City Council - Special Meeting

[Music] [Music] All right. Good afternoon. I'm going to call this uh special meeting four o'clock special meeting to order. Madame clerk, would you please call role?

Council member Dinus here. Council member Dedric here. Council member Temple, acting mayor Carwin here. And Mayor Estrada is absent. Thank you. Uh Council Member Dinus, would you please lead us in the flag salute? Ready, begin. I pledge allegiance to the flag of the United States of America and to the for which it stands, one nation under God, indivisible, with liberty and justice for all.

You haven't lost your touch. All right, we've got uh one discussion item on our special agenda today, a public safety services community facilities district. Um, Director Hickey, would you please introduce the item? Okay. Uh, good afternoon, acting mayor, members of the city council, city staff. I'm Travis Hiki, CFO of the city, and it's my pleasure to be here today to present the first portion of the workshop for the consideration of a public safety community uh, facilities district or CFD. I would like to thank the executive office including the city manager for their time and leadership in the overall direction of this project. I also want to thank Spicer Consulting Group, deputy finance director Margarita Cornnejo and financial analyst Lori Lockwood for their tremendous efforts to bring this all together. Do we have the slides available? Okay. Uh so in every uh project or program the city initiates, the foundation starts with the five strategic goals and priorities of our strategic plan. The proposal for the public safety CFD really revolves around the goals and priorities of the thriving economy and the safe and safe and vibrant community. Overriding principles of the thriving economy involve planning for long-term sustainability and diversifying the city's revenue sources for the safe and vibrant community. This involves maintaining the city as one of the safest cities where residents and

visitors are secure in their neighborhoods and surrounding spaces. So before we look closer at these priorities, I wanted to go back to some information that we provided to the city council a month ago at the joint meeting with the planning commission provided on December 17th of last year. I know the slides are a little bit small, but we just it's just more kind of for context and a reminder of what we talked about. Here we see some of the slides from the presentation provided by Urban 3 as part of their revenue per acre analysis. In the upper left, we see the graphical representation of the city's general fund and quality of life budgets totaling hund00 million. On the left side in green, we see the various revenue streams with the two largest unrestricted sources being sales tax and property taxes totaling 15 $59 million. Another $31 million is generated from licenses, permits, and fees where much of that is charges for services and covers the cost of those services. So, the vast majority of funding to pay for things like public safety comes largely from sales tax and property tax. On the right side in red, we see the expenditures with public safety accounting for $56 million or nearly all of the property tax and sales tax. In that upper right quadrant, we see an analysis analysis of the impact that Prop 13 has on the value of property taxes in California. Prop 13 protects homeowners from property taxes not escalating more than 2% per year. However, that's regardless of how the cost of city services increases. Property tax values are reset every time a property is sold, creating a major variance in the property taxes one homeowner pays for services relative to other homeowners based on how long they have owned the property. You can see an

example in the chart where the value per acre is significantly different for various homes in the same neighborhood based on the year of purchase. On the lower right, we see the impact that CFD CFDs have made to diversify the city's revenue streams and somewhat counteract the impact of Prop 13 on the base property taxes. Those neighborhoods with service CFDs are represented with green layers on their parcels and provide ongoing revenue to provide needed services to those developments, including street maintenance, landscape maintenance, traffic signal maintenance, and more. Shifting back to the city's strategic plan objective of supporting long-term sustainability, we see here the many needs and challenges facing the city. We have needs for new and existing infrastructure, including ongoing pavement management activities, a $1 billion five-year capital improvement program, and new public facilities for virtually all of our functional areas, including city hall, police department headquarters, public works, maintenance operations center, and a community center. In our parks and recreational amenities and service areas, we have expanded programming, including the introduction of an aquatic program, the acquisition of additional open space, accepted new parks from ongoing development, and are pursuing an annexation process to transfer control of the parks of parks and rideway currently operated by the valleywide park and recreation district. In building a fiscally resilient and strong city, the city remains committed to proactively managing the unfunded costs of the city's pension and OPED liabilities and establishing healthy reserves for both emergencies and planned uses such as ongoing capital outlay needs. And with all of these competing priorities, the city still holds public

