HomeMy WebLinkAboutResolution No. R2023-20RESOLUTION NO. R2023-20
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD,
TEXAS, ADOPTING THE CITY OF FRIENDSWOOD'S PUBLIC IMPROVEMENT
DISTRICT POLICY; AND PROVIDING FOR AN EFFECTIVE DATE.
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WHEREAS, public improvement districts ("PIDs") can provide funding for supplemental services
and improvements that meet the needs of the community, that could not otherwise be constructed or
provided; and
WHEREAS, such supplemental services and improvements may include, but not be limited to,
landscaping, construction of sidewalks or roads, security, street lighting, and water facilities; and
WHEREAS, the City Council desires to consider PIDs that are designed to create sustainable
developments with a higher level of public improvements and that are self-supporting and do not place an
undue administrative burden on the City nor involve extensive management or oversight by the City for
their daily activities; and
WHEREAS, City Council desires to adopt a policy to provide guidance to developers and City
Staff in the establishment and use of PIDs within the corporate limits of the City of Friendswood, including,
but not limited to, parameters for petitions, costs, financing, disclosures, plans of services, budgets and
assessments; NOW THEREFORE,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FRIENDSWOOD, STATE OF
TEXAS:
Section 1. That the facts and matters set forth in the recitals of this resolution are hereby found
to be true and correct.
Section 2. That the City Council of the City of Friendswood hereby adopts the City of
Friendswood Public Improvement District Policy, which is attached hereto as Exhibit "A" and incorporated
herein for all intents and purposes. Until the PID Application Review Fee referenced in Section 4.0l .b of
such policy is included in Appendix D of the Friendswood City Code, the City Council sets such fee at
TWO THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($2,500.00).
Section 3. That this resolution shall be effective immediately from and after its passage and
approval by the City Council of the City of Friendswood.
PASSED, APPROVED and ADOPTED by the affirmative vote of the City Council of the City of
Friendswood on this the 281 day of August, 2023.
i
d of F
L TICIA BRYSCH, City c etary U _- O
APPROVED AS TO FORM:
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OF TEMP
L. HORNER, City Attorney
HACity Council\Resolutions\2023\08-28-2023\Resolution -PID Policies.docx
Exhibit "A"
CITY OF FRIENDSWOOD PUBLIC IMPROVEMENT
DISTRICT POLICY
Purpose and Intent
The purpose and intent of this Public Improvement District Policy (the "Policy") is to
provide the policy parameters for establishment and use of Public Improvement Districts
("PIDs") within the City of Friendswood and to outline the issues to be addressed before
the City Council can support the establishment of a PID. The City Council supports the use
of PIDs to create sustainable developments with a higher level of public improvements
than exists in a development that meets the City's minimum standards. PIDs are a viable
alternative for construction of enhanced public open space and maintenance of enhanced
public parks and trails. PIDs should be self-supporting, should not place an undue
administrative burden on the City nor involve extensive management or oversight by the
City for their daily activities. This Policy is intended to provide guidance to developers and
City Staff in the creation of a PID and outline pertinent matters, including, but not limited
to, petition requirements, qualified costs, financing criteria, information disclosures to
property owners, and the determination of annual plans of services, budgets and
assessments. The City Council shall have the authority to establish PIDs that vary from this
Policy as long as they are in accordance with State law.
2. PID Objectives and Criteria
2.01 Objectives Specified
The Texas Local Government Code allows for PID funds to be used in the
construction of roadways, water, wastewater, drainage, landscaping, parks, and
expenses incurred in the establishment, administration and operation of the PID.
