HomeMy WebLinkAbout(0017) PID Policy Operating 11.17.20 vfinal.PDFFORT WORTH
Policy for
Operating
Public Improvement Districts
I. OVERVIEW
Operating Public Improvement Districts ("Operating PIDs" or "O-PIDs") are development
financing tools authorized pursuant to Chapter 372 of the Texas Local Government Code ("Act" )„
O-PIDs which allow for the costs of certain public improvements and supplemental services in a
designated area to be allocated to and paid by the owners of the parcels that actually benefit from
such improvements and services, which are with s,,,.h:,,..r,-,,..oments and serviees paid for solely
out of current assessment revenues or accumulated balance from past assessments and with debt -
obligation financing being unavailable as a funding option.
This Policy is intended to (1) set forth the guidelines and considerations that the City of
Fort Worth ("City") will use to guide the establishment, management, operation, and administration
of O-PIDs and (2) serve as a supplement to all other applicable City rules, regulations, and policies.
Specifically, this Policy addresses petition requirements, assessments, ,,,andat inn .-Matior
dice ,.sufes t pr-apet4yowner-s potential PIP-, the contents of an O- PID's annual service and
assessment plan, the annual budget, and administration requirements. The guidelines and
considerations set forth herein are not intended to be all-inclusive, and City staff is permitted to
exercise reasonable and prudent judgment where issues arise that are not covered by this Policy.
Certain requirements of this Policy may be in addition to those of the Act and other state laws.
PIDs created for the specific purpose of funding capital improvements benefiting a defined
area ("Capital PIDs") or funding hotel -and -tourism promotional activities ("Tourism PIDs") are
governed by separate policies. The Act, this Policy, and City staff are the primary sources of
information regarding O-PIDs in the City.
II. MINIMUM REQUIREMENTS FOR CONSIDERATION OF CREATION
Proposed O-PIDs must generally be located entirely within the City limits before
consideration will be given to establish the O-PID. The City will only consider the
creation of an O-PID that consists of or includes land in the City's extraterritorial
jurisdiction if such property is subject to a development agreement or other concrete
and binding plan for the voluntary annexation of all land within the O-PID with a
schedule for annexation agreed to by the City.
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2. O-PIDs must be financially self-sufficient and not adversely impact the ordinary
service delivery of the City.
3. O-PIDs must be established carefully and only when related to a public purpose to
avoid a proliferation of special districts.
4. O-PID petition signatures should reflect that a reasonable attempt was made to obtain
full support of the O-PID by all property owners.
5. Priority consideration will be given to O-PIDs for the following:
a. Improvements in the public right-of-way (e.g., entryways, landscaping
installation and maintenance, fountains, specialty lighting, and streets and
sidewalks);
b. Improvements that meet community needs (e.g., drainage improvements,
parks and off-street parking facilities); and
c. Improvements related to operations and maintenance expense (e.g., sidewalk
and street cleaning).
6. Secondary consideration will be given for supplemental services not outlined above.
III. PETITION REQUIREMENTS
1. In addition to the requirements set forth in the Act, all petitions requesting
establishment of an O-PID must include the following:
a. Assurances of long-term backing and support by those submitting the petition
and the land owners.
b. Specific language outlining the O-PID's stated goals.
c. Evidence that the petition's signatures meet the requirements of the Act and
this Policy.
i. If the proposed O-PID is an expansion of an existing O-PID, a petition
for the new segment of the proposed O-PID must identify each
subdivision, or portion thereof, within the proposed boundaries of the
expanded portion of the O-PID, and each subdivision or portion
thereof that is not currently in an existing O-PID shall individually
satisfy the requirements for a petition under the Act. Subdivision has
the meaning assigned by §232.021 of the Texas Local Government
Code.
d. Contingency plans to address how, if an O-PID is dissolved, the maintenance
or disposition of O-PID improvements and property that has not been
dedicated to the public will be maintained or disposed of.
e. Legal an ommen y k wn- aDescriptions of the O-PID boundaries, along
with a map outlining said descriptions.