safety within Meny as a top priority, including supporting equipment and everchanging technology to support public safety needs. So with all of these needs comes pressure to build and diversify the city's revenue base and provide the funding to make Manif a premier, safe, thriving, and inclusive city to live, work, play, and stay. So, the city has done a tremendous job in diversifying our revenue streams. Regular citywide user fees and development impact fee updates keep revenues up to date with changes in development, costs of infrastructure and services, and changes in the economy. Negotiating various community benefit agreements has been a welcome relief in recent times with the economy leveling off. The agreement with Nova Battery Park generated a $5 million CBA along with a $1 million contribution towards the RBBD along with additional onetime sales tax for the cost of materials used in the construction of their site totaling over $15 million in the past two years. Had it not been for this one-time sales tax money last fiscal year, the city would have fallen short of budget projections. The city has also restructured its investment portfolio to maximize investment returns while also keeping the city's treasury safe and liquid. We are looking at multiple years in a row with investment earnings outpacing budget expectations. We also have a very active economic development program including the use of incentives to attract new businesses to the community which will drive growth in sales tax, quality of life funds, property taxes, transient occupancy taxes, and franchise fees. Since the voters approved the enactment of the quality of life measure, the city has remained committed to using the funds exclusively for public safety and infrastructure improvements. Regular

meetings with the quality of life committee ensure that the public is vetting the use of these funds before they are presented to the city council for use. However, with all of these efforts, it is still necessary to prioritize a strategy further to diver further diversify revenue streams in support of ongoing services and infrastructure needs. So, this brings us to our topic for today, a public safety services CFD. A public safety services CFD is a legally defensible and sustainable mechanism to ensure that new development contributes its fair share towards the increased cost of public safety. I think the key here is to focus on the word increased. This is not a CFD to pay for existing service levels. This would be to pay for increased levels of services that are required because new development is coming into the city. To say it another way, it's a mechanism to ensure that service levels do not decline to existing residents and business owners within the city. Shane will cover more specifics in a moment, but I want to mention that with new development, most residential parcels are paying property taxes at a rate of nearly 2%. This CFD would not change that rate. It would not add an additional tax to those owners. If the CFD does not move forward, the tax rate would still be up to 2%, but more funding would be made available to the developer of the project to be reimburse for the cost of facilities and fees connected to the project. It is true that the developer reimbursements would be paid off after 30 years when the bonds are paid off. However, we should also keep in mind that the need for those public safety services will not go away and that the fees connected to those properties only represent the incremental cost of those services due to the development coming into the city. The city had started the process of

forming a public safety CFD back in 2015. However, the city council at the time chose not to move forward with the formation. Since 2015, many thousands of housing units have come to the city, representing several million dollars that the city would otherwise be receiving. Now, development continues, and if we act now, we can at least capture the remaining units yet to be developed to recoup that incremental cost for that growth. In June of 2025, the city council asked about a public safety CFD. At that time, the city engaged Spicer Consulting Group to perform a fiscal impact analysis for a potential CFD. In September of 2025, staff reviewed the results of the analysis with the finance committee, which recommended the item be brought forward to the full city council for review and discussion. At this time, I'll turn it over to Shane Spicer from Spicer Consulting Group to cover the results of the fiscal impact analysis and provide specifics of what a potential public safety CFD would look like. Thank you very much, Travis. So, so I'll cover a high level overview of the fiscal impact analysis and how does that translate into a proposed CFD uh structure. So, as was mentioned in 2015, um actually I was here doing the initial analysis and so it's funny 10 10 years later here we are again having the same conversation but much critical conversation needed. So, as uh Travis had mentioned, um you know, the city is intending is expecting uh a consistent level of development and consistent with the city's development impact fee

