SPECIAL CITY COUNCIL MEETING MINUTES

MARCH 27, 2008

The meeting was called to order by President Gore at 6:00 p.m.

MEMBERS PRESENT: Mr. Taylor, Mr. Fogt, Mr. Gore, Mr. Marshall, Mr. Reams, Ms. Groat Excused: Ms. Sellers

OTHERS PRESENT: City Engineer Roush, Finance Director Morehart, Wastewater Superintendent Varner, Jesse Dickinson, Freeman May, Gary Lee, Steve Stolte, Randy Loebig, Scott Mallory, Greg Stype

AGENDA:

Jerome Village Community Authority

Purpose of the meeting was to discuss a Community Authority in the Jerome Village development. The developer, Randy Loebig of Highland Management, requested this meeting.

Mr. Loebig addressed Council. He gave an overview of the Community Authority. It takes approximately 1,000 acres to create a Community Authority and gives you a quasi governmental entity that can fund infrastructure improvements using taxes and debt. It’s created through the County Commissioners. The closest city has an approval right, but from a structure standpoint, the Community Authority allows the developer to issue debt to put in the major infrastructure to the project. Many discussions have taken place with the City of Marysville about wastewater treatment and water and with the County on roadways. A lot of the infrastructure that you would normally have if you were close to a City, which they are not, would be done through a millage, which looks a lot like a special assessment. The millage is on the property which will eventually get developed. It will be collected through the County and returned back to the Community Authority to pay debt service. It’s most always used for capital improvements. Can fund fire safety if it’s a capital improvement. It’s really not set up to do operation and maintenance. In fact, the code does not allow it to pay for salaries and operation and maintenance.

The Community Authority will be structured to do this project in phases. South end of the project is Brock Road to Wells Road. Will fund through taxes and debt the first phase of infrastructure. Will bring off-site water from Marysville, possibly Industrial Parkway, down Brock Road to the south end of the project. Hyland Croy will be extended north. It will allow the developer to take a force main to the north of the project all the way to the treatment plant. Will build the County roadway, which is Hyland Croy and then the east/west roadway is (inaudible) Parkway.

The actual roadways in each one of the neighborhoods will be built by the developers themselves and will be funded independent of this Community Authority.

Mr. Roush met with Highland Management and the County and said they are extremely close to a final agreement. The final agreement will require some amendments to the County/City sewer agreement. Mr. Lee said the agreement between the City and County is going to take some modification to allow for the oversizing that Jerome Village is going to be doing and for recoupment to fit all the structure in. One of the goals that everyone has had in these meetings is to make sure that this is a good deal for Marysville, to make sure that the tap fee is appropriate and makes sense for all the people in Marysville. Restructuring will be needed in the agreement with Jerome Village so that that is an acceptable tap fee to be paid.

Mr. Roush said development will pay for development. The Community Authority would put in the infrastructure, and the adjustment to the tap fee would be used to pay the Community Authority for oversizing put in the infrastructure.

Mr. Gore said this Community Authority allows the project to get started and allows the infrastructure development, but it doesn’t compromise the quality of the overall lines and the project. Mr. Roush said the developer will meet the City specifications/requirements.

Mr. Taylor asked how close the agreement is to being finalized. Mr. Loebig said they are putting together the paper trail for the agreement to be used as background information. The County/City fees have to be resolved. Mr. Roush said from the City’s standpoint, they expect to recover their basic tap fee rates within the City, and then add something on top of that for payback. Jerome Village expressed concern that the add-on to the tap fee couldn’t be so much to make the housing costs, the connection to the sewer, too high. Currently trying to find a way to make that surcharge figure something that is acceptable to them and still does what the City wants it to do.

Mr. Lee said the Community Authority can be expanded. If someone has 50 acres beside Jerome Village that they want to develop, that property will have to go into the Community Authority, which will put them under the assessment, so they’re picking up their fair share of the infrastructure oversizing that Jerome Village has furnished.

Mr. Reams asked if the Community Authority applies to all types of land uses in terms of residential and commercial. Mr. Loebig said the Community Authority is currently set up to go over 1400 acres, which is currently in their zoning. It includes residential, commercial and schools, but schools won’t pay on the tax.

Mr. Reams asked how a government entity like a school, pays its fair share of development?

Mr. Greg Stype of Squire, Sanders & Dempsey addressed Council. He responded to Mr. Reams’ question. “In the same manner that City and County and school buildings do not pay property taxes, they do not pay the new Community Authority charge, because that would result in the taxpayers having to dip further into their pockets to pay taxes.” Mr. Reams asked how the City makes up the lost revenue for the tap-in fees. Mr. Gore said it’s his understanding that the agreement for the tap-in fees is the same as the City presently receives now. Mr. Roush added schools still have to pay tap-in fees.

