POLICY REGARDING ALLOWABLE EXPENSES ON AN RHID
WHEREAS, the City of McPherson has begun to encourage development under RHID;
WHEREAS, after the project, the City is required to determine which expenses submitted by the developer are subject to inclusion within the RHID;
WHEREAS, state law is fairly ambiguous and there is little to no judicial or administrative guidelines to help with determination of includable expenses.
NOW, THEREFORE, the City of McPherson, Kansas hereby adopts the following policy guidelines to aid City staff in the review of expenses submitted by the developer for the inclusion into an RHID.
1. BURDEN OF PROOF. The burden of proof and production is on the developer and not on the City. The developer must justify to City staff the rationale for inclusion of any expense and provide City staff with sufficient information and documentation to justify the request. The City is not responsible for developing the information. Any expense will be assumed excluded unless sufficient justification warrants its inclusion. City staff may request further justification and documentation but is under no duty to do so.
2. GENERAL GUIDANCE. In general, RHID expenses are governed by K.S.A. 12-5249 as amended and any future case law or AG opinions. In broad brush strokes, RHID expenses are for horizontal expenses (e.g. dirt work, underground utilities, etc.) and not for vertical improvements (e.g. buildings). While this is an oversimplification of the statute, but it gives its overall flavor.
3. EXPENSES NOT REIMBURSABLE. The following expenses shall not be reimbursable:
3.1 Any property lying outside of the RHID boundary even if developed at the same time and part of the same project. There will be no prorate of combined expenses on such property and general proration of invoices shall not be accepted. All expenses must be solely for RHID property.
3.2 Legal and accounting fees of any type.
3.3 Temporary utility costs during any portion of the project after the initiation of building of any structure.
3.4 Building permit fees.
4. MIXED EXPENSES. Those costs for RHID expenses which are inherently mixed (between vertical and horizontal) will either be paid pursuant to any pro rata costs sufficiently justified in amount by the developer or 20% of the total cost. For example, insurance covering the project (e.g. liability) can be reimbursed at 20% of the policy cost covering the time of the development. Interest expense for construction financing would also be justified at pro rata or 20%.
This 20% number is designed to reduce the administrative burden of trying to unravel certain expenses.
5. SUBJECT TO AMENDMENT. As the City’s experience with RHID develops, these policies may be amended or altered in the City’s sole and absolute discretion at any time.
6. APPEAL OF STAFF DETERMINATION. If at any time a determination is made by City staff adverse to the developer, the developer may request a hearing before the governing body to state its objections. The governing body may overrule the staff’s determination by a two-thirds vote of the Commissioners.
ADOPTED by the governing body this 20th day of March, 2017.
CITY OF MCPHERSON, KANSAS