HomeMy WebLinkAboutResolution 2654 Establishing an SID policy: 5-04-87 AMENDED by Res. 2712
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RESOLUTION NO.
2654
A RESOLUTION OF THE
CITY COMMISSION OF THE
CITY OF BOZEMAN
RELATING TO SPECIAL
IMPROVEMENT DISTRICTS AND
ESTABLISHING A
POLICY RELATING THERETO.
Be It Resolved By
The City Commission (the
Commission) of the City of Bozeman (the City) :
Section 1. Recitals.
1.0l. Proposed Objectives of Policy.
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 therefor
so as to provide
for the orderly and economical construction
and financing of
necessary public improvements within the City
and to minimize
the risks to the taxpayers in the City as a result of unpaid or
delinquent assessments.
1.02. Findings. 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
15 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
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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 an
d ultimately the City's
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, 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.
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.
Code shall mean
the Internal Revenue Code of
1986,
and any regulations and rulings promulgated thereby.
Costs of Improvements
shall mean those incidental
expenses described in Section 7-12-4104, M.C.A. and those costs
described in Section 7-12-4169, M.C.A.
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,
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(if any) legal fees and
charges, fees and charges
for
preparation, execution and safekeeping of the bonds.
Developed District shall
mean a special improvement
district in which more
than 50% of the lots have
occupiable
structures built thereon.
Developer shall mean an
individual or a group
of
individuals, corporation or partnership requesting the creation
of a special improvement district.
Community Facility Improvements
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.
Improvements shall
mean public improvements
authorized by Section 7-12-4102, M.C.A.
to be constructed and
financed through the creation of special improvement districts.
On-Site Improvements shall
mean those improvements
located within the boundaries
of a Special Improvement
District.
Off-Site Improvements shall
mean those improvements
located outside the boundaries
of a special improvement
district but of special benefit
to the properties within the
district.
Revolving Fund shall mean the fund established by the
City pursuant to Section 7-12-4321 et seq.
Undeveloped District shall mean a special improvement
district in which less
than 50% of the lots have
occupiable
structures built thereon.
Special Improvement Districts
shall mean those
districts established pursuant to Title 7, Chapter 12,
Parts 41
and 42, M.C.A. for the
purpose of constructing and installing
improvements for the special benefit
of properties located
within such districts.
Special Improvement District
Bonds shall mean bonds
issued by the City pursuant to
Title 7, Chapter 12, Parts
41
and 42, M.C.A. for the purpose of financing improvements within
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special improvement districts and paying
incidental costs as
defined in Section 7-12-4101, M.C.A. related to the creation of
the districts and the issuance of the Bonds.
Section 3. Special Improvement Districts Secured
By The Revolving Fund.
3.0I. Creation of Special Improvement Districts
and Issuance of Bonds Secured
by the Revolving 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.
3.02. Standards Applicable
To Undeveloped
Districts.
a. Costs of Im
provements. Costs of the
improvements, including design engineering
and inspection,
survey and legal work incurred relating to the
issuance of the
special improvement district bonds, may
be eligible for
financing by the district and included
in the bond issue,
beginning at the point when the
City Commission creates the
special improvement district.
b. On-Site Improvements
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:
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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
policy.
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 secure a
performance bond naming the City
as beneficiary for
the
installation of the water and
sewer improvements. The
performance bond will remain in pla
ce until water and
sewer
utilities are accepted and turned
over to ownership of the
City, unencumbered. No building permits
will be issued until
all improvements are installed
and acceptable and in the
ownership of the City, unencumbered.
c. Amount of Off-Site Improvements 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. Posting Additional Security.
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:
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1) The developer posts with the City, prior to the
sale of bond s : 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
t.he 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 (ii)
the district has
a 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-existing Undeveloped City subdivisions. This
section will apply to areas previously
subdivided by the City
prior to 1978 which are presently
undeveloped. Special
Improvement Districts may be 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
conditions must be met:
1) The developer posts with
the City, prior to the
sale of the bonds, a Certificate of Deposit or
a
cash escrow amounting
to 10% of
the total
principal and interest payments on the bonds,
for
the entire special
improvement district(s)
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assessments. The cash will
be used as security
for the 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) Any remaining credit "Ii 11 not
be released prior
to five (5 ) years, unless (i)
60% or more of the
lots in the district become
developed, and ( ii)
the district has a delinquency
rate below 10% in
each year for the most
recent two consecutive
years.
3) The five percent (5% ) Revolving
Fund fee and a
three percent (3% ) Administrative
fee will be
charged against the entire
bond issue and paid
from the bond proceeds,
in accordance wit.h
Sections 5 and 6 of this policy.
4) More than 60% of the
district must be owned by
individual property owners.
An "individual
property owner" is defined as a person who has an
ownership interest in
a lot, whether as an
individual, partner, joint tenant,
tenant in
common, or stockholder in a
corporation owning a
lot in the district, who has
a recorded interest
in less than 10% of
the lots in the proposed
district pre-dating the application
hereunder by
at least ninety (90)
days and who is neither
related by blood or marriage to other
individual
property owners within the
proposed district nor
who has any ownership interest,
whether as an
individual, partner, joint tenant,
tenant in
common, or as a stockholder
of a corporation
owning a lot in
the district with other
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individual property
owners within t.he proposed
improvement district.
Section 4. Special
Improvement Districts Not
Secured by the Revolving Fund.
4.0l. Districts Not Secured by
the Revolving 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 sale of bonds.
Section 5. Revolving Fund.
5.0l. Deposit to
the Revolving 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.
Section 6. Administrative Fee.
6.01. Three percent (3%
) administrative fee shall be
assessed against all special improvement districts.
Section 7. Requirements
for Approval.
7.0l. It is
hereby declared to be in
the best
interests of the City of
Bozeman that any person,
firm,
partnership, 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, corporation or
partnership is responsible on
all properties owned by said
person, firm, 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.
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Section 8. Private Activity Bonds.
8.0l. 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. Severability Clause.
9.0l. Severability. 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
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of Bozeman this 4th day of May 1987.
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J ITH A. MATHRE, Mayor
ATTEST:
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ROBIN L. SULLIVAN
Clerk of the Commission
APPROVED AS TO FORM:
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City Attorney
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NOTICE TO BOZEMAN RESIDENTS
NOTICE IS HEREBY GIVEN that at the regular 7:00 p.m. City
Commission meeting of the City of Bozeman on Monday, April 20,
1987, a public discussion will be held on the revised Special
Improvement District (S ID) policy.
Copies of the revised SID policy are available for public
review at the Clerk of the Commission's office, 411 East Main,
and at the Public Library, 220 East Lamme, during regular business
hours.
Any and all interested persons are invited to attend this
public discussion.
ROBIN L. SULLIVAN
Clerk of the City Commission
DISPLAY AD
Publish: Wednesday, April 8, 1987
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