analysis that was approved in 2022. Uh that's estimated that at 2020 2045 population would grow up to 148,000. Uh at the time of our study, that's an increase of about 32,700 new residents to the city. Using the city's current budget and service levels as a baseline, the analysis evaluates what it cost would be for ongoing general fund services to these new residents through development. Through this analysis, it anticipated that revenues for new development for residential would be approximately $41.2 million. The general fund service costs for that same new development is estimated to be at $47 million. That new gen cost increase would consist of the addition of additional public safety service personnel to provide those additional services to that community. Between the revenues and the general fund service costs, the estimated negative general fund impact is $5.8 million a year. And that majority of these service costs, as you as you well know, is with public safety. Uh the city's general fund estimates about 60% of those uh expenditures for public safety. That is consistent up and down the state and uh with all the other uh local communities that I do business with. Um it is very common to have that be a greater share of those costs. These public safety costs include police, fire, animal control. uh of that 60% expenditure and the shortfall that estimates to about $179 per resident which translates to the rates I'll cover in a minute. So with CFDs uh CFDs to provide public safety services is not a new idea. Obviously we talked about it uh in 10

years ago and they've been u implemented I've seen any some as far back as 2005. So for over 20 years, even though the law has been around for longer than that, they've been readily used for public safety. So it's not a novel concept. For this CFD, the proposed rate would be $525 per unit for single family residents and $411 per unit for multifamily. It's important to note that this is similar to the maintenance services CFD. So this is only on new development. So the existing community is not and expected to pay these CFD taxes. It is also important to note that with the CFD tax being established with the CFD uh there would be an escalator included. You know in the maintenance services CFD 2017-1 we have the greater of CPI or 2%. But public safety costs increase at a much greater rate than CPI does. And so the proposed CPI as with other uh public safety CFDs are tend to be greater. Proposed here is the greater of CPI or 4%. Now that is the maximum tax rate. It is up to the council of what amount to be levied annually for this public safety CFD or what percent of increase up to the maximum allowable can be applied each year. And as Travis mentioned, this does not change or modify the 2% effective tax rate that's uh already been adopted through the C city CFD goals and policies. And again, that 2% just to recap is based on the estimated home price at the time the C the properties are developed and up to 2% of that effect of that home value. with public safety CFDs they are an order of highest priority when it comes to determining that. So what that means is that that you have the base 1% ad valorum you have your maintenance or

public safety CFD and then the balance is what would be eligible for facility financing if so asked by the developer. So how does that compare to the region? So there are quite a few CFDs in Riverside County. The proposed rate of $525 is actually below the region uh county average of $65 per single family. There's a wide range of rates in the county, ranging from $257 for city of Hemet up through over $1,500 for the city of Coachella. Each rate varies dependent on when they were uh formed and also based on the mechanics of the general fund that the cities operate under. I can't attest to some of these uh CFD tax rates of how they were determined, but I can tell you about a number of them as I formed these with these cities most recently just last year with the city of Marietta. So, one of the takeaways is that this tax rate is not an outlier. It falls well within the range of those CFDs that are in the county and wholly acceptable for the this type of CFD. With that, I'll turn it back to Travis. Okay, thank you Shane. Um, so if the council would like to move forward, the city would start communicating with developers that there is an intention to create a public safety CFD for new projects. This would be a new condition of approval for the project. We would also communicate with existing projects that have not finalized their conditions and would negotiate with existing projects on their conditions of devel and with development agreements uh to intemp attempt to incorporate the CFD. The actual formation of the CFD would happen concurrently with the cornerstone development starting with the finance committee before being brought to the city council for formation. Once the CFD

is formed, future projects would be annexed into the CFD much in the manner projects are annexed into the existing maintenance CFD. The city would perform regular updates to the fees based on updated growth projections which could result in establishing a newer or updated public safety CFD in the future. So, the recommended action is to discuss and provide direction on establishing a public safety CFD to help fund essential city services for new development projects. And with that, be happy to take any questions.

Thank you, Director Hickeyi. Um, at this time, uh, the city council is welcome to ask questions of staff. Again, this isn't for discussion. It's just technical questions of staff. So, do we have any, uh, questions based on the presentation? Council member Dinus.

