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HomeMy WebLinkAbout09/12/2017 Study Session Meeting Minutes ----------------------#WWWWWAO AOMNIINION� . ................... MARANA A Z ESTABLISHED 1977 MARANA TOWN COUNCIL STUDY SESSION 11555 W. Civic Center Drive, Marana, Arizona. 85653 Conference Center on 2"" Floor, September 12, 201-7, at or after 6:00 PM Ed Honea, Mayor Jon Post, Vice Mayor David Bowen, Council Member Patti Comerford, Council Member Herb Kai, Council Member Carol McGorray, Council Member Roxanne Ziegler, Council Member MINUTES CALL 1-10 ORDER AND ROLL CALL, Mayor Honea called the meeting to order at 6:02 p.m. Deputy Town Clerk Hilary H. Hiser called the roll. Councid Member Kai was excused, constituting a quorum of six council members. PLEI)(-)'FE OF ALLEGIANCE/INVOCATION/MOMENT OF SILENCE. Led by Mayor Honea. APPROVAL OF AGENDA. Council Meymber Ziegler motioned to approve the agenda, 1vith a second provided by Council Member McGorray. Passed 6-0. CALL rFO THE PUBLIC DISCUSSION/DIRECTION/POSSIBLE ACTION Mayor Ilonea announced that items DI and D2 would be read into the record concurrently as both items relate to the creation and operations of'community,facilities districts. Mayor I-Ionea indicated that DI is more of'on overview of the parameters and guidelines dqfined by the SIate, while item D2 is related the possible creation of communilyfticllity district for the Villages Qf 7`10riolila pr(#ect. Although the presentation would start with item D], discussion cif item D2 could occii.r when there was signfficant overlap in sublect matter. September 12,2017 Study Session Minutes 1 DI Relating to Development; presentation regarding changes to the community facilities district policy required by SB 1450 revisions; community facilities districts and consideration of other option changes. D2 Relating to Development; overview of staff negotiations regarding the villages of Tortolita project, including a draft development agreement to address needed transportation infrastructure and a possible community facilities district development agreement. 'fawn Manager Gilbert Davidson introduced the Town's outside bond counsel, Michael Carlso, and financial advisor, Marl. Reader. He encouraged the Council to direct questions to Mr. Cafiso and Mr. Reader regarding the creation, structure, and operations of community facility districts (CFDs) because of their subject matter expertise. Mr. Davidson provided a brief overview of the presentation's format indicating the staff would first focus on the Town's policy and use of CFDs, and then focus on the impact of the new CFF] legislation on the development of future CFDs. Finance Director Erik .Montague started the presentation. by reviewing what a CFD is and how it is used. CFDs are special purpose taxing districts that levy a tax on properties within the district to fund public infrastructure projects roads, parks, water/wastewater improvements, etc. Only property owners within the district are responsible for the debt incurred to build the public infrastructure. The 1988 Arizona Community Facility District Act authorizes the creation of a CFD. Mr. Montague described several reasons why creating a CFD could 'be beneficial to the J'own. 1�e explained that CFDs could facilitate development in an area that might not otherwise occur, advance the timing of development in an area, and provide specific improvements such as infrastructure or enhanced services. Mr. Montague emphasized that CFDs can help to favorably position the Town, from a competitive standpoint, to attract future development opportunities Because CFDs provide financing structures for infrastructure development they provide prQj ect value back to the developer by creating access to areas that might not otherwise have been available. Mr, .Montague provided the Council an overlay map with the locations of the Town's current CFDs and possible CFDs for proposed projects. Mr. Montague noted the 'T'own's earliest CFDs, Red Hawk Phase 1, Red Hawk Phase 11, and Dove Mountain Resort, were created in the mid- 1990s and early 2000s. 1�e explained that the Dove Mountain area CFDs were created as separate independent boards. Mr. Montague acknowledged the Town's more recent CFDs at Gladden Farms 1, Gladden Farms 11, Vanderbilt, and Saguaro Springs developments use the Town Council as the CFD board instead of appointing a separate board. Mr, Montague further explained that the Town's CFD policy, adopted in. 1997 and amended in 2004, guides the current creation of CFDs. The policy specifically articulates criteria the Town will follow when considering the formation of a CFD. The policy ensures proposed projects are well planned and the developer has financial capacity to meet the debt obligation. The policy helps ensure that there are reasonable measures to protect homeowners and businesses within the CFD, such as establishing a target tax rate. Mr. Montague explained the difference between the three main types of bonds acceptable in the current policy. Although there are three types of bonds available for use, general obligation and September 1.2,2017 Study Session Minutes 2 special assessment bonds are the primary instruments used. General obligation bonds are backed by a secondary property tax that. is levied against all properties within the district. Special assessment bonds are levied against an individual property as a flat amount-based on lot size, frontage, or use.