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We usually don't eat your presentations, but since the presenters brought the food. 00:00:00
We're eating it in front of you. 00:00:10
It's just the only spot here. 00:00:17
Stuff. 00:00:22
An ethical problem? 00:00:23
It's under 20. It's under $50. 00:00:26
Like 1,000,000 bucks. 00:00:30
Yeah. 00:00:33
Are we going? 00:00:40
Right. 00:00:42
OK, so we are on the discussion on public infrastructure districts. We've got Laura Lewis here. 00:00:49
Gina's going to do a couple more introductions. 00:00:55
I think I'm OK saying this is a big topic. 00:00:59
A topic that this council is not familiar with. 00:01:04
Other councils have dealt with this sort of thing. I think it's in the packet too who's actually put these in place or some sort 00:01:08
of public assisted financing or partners. 00:01:12
And my fear is that we get too much in the weeds tonight on. I think this could go on for a long time depending on how deep the 00:01:19
discussion was. So I think the intent of. 00:01:24
Presentation is to give the Council. 00:01:31
An idea of what Pids are, what they're for, and just give us a basic understanding without digging in too much of the details. 00:01:35
Regarding the application that's currently been delivered to the city, which I think was last Friday. 00:01:44
And then we'll talk about timelines and whatnot. But we could probably spend a couple of hours on this. This council's very we're 00:01:52
we're not used to working late, so. 00:01:57
Probably try to keep this to that power. 00:02:04
And I know Laura has a heart stopping about 9:00. I love it. 00:02:07
I talk fast. Let me turn it over to Gina for a couple introductions, then we'll just get right into it. 00:02:13
So I think most council members have previously met Laura Lewis and I want to say you're with Lewis Young and that's, that's OK. I 00:02:18
still do the same thing. We're now LARB Public Finance. 00:02:25
And she's accompanied this evening by Aaron Wade, who is with Gilmore Bell and Phil B. 00:02:33
Providing the city some advice on the bond side and. 00:02:41
You may also see his partner Mandy Larson and subsequent discussions. 00:02:47
So I'm looking at my screen. I don't know what you'll be looking at so that I can face you. So someone have to move it along as I. 00:02:58
So the reason for kids is to support economic development in the community. And remember that's a tool that you're providing. 00:03:07
And so it's important, and Gina will talk to you about this later, that you put some guardrails around how you want that tool to 00:03:15
be used. 00:03:20
There are several great options to support development in Utah, and it would take way longer than two hours if we got into all of 00:03:25
those in detail. So this discussion tonight is really intended to. 00:03:31
Focus on just the kids. I can certainly come back whenever you'd like to discuss other stuff and we can. 00:03:38
Over all. 00:03:44
So used correctly they can be beneficial. Tools obviously for the property owner. 00:03:46
As well As for the city. 00:03:51
There's some legislation brewing that, you know, developers may have the ability to just create. 00:03:53
Of their own volition. I don't love that idea, but. 00:04:02
You never know what the legislature will do. 00:04:07
Currently, for a developer to be in a pit, they have to come to a city or county. 00:04:10
To create that fit in their. 00:04:16
And just a very quick reminder, developers want to come to local governments all the time and not all the tools that you can use 00:04:19
for them are financial. 00:04:23
I years ago I attended mutual league of cities and towns and there was. 00:04:28
National presenter they're talking about. 00:04:33
You know, why do developers want to go to cities and if it is a number one thing, was it like straight line permitting process? 00:04:36
And, you know, a lot of times with larger cities. 00:04:43
Really difficult of Salt Lake City. 00:04:47
Might be one of those that is a little bit more challenging. 00:04:51
So they like shovel ready sites like good demographics, you have all of this stuff. So it's great transportation is sometimes. 00:04:56
Transportation accessibility. 00:05:04
About. 00:05:07
My daughter goes to Highland High and driving through Sugarhouse is enough to make me. 00:05:09
So there are a lot of tools that you could use to assist with development your basic financial tools. I mean you can use water 00:05:17
revenue bonds to help it in water infrastructure for development. 00:05:22
That kind of thing. You can use assessment bombs. We're going to focus on kids tonight. You can also use tax increment. There are 00:05:28
a host of other types. 00:05:31
Creative approach. There's a lot of times those tools can be used in conjunction with one another. 00:05:36
This is a picture of I don't know what the Maida Mountain Ski resort will look like when it's done. 00:05:42
And it was the first pit that I worked on and it was kind of interesting because it was a pit that, you know, again used different 00:05:49
tools. The PID was created and then the PID issued assessment on. So you won't be the first one to participate in this. 00:05:57
So it's a special type of limited property tax to support the revenue. 00:06:04
So it is a general obligation like issuance. 00:06:10
That's not voted on by your constituents because they're not impacted 100% of the property owner, two property owners that will 00:06:16
be. 00:06:20
That will pay this tax. Have to agree to it. 00:06:25
100. 00:06:29
So it's not like, you know, you're going to get some speeding constituents in here saying, well, my taxes are being raised. 00:06:30
Until maybe later, right? So 100% of who owns it today? 00:06:39
Has to agree to that tax. 00:06:44
But they're maybe not going to hold on to that property forever, and that's where you as a council needs to, you know, give that 00:06:48
some thought. 00:06:51
I think what is being proposed is not intended to be used for residential. 00:06:55
Property. But if it were, that's what I would say. Your antenna better go up. 00:07:01
Really. Really. 00:07:05
Because it's those future res. 00:07:09
That would, you know, could literally, you know, live across one house, could be across the street in the other house, and they 00:07:11
could be talking that. 00:07:15
You're moving right about taxes, right? And they could say, oh, my taxes are so high. Wait, wait, my taxes aren't that high? 00:07:19
Because. 00:07:28
Right. So that's where. 00:07:31
You know, I think you have to pay very particular attention when it's for commercial. I think that's a little bit easier to, you 00:07:33
know. 00:07:37
Swallowed maybe a spare word that you know those commercial buyers, when you know they really do their due diligence when they're 00:07:42
buying, they would know that in advance. They'll take that into account on the on the purchase price because they know that 00:07:48
product. You know where they're you know future revenue gets sucked away is to pay those taxes. 00:07:54
So pits have only been around, as you can see, for a few years. 00:08:02
City and Counties have the power to. 00:08:07
It becomes a political subdivision. So when you create it, you create it. You put the, you know, guardrails around it, and then. 00:08:10
Wish them well. Hope they do a great job. 00:08:20
So all of the things that you want to see. 00:08:22
Happen or not happen within that pit, you have to set up when you create the pit. 00:08:25
Because after. 00:08:31
You won't have anyone on that pit board. It's usually a developer or two that's on the pit board originally and then then there's 00:08:33
a, you know, eventually. 00:08:37
Cycle where different people within the pit can be on that board. 00:08:42
Created by ordinance. If we did that, then we handed over the counties, actually then. 00:08:47
Built, yes, yeah, because the counties who collects the taxes. 00:08:52
Most publicly owned infrastructure can be included at the creating entities. So you'll be creating entities. So at your discretion 00:09:00
you could say. 00:09:04
You can put anything that the local government can own in that pit, or you can say oh. 00:09:09
You can put in a parking structure. That's what the anticipated for. That's what you can do. 00:09:14
And that's all they'll ever be able to do. 00:09:19
If that's the guardrails that you put around that I know with the exception municipal fire, that's becoming more and more of an 00:09:22
important thing for some cities to finance. 00:09:26
That was stricken out of that years. 00:09:31
It's important to note that projects being funded. 00:09:36
Have to be public, so they have to be owned by a public entity. So if you create it, you have to own it. 00:09:39
Nope. If you create it, can you own it? 00:09:45
If that were the case, if you create the PID and they build, that's not what you're planning on here. You created a PID and they 00:09:49
were going to build. 00:09:53
What's the fire station? 00:10:00
You could own that fire station. The PIT taxes would pay for that fire station, but it would not pay for the O&M. 00:10:03
So you need to think about that. So for a parking structure, again, I don't think the intent here is for the city to own it. The 00:10:11
kid can own it, right? Yeah. So the pig had on it, but it has to be owned by a local government, local government. 00:10:17
Again, you can limit the powers. The tax rate that can be charged by the PIT under state law can be up to a maximum of 15 mills or 00:10:26
1.5%. 00:10:31
And if you look at your tax bill lazy, that would probably make you pass out because in total your property taxes. 00:10:36
Probably the neighborhood 1 to 1 1/4%. 00:10:43
So that's it's a high rate, right. So one of the things that you can do is when you create it, you can restrict that. 00:10:46
Now that stated, yes, it's a very high rate, but again, they can only use that for the debt of the bonds that are issued. 00:10:56
Not for O&M, not to get rich off of it. So you know if once the debt set, if the debt turns out to be $1,000,000 a year, the pay 00:11:05
tax will be put in place to generate. 00:11:11
$1,000,000 a year we've used for development and redevelopment. 00:11:18
The bond issue by a property tax are secured by that new tax. Again, I always think they put on the bond, purchase their hat well. 00:11:26
Well, what would you be? 00:11:35
You'd be getting the tax revenues, but as the bond purchaser, you're taking off all the risk that that development is going to 00:11:37
occur. 00:11:40
100% of that risk falls to the bondholders. 00:11:44
When they're struct. 00:11:48
The good tax while it's on parity with the general property tax revenues. 00:11:51
The general property tax revenues of the rest of the city, or even on that property itself. 00:11:55
Not go to pay the pit bonds. It's just the pit tax. 00:12:01
So let's say if we go back up to my cute picture here. 00:12:06
Let's say this beautiful mountain resort is up there and the bondholders that purchase those bonds. 00:12:10
Expect that to be built can. 00:12:18
Hold a gun to your head. 00:12:21
To build it. 00:12:23
No, they surely can't, right. So they would get property appraisals, they get an independent third party study to come in and say 00:12:25
what's the likelihood of the demand for these units? 00:12:31
And then we say, OK, we take all of those revenue projections, they're here. 00:12:37
We put the dead in, you know, we talked the dead in below that. 00:12:43
With some type of coverage factor. 00:12:47
But if it doesn't occur. 00:12:50
It'll come back to. 00:12:52
They can't go to the pit. 00:12:54
Do something else, give U.S. sales tax because if it doesn't have that ability, so all the risks. 00:12:56
Goes to the purchaser of those bonds. Can I just take one quick thing? So the thing that's really unique about it, Laura mentioned 00:13:02
the limited tax, so you guys might be familiar with general obligation bonds. The example I always give is if you had a city that 00:13:09
had a general obligation block and half of the city burned down, the city would literally have to double the property tax in order 00:13:16
to meet their obligation, right? Unforeseen circumstance doesn't matter, double the tax. 00:13:23
So a PID is similar in that it's a limited general obligation, but it's capped. 00:13:31
So. 00:13:37
The example I gave, if you guys remember, like the Superior wildfires in Colorado. 00:13:38
Two or three years ago, well, I helped on a bond for the Superior Metropolitan District, right, and a big chunk of it burned down 00:13:43
well because the tax rate is capped, even though a good chunk of the district burned. 00:13:49
The mill rate would be raised, but it would hit the cap and you just tell investors sorry, right? You thought you were going to 00:13:56
have 200 houses paying, you have 150, You're going to have a few years of shortfall. But they can't force the district to give up 00:14:02
any other money. They can't force that to raise the rate. They just have to hope that the extra runway the bonds give them at the 00:14:07
end is enough to repay them, and if not, when that. 00:14:13
Clock runs out, they ride it off, you know, tax write off or whatever and they live with their wounds and move on. So it's a 00:14:19
protection for the property owners. The other example would be you expected 200 houses to get built. 00:14:24
10 houses. 00:14:30
And then a huge recession happens. 00:14:32
Those 10 houses aren't going to be. 00:14:35
100 mills, it's still going to be the Max that you put in the governing document. 00:14:38
For the life of the bonds and then eventually the debt will get discharged. So it's a protection for the city and the tax rates 00:14:42
and it's a protection for the future property owners and it's something that the investors just fact. 00:14:48
Decide whether or not to buy the debt. 00:14:55
So high risk. 00:14:57
So these aren't going to be at the same rate that we could do an assessment bond or sales tax bond and they're going to be a lot 00:15:01
higher rate because the risk they're still tax exempt, there's still. 00:15:06
A demand for them in the. 00:15:12
I mean they there are certain things that could make them taxable. Typically they are they are tax. 00:15:16
Parking structure is one of those things that we do have to be careful with the tax exemption because if there's private use. 00:15:22
You can't have private use and private payment and so we have to be very careful with that but. 00:15:28
These guys are very skilled at helping us. 00:15:33
And who's responsible for monitoring that? 00:15:36
The pit, I mean, everything literally falls to the pit once you create it. And if they violate those particular rules, then. 00:15:40
Their bonds get deemed taxable. 00:15:48
And. 00:15:51
Similar to the city they're going to enter into, like a tax covenant. 00:15:55
