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01 - PWMD Report PresentationPueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis November 12, 2019 Background 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 2 Formed as a Metropolitan District in 1969 McCulloch Properties Inc. 25,990 Acres to build a planned community in phases Revised the Service Plan in 1972 Added 4,000 acres. Platted the entire area and removed phasing Mentioned water as problematic for the first time •In 1972, the developer projected a population of 39,000 in 2020 Today the population is 30,700 81% of Target •In 1972, the developer projected a total assessed value for the district of $428,900,000 Today the total assessed valuation is around $270,000,000 60% of Target 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 3 1972 Projections Another McCulloch Development Formed as District in 1963 Incorporated as a City in 1978 Lake Havasu City, Arizona 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 4 In 1964, the 16,530 acres had one paved road. Today is home to over 53,000 people and has 775,000 visitors annually To complete the study, Ehlers engaged Anderson Analytics who amassed data necessary to predict the future population of the District over the next ten years. Anderson was also instrumental in explaining how the issue of sufficient potable water might thwart development. They provided data regarding possible comparable cities that enabled PWMD to select 6 comparable cities. And they used data from these cities to outline the costs that would be involved to move from a District to an incorporated City. Their data is scattered throughout the report, and their complete reports on population and comparable city raw data are appended to the report. Anderson Analytics 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 5 Paul Wisor of Garfield & Hecht, P.C. provided legal advice where needed during the study. He specifically assisted in clarifying the process for dissolution of the district And he provided the process for incorporation. He further reviewed the report for legal inconsistencies. Garfield & Hecht 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 6 11/13/2019 7Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis Executive Summary Municipality Population General Government Taxes Per Capita Tax Town of Yucca Valley, California 21,483 11,936,885$ 555.64$ Windsor 23,386 26,154,538$ 1,118.38$ Fountain 28,799 19,038,490$ 661.08$ Pueblo West Metropolitan District 31,704 5,875,409$ 185.32$ Lake Havasu City, Arizona 53,463 39,049,359$ 730.40$ Rio Rancho, New Mexico 93,317 41,304,341$ 442.62$ Arvada 115,320 89,680,000$ 777.66$ Non-Modified Current Structure •How far can you go on 20.23 mills forever? But it’s not a viable, sustainable option Sustainable Metropolitan District •Starts with a successful election creating a one-cent sales tax (City of Pueblo rate is 3.7%) But it doesn’t stop there Incorporation •Brings new tools and autonomy to the community But there’s a cost 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 8 Financial Options/Models 11/13/2019 9Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis Financial Options/Models 39.4848 mills Two More Cents for a total of Three Cents 7.1637 mills for operations 46.6484 mills $71.99/month Incorporated 20.23 mills One Cent to Build and Operate Fire Station #2 19.2548 mills for operations 39.4848 mills $60.93/Month Sustainable 20.23 mills No Sales Tax No Additional 20.230 mills $31.22/Month Non-Modified Incorporation plan assumes Sustainable Model is accomplished first. 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 10 Financial Model Assumptions The average home price is $259,000 General Fund Unassigned Fund Balance needs to be consistently at 25% of expenditures for the year per District Board Policy. There’s a bit more to your policy, but the model hits this, most impactful tenet General revenues increased by 2%/year, investments by 1.5% Specific Ownership increased by 5%/year Revaluation increases for property tax equaled 5% in 2020, 3% in 2022 and 2% every other year after Expenditures increased by 4%/year Residential property values grow according to Anderson predictions Commercial remains at current levels One cent •$1,500,000 •PWMD Finance Office 6 mills •Each cent of sales tax equals 6 mills of property tax (or $9.26/month to homeowner) Limits •District: Safety, Streets, Transportation •City: Any purpose Sales Tax 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 11 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 12 Non-Modified Option 0 200 400 600 800 1000 1200 Town of Yucca Valley, California Windsor Fountain Pueblo West Metropolitan District Lake Havasu City, Arizona Rio Rancho, New Mexico Arvada Tax Revenue Per Capita Non-Modified Current Structure 11/13/2019 13Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 0% 10% 20% 30% 40% 50% 60% 70% 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Allocation of General Fund Balance Nonspendable Restricted (TABOR Emergency Reserves) Assigned (Equipment)Unassigned Fund Balance as a % of Expenditures Non-Modified Option Property Tax 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 14 PWMD has existed on 20.23 mills property tax for the last 30 years 69% of PWMD Assessed Value is residential and is limited by Gallagher In 1982 when Gallagher passed, 21% of actual value to your home was assessed. Today it’s 7.15% If the residential assessment