-The law and Town policy allow for revenue bonds; however, that bond type is dependent upon having a pledged revenue source, Mr. Cafiso indicated that utility and entertainment districts more commonly use the revenue 'bond option because they generate revenue through some type of service delivery. Mr. Montague noted that the bond election limits the amount of bonds issued and sets a maximum number. He explained that the $2.50 tax rate established by the Town is a target rate, .1 but there is still a financial obligation to levy a rate that will meet the debt service in a given year. The development agreement outlines protections for homeowners such as standby contributions by the developer to ensure that the debt service is met. He noted that during any year where generated tax revenue does not meet the debt service obligation, the developer is required to pay the shortfall and make the district whole. To visually represent the need for sound policy regarding repayment requirements, Mr. Montague presented a chart comparing the minimum rate that would have been required for Gladden Farms CFD for repayment of the debt versus the actual tax rate imposed. The chart illustrated the property valuation within the district from 2006 to 2017 highlighting the revenue shortfall generated by the tax rate, but paid for by the developer during the height of the recession. Mr. Montague also reported that to date the Town's Council-governed CFDs have not levied, any special assessments on individual properties. He explained that the special assessment tax levied against the individual property could be paid one of two ways. One method of payment is to include the tax on the yearly property tax bill or the other method of payment allows the property owner to directly pay the full assessment to the district. Shifting to a review of the changes required by SB 1480, Mr. Montague reviewed the conforming changes the Town's policy will have to incorporate to comply with 5131480. Among those changes for inclusion are the description of the applicant and other representatives associated with the CFD, a general plan for the infrastructure, and a preliminary financing plan that includes sources and uses of funding. Additionally, the statute now limits the application fee to $15,000 max as opposed to the Town's current $75,000 and $25,000 fees. Mr. Montague noted that if the costs to the Town were less than $15,000 the developer could defer those savings to cover future costs. Mr. Montague indicated the new legislation's revised timefrarne requires a public hearing within 60 days of receiving a CFD application. Although the petition for formation is not a presumption of approval, Mr. Montague observed that the accelerated timeframe would suggest otherwise. This time-frame requirement will necessitate extensive pre-planning between staff and the applicate to accommodate the newly imposed deadlines.-If the Council rejects an application, the Town must publically provide clear guidelines related to revision and resubmission needed to approve the application. Mr. Montague reviewed other changes required by S131480. First, a new enhancement limitation states the Council cannot ask the developer to increase the infrastructure that is not speel-fi.cally necessary for the development. The statute also prohibits the increase in sizing, the September 12,2017 Study Session Minutes 3 amount, or timing of the bonds issued. These changes limit the 'Town's past practice of using 1) additional capacity to fund infrastructure projects that have a regional benefit beyond the district, With the enhancement limitation., the infrastructure development and financing will be limited to that particular development only, The second change Mr. Montague reviewed was the creation of a website and searchable database for CFD related information. The transparency requirement states the CFD will provide a digital application that allows the public to search for contracts, public notices, meeting minutes, resolutions, and other documents accounting for the money received and disbursed by the district. Finally, Mr. Montague explained that the statute changes would impact the Town's procedural process regarding the acceptance of infrastructure. He described that the statute has an aggressive timeframe for acceptance of completed infrastructure. Once a. section of infrastructure is complete, the Town will be required to accept ownership and maintenance within 30 days of receipt of the final engineer's certificate. Mr. Cassidy then reviewed