HomeMy WebLinkAboutResolution 3379 Revise SID policy
COMMISSION
RESOLUTION NO. 3379
A RESOLUTION OF THE CITY COMMISSION
OF BOZEMAN, MONT ANA
ESTABLISHING THE CITY OF BOZEMAN'S SPECIAL IMPROVEMENT DISTRICT
POLICY AND REPEALING ALL EXISTING SPECIAL IMPROVEMENT DISTRICT
POLICIES.
BE IT RESOLVED by the City Commission (the Commission) of the City of Bozeman (the
City) that:
Section 1. Recitals.
1.01. ProDosed Objectives of Policv.
It is the intent of the City of Bozeman, Montana, to establish a policy regarding the
creation of special improvement districts within the: City and the issuance of special improvement
district bonds therefore so as to provide for the orderly and economical construction and
financing of necessary public improvements with the City and to minimize the risks to the
taxpayers in the City as a result of unpaid or delinquent assessments.
1.02. Findinas.
The Commission hereby finds that:
(a) The use of special improvement districts is an important and necessary
method of constructing improvements in the City of Bozeman in existing fully
developed neighborhoods and business districts, as well as in new residential and
commercial subdivisions; and
(b) Over the past -t-S 25 years, special improvement districts have been
extensively used by real estate developers to finance the entire costs of water,
sewer, curbs and gutters, streets, road and park improvements associated with
the development of residential and commercial subdivisions within the City; and
(c) Such use of special improvement districts and the issuance of special
improvement district bonds secured by the City's Revolving Fund have provided
a significant economic benefit to the developers of such subdivisions; and
(d) That the rate of delinquent
special improvement assessments for
undeveloped special improvement districts is significantly greater than that for
developed special improvement districts; and
(e) The high incidence of the failure or inability of such developers to pay
assessments levied against the property within such subdivisions while in their
ownership has exposed the City's Revolving Fund and, ultimately the City~
General Fund and taxpayers, to risks that are not warranted
under the
circumstances; and
(f) In order to establish a policy that allows the use of special improvement
districts and special improvement district bonds, and at the same time provide
protection for the City's Revolving Fund taxcaver, it is necessary to establish a
policy that distinguishes between, and establishes different standards for, special
improvement districts created within existing developed neighborhoods and special
improvement districts created for undeveloped residential
and commercial
subdivisions. Furthermore, it may, in some instances, be in the City's interest to
permit creation of special improvement districts on undeveloped properties not
secured by the City's Revolving Fund.
(g) Scction 7 12 4190 MCA allows the City to aooess thc cost of 810
improvcmcnts over a period of 20 ycars or less. This section states in port: "Thc
payment of a:::;:::;c:::;:::;mento to defray the east of acquiring or con:::;trueting any
improvements in special improvemcnt districts may bc spread over a term not to
m(eeed 20 ycars..."
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Asscssing the eosts over a period of loss than the 20 year maximum could
faeilitate tho sale of tho bonds under more advantageous terms or with lower
intcrest rates in ccrtain instanees, sueh as a relatively small bond issue or a period
of volatile interest rates. It is recognized, hewever, that shorter term bonds will
result in higher required semi annual payments by property owners.
(A) Scatien 7 12 4103 MCA authorizes the City to poel bonds of more than
one SID distriet. This seetion states in part: Hlf the city council determincs
by
resolution that the pooling of bonds of moro than ene speeial improvement distriet
of tho city is in tho bost interest of the city and the respoctive dictriets and '.viII
faeilitate the sale of the bonds under more aet,+,antageous termo er with lower
interest rates, the city may issue bonas of the districts oombined in a singlc
offering... H
Section 2. Definitions.
All capitalized terms used herein shall have the meanings given to them in this section,
unless otherwise indicated; or, if not defined herein, the meanings given to them in Title 7,
Chapter 12, Parts 41 and 42.
Aooraised Value means the value for the current use of the orooertv as determined bv a
certified aooraiser.
Code shall mean the Internal Revenue Code of 1986, and any regulations and rulings
promulgated thereby.
Communitv Facilitv Imorovements shall mean those improvements that are designed to
be part of the community-wide system of city service or improvement facilities and which are
not designed to provide city services or access to individual lots or properties.
Costs of Imorovements shall mean those incidental expenses described in Section
7-12-4104, MCA and those costs described in Section 7~ 12-4169, MCA.
Costs of Issuance shall mean all items of expense directly or indirectly payable by, or
reimbursable to, the City and related to the authorization, sale, and issuance of bonds including
the City's fees, costs of preparation and reproduction of documents, initial fees and charges of
Trustee, (if any) legal fees and charges, fees and charges for preparation, execution and
safekeeping of the bonds.
DeveloDed District shall mean a special improvement district in which more than 50% of
the lots have occupiable structures built thereon.