Thank you. Um, so your projections for full buildout if every if if everything's built out the the 500 whatever dollars it was for the single family homes would continue to go on till the house is no longer there I guess forever. Um, so I guess the question is there's some way will there ever be a time where our as we grow in our retail and you know we have a we have toot taxes that you know with the hotels coming in so all that's taken into account and we would on an ongoing basis we'd be short that much money ongoing. Is that accurate?

Yeah. So this is based on the current budget structure. Um so uh and both the revenues and and uh expenditures were um escalated consistent with what would be conservative growth uh rec recognition. Um you know this is not you know this not something that is going to be the answer forever. It may need to be updated to be increased or it could be evaluated that okay the city has t taken on a lot more uh commercial development and we don't have to levy as much which has happened in other cities where you don't levy the maximum amount you know you're able to to cover more costs because you had a better performance on through your general fund activities. So this is to protect the city's general fund to the best of its ability with the current uh structure of the general fund. So this will this will not include any of the construction that's going on today. The homes are being built now. Nothing that's in in the pipeline mean for approvals and everything.

Yeah. So the the typical approach is to identify what would be the next project to come in. We need one project to be the cornerstone to form the project form the CFD. Typically if projects are already underway they're not likely to you know opt in. um at that point it would be voluntary because that project is already you know through its conditions and is not required to be included. You may find a part property that a project that may be already entitled that would want to participate you know and it be a negotiated discussion with the property owner in the city. So it's a business decision at that point and then future development would would automatically be conditioned to participate along with all other residential development. And is it correct that then all the uh special taxes collected for the CFD would be restricted to public safety use only?

Correct. It is only limited to the public safety services, not towards uh capital improvements or anything of that sort. Okay, that's my questions. Thanks. All right, council members, any questions from down here? Council member Dedric. Council member Dinus took my first question, but my second one, it's capped at 2%, right? So, is that I know there's the 4% increase that's allowed each year. How does that how does that balance?

So, the tax rate is going to be at 525 and then every year the maximum tax would be the greater of CPI or 4%. So, um that would just increase the ceiling on that CFD tax. How does that play into the 2% we were talking about? Again, this is the difference between the tax and the effective tax rate. So, the effective tax rate is capped at 2%. Um, and that's per the city's goals and policies. So, what that means is that when the home owner, the developer goes to sell his home after he factors in all the advalorum, the public safety, CFD, the maintenance, then he can only go up to that 2%. So, they're different. These are two different um items to

that's at the initial sale. That's at the initial sale. And then after the initial sale, then the uh you know, if there's bonds, those taxes would be levied. Um and then the public safety services and maintenance services, all everything would be levied. Um but established at that 2% at the onset. Okay. Thank you. I I got a couple questions. So there was you you had mentioned that uh developers who are currently in the works could opt in on a voluntary basis. Why would they do that?

They might have some business incentive to do so. Um typically though once they're already in under construction, they've already done all of their proforma, they've already secured their financing. It is highly unlikely that any development. Now you may have phased developments that you could have a later phase be potentially eligible to come in but then you know that's at it's not typical that you would find somebody that's already in process.

So one thing that you mentioned I didn't see a slide for it here but you said if we if we don't do this there's a developer payment that gets done that would sunset in 30 years. Explain that language to me. What what is it that would be paid out that would sunset in 30 years? That would be the facilities tax. So what what currently you is in existence is that you have a 2% effective tax rate. All right? And the developer forms a facility CFD, one of our CFDs that we formed those that facility CFD is secured to pay off a 30-year bond. So in reality, in 30 years, that CFD would go away. Okay. The problem is is that once in the current environment, the only other revenue source the city actually gets currently would be the maintenance services for ongoing maintenance. No public safety taxes to for above and beyond. Having the public safety CFD would cut into that 30-year tax that the developer would be getting, but the city would be able to continue to levy that public safety tax for perpetuity to provide those vital services once even once the bonds are are paid off. So

So does this take the place of that bond or does it pick up after the bond is paid off? It cuts into how much of the bond can be issued. I see. So what we're going to see is over the next 30 years the impact of the new development would be felt by the city and after 30 years that impact would continue but the payment for it would not. Is that basically what's going on here if we if we were to not implic uh institute this? Correct. If you did not institute this then you would not be recouping those increased service costs for public safety even after the bond is paid off.