Generally, PID consideration may be granted for projects that achieve some or all
of the following objectives:
Generate economic and superior development benefits to the City beyond
what normal development would generate and must be self-sufficient and
not adversely impact the ordinary service delivery of the City;
b. Provide for improvements in the public right of way (e.g., entryways,
landscaping, fountains, specialty lighting, art, decorative and landscaped
streets and sidewalks, bike lanes, multi -use trails, signage, etc.);
Meet community needs (e.g., enhanced drainage improvements, parks and
off-street public parking facilities, pedestrian connectivity, water and
wastewater on or off -site improvements) including without limitation
development's pro-rata share of the regional facilities and services;
d. Meet or preferably enhance the City of Friendswood's comprehensive plan
and master plans, including its water, wastewater, drainage, roadway,
transportation, and capital improvement plans;
PID Policy, Page 1
C. Advance the City's parks master plan, including providing enhanced parks,
trails, open space and recreational amenities that are available to the
public;
f. Exceed the development requirements in the City, including, but not
limited to, enhanced architectural design standards, building standards,
building materials, amenities, landscaping, and design of lots or buildings;
g. Are of mixed residential and commercial use;
h. Accomplish a particular housing objective or goal established by City
Council;
i. Are master -planned residential communities with active homeowners'
associations;
j. Will generate greater economic development benefits to the City beyond
the project; and/or
k. Provide enhanced aesthetic features (e.g., entryways, landscaping,
fountains, specialty lighting, art, decorative and landscaped streets and
sidewalks, bike lanes, multi -use trails, signage).
2.02 Other Objectives and Waivers
The City Council reserves the right, on a case -by -case basis, to consider other
projects that may be different from those listed in Section 2.01 in accordance with
the applicable State law and to waive specific requirements listed in this Policy.
Such waived requirements shall be noted in the approval of any petition together
with a finding that the deviation from the Policy is in the best interest of the City.
Additionally, the City Council maintains discretion to approve or disapprove the
creation of the PID.
2.03 General Criteria
a. PIDs must be established carefully and only when related to a public
purpose to avoid a proliferation of special districts.
b. PIDs must be self-sufficient and not require the City to incur any costs
associated with the formation of the PID, bond issuance costs, PID
administration or the construction or maintenance of RID improvements.
C. Priority will be given to PID improvements that meet the greatest number
of objectives as specified in this Policy and that meet specific community
needs.
PID Policy, Page 2
d. No PIDs will be allowed to be created that overlap the boundaries of another
PID, unless authorized by City Council.
e. All PIDs must be located within the City limits.
3. Process
3.01 Process Established
Generally, the City will follow the process below for consideration of PIDs:
a. Applicant shall submit a completed PID petition, application, and supporting
documentation.
b. Applicant shall pay a non-refundable PID Application Review Fee.
C. The City will review the petition and application for compliance with statutory
PID petition requirements and requirements set forth in this Policy.
d. Upon the City's approval of compliance with this Policy, City Council may
accept the PID petition.
e. If accepted, the City and applicant shall execute a professional services
reimbursement agreement.
f. The City and applicant shall execute a Development Agreement.
g. The City Council may create PID.
h. City and applicant shall work together to complete the required steps as set
forth in Chapter 372 of the Texas Local Government Code and all steps and
procedures set forth in this Policy to create the PID.
3.02 Development Agreement as Prerequisite
The City Council will not take any action to commence the creation of a PID prior to
the approval of a final development agreement governing the development in question.
3.03 Discretionary
Completion of any individual step in the PID creation process is not a guarantee of PID
approval. Creation of a PID is a discretionary action of City Council.