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f. A section that clearly identifies the benefits of the O-PID to the affected
property owners (for use in public benefit hearings) and to the City as a whole
(i.e., public purpose).
g. Identification of all land owned by the City or other exempt jurisdiction, and
all other public land within the O-PID as well as each's proposed share of
benefits, if any.
h. Types of improvements and services that will be undertaken within the O- PID
and who will determine those improvements and services.
i. A budget that includes all of the O-PID's projected revenue, including, without
limitation, assessments revenue, and how all funds will be managed.
l-j_Specified procedure for eventual termination of the O-PID.
hk_Specified assurances to the City that the construction of improvements in the
public right-of-way will be maintained by assessments from the O-PID and in
no way obligates the City to future maintenance or operational costs, unless
otherwise stated in a subsequent agreement.
m-1. Statement that the applicant understands that the annual budget, service and
assessment plan, and assessment levy for the O-PID are subject to review by
the Director of the City's Financial Managemen4 gericesEconomic
Development Department (or that person's authorized designee) ("Director")
with final approval by the City Council.
rrm. A notation that it is the City's right to internally manage the activities of
the O-PID or to hire a management firm to perform such activities.
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2. In addition, the following issues must be addressed before the City Council will take
action on a petition:
a. Applicant must pay Aan "application fee" of $5,000.00 for all new, renewing,
or expanding PIDs to reimburse will be paid by the ^ ",.':ean4 to ro . b,,
the City for the cost of evaluating the petition.
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i. Application fees are intended to pay for all costs incurred by the City
that are associated with establishing the O-PID, including, but not
limited to: salaries for City staff, consultant fees, attorney fees,
independent appraisal fees, and all other reasonable and appropriate
expenses.
i-.ii. Application fees may be reimbursed out of PID Assessments collected
by applying for a waiver, from the Director, if funds are not available
to the applicant to pay for the fee.
b. A petition will be viewed more favorably if it has a current tax roll with the
signatures of the owners registering support of the petition next to the account
for the owner's property on the tax rolls.
c. All estimated costs related to establishing and maintaining the O-PID,
including, without limitation, costs for maintenance, operations, and
administration; and costs for later maintenance, repairs, or replacement of any
public improvements.
d. A professional management plan, detailing who will be responsible for
addressing problems and corrective actions to be taken, maynutst be submitted
for review and approval when the petition is submitted at the discretion of the
Director.-
e. For an O-PID within a residential area, the City Council will look more
favorably on a petition where the developer of a new subdivision has
established a homeowner's organization with a governing body the majority
of the members of which are selected by individual homeowners rather than
the developer.
f. Annually, the City or a designated management firm will hold a public meeting
for property owners in the O-PID to review and comment on the Budget and
Service Plan, and to invite attendance at the annual City Council public
hearing, which is held prior to action being taken on the Budget and Service
Plan.
IV. ESTABLISHMENT
The Act provides the City Council with the authority to undertake an improvement
project that confers a special benefit on a definable area of land if certain procedures
in the Act are met. In establishing an O-PID, the City will comply with all mandatory
procedural requirements set forth in the Act; provided, however, that the City reserves
the right to invoke any permissive procedural requirement as it may deem necessary
on a case -by -case basis.
2. The applicant must submit a proposed service and assessment plan to the City. The
City reserves the right to have its own O-PID consultant finalize the service and
assessment plan should the City decide to move forward with the O-PID_; tThe cost of
finalization must be included in the O-PID budget.
