development,redevelopment, new infrastructure, and/or rebuilding existing
infrastructure. Consideration will also be provided for projects increasing the
City's tax base, and/or allow the City to influence growth in its ETJ;
b. economic development benefits to the City (as defined by City Council)beyond
what normal development would;
c. improvements in the public right of way (e.g., entryways, landscaping, fountains,
specialty lighting, art, decorative and landscaped streets and sidewalks,bike lanes,
multi-use trails, signage);
d. enhanced community needs (e.g., enhanced drainage improvements, land and
infrastructure for re-irrigation of treated wastewater,parks, off- street public
parking facilities,pedestrian connectivity, wastewater and/or water system
improvements,new or enhanced public roads and streets, and creation of
opportunities to redevelop older or underutilized areas of the City);
e. development that meets or exceeds the development standards in the City's
Unified Development Code and aligns with the City's growth and development
goals;
f. enhanced connectivity;
g. increased recreation and open space opportunities for public use;
h. the protection and preservation of natural amenities and environmental assets such
as the bays,trees, creeks, ponds, floodplains, slopes, viewscapes, and wildlife
habitats; and/or
i. the protection and preservation of existing historical buildings, structures, features
or places or would otherwise be of special benefit to the property users or
community.
5. A PID's budget shall include sufficient funds to pay for all related administrative and/or
operational costs, including costs associated with tasks undertaken by City staff.
6. All deeds conveying property within the PID area shall contain language notifying each
owner of the PID and the assessments and annexation required pursuant to the PID
creation/finance documents to notify any prospective owner of the existence or proposal
of special assessments on the property. It will be the developer's and landowner's
responsibility to ensure that all closing statements and sales contracts for lots with
homebuilders, home purchasers, etc., must specify who is responsible for payment of any
existing PID assessment or a pro rata share thereof. If the PID is located in the City's
ETJ, it will be the developer's and/or landowner's responsibility to ensure that all closing
statements and sales contracts for lots with homebuilders, home purchasers, etc. must
specify the future voluntary annexation of the property within the PID.
7. The boundaries of a PID must be clearly identified as such by signage along the main
entry/exits located at the boundaries of the PID. All signage shall be clearly visible to all
motorists entering and exiting the PID.
8. Assessments, if any, for property owned by the City and located within the boundaries of
the PID, may be apportioned pursuant to the City's findings when PID is created.
9. No PIDs will be allowed to be created that overlap the boundaries of another PID.
10. The boundaries of existing PIDs may be modified. However, a boundary change during
the existing term of a PID may only be considered if no PID bonds have been issued and
a new petition of the entire proposed PID area(both current boundary and areas to be
added or excluded, as applicable) is submitted that meets the minimum criteria for
creation/renewal and application fee, along with public hearing process as described
herein.
11. Annual Service and Assessment Plan updates shall be adopted, as required by the Code.
12. The Service and Assessment Plan may contain procedures for the termination of the PID
without imposing unintended costs on the City. A PID cannot be dissolved without a
petition from property owners and must be sufficient as for creation or renewal in
accordance with section 372.005(b) of the Code.
PETITION REQUIREMENTS
In accordance with section 372.005(a) of the Code the petition must state:
1. the general nature of the proposed improvements;
2. the estimated cost of the improvements;
3. the boundaries of the proposed assessment district;
4. the proposed method of assessment, which may specify included or excluded classes of
assessable property;
5. the proposed apportionment of costs between the proposed PID and the City as a whole;
6. whether the proposed PID will be managed by the City, by the private sector, or by a
partnership of the two;
7. that the persons signing the petition request or concur with the establishment of the
proposed PID;
8. that an advisory body may be established to develop and recommend an improvement
plan to the City Council; and
9. that the petitioner has read and understands this Policy and will adhere to all language
herein.
Additional requirements include:
1. PID petitions shall include this additional note: "With respect to community property, the
City may accept the signature of a spouse as a representation of both spouses that they
support the creation or renewal of the PID, absent a separate property agreement.
