The purpose of this Mayor and Council Communication (M&C) is to adopt the attached resolution revising the policy governing the establishment, management, operation and administration of Operating Public Improvement Districts (Operating PIDs).
Public Improvement Districts (PIDs) are development financing tools authorized pursuant to Chapter 372 of the Texas Local Government Code, which allow for the costs of certain improvements and services within a designated area to be allocated to and paid by the owners of the parcels that actually benefit from such improvements and services. The City Council has established three types of PIDs to benefit certain defined areas: (1) Operating PIDs, which fund improvements and services solely out of current assessment revenue or accumulated balances from past assessments; (2) Capital PIDs, which fund capital improvements with debt-obligation financing and (3) Tourism PIDs, which fund hotel-and-tourism promotional activities.
The City Council adopted the original policy for PIDs in September of 1991, with subsequent amendments in March of 1991, July of 2004 and February of 2009, all of which were intended to address Operating PIDs. Since 2009, the City has established two Capital PIDs and a Tourism PID. Capital PIDs are governed by a separate policy.
The attached revised Policy for Operating PIDs (Policy) outlines conditions that must be met for the City to consider the creation of an Operating PID and sets forth guidelines for how the City will utilize and administer Operating PIDs once they are created. Although most of the substantive language of the Policy remains from the February 2009 version, this revised Policy was re-organized to better conform with the recently adopted Capital PID policy and includes language updates and a few new sections. The most significant changes to the Policy include the following:
1. Language distinguishing Operating PIDs from both Capital PIDs and Tourism PIDs;
2. Addition of a section setting out the minimum requirements to consider when establishing an Operating PID;
3. Allowing the establishment for Operating PIDs in the City's extraterritorial jurisdiction as a means to encourage voluntary annexation;
4. The requirement of an annual administrative fee, which is the greater of: (a) two percent of the projected externally generated revenue for the particular year (including special assessments and any City contributions); or $2,000.00. Staff has determined this ongoing, annual fee is necessary to cover the City's annual costs associated with administering an Operating PID;
5. Authority of Staff to collect assessments in any manner authorized by law, including any collection efforts for unpaid assessments; and
6. A new section concerning the dissolution of Operating PIDs.
Consistent with the past PID policies, the cost to establish the PID will be paid on a reimbursement basis from the PID petitioner. No changes to the proposed policy exist with respect to reimbursing the City for the expenses to evaluate, process, and create a PID.
The adoption of this revised Policy is also intended to address deficiencies in PID management outlined in a report issued by the Internal Audit Department.
The proposed revised Policy will be effective upon adoption.This M&C does not request approval of a contract with a business entity.