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Council denies use of Boulder Ridge PID proceeds to satisfy performance guarantee
Summary
After an extended discussion of risks and precedents, Toquerville council voted to deny a proposal to allow Boulder Ridge Public Infrastructure District proceeds to be used to satisfy the city's performance-guarantee requirement.
Toquerville City Council denied a request July 1 to allow proceeds from the Boulder Ridge Public Infrastructure District (PID) to satisfy the city's performance-guarantee requirement for public improvements.
Staff presented background including a comparison to Hurricane City, which uses phased escrow accounts and city approval of developer draw requests; Hurricane staff told Toquerville attorneys that their developers have covered shortfalls with alternative funding and the model has worked for that jurisdiction. City attorney input and staff questions focused on contingencies if PID funds and developer-supplied alternatives are insufficient to complete the improvements.
Council members and staff raised concerns about the risk that PID proceeds earmarked for later phases could be tapped to address shortfalls in earlier phases, leaving subsequent phases underfunded. One council member described the risk in practical terms: if a developer records plats and some utility or roadway work remains unfinished, residents could own lots without complete public improvements. Staff and council discussed several remedies used elsewhere, including requiring a separate surety (letter of credit or performance bond) in addition to PID funds, holding funds by phase in escrow, or requiring an additional cash or surety component equal to the city's completion assurance requirement.
Planning/finance staff and the city attorney described the statutory uncertainty around whether PID proceeds may be used to satisfy the city's bonding ordinance; staff noted state PID statute language that allows working capital "related to the improvements," which the city attorney said could be interpreted differently by jurisdictions and counsel.
Council took a motion to deny the requested use of PID proceeds to satisfy the city's performance guarantee. The motion passed with all council members voting in favor.
Council directed staff to return with guidance on alternate options and specific language should the developer reapply with a different security structure (e.g., surety, cash escrow, letter of credit, or a mixed approach).