4. Application Requirements
4.01 Minimum Requirements
In agreeing to consider a petition for creation of a PID, the City will require the
following from the applicant at the time the petition is submitted. These requirements
PID Policy, Page 3
reflect the minimum requirements and the City, at its discretion, may require additional
items:
a. A completed PID petition in compliance with Section 5;
b. Payment to the City of a non-refundable PID Application Review Fee in the
amount adopted in Appendix D of the Friendswood City Code, which is
designed to cover all administrative or operational costs incurred by the City
during the review period and beginning stages of the PID process until the
escrow account is established pursuant to the Professional Services Agreement;
C. A PID application packet, which shall include:
(1) A completed City of Friendswood PID Application Form;
(2) Letter from developer requesting consideration of a PID and containing
(a) summary of the special benefits to be received by the
development; and
(b) the benefit of the PID to the affected property owners and to
the City;
(3) Evidence that the developer has the expertise, experience, necessary
capital, and financial capability, solvency, and backing to complete the
new development to be supported by the PID financing;
(4) A site plan or general plan of development that outlines, at a minimum,
land use and thoroughfare connections and is consistent with the City's
Comprehensive Plan, Strategic Plan, and all other City plans formally
approved by City Council, as amended;
(5) Identification of how the project will contribute to funding the
expansion of arterial and connector streets, major collector roadways
or highways, and trunk line utility infrastructure, as applicable, when
necessary to address the projected demand for services and the impacts
of the development;
(6) Identification of all project expenses and costs, including acquisition,
construction, and any applicable long-term management cost;
(7) Sources and uses budget and project pro forma detailing projected cash
flows over the life of the proposed PID including other public sources,
private financing, and developer equity contribution to the project;
(8) Demonstration of previous experience developing similar scale and
types of projects;
(9) Demonstration the proposed development is consistent with the zoning
of the property; and
PID Policy, Page 4
Zoning for the proposed development must be in place
prior to PID creation or concurrent with PID creation,
at the discretion of the City.
(10) Indication of the estimated costs of proposed improvements, maximum
assessment, maximum bond issuance, and maximum tax equivalent
rate (in dollars, $);
(11) Description of all City -owned land within the PID as well as its share
of the project costs;
(12) a current tax roll of owners in the PID; and
(13) Any plan for phasing both real estate development supported by the
PID and construction of public improvements in the PID, including a
breakdown between major improvements serving large areas of the
entire PID versus phase -specific improvements as well as a list of
improvements that the developer and/or homeowners' association will
maintain.
5. Petition Requirements
5.01 Compliance with Law
Petitions for creating a PID must satisfy all requirements under Chapter 372 of the
Texas Local Government Code and other applicable law.
5.02 Petition Contents
a. Map of the area, a legal description of the boundaries of the PID for the
legal notices and a "commonly known" description of the area to be
included in the PID.
b. Identification of the benefit of the PID to the affected property owners and
to the City as a whole (i.e., public purpose).
C. Statement that the petitioners understand that the improvements assessed
for, the amount of the assessments and any annual budget for the PID is
subject to review by City staff with final approval by the City Council.
5.03 Signature Requirements
a. Signatures and Verifying Information
Signatures on the PID petition will include the signature of the owner, the
owner's printed name, the address of the property, the GCAD/HCAD
PID Policy, Page 5
account number of the property and any other information deemed
appropriate by the City.
b. Date of Signatures
Signatures for PID petitions must be gathered not more than three (3)
months preceding submittal of the PID Application.
Methods to Obtain Si agn tures
PID petition signatures should reflect that a reasonable attempt was made
to obtain the full support of the PID by the majority of the property owners
located within the proposed PID. Such petition shall also explain the
methods used to obtain support of the PID. Priority will be given to PIDs
with the support of 100% of the landowners within a PID.
