Consideration and Adoption of Ordinance No. 2015-01:  An ordinance of the Mayor and Council of the City of Flagstaff, Arizona amending Title 10 Section 20 of the City Code regarding Subdivision Assurances.

The City of Flagstaff, like many other Arizona cities, experienced problems with failed subdivisions during the Great Recession. This revision to the City Code will strengthen the City's ability to complete subdivision infrastructure when the City finds it to be in the citizen's best interests.  Specifically, this ordinance will clarify that successors to original developers are required to post adequate subdivision assurances when they obtain title to the subdivision property.  It will also provide increased flexibility for the City Engineer as to the types of acceptable assurances and the ability to increase the amount of the assurances in certain instances.

Adoption of this ordinance would have a positive financial impact, especially in bad financial times when subdivisions may fail.

COUNCIL GOAL:
Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics

REGIONAL PLAN:
Goal WR.4  Logically enhance and extend the City's public water, wastewater, and reclaimed water services including their treatment, distribution, and collection systems in both urbanized and newly developed areas of the City to provide an efficient deliver of services.
Goal T.8 Establish a functional, safe, and aesthetic hierarchy of roads and streets.
Goal PF.2 Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics.

Council discussed this possible revision to the City Code in a work session on January 27, 2015 and provided direction to the City Attorney's office during an executive session on September 30, 2014. First reading of the ordinance was held on February 17, 2015.

Council may adopt the recommended changes to protect the City fiscally when subdivisions fail.
Council may reject the changes and determine that the community is better served by accepting some risk of failed subdivisions.
Council may accept some of the proposed changes and reject others.

Often during challenging financial times developers go bankrupt or sell their subdivision property to others due to financial problems.  Sometimes the subdivisions are partially constructed when the property changes hands.  Other times the subdivision is not at all constructed, but the roads in the subdivision are needed to connect to other properties.  In these instances the City would be better protected by clear language in its Code that requires successor developers to post financial assurances to provide funds for completion of the subdivision infrastructure when the City determines that it is beneficial to complete or partially complete construction of the infrastructure.

The proposed changes to the Code would not alter the City's discretion as to whether it will call upon the assurance if the developer does not perform.  The City's discretion is indicated in Section 10-20.100.040 (C)(1) and in the City's Assurance of Performance Agreement.

The proposed amendment to the Code would also make several minor changes:
1.  It would allow the City to enter into a Third Party Trust agreement in lieu of an agreement for assurances.  The Third Party Trust agreement prevents a developer from selling the subdivision or a portion of the subdivision to anyone before the infrastructure is completed and accepted by the City.
2.  It clarifies that the City may require assurances for private amenities included in subdivision plats such as clubhouses, pools, etc.
3.  It clarifies that assurances are not required if the infrastructure has been constructed and accepted by the City Engineer.
4.  It allows the City Engineer to require separate assurances for different types of infrastructure or to secure the site.
5.  It allows the City Engineering to require larger assurances if estimates related to franchise utilities are underestimated.
6.  It allows the City to hold a portion of the assurances until the one-year warranty period for the infrastructure expires.
7.  It clarifies that the City may deduct its costs for administering an assurance form the proceeds if necessary.
8.  It allows the City Engineer to increase the amount of the assurance due to change in circumstances when granting a time extension for completion of the infrastructure.