A RESOLUTION ESTABLISHING POLICIES RELATING TO COMMUNITY IMPROVEMENT DISTRICTS IN THE CITY OF GOODLAND, KANSAS
WHEREAS, the City of Goodland, Kansas (“the City”) recognizes that community improvement is essential to stimulate economic growth and development for industries and businesses in order to provide services, employment and tax revenues for the benefit of the community; and
WHEREAS, it is further recognized that community improvement and the stimulation of balanced economic development is a joint responsibility of the private and public sectors, working closely together to create a positive business environment and to encourage industry to locate and expand in the City; and
WHEREAS, to meet these community improvement and economic development goals, the City recognizes the occasional necessity of levying a community improvement district sales tax and/or special assessments in order to pay the costs of infrastructure improvements; and
WHEREAS, certain infrastructure and related improvements must be constructed to serve commercial development projects which add to and diversify the Goodland tax base as well as projects which would provide an extraordinary or particularly unique community-wide economic opportunity; and
WHEREAS, HB 2324 the Community Improvement District Act (“the Act”) authorizes the governing body of any city or county to create community improvement districts (“Improvements Districts” or “CID”) that may within an Improvement District, acquire, improve, construct, demolish, remove, renovate, reconstruct, rehabilitate, maintain, restore, replace, renew, repair, install, relocate, furnish, equip or extend buildings, structures and facilities; sidewalks, streets, roads, interchanges, highway access roads, intersections, alleys, parking lots, bridges, ramps, tunnels, overpasses and underpasses, traffic signs and signals, utilities, pedestrian amenities, abandoned cemeteries, drainage systems, water systems, storm systems, sewer systems, lift stations, underground gas, heating and electrical services and connections located within or without the public right-of-way, water mains and extensions and other site improvements; parking garages; streetscape, lighting, street light fixtures, street light connections, street light facilities, benches or other seating furniture, trash receptacles, marquees, awnings, canopies, walls and barriers; parks, lawns, trees and other landscape; communication and information booths, bus stops and other shelters, stations, terminals, hangers, rest rooms and kiosks; paintings, murals, display cases, sculptures, fountains and other cultural amenities; airports, railroads, light rail and other mass transit facilities; and lakes, dams, docks, wharfs, lakes or river ports, channels and levies, waterways and drainage conduits; and to operate or to contract for the provision of music, news, child-care, or parking lots or garages, and buses, minibuses or other modes of improvement; provide or contract for the provision of security personnel, equipment or facilities for the protection of property and persons; to provide or contract for cleaning, maintenance and other services to public or private property; to produce and promote any tourism, recreational or cultural activity or special event, including, but not limited to, advertising, decoration of any public place in the district, promotion of such activity and special events and furnishing music in any public place; to support business activity and economic development including, but not limited to, the promotion of business activity, development and retention and the recruitment of developers and business; to provide or support training programs for employees of businesses; and to contract for or conduct economic impact, planning, marketing or other studies (“Improvement Project”); and
WHEREAS, the Act gives discretion to governing bodies to approve Improvement Projects which are located within of the boundaries of Improvement Districts, and Improvement Projects which may include contracting for or conducting economic impact, planning, marketing or other studies; and
WHEREAS, the Act further authorizes governing bodies, in order to pay the costs of such Improvement Projects, to impose a Community Improvement District sales tax on the selling of tangible personal property at retail or rendering or furnishing services within Improvement Districts in any increment of .10% or .25% not to exceed 2.0% and/or the levy of special assessments upon property within such Improvement Districts and to issue special and or general obligation revenue bonds payable from such sales taxes and/or special assessments;
NOW, THERFORE, BE IT RESOLVED BY THE GOVERNING BODY OF THE CITY OF GOODLAND, KANSAS:
Section 1. Purpose and Background. In 2009, the Kansas Legislature exacted the Community Improvement District Act (the “CID Act”), pursuant to which municipalities may create districts in which certain special taxes imposed and the revenue used to fund certain public and private improvements and the payment of certain ongoing operating costs within the geographic bounds of the specified district. The creation of a Community Improvement District (“CID”) is a particularly useful tool of economic development in that it can help facilitate beneficial private development and redevelopment without negativity impacting the tax base of the approving municipality.
It is the policy of the City of Goodland to utilize the provisions of the CID Act to assist private developers by providing financing for commercial, industrial and mixed-use projects that meet the local eligibility criteria outlined below, subject to certain special local policy limitations outlined below. A CID can exist for a maximum of 22 years.
