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Home My WebLink About09-13-19 Public Comment - E. Arnold (Senior Civil Deputy County Attorney) - Levy on Special Improvement District No. 745 Gallatin County Attorney °�`'�`�'�� Judge Guenther Memorial Center Marty Lambert, County Attorney 1709 West College,Bozeman,MT 59715 Phone:Wo6)582-3745 Fax:(4o6)582-3758 JT OF T110 September 13, 2019 geftceive Bozeman City Commission c/o Bozeman City Clerk Bozeman City Hall 121 North Rouse Avenue Bozeman, Montana 59771 Re: Written Objection to Resolution No. 4894—A Resolution of the City Commission Levying A Special Assessment Upon All Property Situated Within Special Improvement District No. 745 Dear City Commission: I submit this written objection on behalf of Gallatin County, the owner of the Gallatin County Regional Park. The County objects to Resolution No. 4894 by which the City will levy a special assessment on the real property situated within Special Improvement District (SID) No. 745. As you know, the Regional Park is the only real property located within SID 745. The County has submitted multiple protests to the City regarding its creation of an SID for the improvements to Ferguson Avenue and Oak Street. Relating specifically to SID 745, the County submitted written protests dated June 8, 2018 and April 27, 2019. Both protest letters are attached for your reference. The concerns explained in the June 8, 2018 protest apply equally to the levy of assessments for SID 745. The County incorporates the entirety of that protest letter herein. The City cannot lawfully levy assessments for the unlawfully created SID 745. Gallatin County respectfully requests the City accept this written objection and vote to deny approval of Resolution No. 4894. Sincerely, ,,,,, Erin L. Arnold Senior Civil Deputy County Attorney Gallatin County Attorney's Office • 1709 W. College • Bozeman, Montana 59715 i� r Hof uui County Commission r GALLATIN COUNTY Joe P.Skinner Donald F. Seifert 311 West Main,Rm.306 • Bozeman,MT 59715 Scott MacFarlane commission@gallatin.mt.gov a OF 140NKr Phone (406)582-3000 April 27, 2019 Bozeman City Commission C/o Bozeman City Clerk Bozeman City Hall 121 North Rouse Avenue, Suite 202 Bozeman, Montana 59771 Re: Written Protest against the Creation of Special Improvement District No. 745 Dear City Commissioners: Gallatin County,through its Board of County Commissioners,and as the landowner of the property known as the Gallatin County Regional Park, hereby re-submits its written protest against the creation of Special Improvement District (SID)No. 745. Gallatin County first submitted its written protest in a letter dated June 8,2018,which outlined the reasons for the County's protest against SID 745. The June 8t'protest letter is attached hereto, and the County incorporates and re-alleges the entirety of that protest herein. As requested in June 2018, the County Commission again asks the Bozeman City Commission and its staff to respect the legal restrictions for creation of a special improvement district and to deny the creation of SID 745. Sincerely, GALLATIN COUNTY COMMISSION .3 Joel, Skinner, Chair 04 GAL County Commission GALLATIN COUNTY R.Stephen White Joe P.Skinner 311 West Main,Rm.306 • Bozeman,MT 59715 Donald F.Seifert commission@gallatin.mt.gov Phone(406)582-3000 June 8,2018 Bozeman City Commission c%Bozeman City Clerk Bozeman City Hall 121 North Rouse Avenue, Saute 202 Bozeman,Montana 59771 Re: Written Protest against the Creation of Special Improvement District No.745 Dear City Commissioners: Gallatin County,through its Hoard of County Commissioners,and as the landowner ofthe property known as the Gallatin County Regional Park,hereby submits its written protest against the creation of Special Improvement District No.745. This proposed district relates to already existing improvements to North Ferguson Avenue and West Oak Street,as well as to financing those improvements. Gallatin County submits this protest puurswmt to §7-12-4110,MCA. On April 3, 2017, the County submitted a written protest against the creation of Special Improvement District No. 740('SID 740'). The creation of SID 740, and the assessments made under SID 740, were unlawful. Contrary to the City's representations, the City failed to bill the County for the first installment purportedly due under SID 740.Although the City has no authority simply to dissolve an SID on its own,the County will not protest the dissolution of SID 740. In place of SID 740,the City proposes creation of Special LW rovement District No. 745 ("SID 745'). The