the CFD requirements that remain unchanged. First, the CFD board will continue to have typical governing body power such as setting and approving the CFD's budget, approving the timing and amounts of bonds issued, and setting tax rates. The set tax rates will continue to fund the operations and maintenance of the infrastructure, as well as provide for the necessary debt service. Additionally, the CFD board members are still considered public officers governed by the same conflict of interest rules and open meeting law requirements as other public bodies. Mr. Cassidy explained that the new legislation has changed the composition of the Council-CFD board. The CFD statutes have always allowed and continue to allow the Council to establish a f1ve-member separate board to govern the CFD. But prior to passage of SB 1480, the Council was able to create a CFD with the Council sitting as the district board. Now, if the Council opts to sit as the CFD board, the new legislation requires that the governing body include two additional members nominated by the largest landowner in the district—a CFD board of nine members total. Under the legislation, the two additional board members may not be landowners of more than 40 acres in the district and must not be directly associated with the developer or the Town, However, Mr. Cassidy explained that the largest landowner in the district-does have the ability to nominate the two additional CFD board members. SB 1480 also requires the CFD application to clearly define the method of selection for the additional board members once the development is complete, Mr, Davidson focused Council's attention on providing direction to staff regarding the CFD board structure and also on the necessary policy changes related to financing options. He asked the Council to consider the board composition between the options created by SBI 480 and a third hybrid option identified by staff a separate board coupled with a strong development agreement that limits certain powers of the governing body. If the Council were to choose the hybrid, the development agreement could include requirements that the CFD appoint its own manager, clerk, and treasurer. The development agreement could also require that the CFD or the developer pay for all costs associated with the CFD and could establish maximum tax rates. This September 12,2017 Study Session Minutes 4 third hybrid option could allow the Council to choose future board members who reside in within the CFD. Council Member Bowen asked if the Legislature intended for the creation of this hybrid third option and if the Council were to choose this option would it clear any legal hurdles. Before answering Council Member Bowen, Mr. Cassidy noted that the legislation has a conforming error regarding the establishment of the board with reference to the council plus two option. Turning to Council Member Bowen's question, Mr. Cassidy explained that although the statute does not specifically mention the creation of a separate CFD board plus development agreement, just from historic analysis creation of a CFD has occurred concurrently with the adoption of the development agreement. Mr. Cassidy further explained that this hybrid option allows clearly articulated elements in the agreement. For example, it could ensure that none of the CFD's operating costs are transferred to the Town, and could require that tax rates be maintained at certain levels. He emphasized that this option allows the Council some flexibility to determine the five member board representation. Although the statute does not expressly address the adoption of the hybrid option, Mr. Cassidy said he does not see any legal reason to prevent the adoption of the hybrid board option. Mr. Cafiso indicated that the conforming issue within the statute, identified by Mr. Cassidy, would be problematic for future board operations if not addressed by the Legislature. He noted that several municipal and county entities that are considering the creation of a separate CFD board with a strong development agreement. Shifting the Council's focus to the taxing options, Mr. Montague asked for specific direction regarding the policy changes related to the types of debt issued. To help 'Erame the discussion, Mr. Montague presented a hypothetical chart breaking down the impact of a general obligation bond, on the assessed value of a hypothetical representative $250,000 home in the district. To calculate the impact of the target tax rate on a general obligation bond, Town staff assumed that the full cash value (FCV) of the property would be 80% percent of its actual value, or $200,000. Then the limited assessed value (LAV) is calculated based on the class of home. For residential (class 03), it's 10% of the FCV, so a $200,000 full cash value has a limited assessed value of $20,000. For simplicity, we talk about tax rates per $100. A home with a limited assessed value of$20,000 will have 200 increments of$100.Multiplying 200 by the $2.80 tax