6. Professional Services Reimbursement Agreement & Deposit
6.01 Agreement
If, during the initial review of the application, the City determines that it will
proceed to pursue creation of a PID, or the City determines it is in its best interest
to establish a PID, a professional services reimbursement agreement will be entered
into with the applicant. The professional services reimbursement agreement will
require the applicant to deposit funds with the City to pay for City staff time, third -
party consultants, including but not limited to, legal study analysts, City Attorney,
bond counsel, financial advisors, PID consultants/administrators, trustees,
underwriters, appraisers, and market study analysts. The payment of such fees is
not a guarantee that the City will approve the PID. The costs a petitioner will pay
include, but are not limited to:
a reviewing the PID petition and application;
h publishing required legal notices;
C. preparation and review of creation proceedings and levy of assessments;
d cost of the appraisal and reviewing the appraisal, the feasibility study, and
engineering report including the cost of services provided by City
consultants, attorneys, bond counsel, financial advisors and PID consultants
or administrators;
e. preparation of the initial Service and Assessment Plan ("SAP") by a third
party PID Administration Firm or PID Consultant engaged by the City
based upon an engineer's opinion of probable cost of the public
improvements to construct and complete the project and with parameters
based upon the City's direction regarding the amount to be reimbursed
relative to the type of the PID, the Policy objectives, and the
recommendation of the City's consultants;
PID Policy, Page 6
£ review and approval of plans for and inspection of construction of PH)
improvements; not including fees paid for review and inspection required
by the City's Code of Ordinances, as amended; and
g procurement of contracts for PID administration and operation or other
similar matters.
6.02 Deposit
The initial deposit made by the applicant shall be $50,000. The applicant is required
to make an additional $25,000 deposit anytime the deposit balance reaches $10,000.
Certain unused balances will be returned to the applicant. The applicant may be
eligible to be reimbursed these costs through bond proceeds or PID assessments as
applicable. The PID deposits are in addition to administrative costs associated with
the PID, the cost of bond issuance, and the RID application fee.
7. Development Agreement
7.01 Development Agreement as a Prerequisite
The City Council will not take any action to commence the creation of a PID prior to
the approval of a final development agreement governing the proposed development.
7.02 Necessary Information
The following shall be required prior to the preparation of a development
agreement:
a. The basic terms and conditions of the creation of the PID, including the
provision of special conferred benefit;
b. Contingency plan to address the maintenance or disposition of PID
improvements and or property that has not been dedicated to the public if a
PID is dissolved.
Specified assurances to the City that the construction of improvements in
the public right-of-way will be maintained by the HOA and in no way
obligates the City to future maintenance or operational costs, unless
otherwise stated in a subsequent agreement.
8. Miscellaneous
8.01 Plan and Construction Approvals
a. Plan Approval
Plans for the proposed development shall be prepared and reviewed by the City
in compliance with the City's development ordinances regarding land use,
development, infrastructure design, permitting, and inspections. Applicants
shall seek City development approvals prior to the commencement of any
construction.
PID Policy, Page 7
b. Construction Approval
All construction of improvements is subject to the City's review and approval
and if applicable, provisions shall be made for dedication to the City or to
another appropriate governmental entity, as authorized by law.
8.02 Certain Property in the PH)
Property in the PID owned by the City shall not be subject to PID assessments.
Property in the PID owned by another governmental entity may be assessed only
pursuant to an interlocal agreement between the entity and the City, or alternately, must
be prepaid by the Developer if an interlocal agreement cannot be finalized.
8.03 Ineli ib�provements
The PID may not finance improvements or services that would not be accessible to the
general public. Additionally, the following are expressly ineligible for funding and/or
reimbursement by the PID:
a. Swimming pools;
b. Perimeter fencing;
Retention/detention ponds;
d. Acquisition, construction, improvement or maintenance of privately owned
roads, facilities or land; and
Any trails, parks, streets or other public amenities that are located within a
gated community or otherwise inaccessible location to the general public.
8.04 PID Reimbursable Costs
a. The City's ongoing administrative and operational costs related to an approved
PID, such as collection of PID assessments, review and approval of Service
and Assessment Plan updates, and other costs shall be reimbursed from PID
assessments. The City's costs will be determined on an annual basis.
b. Administration and management of ongoing PID responsibilities, such as
preparations and updating of the Service and Assessment Plan, issuance of
notices for annual City Council action on the Service and Assessment Plan,
operation and maintenance of PID improvements, and other related matters
shall be paid by PID assessments and performed by a third -party firm under
contract with the City.
8.05 Developer Reimbursement
a The developer will submit expenses for reimbursements in accordance with the
requirements of the applicable financing agreement and bond documents.
