(A) Public financing will be permitted for improvements that benefit the tracts or parcels of property in the SAD if the useful life of the Improvements will be equal to or greater than the term of the bonds.
(B) The city may pledge supplemental revenues to bonds only for SADs where (a) the city owns the improvements; (b) the SAD is contiguous to existing urban facilities or services (including improvements located in Bernalillo County); and (c) the SAD is for the benefit of areas within the city limits. Notwithstanding the condition set forth in clause (c) of the preceding sentence, the city may pledge supplemental revenues to bonds for an SAD for the benefit of the city, in the instance of an obsolete subdivision as defined in this article and when the SAD will improve transportation, storm drainage, water and sewer system or other infrastructure deficiencies, as certified by the Mayor and recommended by the Environmental Planning Commission. The Environmental Planning Commission review shall occur prior to preparation of Resolution No. 1 and, in reviewing the SAD, the Environmental Planning Commission shall consider the factors set forth in § 6-8-2-1. After completing the review, the Environmental Planning Commission shall prepare and submit a written recommendation to the City Council on whether the SAD should be approved. Bonds for a SAD not meeting the preceding conditions of this subsection will be issued only to the extent that the owner(s) of the improvements to be constructed or the owners of the benefitted property provide credit enhancement for the bonds in an adequate amount to obtain an investment grade bond rating from at least one national rating agency.
(C) Each bond issue shall be structured to adequately protect bond owners and to avoid a negative impact on the bonding capacity or credit rating of the city. This shall be accomplished through the prudent requirement of a combination of credit enhancement, minimum property value/lien ratios, special reserve funds or deposits and/or contractual commitments by owners and their successors. Specifically:
(1) If an owner of property within the boundaries of a proposed SAD will be responsible for payment of 20% or more of the proposed total special assessment liens in the SAD, then such owner will be required to obtain, pay for and submit to the city, an appraisal performed by a master appraisal institute certified appraiser on the property of the owner to be assessed which demonstrates a minimum property value/lien ratio of 3:1 (after installation of the proposed improvements in the SAD, including overlapping assessments).
(2) The city may require that credit enhancement be added to the structure in order to insure underwriting by reasonably limiting the risks of prospective bond holders. The cost of such credit enhancement shall be borne by the owners in proportion to the fraction which their assessments contribute to the total assessments for such series.
(3) The city may require that capitalized interest on the bonds be funded from the proceeds of the bonds. The term of capitalized interest shall not exceed 24 months, or a shorter period at discretion of the city. Interest earnings on capitalized interest deposits may at the city's discretion be applied to pay either principal or interest on the bonds.
(4) A reserve fund equal to the lesser of 10% of the original principal amount of the bonds, maximum annual debt service, or 125% of average annual debt service may be funded from the proceeds of each series of bonds and:
(a) Shall be subject to lien and included in the principal amounts of special assessment liens;
(b) Shall be credited against special assessment liens on a pro rata basis upon an event of a payment of special assessments prior to the maturity of the bonds;
(c) Shall be used to liquidate final principal and interest payments due on outstanding bonds;
(d) Interest earnings on reserve funds shall be credited to debt service payments on the series of bonds for which the reserve was established.
(D) Multiple special assessment bond issues shall be structured with approximate level aggregate principal payments. To the extent that bonds are issued in series, some individual series of bonds may have an uneven debt service due to structuring the combined debt service at such time as all series of bonds are issued.
(E) The city may extend the billing date for the first installment of a special assessment lien until construction of the improvements is substantially completed; provided, however, that such billing date shall not be extended beyond the period during which debt service on the SAD bonds is covered by capitalized interest.
(F) The city will include provisions in the special assessment to allow a rebate or credit, as appropriate, to owners if actual final construction and/or financing costs are lower than the amounts provided by the special assessment.
(G) Commitments to new SADs will be approved only to the extent that the amount of pledged supplemental revenues for any particular series of bonds for any 12 consecutive month period ending no earlier than 45 days immediately preceding the date of adoption of the ordinance authorizing additional bonds or for the immediately preceding fiscal year of the city shall have been sufficient to pay an amount representing 125% of the combined maximum annual debt service requirements coming due in any subsequent fiscal year on the proposed series of bonds and all outstanding bonds with a senior or parity lien on the pledged supplemental revenues.
(H) All prepayments of special assessment liens shall be paid as if paid on a semi-annual basis and shall include net interest payable at the next semi-annual special assessment lien payment date.
(I) The interest rate on special assessment liens shall be determined by adding an interest rate differential of 1.5% to the initial average rate of interest for the combined series of SAD bonds issued for an individual SAD to compensate the city for its indirect costs attributable to administration of the overall city SAD program and the basis for the interest rate differential need not be reconcilable to the specific cost associated with an individual SAD.
(J) The interest rate differential, at the discretion of the city, may be recovered over the life of a bond issue as part of the interest component of the semi-annual payments of special assessment liens or included in the special assessments or special assessment liens, or both, and in the principal amount of a bond issue and payable to the city at closing in an amount calculated as the present value of the stream of semi-annual payments discounted at the arbitrage yield of the bond issue.
(K) The interest rate differential included in special assessment lien payments attributable to a specific SAD bond series may, at the discretion of the city, be pledged as credit support to the payment of those bonds. If such credit support is utilized to pay debt service on the bonds because of a shortfall in payment of the special assessment liens, the city shall be reimbursed from future payments on the delinquent special assessment liens or, after foreclosure, from proceeds of the sale of the property subject to the special assessment liens.
(L) The city may impose a credit enhancement fee for a particular series of bonds to which the city has pledged supplemental revenues which fee may be in an amount approximately equivalent to fees charged by traditional providers of similar credit enhancement. The fee may be included in the special assessments or the special assessment liens, or both, at the discretion of the city.
(Ord. 44-1996; Am. Ord. 2017-008)