rate ($2.50 target tax rate + $0.30 for district operations and maintenance) yields a total yearly secondary tax bill of $560 to repay the CFD general obligation bond. Mr. Montague explained that the annual secondary tax obligation continues until the CFD's general obligation bonds are retired. Mr. Montague noted that as you increase the target tax rate slightly, the property owner's yearly obligation would increase correspondingly. For a point of comparison, Mr. Montague stated that a set target tax rate of$4.55 per $100 of assessed value would equate to the property owner of the hypothetical $250,000 home paying $910 yearly into the district until the debt is retired. I-le explained that there should be a reasonable exchange between the enhancement of the district and the services provided to residents. Mr. Montague continued with his hypothetical by reviewing the financial impact on property owners when layering both a general obligation bond and a special assessment bond across the district. With the application of a special assessment, the district sets a defined amount and over September 12,2017 Study Session Minutes 5 a limited timeframe, such as a 20 year period, with a fixed rate. Mr. Montague explained that the property owner would pay the assessed tax related to the general obligation bond at a fixed yearly payment allocated specifically to the special assessment bond. For example, with a secondary tax rate of$2,80 to fund general obligation bonds and O&M plus a special assessment of$4,500, the property owner of the hypothetical $250,000 home will pay the general obligation bond rate of $560 plus the fixed assessment rate of $225 making a total tax payment to the district of$785 yearly, With these general obligation and special assessment bonds levied at the same time, the property owner would pay an effective tax rate of $3.93 per $100 of assessed value. Council Member Bowen asked why the Town would have both a general obligation bond and a special assessment bond levied at the same time rather than just choose one bond type over the other. Mr. Montague explained that based on the timing of the necessary public improvements that have to happen and where there are significant outlays of funds it is advantageous to the Town because the developer is responsible for the shortfall in tax revenue needed to cover the general. obligation debt. He noted that the developer's ability to recoup costs associated with the public infrastructure is dependent on the market's growth curve. Mr. Montague explained that for some developers investing large amounts in the construction of infrastructure, the special assessment provides a quicker rate of return with the ability to recoup the costs of construction of the infrastructure asset. Expanding on the rationale for using a special assessment bond, Mr. Reader explained the difference is between future value dollars or present value dollars. With regards to general obligation bonds, the developer will put the infrastructure in the ground and as homes are built and the budget structure increases to help the developer recoup costs. Vice Mayor Post asked if a special assessment includes the future value of the property and does developer pay the debt service obligation until the property is sold. Mr. Reader responded that with a special assessment bond, those are present value bonds based on the assessed value of the property at the time of the assessment. He noted that at the time of the bond sale, that the special assessment obligation is set regardless of whether or not the land is vacant or developed within a district that is 6,000 plus acres. Once a special assessment is allocated to the property, it remains with the property until the property owner has paid it off completely. Vice Mayor Post clarified that a special assessment bond value for the property is relatively low versus the assessed value of the property associated with a general obligation bond. Mr. Reader confirmed that interpretation. As a follow-up, Vice Mayor Post asked how the role of impact fees plays within the decision to use debt instruments for infrastructure development within the CFD. Mr. Canso responded that the Council cannot "double dip" with regard to fees. He elaborated that jurisdictions that impose a regional impact fee, those impact fee dollars within the CFD district are lower if the district is substantially responsible for the construction of infrastructure that has a regional impact. Vice Mayor Post observed that with the credit of the impact fees towards the infrastructure to the CFD 9 it creates an un-level planning field between developers selling property at fair market value. Although Vice Mayor Post acknowledged the need for a method to recoup the costs of I- �rastructure, I T 1nf he does support the CFD model. Mr. Cafiso acknowledged that there 's diff September 12,2017 Study Session Minutes 6 between. the sale of homes within and outside a CFD development. He noted that to justify that