creation of SID 745 does not cure the inherent defects in the soon-to-be dissolved SID 740:the City's unlawful failure to seek competitive bids for the improvements;the arbitrary nature of the apportionment of the County's share of the improvements; and the failure of the City to offer objective,verifiable data regarding the benefit purportedly bestowed upon the Regional Park by way of the improvement. Bozeman City Commission June 8,2018 Page 2 Further, the City seeks to create SID 745 to finance improvements already in existence. Montana law does not allow creation of an SID to finance already completed infrastructure.The City called the financing of the improvements a"loan"in the documentation pertaining to SID 740--now the City describes the financing as a"purchase"of the improvements. The County Commission requests that the Bozeman City Commission and its staff respect the statutory restrictions for creation of SIDS set forth in Title 7,Chapter 12,Parts 41 and 42,Montana Code Annotated (MCA). The County does not owe any "fair share" for infrastructure improvements and moactary assessments made through unlawful means. Gallatin County therefore protests the creation of SID 745. Creation of SIB 745 Gallatin County protests the creation of SIB 745. Contrary to the assertions made in the City Attorney's Memorandum, the new special improvement district does not "address the County's concerns related to the manner in which the City created SID 740." The attempted creation of a new special improvement district does not cure the City's failure to protect the County's taxpayers by adherence to the laws governing the competitive bidding process. Nor does the County agree with the City's new calculation of costs. As explained in prior public comment,the County has not waived its right to protest improvements to Ferguson Avenue and Oak Street. A landowner cannot waive the right to protest an SID that is void ab initio(from the beginning).In a case against the City,the Montana Supreme Court stated: "[A] property owner cannot ordinarily waive or become estopped to urge the invalidity of an assessment which is void by reason of an inherent defect,either of jurisdiction or of procedure." Smith v. City of Bozeman, 144 Mont. 528, 541-542, 398 P,2d 462, 469 (1965). Both the method and manner of SID 745's assessment are unlawful. Further,the waiver of right to protest entered by the previous landowner did not include any waiver for the payment of existing improvements. Gallatin County's protest is valid. The only property Iocated within the special improvement district is the Regional Park,owned wholly by the County.The City Commission must accept this protest and find that it is made by the owners of more than 50% of the area to be assessed. The City must then refrain from taking any further proceedings regarding SID 745 for at least 6 months pursuant to§ 7-12-4113, MCA. The County's protest against SID 745 is based on the following: a. The City must follow State law governing budgeting financing or borrowing of money. As a local government with self-government powers,the City is subject to"any law regulating the budget, finance, or borrowing procedures and powers of local governments." §7-1-114(l)(g), MCA. Such laws"are a prohibition on the self-government unit acting other than as provided," § 7-1-114(2),MCA. i I Bozeman City Commission June 8,2018 Page 3 b. The City failed to seek competitive bids for the project. Section 7-54302,MCA provides: [A] contract for the purchase of. . ,materials or supplies or for construction,repair, or maintenance in excess of$80,000 must be let to the lowest responsible bidder after advertisement for bids. Further, § 7-12-4143,MCA,requires the City to: [Alward the contract for the work or improvement to the lowest responsible bidder at the prices named in the bid and shall reject all proposals or bids other than the lowest regular proposal or bid of a responsible bidder. The City contracted directly with Flanders Mill,LLC for the construction of the improvements to Oak Street and Ferguson Avenue. the City incorporated estimates from Sime Construction into its contract with Flanders Mill. The City did not seek bids for the work that Suns performed in 2017. Taxpayers recently learned that the City attempted to charge the County$160,713.85 more than it actually cost to make the improvements. The original assessment(now termed an"estimate") was l5%higher than the final improvement costs. This discrepancy demonstrates the importance of the competitive bidding process and is evidence that the City's