I see. And then is there a is there a definition in the law surrounding this of new development? At what point it it would begin? Is it on occupancy? Is it on

Yeah. So similar to our our our maintenance services CFDs, what we typically do is based on only developed property after building permits are issued. So there would be a similar um annual administration component of reviewing new development and if there's a building permit that it made the cut off for that tax year then they would end up paying towards that CFD. If the building permit was after that cut off whatever we define May 1st then it wouldn't be picked up until the following year. But it's only new development. This would not be levied on undeveloped property there. The developers wouldn't be paying this. to be new homeowners and and and develop property that are pursuant to the rate and method that we would be establishing when we bring that back to the council for approval.

And and who does the payment go to? So, the payment would go to the county and then remitt it to the city um as other uh portion of funds for a specific fund number that be designated for public safety restricted from the general fund. So in that path, do we end up back with a 100% of the assessed amount or does the county keep a portion of it on the way through? There there's a 30 cent charge for putting it on the tax role. But um you know if there's delinquencies obviously that wouldn't come back to the city, but it would be essentially 100% of what gets enrolled comes back for public safety. So of the $525 the county would just keep 25 30 cents of it and then the rest would come here

pretty much. So they can't stop it along the way and divert it to their own funds. It just they're just mainly a pass through. Absolutely not. And we bring in this back to the council like all the other CFDs for annual review and approval and the resolution that we would need in order to submit to the tax role. In all of the cities that you have seen institute one of these, have there been any ever that have reduced or eliminated it? Well, reduced in the Okay. For example, um you know,

like for example, I'll tell you exactly what I'm talking about. Maybe it'll help you answer your question. If in 15 years, Han Road is fully built out with economic development and that's just cranking tax revenue for something like that and it would cover the cost of the public services. Do we just keep taking it anyway or is there a way for us to go, hey, we got it covered? Like the Coronado Bridge, hey, we got it covered. We don't need to charge you for it anymore.

Yeah. there. So when the through the the annual audit uh budget review process um that's when you evaluate how much are you getting from all your uh discretionary funds or how much are you getting from your restricted funds and evaluate how much public safety costs are. I can tell you that I have seen instances where a city had froze the maximum amount and didn't increase the assessment for a couple years and and in one instance because if you recall there was a CPI at over 10%. Well, they didn't go to the 10%. They said, "Okay, we're good for we're levy the same amount we did last year." And they did that for a couple years and then they just started in incrementally increasing just recently. So, you could every three to five years, I would recommend anytime you update your development impact fee, your general plan or what have you, that we would re-evaluate the public safety uh fiscal impact analysis, determine are you right size on new development for public safety services. And that can also factor into how how you're evaluating your annual levies for your existing CFD tax rates for public safety.

Would this payment be part of the impound on the mortgages or is it a separate cash issuance? Like is just a bill that the the homeowner would pay or is it rolled into the mortgage? It's an it's a it's part of the property tax bill. So, it's a completely separate line item, completely separate from any uh you know, property tax line items and not part it could be impounded just like their other property taxes, but it just funneled through the county like your other assessments. Okay. So, it would be possible to include it in the impound with the other taxes that are it would be. Yeah, exactly. In fact, they would be if they're impounding,

right? That's what I was suspecting. All right. Uh those are all my questions. Council members, any other questions before we move on? All right. Um, madame clerk, are there any requests to speak on this item or has any correspondence been received on this item? There are none. All right. Um, so at this time is when we get to discuss our feelings and thoughts on this stuff and analyze what we've just been told. So, uh, who would anybody like to chime in on it? I'll start. Thank you. All eyes are on me here for a second here. Well, you're the you're the finance guy, so that's why we're all looking your way.

