Consideration of items related to formation of the “FLAGSTAFF DOWNTOWN BUSINESS IMPROVEMENT AND REVITALIZATION DISTRICT”:

1.  Conduct a Public Hearing and hear testimony and evidence presented in support of, or in opposition to, the formation of the “Flagstaff Downtown Business Improvement and Revitalization District”, including the areas to be included and/or the General Plan for the district; and

2.  Consideration and Possible Adoption of Resolution No. 2014-06:  A Resolution of the City Council of the City of Flagstaff, Arizona, Forming the “Flagstaff Downtown Business Improvement And Revitalization District”, a Special Taxing District; and appointing the initial Board of Directors; and

3.  Consideration and Possible Adoption of Resolution No. 2014-07:  A Resolution of the City Council of the City of Flagstaff, Arizona, Approving an  Intergovernmental Agreement for Services with the Flagstaff Downtown Business Improvement and Revitalization District.

Consideration of this action has been requested by Downtown property owners on the basis that the creation of this mechanism by the City Council will empower the property owners to effectively manage the district for greater economic stability and growth.

If the district is formed:  Limited, however, administrative expenses related to the City Clerk and Treasurer serving as the District Clerk and Treasurer.
If the Intergovernmental Agreement for Services is approved:
1.  FY14 (Current FY):  $127,000 from the Redevelopment Fund
2.  In future years:  An amount equal to the District levied Ad Valorem Taxes that would be due if the City owned properties were privately held (Expected to be $11,800 per year but authorized up to $15,800 per year).  Funding options vary.

Effective governance

1.  Resolution No. 2008-05:  A Resolution Adopting the Downtown Flagstaff Management Plan.
2.  Resolution No. 2014-03:  A Resolution of the City Council of the City of Flagstaff, Arizona, Declaring its Intention to Form the “Flagstaff Downtown Business Improvement and Revitalization District”, a Special Taxing District; and Providing for a Public Hearing Prior to Formation of the District to Consider any Objections of Property Owners (Attached).
3.  On January 7, 2014, the City Council authorized the City Manager to execute the petition(s) on behalf of City-owned properties seeking to initiate the District formation process.

Following the Public Hearing, with regard to the resolution: 
1.  Adopt the Resolution No. 2014-06 forming the District as written, or
2.  Modify the District's General Plan or delete any property determined not to be benefited by the District and then adopt the modified resolution forming the District, or
3.  Do not adopt a resolution forming the District and provide additional or alternative direction regarding district management.

Following adoption of a resolution forming the District, with regard to the Intergovernmental Agreement for Services:
1.  Adopt the Resolution No. 2014-07 approving the Intergovernmental Agreement for Services as written, or
2.  Modify the Intergovernmental Agreement for Services and then adopt the modified resolution approving the Intergovernmental Agreement for Services, or
3.  Do not adopt a resolution approving the Intergovernmental Agreement for Services.

Please see the Staff Summary Report prepared for the January 7, 2014 City Council Meeting regarding district formation (Attached) .

Intergovernmental Agreement of Services (IGA) (Attached): 

The first component of the IGA establishes a contract with the District to develop and implement the organizational needs of the District, to provide ongoing day-to-day district management, and to provide and implement comprehensive long range planning for the District.  If these services are not contracted out, the City would need to continue to provide the services, the accomplishment of these tasks would need to wait until District funding is available (2015), or further reliance on volunteer efforts would be required.  The second component of the IGA recognizes the value added  to the City's real estate holdings by district management and  indicates that the City intends to pay an amount equal to the District levied Ad Valorem Taxes as if our properties were privately owned (the same commitment that Coconino County has made).  Finally, the IGA establishes (or defines) some basic relationships between the City and the District.  This arrangement is very much the same as the founding and ongoing operations of the Mill Avenue District in Tempe and similar to most other downtown district formations.

Please see the Staff Summary Report prepared for the January 7, 2014 City Council Meeting regarding district formation (attached).

Public Hearing:

This Staff Summary Report, the recommendations herein, are based on the known support of Downtown property owners for the formation of a district.  The Public Hearing portion of the formation process is designed to allow the City Council to hear and consider other points of view.  As a result, it may be appropriate to exclude properties, modify the General Plan.

