Courtesy of Gary Nelson – Apr. 28, 2012
azcentral.com
In all likelihood, it will be the biggest bond election in Mesa history.
But only one “person” — the corporation known as DMB Associates — gets to vote. And only the people who eventually will own property in DMB’s Eastmark development will pay taxes to cover the cost of the bonds.
DMB is developing 5 square miles of the former General Motors property east of Phoenix-Mesa Gateway Airport. The company hopes to break ground for a park and the first 800 homes near Ray and Signal Butte roads in early 2013.
Those homes will need water and sewerlines, roads, street lights, traffic signals and other expensive trappings of civilization.
Normally, Mesa would build all that and charge the developer impact fees to offset the costs. But there is a cap on impact fees, and DMB is pitching Eastmark as something special, an environmentally friendly sub-metropolis that could eventually be a hub of international commerce tied closely to the airport.
To provide the kinds of infrastructure DMB wants, the City Council agreed early this month to form what is called a community facilities district. And this week the council, sitting as the board of directors for the district, agreed to call a bond election for May 17.
Before doing so, the council got a brief lesson on those types of districts from Scott Ruby, who has advised Mesa on previous bond questions and has been hired as the district’s lawyer.
“My goal tonight is, hopefully, that I don’t hear in two years, ‘Geez, I wish I’d known that when we formed this,’ ” Ruby said.
The City Council, Ruby said, will sit as the district’s governing board, but its decisions in that capacity will be separate from its role of governing the city.
“It is a special taxing district within the boundaries of your community,” Ruby said. “It is a distinct political subdivision.”
As such, it must produce its own budget, comply with open-meetings laws and meet all other legal standards.
Various city officials are appointed as officers of the district, apart from their duties with the city. The city manager, for example, also is the district’s manager.
Despite having much the same governance and management as Mesa, Ruby said, the district “is separate, independent from the city and in reality, the two shall not mix.”
The district can issue bonds and levy taxes to pay for both the capital costs and operation and maintenance. The levy for operations is capped at 30 cents per $100 of valuation.
The May 17 bond election will be held in the City Clerk’s Office. DMB is the only eligible voter because nobody yet lives in the 2,200 acres covered by the district.
DMB will decide — presumably in the affirmative — whether to authorize $435 million in bonds for the area.
“Obviously, that’s not one sale,” Ruby said. “That’s an amount that sits there, and through the next umpteen 20, 30, 40 years, it’s available to reimburse for infrastructure.”
The bonds are issued after infrastructure has been built, he said, because to remain tax-exempt, the proceeds must be spent within three years.
“We don’t want to have bond proceeds in existence and then we don’t have anything to buy,” Ruby said.
In other words, Mesa’s general fund will not be on the hook if the district somehow fails.
People who eventually buy land in Eastmark, and DMB itself, will pay the requisite property taxes for these bonds, in addition to their payments on voter-approved citywide bond issues.
Another such entity is contemplated for areas that will be more heavily commercial, including the proposed Gaylord resort and hoped-for high-rise districts on the eastern side of Ellsworth Road.
The first project to actually break ground in Eastmark, the First Solar factory at Signal Butte and Elliot roads, is scheduled for completion next month.
It will be occupied at first by about 130 employees, but weak global demand for solar panels has caused First Solar to indefinitely delay production in the 1.3 million-square-foot building.