A couple things. Yeah. Yeah. I understand, you know, public safety is, you know, our highest priority here and we want to continue to make that so and, you know, continue to be one of the safest, uh, cities in the state. Um, so I I I understand where we're going there. I just I'm a little conflicted, you know, um, you know, we're putting the burden on our new residents, but their new residents are the ones that are going to cause the increase. Um, you know, as we add these things, it keeps shooting up the price of homes. That's my that's one of my part I'm I'm concerned on, but uh for the greater good. I understand why we need to do it. Um, c can I ask you to that point, you were here in 2015 when this was discussed, right? You were on council in 2015, right?

No, you weren't here then. I was 2018. 2018. Okay. Then I'll ask him when you're done. I I was going to ask you, but

I can make up something. Um, so I, you know, and my concern is, you know, the greater of of CPI or 4%. You know, your your example was, well, it got to 10%, so they decided not to do that. But there's nothing saying that that a future council can't say hey we're going to do the whole 10% just you know irregardless of what you know well benefits the residents or not that that's that's my largest concern doing that and um and if there could be some mechanism in the in this to say what you know I know it'll be looked at annually and re-evaluated but some way that you know that after that each year it we need to be able to either reduce it, eliminate it or pause it or something like that and not just continue on. I mean, I think it shouldn't be left necessarily to the discretion of, you know, oh, we don't need 10% this year. I mean, that's a lot for some homeowners to see, you know, a 10% increase in part of their property tax. So, I I'm I'm concerned about that.

We we do have the option to include a cap if we would like to do that. We it's kind of not the default position because to protect the city in the event of sustained uh high CPI increases, but we could have it be 4% or CPI capped at 6% or 7%. I mean there we could establish a cap if we if the council would like to do that.

You know, I just that's just my concern. I'm think I'm putting myself in the shoes of of the new resident that comes in here after this has been approved and and implemented that, you know, here's just another line item on my tax bill and now I've been paying, you know, $500 a month and all of a sudden there's a 10, you know, 10% 10%, you know, inflation, all a sudden it jumps up. You know, that would, you know, I hate to be the city council that I get all those phone calls when that happens. So, that that's my concern. uh if you know some way we can address that. I don't know what the other council members uh their concerns or if that's a concern at all. But that's one thing I just other than that I understand I I support it. Um it certainly does not impact our existing residents at all. So it's a it's a benefit to those that are living here now and it was just it is a a minimum amount for the future residents that would give them the enjoy the public safety that we enjoy now. But but my concern is then you know if it's if it goes up to 11 12% you know here was you know here what LA just you a couple years ago was 9% inflation here in Inland Empire that's that's a hard pill to swallow when you're going to raise everyone's you know uh rate by that thank you council member Temple you're next up

yeah if if you want I can add a little bit of color to that if if you'd like. So that's great. Um you know it is it is a a decision that the council gets to make. Um I know working with city staff you know there is there was a reluctance even to increase that um on maintenance services which was acceptable. It was a greater of CPI or 2% and we didn't go to the 10. So there's prudence that's exercised obviously but what that does is it just allows for that maximum to increase. doesn't mean that you levy that amount that maximum amount. So that's where you know even though the maximum could increase and as Travis mentioned you could have seven years in a row of 8% public safety cost increases and then how you you know you you can balance that right but even though the max goes up we're only increasing it by 4% each year so you still have the capacity to catch up in the future. So that's where you know you give have the give and take and then it becomes a decision of the council every year.

There's be some analysis done each year to saying you know here's what our anticipated public safety costs are over our baseline and this is how much revenue we anticipate. So therefore this is how much we should increase you whether we stay at 2% 4% or whatever uh to levy these taxes. I think that would to me give a lot of comfort knowing that we're just not doing it and you know, and storing money away, uh, but actually meeting the needs of the city without overcharging our residents. Thank you, Council Member Temple.