Mr. Stype handed out an information sheet on a Community Authority. He pointed out on Page 4, a list of Community Authorities that have been formed in the State of Ohio and the purposes for which they have been formed. Information also gives New Community District Procedures, as well as New Community District Petition Items. All of these are a function of Chapter 349 of the Ohio Revised Code, which was originally enacted in early 1970’s. At that time, Federal grants were around, but they are no longer. They were eliminated after one Community Authority was tried in Ohio. The Statute became dormant until the New Albany development came along and raised the question, “How is it for a development of that magnitude, that public infrastructure keeps pace with private development rather than always running behind private development and playing catch-up.” After close examination, they felt this was the best way to go.

This Statute, as put together, bears the attention of the Ohio Municipal League. It was because of their involvement that those who are proposing a community authority, even outside of the City’s boundaries, would be taking it to the principal municipality in the County in the process of organizing and creating the Community Authority. Marysville is that principal municipality for Union County. It’s the most populous city in Union County. Under the Statute, Marysville is called the “proximate City.” The Community Authority is ultimately approved by the Union County Commissioners, but the first step in the process is to obtain “proximate City” approval of the petition by the Marysville City Council. Once approval is obtained, it then goes on to the County Commissioners, a petition is filed with them and they hold public hearings. If all is in order after that, they create a Community Authority.

Mr. Stype mentioned there are other protections for the City and for the other jurisdictions in the Statute. Community Authorities cannot go into the business of supplying water or treating sewage, unless that is not available from any other source. It does not provide police and safety services and it does not provide zoning and planning services.

A Community Authority is fundamentally a financing mechanism because it can levy and collect a community development charge. It can use that charge to either directly pay for infrastructure improvements or pay debt service on bonds that are issued to fund those infrastructure improvements. You can also take a piece of the charge and pay for operation and maintenance of those improvements. Since it’s raising money, it has the ability to cause those improvements to be undertaken.

Each Community Authority is created with a particular purpose in mind.

The governing body of the Community Authority is a Board of Trustees. This is a public body and operates in the Sunshine and is subject to open meetings and public records laws. The body can be any number from 7 to 13 trustees. Experience shows that 7 is better than 13, due to calling meetings and special quorums that are required. If there are 7 original trustees, four of them will be appointed by the County Commissioners and three of them will be appointed by the developer. Over time, as the development takes place and the projected population of the development is achieved, which is in the original petition, these trustees become elected. The first one when 1/7 of the projected population is achieved; the second one when 2/7 and so on. Trustees are public officials and are bonded. They have insurance coverage and other types of protection along the way. Until they are elected, they run in two-year overlapping terms. Of the four trustees who are appointed by the County, three are citizen trustees, and one of them is a trustee that is to bring to the table the perspective of public bodies. He noted the laws in the State of Ohio make it awkward to appoint a sitting elected public official to this body, particularly where the public official represents another body that is going to be contracting with this body. This would confront fudiciary conflicts of interest.

Fire services would be those that are currently in the area. Road maintenance is to be spelled out in the petition. Most of the Community Authority charge will need to be applied to debt service on the bonds. Usually what happens is you collect more than you actually need to pay in debt service to play it safe. What’s left over is usually the maximum amount that can really be available for maintenance.

Mr. Fogt said the Community Authority would pay for the initial infrastructure, the sewer lines in particular, and then in the future the agreement was, there would be some future work done on the sewer line. He asked if the Community Authority would take care of that future work for the sewer line without having to renegotiate the agreement. Mr. Loebig said they are putting two things together. One is the agreement with the City/County and then the Community Authority. They are working through the sanitary and utility issues right now. The Community Authority will be the funding source for the future projects.

Mr. Gore’s understanding of this is, what the Community Authority wants from the City of Marysville is to purchase water and sewer. The City supplies water and sewer at the same rate that other customers are being charged, once renegotiated, and City will provide the same services as provided to all other customers. Once the land is developed and City sells that service, then City will be responsible for the maintenance of the lines. Mr. Roush agreed and added that one of the elements of the surcharge is to collect some money for the future off-site project, and then the City would build that project with the additional tap money that is collected from that development, in addition to what they get paid back. Mr. Fogt confirmed that that would be converted to gravity in the future. Mr. Roush agreed and added there is an element in that additional tap fee for that gravity conversion. It is Mr. Roush’s understanding that the City would contract for that future project when those funds are collected, not the Community Authority.

In summary, Mr. Gore stated the next steps are for the developer to prepare and present the Community Authority to City Council, who will have to vote on it. If it passes, it will then go to the County Commissioners and will move forward from there.

Mr. Loebig said he had met with the County Commissioners in January, the Township Trustees in February and now City Council about this proposed Community Authority.

Mr. Taylor asked Mr. Stolte if we’re on the right track with this process. Mr. Stolte said he’s comfortable with where things are headed with this project.

Mr. Stolte said there are two issues here that are co-mingled. There’s the water and sewer issue and there’s the Authority issue. If Jerome Village were not coming to the City for water and sewer, they would still be coming to Council because Marysville is the proximate City.

The meeting adjourned at 6:37 p.m.