Agenda Memo

City of Boulder City Council Agenda Item Meeting Date: November 6, 2025 Agenda Title Consideration of the following pertaining to the 2026 budget of the Knollwood Metropolitan District: Consideration of a motion to adjourn as the Boulder City Council and convene as the Knollwood Metropolitan District Board of Directors; and 1. Consideration of a motion to adopt Resolution 1 concerning the Knollwood Metropolitan District adopting a budget for the fiscal year beginning January 1, 2026; and setting forth related details; and 2. Consideration of a motion to adopt Resolution 2 establishing the 2025 Knollwood Metropolitan District property tax mill levy for payment of expenditures, in part, of the district during the fiscal year 2026, beginning January 1, 2026; and setting forth related details; and 3. Consideration of a motion to adopt Resolution 3 appropriating money to defray the expenses and liabilities of the Knollwood Metropolitan District for the 2026 fiscal year beginning January 1, 2026; and setting forth related details; and Consideration of a motion to adjourn as the Knollwood Metropolitan District Board of Directors and reconvene as the Boulder City Council

Staff Contact • • • •

Nuria Rivera-Vandermyde, City Manager and Executive Director of Knollwood Metropolitan District Joel Wagner, Deputy Finance Director, Finance Department Charlotte Huskey, Budget Officer, Finance Department Krista Morrison, Chief Financial Officer

Draft Motion Language Staff requests council consideration of this matter and action in the form of the following motions pertaining to the 2026 budget of the Knollwood Metropolitan District: Motion to adjourn as the Boulder City Council and convene as the Knollwood Metropolitan District Board of Directors; and 1. Motion to adopt Resolution 1 concerning the Knollwood Metropolitan District adopting a budget for the fiscal year beginning January 1, 2026; and setting forth related details; and 2. Motion to adopt Resolution 2 establishing the 2025 Knollwood Metropolitan District property tax mill levy for payment of expenditures, in part, of the district during the fiscal year 2026, beginning January 1, 2026; and setting forth related details; and 3. Motion to adopt Resolution 3 appropriating money to defray the expenses and liabilities of the Knollwood Metropolitan District for the 2026 fiscal year beginning January 1, 2026; and setting forth related details; and Motion to adjourn as the Knollwood Metropolitan District Board of Directors and reconvene as the Boulder City Council

Executive Summary The purpose of this item is to adopt and appropriate the 2026 budget for the Knollwood Metropolitan District (the “District”) of $237,675 and set a mill levy of 20.570 mills.

Council Action Options Option

Outcome

Approve motion language as drafted

If the motions are approved, the District will have an appropriated and adopted budget and established mill levy for the 2026 fiscal year.

Define and adopt a modified motion

The board would need to define any modifications or amendments to the draft motion language and have the motion language perfected before a vote to adopt this item. This may require staff to bring back an amended version.

Deny the motion or take no action

If the board does not adopt the resolutions, the district's budget and spending authority will expire, no mill levy is established, and essential government functions will be jeopardized.

Refer back to staff

If the board refers this item back to staff, council will need to define modifications or amendments so that staff is prepared to present modified and amended district budget resolutions at a future meeting.

Alignment with City Plans and City Council History Sustainability, Equity, and Resilience (SER) Framework and Citywide Strategic Plan Alignment SER Framework Goal Area N/A – the District is a separate legal entity from the City of Boulder and has not adopted the SER Framework. Citywide Strategic Plan N/A – the District is a separate legal entity from the City of Boulder and has not adopted the Citywide Strategic Plan.

Staff Notes N/A - this is a standard budget item.

Alignment with Additional City Plans N/A - this is a standard budget item.

City Council History In 2019, the city annexed just under 50 homes along the western border of the city in a subdivision called Knollwood. At the time, the District served the residents of the subdivision by providing services such as water and street maintenance. As part of the annexation process, the city and the District entered into an intergovernmental agreement (the “Annexation IGA”) in which the residents of the subdivision agreed to dissolve the District by transferring the provision of the District’s services to the city and to limit the powers of the District following such transfer. The Annexation IGA states that the District shall be dissolved for all purposes except paying financial obligations and outstanding debt of the District. The Annexation IGA also requires that upon such limited dissolution, the Boulder City Council serve as the Board of Directors of the District until all financial obligations and debts are paid and the District can be finally dissolved. On April 17, 2025, City Council accepted the Boulder District Court’s appointment to serve as the Knollwood Board of Directors and adopted bylaws for the District. A more complete background of the annexation process can be found in the April 17, 2025 City Council agenda memo. As the District’s Board of Directors, City Council has the duty to adopt a budget during a public hearing, appropriate funds, and establish a mill levy for the 2026 fiscal year for the District to ensure continued payment of the District’s financial obligations and outstanding debt.

