SUBJECT:
Title
PUBLIC HEARING: A Resolution of the Board of Trustees of the Town of Erie Approving the Third Amended and Restated Service Plan for Sunset Parks Metropolitan District
Body
DEPARTMENT: Administration
PRESENTERS:
Malcolm Fleming, Town Administrator
James A. Mann, UMB
John Cheney, Lennar Homes Applicant’s Representative
Brian Connolly, Attorney for the Applicant
Steve Foley, Applicant
TIME ESTIMATE: 30 minutes
only required for non-consent items
FISCAL SUMMARY: NA
STAFF RECOMMENDATION:
Recommendation
Approve the Resolution
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
This application was last heard by the Board of Trustees on May 26, 2020. At that time, the Board approved the Third Amended and Restated Service Plan for the Sunset Parks Metropolitan District (Service Plan) for the Sunset Development on the condition the applicant provide a confidential report documenting the full sources and uses of funds and demonstrating the need for taxpayer funded debt, with said report to be reviewed by Town staff and the Town’s retained consultants to confirm the reasonably anticipated net return on investment does not exceed 15%.
In the interim since 2020, the applicant has updated several elements of the Service Plan, including the Estimated Cost of Public Improvements, Total Debt Issuance Limitation, District Improvements and Projection of Probable Costs, and Financing Plan with sources and uses and bond solutions. These changes constitute a material change to the Service Plan and thus require Board approval. Town staff and the Town’s Metro District financial consultant, James Mann with UMB, have reviewed this information, as well as the supporting proprietary financial information provided by the applicant, and confirmed that the proposal is consistent with the Board’s condition that the reasonably anticipated net return on investment does not exceed 15%. Accordingly, staff recommends the Board approve the Service Plan amendment.
The proposed development also will address several areas identified by the Board as priorities for new development, including:
• Sustainability - photovoltaic solar systems will be standard on all homes. in Sunset, in addition to our standard energy efficient construction specification
• Open Space - The community will have 26 acres of open space and spine trails
• Oil and Gas - All existing oil and gas wells on the property will be plugged and abandoning
• Pump Track - The project will be dedicating an additional pump track parcel to the Town for the benefit of all residents
• Infrastructure - The project will be widening the adjacent County Road 5 (consistent with the Town’s Transportation Master Plan), constructing a significant offsite sewer line, and constructing critical components of the Town’s master water infrastructure, including a contribution to the Zone 4 water system (per the Water Master Plan)
Please see the November 2, 2021 Letter from Lennar Homes’ John Cheney for additional details on the amenities associated with the proposed development.
Additional Background and Related Action
In the same May 26, 2020 meeting the Board conditionally approved the Service Plan Amendment, the Board also approved the Sunset Preliminary Plat. The Planning and Development Director subsequently approved the Sunset Final Plat and on December 14, 2021, the Board of Trustees approved the Sunset Development Agreement and accept the dedications associated with the Final Plat. Thus, the Board has already approved the proposed development, and the action on this item just pertains to amending Metro District financing plan to reflect the most recent development costs.
In a related action on this agenda, Agenda Item 21-529 is a Resolution that would consent to assignment of the Sunset Filing No. 1 Final Plat development agreement (DA) from FS Erie Estates, LLC to Lennar Colorado, LLC.
This Service Plan is intended to amend and restate the existing and all prior service plans for the Sunset Parks Metropolitan District (the “District”). The Town approved the original Service Plan by Resolution No. 08-07 on February 12, 2008 and the Weld County District Court ordered the organization of the District on May 27 that year. The Town subsequently approved a First Amended and Restated Service Plan on February 14, 2012 and a Second Amended and Restated Service Plan by Resolution No. 15-55 on April 14, 2015.
The District is generally located Northwest of the intersection of County Road 5 and County Road 6, in the SE Quarter of Section 20, Township 1 North, Range 68 West. Among other things, the Service Plan specifies the Maximum Debt Mill Levy and the Maximum Debt Mill Levy Imposition Term. The proposed amendments to the Service Plan do not change the Maximum Mill Levy of fifty (50) mills for the purpose of debt service, nor the ten (10) mills for operations in the existing service plan.
State Statute requires the Board of Trustees approve by resolution the Service Plan of any special district organized within the municipal limits of the Town.
As stated in the Service Plan, the purpose of the District is to provide funding for the Public Improvements required for the proposed Sunset development, which will be located within the District. The Plan identifies improvements and services expected to be provided by the District, and describes how activities will be financed. The Plan identifies powers of the District as well various limitations. In addition, the form for disclosure of the District is included; this disclosure is required to be included with closing documents to advise potential property owners to investigate financing, servicing of indebtedness, etc.
The Town contracted with UMB Financial Services to conduct a review of the proposed Service Plan amendments. UMB’s review concluded, “Given the absorption assumptions, the revised [home] values…, land values…vertical profit…and sales cost…the IRR remains in a reasonable range”. Town staff also conducted a sensitivity analysis using a model developed by UMB and confirmed that home values higher than current market rates and/or profit margins beyond those that could be reasonably expected would not enable the developer to exceed an IRR of 15%. Thus, the proposed service plan amendments are consistent with the Board’s 2020 condition that the reasonably anticipated net return on investment does not exceed 15%.
Board Priority(s) Addressed:
ü Attractive Community Amenities
ü Engaged and Diverse Community
ü Prosperous Economy
ü Well-Maintained Transportation Infrastructure
ü Effective Governance
ü Environmentally Sustainable
ATTACHMENTS:
1. Resolution 22-22
2. Proposed Service Plan
3. Proposed Service Plan (Redline)
4. Letter from Lennar Homes’ John Cheney
5. Public Hearing Notice - Sunset Parks Metro District
6. Certificate of Mailing 3-Mile Radius
7. Certificate of Mailing Property Owners