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City OKs law firm to pave way to taxing districts

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Copyright © 2021 Roswell Daily Record

After a lengthy discussion Thursday night, the Roswell City Council voted 7-0 to contract with the Albuquerque law firm Sherman & Howard LLC to prepare ordinances for and give advice on creating new mechanisms to fund development in the city.

The professional services agreement with the law firm had originally been placed in the consent agenda — meaning it and a dozen other items could be approved without discussion — but City Councilor Margaret Kennard requested it be considered for discussion.

Council members Savino Sanchez Jr. and Angela G. Moore were absent due to illness. City Councilor Judy Stubbs was traveling and joined the early part of the meeting by telephone, but the call had dropped by the time the council discussed the proposal.

Thursday’s action does not commit the city to creating the Tax Increment Development District or Public Improvement District, but rather lays the groundwork to do so.

The complexity of the funding mechanisms led to the length of the discussion, with councilors asking for clarification on how they are funded.

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Community Development Manager Bill Morris and Jill Sweeney, an attorney with Sherman & Howard, were present to explain.

Councilor Juan Oropesa, in particular, was concerned about the cost to the city, saying the fees included in the agenda packet didn’t make sense to him.

The agreement with Sherman & Howard specifies a fee schedule for work on projects such as a TIDD or PID based on the amount of the bonds that would be issued, and hourly fees for work that doesn’t include bonds.

“It depends on the service at this point,” Morris said. “It’s all by work order.”

The formation of the districts would be charged at an hourly rate, Sweeney explained. For an attorney or associate of the company, that rate is $250 an hour, according to the professional services agreement.

Once the district is formed and private developers become involved, the developers pay the fees, Sweeney said.

“So there’s a small piece while you’re up front that you pay by the hour when you’re putting together the structure for accepting applications in the beginning of the process, and then after that, the burden shifts to a developer or others who would be looking to put the infrastructure in the ground,” she said.

The old municipal airport on West College Boulevard is an area the city is looking to develop. Morris said that area is a prime area for a TIDD. The city is the only owner, so not only are there no other property owners to negotiate with, but the tax base would be set at zero.

A TIDD, Sweeney explained, uses growth in property tax or gross receipts tax over time to fund public infrastructure. The districts set an increment above a base tax from the prior year.

“You decide what increment over that base, what gross receipts tax or property tax over the base, would go back into that geographic area,” she said.

The infrastructure would be owned by the city, as public dollars can only be used for public infrastructure, Sweeney said.

Development of the 500-acre former airport has a great need of infrastructure if it is to support the residential, retail and recreational development the city envisions.

“The intent here is to look at a funding mechanism that’s going to be able to put in place over time, working with a developer to install the public infrastructure that’s going to be needed to support anything out there,” Morris said.

That would include water and sewer lines, roads and traffic circles, he said.

“That particular property is going to need a lot of infrastructure, and that money is going to come from within that property. The TIDD allows for the payment of those bonds that would be issued to offset that infrastructure installation,” Morris said.

A PID imposes a special assessment on a property.

“Those assessments are established by a feasibility consultant based on the size of the property or some other measure. A maximum is typically set so any resident would know what the maximum rate that assessment would be,” Sweeney said.

The districts would be overseen by a board separate from the City Council, and that board would be responsible for the bonds, Sweeney said.

“So who would be responsible for paying them, the bonds?” Oropesa asked.

“The district,” Sweeney said. “They are not at the obligation of the city. They will be the obligation of the district you create.”

She likened the district board to a child growing up and going off to college and being responsible for their own debt.

“If they decide to incur that debt, that would be repaid by the growth in the property taxes or gross receipts taxes. That’s their decision and not yours, unless you choose to be the board,” she said.

“You could choose to take on the responsibility but you are still acting as the board that’s separate and apart from the city. Under no circumstances can this allow debt of the city to be created,” Sweeney said.

Oropesa eventually joined the six other councilors in approving the professional services agreement.

“I think this is a good idea, but I don’t fully understand it. I wanted to go ahead and see what it turns out to be,” Oropesa said after the vote.

Included in the consent agenda passed by the council was a resolution also related to economic development. Resolution 20-17 will allow MainStreet Roswell to issue a Request for Proposals to prepare construction documents to create Market Walk.

The community market, event venue and parking area would be located in an area west to east from South Virginia to South Grand Avenue and north to south from East Second and East Walnut streets.

City/RISD reporter Juno Ogle can be reached at 575-622-7710, ext. 205, or reporter04@rdrnews.com.

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