PID Policy, Page 8
b. The City's appointed designee(s) will verify the eligibility and validity of such
reimbursement requests in accordance with the applicable agreements and/or
PID documents.
c. Once expenses have been verified, payment will be processed within the
timeframe stipulated in the applicable agreements and/or PID documents.
8.06 Default
In the event of default by the developer under the terms of any agreement between the
developer and the City relating to the PID, or the property within the PID, the City
shall, after providing notice and an opportunity to cure, have the right to capture
reimbursements to complete development of public infrastructure, and/or terminate its
obligations to the developer.
9. Assessments
9.01 Assessment Term
The maximum term of a PID assessment is not to exceed 30 years and the assessment
term must equal the bond term (if applicable).
9.02 Collection
Prior to the levy of assessments, the City will enter into an agreement with Galveston
or Harris County, as appropriate, to include the annual PID installments on the
Galveston/Harris County Tax Bill.
10. Special Assessment Revenue Bond Issuance (PID Bonds) Limitations
10.01 Permissible Use of PID Bonds
The City may issue PID Bonds solely for the purposes of acquiring, reimbursing or
constructing authorized improvements. The developer may request issuance of PID
Bonds by filing with the City a list of the authorized improvements to be funded with
the PID Bonds and the estimated costs of such authorized improvements pursuant to
an engineer's estimate of probable costs. The developer acknowledges that the
mandatory PID Professional Service Reimbursement Agreement obligates the
developer to fund the costs of the City's professionals relating to the preparation for
and issuance of PID Bonds, which amount shall be considered a cost payable from such
PID Bonds.
10.02 Performance Standards for PID Bonds
The following performance standards shall apply to PID bonds:
a To receive consideration by and approval from the City for PID financing
through a bond to facilitate a residential development, the proposed boundaries
of the development shall be no less than 50 acres;
h Minimum appraised value to lien ratio of 3:1 based upon third -party appraisals
approved by the City;
PID Policy, Page 9
c. Maximum of two years capitalized interest for each bond issuance;
d No annual assessment increases of principal once assessments are levied.
Assessments for future phases will remain competitive with original phases and
lot types as defined in the SAP;
e The developer is required to demonstrate committed capital in the form of cash
deposit, to the City with an amount confirmed by an engineer's opinion of
probable cost, which represents the difference between budgeted cost to
complete the public improvements assumed to be complete in the appraisal and
the net proceeds of the PID bonds. The form of acceptable committed capital
(cash deposit) will be determined by the City (in consultation with its financial
advisors, consultants and participating underwriters) on a case -by -case basis.
10.03 Considerations and Limitations
The following additional considerations and limitations will apply when a developer
requests PID bonds:
a A developer or landowner may request the issuance of PID bonds to reimburse
the costs of public improvements upon completion, all subject to compliance
with this Policy and pursuant to the terms of the development agreement.
b. No general obligation bonds or certificates of obligations will be utilized by
the City to directly or indirectly pay, or guarantee payment of, PID bonds.
c. If in any calendar year the City issues bonds that would constitute a bank
qualified debt issuance but for the issuance of the PID bonds, then the
developer shall pay to the City a fee to compensate the City for the interest
savings the City would have achieved had the debt issued by the City been bank
qualified provided that all other developers or owners benefitting from the City
issuing debt are similarly burdened with an obligation to compensate the City.
d All initial and subsequent PID bond issues, if any, will be subject to approval
by the City Council.
e. If the City Council authorizes the issuance of PID bonds, the City shall issue
all such PID bonds in accordance with the protocols and procedures adhered
to by the City's Director of Administrative Services for issuing long-term
debt instruments including tax notes and bonds.
