SUBJECT:
Title
PUBLIC HEARING: A Resolution of the Board of Trustees of the Town of Erie Approving the Service Plan for Lafferty Canyon Metropolitan District
Body
DEPARTMENT: Planning and Development
PRESENTER: Zachary P. White, Attorney for the Applicant
Malcolm Fleming, Town Administrator
Fred Starr, AICP, Planning and Development Director
TIME ESTIMATE: 30 minutes
only required for non-consent items
STAFF RECOMMENDATION:
Recommendation
Consider the information contained in the independent review of the Service Plan and the Applicant’s response and either approve the resolution, or provide direction for staff to pursue additional information and conduct further review.
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
The applicant submitted a request for approval of the Service Plan for the Lafferty Canyon Metropolitan District, in November of 2020 (See attachment). This first draft of the Service Plan was reviewed by Ehlers who provided their comments to the Town and the applicant on January 22, 2021 (See Attachment). The applicant provided their response to these review comments and a revised Service Plan on August 10, 2021 (See Attachment). The reason for this timing was to allow the review and approval of the Canyon Creek filing 7 & 8, preliminary plat, which has recently been approved by the Board of Trustees.
The stated objective of the service plan is to authorize the District to provide for the planning, design, acquisition, construction, installation, financing, relocation, and redevelopment of the Public Improvements from the proceeds of Debt to be issued by the District. All Debt is expected to be repaid by taxes imposed and collected for no longer than the Maximum Debt Mill Levy Imposition Term and at a tax mill levy no higher than the Maximum Debt Mill Levy or repaid by Fees as limited by Section V.A.6.
This Service Plan is intended to establish a limited purpose for the District and explicit financial constraints that are not to be violated under any circumstances. The primary purpose is to provide for the Public Improvements associated with development and regional needs.
Unless the District has operational responsibilities for any of the Public Improvements, it is the intent of the District to dissolve upon payment or defeasance of all Debt incurred or upon a court determination that adequate provision has been made for the payment of all Debt, or upon the occurrence of an event specified in Section 32-1-701(2) or (3), C.R.S.
The District shall be authorized to finance the Public Improvements that can be funded from Debt to be repaid from tax revenues collected from a mill levy which shall not exceed the Maximum Debt Mill Levy and which shall not exceed the Maximum Debt Mill Levy Imposition Term. It is the intent of this Service Plan to assure to the extent possible that no property bears an economic burden that is greater than that associated with the Maximum Debt Mill Levy in amount and that no property bears an economic burden that is greater than that associated with the Maximum Debt Mill Levy Imposition Term. Generally, the costs of Public Improvements that cannot be funded within these parameters are not costs to be paid by the District.
The area of the proposed district is approximately 109.622 acres and is generally located in the North One-Half of the Southwest One-Quarter of Section 13, Township 1 North, Range 69 West of the Sixth Principal Meridian. (See Exhibit D, in Service Plan)
Section VI of the Service Plan describes the proposed Financial Plan for the Metropolitan District including among other items, a Total Debt Issuance Limitation of $21,606,613.00 and a Maximum Debt Mill Levy to be fifty (50) mills, with adjustments as noted in Section VI. E. of the Service Plan.
The Ehlers review indicates the following:
Section VI. I. of the Service Plan also proposes an Operating Mill Levy of ten (10) mills, for the administration and to plan and cause the Public Improvement to be constructed and maintained.
The proposed debt issue will net approximately $18.27 M of proceeds to be used for $15.55 M in public improvements identified in Exhibit D-1, which is approximately $2.7 M greater than the projects identified in said exhibit to be reimbursed. We do note that Exhibit D2 provides a list of “Overall Development Cost Estimate” of which we assume include the costs enumerated in Exhibit D-1. If we are understanding correctly, that would mean that the proponent is not being reimbursed for approximately $14.8 M of infrastructure necessary to serve the development. While on the surface it would appear that the proponent is contributing significant capital, the numbers do not represent a full picture of the development finances. For example, most real estate projects assume that approximately 18% of the end home/lot package costs is related directly to the cost of the land and infrastructure. This calculation would generate approximately $33.2 M of lot sale proceeds that would be used for initial land purchase, infrastructure improvements and other development costs. Therefore, without a full analysis of inflow revenues and outflow expenses, there is no ability to determine if a gap exists that needs to be filled by another source of revenue (through the metropolitan district). A gap analysis and ultimate evaluation of the proponent return on investment will help determine the reasonableness of the proposed metropolitan district. No information was provided regarding:
i. Land sale revenue (see sub 6 below)
ii. Initial Land Cost - Title 32-1-202(2)f C.R.S
iii. Other contributions
iv. Proponent expected return on investment
In response to these comments from Ehlers, the applicant stated the following:
A “full analysis of inflow revenues and outflow expenses” is not necessary for the Town to consider the factors listed in Section 32-1-203(2.5), C.R.S. and approve the Service Plan. The Applicant’s “return on investment” is not listed in Section 32-1-203(2.5), C.R.S. because it is not appropriate for the Town to link the “reasonableness of the proposed metropolitan districts” with the “return on investment,” which inherently includes an investigation and determination of a private party’s financial investment. A more appropriate question to ask is: does the District propose to provide public services and public improvements to an area in the Town that does not have these services? The answer is, yes.
Furthermore, Section 32-1-203, C.R.S. provides “(4) The findings of the board of county commissioners [regarding the service plan] shall be based solely upon the service plan and evidence presented at the hearing by the petitioners, planning commission, and any interested party.” It is not necessary or appropriate for the Board of Trustees to consider confidential or proprietary information from the Applicant as part of the public hearing to approve the Service Plan.
Board Priority(s) Addressed:
ü Attractive Community Amenities
ü Well-Maintained Transportation Infrastructure
ü Safe and Healthy Community
ATTACHMENTS:
1. Resolution 21-135
2. Initial Service Plan for Lafferty Canyon Metropolitan District, submitted Nov 2020
3. Ehlers comments to initial Service Plan, dated Jan. 22, 2021
4. Response to Ehlers review comments submitted August 10, 2021
5. Lafferty Canyon Metropolitan District Service Plan, submitted August 10, 2021