Agreeing to use the funds in a certain way to use the facilities financed in a certain. 00:15:58
And if they violated that or there was an audit that found that they weren't in compliance? 00:16:03
Probably the lawsuit start and it's not that it I mean we try to plan what we can up front right relative and I just finished a 00:16:10
transaction within a pit but for a parking structure in. 00:16:15
And there. 00:16:21
Discussions ad nauseam with Gilmore, Bell's tax counsel, about. 00:16:23
What stalls are going to be used private? How many can remain public? What does it mean to be public? I mean, are we designated 00:16:29
roughly 20% of the bonds as taxable to give them some flexibility? 00:16:34
You know, they're thinking about having a grocery store in this development. It's like, well, that grocery store is not going to 00:16:40
want. 00:16:43
They're gonna want some designated stalls when you start designating stalls. 00:16:46
It's up. Taxability comes into play, so we can work with it all, but we just need to, you know, build that up front and then they 00:16:50
have to stay within the bands of what we've discussed. 00:16:55
The taxes are collected by the county, if they don't pay it, you know, stays delinquent for five years and the crews interest and 00:17:01
then those two sheriff's sale. 00:17:06
There we go. 00:17:16
So the next creation considerations and you know. 00:17:19
Once you designate the kid or you're giving you more than you may or may not want to know. Once you designate the pit, then again, 00:17:24
you kind of wash your hands of it as long as you say you're the lanes you stay within. 00:17:30
But as you're thinking about those lanes, I thought might be helpful to know some of the things that we think of. 00:17:36
How and what you do when you create it is at your complete discretion. 00:17:43
We talked about how 100% of the property owners that that agreed to. 00:17:47
What kind of infrastructure they can do, that's within your description. You establish the mill rate, you establish the transition 00:17:52
to elective. 00:17:56
You established the PID lifestanes dissolution usually. 00:18:01
We'd like them to go. We can issue bonds, Interstate law up to 40 years because usually we'll issue for 30 years or less. 00:18:07
To help address that problem that Aaron talked about. So if you know, so again, the projections are going to say, OK, here's the 00:18:14
line that we think the revenue is going to go up. We put the debt in here, but then reality comes along and then it goes at this, 00:18:21
right. So there might be some years when there's not enough tax revenue at the 12 mill rate. 00:18:28
So if we structure the bombs for 30 years, what the bondholders do have is. 00:18:35
Well, they weren't paid off, so now we're going to go an extra 313233 years. So we like to make sure that we have some runway at 00:18:40
the end of case. 00:18:44
Quick clarifying, you said before that fintechs can't be used for O&M. 00:18:52
But the item being financed? 00:18:58
Still can be owned by It's still owned by the pit, not necessarily municipality. 00:19:01
So the pit is the responsibility on them. It just can't come from this source. Yeah, what we would usually see, so example in the 00:19:05
parking scenarios or the other example we have is maybe some kids. 00:19:11
Will say please let us own the roads between townhouses that the city is not going to maintain. 00:19:17
Contract with the HOA or you contract with the Commercial Condominium Association. 00:19:23
And they would maintain the parking garage. They would own it, but for all intense purposes. 00:19:29
That association. 00:19:34
Levying against. 00:19:36
Everybody doesn't fall back on the city, doesn't fall back on the city and the city. 00:19:38
Want to put probably in their governing document. 00:19:43
We will not be accepting any parking structures. The big. 00:19:45
Don't ask. 00:19:49
And I guess real quick to add on that line a pig is going to construct and it might be sewer lines, it might be water lines, 00:19:51
roads. 00:19:54
But everything still falls under the jurisdiction of the accepting entity, so it's not as if the pig can say I grant myself the 00:19:58
right to. 00:20:02
You know, build an 18 inch sewer line in the city. You're just going to have to accept it even though you wanted a 12 inch. 00:20:06
It still has to go through all the ordinary planning process. 00:20:11
Planning. You know, engineering space. It doesn't change any of the land use components. It's just a financing tool. 00:20:15
The one thing above the bond debt service cost that can be included in the tax will be to pay for an annual audit and to pay for 00:20:25
legal. 00:20:29
This is oh, on the other side of the freeway, another pit that we refer to as the Golf Equestrian Center. And interestingly, they 00:20:39
built the equestrian center and it burned. 00:20:45
And yeah, and I was like, quit. Do they have insurance? 00:20:51
They have insurance like this. 00:20:56
So again, these are used and this was a more traditional pit in terms of putting in the actual pit tacks, not doing as an 00:20:59
assessment bond. 00:21:03
So the approval and financing considerations, the ultimate property owners will the ultimate property are within the kid. 00:21:07
View the tax applicable to their district as fair and reasonable. 00:21:16
Again with commercial properties. 00:21:20
You know, it's quite a bit easier. I know when this discussion was being had in South Jordan. 00:21:23
What they talked about conceptually, I don't think they've created a pit yet, but what they've talked about conceptually as well. 00:21:29
Because they they may do one that would hit a residential area. 00:21:36
Out in Daybreak where they're, you know, planning to do the baseball stadium and. 00:21:42
And they're thinking of making like a. 00:21:47
Really wide. 00:21:50
City thoroughfare with, you know, between. 00:21:52
Lanes of St. They're going to have pickleball courts or whatever. 00:21:56
They're thinking as well we would we they would feel justified in doing that, putting on residents because it's something above 00:22:00
and beyond what. 00:22:04
People of. 00:22:08
East side of South. 00:22:10
So in their minds, again, you have to think about in terms of would they, you know, will future residents or future future 00:22:12
property owners, you know, consider that good taxes very reasonable. Did they get something for it, right? 00:22:17
I'm assuming that they're imposing a pit tax. 00:22:28
An overlay where they're going to be residences that aren't residents this year. 00:22:32
Yeah, absolutely. Because right now, today, 100% of the property owners, which would be. 00:22:37
So now they buy a home. 00:22:42
That's inside of the pin. 00:22:46
And they have no representation in terms of the pit tax. You got it. 00:22:48
They're buying an encumbered essentially with. Yeah, and. 00:22:55
You know, so the way I do it is, you know, you move into a school district after they held their Geo bond election. 00:23:00
You know, you missed the window to speak and to vote, but I think the important thing like Larson is when the city's creating, 00:23:06
you're super focused on what's the, what's an appropriate tax rate and then secondly, what's the appropriate level of disclosure. 00:23:14
And so I think disclosure is catching up to the statute. 00:23:22
But in a lot of cities, what we're seeing is one that when any kind of a district gets created, you're going to record a plat map 00:23:26
that shows you're in the boundaries of the district. You're going to record the certificate of creation. 00:23:32
The state issues and then most jurisdictions are also requiring a separate notice. That's just kind of a clear one page. 00:23:38
Notice of pid. You're in a pit. It can. 00:23:45
1/2 a mil tax, Which? 00:23:49
$500.00 of taxes per $100,000 of taxable value. 00:23:51
And here's how you can learn more information, right? So those are kind of the things that. 00:23:55
Or either statutory or best practice. 00:24:00
But the other ways that it's catching up is now the standard real estate. 00:24:03
Sellers disclosure form has a section on it that says. 00:24:08
Is this residence within a Public Infrastructure district? 00:24:13
Has the Public Infrastructure District issued tax bonds and what's what's the rate or something like that? So at least there's. 00:24:16
Not everyone's going to pay attention where they should, but at some point you kind of go into the space of. 00:24:24
If you ignore that many things. 00:24:29
It starts to fall more on, you know, buyer beware. 00:24:32
You gotta pay attention to what you're saying. 00:24:35
But they're still going to call the city. 00:24:38
I 100% believe that there's someone going to call the city and say. 00:24:42
For residences, right? 00:24:48
For commercial I think it's a much much easier pay more attention policies. 00:24:51
Absolutely. It immediately affects the market value of the property. 00:24:56
Exactly right. They're typically nominated bonds when they're originally issued because of the risk once. 00:25:02
Development is up and built and gone vertical. Then it's much easier to get those rated because now we know what the tax stream is 00:25:10
going to be. It's not, you know, you're gambling that they're going to come. 00:25:16
Because they're risky. State law does require that these nominated kids bonds get sold to qualified investors or be sold in 00:25:23
$500,000 increments to kind of keep my other hands of Platos and orphans. 00:25:29
The length and maturity. 00:25:37
And again, we talked about 40 years is a preference will 40 years is how we'd like to be able to take good tax. 00:25:40
Bonds will typically be structured less than 40 years, typically around 30. 00:25:48
We can capitalize interest to, you know, give them some runway before those good taxes are due so that there's enough value in 00:25:52
that property to generate the bond. 00:25:57
You'll typically see the bond amortization again. 00:26:04
Structured so that increases overtime because once the you know while the projects being built it will generate some taxes, but 00:26:07
once it's all the way built it will generate more taxes. 00:26:11
Typically have a 10 year call an interesting thing. There is no ability to prepay a pit tax, but there is an assessment bond. So 00:26:16
back to that MIDA example. 00:26:21
We had created the PID and the developer up there said. 00:26:27
I want to be able to prepaid that tax. If you want to sell, right? You want to sell, it doesn't want that tax on there. 00:26:31
So that he can get a higher value, we said. 00:26:38
Yeah. Then you don't want to do kids. I mean, if someone calls you and said I want to prepay my property taxes for five years. 00:26:40
I just can't do it right. I mean, we don't know what the future is going to be, so. 00:26:47
In that instance, we created the PID, but then the PID as that governmental entity issued assessment. 00:26:53
Well, they could pay it all off. They could pay 100% of it all. 00:26:59
But let's say that you end up with, you know, this commercial area gets subdivided into three commercial condominiums. 00:27:05
Right then, Condominium A can't pay their piece off and 100% of the debt has to get paid off. 00:27:12
So a follow up just based on the legislation that's pending, which is actually. 00:27:19
Assuming that prepayment could. 00:27:25
For. 00:27:28
I know this issue was raised. 00:27:32
That was completely opposite because there was an LPC last week and it was all based on as the as the subdivision plots get sold, 00:27:36
it pays off the piece of the debt. 00:27:41
For that piece goes away. Are you talking about the Ifes? Yeah. So the difference there is those districts are only able to levy 00:27:47
taxes for administration expenses, so the audit. 00:27:53
Hiring accountant, hiring an attorney and they're actually issuing special assessment bonds, not property tax bonds. So with the 00:27:59
special assessment what you do is you figure out a method and you say, OK, for every acre we're putting 100,000 assessment, your 00:28:04
quarter acre lot 25,000. 00:28:09
And then they know exactly how much each piece of ground owns. I bought my house. Here's 25,000 lien goes away. 00:28:14
So it is a different structure. 00:28:21
I assume you a great great visual earlier. This is that on a piece of paper with some. 00:28:27
You know, the tax rate. 00:28:33
Revenues are set to be higher than the debt service coverage we anticipate. 00:28:35
Obligation of a potential risk to the city. If it's created, you're obligated to create it correctly. 00:28:41
Your obligations are limited to ongoing maintenance of whatever public projects were funded with a bid that you take ownership of. 00:28:48
I should have added that. 00:28:51
In this instance, with your partner structure, you don't intend to take ownership of it. 00:28:55
There is no obligation to repay the debt issued by the pit. It doesn't show up on your books, ever, no matter what they do. 00:29:01
The risks are basically related to future political risks of you know what? What? 00:29:09
Those proper? 00:29:15
Think or do or how mad will they be in 10 years? Or five years or? 00:29:17
So that's really the risk. 00:29:22
In the city's perspective. 00:29:25
Can you clear? 00:29:27
Back a little bit, but you said. 00:29:29
Kid owns the asset. 00:29:32
It hugs into the impression that the city had. 00:29:35
At the end, at the end of the process or the presentation we saw. 00:29:39
Presumed that once the debt was paid off. 00:29:44
That ownership had to transfer to the city in order to tax, in order the bonds to remain tax free and then we could sell it back. 00:29:47
And it had to be a fair market value. It couldn't be in a bus. That was something in that state presentation. 00:29:56
So I think it's a little bit of each, so that the thing would be that the pigs are designed that when their purpose is fulfilled, 00:30:01
which is usually pay off your debt, then the pit would. 00:30:06
You know, if the city was saying, look, if you want your pick to continue to own the parking garage and stick around. 00:30:12
We're not worried about you could allow it. 00:30:17
Continue on, but it could. At the point that the bonds are discharged, all of the tax covenants and stipulations go away. 00:30:20
So you could have at that point in. 00:30:29
Some kind of a finding basically, where you would say. 00:30:32
In consideration for you guys having operated and maintained this parking garage for the last 30 years, rebuilt at a time or two. 00:30:35
We're just going to go ahead and feed it to the condo association. 00:30:42
You know, they're they're taking care of it. You could do something like that, but what you couldn't do is you couldn't promise 00:30:46