Board of Directors:

Please note that the resolution forming the District also appoints the initial members of the Board of Directors for the District.  The term of service is one year, at which time District elected Directors will serve.  There is a maximum of three board members and all property owners in the district are qualified to serve. 

While the City Council may appoint any property owner from the District, the City has received applications from John VanLandingham, Dave Stilley, and Antoinette Beiser  - property owners who wish to serve on the initial Board of Directors.

Clerk and Treasurer:

Please note that the City Clerk and Treasurer (Finance Manager) serve as the Clerk and Treasurer for the District until replacements are appointed.  The IGA imposes financial penalties if the District does not appoint a new Clerk and a new Treasurer by September 1, 2014.
Funding:

The stakeholders believe, and staff concurs, that both the initial funding and the ongoing funding proposed in the IGA are necessary to afford a seamless continuation of the formation process, to allow District operations to start immediately, and to assure success of this stakeholder driven effort.

Important Dates and Actions:

Following adoption of a resolution forming the district (Resolution No. 2014-06), there is a 30-day judicial review period, allowing a special action to be filed to challenge the legality of formation of the district and/or to challenge whether land is benefited by being part of the district.  The City would likely be a party in such an action.

In order to levy a tax in 2015, the District must be formed and certain notices provided to the Coconino Tax Assessor's Office and the Arizona Department of Revenue by February 15, 2014.  The stakeholders, City staff, and the City Council have been diligently working to meet those deadlines.  To continue to meet these deadlines, in the event the City Council determines that it is appropriate to exclude properties, modify the General Plan, or modify the IGA, the City Council is requested to authorize the appropriate City staff approve such changes in accordance with the City Council’s direction.

The District must also conduct an election regarding the Ad Valorem taxes.  This is not a part of any City actions; however, the process to do so is underway.

The proposed funding in future years, as the IGA is written, would be subject to annual budget appropriations by the City Council so as not to obligate future city councils.  Like any other landlord, the City may pass along the added costs to its tenants.  The amount of the annual funding would change as the District changes the Ad Valorem taxes being levied.  Such a change requires an election indicating support of the District members and the City properties are voting members of the District.  The amount would also change as the City acquires, modifies, or disposes of property. 

Future funding sources need to be included in budget discussions.  Each of the City's properties have different uses and users.  For those that are rented, increasing the rents to account for the added costs, or absorbing the added costs, would emulate private ownership.  For those occupied by City functions, the Municipal Courts and the Train Station, funding from the budgets of the facilities may be appropriate.  Note that the Redevelopment Fund will be exhausted after funding the construction of the Municipal Courts and the initial year District funding proposed in the IGA.

Please see the Staff Summary Report prepared for the January 7, 2014 City Council meeting regarding district formation (attached) .

Please see the Staff Summary Report prepared for the January 7, 2014 City Council Meeting regarding district formation (Attached) .

Consult

Following adoption the resolution of intention to form the district (Resolution No. 2014-03), the City Clerk caused Notice of the adoption of the resolution to be mailed by the US Postal Service, first class mail, to all of the property owners within the proposed district boundaries as identified on the Coconino County Assessor’s Roll, along with a copy of the resolution. This mailing occurred on or about January 13, 2014.  The City Clerk also caused the Notice along with the resolution to be published in the Arizona Daily Sun on January 14, 2014.  The Notice advises the property owners of their right to file written objections concerning the proposed district on or before February 3, 2014 at 5:00 p.m., and to appear at the Public Hearing.  Affidavits of mailing and publication have been placed in the City Clerk’s file and are available for public inspection, as required by law.

The City also issued a request for applications for any property owners in the proposed district who wish to serve on the initial board of directors.  This request was posted on the City website and also was advertised in the Arizona Daily Sun. 

Since the last action of the City Council, and as of this writing, one property owner has contacted City staff seeking information regarding the district formation, and seven (7) objections  have been filed with the City Clerk (attached). The City received three (3) applications to serve on the Board of Directors. An update, if any, will be provided to the City Council prior to the public hearing.

COUNCIL INTERVIEW TEAM: Councilmember Brewster and Councilmember Oravits