City Council Regular Meeting - Includes Action Taken


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Meeting Date: 05/15/2017  
Recommended by: Paul Tice Prepared by: Paul Tice, Planning & Development Director
Finance Director Review: Celina Morris  
City Attorney Review: Brett Wallace  
Approved by: Larry Rains Date Submitted: 04/21/2017
Type of Action Requested: Ordinance, Public Hearing

Request by, City of Casa Grande for the following Code Text Amendment:
Modification of Section 16.20.010 (Financial guarantee required) of Title 16 (Subdivisions) of the City Code to allow:
  1. A maximum of five (5) years to complete all required subdivision improvements which are subject to a financial security requirement.
  2. To allow a Development Agreement to be utilized as a form of financial security for subdivisions.
City staff and the Planning Commission recommend approval of the proposed revision to Section 16.20.010 of the Subdivision Regulations
The current Subdivision Code (16.20.010) requires that prior to the recordation of a Final Subdivision Plat the subdivision applicant post a financial security that guarantees that all required subdivision improvements will be completed within two years with a potential for a one year extension. Required subdivision improvements typically include:
  1. Perimeter arterial/collector streets, sidewalks, and streetlights
  2. Internal street networks, traffic control signs, street signs, sidewalks, and street lights
  3. Drainage and stormwater retention facilities
  4. Site Grading
  5. Water mains and fire hydrants
  6. Sewer mains
  7. Dry utilities (i.e., gas, electric, etc.)
  8. Perimeter streetscape landscaping
  9. Internal streetscape, open space and recreational area landscaping
  10. Perimeter and interior walls
    The reason for this code provision is two-fold:
  1. To allow the subdivision developer to sell lots and obtain building permits for new home construction while the full subdivision improvements are being completed.
  2. To guarantee that the buyers of these new homes will ultimately have the necessary infrastructure and subdivision improvements installed by the subdivision developer or by the City in case the subdivision developer fails to perform.
An issue with the this existing code requirement is that during the 2004-2006 housing boom period a number of large residential subdivisions were approved and recorded that have seen no development activity over the past ten (10) years due to the change in the residential market. Financial securities were posted for these residential subdivisions in conjunction with the plat recordation. However, these securities have been renewed and extended far past the three year limit set forth in the Code as the subdivision developer did not wish to construct subdivision improvements until there was a demand for the lots for new home construction. Additionally, it was not in the  City's best interest to have streets, sidewalks, streetlights and sewer mains constructed and dedicated to the City for ownership and maintenance if this infrastructure was going to sit unused for a number of years.

There is a significant carrying costs to the owners of these subdivisions in maintaining these financial securities. These costs are typically passed on to the ultimate purchasers of the platted lots which results in higher new home costs. All of these subdivisions, with the exception of Mystic Trails, have some level of underground infrastructure (water mains, sewer mains, dry utilities) and street improvements in place which make it impractical to vacate the subdivision and convert it to raw land as a method to eliminate the need to maintain the financial security.
This code amendment is designed to provide an alternative method of financially securing these subdivisions until they are ready for building activity. The proposed code language will allow a subdivision developer to, reduce or eliminate the posted financial security, upon entering into a Development Agreement with the City that:
  1. Restricts the sale of any of the platted lots until the financial security is re-established or the required subdivision improvements installed and accepted.
  2. Prohibits the issuance of any building permits within the unsecured portions of the subdivision until the financial security is re-established or the required subdivision improvements installed and accepted.
    The proposed code acknowledges that as part of the Development Agreement process the City may require that certain subdivision improvements, that have significant impact to the surrounding properties or upon the community in general, may be required to be completed or financially secured. This evaluation would occur on a case-by-case basis in conjunction with the review of a Development Agreement.
    It is the intent of this code amendment to eliminate, or significantly reduce, the carrying cost incurred by subdivision developers in maintaining financial securities for subdivision improvements. It is also the intent to ensure that neither the City nor prospective lot purchasers are left with any requirement to complete subdivision improvements that are the responsibility of the subdivision developer.
    Another aspect of the proposed code amendment is to extend the timeframe within which required subdivision improvements, which are covered under a financial security, are to be completed. The new code language allows City Council, at its discretion, to allow three (3) years for the completion of required subdivision improvements and to allow a maximum extension of two (2) years if warranted. Said extension would require to be accompanied by an updated cost estimate for completion of the required subdivision improvements and the amount of the financial security to be adjusted to reflect the updated cost estimate if necessary. This modification is appropriate given that as the residential home market fluctuates it may take more than three (3) years for all lots in a subdivision to be purchased and home construction to be completed.
There are potential positive fiscal impacts associated with this proposed modification to the City's financial assurance requirements:
  1. It will reduce the amount of staff time and associated cost  that is associated with the management of the subdivision financial securities to ensure that they are kept current and valid.
  2. It will reduce the cost the land developer, who owns a subdivision, incurs annually in maintaining the  Letter of Credit or Subdivision Bond that is typically used to meet the financial assurance requirement. These costs are typically passed on to the  builder who ultimately purchases the lots and this cost is reflected in the final home cost.
  1. Approve the proposed amendment to Section 16.20.010 as presented.
  2. Modify the proposed amendment to Section 16.20.010 prior to approval.
  3. Deny the proposed amendment.
Ord. 1397.16.03
Planning Commission Staff Report
Planning Commission Meeting Minutes
Presentation - Exhibit "A"



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