today to sell it to the condo association for a dollar, right? So you could do a fair market, but there's the ability. 00:30:52
Factoring who's been paying to upkeep the thing, yeah, so that was fair. But that was the weird thing about that state president. 00:30:59
They wouldn't have to go. It sort of led the presentation, led me to believe. 00:31:05
Not that that's what I wanted, but that in order for the bonds to remain tax free at the end, the asset had to transfer the city 00:31:11
in order to maintain. 00:31:16
The tax free status of bonds over there. 00:31:22
Yeah, and then? 00:31:25
And also. 00:31:26
You couldn't sell it for a buck, you had to sell it back, for if you were going to sell it back, it had to be for fair market 00:31:28
value in order to retain that. 00:31:32
That tax recess? Now that's wrong. That's fine. 00:31:36
You can give consideration for things like that. 00:31:46
But the very critical thing is you cannot make any agreement to do that. 00:31:51
Yeah, yeah. And one way that we kind of commonly overcome this is you'd be saying, OK, we have a 20 or a 30 year bond. 00:31:57
But maybe you have some kind of? 00:32:05
A50 year. 00:32:08
So that if you get to the end you don't have maybe like. 00:32:10
An angry HOA that's trying to stick it back to the, you know, we're not going to sell this part. You can't have any parking unless 00:32:14
you pay US $20 million. It's like, OK, then we'll just continue to use our lease for 20 more years. And at that point, it's 00:32:18
probably a little bit. 00:32:23
Of an easier negotiation. 00:32:27
So it would probably be with the PID to the. 00:32:31
To the condo association or whoever. 00:32:35
OK, so we're talking about a parking structure here, yeah. 00:32:38
So right, that's what we're talking about. 00:32:42
So who owns the parking structure when it's built? The. 00:32:44
In this case, it would be the city could choose to do that, No, because that's what I was always under the impression of. And was 00:32:48
I never? 00:32:52
Well. 00:32:57
You would not. I would agree you would not want it. 00:33:00
And so for me this is an important clarification tonight because my understanding before was kind of similar to where I think 00:33:04
mayor is was of the city in order to provide a tax exempt bonds that the city needed to own. But if the pig qualifies any 00:33:11
governmental entity, that's great. So that's a better solution. 00:33:19
And so you're really talking about at the end? 00:33:27
At the end of the bond Finan. 00:33:31
The pit is basically negotiating back with the developer that. 00:33:33
It's not the city, which, yeah, you're good by me, yeah. 00:33:38
I'm better with. 00:33:42
So another question I have, just a quick question. 00:33:44
I haven't seen how the kids are created. 00:33:48
And I. 00:33:50
I could operate in the subset, it's just going to be the parking structure. 00:33:52
Going to be considered as part of the pit financing. 00:33:57
And that all. 00:34:01
Future residential units will not be part of that. 00:34:04
Commercial issue for us because that other stuff was. 00:34:13
Was. 00:34:19
You know, down the road, but we had a big problem with we don't want residences. 00:34:22
Having a pit tax levy on them and not having elected representation. So that was when that became part of the peace, as long as 00:34:28
that's not part of the peace. 00:34:32
And the head's going to own the parking structure. 00:34:38
Sure. 00:34:41
Those residents are not they don't pay taxes. They're paying at this part of their rent, probably. 00:34:47
Whether they want to pay it or not, they're going to underwrite based on that income, right? 00:34:57
And real quick, am I mistaken? Is there going to be? 00:35:02
Condo units like for sale condos above commercial. So that's one thing I think we'll have to. It's a little bit unique because 00:35:06
when you draw the boundaries. 00:35:10
Is the condo known today like that we can lessen accept OK, cuz that's the. 00:35:19
That's the crucial thing. 00:35:25
OK, yeah, as long as it's accepted. 00:35:30
Today then? 00:35:32
That's easy. 00:35:34
And real quick, sorry I meant to say this earlier when you brought up the representation. 00:35:35
The other way with with a commercial district, that's going to operate differently, but if you have a residential district and for 00:35:39
commercial, the governing document which is the charter for the pit should stipulate. 00:35:44
The terms under which the board transitions from appointed property owners to elected. 00:35:49
And so if you had a residential PID and you have people moving in, then you would have some kind of milestone where you say? 00:35:55
100 certificates of occupancy. 00:36:02
Seat one will no longer be appointed and will become elected at the next election. 00:36:05
And so over time. 00:36:10
The board would. 00:36:11
You know, comprised of. 00:36:13
At that point, the debts already issued, the tax is already pegged. But what they would have control over is do we refinance the 00:36:15
debt and lower our tax rate, Do we refinance the debt and keep the rate the same and pay it off more quickly. So they'll be in 00:36:21
control of those decisions going forward. But it is going to be a while before they transition. With commercial property, we 00:36:26
usually see there's a transition, but it usually stays kind of proportional to like somebody owns a hotel and it's worth 50% of 00:36:32
the taxable value. 00:36:38
They ought to have a significant say on the. 00:36:44
Because they're paying the majority of the taxes. So that's how we see it kind of balance. 00:36:46
I think the way that our. 00:36:52
Handles this. 00:36:54
As we have our board in place, if we're going to come back and have any amendments to the board, it will still come to the 00:36:56
council. You'll see who we're. 00:37:00
It's really if we do sell commercial property, more than likely those new users are going to want to come in and have a seat at 00:37:08
the table. 00:37:10
And so we'll have to come to you and make sure that's, yeah, I assume that that's going to be down the road discussion is created. 00:37:13
But if any. 00:37:23
Participation we want to have on the pit board, not that's not a conversation for here, right, But so, but yeah, I mean that's 00:37:25
something we have to get into the details of it. 00:37:31
And for benefit of anyone who doesn't know. 00:37:38
Mac is. 00:37:42
Well. 00:37:46
As Chris introduce yourself to SO Chris Watson and Development Consultant. 00:37:57
Can I, sorry, can I reopen, just discuss a few things? Absolutely. 00:38:08
So it might be. 00:38:14
For the Council understand, because I think it's a fair question. 00:38:16
You know, why are we even having this discussion? 00:38:20
What you're saying is these are high risk. 00:38:24
And so a high response could have a higher. 00:38:27
Why? What's the advantage here? 00:38:32
It's the same borrowing. So we're going and borrowing from a bank for instructional and that's the exact same risk profile. 00:38:37
But right now and kids are relatively new and when bids first came out it seemed like they were just designed for subdivision 00:38:46
developments and sub commercial developers like us kind of just said well. 00:38:51
Kind of doesn't make sense for mixture. 00:38:56
But when all of a sudden the banking market froze up, it's really, really hard to get loans right now, especially for a free 00:39:00
standing parking structure that's somehow going to pay back a loan with can association payments. 00:39:05
Bank will touch it. 00:39:10
And so we're trying to get going on this parking structure, but we need to somehow. 00:39:12
Create a credit profile that brings lenders to the table to help us. 00:39:16
The other thing we have is we have our property tax increment that can help back up these payments at the same time. 00:39:19
And so by doing a PID, we're able to go to the bond market, which is a different borrowing pool, and find the financing source to 00:39:25
help us build parking structure. In other words, we can. 00:39:30
We're working. We're working to try and get this thing started this summer. 00:39:35
And we just don't want to be, you know, we're just trying to find where the optionality is and how to make this thing move forward 00:39:39
and so. 00:39:42
What we're trying to do is say, OK, well, it allows all these things and Mars done a great job talking about how broad you can 00:39:46
make the bid. 00:39:49
We're trying to say, look, we just. 00:39:53
We want to be able to tax just ourselves, no residents, just property, we. 00:39:55
And use those taxes to finance the parking structure that's really just for this development and we'll maintain it. We'll cover 00:39:59
all the operating costs. 00:40:03
And again, I was used to. 00:40:07
Say that they want to build the assets in the future, but some of those are roads and infrastructure, things like that. So we 00:40:10
weren't very clear on. 00:40:13
I think the intent was to say, OK, well, if we do this. 00:40:17
It's it's just it's basically just reducing our net income. So we can't finance as much permanent under when we stabilize because 00:40:24
we're now paying more property taxes. 00:40:28
But now that the character that Internet income is now property tax, which I. 00:40:32
Go through the PID and find financing a different. 00:40:37
It's really just a tool to update this partner structure though and I. 00:40:40
100% agree with all of that and I'll also add to that that your commercial lending. 00:40:44
Is typically one right now. He is absolutely right. 00:40:50
Type I've. 00:40:54
Multiple parking structures with multiple different ways with the same. 00:40:56
Reason. But while the interest rates are high compared to what it would be if we did an assessment bond or a sales tax bond or 00:40:59
whatever, it's still going to be well below what they could get in terms of a commercial loan. 00:41:05
And our terms are better, so we can amortize over 30 years, your typical commercial loans amortize over 30 years, but has a 10 00:41:11
year balloon and then they have to take that market risk of whatever that is then to to redo that. So it's it's still a beneficial 00:41:17
tool, the tool the rate will be lower. 00:41:23
And it's off balance sheet rates lower and they can advertise it. 00:41:29
And and also these, these, these bonfires need to be fairly institutional buyers as opposed to the wheels and and so then also 00:41:34
those buyers. 00:41:40
Can sufficiently differentiate these sorts of. 00:41:47
No disrespect to the project, but these bonds would be quasi municipal jump bonds essentially and. 00:41:51
Sufficiently differentiable in the market. 00:41:59
Municipal bonds that are more integrated so that the issuance of these bonds doesn't degrade somehow in the marketplace the value 00:42:03
of. 00:42:07
They're sufficiently differentiated. 00:42:12
And would they remain sufficiently differentiated? 00:42:16
I have no concern about this project, but long term if this doesn't work out over the next decade. 00:42:21
I think what will happen what we've. 00:42:28
A little bit to a lot of in Colorado. 00:42:31
Is. 00:42:35
I don't know how many kids over there, a lot of them, and they've been around a lot longer. 00:42:38
But it's it's it wouldn't be like the local government bonds that become like. 00:42:43
Its kids. I mean, once it has public infrastructure district off, it's like, well, maybe we won't be buying those anymore. 00:42:49
So that's what could get harmed, right? I mean, if five years from now? 00:42:56
A bunch of these aren't paying or whatever. 00:43:02
Utah kid Daniel not going to touch it or the rates are going to really go up. 00:43:05
But it wouldn't have an impact. 00:43:10
Holiday or in other? 00:43:12
Created. 00:43:14
In terms of, you know, how you would be viewed by the debt markets? 00:43:15
Could I just add some of you may be asking? 00:43:19
You know why? 00:43:23
We have some tenants that we're working with. In order to move those things forward in this difficult market, we have to provide 00:43:25
that parking. 00:43:30
Now. 00:43:35
Have that sign and execute. 00:43:37
And so we don't want to miss an opportunity in this difficult market to keep the momentum that we've started. 00:43:39
And have this project get slowed down or shut down again like it has been. 00:43:44
E-mail but. 00:43:51
It's really to keep the momentum going, and we're not. 00:43:53
This PIN tool allows us. 00:43:57
Move forward with the financing mechanism that makes sense so that we can keep it moving forward without. 00:43:59
You know, asking for city funds or put any burden on. 00:44:04
City obligations on the. 00:44:07
We are the ones that are paying the taxes. 00:44:10
You know, and paying for it and. 00:44:14
It's a financing mechanism to keep a project. 00:44:16
That has a great benefit to holiday moving forward. 00:44:18
Putting any additional. 00:44:22
So we're recognizing that you are close to. 00:44:24
This slide let's see the slide I have. 00:44:31
That one. Oh, sorry. 00:44:35
That's right. So this just gives you an idea, just very visually of that 1.5. 00:44:39
Bill, as I guess and I haven't looked at this, if I can drop this in after I did my bit of it, your current tax rate and holiday 00:44:43
is just over 1.1%. So it gives you an idea of what 1/2 mil would be on median home value. Again, this is just sort of a magnitude 00:44:50
slide. You've got commercial, it's a whole different, whole different world. 00:44:57
Benefits to the city is that you get the improvement that you need to make this development happen. 00:45:06
And instead of increasing the city's debt burden or the burden on, again, you could finance this with sales tax bonds. And there's 00:45:12
lots of things you could do if you chose to do. 00:45:17
This gets it built and keeps the burden on those benefiting from. 00:45:21
No debt on the city books for the pit bond. No ongoing management. 00:45:26
City or someone else owns a facility and it's a means of assisting the developer with the improvements that they want to need. 00:45:31
The next slide is a fairly long list of many kids that have been created. Not all of these have had financings. 00:45:38
Done. The kids have been created, The cities have gone through the exercise of. 00:45:45
Here's what we want our PIT policy to look like. 00:45:49
Those pits have been created. Some have had bomb issues, some have not. 00:45:51
And almost lastly, creative financing solutions that can be beneficial. Some of these tools again are used in a joint fashion. 00:45:58
It's not uncommon or unheard of for a pit to get created, but then for whatever reason to do an assessment bond. That's a whole 00:46:03
nother discussion for a whole another day. 00:46:08
The different security. 00:46:15
We can amortize it over only amortize it over a shorter period. 00:46:17
