Financing Your CIP …and Planning Ahead for New O&M

Disclaimer Discussion will be in general terms Implementing these ideas will require legal assistance

Opportunities State Budget Crisis Revenue Sharing May Drop Local Revenue Growth is Slowing, at best LGIP takes a Significant Loss

Options for Funding Infrastructure Cash Grants or New Revenue Streams Dedicated Revenues Debt Repaid from Existing Revenues Debt Repaid from New Revenues Debt Repaid by Beneficiaries

Impact Fees-What are they? Premise: Development should pay for facility costs of growth “A municipality may assess development fees to offset costs to the municipality associated with providing necessary public services to a development” (ARS ) Cost of growth element in general plan Revenue or Liability?

Impact Fees-What they aren’t Revenue source for operating expenses Revenue source for existing capital shortfalls A quick fix for next year’s budget

Impact Fees-Examples Roads Water Sewer Parks Public Safety Facilities Libraries Public Facilities

Impact Fees-Hints Prepare an in-depth written report to start the process Include groups with strong feelings (Builders, HOA’s, activists) Implement full fees for less components, rather than reducing them all Avoid unfunded level of service liabilities

Impact Fees-Hints (cont.) Stay involved-don’t let other departments do this alone Keep a separate fund for each fee.

Debt Repaid from Existing Revenues Revenue Bonds HURF Bonds Municipal Property Corporations

Revenue Bonds Generally used for water or sewer infrastructure Repaid from user fees of system funded Require voter approval

HURF Bonds Used for street improvements or ROW acquisition Repaid from HURF revenues and/or other pledged revenues Requires voter approval Consider ongoing street maintenance and improvement costs

Municipal Property Corporations Used for infrastructure or public facilities Secured by property vital for municipal operations Often includes additional revenue pledge Structure could be compared to lease purchase Consider future General Fund needs

Debt Repaid from New Revenue General Obligation Bonds Used for Infrastructure and Public Facilities Requires Voter Approval Select Projects based upon Public Appeal Consider cafeteria approach

Debt Repaid by Beneficiaries Special Assessment Districts Community Facilities Districts

Special Assessment Districts Used to fund infrastructure Costs are assessed to property owners based upon benefit received from the improvements Available for new or existing development Initiated by Council or property owners Property owners can block with protests

SAD’s-Process Formal process starts with engineered plans Assessment methodology report Public hearing and protest period Formal bid process Property owners can pay cash or bond Bonds are sold and construction begins

SAD’s-Examples Raw Land Developments Sewer for areas on septic systems Paved roads in older subdivisions Off-street parking facilities Water system acquisition Pedestrian malls

Infrastructure Extension Agreements Used when an SAD is not practical Developer funded or public/private partnership Payment required when extension is used Difficult to administer Normally sunset after 10 or 15 years

Community Facilities Districts Generally used for raw land developments Ideal for master planned communities Initiated by property owners Distinct entity Should be self sustaining financially

What Can CFD’s Do? Issue General Obligation Bonds Issue Special Assessment Bonds Issue Revenue Bonds Levy a Property Tax for O & M Charge User Fees for Infrastructure or Services

CFD’s-Process Petition from Property Owners General Plan for the Proposed Improvements Hold formation election if necessary Hold GO bond election in formation stages SAD process is generally the same

O&M Considerations Include Property Tax for O & M on CFD’s Consider formation of other Districts Street Lighting District Protect your HURF revenues Enhanced Municipal Services Districts

Summary Development Fees to Fund Growth Related Capital Debt to be Repaid from Existing Resources Requires Long-Term Planning General Obligation Bonds for Projects Demanded by Public Special Assessment Districts to Address Specific Area Needs

Summary (continued) Community Facilities Districts for Master Planned Communities Include O&M in Planning Projects

Final Thoughts Consult with your Financial Advisor or Underwriter for Innovative Solutions (Refundings, WIFA, GADA) Review Investments to Optimize Fund Balance Earnings in line with Arbitrage Limitations Seize the Opportunity

Presented by: Larry Lange 1717 W. Northern Ave., Suite 112 Phoenix, AZ MuniFinancial Provides Comprehensive Services in the Following Areas:  Arbitrage Rebate  CFD & Assessment District Formation  City Consulting Services  Cost of Service & Utility Rate Studies  Development Impact Fees  District Administration: Taxes, Assessments, Fees & Standby Charges  Municipal Disclosure One of the Willdan Group of Companies