However, if City staff is made aware of any disagreement among owners of community
property, those signatures will not be counted."
2. Signatures for PID petitions must be gathered not more than six months preceding
submittal of the PID petition.
For a PID to be established, a petition shall include the following:
1. Evidence that the petition's signatures meet the state law requirements, or the petition
must be accompanied by a reasonable fee to cover the City's costs of the notary/signature
verification.
2. Map of the area, metes and bounds with a survey (all signed by a licensed engineer), and
a"commonly known" description of the area to be included in the PID.
3. Statement that the petitioners understand that the annual update, including any annual
costs, for the PID is subject to review by City staff with final approval by the City
Council.
In addition, the following issues must be addressed before the City Council will consider a
petition:
1. A non-refundable application fee of$15,000 will be required to create, modify the
boundaries of, or renew a PID. This fee is regulatory in character and approximates the
costs of administering the PID through creation or renewal by City staff.
2. A petition will include a current tax roll with the signatures of the owners' registering
support of the petition next to the account for the owner's property on the tax rolls, or
other evidence that the petitioner(s) are the current owner(s) of taxable property within
the PID.
3. A copy of the preliminary plan for the anticipated financing of the construction of the
authorized improvements in the proposed PID (the "Financing Plan") shall be submitted
with the Petition. This Financing Plan shall include at a minimum:
a. Targeted gross bond amount;
b. Estimated annual assessment revenue generated;
c. Annual installment per unit;
d. Estimated number of bond issuances;
e. Proposed maturity dates for PID bonds;
f. Proposed timetable of the development; and
g. Any other such supporting information related to the success of the PID.
4. A copy of a Feasibility Report (as referenced in section 372.007 of the Code) which
demonstrates the economic feasibility of the project and includes the following
information:
a. An assessment revenue pro forma for the proposed project;
b. A financial review of the development projections and absorption schedule;
c. Analysis of above describing the timing and amount of PID assessment revenue
which will be generated based upon varying levels of assessments; and
d. Comparison of the project with other similar projects in the area that will not have an
assessment.
e. Proposed and estimated reserve amounts, if any.
f. Projected revenue on all other applicable taxing jurisdictions (school, county, etc.).
PID ADMINISTRATION
1. The City may provide for the administration of a PID through in-house resources or
contract with a qualified third-party company to manage and administer the PID, subject
to appropriate oversight by City staff.
2. If the City agrees to the hiring of a third-party administrator, the City will provide
authority for the administrator to:
a. Coordinate the annual development of the budget and update to the Service and
Assessment Plan which will be submitted to the City Council for consideration in
accordance with the Code and any other applicable Texas law.
b. Provide for the calculation of the assessment and allocation to the respective
parcels in the PID and shall provide for the billing of the assessments to the
property owners or provide information to the County Tax Office. The contractor
and developer will coordinate to ensure that the billing/assessment information
provided to the tax office includes all pertinent properties.
c. Prepare annual reports reflecting the expenditure of PID bond proceeds or the
reimbursement of developer expenditures, as appropriate.
d. Prepare annual reports reflecting the imposition and collection of the assessments
and the balances in the various accounts related to the PID to be provided to the
City Council on a quarterly or other periodic basis as may be required by the City.
e. Prepare and provide any other reports or information required of the City or the
project under the Code.
3. Provision for the costs associated with the provision of the administrative services,
whether the services are provided by third parties or the City, shall be included in any
budget proposed by the developer and may include but is not limited to allocation of
interest on the assessment to the extent authorized under the Code.
4. If the City agrees to the hiring of a qualified third party PID administrator to administer
the PID, the costs for such administration shall be paid for with revenues generated
within the PID.
5. The City may request an audit by the City's Auditor at any time and/or an independent
audit at any time if the City Auditor finds irregularities.
