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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 0320-'77 SCANNED 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