Analysis In its limited role, the District’s continuing duties include: •

•

All activities related to ensure full repayment of the debt, including: o Opening and maintaining bank accounts. o Adjusting and certifying a mill levy to the County Commissioners of Boulder County. o Enforcing collection of any taxes due to the District. o Complying with all terms and conditions, covenants or reporting requirements contained in the loan agreements. General administrative duties of the District, as required by §§ 32-1-701 to 710 C.R.S., including: o Keeping and maintaining books of account in accordance with generally accepted accounting principles,

o Preparing an annual budget and appropriating funds, o Preparing for an annual audit, and o Maintaining proper insurance. The source of the District's revenues are property taxes derived from separate mill levies for debt service and general operations. Over the past several years the District's Board of Directors aggressively reduced the number of mills for both debt service and general operations. This was made possible due to a high amount of cash reserves at the District and historical trends of increasing property tax assessments which enabled the District to collect less property taxes than was required to satisfy the debt obligations of the District. However, the cash reserves no longer cover the debt obligations, and an increase in the mill levy is necessary to meet the required debt payments. Table 1: Property Tax vs. Debt Service Category Property Tax Revenue Debt Service Expense

2025 Projected

2026 Budget

2021

2022

2023

2024

$188,849

$216,045

$219,340

$206,782

$173,875

$227,675

$220,652

$223,384

$433,667

$224,220

$225,760

$227,675

Surplus/(Deficit) $(31,803) $(7,339) $(214,327) $(17,438) $(51,885) Note: 2023 debt service expense included an additional payment and draw down of reserves.

$0

Chart 1: Property Tax vs. Debt Service

Propery Tax vs. Debt Service $500,000 $400,000 $300,000 $200,000 $100,000 $Property Tax Revenue

2021 $188,849

2022 $216,045

2023 $219,340

2024 $206,782

2025 FCST $173,875

2026 BUD $227,675

Debt Service Expense

$220,652

$223,384

$433,667

$224,220

$225,760

$227,675

Property Tax Revenue

Debt Service Expense

The mill levy for the debt service fund declined from 21.1 mills in 2021 to 14.0 mills in 2025. Likewise, the mill levy for the general operating fund declined from 3.258 mills in 2019 to 1.0 mills in 2024, where it remains without approval by the District’s eligible voters.

Table 2: Mill Levy History Category General Debt Service Total Mills

2021 2.941 21.146 24.087

2022 2.000 20.900 22.900

2023 1.250 20.500 21.750

2024 1.000 17.000 18.000

2025 1.000 14.000 15.000

2026 1.000 19.570 20.570

Chart 2: Mill Levy History 30.000 25.000 20.000 15.000 10.000 5.000 -

2021

2022

2023

2024

General

Debt Service

2025

2026 BUD

Cash reserves have declined from $445,404 dollars in 2021 to a year end forecast of $29,867 in 2025. Table 3: Cash Balance History Category Ending Cash Balance

2021

2022

2023

2024

$445,404

$437,724

$117,211

$75,402

2025 Projected $29,867

2026 Budget $31,346

Chart 3: Cash Balance History $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $Ending Cash Balance

2021 $445,404

2022 $437,724

2023 $117,211

2024 $75,402

2025 FCST $29,867

2026 BUD $31,346

Due to slowing real property growth and recent state legislation affecting residential properties, the total assessed value for the District has decreased approximately $550,000 to $11.9 million in 2025, which is collected in 2026. To cover the 2026 debt service payments, the debt service mill levy has been calculated at 19.570 mills. The mill levy for the operating fund will remain unchanged at 1.000 mill.

Equity Analysis N/A – the District is a separate legal entity from the City of Boulder and has not adopted the SER Framework.

Fiscal Note The 2026 Recommended Budget presented for Board consideration proposes a total District budget of $237,675. The 2026 Recommended Budget online budget book provides an overview of the proposed district budget in the fund financials section. The attached District Resolutions represent the spending level appropriation and property tax mill levy proposed to the Board of Directors as part of the Knollwood Metropolitan District Fund 2026 Budget.

Community Engagement This is a standard budget item and appropriations are limited to those necessary to pay for debt service and statutory reporting requirements. Since 2026 is the first year under the new structure, and the mill levy is increasing, staff mailed a letter to all property owners providing notice of the changes.

Workplan Considerations Adoption of the Resolutions are incorporated into the work of the District’s annual budget process and would not require additional workplan considerations at this time.

Next Steps for City Council Per standard practice associated with resolutions, City Council, acting as the District Board of Directors, will consider the District Resolutions at one meeting, which will take place during the City of Boulder City Council meeting scheduled for November 6, 2025.

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Attachments Attachment A – Resolution 1 Attachment B – Resolution 2 Attachment C – Resolution 3