Develooer shall mean to include an individual or a group of individuals, natural cerson.
business. ioint venture. association. trust. club. corporation or partnership requesting the creation
of a special improvement district.
Imorovements shall mean public improvements authorized by Section 7-12-4102, MCA
to be constructed and financed through the creation of special improvement districts.
Off-Site ImDrovements shall mean those improvements located outside the boundaries of
a special improvement district but of special benefit to the properties within the district.
On-Site Imorovements shall mean those improvements located within boundaries of a
Special Improvement District.
Revolvina Fund shall mean the fund established by the City pursuant to Section
7-12-4321 etseq.
Soecial Imorovement Districts shall mean those districts established pursuant to Title 7,
Chapter 12, Parts 41 and 42, MCA for the purpose of constructing and installing improvements
for the special benefit of properties located within such districts.
Scecial Imorovement District Bonds shall mean those bonds issued by the City pursuant
to Title 7, Chapter 12, Parts 41 and 42, MCA for the purpose of financing improvements within
special improvement districts and paying incidental costs as defined in Section 7-12-4101, MCA
related to the croatian of the dictriotc and tho isouanoe of tho Bonde.
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Undeveloced District shall mean a special improvement district in which less than 50%
of the lots have occupiable structures built thereon.
Section 3. Creation of Sceciallmorovement Districts Secured By The Revolvina Fund.
3.01. Creation of Sceciallmcrovement Districts and Issuance of Bonds Secured
bv the Revolvina Fund.
In accordance with the provisions of Title 7, Chapter 12, Parts 41 and 42,
the City may create special improvement districts for financing improvements only
upon a determination that the creation of the district and the installation of the
improvements is in the public interest.
The City may issue special improvement district bonds for financing the
costs of constructing and installing the improvements and paying incidental costs
relating thereto. The City will not pledge the Revolving Fund to such bonds unless
one of the additional following circumstances exist:
a) The district is a developed district.
b) The district is being created and the bonds are being issued for
the purpose of financing Community Facility Improvements in either
developed or undeveloped districts.
c) The district is undeveloped and the developer complies with
3.02 hereof or at the time of creation of the Soecial Imcrovement
District that the accraised value of each carcel minus any cublicly
financed imcrovements is not less than two times (2X) the amount
of the assessment assianed to that Darcel.
3.02. Standards Applicable To UndeveloDed Districts.
a. C03t3 of ImDrovementa. Costs of the
improvement::;,
including design engineering and inspeotion, survey and legal worl't:
incurred relating to the issuance of the special improvement di3trict
bonds, may be eligible for financing by the district and included in
the bond bauc, beginning at the point when the City Commi33ion
creJtes the spacial improvement district.
&:- 2..,. On.Site ImDrovements to be Financed. Special Improvement
Districts may be created
to finance the costs
for street
improvements of on-site
improvements proposed for an
undeveloped district. Approval of a special improvement district is
contingent upon:
1 ) developers financing the cost of improvements
for water and sewer services; and
2) developers remitting to the City a five percent
(5%) Revolving Fund fee and a three percent (3%)
Administrative fee, in cash prior to the sale of the
bonds, for the street improvement SID in accordance
with Section 5 and 6 of this Dolicy olus any other
fees aooroved by the Citv Commission and Drovided
by law.
Developers are fully
responsible for financing,
contracting, and installing
water and sewer
improvements. Plans
for water and sewer
improvements must be approved in advance by the
City. Actual construction must be certified by a
professional engineer that the improvements were
installed in accordance with City standards.
Prior to Commission approval of the creation of a
district for street improvements, the developer must
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secure a performance bond naming the City as
beneficiary for the installation of the water and
sewer improvements. The performance bond will
remain in place until water and sewer utilities are
accepted and turned
over to unencumbered
ownership of the City, unenoumbered. No building
permits will be issued until all improvements are
installed and acceptable and in the unencumbered
ownership of the City, unencumbered.
e..b.... Amount of Off-Site Imorovements to be Financed.
The cost of off.site improvements, which are assessable against
any district, may be financed through a special improvement district
upon a determination that the proposed off-site improvements are
consistent with the City's public improvement goals.
d. POGtina Additional Seeuritv.
ApplioJtion of this sootion is oontingent upon bond oouncel's
approval and concurrence.
Notwithstanding other provisions of this section, the City may, in
ita diooretion, crOJte speciJI improvement dictricts for undeveloped
districts to finance water, sewer, and street improvements and
issue bonds for financing such improvements secured by the
Revolving Fund if:
1 ) The developer posts with the City, prior to the
sale of bonds: cosh, and/or some other acceptable
form of credit or security obligating the developer to
pay principal and interest on the bonds for all
assessments for the first five (5) years. The credit
will be estimated prior to the sale of the bonds and
finalized upon awarding of bido. The credit pooted
will separately identify eaoh individual property in tho
di:Jtrict and aet as its security. The credit will be
uGed as security for special improvement diGtriet
assessments for a minimum of 80~{' of the propertie:J
within the district. ^ separate written agreement will
be mode between the
developer and the City
regarding the credit and how it will be applied in
instances of default and/or transfers of property.