failure to conform to the law has harmed the County taxpayers. c. The City failed to-ve the County the opportunity to make the improvements at a lower Cost to the taxpayers. i Due to its failure to seek competitive bids,the City deprived the County of the ability to make the improvements at its own expense and i'or a lower cost. Section 7-124147, MCA states: j The owners of three-fourths of the frontage of lots and lands liable to be assessed or their agents . . .may,within 3 days after the award pursuant to 7-12-4143, elect to take such work and enter into a written contract to do the whole work at a price at least 5%less than the price at which the saane has been awarded. Interestingly,the public now knows that the City's original amount,as set forth in S1D 740,was an excessive and unlawful charge against the County.The County lost the opportunity to save even more taxpayer.money by taking an independent review of the City's project and its costs. The Montana Attorney General has reco guized that"the procedures for the letting of contracts form an integral part of the budget and finance functions of local government." 37 Mont. (gyp. Atty. Gen. 735,37 Mont. Op.Atty.Gen.No. 175, 1978 WL 33588,at*3 (Dec. 7, 1978). Accordingly,the"requirements for competitive bidding . . . are mandatory provisions applicable to local government units with self government powers." Id. Bozeman City Commission June 8,2018 Page 4 d. SID 745 would unlawfully assess the Gallatin County Regional Park for existing improvements. Similar to the methods used to create SID 740,the City seeks to unlawfully assess the County via SID 745.Both SIDs are void ab initio. According to the City's Engineer,the SID's purpose is"to raise funds from adjacent property owners to pay for a portion of the existing improvements." These"existing improvements"are the construction of North Ferguson Avenue and the widening of Oak Street, The City cannot create an improvement district to recover payment for existing improvements. The relevant statutes in Title 7, Chapter 12, Parts 41, MCA contemplate the construction of proposed improvements, not payment for improvements already in existence. No authority supports the creation of a special improvement district solely as a financing mechanism for improvements after they are completed. For example, under § 7-124102, MCA, the City can create a special improvement district and then"order work to be done that is considered necessary to improve the whole or a portion of the streets. . . ."(Emphasis added.) Similarly,§ 7-12-4104 requires a resolution of intent to state"the general character of the improvement or improvements which are to be made . . . ." (Emphasis added.) Finally, § 7-12-4114, MCA requires the City to pass a resolution creating the special improvement district"@jefore ordering any of the proposed improvements . , . ." As with SID 740, the City again seeks to unlawfully force the County to repay a loan for the improvements to Oak Street and Ferguson Avenue.According to Resolution 4892,the"District's Share of the Improvements"are"payable over a three-year term,in equal semiannual installments of principal, plus interest; or equal semi-annual payments of principal and interest, as this Commission shall prescribe . . . ." The County must then repay "principal and interest" toward the total`obligation"of$903,424.65. SID 745s sole purpose is to require the County to fund completed infrastructure through a loan. The City has no legal authority to require the County to finance the existing improvements. e. The City may not "purchase" the improvements and then charue the Cooly for those improvements. The City may not purchase the improvements to Oak Street and Ferguson Avenue for the County. Resolution 4892 is titled, in part, "A Resolution . . . Declaring It to Be the Intention of the City Commission to Create the District for the Purpose of Purchasing Certain Local Improvements and Financing the Costs Thereof. . . ." The Resolution then states the City"proposes to purchase,on �. behalf of a special improvement district to be created,upon such terms as the Commission deems just,certain local improvements . . ." The"purchases"basis for creating SID 745 is unlawful.There is no statutory authority for the City to purchase public improvements for another local government. Such purchase would violate the ! i Bozeman City Commission June 8,2018 Page 5 specific procedures in Title 7,Chapter 8,MCA through which the County can purchase and acquire property.Further,the purported purchase of the improvements would not