To: Honorable Mayor and Members of Town Council
From: Robert J. Slentz, Town Attorney
Elizabeth Allen, Assistant Town Attorney
Title
Resolution Approving the Second Amended and Restated Service Plan for Lanterns Metropolitan District No. 1, the First Amended and Restated Service Plan for Lanterns Metropolitan District No. 2, the First Amended and Restated Service Plan for Lanterns Metropolitan District No. 3, the Service Plan for Lanterns Metropolitan District No. 4 and the Service Plan for Lanterns Metropolitan District No. 5
Body
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Background
The Service Plans (“Service Plans”) for the Lanterns Metropolitan District Nos. 1-3 (“Districts”) were last approved by Town Council in 2014. The collective boundaries of the Districts encompass 605 acres, and at build-out of the Lanterns PD, will have approximately 1,200 homes and 3,000 residents. No development has taken place within the Lanterns PD, however, there are active land use applications in process.
The amendment presents current projections for capital expenditures, debt issuance and property tax based upon the current development plan for the Lanterns PD. Additionally, the amendment creates new overlay District Nos. 4 and 5, providing maintenance and operation services within District Nos. 1-3. Currently, the Districts have no outstanding general obligation debt.
Updated Financial Information
The Districts’ estimated cost of public improvements are now projected at $64.7 million, and the total anticipated debt issuance at $87 million. It is projected that the Districts will issue three series of 30-year term bonds ($35.5 million in 2019, $23.5 million in 2021, and $24.5 million in 2023).
The financial plan projects that the debt of the Districts may be retired with a mill levy capped at 63.6 mills, subject to adjustment to retain revenue neutrality upon constitutional reassessment. The Districts also propose to impose a $2,000/unit capital surcharge. Each of the five districts are authorized to impose operation and maintenance mill levies, however the total mill levy for debt service and operation and maintenance may not exceed 74.6 mills, subject to reassessment adjustment. In addition, the duration of the debt service mill levy on any property is limited to 35 years, irrespective of the status of the debt retirement, unless extended by a vote of a resident-controlled Board of Directors.
Mill Levy Comparison
Attached is a comparison of selected metropolitan district mill levies within the Town for tax year 2017 (payable in 2018). The average mill levy cap for service plans approved by the Town Council within the last ten years is 55.7 mills, In 2014, the Lanterns debt service mill levy was capped at 57.5 mills, and as adjusted is now 63.6 mills.
Review Standard
The Special District Control Act, Article 1, Title 32, C.R.S., and Chapter 11.02 of the Castle Rock municipal code, the Special District Oversight ordinance (“SDO”) govern the Town Council’s consideration of the request for Service Plan approval.
The Special District Act specifically authorizes the Council to approve the Service Plan as submitted, to disapprove the Service Plan, or to conditionally approve the Service Plan subject to the receipt of additional information or modification. Fundamentally, the Council’s decision should be based on the Service Plan’s demonstration that the Districts will develop the necessary infrastructure to serve the Lanterns PD, and that the Districts will have the financial ability to pay for the infrastructure with reasonable taxes and fees, given the level of development projected.
The Special District Act provides that the Council shall disapprove a service plan unless it finds that:
- there is sufficient projected need for the services the Districts will provided because existing services are inadequate;
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- the Districts are capable of providing sufficient and economical service; and
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- District debt can be retired on a reasonable basis.
In addition to the Special District Act, the request must be found to be in compliance with the SDO. The SDO generally provides additional detail and requirements on the submittals otherwise required by the Special District Act, and establishes objective conditions, which trigger the need for service plan amendment under the Special District Act.
The organizers may appeal an adverse decision by the Council to the District Court.
Staff Recommendation
Staff recommends approval of the Service Plan amendments as presented. The capital and financial plans reflect reasonable projections. Irrespective of the market acceptance of the Lanterns PD over time, the mill levy cap limits the financial burden of individual homeowners/taxpayers.
Proposed Motion
“I move to approve the Resolution as introduced by title”
Attachments
Attachment A: Resolution
Exhibit 1: Service Plan
Attachment B: Mill Levy Comparison