Yeah. Um, Shane or Travis. So, first of all, um, where it does not increase the overall maximum property tax rate of 2%. We're just carving out a portion of that 2% instead of for the developers. We're taking that for this purpose. Correct. That's correct.

Okay. Um, so I I actually really appreciate what Dean said. Um, you know, nothing's more permanent than a temporary tax. And you know, I don't want to be that city where we we vote for something that uh we hope one day we may either eliminate or lower or keep the same and and you know, we we come to accept the fact that we have this money and we keep using it and one day we'll ask for more. I don't I don't like that and I don't accept it. I do I do appreciate this very much and am in favor of it. Um, but I would I would appreciate um uh a regular reassessment to see where we fall, how we're spending the money, and you know, perhaps one day as uh as we get the uh the economic development corridors um producing and doing what they ought to do. This is something that we could either decrease or eliminate, but I am in favor of it as as you've written it. Thank you.

Thank you. Council member uh Dietrich, do you have any comment?

I would just reiterate that again, I think we all agree public safety is one of our highest concerns. Um I appreciate the fact that it's not increasing the property tax bill. I mean, aside from the potential future increases, which would happen even if it was the other bond, right? Not necessarily as high. So, I am definitely in favor of this because I think it serves a dual benefit that front. Um, I do agree that I think there should it should be we should be the future city council should be presented the data to make anal an educated analysis as to how to deal with it any potential future increases or reductions, but I'm not necessarily in favor of instituting a cap that might hamstring them if they needed it for that.

Yes. U my question was I was I was going to ask council but he wasn't here. Why did they say no in 2015? Um, they initially said yes and then they didn't vote on the second reading of the ordinance. So, it got they didn't vote at all or they voted no at the second reading. They didn't vote at all. They didn't get a second on the second reading of the ordinance. It got through the public hearing favorable and went to the second reading of the ordinance and didn't get a second. Do we know why? Above my pay grade.

Fair enough. Um, I wasn't here at the time, but I understand there was pressure from developers that that's what it would sound like to me. Um, so is it is it possible to have a like a a a reviewable cap? I mean, nothing's nothing's permanent here, right? So, anything can be reviewable. What What is the ask that's being made of staff right now? what is the what is the preferred ask from staff on this as far as percentages go and then caps and all that kind of stuff.

So so the way the process is going to work is we'll um we'll get that project that'll come in and then we'll be uh preparing a formation documents for the council consideration in that as like the other CFDs that have been formed in the past. There will be a resolution of attention on consent and then there will be a public hearing. Um the staff report is going to outline exactly what's being proposed. Um in that rate and method of portionment I'm presuming will go under the standard practice as other agencies are implementing this public safety CFD single family multi- family with the rates and an escalator. That escalator can be um up for discussion and if if acceptable gets approved as part of the formation. Now that tax rate would be only implemented to those properties that annex into that CFD in the future in the event that you know three years down and there's another development impact fee update uh analysis and we push push the development out to 2050 we re re-evaluate and if at that time we said well you know we're doing really well on our general fund and that we we think that $425 is a better rate so then we can reestablish a new tax CFD public safety with that reduced rate on new development. There's an adjustment from switching to a new CFD at those moments. But the other ultimate um application is that whatever you set the tax rate doesn't mean you're levy at the full amount. So what we're talking about is we're saying the 525 will escalate the maximum tax. And if it's at 600, but you say we only still need 525, we only levied 525, but you have the ability in the future to go up to 600. So we're really not hand you know restricting the opportunity in the future. We're just saying you have a ceiling and then annually we'll review what's what the amount should be levied and make that decision present it to council for approval.

I maybe my question wasn't clear because your answer to me wasn't clear and either I'm not getting it or I'm not asking it right. So, if the staff were to present us with a proposed ordinance right now, what is the language in there that staff is looking for? It says 525 per single family unit, 411 per unit, and it says subject to annual escalator greater of CPI or 4%. Is that the language that staff is asking for or is that one of several ideas that are being presented to us for council for for recommendation to come back? I I right now it's proposed to include uh CPI or 4% unless council directs differently.

