Consideration and Possible Adoption of Resolution No. 2014-16:  A Resolution of the City Council of the City of Flagstaff, Arizona, Repealing Resolution No. 2014-07 and Approving an Intergovernmental Agreement for Services with the “Flagstaff Downtown Business Improvement and Revitalization District” to accommodate more flexibility in the development of this first-of-its-kind District.

This action is proposed by the Flagstaff Downtown Business Improvement and Revitalization District (the District) and the City of Flagstaff (the City) to accommodate a more flexible schedule and to clarify certain provisions of the IGA.

As with the IGA approved February 4, 2014 (Resolution 2014-07), the revised IGA, if approved, would have the following financial Impacts:
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  ($11,800 in FY15).

Effective Governance

Resolution 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 (adopted February 4, 2104).

1)  Adopt Resolution No. 2014-16.
2)  Modify the IGA and adopt Resolution.
3)  Do not adopt Resolution.

For overall background information, please see the Staff Summary Report for the January 7, 2014 City Council Meeting (Attached) and Staff Summary Report for the February 4, 2014 City Council meeting (Attached).

Since the original IGA was approved on February 4, 2014 (Resolution 2014-07), the District has retained Counsel and begun the Ad Valorem Tax election process.  The schedule for the provision of services in the IGA was based on the District conducting an  election immediately following the formation of the district.  Based on advice from their attorney, the District has developed a different schedule for holding the election.  While targeting a June 2014 election, due to statutory and logistical requirements, it is possible that it could be delayed to later in the year.  The need to accommodate a more flexible schedule was the impetus for revising the IGA.

As such a district has not yet been created in Arizona, the District and the City have been moving forward in partnership working out certain post-formation details.  While the election schedule is the main consideration, and on that basis having decided that bringing a revised IGA proposal before the City Council was warranted, the District and the City seek to memorialize some of the other clarifications that have been discussed.  These additional changes include a provision conditioning the IGA approval on the successful Ad Valorem Tax election; a clarification on assessment of right-of-ways; a clarification of the required insurance; and deleting the indemnification clause.

1.  The primary changes relate to the "due dates" within the Scope of Work (Exhibit 1) as follows:
      a.  Many dates have been changed from fixed dates to a specified amount of time after a successful election.  This allows the District  more flexibility and has no negative or financial impacts on the City.
      b.  Some of the work should not be delayed or tied to a successful election - notably the services of the City's Treasurer and Clerk as Treasurer and Clerk of the District.  Therefore, for those items, the dates have remained fixed dates.  As a result of this change, the contents of the Scope of Work were reorganized, moving certain items to a new section titled "The following tasks shall be performed per the fixed completion dates shown".
      c.  Please note that some small time extensions have been built into some of the new due dates to account for the lack of "immediateness" in conducting the election.  Notably the services of the City's Treasurer and Clerk were extended three months. 

2.  A provision has been added to the adopting resolution that conditions the City Council approval upon the District conducting an election and being successful in instituting an Ad Valorem Tax.  The resolution that the District intends to adopt for their approval of the IGA will have an identical provision.  Essentially, the Board of Directors of the District is not interested in accepting funds and providing services unless their membership approves an ongoing funding source.

3.  While the payment of an "assessment" by the City is voluntary and subject to annual budget appropriations, language has been added clarifying that there will be no assessment sought or paid for property that is actually a right-of-way.  Only parcels would be subject to the voluntary assessment.  However, the use of the word "property" in applicable laws the could be interpreted differently and thus this clarification memorializes the intent of the District and the City in forming this agreement.

4.  The section requiring the District to provide insurance has been changed such that the provision of insurance is at the discretion of the City instead of mandatory.  The insurance provision requirement has also been expanded to include types, amounts, and other particulars related to the provision of insurance.  As a result of this change, an entirely new exhibit (Exhibit 2) has been added to the IGA.

5.  The original blanket indemnification clause has been deleted, as this requirement was felt by the District to be one sided. There is still a provision in the scope of services contemplating that the City Clerk and  City Treasurer will be indemnified for their work on behalf of the District until they are replaced. 

As with the IGA approved February 4, 2014 (Resolution 2014-07), the revised IGA, if approved, would have the following financial Impacts:

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 first year District funding proposed in the IGA.

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

Consult

Please see the Staff Summary Report for the February 4, 2014 City Council meeting (Attached).

Since the formation of the District, no informal or formal objections have come forth to the City or the District.  The District Board of Directors has been conducting monthly meetings that are open to the public.  Some members of the public have attended - both district members and downtown tenants. 

1)  Adopt Resolution No. 2014-16, repealing the old IGA and approving the revised IGA as written, or
2)  Modify the revised IGA and then adopt a resolution repealing the old IGA and approving the IGA as modified, or
3)  Do not adopt the resolution.