But you know, again, there are things in the future I'm trying to cast you beyond just this parking structure when things in the 00:46:21
future, there are different ways to use pits. 00:46:26
You know different ways, so which tools are the best? It really depends. 00:46:33
Is an assessment better than a PIT? It really depends, right? So you need to consider what types of projects need to be funded. 00:46:37
How much is it incentive is the city willing to enable to provide? 00:46:43
How much is the risk is the city willing to take? 00:46:49
What's the financial strength of the developer? You've got a great developer here. How badly the project needed to meet the city's 00:46:53
goals? Would you want to see that area developed and not be dirt so you know all those things you take into account? Say this is 00:46:58
this the right tool for us to allow them to use? 00:47:03
General Commentary Point says holiday well known state law operations allows. 00:47:09
20% of registered voters to petition to force the vote on any action that can impact. 00:47:14
Of the city development goals, that is still in place. 00:47:19
It's always advisable for the city to adopt policies or guidelines, which I think have been discussed by your staff and I think 00:47:23
we're going to talk to you about that now. 00:47:27
And it's advisable to create standard policies for evaluating bid requests. One thing with developers is. 00:47:31
With various great great developer. 00:47:38
Work. 00:47:41
When I was really, really young. 00:47:44
And I think very highly of them, but as soon as you do something for one developer. 00:47:47
Someone else is going to come in the door, and you need to, you know, think about it in terms of. 00:47:53
How we want to set those policies for the next developer that's going to come in the. 00:47:58
And make sure that you have you know you maintain those standards. Doesn't mean they can't be changed in the future, but you need 00:48:03
to think about that. 00:48:06
And. 00:48:09
So the reason that the city even has to get involved, that is because of. 00:48:17
The fact that it will show up as other property taxes. 00:48:22
On the private tax bill, the tax free component I'm guessing is another part of that as opposed to just like. 00:48:25
Them packaging this together and going up right? And Aaron probably knows more about that relative to the discussions being held 00:48:32
and filled with them being able to create. 00:48:37
Kid or whatever it's called, without coming to a city, because if they're given the ability to do that, they would still be able 00:48:42
to preserve tax exemption depending on what they're financing, right? If it's a infrastructure, it's going to be all my local 00:48:47
government. 00:48:52
But right now, today, the only way to do it is for severe. 00:48:59
Yeah. Just because of law, Yeah. You can't just, you know, create something out of mouth. You have to have a governmental entity 00:49:03
authorize a governmental entity. 00:49:08
Presently until a couple weeks from now perhaps, when a lot of changes and we don't have any. 00:49:14
Yep. 00:49:20
Other questions for Mark the questions. 00:49:24
You think it's, I mean? 00:49:27
Do we have to? 00:49:31
And this isn't so much for you, I don't think this is more internal. 00:49:32
How important is this for us to develop a comprehensive policy? 00:49:37
As part of this project or. 00:49:42
Somewhat bifurcate that and say look this is very unique and 1st. 00:49:47
It seems like a pretty simple. 00:49:53
I would say there are a lot of cities that have done what you described, where they say we have this project that we know meets 00:49:56
our objectives. 00:50:01
Let's get it done and then let's do a policy. 00:50:06
You know, the first pit we did, the medical school campus in Provo. We spent forever trying to craft a policy and we just 00:50:09
realized. 00:50:12
Let's I say the city kind of said let's just approve this. We don't have anyone else asking yet. 00:50:16
Right. And then I think they haven't created any other sense then, but I think sometimes it makes sense to get one through so you 00:50:21
know what the questions are. 00:50:25
To ask for the policy, Yeah. I mean, that's kind of what that's kind of the path I'm going down because this one seems pretty 00:50:29
simple to me. It's I get. 00:50:33
Thanks. I want to loan money on parking structure. 00:50:39
The loan money on leases. 00:50:43
But it's hard to get people to sign a lease until there's parking structure and so that and there's no residential component to 00:50:46
that. 00:50:49
But down the road. 00:50:54
I would have and. The developer is essentially taxing themselves and then passing those costs on. 00:50:57
To their tenants or. 00:51:05
Who can decide whether or not they can afford what? 00:51:06
Red right where I start having an issue is when you start to. 00:51:10
What the legislators considered where they want to create an opportunity for developers. 00:51:16
To just. 00:51:22
Without representation that scares me. Residential and even commercial. 00:51:26
Down the road, you can see how it can spin. We're basically elected officials are basically pushed over to the side. 00:51:33
And now you've got kind of. 00:51:39
I can see that's where we need a broader policy. 00:51:43
And so, but I would hate to hold this up for however long. 00:51:46
Trying to spend three or four months trying to develop a whole city pin policy. 00:51:51
Got a pretty? 00:51:56
What seems to me anyway to be a pretty simple request here. 00:51:58
But I do think we need to, because I think you're right. 00:52:02
If this works, you're going to start. 00:52:07
Every developer that comes in is going to want to take the opportunity to get tax free financing. 00:52:10
So at that point, we were probably going to need a policy of what we. 00:52:17
Will support because at the end of the day, it's totally up to us whether. 00:52:22
We want to do it. 00:52:27
And again, there are other tools and if you for whatever reason. 00:52:28
If someone comes in and walks, the ability to build. 00:52:32
Water, streets, whatever. 00:52:39
You're not, but it's for residential and you're not wild about fit for residential. Well, then let's talk about an assessment. I 00:52:42
mean, there are other tools, right, that maybe may be better suited because in an assessment bond setting. 00:52:48
You can require prepayment that building per. 00:52:54
There's a way to do that prep. 00:52:58
You can't. 00:53:00
I know you got an appointment. I've got a 16 year old that can't quite drive yet and she's at a club volleyball. 00:53:03
So thank you very much. 00:53:13
Thank you very much. Appreciate it and thanks for the. 00:53:16
You're welcome. 00:53:19
From Great Harvest a local. 00:53:24
So. 00:53:29
We do have a pending application. 00:53:31
What we are considering in terms of timing is scheduling both a discussion well scheduling a public hearing. 00:53:35
On that application on the. 00:53:45
Along with a more comprehensive discussion of exactly what the application would entail that same evening. 00:53:49
Because it is on the Holiday Hill site. 00:53:57
We know our residents are interested in and. 00:54:01
Likely have a lot of quest. 00:54:06
We're planning. 00:54:07
Committee engagement. 00:54:11
Just releases kind of explaining this concept. 00:54:14
Because it is possible, when the public hearing notice is issued, that will raise a lot of questions. 00:54:18
Especially for District one, it sounds like I have some policy questions to kind of talk through, but it sounds like at least 00:54:31
you're comfortable with the idea of moving forward with this. 00:54:40
Application without. 00:54:51
Well, I am based on. I have not read the application. 00:54:54
But my understanding is it's just. 00:55:01
It's just to finance the parking structure. 00:55:05
That right. It's presented more broadly than that. There it's presented as a financing tool for other infrastructure also. 00:55:08
That's the point we'll have to discuss. 00:55:15
Discussion of that and. 00:55:17
A decision on that doesn't require a policy. 00:55:20
But there is broader in the proposal than Justin. 00:55:25
So that's that's one thing, but it does exclude assessing residents. Yes, it clearly owner, owner, product residents. I will even 00:55:30
any resident because partner dwellers won't be assessed either. 00:55:37
Baked in. 00:55:44
I mean, I'm just saying there's all sorts of questions we're going to have to have. With there are you and our legal counsel and 00:55:46
staff. 00:55:49
Questions we have to have answered that go into the agreement. 00:55:53
But uncomfortable proceeding with that without. 00:55:58
Full blown. 00:56:02
In pursuit of policy, separate from. 00:56:04
Yeah, we can. 00:56:08
At least initially. 00:56:09
Fairly restrictive policy, that. 00:56:11
Projects have to be in an RDA for. 00:56:14
Something like that. So that limits the amount of exposure and that's a policy that could change later, but we could even start 00:56:16
out with a pretty restrictive policy. 00:56:20
So it has to be a certain size that you can consider or you've already preexisting RDA or? 00:56:24
Yeah, I don't know. But so I don't know. 00:56:31
I haven't seen it. I've never been through this before. So I I have to kind of defer to staff and legal counsel to say we're okay. 00:56:34
We'll have enough to put this up on for a public hearing on the 15th. 00:56:41
Block out a pretty good amount of time during the work session on the 15th. 00:56:45
Start dealing with a lot of issues. 00:56:49
For whatever issues are in front of us to get this thing put in place. 00:56:52
So we have been guided in our review by policies that other entities have adopted. 00:56:57
We've looked at a couple of those and they've helped us to start to flesh out issues. 00:57:02
But I think your characterization of this project is relatively simple as correct. 00:57:08
And there isn't. 00:57:14
Anything in the law that requires you to have a policy in place before you. 00:57:15
Approve a proposal to. 00:57:20
And just be clear, it is just Park Insurance, you're right, a little broader. 00:57:23
You know you have to have certain utilities that feed the target structure and so forth, but it is. 00:57:27
The other piece I just add on that is if they were, I mean I don't know the insurance and outs of this project, like if there's 00:57:33
sewer needs or storm drain needs. 00:57:38
But in some cases, you know, if the city's saying, hey, we're OK with five mills, we're OK with six mills, that tax rate's already 00:57:43
capped, so you might not care if the developer of the district says. 00:57:48
It's easier from a tax analysis standpoint to pay for the sewer, which frees up our cash to pay for the parking. You probably 00:57:53
don't care so much if they're like let's pay for the storm during let's play for the sewer, let's pay for the water. 00:57:59
If we're still going to build the parking structure with the money, that frees up. 00:58:06
Because it might make our tax analysis easier, like Laura was saying with reserve stalls or. 00:58:10
Things like that. So that's why I've seen a commercial project. There's not quite that component of what are we getting in return 00:58:16
versus a residence not going to be very happy. It's like why do I have an extra tax? And you say do you have roads and sidewalks? 00:58:20
Everybody has roads. 00:58:24
So that's that's the piece I'd say is I don't think that's. 00:58:29
Important factor here, Because they're taxed, they're limited by a tax rate and the maximum amount they're allowed to borrow. 00:58:33
And just to make things clear from the policy sample on this and we're fine. We're going to use this filled parking structures, 00:58:41
that's what we need for. So we're fine limiting this. This is for the parking structure, but Chris is right. 00:58:46
There's still power utilities that go into feed those stacks and so we. 00:58:52
So do you, I mean as part of the process that you basically say? 00:58:57
We think, well this is what we know the parking structure is going to cost and so this is the mill rate we're going to need under 00:59:02
the cap to do it. So that's in the proposal, yes. 00:59:09
Put together a whole take off of everything needed. 00:59:19
So all the costs. 00:59:24
It shows how much we're capped on Bo. 00:59:29
Those I assume are the issues will be discussing. We have to discuss next week in work session after and say OK, we're good with. 00:59:33
We think this is an appropriate mill rate based on the numbers we've seen. 00:59:40
As long as it doesn't see the cap when you're texting yourself. 00:59:45
And you're required to. 00:59:54
On the parking structure legally in this case, right? Why do I care what? 00:59:58
It either come up with new dollars of our money, which is pretty expensive. 01:00:06
It's way way more efficient. 01:00:12
Were there not other things that? 01:00:15
Probably is the parking structure, that's what we're trying to address the other issue and it may not relate as much here, but. 01:00:20
There's a definition in the statute that says it has to be a public. 01:00:31
Doesn't mean. 01:00:34
Publicly dedicated. 01:00:36
So there is some kind of a constraint on what you. 01:00:40
Statutorily. 01:00:44
And then from a policy standpoint, there is. 01:00:45
What you would? 01:00:51
I guess create another governmental entity. 01:00:53
To finance. 01:00:56
And if it's? 01:00:58
You know, we're trying to incentive all in our project. There's a private angle to it. All those things are true. 01:00:59
But you can see a development that would have less. 01:01:06
Public. 01:01:09
Asking for public dollars in the same way. 01:01:10
That public infrastructure requirement I think is. 01:01:14
As you formulate a policy going forward, that's certainly something. 01:01:20
I mean, but I just have to. 01:01:25
I kind of have to defer to staff and council. 01:01:27
On a public hearing on the 15th. And I've never done this before. I don't know. 01:01:31
I mean, I'd love to do it if we can do it. 01:01:38
Open it up if we think we can add together and have a discussion and get a timeline going. I think because of the simplicity of 01:01:41
this project, we can do it. 01:01:45
I would not be surprised if, after hearing on the 15th, we still have substantial questions and lots of things to talk about. 01:01:52
But I think we. 01:01:58
And just so that you guys understand. 01:02:01
The legal process to create a pity, like you mentioned, you know you have created one before, so they're created by resolution, 01:02:04
they're petitioned by the property owner that that's already happened. Have you guys already certified the petition? 01:02:11
Formally. And so I can, I can work with Todd and your city. 01:02:18
We have kind of like a checklist. This is how you certify a petition. 01:02:23
But you know. 01:02:27
Petition in front of the City Council. 01:02:28