difference in price, the CFD agreement is designed to provide additional amenities within the district to mitigate the cost of the bonds, such as wider streets or parks. Vice :Mayor Post asked how the Town handles a development that constructs public infrastructure with a greater regional benefit in and outside the district. Mr. Cafiso responded that there is no specific way to account for oversize infrastructure in regards to the financing obligation because the development agreement is tailored to the development and relies on general obligation bonds. Council Member Comerford said in this instance (referencing the proposed villages of Tortolita project) with the construction of an interchange where a lot of people benefit from it, not just the developer, what is the Town to do. Mr. Reader replied that those individuals could be included in the district because they benefit from the public infrastructure. Mr. Cafiso also offered an option of creating an intergovernmental agreement that defines cost sharing of the construction of the infrastructure project by the areas and/or entities that are benefiting from the public infrastructure. Vice Mayor Post asked if the Town could be that: designated entity. Mr. Cassidy responded that the draft development agreement for the Villages of Tortolita includes a provision that allows a portion of the costs of construction to be eligible for reimbursement from the Town's impact fee structure. l---le noted that the developer would build the interchange and the Town would refund a portion of the impact fee that is attributable to the interchange to the developer for the costs of construction. Mr. Cassidy noted that those properties within the villages of Tortolita district would have their CFD tax apply to their portion of the interchange and the property areas outside of the district would be charged the full impact fee for the interchange. Mr. Cassidy explained to the Council that the draft agreement is designed to ensure a distribution regarding the cost of construction of the interchange. Vice /Mayor Post followed up by asking if the developer is also responsible for the costs of constructing the sewer line and are those costs recouped through the CFD or impact fees. Mr. Cassidy stated that the construction of a sewer line is not covered in the current draft as it only covers transportation. Mr. Cassidy anticipates that in the sewer service agreement the Town would provide for reimbursement to the developer. He expects that the developer would want to pay for the sewer infrastructure with CFD money and then delineate some type of mechanism to reimburse the developer for third-party hookups to the line. Alternatively, the sewer conveyance infrastructure could be incorporated as a new project into the Town's wastewater infrastructure improvement plan and paid for through third-party impact fees. Vice Mayor Post commented that there are two separate issues, one the main sewer line and two, capacity on the plant. Mr. Cassidy responded that the developer would still have to pay for capacity on the plant to the extent that they don't provide it. vice Mayor Post asked if there are impact fee credits available for the plant. Mr. Cassidy clarified the developer is only eligible for impact fee reimbursement if they build the plant and can provide the capacity to the plant. Mayor Honea observed that the Town did something similar to what Mr. Cassidy described with the Gladden Farms development. He reminded the Council that once other developments started hooking into the main line those impact fees were applied towards the construction debt. September 12,2017 Study Session Minutes 7 Transitioning back to the board composition, Vice Mayor Post acknowledged that he would prefer not to be the CFD board for the Villages of Tortolita. He stated that the developer will want to recoup the costs for construction and the board will max out the approved tax rate to help facilitate a faster return. Mayor f3onea disagreed stating that the Council should sit as the board because when a CFD is established you are giving an entity the right to tax citizens. He stated that an appointed board is not elected by citizens and therefore lacks any culpability regarding the tax rate. Mayor F lonea further stated that another board would add unnecessary bureaucracy to the process and waste tax payer money. He noted that by keeping the CFD with the Council, then the Town's administrative officers are responsible to ensure compliance with necessary funding structures and other applicable laws. Vice Mayor Post asked what would happen if a CFD wanted to issue more debt after having met all the requirements agreed to. He wanted to know if the district could sue the Town for refusing to issue additional debt. Mr. Cafiso stated that there is no legal precedent a private developer has to force a political subdivision to incur debt. Vice Mayor Post countered that if the developer has met all the requirements and asked for