2) The credit will not be released prior to five (5)
years, unless (i) over 60% of the lots in the distriet
become developed, and
(ii) the district has
a
delinquenoy rate of loss than 10% for tho moot
recent two consecutive years.
3) That portion of credit relating to pareels not
participating in crodit oeorow will be provided in OJsh
for five (5) years of principal and interest coverage
by thooe participating.
e. Pre mciatina Undovoloocd City Subdivisiono. This Geotion will
apply to areas previously subdivided by the City prior to 1978
which ore presently undeveloped. Special Improvement Distriot3
ma" bo approved and created on undeveloped properties for all
improvements with guarantee by the City's Revolving Fund. In
order to be approved, all of the following oonditions must be met:
1 ) The developer posts with the City, prier to the
oale of the bonds, a Certifioate of Deposit or a eaoh
escrow amounting to 10% of tho total prineipal and
interest payments on the bonds, for the entire special
improvement distriet(s) assessments. The eash will
be used as oeourit, for the special improvement
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district assessments for a minimum of 80% of the
properties within tho district. ^ separato writton
agreement will be made between the developer and
the City regarding tho credit and how it will be
applied in inotanee3 of default and/or transfers of
property.
2) Any remaining credit will not be roloased prior to
five (5) years, unless (i) 80<K. or more of the: lots in
tho distriet bocome devoloped, and W) tho district
ha3 a delinquency rate below 1 O~(, in eaoh year for
the most recent two consecutive years.
J) The fivo percent (5%) RevolviRg Fund fee and a
three percent (JI;J(.) Administration
fee will be
charged against the entire baRet issue and paief from
the bond proceeds, in aocordanee with Sections 5
and e of this policy.
4) More than 60% of the district muot owned by
individual property owners. An "individual property
owner" is dofinod as ::) person who has an ownorohip
intercst in a lot, whether 03 an individual, partner,
joint tonant, tenant in common, or stockholder in a
corporation owning a lot in tho district, who has ;)
recorded interoct in loos than 10% of tho lots in tho
proposed district pre dating the application horeunder
by at least ninoty (00) days and who is neither
related by blood or marriage to other individual
property ewnOrG within tho propoood distriot nor who
has any ownership interest, whethor as on individual,
partner, joint tonant, tenant in common, or 00 a
stockholder of a corporation owning a lot in the
diotrict with other individual property owners within
the proposed improvement district.
d. Postina Additional Securitv.
Application of this section is contingent upon bond counsel's
approval and concurrence.
Notwithstanding other provisions of this section, the City may, in
its discretion, create special improvement districts for undeveloped
districts to finance water, sewer, and street improvements and
issue bonds for financing such improvements secured by the
Revolving Fund if:
1 ) The developer posts with the City, prior to the
sale of bonds: cash, and/or some other acceptable
form of credit or security obligating the developer to
pay principal and interest on the bonds for all
assessments for the first five (5) years. The credit
will be estimated prior to the sale of the bonds and
finalized upon awarding of bids. The credit posted
will separately identify each individual property in the
district and act as its security. The credit will be
used as security for special improvement district
assessments for a minimum of 80% of the properties
within the district. A separate written agreement will
be made between the developer
and the City
regarding the credit and how it will be applied in
instances of default and/or transfers of property.
2) The credit will not be released prior to five (5)
years, unless (i) over 50% of the lots in the district
become developed, and (ij)
the district has a
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delinquency rate of less than 10% for the most
recent two consecutive years.
3) That portion of credit relating to parcels not
participating in credit escrow will be provided in cash
for five (5) years of principal and interest coverage
by those participating.
e. Pre e>cistina Undevelooed City Subefivi3ion3.
This section will
apply to areas previously subdivided by the City prior to 1878
which arc pre3ently undeveloped. Special Improvement Distriet3
may be approvcd and created OR undeveloped J3roperties for all
improvement3 with guarantee by the City's Re':olving Fund.
In
order to be approved, all of the following oonditions must be mot:
1 ) The developer posts with the City, prior to thc
sale of the bonds, a Certificate of Depooit or a cash
escrow amounting to 10% of tho total principal and
interest payments on the bonds, for the entire special
improvement distriet(3) assessments. The eooh will
be uoed as security for the special improvement
diotriot assessments for a minimum of 80% of the
propertieD within the di3triet. A separate written
agreement will be mode between the developer and
the City regarding the credit and how it will be
applied in instances of default and/or transforc of
property.