Section 2. Local Eligibility Criteria. It shall be the policy of the City to create a CID if, in the opinion of the City Commission, the petition satisfies all statutory requirements of the CID Act and if creation of such CID would meet the following criteria:
- The CID will attract development which would enhance the economic climate of the City or otherwise benefit the City or its residents.
- The CID will result in the construction of public or private property improvements and infrastructure, or the provision of ongoing services, that would otherwise not be financially feasible.
- The CID will promote redevelopment or rejuvenation of properties within the City which would otherwise be unlikely to happen. Special consideration will be given to projects located in the Neighborhood Revitalization Area, the Central business District or an area for which a neighborhood plan, a corridor plan or a redevelopment plan have been adopted by the City of Goodland.
- The CID will be used to assist the development of commercial, industrial and mixed-used projects, and for common area amenities in residential developments that are called for in the Parks, Recreations and Open Space (PROS) Plan.
- The CID will not be used for projects in which construction has begun prior to approval by the City or that are incompatible or inconsistent with a neighborhood plan including any of the following: sexually oriented businesses, community correctional facilities, half-way houses, drug or alcohol rehabilitation facilities, new or used car lots, multi-game, casino-style gambling facilities, and commercial billboard siting.
- The CID will support projects with total costs of not less than $2,000,000 for bonded projects or $500,000 for pay-as-you-go.
Section 3. CID Petition Process. A CID is formed by the petition of landowners within the proposed CID. According to the CID Act, a Petition to create a CID must be signed by the owners of at least 55% of the total land area and total assessed property value within the proposed district. Upon receipt of the petition, the City Commission may approve the CID. In cases in which no special sales tax is requested (i.e. only special property tax assessments are requested), the City Commission may create the requested CID without notice or a public hearing. If a special sales tax is requested, the City Commission must give notice and hold a public hearing pursuant to the CID Act.
A CID petition must contain:
- The general nature of the proposed CID project;
- A statement of the public purpose being served by the use of CID financing;
- The estimated cost of the proposed CID project including maximum amount of CID funding to be paid prior to termination of CID, based on 125% of the total estimated amount of CID revenue during the 22-year term of the CID;
- The proposed method of financing the project (special assessments or special sales tax);
- The proposed amount and method of assessment;
- The proposed method of financing (pay-as-you-go or special obligation bonds);
- A map of the proposed CID; and
- The legal description of the boundaries of the proposed CID.
Section 4. Sources of Funding for CID Improvements. Landowners or developers seeking to form a CID may request to draw upon one of the following two revenue sources, or a combination of both, to fund eligible improvements:
- Special property tax assessments on the property within the district, or
- A special sales tax of up to 2% on all taxable sales within the district.
Upon the creation of a CID by the City Commission, revenue generated by these sources is available to pay for eligible improvements and costs. This can occur in one of two ways: a bond issuance or a pay-as-you-go dedicated account.
Bond Issuance – In cases in which a bond issuance is requested, the City’s Economic Development Office will work with the landowners within the CID to calculate how much revenue will be raised from the CID revenues (the special property tax and/or special sales tax levied within the CID) and the principal amount of bonds that can be issued based on the CID revenue stream and a minimum 1.2 debt service coverage ratio. The City may then issue bonds in that amount and use the CID revenue to retire the debt. The proceeds from the sale of the bonds will be used on eligible improvements and costs pursuant to the development agreement. While the CID Act permits the issuance of either full-faith and credit general obligation bonds or special obligations bonds, payable solely from the CID revenue, it is the policy of the City of Goodland to issue only special obligation CID bonds.
Pay-As-You-Go Account – As an alternative to a bond issuance, the landowners within the CID may request the establishment of a pay-as-you-go account. This account will be a dedicated account into which the CID revenues will be deposited and will be available to be used as funds accrue to pay eligible costs.
Funds used to pay eligible CID costs, whether from bond proceeds or a pay-as-you-go account, will be held by the City or a third-party trustee, and disbursed to pay actual costs pursuant to a development agreement. Preference will be given to projects that use pay-as-you-go financing.