reimbursement, how could the Town refuse to pay? Mr. Cafiso explained that development agreement provides clearly defined circumstances in which the CFD board agrees to issue debt based on the statute's requirements and the developer's commitment to create better developments. Mr. Cafiso stressed that the relationship between the municipality and the developer can only create a strong development that is cooperative between both groups. Council Ziegler pointed out that residents will still copse to the Town for issues related to the CFD and the Council will have to handle whatever the issue is regardless of responsibility citing, as an example the issues with The Pines development. Mr. Cafiso responded that regardless of board composition, the Council must form the district first. He cautioned that as the party responsible for the formation of the district, the Town is ultimately responsible for any issues that occur within the district and can be sued by the property owners in a lawsuit. Council Member Bowen asked how many restrictions regarding the scope of the CFD the Town could impose. Mr. Cafiso replied that it is dependent on the negotiations between the Town and the developer regarding the content and scope of the final CFD development agreement. He noted that the development agreement runs with the land and should benefit the property. Mr. Canso also commented that even though there are no guarantees regarding rates, if the Council maintained control of the CFD it would be in a better position to control for issues related to the bond funding should any occur. Vice Mayor Post returned to the discussion of bonds and asked if the developer can use the special assessment bond money for immediate infrastructure improvements. Mr. Cassidy responded that the Red hawk Phase I sold about $18 million dollars' worth of special assessment bonds to pay for the construction of the sewer lines and Dove Mountain Boulevard. Vice Mayor Post clarified that the special assessment bonds are a tool that can be used for immediate construction of infrastructure. Mr. Cafiso added that the benefit of general obligation bonds is that they can be used over and over again on a property, whereas special assessment bonds are a one-time shot based on the debt to value ratio determined at the time of the original financing and cannot increase. Mr. Reader also noted that homeowners need to feel. good about their taxes. The general obligation bonds are based on two things, the value of the home within that September 12,2017 Study Session Minutes 8 development and the property tax rate. He explained that at the end of the day, property owners need to feel good about the infrastructure their tax dollars support. Mr. ][deader explained that special assessment allocation cost applied to the property does not change even if the assessed value of the property increases over time. Council Member Ziegler asked for clarification regarding what the property owner gets in return from paying the special assessment allocation. Mr. Reader remarked that the special assessment allocated to each property pays for the infrastructure associated with the bond. Mr. Cafiso further clarified that with a general obligation bond, the property tax levied is based on the property value and also on the payment history of other property owners within the district, if a property owner does not pay the tax, then the other property owners' tax within the district will have their tax assessment increased to cover the shortfall. Conversely, a special assessment tax applied to the property is a fixed amount and independent of the payment history of other property owners or changes in assessed value of the property. Mr. Cafiso acknowledged that the assessed value of the property for a special assessment is based proportionally on the property's expected use of the infrastructure, e.g, larger lot size equals higher assessment value. Mr. Cafiso reported that the benefit of a special assessment to individual property owners is that: it can be paid in full at any time unlike a general obligation bond that will continue to appear as a secondary property tax until the debt is retired. Vice Mayor Post observed that both general obligation bonds and special assessment bonds are useful tools to pay for the construction of large public infrastructure projects. Mr. Cafiso stated that he and Mr. Reader try to create an agreement that balances between the developer and the Town while also protecting the interests of the property owner. vice Mayor Post expressed support for the use of special assessment bonds for large infrastructure projects. Mr. Cafiso reiterated the need to have a funding source upfront for construction and the special assessment bonds may not have enough value to cover the costs of construction, however, with a general. obligation bond the value of the assessment grows making it a better mechanism to recoup the costs of construction over time. The special assessment bond is based on