Loading...
03/07/2022-CC-Agenda Packet-Work SessionAGENDA CITY COUNCIL WORK SESSION MONDAY, MARCH 7, 2022 6:00 PM HISTORIC CHURCH BUILDING ­ 403 N 7TH STREET SANGER, TEXAS 1.Call Meeting to Order 2.PID AND TIRZ PRESENTATION Presentation by Kyle Sikorski with P3­Works on Public Improvement District (PID) and Tax Incentive Reinvestment Zone (TIRZ) districts. (Hammonds) 3.Overview of Items on the Regular Agenda 4.Adjourn I, the undersigned authority, do hereby certify that this Notice of Meeting was posted on the City Website, and on the bulletin board, at the City Hall of the City of Sanger, Texas, a place convenient and readily accessible to the general public at all times. Said notice was posted on the following date and time, and remained posted continuously for at least 72 hours prior to the scheduled time of said meeting and shall remain posted until meeting is adjourned. March 3, 2022, at 3:00 PM Kelly Edwards, City Secretary City of Sanger, Texas Date/Time Posted This facility is wheelchair accessible and accessible parking spaces are available. Requests for additional accommodations or interpretive services must be made 48 hours prior to this meeting. Please contact the City Secretary's office at (940) 458­7930 for further information. Page 1 CITY COUNCIL AGENDA MEMO AGENDA ITEM NO. 2. AGENDA MEETING DATE: March 7, 2022 TO: John Noblitt, City Manager FROM: Ramie Hammonds, Development Service Director ITEM/CAPTION: PID AND TIRZ PRESENTATION Presentation by Kyle Sikorski with P3­Works on Public Improvement District (PID) and Tax Incentive Reinvestment Zone (TIRZ) districts. (Hammonds) AGENDA TYPE: Work Session ACTION REQUESTED:   BACKGROUND: N/A LEGAL/BOARD COMMISSION RECOMMENDATIONS/CITIZEN NOTICE FEEDBACK: N/A FINANCIAL SUMMARY ­ FUNDING/FISCAL IMPACT: N/A FUNDS: N/A STAFF RECOMMENDATION/ACTION DESIRED: N/A Page 2 Introduction to Public Improvement Districts and Tax Increment Reinvestment Zones March 7, 2022 1 Introduction to PIDs ▪Chapter 372 of Local Government Code Statute provides a legal and regulatory framework that governs the process 2 How does a PID work? ▪PID formed over a defined, contiguous area in the corporate limits of the City or the City’s ETJ ▪Assessments are levied on property within the PID based on the benefit received from PID improvements ▪Assessments can be paid in full or paid in annual installments ▪Assessments do not increase as home values increase ▪Assessments terminate after payment in full (either via prepayment or annual installments) ▪Assessments are a lien that run with the land ▪The Assessments are used to pay: ▪Debt service on tax exempt bonds issued to fund PID improvements, or ▪Reimbursement Agreement with developer, including interest ▪Administrative expenses are included in the annual installment 3 Why Utilize a PID? ▪Use PIDs as an economic development incentive tool to promote annexation and development ▪Incentivizes amenities provided by the developer but for the creation of the PID ▪Superior plan, design, architecture and building materials that exceed subdivision building standards ▪Lot and residential unit size that align with the City’s goal for economic growth ▪Private amenities tailored to the community ▪Playgrounds ▪Fitness Centers ▪Enhanced Trails ▪Accelerate construction of improvements described in City’s Comprehensive Plan, Thoroughfare Plan and Parks Plan ▪City can require cash contribution from developer (non PID funds) to fund City projects 4 Big Picture Considerations 5 ▪PIDs are NOT separate political subdivisions. The City Council is the de facto board. ▪Allows Cities to extend public infrastructure without burdening rate payers and taxpayers. ▪Economic development tool can be useful when negotiating with developers (annexation, oversizing, amenities, design standards, etc.). ▪Grows the City’s tax base without obligating City revenues (TIRZ, 380 Agreements, etc.). ▪PIDs can be used to forward the City’s Comprehensive Plan, Thoroughfare Plan and Parks Plan Who is on the City Team? 6 Ci t y C o u n c i l / S t a f f City Financial Advisor City Bond Counsel City Attorney PID Administrator Dissemination Agent Underwriter* Trustee* Financial Implications for the City •PID Debt •Non-recourse to the City •Bonds or Reimbursement Agreements are backed only by the Assessments on the property within the PID •Issuance of PID debt by City does not reduce