Allows you to hold the public. 01:02:31
There's a bunch of statutory requirements for creating any type of district, but where this already is 100% consent requirement. 01:02:33
You basically the statute allows you to waive everything. You know there's a 60 day protest period. 01:02:41
Well, the only people who can protest under that period are property owners. So that's wait, they're not going to say I consent, 01:02:47
but I also protest, right? So. 01:02:50
All that gets skipped. So then it becomes a statutory requirement and it's there's actually a little bit of question of is a 01:02:54
public hearing actually required because. 01:02:58
But we still strongly recommend hold it. There's no harm in holding a public hearing on anything. So you notice it. It's a classic 01:03:03
notice. I think you guys already posted it on the public notice website today or yesterday. 01:03:08
And then once you hold that hearing because all the other wait periods. 01:03:14
Waived by the property and I think that's in their petition as. 01:03:18
It would allow the City Council close the public hearing and if you wanted to, you could immediately consider a resolution to 01:03:21
create. 01:03:25
So if you guys felt that's even a remote possibility, I can work with Todd to prepare a resolution that you guys could have. Or if 01:03:28
you're saying there's no way we're going to consider resolution, no matter. 01:03:33
We keep that off the agenda. You guys just guide us, but that's the ordinary processes. A lot of cities will say work session. 01:03:39
Public hearing and then maybe they approve that night or work session. 01:03:47
Public hearing. 01:03:51
Come back in a week or two and then we approve. So that's the that's the process. 01:03:52
Yeah. And then a work session and then we'll take it from there. 01:03:59
Yeah, and work as quickly as we. But let me not ascend that everybody's OK with this dual track. 01:04:05
Kind of moving on this application and then say we're. 01:04:14
Take a longer period of time to put together more comprehensive policy regarding pits. 01:04:18
Soon would we be able to address that more? 01:04:22
Very soon. We have a draft. Oh, OK, Yeah. OK. So we could get it done in a few months probably. OK. 01:04:27
Yeah. 01:04:38
I know, and then it just. 01:04:42
I mean, there are other potential sites I can think of if they come up for redevelopment. 01:04:44
Yeah, and I think it's gonna be the redevelop. 01:04:55
Capital right now in this market, that doesn't seem very likely without some kind of a special tool, right? And yeah, holiday 01:05:06
crossroads. 01:05:10
For sure. 01:05:15
There is potential. 01:05:17
So probably the less potential because those don't have 100% ownership. 01:05:20
Scenarios right? As clean as that right now, it doesn't. 01:05:24
So public hearing on the 15th. 01:05:30
A blocked out. 01:05:33
Discussion in the work session same night. 01:05:36
OK, and we'll just need to know. 01:05:38
And if it looks good, I mean is that something? 01:05:41
Another round this. 01:05:47
This is a truly significant decision. 01:05:50
In the big picture, for a lot of reasons. 01:05:53
And I would advise you that you not act on the. 01:05:55
I know there is emergency from the developer. 01:06:01
I would be inclined to tell you not. 01:06:08
And that's your normal process. 01:06:13
Yeah. 01:06:15
OK. 01:06:19
Bueno. 01:06:22
Thank you for the direction. Thanks. Thank you. Thank you. 01:06:24
OK. 01:06:33
This is an unbelievable. 01:06:35
Well, we used to do this. We used to do this regularly, but just lately it's been like and it was. 01:06:43
So there's precedent. 01:06:51
Given the parcel involved. 01:06:54
OK. 01:07:03
Yeah, we are. Yes. Thanks so much for coming. 01:07:14
All right. We'll be quick with screen. 01:07:17
So tonight I we just wanted to review really quickly where we're at with the screen lane. 01:07:27
Reuse project. 01:07:33
We are working with a consultant. They're going to be coming to you on February 15th with a more robust discussion. So tonight you 01:07:36
just to let you know kind of where we're at and what to expect in this process. So you all recall that in spring 2023. 01:07:44
Grand School District closed Spring Lane Elementary School. We've been in discussion with officials. 01:07:52
There's an opportunity to develop it as a public park. There's a lease option. 01:07:58
But we need more information, so this process is meant to flush out some of those details. So you'll have that for consideration 01:08:02
as part of your budget cycle this year. 01:08:07
And we'll also have better information as we continue discussions with kind of school district. 01:08:12
So we went through an RFP process, Councilmember Fatheringham and near Delhi, as well as John, Jared and Gina and I served on that 01:08:18
selection committee and we've chosen MHTN as the firm that we're going to work with. 01:08:24
They have a lot of depth in their project team. 01:08:31
And I think it's going to expedite. 01:08:34
Our process, one of the things that they bring to the table, they've already worked with Granite School District on evaluating 01:08:37
their buildings. 01:08:40
So they already have done some work at Springland Elementary School that we can use. 01:08:44
And that I think is what you're going to see on February 15th is some of that initial information. 01:08:49
So as we work through this process, of course we're trying to reimagine the space as a perk. 01:08:54
So we're going to be looking at what do we not have at other parks or what's not planned other parks in the community. So what, 01:09:00
what holes do we have for facilities? We're going to be talking with res. 01:09:06
Property owners that are adjacent, other stakeholders, so we know what their concerns or ideas are. 01:09:12
What they would like to see. 01:09:18
At the. 01:09:20
And then there's a lot of facilities that exist on the park race. We've got the building playground, there's parking. 01:09:21
We want to take a look at that and see do we want to review some of that. 01:09:27
Do you not want to use any of it? Do you want to use a portion of it? So we're going to be evaluating the condition and the 01:09:31
utility of all that going forward. Are we including the entrance and exit? Yes, Access is going to be a big deal. 01:09:38
And that will play into the type of facilities too. We know like just as an example, we know a lot of mines of wanting to do that 01:09:46
would draw a lot of people. So we need to balance that equation. 01:09:52
So those are things that we'll be working with our consulting. 01:09:58
So we have a fairly aggressive project schedule. So Steph, if you go to the next slide, this is a really good graphic that was 01:10:01
part of MH Stan's proposal that just lays out how all these pieces are gonna fit together. So it's really aggressive. We're 01:10:08
starting now and we wanna wrap this up by early June. So you have all the information you need to make budget decisions, so. 01:10:15
This top part kind of summarizes the tasks or the scope of work. 01:10:23
So you can kind of see how this is going to roll out over the next five months? 01:10:28
And then the bars kind of in the middle are the meetings. 01:10:32
So we are going to have a steering committee, so the same group that was on the RFP selection committee, our student committees, 01:10:35
Councilmember Fottingham and Mayor Dally. 01:10:39
John, Terry, Gina and I and. 01:10:44
Will be part of that. We're going to be meeting as a committee and then every other week we'll be meeting as just basically a 01:10:46
staff team. So we're going to be meeting a lot to keep the momentum of this project moving forward. 01:10:52
We're also doing some stakeholder and community outreach. 01:10:58
So there's some more description below that kind of explains some of the public engagement plan Lena is going to be working 01:11:02
closely with their two communication professionals we'll have. 01:11:07
Balanced way of getting the feedback. So right now what we're looking at doing is having more one-on-one meetings with our 01:11:13
stakeholders, but then having some small in person meetings with the adjacent universe. 01:11:20
And then we'll have surveys that the greater. 01:11:26
Community can participate in because we want to hear from everyone and those will happen in a few key points in the process. 01:11:29
So you can kind of see how those are lined up with the tasks. So the green bars up above and then we're going to be coming to you 01:11:35
three times. 01:11:40
During the process on February 15th is kind of our kickoff discussion where MHTN will be here and we'll start to talk about I 01:11:46
think the condition of the building and some other questions just so they have some good direction as we get started. 01:11:52
In May, they're going to be coming back to you. 01:11:59
In between that, you'll hear probably from Gina or I just sharing updates as we're moving through, but in May they'll come back. 01:12:02
With some. 01:12:08
So they'll say, here's what we've learned through our community engagement process. Here's what we've learned from evaluating the 01:12:10
site. Here's some options that might work and fit well together. 01:12:15
And then after you give direction, then we can prepare a final proposal that will come back to you. 01:12:21
For review before it's finalized. 01:12:28
But that's kind of big picture how this is all going to work. 01:12:31
It is going to be pretty fast and. 01:12:34
Segment sounds like a long time, but it's really not a long time. 01:12:37
When we're, you know, doing outreach and also trying to work through these pieces, but we feel like we have a really good. 01:12:40
Firm that we're going to be working with, they. 01:12:47
On the ball they've already given, we've been impressed by the things that they've already thought through. 01:12:49
There are a few steps ahead, which is why we hired them and we want, we need a good partner. So that's kind of the overview and 01:12:56
just what we wanted to share tonight just so when MHTM comes in a couple weeks, we're kind of ready to. 01:13:02
Are there any questions? 01:13:11
Those pieces, one quick question. Remind me, are we dual tracking with granite or are we waiting to kind of take next steps with 01:13:13
granite until we see what comes out of this? 01:13:19
One of our identified stakeholders. 01:13:25
So we're going to be needing one-on-one with them as part of this process. 01:13:28
But I my guess and Gina correct me if I'm wrong, but we. 01:13:31
Will be meeting with them so they know that we're. 01:13:35
This plan, but I think that those conversations may be moving. 01:13:37
Along together but. 01:13:42
The next step in that process needs to be informed by this plan, because right now we don't know. 01:13:44
What we would intend to build, how much it would. 01:13:50
One great thing. 01:13:53
Part of the firms team is Susie Becker from Science. 01:13:56
And she will be able to help us look at the financing and the phasing. 01:14:01
So whatever plan we come up with, it needs to make sense with these terms. 01:14:05
It needs to make sense. 01:14:10
What you're comfortable with financing and how you how you want to implement it if you wanted to proceed. So you'll have all that 01:14:12
information when you go back to granite. 01:14:16
And I think they would appreciate that too because then we'll know exactly what what would work for us and we can have a a more 01:14:21
robust conversation with them. 01:14:24
So the other ones will be speaking with our Impact Soccer. So there's a soccer club that uses the filled space for their club 01:14:30
practice and games. 01:14:35
And there's an agreement with Granite School District existing, so I want to talk to them. 01:14:41
And we also want to talk with the truth of Jesus Christ of Latter Day Saints, because there are access partners. 01:14:46
Or currently have access through a church parking lot into the park. 01:14:51
Area, and we're calling it the park. It's been laying elementary school, so we want to talk to them to understand what they're 01:14:57
comfortable, you know? 01:15:01
Moving forward as far as like access sharing, maybe parking, you know, I think there's a whole host of things we want to talk to 01:15:05
them. 01:15:08
And the MH stand is also identified, like the kind of Country Club, just because they're adjacent. 01:15:12
I think we might be talking with, I would guess we can sell a county parks and rec they've got. 01:15:17
A Regional Park that's just down the road and we don't want to duplicate what they're doing long term at their part. We want to 01:15:23
complement it with other types of facilities. 01:15:27
So is the contract or agreement Impact Soccer a binding agreement that when we take Overland as a property that? 01:15:32
Obligated to. 01:15:42
That's a question that I think is still. 01:15:44
My understanding is that Impact has signed your year by year contracts with the Grant School District. 01:15:48
What we recognize that there's not a lot of other fields for that club to go to. 01:15:56
So I. 01:16:02
It's hard for me to imagine not maintaining some field space for that club if we want to prioritize. 01:16:04
Yeah. I mean, that's a bigger question for me and I understand that that. 01:16:13
The school had to maintain those fields for their own purposes anyway. 01:16:19
But now it's our purpose. 01:16:25
Sure. And if all of a sudden? 01:16:28
That secondary purpose now becomes a primary for us. I'm not interested in that. 01:16:32
As it sounds like with baseball, like softball or t-ball things. 01:16:39
Like that here we have not. 01:16:44
We have, I would say, annual conversations with Malibus baseball. 01:16:49
And less frequent conversations with the football. 01:16:56
Group for the most part, we've just let those groups kind of manage themselves. 01:17:02
What about from a standpoint, what would you foresee like as far as grant money and also mechanics? Seems like they have a lot 01:17:10
more at their disposal. 01:17:15
From a funding perspective and that from projects. 01:17:23
Like this, but would that be more just if it was going to be one of their projects or do they? 01:17:25
Is that where track? 01:17:29
Would be a grant that we would potentially look at. 01:17:31
You know, applying force and finance things here. 01:17:35
Are we thinking that the city is going to finance a lot? 01:17:39
That's there as well. 01:17:43
Yes to all those. 01:17:45
So that will be the funding package that comes at the end of the project is how do we, how do we put this funding together so 01:17:48
we'll have listed resources that this project would be eligible for. 01:17:53
And the timing of those and then there probably will be a delta, I think it will be, I mean this park is twice the size of our 01:17:59
other parks that we own. 01:18:04