3. There is no requirement to establish a statutory advisory body to oversee the
development and recommendation of a service and assessment plan. In the absence of
a statutory advisory body, the Director may approve of an informal advisory
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committee that is representative of the property owners within the O-PID. The function
of the informal advisory committee will be to provide comments and recommendations
concerning the O-PID_ to the Director and City Council; however, final decision
making power will lie with City Council. the . dvis n. eammittee will have no
deeisio y,..,king power- or the 0 DTP. The composition of an informal advisory
committee may vary_; Tthe committee members could include a mix of
individual property owners and representatives of homeowners associations,
business associations, historical associations, and similar organizations with a
direct interest in property subject to assessment within the O- PID or could
consist entirely of the governing body of an association or organization having
direct interest in property subject to assessment in the O-PID. The City reserves
the right to review and revise the criteria for appointed informal advisory
bodies.
V. ASSESSMENTS
1. The City Council will apportion the costs of improvements and services to be assessed
against property in an O-PID. The apportionment will be made on the basis of special
benefits accruing to the property because of the improvements and services. The costs
of the improvements and services will be assessed in accordance with the Act and this
Policy.
2. By ordinance, the City annually levies the assessments on the properties in the O-PID
in accordance with the adopted Budget and Service Plan.
The City has contracted with the Tarrant County Tax Assessor/Collector's Office for
billing and collecting of O-PID assessments.
4. The City Council will have the final authority on the assessment methodology.
An O-PID assessment will generally not be allowed if it causes the total City
assessment rate, including all City property taxes, to exceed $1.13 per $100 of property
valuation. Special assessments established before the adoption of this !!Policy shall
area grandfathered.
The O-PID assessment is billed on each property owner's annual ad valorem tax
statement, unless supplemental billing is necessary:
All costs incurred by the City that are associated with the administration of the O-PID
will be paid out of revenue generated from the special assessment levied against
property within the O-PID.
Through approval of this Policy, the City Council delegates authority to City staff to
collect assessments in any manner authorized by the Act and all other applicable law,
which provides that assessments may be collected in the same manner as the collection
of ad valorem taxes. To the extent permitted by law, such authorized collection efforts
may include the initiation of foreclosure proceedings on any lien for an unpaid special
assessment, interest, and collection and attorney's costs, if any, associated with the O-
PID.
VI. O-PID MANAGEMENT
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The City may directly manage an O-PID or contract with a separate entity to manage
an O-PID ("Management Company"), subject to administrative oversight by the
Director. Costs associated with the management of the O-PID will be paid from annual
assessment revenue.
2. Either the Management Company or the Director, as applicable, will perform the
following:
a. Prepare the annual budget and five-year Service and Assessment Plan within
the timeline published by the City on an annual basis to coincide with the
City's annual budget process;
b. Hold a public meeting with owners of property within the O-PID to review the
proposed budget and assessment plan and to seek input regarding the needs of
the O-PID; and
c. Submit the budget and assessment plan to the City Council for consideration
following a public hearing conducted in accordance with the Act.
3. The Management Company or Director, as applicable, will communicate to all
property owners within the O-PID regarding special events, activities, or other
pertinent news concerning the O-PID.
4. The Management Company or the City, as applicable, will perform, or ensure the
performance of, the improvements and services specified in the applicable service
plan for each O-PID and coordinate, or ensure coordination of, such work with
property owners within the O-PID.
5. The Management Company or Director, as applicable, will attend all O-PID meetings.
6. The Director must be notified at least 72 hours in advance of the time and place of all
O-PID informal advisory body meetings and of annual budget -and -service -plan review
meetings if a Management Company is in place; otherwise, the Director will call such
meetings and notify the property owners within the O-PID of the time, location, and
agenda for the meeting.
7. Any member of an O-PID statutory advisory body, if so appointed by the City Council
in accordance with the Act, is subject to the City's Ethics Code.
8. The Management Company or the City, as applicable, will ensure that the annual
budget and five-year Service and Assessment Plan are approved by the applicable
advisory body for the O-PID.
9. The Management Company must provide the Director with documentation of liability
insurance that provides adequate protection, as determined by the City in its sole
discretion, for risks associated with the types of improvements and services being
proposed.
