Monday, March 25, 2013

A Nutshell Summary of The Pending $17 Million Powder Mountain Bond Proposal

Weber County Forum gives the County Commission's new Powder Mountain bond proposal an unequivocal and unprecedented thumbs-up

In preparation for tomorrow's Weber County Commission session, about which we've had some discussion concerning the pending $17 million bonding issue which is item #8 on tomorrow's Commission agenda, we've done a little footwork today, interviewing Commissioner Jan Zogmaister and government finance wonk and County Assessor John Bond, each of whom, along with many other Weber County officials and staff, have expended substantial effort on this measure over the course of the past few months, to carefully help formulate a plan to achieve significant upgrades to existing Powder Mountain infrastructure.  All of the effort which has been expended, we've learned, was undertaken with an overriding goal of avoiding the imposition of additional burdens on the beleaguered Weber County taxpayer, through the use of  a special form of revenue source-funded bonding, a proposed municipal assessment bond. In the interest of shedding more light on this proposed project, we'll submit the brief nutshell summary below.

According to Commissioner Zogmaister and County Assessor Bond,  the funds derived from this bonding will be applied to three elements of Powder Mountain infrastructure improvements:
  1. A new publicly-dedicated (county) road, designed, among other things, to serve a new 103-unit Planned Residential Unit Development (PRUD),
  2. Culinary water improvements, including exploitation of a new water source and construction of additional storage tanks,
  3. Sewage treatment improvements, also designed to serve the above-mentioned PRUD project.
 In short, and in order to facilitate the proposal, the County Commission and Summit Group will enter into a special "Memorandum of Agreement" setting forth a legal arrangement whereby Weber County will obtain these funds under currently favorable municipal bond interest rates (which are considerably better than commercial bank rates), and apply them to these public infrastructure improvements listed above.  On the other side of the contract equation, the Summit Group, owner of the 1500 acres of property adjoining property which will primarily enjoy the benefit of these improvements, will in exchange agree to bear the full obligation for bond repayment. In order to qualify for the issuance of the assessment bonds contemplated by this proposed arrangement, the County proposes to designate by ordinance a special assessment district to be described by the  boundaries comprising Summit's 1500 acres, imposing an additional assessment on these "revenue source" properties, in an amount equal to the cost of bond debt service, plus fees and commissions. Consequently, the plan, as conceived, will not impose any additional tax obligation on any Weber County taxpayer, other than Summit Group itself, (and those individuals who may later purchase lots in Summit's planned PRUD). In the event of default, Weber County will have the remedy to immediately take these assessment-burdened properties by foreclosure, as well as the option to exercise numerous other other expedited remedies, rather than being forced to defer enforcement for five years, as is the case for property tax payment defaults.

As Gentle Reader Drew commented in response to yesterday's WCF article on this subject, "I see this as just a standard county-developer bond issue, I have seen it with other developers when a public road is created, this really seems much adu (sic) about nothing," in which regard wethinks he gets it pretty much right. Aside from the fact that Tuesday's Commission proposal involves culinary water and sewage treatment elements which go beyond the mere public road construction aspect, we'll agree in substance with Drew that this project is for all intents and purposes identical to hundreds of other such "mundane" public infrastructure improvement projects which are carried out successfully and without fanfare all over the country every year.

Accordingly, and subject to any negative information which might emerge from tonight's Summit Group-sponsored Town Hall Meeting, we'll give the Commission's pending Powder Mountain bond proposal an unequivocal thumbs-up.  Just as Summit Group, like any other developer who'll build out their property under Weber County zoning constraints have a right to the kinds of infrastructure improvements which will provide the availability of suitable public road, water and sewer amenities to their properties, Weber County has a corresponding duty to help out with reasonable mechanisms to bring those features into place.

Regarding tomorrow morning's meeting however, we'll stick with our earlier recommendation that our County Commission voluntarily set this matter forward for hearing which would include a public information/comment segment at least a few weeks hence.  Despite their formidable behind-the-scenes preparation, the Commission seriously dropped the ball public information-wise in this matter, thus sparking a fear-driven public reaction which could have been easily avoided had the Commission issued even so much as an informational press release, something which the Standard would have no doubt eagerly gobbled up. Regardless of the legalities regarding public notice in the realm of revenue bond issuance, the Commission's "minimalist tactics" ham-handedly created an unnecessary crisis of public confidence which was entirely unnecessary... a crisis which sorely needs to be corrected, or at least mitigated to the greatest possible extent wethinks.

This one's a no-brainer folks.

That's it people.  So who wants to throw in their own 2¢?


Bob Becker said...

Interesting that the charge made only two days ago on WCF that these bonding arrangements ( whatever their character) were negotiated "secretely" has, it seems, disappeared.

rudizink said...

Good point, Bob, and thanks. I'd planned to throw in a paragraph addressing that issue, but in my haste to get this article up at a reasonable hour, I flat forgot. In that connection, check the now-posted amendment to my original published draft, which DOES critically speak to that issue.

Dennis Craig said...

After expressing my concern yesterday via OVF about the bond issue, I attended the meeting with the Summit Group last night at Wolf Creek. It looks like there were errors in the prev OVF posts.

It is not a Revenue bond but instead an assessment bond that is used for this kind of development. County commissioners need to do a better job of explaining what is going on. Whether required by law or not, this is why public hearings should take place.

I questioned the use of bond funds to improve Powder Ridge Rd that has been partially pvt, but am ok if it will become public.

The debt appears to be properly secured by reserve funds by the Summit Group, but It would be a better bond issue (for the taxpayers) if a % of the price of each lot/home would go into a sinking fund to have the debt partially retired annually via an annual bond lottery as the properties are sold starting 5 years out after the completion of the bond issue.

For those Weber Co taxpayers who think this will be taxpayer $'s going to PM for their private development,the county commission needs to explain to the average person what a muni bond is: A municipal bond is a security sold in $1000 units to investors and not taken out of the county's funds. The investors are paid interest, usually semi-annually, until the debt is retired.

Dennis Craig

rudizink said...

Thanks for the update, Dennis!

Dennis Craig said...

Per the last paragraph, this is not a revenue bond. But whether Comm Zogmaister or any other media misrepresented this bond issue as a revenue bond, WCF hits the nail on the head by restating the importance of hearings and better communication to taxpayers.

rudizink said...

At risk of dwelling on what I consider to be a relatively trivial detail at this juncture, Mike, I'd like to point out that an "assessment bond" is merely a subtype of the general municipal bond category "revenue bond." The terms are not mutually exclusive, but rather overlapping. I'll paste in an excerpt and link below an informative article on this topic:

"The tax-free municipal bond market is massive. It is the mechanism through which cities, counties, and states build roads, schools, hospitals, airports, sewage facilities, water lines, and so much more. Yet, not all municipal bonds are created equally. From a broad perspective, there are two categories of municipal bonds. The first are known as General Obligation bonds, or GO bonds, for short. The second are known as Revenue bonds."

General Obligation Municipal Bonds vs. Revenue Municipal Bonds

The current Powder Mountain "assessment bonds" arrangement will generate its revenue from the (Summit Group) "special assessment revenue source," and not "by the full faith and credit of the (Weber County) issuer, including the power of the municipality to tax its citizens," and thus falls squarely within the general "revenue bond,"category, within which category the term "assessment bond" merely describes one of a broad array of special revenue bond subtypes.

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