The City shall not be obligated to provide any funds for any improvement
except from the proceeds of the PID bonds and PID assessments.
g Each PID bond indenture will clearly state that all debt service payments for
the PID bonds shall be payable solely from and secured by the pledged
assessments levied against properties within the PID or funds held under a bond
indenture for such purposes, and that the City will have no obligation to make
debt service payments for the PID bonds from any other sources.
PID Policy, Page 10
h A PID will be responsible for payment of all the City's reasonable and
customary costs and expenses including the cost of any appraisal.
Any new money PID bonds issued will include a Reserve Fund in an amount
to be determined.
Pursuant to the PID Act, the interest rate for assessments may exceed the
interest rate of the bonds by no more than one half of one percent (0.50%).
k All developers and significant landowners will provide any required continuing
disclosure obligations associated with the issuance of PID bonds as required
under the respective bond indenture or any other regulatory agreement or
regulatory agency. Failure to abide by continuing disclosure requirements may
limit access to proceeds and/or future bond issues.
The developer is required to deposit cash with the City, or a bond trustee on or
prior to the sale date of the PID bonds in an amount confirmed by an engineer's
estimate of probable cost, which represents the difference between the
budgeted cost to complete the public improvements assumed to be complete in
the appraisal and the net proceeds of the PID bonds.
10.04 Expenditure of PID Bond Proceeds
The City will use PID bond proceeds only to pay or reimburse the cost of PID
improvements that have been designed and constructed to the applicable standards, and
accepted for maintenance, or otherwise approved by the governmental entity
responsible for them.
11. Disclosures
11.01 General Requirements
A notice and the assessment ordinance must be recorded in the official public records
of the county in which the PID is located, which, among other things, will notify any
prospective owner of the existence or proposal of assessments on the property. All
closing statements and sales contracts for lots must specify who is responsible for
payment of any existing assessment, or a pro rata share thereof. Any applicable
proration of assessments at land sale closing shall be the responsibility of the buyer and
the seller.
11.02 Disclosures to Homeowners
To satisfy disclosure to homeowners, the City will require the petitioner to comply with
the following:
Landowner Consent or Agreement to be recorded in the Official Public
Records of Galveston or Harris County, as appropriate;
b. Signage and information flyers in any sales centers within the PID in
accordance with the PID Act;
PID Policy, Page 11
C. Disclosure documents in accordance with Section 5.014 of the Texas Property
Code to be signed both at contract signing and at closing with such agreements
maintained on file by each homebuilder and available for inspection by the
City; and
d. The developer's contracts with homebuilders must require the homebuilder to
disclose the PID on any MLS listing.
12. PID Creation. Administration. and Management
12.01 City Consultants
a. Selection
The City will independently select a Bond Counsel, Financial Advisor, PID
Administrator, Trustee and Market Study Analyst. With input by the developer,
the City will select an Underwriter and Appraiser. The City's PID
Administrator, in conjunction with the developer's PID Consultant, will draft
the Service and Assessment Plan and prepare all annual updates.
b. PID Administrator
The City will contract with an outside consultant to administer the PID and to
bill, collect, and track PID assessments, subject to appropriate oversight by
City staff and in compliance with the Act, as amended. This cost will be
considered a reimbursable project cost and shall be included in the PID Service
and Assessment Plan.
12.02 Authorily
a. This Policy does not bind the City Council to approve, authorize or create a
PID or take any related action. PID creation, PID bond issuance and all related
matters are legislative acts solely with the discretion of the City Council.
b. Any requests for adjustments, exceptions, or waivers to this Policy must be
reviewed and approved by the City Council of the City of Friendswood.
No public official or employee shall be personally responsible for any liability
arising under or growing out of any approved PID. Any obligation or liability
of the developer whatsoever that may arise at any time under the approved PID
or any obligation or liability which may be incurred by the developer pursuant
to any other instrument, transaction or undertaking as a result of the PID shall
be satisfied out of the assets of the developer only and the City shall have no
liability.
HACity CouncilToliciesTublic Improvement District Policy\PID Policy - Final.docx
PID Policy, Page 12