2) ^ny remaining credit will not bc released prior to
five (6) yearc, unloss (i) 60% or more of the lots in
the diotrict become developed, and (ii) tho di3trict
ha:;; a delinquency rate below 1 O~(. in each year for
tho most recent two consecutive year3.
3) The five percent (5%) Revol'/ing Fund fee and a
three percent (3%)
Administration fee will bc
charged against tho entire bond issue and paid from
tho bond prooecdo, in accordance with Sectiono 6
ond 6 of this policy.
1) More than 60~(' of the district must owned by
individual property ownerc:. An "individual property
owner" is defined os a person who h03 an 0'Nner3hip
intoreot in a lot, whether as an individual, partner,
joint tenant, tenant in common, or stoel(holder in a
corporation owning a lot in the diotrict, who has a
recorded interest in leGs than 10% of the lots in thc
prop03cd district pre dating the application hereunder
by at Icast ninety (90) daY3 and who i3 neither
related by blood or marriage to other indi'Jidual
property owners '.lVithin the proposed district nor who
hao any owner3hip interest, whether os an individual,
partner, jeint tenant, tenant in eommOA, or 00 a
ctockholder of 3 corporation owning a lot in the
district with other individual property owner3 within
the proposcd imprm:ement di3triet.
Section 4. Soecial Imorovement Districts Not Secured by the Revolvina Fund.
4.01. Districts Not Secured bv the Revolvina Fund.
Special Improvement Districts may be approved and created on undeveloped properties
for all improvements without guarantees by the Revolving Fund. In such instances, all costs of
issuance including engineering fees, bond counsel fees, etc. will be paid by the developer, prior
to the sale of bonds.
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Section 5. Revolvina Fund.
5.01. Deoosit of the Revolvina Fund.
For districts which the City issues bonds secured by the Revolving Fund, the costs
of the improvement shall include a deposit to the Revolving Fund of five percent
(5%) of the principal amount of the bonds to be issued and the Citv Commission
may include an additional amount. not to exceed five oercent (5%) of the crincioal
amount of the bonds to be issued. in accordance with MCA section 7-12.4170.
5.02. Factors to Consider in Use of Revolvina Fund.
Prior to orovidina funds for the Revolvina Fund. the Citv Commission shall take
into consideration of the factors soecified in MCA Section 7-12-4225.
Section 6. Administrative Fee.
6.01. Three percent (3%) Administrative fee shall be assessed against all special
improvement districts.
Section 7. Reauiremcnts for Conditions of Aooroval.
7.01. It is hereby declared to be in the best interests of the City of Bozeman
that any person, firm, partnership,
develooer . organization or corporation
requesting the creation of a special improvement district shall, as a condition of
approval of said special improvement district, have paid and brought current all
existing special improvement district assessments for which said person, firm,
develooer. corporation or partnership is responsible on all properties owned by said
person, firm, develooer, corporation or partnership or in which said person, firm,
corporation or partnership has an interest therein.
EXCEPTION: This section shall not apply to existing residential neighborhoods or
commercial districts applying for special improvement districts, such as lighting
and sprinkling, and various maintenance districts.
Section 8. Private Activitv Bonds.
8.01. Under the Code, it is possible that bonds issued to finance improvements
in an undeveloped district, pursuant to the resolution, may be considered private
activity bonds, and if such bonds can be considered exempt facility bonds, such
bonds may be issued as taxable bonds, subject to the provisions of the Code.
8.02. Costs of Issuance. If special improvement district bonds are determined
to be private activity bonds, the developer of the district for which the bonds are
to be issued shall be responsible for costs of issuance in excess of the amount
allowed by the Code to be financed from bond proceeds.
Section 9. Term of Soecial Imorovement District.
The term of SID assessments and the corresponding bond issue shall be established at
a period (years) which will be in the best interests of the property owners, taking into
consideration the expected interest rate and the property owners' ability to pay.
Section 10. Poolina of SID bonds.
If the City Commission determines that the pooling of bonds of more than one special
improvement district of the City is in the best interest of the City and the respective districts and
will facilitate the sale of the bonds under more advantageous terms or with lower interest rates.
the City will issue bonds of the districts combined in a single offering.
Section 11. Reoealer
All resolutions, ordinances and sections of the Bozeman Municipal Code and parts thereof
in conflict herewith are hereby repealed
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Section 12. Severabilitv Clause
12.01. Severabilitv
If any part of this policy is held to be unconstitutional or void, such part shall be deemed
severable from the other parts, and the invalidity thereof shall not affect the remaining parts of
this policy.
PASSED AND ADOPTED by the City Commission of the City of Bozeman this 7th day of
August 2000.
M~of~aYor
ATTEST:
~oi~
R BIN L. SULLIVAN
Clerk of the Commission
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