BOND SIZE LIMITATIONS
The following limitations and performance standards shall apply to a PID debt issue
approved by the City:
1. Minimum appraised value to lien ratio: 3:1
2. Maximum annual permitted increase in annual assessment installment: 2%
3. Maximum years of capitalized interest for each bond issue: 3
4. Maximum maturity for each series of bonds: 20 years
The aggregate principal amount of bonds required to be issued shall not exceed an amount
sufficient to fund: (i) the actual costs of the qualified public improvements (ii) required
reserves and capitalized interest during the period of construction and not more than 12
months after the completion of construction and in no event for a period greater than 3 years
from the date of the initial delivery of the bonds and (iii) any costs of issuance. Provided,
however that to the extent the law(s) which limit the period of capitalized interest to 12
months after completion of construction change, the foregoing limitation may be adjusted to
reflect the law(s) in effect at the time of future bond issuances and applicable federal law
pertaining to the issuance of tax-exempt bonds.
FINANCING CRITERIA
1. Bond issuances in advance of construction of an individual phase of a PID will be subject
to compliance with these standards.
2. No General Obligation or Certificate of Obligation bonds will be utilized by the City to
fund or support the PID improvements.
3. The City shall not be liable for any debt associated with the creation of a PID and
issuance of PID bond(s). The PID and PID assessment will be solely liable for debt
associated with formation and bond issuance.
4. All subsequent PID bond issues, if any,will be subject to approval by the City Council.
The City Council will consider evidence that(i)the value of the property within the PID
and the City as a whole will be significantly increased by the projects financed with the
PID bonds; (ii) no financial risk or burden will be imposed on the City; and (iii)
development in phases will be self-sustaining and financially sound.
5. Additional special assessments may be levied or special assessments may be adjusted in
connection with subsequent bond issues if an agreed-upon maximum annual assessment
rate is not exceeded and the special assessments are determined in accordance with the
Service and Assessment Plan and the Code.
6. Special assessments will bear a direct proportionate relationship to the special benefit of
the public improvements received. In no case will assessments be increased for any
parcel unless (a)the property owner of the parcel consents to the increased assessment
and (b) no bonds secured by such assessment have been levied.
7. The City shall not be obligated to provide funds for any improvements (regular City
improvement projects excluded) except from the proceeds of the PID bonds and PID
assessments.
8. Each PID bond indenture will contain language precluding the City from making any
debt service payments for the PID bonds other than from available special assessment
revenues.
9. A PID developer will be responsible for payment of all the City's reasonable and
customary costs and expenses, including the cost of any appraisal, subject to
reimbursement from PID bonds or PID assessments, if any.
10. Improvements funded with PID proceeds will be exempt from any public bidding or
other purchasing and procurement policies in accordance with section 252.022(a)(9) of
the Texas Local Government Code which states that a project is exempt from such
requirements if"paving drainage, street widening, and other public improvements, or
related matters, if at least one-third of the cost is to be paid by or through special
assessments levied on property that will benefit from the improvements."
11. Any PID bond issued will include a Reserve Fund in an amount equal to the lesser of: (i)
the maximum annual debt service on the bonds, (ii) 10 percent of the principal amount of
the PID Bonds, or(iii) 125 percent of the average annual debt service and that such
Reserve Fund will be funded from bond proceeds at the time bonds are issued, subject to
the regulations of the Internal Revenue Code related to tax-exempt bonds.
