It’s hard to make this up. But Adam Paul has really out done himself this time. And maybe this is the work of Cardel who didn’t have the votes to get a metro district under the law and decided to write its own law creating a special Lakewood Profit District for Developers (my title).
First reading of this new proposed windfall for developers is scheduled for Monday, September 11, 2023.
Welcome to the Lakewood proposed developer “Public Improvement Reimbursement Program” creating a “Public Improvement Reimbursement Area” to make sure the developer is paid as much as he wants to be paid for infrastructure costs because, according to the staff memo:
“There is currently no program offered by the City of Lakewood that allows an initial developer to be reimbursed for extensive public improvements that may then be utilized by future development.”
Really? So how in the world could the developers afford to build all the public infrastructure in their developments if they didn’t get reimbursed for it.
The staff memo is correct, sort of. There is “no Lakewood program” to guarantee reimbursement for development costs.
But of course, even though they aren’t “Lakewood Programs” there are two very well known and well established ways developers DO get reimbursed for development costs:
1. Through the cost of the home – the way it is done in most the rest of the country and in Colorado until the mid 80’s.
(There is still new development in Colorado financed the traditional way though the cost of the home but it is in the minority)
2. Through the metro district statutes passed by the State (Title 32) which create “loans” and bond debt to pay for the public improvement costs.
We don’t know what prompted the City to come up with their own additional “metro district law”. Perhaps this “work around” to sidestep the metro district law is because Cardel couldn’t satisfy the legal requirements in Title 32. Hard to tell.
But whatever the reason, Lakewood is creating a brand new “metro district work around” that completely eliminates any semblance of public checks and balances leaving the future residents completely at the mercy of the developer.
Even worse than a metro district.
And there’s no authority to do this in state law. They are just doing it on their own under the home rule charter.
The ordinance, staff marketing piece selling the proposal and their video are linked below. Here is a summary of the highlights with excerpts from the proposed ordinance:
“14.28.030 Agreement
A. The owner of any property in the City
who installs and dedicates qualified Public Improvements
to be owned and maintained by the City
may apply for the identification of a Reimbursement Area
within which reimbursement of a portion of the costs of the Public Improvement(s) will be required from the owners of property specially benefited by the improvements. . . .”
Summary – a developer of a new development can create a “Reimbursement Area” and the new residents will pay him for the infrastructure costs.
Here are the public improvements that may be reimbursed through this “program”:
“A. Public water system extensions and sanitary sewer where such extension provides new mains intended to be owned and operated by the City in locations where no mainlines are available at the time of the formal submittal;
B. Public storm collectors and outfalls including manholes, inlets located beyond the property frontage, headwalls or end sections, culverts, and major channel improvements;
C. Public streets or portions thereof including curb and gutter, asphalt pavement, concrete pavement, pavement striping, sidewalks, pedestrian/bike paths, traffic signals, streetlights, acceleration and deceleration lanes; or
D. Other improvements, at the discretion of the City Engineer, which upon acceptance by the City, are intended to be for the use of and enjoyment of the public.”
Here are public improvements that are excluded from the “program”:
“A. Asphalt required as part of street widening along the frontage of the initial property being developed including the asphalt transitions in front of abutting properties;
B. Curb, gutter, and sidewalk along the frontages of initial property being developed;
C. All improvements used to meet the City of Lakewood’s Enhanced Development Menu
criteria;
D. Storm sewer inlets that are located along the frontage of the initial property being developed and are connected to an existing storm sewer collector pipe;
E. Any improvements associated with a required detention or water quality facility; or
F. Infrastructure systems that are included in any metropolitan or other special district that assesses fees to residents or collects any supplemental tax from residents.”
The last one appears to exclude doubling up with reimbursement under metro districts which is consistent with this being a work around – where there is no metro district as with Cardel’s proposed development.
Or it may be used where there is a metro district as long as the metro district does not also cover the costs. But . . . who is going to know without any checks and balances in the metro district.
“14.28.060 Application for Establishment of Public Improvement Reimbursement Agreement
A. At the time of the initial submittal of the Site Plan and Engineering Drawings, the developer may file an application with the City Engineer to form a reimbursable area in order to obtain partial cost recovery from later users of the Public Improvement(s) required by the City and included in the initial submittal of the engineering drawings.
. . .
the City Engineer shall conduct a review of the complete application. . . . . The Initial Developer will be notified in writing if the Public Improvement qualifies as Reimbursable Infrastructure and whether the application is approved. . . .
E. The applicant may appeal the decision of the City Engineer to the Director of Public Works . . . “
The approval does not go through city council, like a metro district. It stays with the staff – first the City Engineer and then Director of Public works.
No public check and balance. No public hearing.
There is a “hearing” with the property owners about whether or not the assessment is fair – but when this is done there won’t be any residents yet – just the developer “approving” payment to himself “on behalf of the future residents” (my words):
“14.28.080 Determination of Pro Rata Shares
A. Properties within a Reimbursement Area shall be assessed in such a manner as to equitably apportion the cost among all properties specially benefitted by the improvement, but no property shall be assessed an amount greater than the special benefit received by it. . . . “
14.28.090 Reimbursement Area Hearing
A. Upon approval by the City Engineer of the estimated construction cost report, the City shall set a hearing date no less than thirty-five (35) days from the approval and notify the Initial Developer.
