From
Tannie Camarata, Cash & Debt Manager
Title
Payment in Lieu of Taxes Agreement with Grand Prairie Metropolitan Utility Reclamation District
Presenter
Tannie Camarata, Cash & Debt Manager
Recommended Action
Approve plan for City Payment in Lieu of Taxes
Analysis
The Grand Prairie Metropolitan Utility Reclamation District (GPMURD) was created in 1985 by the state legislature to reclaim land from the flood plain through a series of levees, lakes and pump system. The district issued debt in 1985 and 1986 to build the levee system and roadways.
In the late 1980's the district experienced financial problems due to the real estate collapse. The Crow Family interest took control of the district in the early 1990's in an effort to revitalize the district.
In 1995 the delinquent principal, interest and property taxes were brought up to date with the financing for Lone Star Park. Lone Star agreed to a Payment in lieu of Taxes (PILOT) agreement with the district and side agreements with Pollock Paper and Lone Star Race Park Ltd. which provided the district with funds to make debt service payments. This allowed the district to keep the overall tax rate lower than what would be required for M&O and debt service payments. This year's PILOT payment by Lone Star was $1,657,257 which equates to a tax rate equivalent of $9.88 per $100 valuation. The PILOT agreement with Lone Star along with side agreements with Pollock and Lone Star Race Park Ltd. expired in April 2012 when the final debt service payment was made by the district.
The district has approached the city about either dissolving the district and taking over operations or providing financial assistance to help fund the district's operations. The district will be under considerable financial stress starting this year as most of the development in the district is tax exempt property owned by the City combined with the expired PILOT agreement with Lone Star.
The Finance and Government Committee has reviewed the options available to the city at their meetings on June 5, 2012 and July 18, 2012 and recommend a briefing to the full City Council at the August 7, 2012 briefing session. At the August 7 briefing meeting staff presented three options to the City Council as detailed below:
1. Do nothing and let GPMURD operate as they have in the past.
2. City dissolves the district and takes over the operation and maintenance of the levee system
3. City contracts with GPMURD to provide funds to operate
Financial Consideration
The financial impact of the options listed above are as follows:
Option 1 Do nothing.
The district would have to levy an estimated tax rate of $1.52 per $100 valuations. The largest impact would be to Pollock Paper. Their estimated taxes for FY13 would increase from approximately $77,367 to $214,545. They represent approximately 79% of the districts expenses.
The estimated amount for Lone Star, Verizon and the Airhogs is $21,760 or 8% of the districts expenses. The remaining 13% or $35,695 would be paid by companies related to Lone Star, Verizon, Airhogs and Lone Star Race Park Ltd.
Option 2 the City dissolves GPMURD
The City Dissolves GPMURD and integrates the operations into the City's Storm Water Utility. Public Works has estimated the first year's estimated budget at $250,000 which includes funds to automate the manual pump system and upgrade electrical utilities to the facility.
Staff has been researching the possibility of creating a PID to assess the property owners to help offset the additional expenses to the City. Creating a PID will be difficult without the cooperation of Pollock Paper as they represent approximately 76% of the real taxable property in the district. Another revenue possibility is for the Sports Corporation to contribute funds for the real property it owns in the district.
Option 3 the City Contract with GPMURD
GPMURD would continue to operate as it does now. They would levy a $0.60/$100 assessed valuation to operate the district. This would generate approximately $107,000. The City would enter into a Payment in Lieu of Taxes (PILOT) Agreement of approximately $144,720 for FY13 with the payment funded in the City's Storm Water Utility budget. The PILOT amount would be subject to change each year depending on the GPMURD budget.
The City Council at the briefing session supported a recommendation for Option 3 whereby the City would enter into a PILOT agreement with the district. The agreed upon amount is $165,000 for one year with annual renewals for five years. Authorize the City Manager to execute the renewal options with aggregate price fluctuations of the lesser of up to $50,000 or 25% of the original maximum price so long as sufficient funding is appropriated by the City Council to satisfy the City's obligation during the renewal terms.