Section 5. Eligible CID Costs. The CID Act provides an exclusive list of eligible improvements and costs that may be paid for with CID funding. CID funds may be used to acquire, plan, design, engineer, improve, construct, demolish, remove, renovate, reconstruct, rehabilitate, maintain, restore, replace, renew, repair, install, relocate, furnish, equip, extend or finance:
- Buildings, structures, and facilities;
- Site improvements, including without limit sidewalks, streets, roads, interchanges, highway access roads, intersections, alleys, parking lots, bridges, ramps, tunnels, overpasses and underpasses, traffic signs and signals, utilities, pedestrian amenities, abandoned cemeteries, drainage systems, water systems, storm systems, sewer systems, lift stations, underground gas, heating and electrical services and connections located within or without the public right-of-way, and water mains and extensions;
- Parking garages;
- Streetscape, lighting, street light fixtures, street light connections, street light facilities, benches or other seating furniture, trash receptacles, marquees, awnings, canopies, walls and barriers;
- Parks, lawns, trees and other landscaping;
- Communication and information booths, bus stops and other shelters, stations, terminals, hangars, rest rooms and kiosks;
- Paintings, murals, display cases sculptures, fountains and other cultural amenities;
- Airports, railroads, light rail and other mass transit facilities; and
- Lakes, dams, docks, wharfs, lakes or river ports, channels and levies, waterways and drainage conduits.
The CID Act also permits the use of CID funds to pay ongoing operating expenses, including security, entertainment, public events, business promotion, employee training, and market studies; however, it is the policy of the City of Goodland that CID funds may only be used to pay eligible operating costs up to the maximum amount identified in the petition and may not be used for operating costs in residential developments. CID funds may be used to reimburse capital costs incurred not earlier than one year prior to City Commission action initiating the establishment of a CID, and City administrative costs and costs of issuance.
Section 6. Process for Creating a CID. All of the projects will be subject to the notice and hearing process.
- Approval Process
- The City Commission shall adopt a resolution giving notice of a public hearing to consider the advisability of creating the CID.
- Such resolution shall be published once each week for two consecutive weeks in the City’s official newspaper and shall be sent by certified mail to all owners and occupants of property within the proposed district.
- The second publication of such resolution shall occur at least seven (7) days prior to the date of the hearing and the certified mailed notice shall be sent at least ten (10) days prior to the hearing.
- Such resolution shall contain the following information:
- Time and place of the hearing;
- General nature of the proposed district;
- Estimated cost of the project;
- Proposed method of financing the project, including, if applicable, the issuance of full-faith and credit bonds;
- The proposed amount of the CID sales tax, if any;
- The proposed amount and method of assessment, if any;
- A map of the proposed district; and
- A legal description of the proposed district.
- Following the hearing, the City Commission may by majority vote approve the CID by ordinance.
- The ordinance shall:
- Authorize the project;
- Approve the estimated costs of the project;
- Contain a legal description and map of the proposed district;
- Levy the CID sales tax, if any;
- Approve the maximum amount and method of assessment, if any; and
- Approve the method of financing.
- Such ordinance shall become effective upon publication once in the newspaper.
- The ordinance shall also be submitted for recording in the office of the register of deeds of the county in which the district is located.
Section 7. Preliminary Review Meeting. Prior to consideration by the City Commission, parties intending to request the creation of a CID must submit a draft version of the intended petition to the City Manager, the Economic Development Director and any other City Staff designated by the City Manager. Such draft petition need not be signed by any landowners within the proposed district until such time as it is formally submitted for consideration by the City Commission. Within ten (10) days after the submission of any such draft petition, the City Manager, Economic Development Director of and other City Staff designated by the City Manager, shall hold a pre-petition meeting with the party submitting such petition to evaluate the sufficiency thereof and gather information needed to determine the eligibility of the project.
Section 8. Development Agreement Required. Concurrently with, or prior to, the creation of a CID by the City Commission, the City and the petitioner shall enter into a Development Agreement governing the conduct of the respective parties in relation to the proposed CID. The Development Agreement will include a site plan and elevation drawings or renderings of the CID project, and a Sources and Uses of Funds table that identifies the various sources of public and private project funds and how they will be used.
Among all other provisions, the Development Agreement will set forth the method and manner for disbursement of CID funds by the City, including the proceeds of bonds paid with CID funds, to pay for eligible project costs pursuant to acceptable documentation that such costs have been incurred. The assignment of Development Agreement rights shall be limited to a collateral assignment of all rights to a lender with written notice to the City, or assignment of all rights to any third party assignee with the written consent of the City or City Representative, at the discretion of the City. The assignment of rights shall not impair the City’s right to determine the eligibility of CID costs nor require the City to subdivide any CID funds due to the developer.
In addition, the agreement shall provide for rapid repayment of the bonds and termination of the tax. City administrative fees and costs of issuance shall be paid from CID funds. For “pay-as-you-go” CID projects, the agreement will set forth the method and manner of disbursement of CID funds to the developers and shall include provisions for the termination of the CID taxes when developers have been fully reimbursed for eligible CID costs.
