HomeMy WebLinkAboutResolution 2441 Establishing policy for cash escrow for SIDs AMENDED BY 2484
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RESOLUTION NO. 2441
A RESOIJUTION OF THE CITY COMMISSION OF THE CITY
OF BOZEMAN, MONTANA, ESTABLISHING A POLICY WHEREBY
A CASH ESCROW ACCOUNT SHALL BE REQUIRED AS A
CONDITION OF THE CREATION OF ANY SPECIAL IMPROVE-
MENT DISTRICT ON UNDEVELOPED LAND IN WHICH 40
PERCENT OR MORE OF THE PROPERTY IS HELD IN LIMITED
OWNEHSHIP.
WHEREAS, the City Commission is authorized and
empowered to create special improvement districts for
purposes allowable under the laws of the State of Montana
whenever the public interest or convenience may require: and
WHEREAS, the cregtion of a special improvement district
may affect the tax liability of all taxpayers in the City of
Bozeman: and
WHEREAS, the nonpayment of special improvement district
assessments creates a potential financial hardship for all
taxpayers of the City of Bozeman: and
WHEREAS, the more property owners there are in a
special improvement district, the more widely the liability
for payment of the assessments is spread resulting in a more
remote potential for financial hardship for the taxpayers
within and without the district: and
WHEREAS, the City of Bozeman recognizes that one viable
means of financing needed improvements is the creation of
special improvement districts: and
WHEREAS, the City of Bozeman must act within a period
of time of only 31 days, from the deadline of November 30
each year for the payment of special improvement district
assessments to January 1 of the succeeding calendar year,
to pay principal and interest on special improvement
district bonds: and
WHEREAS, the advertisement required by law for the call
for bonds must be prepared and published on or about
December 20 of each year, thereby imposing on the City an
even more limited time period between the deadline date of
November 30 for the payment of special improvement district
assessments and the publishing date for the bond call: and
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WHEREAS, the nonpayment of special improvement district
assessments as of November 30 leaves the City with insuffi-
cient time to pursue the collection of money under instru-
ments of financial guarantee, other than a cash guarantee;
and
WHEREAS, the City of Bozeman, along with other cities
and towns in the State of Montana, has experienced
substantial nonpayment of special improvement district
assessments by record owners of undeveloped land; and
WHEREAS, in order to serve the public's interest or
convenience and fulfill its duties to act prudently with
regard to the interest of all taxpayers within the City, the
City Commission finds it necessary to develop a policy to
alleviate the potential risk and liability created by the
nonpayment of special assessments.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION
OF THE CITY OF BOZEMAN, MONTANA:
Section 1
That the following definitions shall be established for
the purpose of this Resolution:
1. Undeveloped land--shall mean that land
previously undivided or on which there
exists no structure usable for the pur-
poses permitted under the applicable
zoning district.
2. Limited land ownership--shal1 mean the
percentage which results when the square
feet of property not held in individual
ownership within the special improvement
district is divided by the total square
feet of the assessed property within
that district.
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3. Individual ownership--shall mean those persons
who are independent property owners of record
(including contract purchasers) of not more
than 10 percent of the total square footage of
the assessed property within the district.
Section 2
That it shall be the policy of the City of Bozeman to
require the establishment of a cash escrow account in the
name of the City of Bozeman by those petitioning for the
creation of a special improvement district on land which is
wholly or partially undeveloped when 40 percent or more of
the land is held in limited ownership. The cash escrow
account shall be the only acceptable form of security. The
cash escrow account shall consist of and be operated with
the following conditions:
A. The cash escrow account shall be established in a
financial institution acceptable to the City of
Bozeman as evidenced by the written approval of
the Director of Finance.
B. The cash escrow account shall be established in
the name of the City of Bozeman.
C. The costs of establishing and maintaining the
cash escrow account shall be borne by those
person(s) required to establish the account.
D. The cash escrow account shall continue for the
full term of the assessment levy, unless other-
wise authorized by the Director of Finance in
accordance with paragraph K, below.
E. The City of Bozeman, by and through the Director
of Finance, may withdraw such sums from time to
time as may be necessary due to nonpayment of
assessments levied on the property held in limited
ownership.
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F. Interest earned from the escrow account shall
accrue to the person(s) establishing the escrow
account. The City of Bozeman shall not derive any
benefit from the interest earned on that account.
However, the City of Bozeman, by and through the
Director of Finance, retains the right to control
and limit the investment of the escrow account in
order to preserve the tax exempt character of the
special improvement district bonds.
G. The cash escrow account shall be established
in an estimated amount prior to the passage
of the resolution creating the special improvement
district. After the bonds are sold, that amount
shall be adjusted up or down to reflect the actual
interest rate established. In the event that
bonds are not sold and improvements are not
constructed, the original balance of the escrow
account, along with all accrued interest earned,
shall be returned to the original depositor(s)
less any costs incurred by the City in the
establishment of the special improvement district
or the attempted sale of the bonds.
H. The percentage of land ownership shall be
submitted to the Director of Finance by those
petitioning for the creation of a special
improvement district as verified in the property
ownership records on file and of record in the
Office of the Gallatin County Clerk and Recorder.
I. The Director of Finance shall calculate the
amounts required in paragraph J, below.
J. The escrow account shall be established in the
following amounts:
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Percentage of
Limited Ownership
Amount Required
40% up to but
not including 60%
first year's assess-
ments for entire
district
60% up to but
not including 80%
first and second
years' assessments
for the entire
district
80% or more
first, second, and
third years' assess-
ments for the entire
district
K. The person(s) establishing the escrow account may
submit a written request to the Director of
Finance to reduce the amount held in the account
if the percentage of limited ownership of land
decreases during the term of the account to a
percentage requiring a lower amount or when the
total balance of the principal and interest
assessed against property owned by such persons
becomes less than the balance of the account.
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PASSED, ADOPTED AND APPROVED BY THE CITY COMMISSION OF
THE CITY OF BOZEMAN, MONTANA, at its regular session held on
the
2nd
May
day of
, 1983, and effective
thirty (30) after said date.
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