The Routt County Board of Commissioners on Tuesday made changes to the county's policy for local improvement districts.
The LID policy was used for the first time in 2003 when residents of the Meadowgreen at Stagecoach subdivision voted to establish such a district. The district uses county-issued bonds to pave roads, install water and sewer systems and install electricity in the subdivision. The lot owners pay back the bonds through taxes levied by the LID.
The Meadowgreen LID was the first the county has assisted with since the early 1990s. Working on the Meadowgreen LID showed the county how the policy needed to be changed, Routt County officials said.
The changes are designed to ensure that the LID process does not cost the county, County Manager Tom Sullivan said.
"The key to the LID process (is) it's a local district and all the costs ought to be borne by the district," Sullivan said. "What we found out through the Meadowgreen process was that the county's cost ended up being more than we had originally estimated."
The county asked for only $3,000 for administrative costs, with the remaining administrative expenses to be paid out of the total project cost, County Finance Director Dan Strnad said. One problem with that method is that projects that go over budget might not have enough to pay back the county. The county will be fully reimbursed in the Meadowgreen LID, he said.
The new policy requires $15,000 for administrative costs upfront -- half before an LID goes out for a vote and the other half if the LID is approved, Strnad said. Administrative costs above that still must be paid.
The policy changes also clarify language regarding contingency funds.
In the Meadowgreen LID, residents agreed to take out about $1.8 million in bonds. The project's total cost was only $40,000 less than that total, Strnad said. Some small expenses, including the county's administrative work, are still unpaid, Strnad said.
The policy changes emphasize that projects must be closely considered to make sure there is enough contingency to cover risks, Sullivan said. That could mean requiring more engineering reviews of the proposals.
Even so, there is a chance that the cost for improvements could be more than what was budgeted. In that case, the project's increased price tag may have to be brought back to the voters, which could mean long delays, Sullivan said.
If there are leftover funds, they can be used to buy down the bonds, Strnad said.
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