Discussion and possible directions to staff on any and all matters regarding the resolutions for creation and order of work for the required improvement districts for Belleza Del Desierto Unit III and Bienestar Estates Phase 2 Subdivisions. (Jose A. Guzman, Director of Development Services)

The City of San Luis does not collect property taxes, so Improvement Districts are necessary to manage and fund the maintenance of certain infrastructure and services that are part of residential subdivisions. These districts ensure that the costs for maintaining services like streetlights, landscaping, and retention basins are distributed among property owners who directly benefit from them, rather than being absorbed by the City’s general fund.

BACKGROUND:
The City of San Luis established its first Improvement District in 1999. Of the city's 63 residential subdivisions (with each phase counted as a separate subdivision), 34 are currently covered by Improvement Districts, while 29 are not. Subdivisions without Improvement Districts place the burden of maintenance costs on the City's general fund.  This reliance on limited general funds makes it critical for new subdivisions to establish Improvement Districts as part of their development process.

Three types of districts are required for new developments: the Street Lighting Improvement District, the Enhanced Municipal Improvement District, and the Landscape Improvement District.

• Street Lighting Improvement Districts are created pursuant to A.R.S. §§ 48-572(A)(7), 48-616, and 48-617. These districts handle the maintenance and electricity costs of streetlights within subdivisions. Developers install the streetlights, and homeowners in the district pay a portion of the electricity costs. Property owners will pay a special assessment through their property tax bills. 
• Enhanced Municipal Improvement Districts, created under A.R.S. §§ 48-575 and 48-576, cover the maintenance of retention basins that collect rainwater. Property owners will pay a special assessment through their property tax bills. 
• Landscape Improvement Districts, established under A.R.S. § 48-574, ensure that subdivision landscaping is maintained, with costs shared among property owners. Property owners will pay a special assessment through their property tax bills. 

IMPROVEMENT DISTRICT FORMATION PROCESS:
The creation of an Improvement District begins with a signed petition from the developer requesting its establishment. Two resolutions are then required for each district: one to create the district (resolution of Intention) and another to activate it (Resolution of Order).

For a typical subdivision with three required districts, a total of six resolutions must be approved by the City Council:

• Resolution of Intention to Create Street Lighting Improvement District. This resolution Declares the City's intention to create a district for street lighting, based on a developer's petition. This district ensures the installation and maintenance of street lighting infrastructure.
   
• Resolution of Order for a Street Lighting Improvement District. This resolution authorizes the activation of the district and approves its implementation and operation.
   
• Resolution of Intention to Create a Municipal Improvement District. This resolution declares the City's intention to create a district to manage and maintain infrastructure such as retention basins or other specified municipal improvements within a subdivision.
   
• Resolution of Order for a Municipal Improvement District. This Resolution activates the district, authorizing its implementation and associated operations.
   
• Resolution of Intention to Create a Landscaping Improvement District. This resolution declares the City's intention to create a district to manage and maintain landscaping within the subdivision, including landscaping along arterial and collector streets, retention basins, and other open spaces.
   
• Resolution of Order for a Landscaping Improvement District. This resolution authorizes the activation and operation of the district to fund and manage landscape maintenance and improvements.

Since this process is now customary, these resolutions are generally placed on the Consent Agenda for Council approval.

REGULAR COUNCIL MEETING OF DECEMBER 11, 2024:
During the Regular Council Meeting on December 11, 2024, the following resolutions related to the creation and activation of new improvement districts for the Belleza del Desierto Unit III Subdivision and the Bienestar Estates Phase 2 Subdivision will be placed on the agenda:

Belleza del Desierto Unit III Subdivision

• Resolution No. 2338 - Intention to Create Belleza del Desierto Unit III Street Light Improvement District. 
• Resolution No. 2339 - Order of Work for Belleza del Desierto Unit III Street Light Improvement District.
• Resolution No. 2340 - Intention to Create Belleza del Desierto Unit III Municipal Improvement District.
• Resolution No. 2341 - Order of Work for Belleza del Desierto Unit III Municipal Improvement District.
• Resolution No. 2342 - Intention to Create Belleza del Desierto Unit III Landscaping Improvement District. 
• Resolution No. 2343 - Order of Work for Belleza del Desierto Unit III Landscaping Improvement District. 

Bienestar Estates Phase 2 Subdivision

• Resolution No. 2344 - Intention to Create Bienestar Estates Phase 2 Street Light Improvement District.
• Resolution No. 2345 - Order of Work for Bienestar Estates Phase 2 Street Light Improvement District.
• Resolution No. 2346 - Intention to Create Bienestar Estates Phase 2 Municipal Improvement District.
• Resolution No. 2347 - Order of Work for Bienestar Estates Phase 2 Municipal Improvement District.
• Resolution No. 2348 - Intention to Create Bienestar Estates Phase 2 Landscaping Improvement District.
• Resolution No. 2349 - Order of Work for Bienestar Estates Phase 2 Landscaping Improvement District

These resolutions will be listed individually as 12 separate items on the Consent Agenda for the Regular Council Meeting on December 11, 2024. Council may request further discussion during the meeting if necessary.

STAFF RECOMMENDATION:
Improvement districts are essential for ensuring the long-term maintenance of subdivision infrastructure without placing an undue burden on the City's general fund. These districts equitably distribute financial responsibility among property owners within their boundaries.

Staff recommends that the Council approve the resolutions as outlined. If additional discussion is required, staff will provide further details during the work session.