SUBJECT: RESOLUTION
Title
Continuation of the PUBLIC HEARING: A Resolution of the Board of Trustees of the Town of Erie Approving the First Amendment to the Amended and Restated Service Plan for the Erie Farm Metropolitan District
Body
DEPARTMENT: Planning and Development
PRESENTER: Fred Starr
TIME ESTIMATE:
only required for non-consent items
FISCAL INFORMATION: N/A
Cost as Recommended:
Balance Available:
Budget Line Item Number:
New Appropriation Required:
STAFF RECOMMENDATION:
Recommendation
Approve the request for a continuance of the Resolution as stated
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
The applicant is requesting the Board of Trustees continue this item to a date certain of June 25, 2019. During the Board of Trustees April 9, 2019 meeting, the Board asked the applicant to (1) contact existing residents and notify them of the issue, and (2) clarify what the additional funding would be used for and how long District’s tax would it be extended if the amendment is approved. The applicant has asked for the continuance to provide additional time to complete meetings with the Homeowners Association members and property owners in the development to provide them with more information about the Metro District and the request to amend the metro district service plan.
The applicant made this request by email correspondence. Staff has asked for an additional letter from the applicant regarding this request.
Additional Background. On March 12, 2013 the Board of Trustees approved Resolution 13-39, approving the amended and restated Service Plan and the material modification to the Original Service Plan for the Erie Farm Metropolitan District. The purpose of Resolution 13-39, was to bring the Erie Farms Metropolitan District Service Plan into conformance with he recently approved Town of Erie Model Service Plan.
The purpose of the current request is to increase the Debt limit from the current Thirteen Million Dollars ($13,000,000) to Thirty Million Dollars ($30,000,000), providing that the foregoing shall not include the principal sum of the debt which has been refunded by the issuance of refunding debt.
This request is based upon increases in Public Improvement Capital costs associated with the continued build-out of the development. Town staff have reviewed and verified that the proposed increase in Public Improvement Capital Costs represent an accurate assumption of these costs.
The Town retained Stifel, Nicolaus & Company (Stifel) to evaluate the Erie Farm Metro District’s request. Stifel’s analysis indicates, among other things:
“The Service Plan from 2013 included 497 homes with property values ranging from $540,000 to $800,000, to be constructed between 2014 and 2021. The Petition includes updated development projections of 513 lots with property values from $400,000 to $650,000. As of the date of the Petition, 98 homes were constructed in 2017 and 48 in 2018, leaving 367 lots to still be developed 2019 and 2023, assuming development occurs as projected. The assessed value at full buildout in 2023 (for collection year 2025) is expected to be $20,798,875, using the current assessment ratio of 7.2% for residential property.”
“The financing would fund approximately $10.48 million of new project funds and refinance all outstanding bonds (Series 2016A, 2016B, and 2017C). Under this scenario there would no longer be subordinate bonds outstanding after 2021. The model shown anticipates that the District would need to levy the maximum mill levy of 55.277 to cover debt service and operations.”
“The model is presented with one new financing in 2021 to restructure the outstanding debt and fund new net proceeds. If growth and development do not occur as projected, the District may not be able to support the additional debt under the presented assumptions. If the financing occurs as shown, the District’s maximum mill levy of 55.277 mills will be imposed in every year through 2051.”
“Within the Petition, there is little room for shortfalls, higher interest rates, or other negative influences. If the full amount of debt is actually issued, and the subsequent financial performance falls short, a full repayment may require the maximum debt service mill levy to be applied for a longer period, or to extend the repayment term, or both. However, all of these are subject to the restrictions provided in the Service Plan and the Petition.”
In summary, the Stifel analysis suggests the financing plan has little room for significant changes in the market, either lower demand for homes or higher interest rates. However, Stifel nevertheless concludes, “Based on the assumptions made by the Developer in the Petition, development should be adequate to cover the requested maximum authorization of $30 million as presented in the model. Stifel does not feel it unreasonable for the District to request the additional bonding capacity to cover the revised public infrastructure costs and any additional contingencies as market conditions are always changing.”
ATTACHMENTS:
1. REQUEST FOR CONTINUANCE
2. RESOLUTION
3. APPLICATION IMFORMATION FROM ERIE FARMS METRODISTRICT BOARD
4. FINANCIAL REVEW BY STIFEL, NICHOLAS & Co. for THE TOWN