So it's gonna. 01:18:09
I think difficult to get all grant money for construction, which is one of the reason we're going to look at phasing because maybe 01:18:11
there's an opportunity. 01:18:15
Pieces fit together. There is another. 01:18:20
County staff rec fund. That would be two years. I'm trying to remember in 2026, OK, so two years. And that's how we find the case. 01:18:23
Yeah. 01:18:32
So there's, I think options and I think this process will be really valuable because we'll understand how that all fits together. 01:18:35
And we'll know what the project cost is too, which is I think a big question. 01:18:42
Did the city have to find as much as? 01:18:47
We didn't. We purchased the. 01:18:50
But the actual construction costs were covered. I think it's like 85% of the construction costs were covered by the grant. 01:18:53
And the great thing about that was that it allowed us to build out that park all at once, as opposed to City Park, which we 01:19:01
phased. 01:19:05
So we did it. 01:19:10
Yeah. 01:19:12
A bad situation. 01:19:17
I was going to use one way less appropriate. 01:19:37
Way better. 01:19:41
I still have a picture of Paul with. 01:19:45
All right. 01:19:50
Let's see, what are we on now? 01:19:54
100, I think, I believe fundraising and then staffing, right? Yeah, And I think mostly they are. 01:19:56
So a year or so ago? 01:20:04
The council authorized A1 year experiment really focusing on. 01:20:07
Raising funds from donors for specific projects. And so based on that direction, we entered into a contract with Pathway 01:20:14
Associates. 01:20:19
And prioritize 2 projects. One was providing lighting for the state. 01:20:23
And then providing matching funding for historic exhibit exper. 01:20:29
Umm We also looked at another number of other projects, including improving some amenities in City Hall Park. 01:20:35
Maybe constructing a new stage for the summer? 01:20:44
So in the report you'll see a summary of funding that we were able to secure through this process. 01:20:48
125,000 in track funding from Salt Lake County. 01:20:55
Which will fund State Park, the lighting and part and then will allow us to replace colors along the trellis with materials that 01:20:59
are. 01:21:05
Susceptible to vandalism? 01:21:12
So you don't see holes in those fillers any longer. 01:21:14
We received $5000 from the Sorenson Foundation for the historic exhibit experience. 01:21:19
And then $20,000 from a private donor to complete funding. 01:21:25
We made application for a bunch of other. 01:21:32
Grants that were not successful. 01:21:38
And we have some that are. 01:21:41
We held a kickoff event for Front Holiday and Pathways also conducted a lot of research into foundations in Holiday. 01:21:44
And met with all of you to identify existing relationships. 01:21:55
We set up a donor platform for to allow people to easily contribute to two different projects and they have had some success with 01:22:02
that donor box. 01:22:08
And now at the end of this year, we wanted to talk to you about. 01:22:16
What direction you wanted to go? 01:22:21
With this this experiment. 01:22:24
Umm, from a staffing perspective, I will say, I think it's fair to say Holly and I were a little surprised at how much time we 01:22:28
ended up spending. 01:22:33
And Holly more than me. 01:22:39
On. 01:22:42
This project. 01:22:44
At times we were spending as much as five hours a week each. 01:22:46
On these types of projects. 01:22:52
One thing I will say is that. 01:22:55
Particularly the track application is something that. 01:22:58
I think we would have done. 01:23:02
Even in absence of this. 01:23:06
So with all of that. 01:23:09
I am looking for direction from the Council. 01:23:13
What how you feel like this year went? Did it meet your expectations when you? 01:23:16
When you decided to try this experiment a year ago, do you want to continue the relationship with Pathways as it exists now? 01:23:23
Or perhaps more narrowly defined, that relationship into something that just provides grant writing and. 01:23:31
Foundation applications that don't need your assistance. 01:23:39
I know in conversations with a couple of you, there was some discomfort with. 01:23:46
Making acts of of your friends and neighbors and. 01:23:53
And my concern also is that it was sold as more of a turnkey package than what it turned out to be. 01:23:59
Particularly in terms of how much you guys had to end up supporting? 01:24:07
Instead of them supporting you. 01:24:11
The total contract was about it was $3000 a month. 01:24:16
The last two months, I believe they did not end up billing us. We didn't enter into a separate. 01:24:21
Contract for some assistance on the brick grant and that was a big heavy lift and we were really grateful for that assistance. 01:24:31
It feels more like instead of having a monthly stipend or actively involved in these. 01:24:39
Projects where they're continually needing city support. 01:24:47
That perhaps contract basis for. 01:24:51
Grant writing. You've got this. I want you to help us write a grant. 01:24:56
Go bring back what you. 01:24:59
What's Your Price? 01:25:01
As opposed to. 01:25:03
Because it seemed like what we set up, which was supposed to be more turnkey, was not. 01:25:05
That's not to say they couldn't be of value, but it doesn't seem like the structure of how our relationship is now. 01:25:11
Providing the ROI we were expecting. 01:25:17
And that maybe it's more. 01:25:20
A. Periodic one off consulting for specific. 01:25:24
Projects like running a brand that offloads you guys instead of unloads. 01:25:27
Yeah, for sure. 01:25:34
Well, you know. 01:25:39
When I look at the numbers up there. 01:25:42
I totally agree. I think we would have got. 01:25:44
Award, anyway. 01:25:47
And the other words. 01:25:49
We're not. I don't know about the sorts. 01:25:51
Over 5000. 01:25:56
But not to drag us up 100% agree with what you said. 01:25:58
Exactly. 01:26:03
Put a grant for the seismic pressure and they help with that. And that did help us a lot. That helped us. That was a huge, huge 01:26:05
help. 01:26:10
But I think, I think if there are people like you mentioned this. 01:26:18
If that's an asset you guys have available, you can pick and choose from and you think that's a value, I think that's great. But I 01:26:25
would totally prefer to staff on this one and say but in terms of going forward with 100% agree with what Paul said. 01:26:32
Yeah. And to be fair, we said that when we approved it. We said, look, we're happy to take a look at it. 01:26:42
Will evaluate in the year and see if there's an ROI and there is. 01:26:50
Right. 01:26:57
Still do still advocate for trying to voluntarily fundraise for. 01:26:58
Amenities to the extent that we're able to, and I hope we'll kind of culturally strive for that. I don't have a problem at all in 01:27:03
asking. 01:27:06
And especially if like the exercise we went through on naming rights and different things like that, I think that was healthy and 01:27:11
beneficial. 01:27:14
And maybe with the spring lane deal, there would be an opportunity to have. 01:27:17
You know, a Miller XYZ or whatever or whatever, right? 01:27:21
But I just. 01:27:25
I definitely prefer to see voluntarily. 01:27:31
And we are trying to incorporate that into some of our thinking about the historic experience. And I think you're right, we'll 01:27:36
have opportunities as well. 01:27:40
I think it's finished kind of a cultural shift. 01:27:45
The staff. 01:27:49
Just thinking about. 01:27:51
What other potential sources there might? 01:27:53
Thank you for that direction. 01:28:00
Oh, it's me again. Sorry I turned into a pumpkin. 01:28:06
So as you know, Diane Brandt, who's been our finance director, passed away recently. 01:28:15
She has been for. 01:28:23
Five years, at least. Been our sole member of the Finance department. 01:28:25
We have maintained in our budget but not filled a part time position. 01:28:31
And my intention, with your permission, is to advertise for the finance Director position beginning tomorrow. 01:28:38
That position is likely to be graded higher than Diane's position was, and partly that's just the needs of the city have changed 01:28:47
over time. 01:28:52
So I'm hoping to have a either a CPA or a certified financial government manager in that role that's going to require. 01:28:57
A higher salary. 01:29:08
However, we have employed a financial consultant with a on contract. 01:29:10
And depending on the qualifications of the person we hire, we might not need to continue that that arrangement in the same way. 01:29:18
So overall, I assume like year over year we're probably looking at a 25 or $30,000 increase in budget. 01:29:26
I think the. 01:29:35
Our resident expectations of both our financial statement presentation of our budget presentation. 01:29:37
Have probably changed to a point where that makes sense. 01:29:43
So just wanted to get your perspective on that before I post the position. Absolutely, because they sort of suffered. We have 01:29:48
suffered where you have suffered. 01:29:54
Would be in all the effort you have to put in the budget prep. 01:30:01
Because that was not in Diane's wheelhouse at all. 01:30:05
And. 01:30:08
And it would be great to have a finance director who could not only. 01:30:09
Deal with, you know, the recording, keeping the books, but also provide that forecasting and budgeting. 01:30:13
That would then freak you. 01:30:20
Your city manager stuff because I. 01:30:22
Season. But you wonder, it takes up a whole bunch of time, right? And it really puts everything else behind the 8 ball when that 01:30:26
just has to be done so to have some expertise. 01:30:32
From the mass direction that can help offload some of that. 01:30:40
Talk about the opportunity. 01:30:43
Perhaps reduce the cost of the outside consult. 01:30:46
That kind of. 01:30:49
We've always been a little bit. 01:30:51
We felt like there's been a redundancy hold there too and I think this is going to be an opportunity for us to at least. 01:30:55
Even like with the preparation of the budget. 01:31:01
You know how to do it. 01:31:05
You get a actual finance director. It provides us some redundancy there, but also we give some redundancy to. 01:31:08
We could bring an apartheid person where they can. 01:31:17
Prostate a little bit to give us a little bit of protection there because we were just exposed with. 01:31:20
So yeah. 01:31:27
I'm guessing so we're talking about. 01:31:31
Replacing with the full time more say more skilled or whatever and a part time because I was worried. 01:31:34
Tolerate I guess doing a lot of the more Monday and grunt work that stuff too, right? And that's exactly what we're hoping 01:31:43
probably a finance coordinator physician who would do payroll and accounts. 01:31:49
Do you think you can get them in in time to help you with this years, But maybe it's going to be tough, I think. 01:31:56
I'm just predict. 01:32:06
Just one quick thing everybody wants to get out of here. 01:32:22
We probably ought to decide on this April 4th date or council. I know we've got. 01:32:25
All of us. 01:32:33
Don't have kids in school anymore, so it's not a big issue, but should we move that day? I mean, are you guys? 01:32:35
What about? 01:32:46
So when we have. 01:32:49
What if we want the 11th and then? 01:32:52
What would it be this 24th? 01:32:57
But then we would do the 25th and then the second, yeah. 01:33:01
Of May the 2nd of May. Oh, we have to accept the yeah. 01:33:04
Push me to studio 11th and the 18th. 01:33:10
I'm out the paint. 01:33:14
25th. 01:33:18
OK then. 01:33:31
And then it's May 2nd. 01:33:35
All right. 01:33:37
OK. All right. I think we're all done, right? 01:33:40
There I move to adjourn. 01:33:45
All in favor. 01:33:48
Thank you and sadly I think the. 01:33:51
Really. 01:33:54
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We usually don't eat your presentations, but since the presenters brought the food. 00:00:00
We're eating it in front of you. 00:00:10
It's just the only spot here. 00:00:17
Stuff. 00:00:22
An ethical problem? 00:00:23
It's under 20. It's under $50. 00:00:26
Like 1,000,000 bucks. 00:00:30
Yeah. 00:00:33
Are we going? 00:00:40
Right. 00:00:42
OK, so we are on the discussion on public infrastructure districts. We've got Laura Lewis here. 00:00:49
Gina's going to do a couple more introductions. 00:00:55
I think I'm OK saying this is a big topic. 00:00:59
A topic that this council is not familiar with. 00:01:04
Other councils have dealt with this sort of thing. I think it's in the packet too who's actually put these in place or some sort 00:01:08
of public assisted financing or partners. 00:01:12
And my fear is that we get too much in the weeds tonight on. I think this could go on for a long time depending on how deep the 00:01:19
discussion was. So I think the intent of. 00:01:24
Presentation is to give the Council. 00:01:31
An idea of what Pids are, what they're for, and just give us a basic understanding without digging in too much of the details. 00:01:35
Regarding the application that's currently been delivered to the city, which I think was last Friday. 00:01:44
And then we'll talk about timelines and whatnot. But we could probably spend a couple of hours on this. This council's very we're 00:01:52
we're not used to working late, so. 00:01:57
Probably try to keep this to that power. 00:02:04
And I know Laura has a heart stopping about 9:00. I love it. 00:02:07
I talk fast. Let me turn it over to Gina for a couple introductions, then we'll just get right into it. 00:02:13
So I think most council members have previously met Laura Lewis and I want to say you're with Lewis Young and that's, that's OK. I 00:02:18
still do the same thing. We're now LARB Public Finance. 00:02:25
And she's accompanied this evening by Aaron Wade, who is with Gilmore Bell and Phil B. 00:02:33
Providing the city some advice on the bond side and. 00:02:41
You may also see his partner Mandy Larson and subsequent discussions. 00:02:47
So I'm looking at my screen. I don't know what you'll be looking at so that I can face you. So someone have to move it along as I. 00:02:58
So the reason for kids is to support economic development in the community. And remember that's a tool that you're providing. 00:03:07
And so it's important, and Gina will talk to you about this later, that you put some guardrails around how you want that tool to 00:03:15
be used. 00:03:20
There are several great options to support development in Utah, and it would take way longer than two hours if we got into all of 00:03:25
those in detail. So this discussion tonight is really intended to. 00:03:31
Focus on just the kids. I can certainly come back whenever you'd like to discuss other stuff and we can. 00:03:38
Over all. 00:03:44
So used correctly they can be beneficial. Tools obviously for the property owner. 00:03:46