present--day dollars as opposed to general obligation bonds which is based on future day dollars. Mr. leader indicated that it is a collaborative public/private partnership that will come together to create a financing plan that makes sense for both the Town and the developer. Mr. Davidson directed the Council's attention to the final slide of the presentation to consider the direction regarding policy changes given the information presented during this meeting. Mr. Montague explained that the current policy has a seven year timeframe for general obligation bonds with a current target tax rate of$2.50. Ile noted for assessment bonds, the Town currently does not have a cap other than the value of the lien. Mr. Montague stated that the Town has made a policy decision reflected in the current CFD policy not to pass the assessment bond obligation on to the ultimate homeowner. Also under current policy, the value to lien ratio is 6:1 public and 4:1 private placement with the land as is at the time of assessment and excluding the value of the improvements. Mr. Montague stated that there could be an argument to increase the maximum secondary tax rate to fund general obligation bonds, referencing other jurisdictions within the state. Another policy change; could include some flexibility in length of time authorization depending on project size or some combination of term and percentage of development within the CFD. Another September 12,2017 Study Session Minutes 9 possible change could include adjusting the target tax rate by a reasonable increase as compared to other communities. .Moving on to special assessment bonds, Mr. Montague stated that some policies define a. cap of the total effective tax rate per lot. He also identified the possibility of making adjustments to the value to lien calculation and adjusting the value to the lien ratio to include the value of improvements within the assessment. 'dice Mayor Post asked if the special assessment bond could be retired at the purchase of a horns. Mr. Cafiso responded that some communities require it and noted that these liens are superior to all other debts by statute, so lenders sometimes require full payment at the property's purchase. Mr. leader added that some master planned communities have provisions incorporated in the bond documents to allow the Special assessment to be paid off quickly. Council Member Comerford asked how flexible the Town can be with setting the tax rate when developments have a disproportionate burden of infrastructure, i.e. one development is the $2.50 rate while another is at the $3.00 rate. Mr. Montague ,said that from a policy perspective the Town could define a target tax rate that does not exceed a particular rate. Niro Reader confirmed that the Town could differentiate the target tax rate between CF Ids, but the tax rate is partly driven by the developer. Mr. Cassidy stated that to have a policy and consistently apply it helps to level the playing field and avoid the appearance of subjectivity on the Town's part. Vice Mayor Post asked that if the Town changes its target tax rate, will it retroactively apply to the current: CF{Ids. Mr. Cassidy responded in the negative and stated the development agreerrients have language defining the tax rate. vice Mayor Post asked that if the Town uses two different funding mechanisms are the property owners charged different rates. Mr. Cassidy replied that special assessment tax is a flat amount to the property owner and does not increase as the property's assessrrient value increases. Mayor IRonea stated the issue with levying both a general obligation bond and a special assessment bond at the sante time stacks the taxes on the property owner. vice Mayor Post responded that by using both bond options could help meet the needs of the project. Mr. Davidson asked if the Council would like to craft a policy that meets those needs, but also minimizes the subjectivity component mentioned by Mr. Cassidy. He noted that the Town is aware of each project's unique needs, but wants to make sure the Town stays within certain ranges. Vice Mayor Post conceded that perhaps the target tax rate should be adjusted to better account for the current cost of development as the Town has applied the $2.50 target tax rate since 2004. .Mr,, Reader reminded the Council that general obligation bond monies are for enhanced regional public infrastructure that benefit the community and may lend itself to a higher tax rate. vice Mayor Post observed the dollar amount required to construct an interchange is so high that it takes away -funds from other public amenities and improvements and requires some adjustment to ensure the community has fiends to invest a diverse array of public projects. Both Mr. Reader and Mr. Cafiso affirmed that: there are many jurisdictions that use differentiated tax rates for development. September 12,2017 Study Session Minutes 10 Mr. Davidson suggested that to help manage all the variables that staff comes back with a