cure the City's failure to competitively bid the construction of the improvements, as required by Title 7,Chapter 12, Part 41, MCA. Regardless of how the City seeks to fund the improvements, any related assessment remains invalid and unlawful. f. SID 745s proposed assgs rnent:s are arbitrary and unlawful. The assessments are not proportionate to any benefit,bestowrd on the Regional.Park. The City maintains the County will be assessed its "proportionate share of the costs" for the improvements to Oak Street and Ferguson Avenue. According to Resolution 4892, these costs allegedly are"equitable and in proportion to and not exceeding the special benefits derived from the Improvements"by the Regional Park. The City offers no proof,however,that the new amount of$903,424.65 equals the benefit conferred on the County,if any. Rather, the dissolution of SID 740 and the creation of SID 745 demonstrate the arbitrary and capricious manner in which the City calculated the improvements' costs. The City's Engineer admits to the City Commission that the"final costs of construction are significantly lower than the estimated costs when SID 740 was created." According to Mr. Hixon's memorandum, this "significant difference in costs"now compels the City to create"a new SID that accurately reflects the costs to be assessed." The City calculates that the original assessment provided by SID 740 of$1,062,138.50 is 15% higher than it should have been, The County's share of the improvements is now$160,713.85 less than the City originally sought through SID 740. If the County had not protested the creation of SID 740 and sought a judicial determination that SID 740 was void,the County's taxpayers would have been significantly overcharged for the improvements. The City's new calculations are as specious as the calculations for SID 740. The City derived the new amount of$903,424.65 by taking the "Final Construction Costs" for the improvements to Ferguson Avenue and West Oak Street and, again, splitting them among the City,the proposed District, and the Flanders Mill Subdivision, and then adding $1,000 for "incidental costs." The City has produced no documentation supporting the final costs. Nor has the City produced any documentation supporting the City's determination that the County is benefitted by exactly one- third for the improvements to Ferguson Avenue and by exactly one-half for the improvements to West Oak. In deciding how to apportion the costs among the County,the City,and Flanders Mill, the City followed the same arbitrary process it used to apportion the costs under SID 740. The Montana Supreme Court has specifically disallowed such arbitrary assessments. As stated in Toccf a City of Three Forks,216 Mont. 159, 163-64,700 P.2d 171, 174(1985):"It is fundamental to assessments for special improvements that the assessment be in proportion to the benefits i Bozeman City Commission June 8,2018 Page 6 conferred by the improvement," Through STD 745,the City again seeks to unlawfully impose an assessment on the Regional Park,this time for$903,424.65. In conclusion, the City should accept the County's written protest and decry the creation of 745. At a minimum,the City is required by§7-12-4113,MCA to take no further action on this item for a period of 6 months. Dissolution of SID 740 Finally,the County notes that the City seeks to dissolve SID 740 based on the admission that the "final costs of construction are significantly lower than the estimated costs when SID 740 was created."In fact,the actual costs of the improvemcnts to Ferguson Avenue and Oak Street were 15%less than anticipated.According to the City Attorney,this"significance difference in costs" supposedly necessitates the dissolution of SID 740 to"accurately assess the property."The City has no authority to dissolve a special improvement district.There is no authorization in Title 7, Chapter 12,Parts 41 or 42,MCA,either express or implied,allowing the City to dissolve a special improvement district by following the process for creation of a district. Notwithstanding the lack of authority to dissolve an SIT),the County win not protest the City's dissolution of SID 740. The decision not to protest the dissolution of SID 740 does not constitute a waiver of any County claim, defense, or cause of action regarding the illegal formation of SID 740, the illegal nature of the assessments made under SID 740, and the resulting illegalities inherent in SID 740's successor, SID 745. Sincerely, GALLATIN COUNTY COMMISSION X phen White,Chair Joe . S " r,Commissioner Donald F. Seifert, ssioner