12. Improvements to be funded by the PID are limited to those defined as Authorized
Improvements under section 372.003(b) of the Code, including, but not limited to:
a. Landscaping and irrigation in public rights of way;
b. Erection of fountains, distinctive lighting, and signs;
c. Acquiring, constructing, improving, widening, narrowing, closing or rerouting
sidewalks, streets or any other roadway or their rights-of-way;
d. Construction or improvement of pedestrian malls;
e. Acquisition and installation of pieces of art;
f Acquisition, construction or improvement of libraries;
g. Acquisition, construction or improvement of public off-street parking facilities;
h. Acquisition, construction, improvement or rerouting of mass transportation facilities;
i. Acquisition, construction or improvement of water, wastewater or drainage
improvements;
j. The establishment or improvement of parks;
k. Projects similar to those listed in a. through j. above;
1. Acquisition, by purchase or otherwise, of real property in connection with an
authorized improvement;
m. Special supplemental services for improvement and promotion of the PID, including
services related to advertising,promotion, health and sanitation, water and
wastewater, public safety, security, business recruitment, development, recreation,
and culture enhancement;
n. Payment of expenses incurred in the establishment, administration, and operation of
the PID, including expenses related to the operation and maintenance of mass
transportation facilities; and
o. The development,rehabilitation, or expansion of affordable housing.
13. Any trails, parks, streets or other public amenities that are located within a gated
community or otherwise inaccessible location may not be funded or reimbursed by the
PID.
14. All public infrastructure within the PID that is to be reimbursed will be subject to City
inspection at any time and verification of eligible costs. Public infrastructure must be
built to meet or exceed City specifications as provided in the City's Unified Development
Code and Code of Ordinances.
15. All current and future landowners will be required to undertake continuing disclosure
obligations associated with the issuance of PID bonds in accordance with the provisions
of a regulatory agreement which meets the requirements of federal securities law
PROJECT CRITERIA
Prior to forming a PID for which bonds will be issued to fund the costs of qualified public
improvements,the following requirements must be satisfied:
1. The property owner or developer must demonstrate to the City that it has the expertise to
complete the proposed development.
2. The property owner must provide the City with its sources of funding the public
improvements not being funded by the PID.
3. The proposed development must be consistent with the entitlements on the property. All
required zoning, other required land use approvals or other required permits must be in
place for the development prior to the issuance of any PID bonds.
4. The property owner must provide evidence to the City that the utility service provider has
sufficient capacity to provide all necessary utility services.
5. All reasonable estimated costs must be identified before a decision is reached on a
request to issue bonds for a PID. Costs to be identified include costs related to
establishing the PID; costs for construction and/or the acquisition of improvements,the
maintenance and operation of PID projects (if any) and PID administrative costs.
6. If the City agrees to the hiring of a qualified third party PID administrator to administer
the PID, the costs for such administration shall be paid for with PID assessment revenues.
The PID administrator will be required to prepare the annual update to the Service and
Assessment Plan.
7. The developer will submit a final Feasibility Plan(and other applicable PID
documentation) for review by the City,which clearly identifies the benefit of the PID to
the affected property owners and to the City as a whole (i.e., public purpose) and
evidence of insurance.
8. The Service and Assessment Plan shall describe, if applicable, all City-owned land within
the PID as well as its proposed share of project costs.
9. Improvements constructed in the public right-of-way will be dedicated to the City (or
other political subdivision of the State with the City's consent) and maintained by the
developer, an owner's association or other third-party mutually agreed upon by the City
and the developer. Any signs, structures, or improvements proposed to be built in the
public right-of-way must be approved by the City in writing before any costs are
incurred.
Developer Reimbursement
1. The Developer will submit expenses for reimbursements pursuant to the terms of an
agreed upon PID reimbursement agreement with the City.
2. The City's appointed designee (which may be the PID Administrator) will verify
expenses' and eligibility for reimbursements pursuant to the provisions of the PID
reimbursement agreement.
3. Subject to the availability of assessment revenues, reimbursement payments will be
processed within thirty (30) days after the date on which the costs were verified.
Miscellaneous
1. If any section, subsection, sentence, clause,phrase, or word of this Policy is declared
unconstitutional or invalid for any purpose,the remainder of this Policy shall not be
affected.
2. Subject to all applicable State Laws,the Petitioner(s)may seek other economic incentives
for the Project in conjunction with the PID.