recommendation that modernizes the numbers and takes into account some the projects coming forward. Council Member Comerford clarified that staff is asking for Council direction regarding one, the composition of CFD boards and two, creating a policy regarding the numbers. She indicated that she is ready to provide direction on the board and wants staff to present additional information for policy on the numbers. Vice Mayor Post agreed that he is ready to give direction on the board composition, but really needs more real world examples to determine and justify a policy related to the target tax rate. Specifically, he wants a better idea of the financial impact of the villages of Tortolita project. Council Member Comerford agreed that financial obligations are complicated and need additional attention before making a decision without first knowing the estimated cost of development. Mayor Honea remarked that there will be other CFDs beside the villages of Tortolita and the Town needs to set a general CFD policy with the ability to modify if needed. vice Mayor Fast asked that a policy include some forethought when it comes to the large infrastructure projects. Council Member Bowen stated the revised policy needs to articulate how the Town sets its numbers, e.g. what is the basis used for the tax rate. ��e did express support for an assessment bond that uses a formula that calculates either an "x" amount per lot or a percentage of value because it will allow money to come to start construction. Council Member Bowen also supported the idea of incorporating a max target tax rate into the policy to provide flexibility. He did express the desire to have more information regarding the rationale for adopting a particular timeframe for the general obligation bonds. Council Member Bowen also supported the idea. of allowing the homeowner the option of paying off the special assessment in one transaction. Finally, he concurred there needs some reasonable basis for the adoption of particular numbers bef ore he is comfortable adopting a policy. Council Member Bowen suggested staff provide more detail regarding the Villages of Tortolita project to help frame the possible policy changes and adoption. Council Mt1,vi ber Comerford nioi�ed to direct staff' to create u final policy, regarding the creation of a CFD board comprising the Council plus two appointments as defined by state statute,for consideration and approval at o future council. meeting. Vice Mayor Post provided the second motion. Passed 6-0. Mr. Cassidy asked the Council if they had any specific questions regarding the information submitted in the staff report for item D3. The Council did not have any specific questions regarding the staff`report. D3 Relating to Strategic Planning, discussion, consideration, and direction regarding the revised. Marana Strategic Plano Mra Davidson started his presentation with a brief review of the "Town's history of strategic plans. He noted that the plan's first adoption occurred in 2008 and the Town has revised it roughly every two years. Mr. Davidson presented a visual animation of the Strategic Plan IV's proposed online appearance and provided the Council a draft copy of the revised plan. �le noted September 12,2017 Study Session Minutes 1� that the draft includes many items identified during the Strategic Plan study sessions conducted early this year and also incorporated citizen feedback from an on-line survey. Mr. Davidson asked the Council to review the draft document and provide feedback in the weeks to come. He reported that the five focus areas remained the same, but the principle statements were revised to reflect current process. The revision also includes several on-going initiatives rolled over from Strategic Plan 111. Mr. Davidson stated overall that it is good strategic plan and it will keep moving Marana forward. The Council will consider the final document at an October council meeting. EXECUTIVE SESSIONS Pursuant to A.R.S. § 38-431.03, the Town Council may vote to go into executive session, which will not be open to the public, to discuss certain matters. El 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. FUTURE AGENDA ITEMS Notwithstanding the mayor's discretion regarding the items to be placed on the agenda, if three or more Council members request that an itern be placed on the agenda, it must be placed on the agenda for the second regular 'l.'own Council meeting after the date of the request, pursuant to Marana Town Code Section 2-4-2(B). ADJOURNMENT. Council Membet- 11C..G Go 1414(1 J� motioned to a(joutn at 7:52 p.ni. �vith a second by Council Metnbei- Conierjbrd. 14assed 6-0. CE jZrj,,IFI(--.-".ATION I hereby certify that the foregoing are the true and correct minutes of the study session/presentation of the Marana Town Council meeting held on September 12, 2017. 1 further certify that a quorum was present. Hilary H. H&�,_Dputt' Town Clerk MARANA AZ E.S TA B L I S 14 E D I1 177 September 12,2017 Study Session Minutes 12