Title
Community Facility Districts Financial Policy Guideline and Process (Ordinance S-44487)
Description
Request for the City Council to adopt the revised Financial Policy Guideline and Process for forming Community Facility Districts. The existing policy was revised as a result of the new Senate Bill 1480 adopted in 2017.
Report
Summary
Community Facility Districts (CFD) are authorized by the Arizona Community Facilities District Act, which went into effect in September 1988, and has been amended from time to time. The law allows a municipality to establish a CFD within its boundaries to finance public infrastructure and the operation and maintenance of public infrastructure, and enhance municipal services in qualifying areas. A CFD may issue bonds to finance public infrastructure which can be repaid with annual property tax levies, special assessments, or user fees and charges, depending on the type of bonds issued. Another option is to do a private placement of non-rated bonds subject to the approval by the Finance Department.
In May 1991, the City Council adopted a Financial Policy Guideline and Process for Community Facilities Districts. This document is intended to address certain risk, as well as practical, legal and financial requirements. Only one CFD has existed in Phoenix: the Tatum Ranch Community Facilities District, which paid off its bonds and was abolished in July 2017.
The Governor approved Senate Bill 1480 on April 26, 2017 which revised the law on CFDs. Key revisions to the law include:
1. The City shall hold a public hearing within 60 days to consider the formation of the CFD, on presentation of an application and a signed petition of 25 percent of landowners to be included in a district.
2. If the City Council does not adopt a resolution declaring its intention to form a CFD following the public hearing, the City must provide a written basis for not adopting the resolution including specific changes needed for the application to be approved.
3. Upon its formation, the governing CFD board has to include City Council and two additional members who are designated by the land owner who owns the largest amount of acreage in the proposed district board. Members of the board of deemed public officers shall comply with A.R.S. title 38 - Public Officers and Employees.
4. Fees assessed by the City in connection with the consideration of the application cannot exceed $15,000.
5. The CFD must establish and maintain an official website that the public can access for meeting minutes, financial information and other records required by law and to include more information on the City process.
Given the above changes to the state law, the Finance Department has revised the Financial Policy Guideline and Process for the consideration of formalizing CFDs. The City will need to have clear procedures in place to meet the timelines, including having a public hearing within 60 days after the CFD application is received. Attachment A is the Financial Policy Guideline and Process and has only been revised to reflect changes due to SB 1480.
The Financial Policy Guideline and Process for Community Facilities Districts has been developed with the Community and Economic Development, Planning and Development, Street Transportation and Law Departments in accordance with the state law. In January 2018, the working group met with the development community stakeholders to solicit feedback and incorporate modifications to the draft CFD Policy.
Based on changes to the state law, the Finance Department recommends adopting the attached revised Financial Policy Guideline and Process.
Concurrence/Previous Council Action
The Financial Policy Guideline and Process for Community Facilities Districts was recommended for approval by a unanimous vote at the Downtown, Aviation, Economy and Innovation Subcommittee on March 13, 2018.
Department
Responsible Department
This item is submitted by City Manager Ed Zuercher and the Finance Department.