City’s bonding capacity •City keeps all of its ad valorem and sales tax revenues •Counts against Bank Qualified Debt limit •PID Creation and Administration •All City costs incurred as a result of creating the PID should be paid by the Developer via a cash escrow deposit with the City •Administration is typically contracted to a third party, overseen by the City and paid for by PID assessments 7 Types of PIDs ▪Pay-As-You-Go PID: allows future long-term reimbursements from assessments to developer ▪Interest rates predetermined; 2-5% above bond index ▪Reimbursement Bonds PID: allows reimbursement soon after infrastructure is installed ▪Appraisal to establish market value ▪Contracts with 3rd party builders ▪Less perceived market risk = lower interest rates = lower annual installments to homeowners ▪Interest rates lower since infrastructure construction is complete and homes beginning construction ▪The further the project is in the development cycle the less perceived risk ▪Construction Bonds PID: up front Bond funds to construct infrastructure ▪Appraisal to establish market value ▪Typically, contracts with 3rd party builders ▪More perceived market risk as land is undeveloped = higher interest rates ▪Generally, one owner; single assessment payer 8 City Obligations for PIDs In Conjunction with PID Administrator ▪Review request for draws by developer ▪Verify infrastructure costs against SAP ▪Certify compliance with the terms of the certificate of payment prior to the release of bond proceeds ▪Verify appropriate release of lien and all bill paid affidavit prior to release of payments to developer ▪Maintain database of all property within PID, update assessment roll, allocate assessments upon subdivision, track payment history ▪Send assessment roll to County for collection with property taxes ▪Prepare delinquency reports ▪Account for dollars withdrawn from trust estate against approved draws/debt service payments (account reconciliation) ▪Review developer quarter disclosure to ensure accuracy with construction and ownership/platting status ▪File annual continue disclosure reports as issuer/obligated party ▪Pursue and enforce collection of delinquencies (via County contract) ▪Prepare and adopt Annual SAP Update •Inspect Public improvements •Hire and oversee PID Administrator 9 Red bullet denotes activities for all PIDs Blue bullets denote activities for bonded PIDs City Documents •Service and Assessment Plan (SAP) and Annual Assessment Roll •Bond Indenture •Development Agreement •Construction/Funding Agreement •Assessment Reconciliation/Delinquency Reports •Trustee Monthly Asset Statements •Monthly Bond Fund Reports Other Documents •Issuer Continuing Disclosure Agreement •Developer’s Quarterly Disclosure Agreement •Homebuyers’ Disclosure Documents •County Parcel Tax Roll •County Collection Reports •Developer Draw Requests •Developer construction invoices for Authorized Improvements •Developer lien releases/All bills paid affidavits •City inspector report •Cancelled checks for Authorized Improvement construction •Developer’s continued construction plans, plats, and development and/or zoning changes/amendments 10 Governing Documents Overview 11 Questions on PIDs? Introduction to TIRZs ▪Chapter 311 of Texas Tax Code, the Tax Increment Financing Act, provides a legal and regulatory framework that governs the process 12 Big Picture Considerations ▪A TIRZ is a tool that Cities and Counties can use to finance infrastructure in a defined area ▪The TIRZ Board of Directors make recommendations to the governing body of the City or County on the implementation of the tax increment financing ▪Each taxing unit can choose what percentage, if any, it will contribute ▪A TIRZ obligates future tax revenues, derived from increased Ad Valorem taxes, to pay for project costs ▪TIRZ revenues can be used to offset annual installments of PID assessments 13 How do PID and TIRZ Relate? 14 ▪PID Boundary and TIRZ Boundary are coterminous ▪PID Assessment fixed amount on each parcel ▪As value increases, TIRZ % of property tax flows into TIRZ Fund ▪City applies preset TIRZ amount to each parcel, on a parcel-by-parcel basis ▪When PID bonds are retired, TIRZ terminates, and tax dollars return to the General Fund, unless the City Council elects to extend the term of the TIRZ Homeowner Annual Installment (Post-TIRZ) 15 PID/TIRZ Offset 16 17 Questions?