3. The City in its sole discretion may engage the following professionals, including but not
limited to: 1) PID Administrator; 2) Appraiser; 3) Underwriter; and 4) Trustee.
4. Any waivers to this Policy must be approved by the City Council of the City.
5. The City shall, upon reasonable prior written notice to the developer and during normal
business hours, have the right to audit and inspect the developer's records, books, and all
other relevant records related to reimbursable amounts under this agreement. The parties
agree to maintain the appropriate confidentiality of such records, unless disclosure of
such records and information shall be required by a court order, a lawfully issued
subpoena, State Law, municipal ordinance, or at the direction of the Office of the Texas
Attorney General.
6. In the event of a default by the developer under a negotiated PID reimbursement
agreement, the City shall, after providing the developer notice and an opportunity to cure,
have the right to recapture all prior reimbursements.
7. No public official or employee shall be personally responsible for any liability arising
under or growing out of any approved PID. Any obligation or liability of the developer
whatsoever that may arise at any time under the approved PID or any obligation or
liability which may be incurred by the developer pursuant to any other instrument
transaction or undertaking because of the PID shall be satisfied out of the assets of the
developer only and the City shall have no liability.
8. All PID agreements shall include indemnification language as follows: Indemnification.
Developer covenants and agrees to fully indemnify and hold harmless, City (and
their elected officials, employees, officers, directors, representatives, and agents),
individually and collectively,from and against any and all costs, claims, liens,
damages, losses, expenses, fees, fines, penalties, proceedings, actions, demands,
causes of action, liability and suits of any kind and nature brought by any third
party and relating to Developer's actions on the project, including but not limited
to, personal injury or death and property damage, made upon City or directly or
indirectly arising out of, resulting from or related to Developer or Developer's
tenants' negligence,misconduct or criminal conduct in its activities under this
agreement, including any such acts or omissions of Developer or Developer's
tenants, any agent, officer, director, representative, employee, consultant or
subconsultants of Developer or Developer's tenants, and their respective officers,
agents, employees, directors and representatives while in the exercise or
performance of the rights or duties under this agreement, all without, however,
waiving any governmental immunity available to City, under Texas law and without
waiving any defenses of the parties under Texas law. The provisions of this
indemnification are solely for the benefit of the City and are not intended to create
or grant any rights, contractual or otherwise, to any other person or entity.
Developer shall promptly advise City in writing of any claim or demand against
City, related to or arising out of Developer or Developer's tenants' activities under
this agreement and shall see to the investigation and defense of such claim or
demand at Developer's cost to the extent required under the indemnity in this
paragraph. City shall have the right, at their option and at their own expense,to
participate in such defense without relieving Developer of any of its obligations
under this paragraph.
It is the express intent of this section that the indemnity provided to the City shall
survive the termination and or expiration of this agreement and shall always be
broadly interpreted to provide the maximum indemnification of the City and/or
their officers, employees and elected officials permitted by law.
9. All PID agreements will stipulate that the developer, or its assign, will acquire General
Liability and Property insurance which provides liability coverage at least equal to the
liability coverage that the City maintains at the time the PID is approved.
Note:
1) Owning taxable real property representing more than 50 percent of the appraised value of
taxable real property liable for assessment under the proposal; and 1) who either constitute
more than 50 percent of all record owners liable for assessment under the proposal or 2) who
own taxable real property that constitutes more than 50 percent of the area of all taxable real
property.
PASSED AND APPROVED on the 3 15t day of D40(()j , 2020:
Joe McComb ) -PLiaL0
Roland Barrera
Rudy Garza
Paulette M. Guajardo
Gil Hernandez
Michael Hunter
Ben Molina
Everett Roy
AL?-."
Greg Smith
ATTEST: CITY OF CORPUS CHRISTI
Vl/Lr
Rebecca Huerta Joe Comb
City Secretary Ma or
Corpus Christi, Texas
I day of k ri I , 2020
032077