Section 9. “GAP” Financing Requirement. CID projects financed with special obligation bonds will not be approved without a financial analysis that demonstrates that the project would not otherwise be possible without the use of CID funding (“gap” analysis). CID projects financed on a “pay-as-you-go” basis do not require a “gap” analysis. Any applicant requesting use of special obligation bonds will be required to provide City Staff with pro forma cash flow analyses and sources and uses of funds in sufficient detail to demonstrate that reasonably available conventional debt and equity financing sources will not fund the entire cost of the project and still provide the applicant a reasonable market rate of return on investment. “GAP” financing, including CID and any other public financing, should not exceed 30% of the total project cost.
Section 10. Background Check. The City will conduct a background check on all CID applicants and applicants’ project partners. Applicants are required to furnish City Staff the personal and business information needed to carry out such a background check. Such information will be treated as confidential information to the maximum extent allowed by the KORA.
Section 11. Project Management and Development Fees. CID funds may not be used to pay development fees. Project management fees may be financed through CID revenues only if the need for such financing is established through analysis of financial information showing that private funding is not available to pay such costs based on a market rate of return on investment. If allowed, project management fees paid through CID revenues must be documented as actual costs incurred.
Section 12. City Administrative Fees. The City shall be paid a non-refundable application fee of $2,000 with the formal submittal of any CID petition. For any approved CID, the City shall be paid an on-going administrative service fee, in an amount equal to 5% of the total CID revenues received by the City. The $2,000 application fee shall serve as a credit against the 5% on-going administrative service fee.
Section 13. Standard Design Guidelines Govern. All property improvements commenced under an approved CID shall be subject to City regulations, standards, and policies, including, but not limited to: zoning and subdivision regulations, buildings codes, the City code, and any applicable design guidelines currently in place or hereafter approved. In addition, project plans and rendering shall be reviewed by the City’s Staff and any suggestions provided by that body will be incorporated into the design of the project unless expressly overruled by the City Manager.
Section 14. Financial Reporting. Developer will provide a certified annual accounting to the City on the amount and use of CID funds used to pay CID costs, by June 1 of the following year. City reserves the right to audit the use of the CID financing at its discretion and expense.
Section 15. Public Disclosure. The City shall establish and maintain a special website, linked to the City’s official website, which lists all approved CID’s existing within the City and provides a description of the CID, including a map of its location, the amount of CID taxes and the intended use of CID funding.
In addition, developers will be responsible for signs being posted adjacent to the main entrance of every retail establishment within the CID where a special sales tax is charged. The signs must be at least 24 square inches in size and contain the words: “THIS PROJECT MADE POSSIBLE BY COMMUNITY IMPROVEMENT DISTRICT FINANCING” using type face of at least 18 points in size, and “FOR MORE INFORMAITON GO TO WWW.CITYOFGOODLAND.ORG/CID” using type face of at least 12 points in size. Continuing failure to comply with the requirement will result in termination of CID reimbursement payments.
Section 16. Termination of CIDs. Subject to provisions contained in development agreements, the City shall take appropriate action to terminate CIDs when all eligible project costs have been fully paid, including the principal and interest on any special obligation CID bonds or in the case of pay-as-you-go projects, the maximum CID funding amount provided in the petition.
Section 17. Waiver of Policy. Should the City Commission determine the terms of this policy inappropriate to evaluate a particular CID application, it may, by majority vote, waive the binding effect of this policy in regard to that application.
Section 18. Authority of Governing Body. The Governing Body reserves the right to deviate from any policy, but not any procedure set forth in this Resolution or any other procedural requirements of state law, when it considers such action to be exceptional benefit to the City or extraordinary circumstances prevail that are in the best interests of the City.
Section 19. Sunset Date. Since the justification and necessity for creation of Improvement Development Districts may be lessened as the local economy moves towards its goals of balance and diversification and the City’s improvement needs are satisfied, this policy shall automatically expire on December 31, 2018 unless it is readopted for an additional term. No such Improvement Project shall be granted following such expiration, unless this policy is readopted or repealed by adoption of a new policy.
Section 20. Effective Date. This Resolution shall take effect upon approval by the Goodland City Commission.
ADOPTED by the Governing Body of the City of Goodland, Kansas on this 17th day of January, 2017.
Annette Fairbanks, Vice-Mayor
Mary P. Volk, City Clerk
APPROVED AS TO FORM:
Jake D. Kling, City Attorney