The URL can be used to link to this page

Home My WebLink About06/14/2011 Study Session Minutes MAR STUDY SESSION MINUTES 11555 W. Civic Center Drive, Marana, Arizona 85653 Council Chambers, June 14, 2011, at or after 6:00 PM Ed Honea, Mayor Herb Kai, Vice Mayor David Bowen, Council Member Patti Comerford, Council Member Carol McGorray, Council Member Jon Post, Council Member Roxanne Ziegler, Council Member STUDY SESSION CALL TO ORDER AND ROLL CALL Called to order by Mayor Honea at 6:01 p.m. There was a quorum present, with Council Member Ziegler excused. PLEDGE OF ALLEGIANCE /INVOCATION /MOMENT OF SILENCE Led by Mayor Honea. APPROVAL OF AGENDA Motion to approve moved by Council Member Post, second by Council Member McGorray. Motion carried unanimously. DISCUSSION /DIRECTION /POSSIBLE ACTION 1: Presentation: Relating to Community Facilities Districts; discussion and direction regarding the Saguaro Springs Community Facilities District, financing alternatives and elements of the adopted Community Facilities District policy Presented by Erik Montague, Frank Cassidy and Mike LaVallee, managing partner with Stone and Youngberg. Mr. Montague acknowledged Grayhawk developer, Brian Baehr and his financial advisor, Carter Froelich, DPFG in Phoenix. Mr. Montague covered the general agenda for the presentation including the history of the Saguaro Springs CFD, an outline of the Saguaro Springs CFD's financing objectives, the town's adopted CFD policy, possible amendment to the town's CFD policy, a comparison and contrast of general obligation bonds and special assessment bonds, CFD financing alternatives and the characteristics of the tax and assessment impact on homeowners. Mr. Montague noted that the specific purpose of the session was to follow up on the April 26, 2011 presentation. 1 June 14, 2011 Council Meeting Minutes Frank Cassidy noted that the Saguaro Springs CFD was formed in 2007 when the owners /applicants with Empire and KB Home. At the time there was a formation agreement which was approved by not signed by KB Home. No bonds were ever sold by Saguaro Springs CFD. Empire filed for bankruptcy in the Spring of 2008. Grayhawk bough the bank's note and foreclosed on Empire's interest. Grayhawk now owns all of Saguaro Springs except for 70 lots formerly owned by KB Home and one block on the east side up against the hills, which they are in the process of acquiring. The project is now called Saguaro Bloom. None of the bond money has ever been used to clear the property. The town has cleaned up tumbleweeds at its expense. In terms of uses of the bond proceeds, for the first phase there is a lot of remediation work that the developer will expend - $6 -8M. The initial infrastructure was done by Empire for about $30 -40M. There is about $15M that must be spent to build two lanes immediately adjacent to their project to connect with Twin Peaks Road. Lambert Lane, Airline Road and public park improvements also fall under this category. Mr. Cassidy also went on to explain how the CFD policy works. The purpose was to secure benefits of the 1988 Community Facilities Act. Forms of debt financing include general obligation bonds which appear on the tax record as a secondary property tax; special assessment bonds which are presented to homeowners as periodic assessment payments; and revenue bonds, which are designated for a specific revenue source. The debt is not intended to impose an unreasonable financial burden on future CFD homeowners. Mr. Montague continued regarding current forms of financing. To date, only general obligations bonds have been issued — for Gladden Farms CFD. The target tax rate is $2.50 of $100 assessed value. No special assessment bonds have been issued. He went on to describe the characteristics of general obligation bonds. Mike LaVallee presented some statistics on borrowing through a CFD. There are approximately 12 -15 cities that do CFDs in the state in excess of about $650M. Approximately 70% of those have been general obligation bonds; 70% special assessment bonds. Many CFDs issue both. Characteristics of special assessment bonds are that they are payable from special assessments on the land which benefits the improvements. They are fixed at a set amount before bonds are issued. Cash prepayment is allowed. A special district engineer allocates assessments based on the benefit received. They are collected twice a year by the town or the CFD. The lien position is junior to property taxes but ahead of the mortgage lender. No election is required; landowners have protest and objection rights before assessment, and debt limitations (no more than 60% of market value of the project) and underwriting criteria vary by appraisal requirements and financing assumptions. Mayor Honea noted that previously, when the town started doing CFDs, there was a 4:1 ratio that they would not allow to be exceeded. Mr. LaVallee referred to the characteristics of special assessment bonds. The town has a 4:1 on assessment bonds. He went over assessment financing assumptions using examples of different assessments. He is of the understanding that the developer doesn't want to sell the upper amount of debt right away, but to phase it in over time which you can do with special assessment bonds but not with general obligation bonds. He noted that this is consistent with what he's seeing in the current market. Council Member Bowen asked about fire sale value. Mr. LaVallee then referred Council to a sample tax bill which had included in his handout showing a special assessment calculation on a 2 June 14, 2011 Council Meeting Minutes $225K home. He also showed a comparison of the same home value for each of the three CFDs in Marana at $3K, $4K and $5K special assessment lien amount. Mr. Cassidy noted that the town as the boards have not made any amendments to its CFD policy, but each of the three CFDs in Marana have had special bond assessments — the RedHawk Canyon #1 and #2 and Dove Mountain. The Gladden Farms CFD issued general obligation bonds. He stated that the town is close to accepting a formal application from the developer which means that they will have to pay the $75,000 fee, but would like to know the Council's feelings about layered bonds (special assessment and general obligation). The experience of the past has made staff wonder whether reliance on general obligation bonds make a lot of sense. After considerable discussion by Council and responses from Mr. Baehr, Mr. LaVallee, Mr. Cassidy and Mr. Montague, Mr. Davidson recommended that staff craft several options for Council consideration and lay out what a blended rate would look like. He acknowledged that there's a concern about property tax, and ultimately residential citizens help pay for all of this. His hope is that the project be successful and that everyone is able to keep the momentum going. 2: Presentation: Relating to Mayor and Council; staff presentation and discussion with Council regarding laws and policies that apply to Councilmembers, including Arizona state laws regarding open meetings, conflicts of interests, public records, incompatibility of office, nepotism, financial disclosure and limitations on entertainment and the Town of Marana Code of Principle- and Ethics - Centered Governance Mr. Davidson began with the implementation of the Strategic Plan, in which there is a goal to find ways to improve out operations and raise the bar of how we operate as an organization. The Council adopted a Council Code of Ethics, and from time to time it's important to get it out and review it and make sure it's fresh and put into daily practice. Tonight is that time to ask questions and get a refresher course. Frank Cassidy noted that this would be review for everyone except Council Member Bowen. He gave an overview of the open meeting law, conflicts of interest (pecuniary or proprietary interests), public records, noting that just about everything done in government is open to public review, nepotism and the distinctions, financial disclosure and limitations on entertainment and accepting gifts from lobbyists or persons who are offering gifts in exchange for possible voting in favor of a project. Executive Session pursuant to A.R.S. §38- 431.03 (A)(3), Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda. ADJOURNMENT Motion to adjourn moved by Council Member McGorray, second by Council Member Post. Motion carried unanimously. The meeting was adjourned at 7:59 p.m. 3 June 14, 2011 Council Meeting Minutes CERTIFICATION I hereby certify that the foregoing are the true and correct minutes of the Marana Town Council meeting held on June 14, 2011. I further certify that a quorum was present. o �lil / ryj�� YJceI ronson, Town Clerk ��unr 11WC PORA/� 000 '� % SEAL 4 June 14, 2011 Council Meeting Minutes