As well As for the city. 00:03:51
There's some legislation brewing that, you know, developers may have the ability to just create. 00:03:53
Of their own volition. I don't love that idea, but. 00:04:02
You never know what the legislature will do. 00:04:07
Currently, for a developer to be in a pit, they have to come to a city or county. 00:04:10
To create that fit in their. 00:04:16
And just a very quick reminder, developers want to come to local governments all the time and not all the tools that you can use 00:04:19
for them are financial. 00:04:23
I years ago I attended mutual league of cities and towns and there was. 00:04:28
National presenter they're talking about. 00:04:33
You know, why do developers want to go to cities and if it is a number one thing, was it like straight line permitting process? 00:04:36
And, you know, a lot of times with larger cities. 00:04:43
Really difficult of Salt Lake City. 00:04:47
Might be one of those that is a little bit more challenging. 00:04:51
So they like shovel ready sites like good demographics, you have all of this stuff. So it's great transportation is sometimes. 00:04:56
Transportation accessibility. 00:05:04
About. 00:05:07
My daughter goes to Highland High and driving through Sugarhouse is enough to make me. 00:05:09
So there are a lot of tools that you could use to assist with development your basic financial tools. I mean you can use water 00:05:17
revenue bonds to help it in water infrastructure for development. 00:05:22
That kind of thing. You can use assessment bombs. We're going to focus on kids tonight. You can also use tax increment. There are 00:05:28
a host of other types. 00:05:31
Creative approach. There's a lot of times those tools can be used in conjunction with one another. 00:05:36
This is a picture of I don't know what the Maida Mountain Ski resort will look like when it's done. 00:05:42
And it was the first pit that I worked on and it was kind of interesting because it was a pit that, you know, again used different 00:05:49
tools. The PID was created and then the PID issued assessment on. So you won't be the first one to participate in this. 00:05:57
So it's a special type of limited property tax to support the revenue. 00:06:04
So it is a general obligation like issuance. 00:06:10
That's not voted on by your constituents because they're not impacted 100% of the property owner, two property owners that will 00:06:16
be. 00:06:20
That will pay this tax. Have to agree to it. 00:06:25
100. 00:06:29
So it's not like, you know, you're going to get some speeding constituents in here saying, well, my taxes are being raised. 00:06:30
Until maybe later, right? So 100% of who owns it today? 00:06:39
Has to agree to that tax. 00:06:44
But they're maybe not going to hold on to that property forever, and that's where you as a council needs to, you know, give that 00:06:48
some thought. 00:06:51
I think what is being proposed is not intended to be used for residential. 00:06:55
Property. But if it were, that's what I would say. Your antenna better go up. 00:07:01
Really. Really. 00:07:05
Because it's those future res. 00:07:09
That would, you know, could literally, you know, live across one house, could be across the street in the other house, and they 00:07:11
could be talking that. 00:07:15
You're moving right about taxes, right? And they could say, oh, my taxes are so high. Wait, wait, my taxes aren't that high? 00:07:19
Because. 00:07:28
Right. So that's where. 00:07:31
You know, I think you have to pay very particular attention when it's for commercial. I think that's a little bit easier to, you 00:07:33
know. 00:07:37
Swallowed maybe a spare word that you know those commercial buyers, when you know they really do their due diligence when they're 00:07:42
buying, they would know that in advance. They'll take that into account on the on the purchase price because they know that 00:07:48
product. You know where they're you know future revenue gets sucked away is to pay those taxes. 00:07:54
So pits have only been around, as you can see, for a few years. 00:08:02
City and Counties have the power to. 00:08:07
It becomes a political subdivision. So when you create it, you create it. You put the, you know, guardrails around it, and then. 00:08:10
Wish them well. Hope they do a great job. 00:08:20
So all of the things that you want to see. 00:08:22
Happen or not happen within that pit, you have to set up when you create the pit. 00:08:25
Because after. 00:08:31
You won't have anyone on that pit board. It's usually a developer or two that's on the pit board originally and then then there's 00:08:33
a, you know, eventually. 00:08:37
Cycle where different people within the pit can be on that board. 00:08:42
Created by ordinance. If we did that, then we handed over the counties, actually then. 00:08:47
Built, yes, yeah, because the counties who collects the taxes. 00:08:52
Most publicly owned infrastructure can be included at the creating entities. So you'll be creating entities. So at your discretion 00:09:00
you could say. 00:09:04
You can put anything that the local government can own in that pit, or you can say oh. 00:09:09
You can put in a parking structure. That's what the anticipated for. That's what you can do. 00:09:14
And that's all they'll ever be able to do. 00:09:19
If that's the guardrails that you put around that I know with the exception municipal fire, that's becoming more and more of an 00:09:22
important thing for some cities to finance. 00:09:26
That was stricken out of that years. 00:09:31
It's important to note that projects being funded. 00:09:36
Have to be public, so they have to be owned by a public entity. So if you create it, you have to own it. 00:09:39
Nope. If you create it, can you own it? 00:09:45
If that were the case, if you create the PID and they build, that's not what you're planning on here. You created a PID and they 00:09:49
were going to build. 00:09:53
What's the fire station? 00:10:00
You could own that fire station. The PIT taxes would pay for that fire station, but it would not pay for the O&M. 00:10:03
So you need to think about that. So for a parking structure, again, I don't think the intent here is for the city to own it. The 00:10:11
kid can own it, right? Yeah. So the pig had on it, but it has to be owned by a local government, local government. 00:10:17
Again, you can limit the powers. The tax rate that can be charged by the PIT under state law can be up to a maximum of 15 mills or 00:10:26
1.5%. 00:10:31
And if you look at your tax bill lazy, that would probably make you pass out because in total your property taxes. 00:10:36
Probably the neighborhood 1 to 1 1/4%. 00:10:43
So that's it's a high rate, right. So one of the things that you can do is when you create it, you can restrict that. 00:10:46
Now that stated, yes, it's a very high rate, but again, they can only use that for the debt of the bonds that are issued. 00:10:56
Not for O&M, not to get rich off of it. So you know if once the debt set, if the debt turns out to be $1,000,000 a year, the pay 00:11:05
tax will be put in place to generate. 00:11:11
$1,000,000 a year we've used for development and redevelopment. 00:11:18
The bond issue by a property tax are secured by that new tax. Again, I always think they put on the bond, purchase their hat well. 00:11:26
Well, what would you be? 00:11:35
You'd be getting the tax revenues, but as the bond purchaser, you're taking off all the risk that that development is going to 00:11:37
occur. 00:11:40
100% of that risk falls to the bondholders. 00:11:44
When they're struct. 00:11:48
The good tax while it's on parity with the general property tax revenues. 00:11:51
The general property tax revenues of the rest of the city, or even on that property itself. 00:11:55
Not go to pay the pit bonds. It's just the pit tax. 00:12:01
So let's say if we go back up to my cute picture here. 00:12:06
Let's say this beautiful mountain resort is up there and the bondholders that purchase those bonds. 00:12:10
Expect that to be built can. 00:12:18
Hold a gun to your head. 00:12:21
To build it. 00:12:23
No, they surely can't, right. So they would get property appraisals, they get an independent third party study to come in and say 00:12:25
what's the likelihood of the demand for these units? 00:12:31
And then we say, OK, we take all of those revenue projections, they're here. 00:12:37
We put the dead in, you know, we talked the dead in below that. 00:12:43
With some type of coverage factor. 00:12:47
But if it doesn't occur. 00:12:50
It'll come back to. 00:12:52
They can't go to the pit. 00:12:54
Do something else, give U.S. sales tax because if it doesn't have that ability, so all the risks. 00:12:56
Goes to the purchaser of those bonds. Can I just take one quick thing? So the thing that's really unique about it, Laura mentioned 00:13:02
the limited tax, so you guys might be familiar with general obligation bonds. The example I always give is if you had a city that 00:13:09
had a general obligation block and half of the city burned down, the city would literally have to double the property tax in order 00:13:16
to meet their obligation, right? Unforeseen circumstance doesn't matter, double the tax. 00:13:23
So a PID is similar in that it's a limited general obligation, but it's capped. 00:13:31
So. 00:13:37
The example I gave, if you guys remember, like the Superior wildfires in Colorado. 00:13:38
Two or three years ago, well, I helped on a bond for the Superior Metropolitan District, right, and a big chunk of it burned down 00:13:43
well because the tax rate is capped, even though a good chunk of the district burned. 00:13:49
The mill rate would be raised, but it would hit the cap and you just tell investors sorry, right? You thought you were going to 00:13:56
have 200 houses paying, you have 150, You're going to have a few years of shortfall. But they can't force the district to give up 00:14:02
any other money. They can't force that to raise the rate. They just have to hope that the extra runway the bonds give them at the 00:14:07
end is enough to repay them, and if not, when that. 00:14:13
Clock runs out, they ride it off, you know, tax write off or whatever and they live with their wounds and move on. So it's a 00:14:19
protection for the property owners. The other example would be you expected 200 houses to get built. 00:14:24
10 houses. 00:14:30
And then a huge recession happens. 00:14:32
Those 10 houses aren't going to be. 00:14:35
100 mills, it's still going to be the Max that you put in the governing document. 00:14:38
For the life of the bonds and then eventually the debt will get discharged. So it's a protection for the city and the tax rates 00:14:42
and it's a protection for the future property owners and it's something that the investors just fact. 00:14:48
Decide whether or not to buy the debt. 00:14:55
So high risk. 00:14:57
So these aren't going to be at the same rate that we could do an assessment bond or sales tax bond and they're going to be a lot 00:15:01
higher rate because the risk they're still tax exempt, there's still. 00:15:06
A demand for them in the. 00:15:12
I mean they there are certain things that could make them taxable. Typically they are they are tax. 00:15:16
Parking structure is one of those things that we do have to be careful with the tax exemption because if there's private use. 00:15:22
You can't have private use and private payment and so we have to be very careful with that but. 00:15:28
These guys are very skilled at helping us. 00:15:33
And who's responsible for monitoring that? 00:15:36
The pit, I mean, everything literally falls to the pit once you create it. And if they violate those particular rules, then. 00:15:40
Their bonds get deemed taxable. 00:15:48
And. 00:15:51
Similar to the city they're going to enter into, like a tax covenant. 00:15:55
Agreeing to use the funds in a certain way to use the facilities financed in a certain. 00:15:58
And if they violated that or there was an audit that found that they weren't in compliance? 00:16:03
Probably the lawsuit start and it's not that it I mean we try to plan what we can up front right relative and I just finished a 00:16:10
transaction within a pit but for a parking structure in. 00:16:15
And there. 00:16:21
Discussions ad nauseam with Gilmore, Bell's tax counsel, about. 00:16:23
What stalls are going to be used private? How many can remain public? What does it mean to be public? I mean, are we designated 00:16:29
roughly 20% of the bonds as taxable to give them some flexibility? 00:16:34
You know, they're thinking about having a grocery store in this development. It's like, well, that grocery store is not going to 00:16:40
want. 00:16:43
They're gonna want some designated stalls when you start designating stalls. 00:16:46
It's up. Taxability comes into play, so we can work with it all, but we just need to, you know, build that up front and then they 00:16:50
have to stay within the bands of what we've discussed. 00:16:55
The taxes are collected by the county, if they don't pay it, you know, stays delinquent for five years and the crews interest and 00:17:01
then those two sheriff's sale. 00:17:06
There we go. 00:17:16
So the next creation considerations and you know. 00:17:19
Once you designate the kid or you're giving you more than you may or may not want to know. Once you designate the pit, then again, 00:17:24
you kind of wash your hands of it as long as you say you're the lanes you stay within. 00:17:30
But as you're thinking about those lanes, I thought might be helpful to know some of the things that we think of. 00:17:36
How and what you do when you create it is at your complete discretion. 00:17:43
We talked about how 100% of the property owners that that agreed to. 00:17:47
What kind of infrastructure they can do, that's within your description. You establish the mill rate, you establish the transition 00:17:52
to elective. 00:17:56
You established the PID lifestanes dissolution usually. 00:18:01
We'd like them to go. We can issue bonds, Interstate law up to 40 years because usually we'll issue for 30 years or less. 00:18:07
To help address that problem that Aaron talked about. So if you know, so again, the projections are going to say, OK, here's the 00:18:14
line that we think the revenue is going to go up. We put the debt in here, but then reality comes along and then it goes at this, 00:18:21
right. So there might be some years when there's not enough tax revenue at the 12 mill rate. 00:18:28
So if we structure the bombs for 30 years, what the bondholders do have is. 00:18:35
Well, they weren't paid off, so now we're going to go an extra 313233 years. So we like to make sure that we have some runway at 00:18:40
the end of case. 00:18:44
Quick clarifying, you said before that fintechs can't be used for O&M. 00:18:52
But the item being financed? 00:18:58