10. Except asset forth below, iIf a Management Company is in place, no cash or assets of
the City (which includes the O-PID) will be held by the Management Company. All
financial resources will be administered by the Director and the Department of
Financial Management Services.
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11. As a general rule, the City will not provide monetary advances to a Mana eg ment
Company to carry out its management obligations. However, the Director of Economic
Development may consider written requests for such advances from a Mana eg ment
Company only in the circumstances set forth below. Any monetary advances must be
documented in writing and include the reasons for the request, the proper accounting
methodology, and the terms for repayment.
a. Operating Cash Flow (Seed Money) Advance:
i. The Director of Economic Development may consider a written
request for an advance of operating cash flow (i.e., seed money) from
a Management Companyy 1) the advance is requested as part of the
establishment/creation of the O-PID or (2) when a new Mana eg ment
Company begins managing an existing O-PID. An operating cash
flow advance is subject to approval by the Director of Finance and
City Council.
b. Short -Term Advance (less than one month)
i. The Director of Economic Development may consider a written
request for a short-term monetary advance of less than one month from
a Management Company if the Management Company lacks sufficient
cash -flow to pay invoices for the improvements and services under
pursuant its agreement with the City. City may provide an advance
prior to the end of the month reimbursement cycle. An advance would
only be issued on PID funds already held by the City. A short-term
advance of less than one month is subject to written approval of the
Director of Economic Development.
VII. SERVICE AND ASSESSMENT PLAN
A Service and Assessment Plan sets out the improvements and services to be provided
within an O-PID and the costs associated therewith. Each applicant is responsible for
submitting an initial Service and Assessment Plan that complies with the Act, with
annual updates to be completed by the Management Company or Director, as
applicable. All Service and Assessment Plans are subject to review by the Director
and approval by City Council.
2. O-PIDs may be used to finance the costs of any authorized improvement or service
allowed by the Act and approved in the Service and Assessment Plan and the annual
budget, provided, however, that no debt -based financing shall be allowed for such
improvements or services.
3. Budgets must be developed and funds allocated so that all improvements and services
in the O-PID confer a special benefit on the property within the O-PID.
4. Annual budgets must be supplemented by a detailed, line -item explanation of the
various components and how the amount was derived.
5. The City's Payment In -Lieu of Services is intended to act as a supplement to the O-
PID budget and provide for the standard level of improvements and services as
comparable to what would be provided by the City for the taxpayers . generally.
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�7. Annual budgets may be altered by submitting requested adjustments at least sixty
(60) days prior to their proposed effective date for approval by City Council.
46--.8. An O-PID's budget must include sufficient funds to pay for all costs above and beyond
the City's ordinary costs, including, but not limited to, additional administrative and
operational costs incurred, as well as additional maintenance costs resulting from the
operation of the O-PID.
VIII. EXPENDITURE REIMBURSEMENTS
1. In order to ensure that O-PIDs continue to operate without cost to the City, the City
will charge a fee to each O-PID for the annual costs associated with administering the
O-PID. This fee will be calculated annually for each O-PID to be the greater of
a. 2% of the projected externally generated revenue for that year, to include
special assessments and any City contributions; or
b. $2,000.00
2. The City will pay all approved and qualified expenses of the O-PID in accordance with
the adopted Budget and Service and Assessment Plan, including invoices submitted by
the Management Company, with such approval and payment to occur in a timely
manner. For purposes of this Article VIII, an expense that is included in the then -
current Budget and Service and Assessment Plan approved by the City Council is
considered to be an "approved and qualified expense" eligible for payment or
reimbursement.
3. If a Management Company is selected to perform administrative duties of the O-PID,
the following provisions will apply:
a. By the 5t' business day of each month, the Management Company must submit
the following to the Director:
i. All receipts or invoices for approved and qualified expenses incurred
by the O-PID that were paid in the prior month;
ii. A monthly report detailing activity and work performed during the
prior month in alignment with the Service and Assessment Plan;
iii. An invoice for the Management Company's services for the prior
month.
b. The City will reimburse the Management Company in a timely manner for O-
PID management services in accordance with the terms of a separately
executed contract and within the limit of assessments actually collected.
