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3 '73 • STUDY SESSION (continued) In response to a supposition by Council that the developer, for one reason or another, might fail to move the property and it lies idle, Mr. Fales advised that the key to this recommendation is that if the land is reclaimed and is ready for building, that represents a substantial expenditure on the private developer's part for reclamation and/or interior waterways and is the indicator that the intent is to proceed with development. If the building permits stop, the revenues stop, but the expenditures stop, too. City Attorney Schricker added that the amount of the unit charge is predicated upon full development, so that unit charge would still be at a level that's based on a full dollar build-out, subject to adjustment. Jack Murray, 568 Sea Horse, suggested creation of an improvement district within the General Improvement District that coincides with the boundaries of that presently developed, and have the remainder bear whatever additional bonding is necessary in the improvement district that is created. City Manager Fales responded to comment by Council to say that the only thing the present homeowners would be voting on at this point would be whether or not to install a facilities charge on future development, which they wouldn't pay at all. The facilities charge is collected just one time, when the building permit is taken out, and those already there would not be charged a facilities charge. In response to further question, Mr. Fales advised that if bonds were sold there is a possibility that the existing homeowners might have to pay some debt service for a period of time if the Council did not vote to use reserve funds from the facilities charge. He added that the decision as to whether to sell any bonds at all in 1985 could not be made until 1985 or 1986, and the amount cannot be known now. Another unknown factor is how much value is going to be created in Areas A and B which are the high-value areas. Assuming subdistricting in such a way that no future development would be able to share in terms of debt service on that high value, then the bonds would not be saleable for the rest of the development. If you isolate that high value and use its tax-reducing effect only for what is there now, then the rest of the development, which wouldn't have the benefit of that high value, probably could not support any bonds. Discussion by Council continued relating to the requested supplemental chart ex- pressing how many units would be finished by an approximate time, and what the taxes would be. Mr. Wells referred to page 8 of the report relating to the build-out schedule, noting that the combined analysis showed that in 1985 the first plateau would be reached that would require the sale of bonds of about $7 million; that the big expenses there are clearly identifiable as those expenses necessary to provide for land which would be expected to be developed at that time. The ending balance projected for 1994 would be $3 million. It was attempted in the report to scale the escalators on the facilities charge so that developers would pay the full capital amount of all of the improvements needed for the complete build-out. Aside from conjecture as to what would happen if there is no build-out, there is some control in terms of whether or not those particular expensive project proceed. Also, Council has control over the escalator itself, which can be in- creased if it is believed it will not produce enough funds, but in terms of the existing homeowners' risks, within ten years of the build-out, about $3 million will have been collected over and above the principal amount of the complete facilities, and that is available to reduce bond service on the $30 million. So the unit charge is there collecting at least all of the principal amount of the bonds which are issued within the build-out period of about ten years, according to this proposal. If development stretches out or does not occur, the escalator factor that has been imposed on the facilities charge should be allowed to escalate. The escalator is intended to cover time lapse problems of future costs and reim- bursement at a greater level to the tax base that is carrying the financing on the bonds during the intervening period. If development delays a year, the charge will be that much higher, so the inflationary factor, or time delay factor can be covered by the escalator. Adj.Reg.Mtg. �""""' 10/11/80 Page 5 / .