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q<�FOit City Council Staff Report
Date: March 15, 2017 NEW BUSINESS
Subject: DISCUSSION OF SCIP PUBLIC FINANCING FOR THE RESIDENTIAL
DEVELOPMENTS
From: David H. Ready, City Manager
Initiated by: Engineering Services Department
SUMMARY
At the January 18, 2017, City Council meeting, staff requested City Council direction on
a policy of allowing the Statewide Community Infrastructure Program ("SCIP") as a
public financing tool available to developers of residential properties. At that time, the
City Council requested additional information regarding the program, specifically,
whether other Coachella Valley cities have participated in SCIP.
RECOMMENDATION:
Direct Staff as appropriate — proceed with issuing residential SCIP applications for new
housing developments, or modify the October 1, 2014, SCIP Resolution restricting
residential development applications or adding conditions.
BACKGROUND
The City Council last adopted a policy regarding public financing for new development
projects in 2002. The 2002 policy implemented certain requirements for the City's
establishment of an Assessment District or Mello-Roos Community Facilities District, (a
"Special District"), for development projects. Generally, the requirements stated were:
• Public facilities to be financed must provide major infrastructure improvements that
significantly benefit the general public;
• Each development project must have significant financial benefit to the City;
• $2,000,000 minimum financing amount;
• The development must have a property value to lien ratio of at least 4:1 after
considering the value of the financed public improvements and considering any prior
or pending special taxes
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SCIP Funding Request—Agave/ Palermo Projects
• The maximum amount of special taxes to be levied, together with general property
taxes and any other special taxes or assessments, cannot exceed 2% of the full
cash value of the property.
A copy of the City's policy adopted in 2002 is included as Attachment 1.
The City last formed a Special District to finance public improvements and development
impact fees for a residential project on December 1, 2004, when the City Council
established Assessment District No. 164 for the Mountain Gate II development.
On November 2, 2005, the City subsequently established Community Facilities District
("CFD") 2005-1 for public safety services as a requirement for approval of all new
residential projects located on "fee" land. Similarly, on November 7, 2007, the City
established CFD 2007-1 for public safety services as a requirement for approval of all
new residential projects located on allotted and leased Tribal land. The maximum tax
rate by the City for public safety services via CFD 2005-1 or 2007-1 is $500 annually
per property.
On October 1 , 2014, the City Council adopted Resolution No. 23671 authorizing the City
to join the Statewide Community Infrastructure Program ("SCIP"), in an effort to assist
and incentivize the construction of the Dream Hotel project including a Convention
Center parking structure. That project has received entitlements and is working on final
design, in addition to ongoing negotiations with the City relative to Convention Center
parking. To date, the Arrive Hotel is the only commercial project which has formally
participated in the SCIP program.
Although the original intent was to provide alternative financing assistance for the
Dream Hotel project as noted above, the state program also has provisions for private
residential developers to participate. At issue, given City Council action in 2005
creating Community Facilities Districts on new residential development for safety
services — approximately $500 annually per household — a residential SCIP annual fee
would be an additional layer of property tax for effected homeowners. Hence, Staff
seeks direction on whether to proceed with issuance of SCIP applications for residential
developments, or in the alternative, modifying the 2014 SCIP Resolution restricting
residential developments or adding conditions.
STAFF ANALYSIS:
The SCIP is coordinated by the California Statewide Communities Development
Authority ("CSCDA"), a joint powers authority sponsored by the League of California
cities and the California State Association of Counties. Instituted in 2002, SCIP allows
private property owners in participating cities and counties to finance the construction of
public improvements or payment of development impact fees as a special assessment
to be levied on the property tax roll. A private property owner developing a project in a
participating agency has the ability to request approval to finance public improvements
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March 15, 2017- Page 3
SCIP Funding Request—Agave/ Palermo Projects
and development impact fees through the SCIP, which is financed by the issuance of
tax-exempt bonds by the CSCDA. Subsequently, in those cases, CSCDA will impose a
special assessment on the property owner's tax bill to repay the bonds issued to finance
the cost of the public improvements and/or development impact fees.
In its action from 2014, the City Council authorized the City to be a participating agency
in the SCIP through CSCDA. The SCIP is an alternative public financing tool to a
Special District formed and approved by the City Council for a specific property. The
advantage of the SCIP is that the City avoids most of the administration responsibility in
establishing a Special District, and avoids the liability for the tax-exempt bonds used to
finance the public improvements or development impact fees through that Special
District. CSCDA assumes all responsibility and liability for the tax-exempt bonds and
annual debt payments levied on the tax roll.
A copy of the October 1, 2014, staff report and Resolution No. 23671 is included as
Attachment 2.
Since the City Council's authorizing actions taken in 2014, only one commercial project
— the Arrive Hotel — has taken advantage of the SCIP. In that case, certain public
improvements (utility undergrounding, water lines, and street improvements) and
development impact fees (sewer connection and storm drainage fees) were financed
through SCIP.
At the City Council Meeting of January 18, 2017, Staff requested direction on
proceeding with SCIP applications for residential developments as a result of two
developers making such requests. City Council direction to Staff was to provide
additional information, including identification of other cities in the Coachella Valley and
statewide that utilize this program for residential developments.
