We are here for our city council study session tonight.

Our first agenda item is the metropolitan districts and the junction property.

We have Lauren here from planning who's going to start us off.

Good afternoon, council.

I'm joined here today by Rick Murvey with our community development department and Kim Crawford from Butler Snow, our special counselor for metropolitan districts.

The reason for our study session today is provide to provide council a high level overview of metropolitan districts and just how it relates to an upcoming request that will be from the junction property for a metropolitan district.

This is the first study session we're holding and first meeting about metropolitan districts.

There will be opportunities in the future to provide more input on negotiations and upcoming topics related specifically to the to the metropolitan district and the junction.

So this is a 30-minute state session, so staff is going to provide just a brief overview, and then we'll have the balance of the time and the majority of the time turned over to our council and you all to discuss specific structural elements of metropolitan districts and the service plans.

The junction property is currently annexed.

It was annexed in December of this past year.

We understand that a plumber plat and metropolitan district requests are forthcoming in the very near future.

The project is large, it's over 50 acres, and so a metropolitan district is necessary for the large amount of infrastructure required for this project, which includes roads, a lift station, large drainage facilities, and other improvements related to extension of utilities.

In the approval for the junction, there was a draft service plan for a metropolitan district that was included as an attachment to the annexation and development agreement at that time.

But that agreement had not been reviewed by our special council and then just really been given a cursory overview by staff to include it as just to be upfront and transparent that that would be the methodology for financing these improvements in the future.

A metropolitan district has a couple components, but the main component that council will be looking at is the service plan.

The service plan is approved by city council as part of the formation of the district, and that service plan is reviewed by city staff, our special council for metropolitan districts, and we have a financial advisor that will advise on the financial aspects of the plan.

That is reviewed by internally by staff, and that that review is forwarded to city council for review and potential approval.

After that, that happens a few months before the metropolitan district has to file with district court for formation, and then they file and hold elections for their board of the associate with the property.

So I'm going to turn it over to Kim Crawford with Butler Snow to talk about the high-level approval process for metropolitan districts, Title 32 Colorado revised statutes, and walk you through the rest of the study session.

Hi, thank you.

Thanks.

I'm Kim Crawford.

I'm with Butler Snow in Denver.

Been working with local governments, cities, counties, towns, special districts for almost 26 years now.

So see a lot of these.

They're all under Title 32.

Each of them have a little bit different formation requirements, but all of them have to have service plans if they formed after 86.

So the statute requires service plans, and service plans have to include certain things, and it's about two pages long if you want to look at the statute.

So this service plan that was attached to the annexation agreement certainly complies with state law.

What the the theory is or your job is is to decide they can do whatever they want, well, whatever's allowed under state law, but you want to decide what your policy is and how you want to limit them because they're allowed all of these powers, and what a metro district service plan does is it's a limiting document, so it limits what they can do.

So state law requires actually only just pretty recently that each metro district have a debt limit.

Um that's always been in the service plans, but I guess they figure that state law now figures that they need to specifically call it out.

Um so it has to have a debt limit, it has to have a maximum mill levy, has to have a maximum term.

Um, all of those things are in your service this proposed service plan.

Um everything really has that I saw was really pretty common to what you see in a metro district service plan.

I know a lot of cities are probably a little bit more comfortable with commercial properties because there are no resident taxpayers in these districts, and the residents really are the ones I think that cities are more concerned about as far as making sure that everything is in compliance and that that they're not burdened more by taxes than then commercial districts.

But um, so commercial districts, it's it's the same taxing um approach, and everything every um the tax in each metro district has to be uniform, just like every other, just like in the city.

Um once they become a metro district, um, they have to comply with pretty much the same local government laws that you do.

They have to have budgets, they have to have audits, they have to have elections, they have to have open meetings and things like that.

So they become a little government and they function as a government with an elected board.

Um metropolitan districts initially start out with usually one homeowner or one property owner, that's the developer.

Under state law, they can't uh they can assign an interest in real property, and that's what they do.

If you own an interest in real property, you can be on the board.

So until properties are actually purchased by in residential areas by by residents in a commercial commercial area by whoever's going to be developing or or leasing in that space, um, usually it's the developer who comprises the initial board of five to seven um board members, but they have to have elections.

Um after a service plan is approved, the metro district goes to the district court or their proponents go to the district court, they get a court order to call an election.

An election for debt can only be held in November or in May of even numbered years.

I'm sorry, odd numbered years, they just change that.

So table elections can only be held at certain times.

So if they only wanted to organize their district, they could do that with 60-day notice for an election.

But if you but they all want to have their table questions and get those approved right at the very beginning so they can start their financing.

Um, some of the things I wanted to just I guess briefly um point out is the structure.

These are this very standard terms, a maximum debt mill levy of 50 mills, so it doesn't matter how much debt they issue, although they have a debt limit of 65 million dollars.

All they're gonna impose is 50 mills, and that mill levy is subject to adjustment because as you know, the state legislature keeps tinkering with the residential assessment rates.

So the adjustment means that if the residential assessment rates go down, they can increase their millvy so that they have a revenue neutrality because they are they are pledging their revenue to bondholders and bondholders want to make sure that they're gonna get essentially paid.

So if the if the residential assessment rate goes down, they can boost their millennium up a little bit to make up for that difference, but it's a net revenue neutral, it's not an it's not they're not making more money by doing that.

Kim, do you want to pause here and just have them ask any questions on the structure?

I'll talk fast if we have something okay.

Any questions on the structural protections?

Our first bullet point on page three, where we are being asked if there's any input.