The Initial Developer shall send by first class U.S. mail, at least twenty-one (21) days before the hearing date, a notice to each of the owners of each property that is situated within the proposed Reimbursement Area boundary, together with a copy of the proposed reimbursement agreement, the individual property summary sheet, letter of explanation and a copy of this code section.
The notice shall advise the property owners of the hearing date, time and location and their right to appear at the hearing to contest the Reimbursement Area, the reimbursement agreement, or both.
B. Hearing Process. The Director shall conduct the hearing on the matter. The burden of proof to establish that the request for reimbursement for construction cost is reasonable and necessary shall be on the Initial Developer.
If the Initial Developer establishes that the request for reimbursement is reasonable and necessary, the burden of proof to establish disqualification for reimbursement shall shift to the owner(s) of property identified as being within the Reimbursement Area. Following the hearing, the Director shall render, within thirty (30) days, a written decision and provide copies of the decision to all parties. The Director’s decision is final and subject to judicial review by a court of competent jurisdiction. “
Again, since the property owners will be the developer, he will have a hearing with himself to decide whether or not what the future residents will pay him is reasonable. And the Director of Public Works’ approval is final.
No public hearing. No review or decision by city council. No public accountability.
“14.28.100 Establishing the Final Construction Cost
A. Prior to acceptance of Public Improvements, the Initial Developer must provide the following final construction cost information:
1. A report acceptable to the City Engineer detailing the final construction cost and the resulting reimbursement amount to be assessed to each property within the approved Reimbursement Area.
The report shall include all calculations substantiating the final costs based on the actual construction cost incurred for construction of the approved reimbursable Public Improvements.
For purposes of calculating the assessed reimbursement amount, the total reimbursable amount shall not exceed one hundred fifteen percent (115%) of the estimated Construction Costs determined in Section 14.28.070.”
In sum, the City Engineer, subject to review by the Director of Public Works will decide how much the residents will pay and no more than 115% than the estimate provided by the developer.
Convenient. No public hearing. No public accountability or check and balance. 15% more than the “cost”.
“A. The reimbursement agreement shall terminate upon the earlier to occur of the following: payment of the full amount of reimbursable Construction Costs, or ten (10) years from the date of execution.”
The payment agreement will expire in 10 years or when all the money is paid.
There is no reference to “interest” – one way “allowed” or the other “not allowed”. But there is this provision:
“14.28.110 Reimbursement Payments
D. In no event shall the actual amount reimbursed to the Initial Developer exceed the reimbursable Construction Costs.”
There are no public checks and balances. No public hearings. It is up to the Chief Engineer and Director of Public Works.
The good news is the developer is limited to collecting “reimbursable construction costs”.
But those “reimbursable construction costs” are defined by the developer, Chief Engineer and Director of Public Works.
So, we come full circle. Why is this necessary in the first place.
We already have two ways to pay the developer back for the costs of the infrastructure:
1. The cost of the home
2. Metro district (which may also duplicate the cost if it was already paid with the cost of the home).
The advantage of this new “reimbursement district”, of course, is that the developer can avoid
- the market place transparency when the cost is included in the cost of the home and
- the metro district process, including the part about showing that the costs haven’t already been included in the cost of the home.
- And the checks and balances of residents, not developers, actually deciding for themselves how much money to tax themselves to spend on government services.
AGENDA
REGULAR MEETING OF THE CITY COUNCIL 480 S. ALLISON PARKWAY, 80226 CITY OF LAKEWOOD, COLORADO HYBRID MEETING SEPTEMBER 11, 2023
7:00 PM
To watch the Council meeting live, please use either one of the following links: City of Lakewood Website: Lakewood.org/CouncilVideos
or
Lakewood Speaks: Lakewoodspeaks.org
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How to Connect to Provide Public Comment:
By Computer: https://lakewood.zoom.us/j/84957320840
By iPad, iPhone, or Android device on the Zoom App, enter webinar ID: 849 5732 0840 By Telephone: 720-707-2699
Webinar ID: 849 5732 0840 #
Participant ID: #
Press *9 to Request to Speak, you will be prompted when to speak.
Press *6 to Unmute
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The City of Lakewood does not discriminate on the basis of race, age, national origin, color, creed, religion, sex, sexual orientation or disability in the provision of services. People with disabilities needing reasonable accommodation to attend or participate in a City service program, can call 303-987-7080 or TDD 303-987-7057. Please give notice as far in advance as possible so we can accommodate your request.
Anyone who would like to address the Council on any matter other than an agenda item will be given the opportunity. Speakers should limit their comments to three minutes.
CALL TO ORDER
ROLL CALL
PLEDGE OF ALLEGIANCE
STATEMENT OF CONFLICT OF INTEREST PROCLAMATION – HONORING ED PERLMUTTER
PUBLIC COMMENT
ORDINANCE O-2023-38 – ADOPTING TITLE 14, CHAPTER 28 OF THE MUNICIPAL CODE OF THE CITY OF LAKEWOOD, COLORADO, IN CONNECTION WITH ESTABLISHING A PUBLIC IMPROVEMENT REIMBURSEMENT PROGRAM TO ALLOW DEVELOPERS OF PRIVATELY FINANCED CONSTRUCTION THE ABILITY TO APPLY FOR AND OBTAIN PARTIAL COST RECOVERY FROM SUBSEQUENT USERS OF THE PUBLIC IMPROVEMENTS