rate were still 21%, McCulloch’s prediction of assessed value today would have been exceeded. Adding any additional facilities or services without increasing revenues will necessitate reductions in other services. Fire Station and its operations •One Cent Sales Tax Civic Building •DOLA Grant •Insurance Proceeds •Financing 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 15 Sustainable Metropolitan District PWMD is losing valuable, productive employees to local, competing governments and is finding it difficult to attract new employees. •In 2019 comps were assembled for similar positions in the City of Pueblo, Pueblo County, Ca �𝑛𝑛on City and the City of Fountain. •Pueblo West Metropolitan District’s wage scale was on average 18% below these nearby, competing local governments. •Consistent underpayment leads to costly dissatisfaction among employees. It erodes the community trust when employees disengage. The longer the problem exists, the more difficult it is to fill the gap. 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 16 Market Rate Salaries In the sustainable mode, the District is 37 FTE short-staffed •4.5 FTE in General Government •15 FTE in Parks and Recreation •17.5 in Streets and Engineering 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 17 City Arvada Rio Rancho Lake Havasu Pueblo West Fountain Windsor Yucca Valley Average Total FTE*441.05 429 351 86 147.7 110 34.5 228.46 Population 115,320 93,317 53,463 30,734 28,799 23,386 21,483 52,357 FTE Per 1,000 3.825 4.60 6.57 2.80 5.13 4.70 1.61 4.36 Staffing Levels The FTE information excludes fire personnel. 11/13/2019 18Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis Purpose for New Revenue Mill Levy Taxpayer Cost per $259,000 home Sales Tax First Year Revenue Generation Fire Safety One Cent $1,500,000 Civic Building $0.00 $0.00 (Grant funds,insurance,and Certificate of Participation financing.) Staff Salaries 3.3761 $5.21/Month $891,891 Increased Staff & maintain 25%FB 15.8787 $24.51/month $4,194,804 Total 19.2548 $29.71/month One Cent $5,086,695 Cost to Sustain the District 11/13/2019 19Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 0% 10% 20% 30% 40% 50% 60% 70% 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Allocation of General Fund Balance Nonspendable Restricted (TABOR Emergency Reserves) Assigned (Equipment)Unassigned Fund Balance as a % of Expenditures General Fund –Sustainable Mode Incorporation 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 20 Implement all Remedies of Sustainable Mode –37 employees added 2FTE Admin, Clerk & Court 1.5 FTE Finance and Human Resources 1.5 FTE Office of Emergency Management 2.0 FTE Public Works 1.0 FTE Information Technology 3.0 FTE Community Planning Policing Services As an Incorporated City, Pueblo West will be required to provide policing services to its residents and businesses The Pueblo County Sheriff’s Office (PCSO) currently provides this service If the District is satisfied with PCSO, it is recommended that the newly incorporated city contract with the County to continue that service Municipal Court If the City contracts for policing services with PCSO, a part- time contracted municipal judge and city prosecutor should be sufficient to handle ordinance violations. 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 21 Police and Municipal Courts The District will likely be comfortable with City Government Home Rule Charter Size of Council Mayoral Power City Manager Authority Authority to regulate local and municipal matters Required to enforce local laws Greatest authority over land use and over types of businesses allowed and their location May self-collect sales tax 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 22 City Government There are multiple reasons to incorporate Removes the threat of annexation by another local government Provides the citizens with definitive control of land uses Opens up sales, excise, occupation tax opportunities. Brings a number of commercial and industrial incentive tools Commercial and industrial development brings 3 times the property tax revenue than residential. 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 23 Reasons to Incorporate Cost to Incorporate 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 24 39.4848 mills Two More Cents for a total of Three Cents 7.1637 mills for operations 46.6484 mills $71.99/month Incorporated 20.23 mills One Cent to Build and Operate Fire Station #2 19.2548 mills for operations 39.4848 mills $60.93/Month Sustainable 20.23 mills No Sales Tax No Additional 20.230 mills $31.22/Month Non-Modified Percapita Impact 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 25 $- $200 $400 $600 $800 $1,000 $1,200 Town of Yucca Valley, California Windsor Fountain PWMD Non-Modified PWMD Sustainable Metro PWMD Incorporation * Lake Havasu City, Arizona Rio Rancho, New Mexico Arvada Incorporation Process 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 26 Fall 2021 PCSO Contract January 2022 Petitions, Budget August 2022 Questions to County Clerk November 2022 Election; then form a Charter Commission May 2023 Charter Election and Election of Officers July 2023 New City Begins Summary 11/13/2019Pueblo West Metropolitan District Comprehensive Fiscal and Sustainability Analysis 27 Do nothing, but plan to cut future services and staff. Do the heavy lifting and ensure a healthy sustainable District. Invest a little more and take control of your community’s destiny.