Okay. So that's the ask is these amounts increase at a rate of the greater of CPI or 4%. That's that's what would be proposed. Okay. That's what I want to make. I want to make sure what it is that we're we're either adjusting or looking at or reviewing.

Um go ahead. And if I could just clarify, you know, when the CFD is set up, there's a document called the rate and method of aortionment. And that's where you establish these parameters, and that's a one-time thing that's adopted when the CFD is formed. And as Shane has talked about, you have this annual escalator. And every year when you want to levy the amount for that CFD for that year, you come back to the council, you adopt the levy for that year. And that's where you have the option to go. Well, under the rate method of aortionment, it says we could our maximum rate is this, but we think we're good at this level. We want to keep it the same. And so, it's sort of kind of concrete when you adopt the rate method of aortionment, but your annual levy each year can be modified as long as it's below the maximum rate because the RMA establishes the maximum rate for each year going out into the

So, what did Moretta do as an escalator? believe they did the same uh 4% CPI or 4% CPI or 4%. All right. Uh Council Dinus, you have a question.

I I know Travis kind of answered it, but I'll I'm digging back into my archive memory here of CFDs. Usually when you issue bonds that and Shane does the all his calc runs his magic and calculates everything for the annual the the payments of it for the to put on special tax roles that you take what the what the debt service is and what kind of and how much you collect from the property owners that um to meet that to meet that debt service payment. It's only if you only if you lack If you're the levy is insufficient to you, then you increase the go to the special tax and increase that amount to pay for the debt service. So, it sounds like this is kind of what we're going to do with this CFD is you look at what the costs are. you know, while you get the $525 on whatever percent that is. And then if it's not enough to cover the difference, then you'll have to go above the 4% or start approaching the the CPI then to to to make sure you get levy enough to pay for the the public service uh difference that we need have. I mean, I don't make it makes sense to me a lot, but

Well, from my standpoint, did did you want to respond to that or was there anything that I I I'm sorry. I had to look I clarify Marriott is at a flat 4%. So they didn't do the CPI. They went flat 4%. Flat 4%. Yeah, that's that's kind of what I was thinking as well. You know, I something you said resonated with me that, you know, we don't want to impose a new tax on the residents, but the new residents are causing us an increase in the services. I mean, we can't provide if we if we go to 175,000 people without affording the cost of it. we would have to hold off on that development until economic development catches up, but economic development won't come in unless the rooftops are there. So, it's kind of a states,

right? We need more housing. So, um it would seem like the the the new development drives the need for more public safety. We're going to need more fire coverage. We're going to need all those kinds of all those people with pets, animal control, that kind of thing. Um I do get scared about CPI as well. would I would be inclined to to implement this with a straight 4% like mya did. I when I was thinking the reason I asked I was I was thinking in my head I want to make sure that I wasn't being completely way off base financially. Um I can't believe Lorie Stone voted for this that had to have gone 4-1 that way. No, it went 5. Crazy. Um, but I would like some sort of language in it that makes it a prominent question each time the budget comes in. Like just it because this seems like the type of thing that I would I wouldn't want future city council members to just roll it into the big giant stack of stuff to consider. I would I wouldn't want at least for the time being for people to look at it individually and just go, "Oh yeah, that's right. We're going to look at this each time to see if we need to keep doing it or not.

Well, I I mean, if you increase the the rate over 4% because CPI is higher, I think it the way to help to ensure that the council understands that it has to come back for approval from the council before they they make that increased. You do have to go to council each year to have the council approved the levy that we send to the county. So it could be a part of that report when you adopt that levy that there's an analysis that that fee is justified and within the maximum parameters. Yeah.

Okay, that makes sense. Um, do we have any other questions or comments from from council? Um, do you need a vote from us or do we is there direction? It seems like we're all in consensus here. It seems like a pretty clear message. Yeah, I think it's planning clear, mayor. Okay, then I think we've got it. Well done. Thank you, gentlemen. Appreciate it. Um well with that that was the only thing on our special agenda item. So at 4:47 we are adjourned.