Still can be owned by It's still owned by the pit, not necessarily municipality. 00:19:01
So the pit is the responsibility on them. It just can't come from this source. Yeah, what we would usually see, so example in the 00:19:05
parking scenarios or the other example we have is maybe some kids. 00:19:11
Will say please let us own the roads between townhouses that the city is not going to maintain. 00:19:17
Contract with the HOA or you contract with the Commercial Condominium Association. 00:19:23
And they would maintain the parking garage. They would own it, but for all intense purposes. 00:19:29
That association. 00:19:34
Levying against. 00:19:36
Everybody doesn't fall back on the city, doesn't fall back on the city and the city. 00:19:38
Want to put probably in their governing document. 00:19:43
We will not be accepting any parking structures. The big. 00:19:45
Don't ask. 00:19:49
And I guess real quick to add on that line a pig is going to construct and it might be sewer lines, it might be water lines, 00:19:51
roads. 00:19:54
But everything still falls under the jurisdiction of the accepting entity, so it's not as if the pig can say I grant myself the 00:19:58
right to. 00:20:02
You know, build an 18 inch sewer line in the city. You're just going to have to accept it even though you wanted a 12 inch. 00:20:06
It still has to go through all the ordinary planning process. 00:20:11
Planning. You know, engineering space. It doesn't change any of the land use components. It's just a financing tool. 00:20:15
The one thing above the bond debt service cost that can be included in the tax will be to pay for an annual audit and to pay for 00:20:25
legal. 00:20:29
This is oh, on the other side of the freeway, another pit that we refer to as the Golf Equestrian Center. And interestingly, they 00:20:39
built the equestrian center and it burned. 00:20:45
And yeah, and I was like, quit. Do they have insurance? 00:20:51
They have insurance like this. 00:20:56
So again, these are used and this was a more traditional pit in terms of putting in the actual pit tacks, not doing as an 00:20:59
assessment bond. 00:21:03
So the approval and financing considerations, the ultimate property owners will the ultimate property are within the kid. 00:21:07
View the tax applicable to their district as fair and reasonable. 00:21:16
Again with commercial properties. 00:21:20
You know, it's quite a bit easier. I know when this discussion was being had in South Jordan. 00:21:23
What they talked about conceptually, I don't think they've created a pit yet, but what they've talked about conceptually as well. 00:21:29
Because they they may do one that would hit a residential area. 00:21:36
Out in Daybreak where they're, you know, planning to do the baseball stadium and. 00:21:42
And they're thinking of making like a. 00:21:47
Really wide. 00:21:50
City thoroughfare with, you know, between. 00:21:52
Lanes of St. They're going to have pickleball courts or whatever. 00:21:56
They're thinking as well we would we they would feel justified in doing that, putting on residents because it's something above 00:22:00
and beyond what. 00:22:04
People of. 00:22:08
East side of South. 00:22:10
So in their minds, again, you have to think about in terms of would they, you know, will future residents or future future 00:22:12
property owners, you know, consider that good taxes very reasonable. Did they get something for it, right? 00:22:17
I'm assuming that they're imposing a pit tax. 00:22:28
An overlay where they're going to be residences that aren't residents this year. 00:22:32
Yeah, absolutely. Because right now, today, 100% of the property owners, which would be. 00:22:37
So now they buy a home. 00:22:42
That's inside of the pin. 00:22:46
And they have no representation in terms of the pit tax. You got it. 00:22:48
They're buying an encumbered essentially with. Yeah, and. 00:22:55
You know, so the way I do it is, you know, you move into a school district after they held their Geo bond election. 00:23:00
You know, you missed the window to speak and to vote, but I think the important thing like Larson is when the city's creating, 00:23:06
you're super focused on what's the, what's an appropriate tax rate and then secondly, what's the appropriate level of disclosure. 00:23:14
And so I think disclosure is catching up to the statute. 00:23:22
But in a lot of cities, what we're seeing is one that when any kind of a district gets created, you're going to record a plat map 00:23:26
that shows you're in the boundaries of the district. You're going to record the certificate of creation. 00:23:32
The state issues and then most jurisdictions are also requiring a separate notice. That's just kind of a clear one page. 00:23:38
Notice of pid. You're in a pit. It can. 00:23:45
1/2 a mil tax, Which? 00:23:49
$500.00 of taxes per $100,000 of taxable value. 00:23:51
And here's how you can learn more information, right? So those are kind of the things that. 00:23:55
Or either statutory or best practice. 00:24:00
But the other ways that it's catching up is now the standard real estate. 00:24:03
Sellers disclosure form has a section on it that says. 00:24:08
Is this residence within a Public Infrastructure district? 00:24:13
Has the Public Infrastructure District issued tax bonds and what's what's the rate or something like that? So at least there's. 00:24:16
Not everyone's going to pay attention where they should, but at some point you kind of go into the space of. 00:24:24
If you ignore that many things. 00:24:29
It starts to fall more on, you know, buyer beware. 00:24:32
You gotta pay attention to what you're saying. 00:24:35
But they're still going to call the city. 00:24:38
I 100% believe that there's someone going to call the city and say. 00:24:42
For residences, right? 00:24:48
For commercial I think it's a much much easier pay more attention policies. 00:24:51
Absolutely. It immediately affects the market value of the property. 00:24:56
Exactly right. They're typically nominated bonds when they're originally issued because of the risk once. 00:25:02
Development is up and built and gone vertical. Then it's much easier to get those rated because now we know what the tax stream is 00:25:10
going to be. It's not, you know, you're gambling that they're going to come. 00:25:16
Because they're risky. State law does require that these nominated kids bonds get sold to qualified investors or be sold in 00:25:23
$500,000 increments to kind of keep my other hands of Platos and orphans. 00:25:29
The length and maturity. 00:25:37
And again, we talked about 40 years is a preference will 40 years is how we'd like to be able to take good tax. 00:25:40
Bonds will typically be structured less than 40 years, typically around 30. 00:25:48
We can capitalize interest to, you know, give them some runway before those good taxes are due so that there's enough value in 00:25:52
that property to generate the bond. 00:25:57
You'll typically see the bond amortization again. 00:26:04
Structured so that increases overtime because once the you know while the projects being built it will generate some taxes, but 00:26:07
once it's all the way built it will generate more taxes. 00:26:11
Typically have a 10 year call an interesting thing. There is no ability to prepay a pit tax, but there is an assessment bond. So 00:26:16
back to that MIDA example. 00:26:21
We had created the PID and the developer up there said. 00:26:27
I want to be able to prepaid that tax. If you want to sell, right? You want to sell, it doesn't want that tax on there. 00:26:31
So that he can get a higher value, we said. 00:26:38
Yeah. Then you don't want to do kids. I mean, if someone calls you and said I want to prepay my property taxes for five years. 00:26:40
I just can't do it right. I mean, we don't know what the future is going to be, so. 00:26:47
In that instance, we created the PID, but then the PID as that governmental entity issued assessment. 00:26:53
Well, they could pay it all off. They could pay 100% of it all. 00:26:59
But let's say that you end up with, you know, this commercial area gets subdivided into three commercial condominiums. 00:27:05
Right then, Condominium A can't pay their piece off and 100% of the debt has to get paid off. 00:27:12
So a follow up just based on the legislation that's pending, which is actually. 00:27:19
Assuming that prepayment could. 00:27:25
For. 00:27:28
I know this issue was raised. 00:27:32
That was completely opposite because there was an LPC last week and it was all based on as the as the subdivision plots get sold, 00:27:36
it pays off the piece of the debt. 00:27:41
For that piece goes away. Are you talking about the Ifes? Yeah. So the difference there is those districts are only able to levy 00:27:47
taxes for administration expenses, so the audit. 00:27:53
Hiring accountant, hiring an attorney and they're actually issuing special assessment bonds, not property tax bonds. So with the 00:27:59
special assessment what you do is you figure out a method and you say, OK, for every acre we're putting 100,000 assessment, your 00:28:04
quarter acre lot 25,000. 00:28:09
And then they know exactly how much each piece of ground owns. I bought my house. Here's 25,000 lien goes away. 00:28:14
So it is a different structure. 00:28:21
I assume you a great great visual earlier. This is that on a piece of paper with some. 00:28:27
You know, the tax rate. 00:28:33
Revenues are set to be higher than the debt service coverage we anticipate. 00:28:35
Obligation of a potential risk to the city. If it's created, you're obligated to create it correctly. 00:28:41
Your obligations are limited to ongoing maintenance of whatever public projects were funded with a bid that you take ownership of. 00:28:48
I should have added that. 00:28:51
In this instance, with your partner structure, you don't intend to take ownership of it. 00:28:55
There is no obligation to repay the debt issued by the pit. It doesn't show up on your books, ever, no matter what they do. 00:29:01
The risks are basically related to future political risks of you know what? What? 00:29:09
Those proper? 00:29:15
Think or do or how mad will they be in 10 years? Or five years or? 00:29:17
So that's really the risk. 00:29:22
In the city's perspective. 00:29:25
Can you clear? 00:29:27
Back a little bit, but you said. 00:29:29
Kid owns the asset. 00:29:32
It hugs into the impression that the city had. 00:29:35
At the end, at the end of the process or the presentation we saw. 00:29:39
Presumed that once the debt was paid off. 00:29:44
That ownership had to transfer to the city in order to tax, in order the bonds to remain tax free and then we could sell it back. 00:29:47
And it had to be a fair market value. It couldn't be in a bus. That was something in that state presentation. 00:29:56
So I think it's a little bit of each, so that the thing would be that the pigs are designed that when their purpose is fulfilled, 00:30:01
which is usually pay off your debt, then the pit would. 00:30:06
You know, if the city was saying, look, if you want your pick to continue to own the parking garage and stick around. 00:30:12
We're not worried about you could allow it. 00:30:17
Continue on, but it could. At the point that the bonds are discharged, all of the tax covenants and stipulations go away. 00:30:20
So you could have at that point in. 00:30:29
Some kind of a finding basically, where you would say. 00:30:32
In consideration for you guys having operated and maintained this parking garage for the last 30 years, rebuilt at a time or two. 00:30:35
We're just going to go ahead and feed it to the condo association. 00:30:42
You know, they're they're taking care of it. You could do something like that, but what you couldn't do is you couldn't promise 00:30:46
today to sell it to the condo association for a dollar, right? So you could do a fair market, but there's the ability. 00:30:52
Factoring who's been paying to upkeep the thing, yeah, so that was fair. But that was the weird thing about that state president. 00:30:59
They wouldn't have to go. It sort of led the presentation, led me to believe. 00:31:05
Not that that's what I wanted, but that in order for the bonds to remain tax free at the end, the asset had to transfer the city 00:31:11
in order to maintain. 00:31:16
The tax free status of bonds over there. 00:31:22
Yeah, and then? 00:31:25
And also. 00:31:26
You couldn't sell it for a buck, you had to sell it back, for if you were going to sell it back, it had to be for fair market 00:31:28
value in order to retain that. 00:31:32
That tax recess? Now that's wrong. That's fine. 00:31:36
You can give consideration for things like that. 00:31:46
But the very critical thing is you cannot make any agreement to do that. 00:31:51
Yeah, yeah. And one way that we kind of commonly overcome this is you'd be saying, OK, we have a 20 or a 30 year bond. 00:31:57
But maybe you have some kind of? 00:32:05
A50 year. 00:32:08
So that if you get to the end you don't have maybe like. 00:32:10
An angry HOA that's trying to stick it back to the, you know, we're not going to sell this part. You can't have any parking unless 00:32:14
you pay US $20 million. It's like, OK, then we'll just continue to use our lease for 20 more years. And at that point, it's 00:32:18
probably a little bit. 00:32:23
Of an easier negotiation. 00:32:27
So it would probably be with the PID to the. 00:32:31
To the condo association or whoever. 00:32:35
OK, so we're talking about a parking structure here, yeah. 00:32:38
So right, that's what we're talking about. 00:32:42
So who owns the parking structure when it's built? The. 00:32:44
In this case, it would be the city could choose to do that, No, because that's what I was always under the impression of. And was 00:32:48
I never? 00:32:52
Well. 00:32:57
You would not. I would agree you would not want it. 00:33:00
And so for me this is an important clarification tonight because my understanding before was kind of similar to where I think 00:33:04
mayor is was of the city in order to provide a tax exempt bonds that the city needed to own. But if the pig qualifies any 00:33:11
governmental entity, that's great. So that's a better solution. 00:33:19
And so you're really talking about at the end? 00:33:27
At the end of the bond Finan. 00:33:31
The pit is basically negotiating back with the developer that. 00:33:33
It's not the city, which, yeah, you're good by me, yeah. 00:33:38
I'm better with. 00:33:42
So another question I have, just a quick question. 00:33:44
I haven't seen how the kids are created. 00:33:48
And I. 00:33:50
I could operate in the subset, it's just going to be the parking structure. 00:33:52
Going to be considered as part of the pit financing. 00:33:57
And that all. 00:34:01
Future residential units will not be part of that. 00:34:04
Commercial issue for us because that other stuff was. 00:34:13