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c. Management fee payments will not exceed 20% of the current year's budgeted
assessment revenue, including any City contributions.
i. Administrative costs include, but are not limited to, rent, office
supplies, salaries for management and clerical staff, and other
expenses necessary for the administration and oversight of O-PID
projects.
ii. Management fee payments under this provision are for the payment of
oversight and expenses incurred in the establishment, administration,
and operation of the O-PID under §372.003(b)(14) of the Act and are
separate from payment for special supplemental services that may be
authorized for the improvement and promotion of the O-PID under
§372.003(b)(13) of the Act.
47d. The methodology used to allocate expenses shared between the Mana e n
Company and other entities to the O-PID must be fair and equitable, as agree
d
upon by the PID Management Company and the Director. The approved
allocation methodology should be documented in the annual contract.
eManagement Companies are responsible for complying with the Act
concerning the expenditure of any O-PID funds.
�f. Management Companies should adhere to the Capital Improvements
Application process as defined by the City's Park and Recreation Department.
e g_The Management Company is subject to the City's purchasing policies, rules,
regulations, and procedures.
i. Exceptions to this policy may be made at the City's discretion for
emergency situations, long-term contracts negotiated for cost
management before January 1, 2009, and professional services
approved in the budget.
fl.h. Compliance with this Policy is subject to review by the Director.
gi. Care should be taken to classify expenditures. Routine repairs and
maintenance should not be classified as capital improvements. Capital
improvements involve the construction, purchase, or substantial renovation of
buildings, parks, streets, or other physical structures that will either enhance a
property's overall value or increase its useful life. A capital improvement must
have a useful life of five or more years.
I}j_An income statement comparing the annual budget to the projected year end
line item balances must be prepared and submitted by the Management
Company to the Director -by the 1 Ot'business day of January, April, July, and
October, which are the months following the end of each City quarter.
kThe records maintained by the Management Company for the O-PID are
subject to review and audit by City personnel and external auditors at any time,
provided that reasonable advance notice will generally be provided.
1. The Management Company is subject to the City's Record Retention Schedule
for any O-PID related records.
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i-.m.The Management Company is subject to the City's Donations Policy for any
O-PID related donations.
IX. FINANCIAL RESERVES
1. Reserve funds must be maintained in accordance with the City reserve policies that
are included in the Financial Management Policy Statements.
a. Reserve Levels — The City will maintain a combined Restricted and Assigned
Fund Balances in Special Revenue Funds equivalent to two months G 6.67%)
of the next fiscal year budgeted operating expenditures.
b Reserve funds shall not exceed 507-5% of the prior year's assessment without
advance written approval from the DirzetenDirector.
2. The annual assessment rate should be supported by the required Budget and Service
and Assessment Plan. If a Management Company is selected, an explanation in writing
of the reason for delaying or cancelling a project or expenditure in a given year that
result in the increase of fund balance shall be provided by the Management Company
to the Director_ prior to the submission of the next year's budget.
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To address complaints within an O-PID, property owners within an O-PID and any
advisory board or committee must provide a written communication of an initial
complaint to the Management Company, if one exists, or to the Director_ -if no such
Management Company exists.
2. Property owners who are dissatisfied with the decision of the Management Company
may then submit such written complaint to the Director.
3. Property owners who are dissatisfied with the decision of the Director may appeal such
decision to the City Manager (or that person's authorized designee). The decision of
the City Manager is final.
XI. DISSOLUTION
An O-PID may be dissolved in accordance with the procedures set forth in the Act. If
an O-PID is dissolved, the O-PID will remain in effect for the purpose of meeting
unpaid obligations for improvements and services.
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