Staff has determined that the City of Palm Springs is the only city within the Coachella
Valley that has taken action to participate in the SCIP. The Coachella Valley Water
District is the only other public agency in the Coachella Valley that participates.
Statewide, with 482 incorporated cities, 58 counties, and an unknown number of other
potentially eligible public agencies within the state of California, there are only 70 public
agencies participating in SCIP.
Staff has also determined that since 2011 , the following 8 cities have used SCIP for
residential projects:
• City of Manteca
• City of Rocklin
• City of Chula Vista
• City of San Diego
• City of Brentwood
• City of Gardena
• City of Roseville
• City of Fairfield 03
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SCIP Funding Request—Agave/ Palermo Projects
The following 21 public agencies within Riverside County from 2014-2016 have utilized
traditional Community Facilities Districts ("CFDs") or Assessment Districts outside of the
SCIP administered by the state. Most of CFDs were formed for the purpose of financing
public school fees:
Number of Bond Issues
City of Calimesa 3
Eastern MWD 6
Hemet USD 1
Jurupa Community Services District 7
City of Lake Elsinore 4
Menifee USD 1
City of Moreno Valley 1
Perris USD 1
City of Riverside 4
Riverside Co for Jurupa USD 6
Riverside Co for Norco-Corona USD 1
Riverside Co for Lake Elsinore USD 2
Riverside Co for Menifee USD 5
Riverside Co for Moreno Valley USD 3
Riverside Co for Murrietta Valley USD 2
Riverside Co for Romoland USD 1
Riverside Co for San Jacinto USD 1
Riverside Co for Temecula Valley USD 1
Riverside County 1
Romoland SD CFD #2004-1 1
San Bernardino Co (Colton) JUSD 1
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Also, according to the City's Financial Advisor, Suzanne Harrell, the California Debt and
Investment Advisory Commission ("CDIAC") is provided with data on every bond issued,
and information was retrieved from 2009 to 2015, the latest available public financing
issuances for commercial and residential projects, as shown in the following summary
of non-SCIP districts:
Year Special Tax ("CFD") Special Assessment District
2009/10 51 16
2010/11 21 14
2011/12 34 9
2012/13 36 14
2013/14 50 17
2014/15 49 18
Total 241 88
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March 15, 2017 - Page 5
SCIP Funding Request—Agave/Palermo Projects
Current Requests for Residential SCIP Participation
Recently, the City received two requests for SCIP participation. First, Arroyo Vista
Partners, LLC, wants to pursue public financing through the SCIP to pay certain
development impact fees for the 28 lots remaining at the "Agave" (Tract No 33161).
Second, for the 82 condominium units remaining at the 'Palermo" (Tract No. 33561)
project. Each of these projects were previously approved by the City Council without
any public financing proposed, and both of these projects have been partially
completed.
"Agave" (Tract No. 33161)
The "Agave" project is a subdivision of 32 single family homes located west of Indian
Canyon Drive between Rosa Parks Road
a annd! Radio Road, as shown in#Figure 1.
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Figure 1 — "Agave" Project
The "Agave" project was approved by the City Council on November 2, 2005, as
Tentative Tract Map 33161. At that time, the original developer, (Sherman Las Vegas
Road Housing, Inc.), did not propose public financing assistance. A final map for Tract
No. 33161 was approved by the City Council on February 21, 2007, and the original
developer commenced with construction of on-site and off-site improvements. A model
complex consisting of four single family homes was constructed. However, further
completion of the "Agave" project did not continue as a result of the economic recession
and the 28 remaining lots remain vacant. The four model homes were subsequently
sold by the original developer and are individually owned.
In its letter of November 17, 2016, the new developer (Arroyo Vista Partners, LLC) has
requested that the City allow public financing through the SCIP for the following
development impact fees: $5,576 per lot for Quimby park fees, and $3,000 per lot for
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March 15, 2017 - Page 6
SCIP Funding Request—Agave/ Palermo Projects
sewer connection fees. The total request for public financing is $240,128 which would
result in an estimated special assessment levy of $450 annually for the 28 remaining
lots. A copy of the new developer's request letter is included as Attachment 3.
The issue here for City Council consideration is that with approval of SCIP public
financing for the 28 remaining lots, these lots will carry a higher property tax rate
(estimated at $450 more annually) than the 4 existing homes within the development.
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City Council Staff Report
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SCIP Funding Request—Agave/ Palermo Projects
"Palermo"(Tract No. 33561)
The "Palermo" project is a mixed-used development allowing for construction of up to
211 condominium units and 10,000 square feet of commercial space located east of
Indian Canyon Drive and north of San Rafael Drive, as shown in Figure 2.
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City Council Staff Report
March 15, 2017 - Page 8
SCIP Funding Request—Agave/ Palermo Projects
Figure 2 — "Palermo" Project
The "Palermo" project, was approved by the City Council on October 5, 2005, as
Tentative Tract Map 33561. At that time, the original developer, (P.S. Venture Indian
Canyon/San Rafael, LLC), did not propose public financing assistance. A final map for
Tract No. 33561 was approved by the City Council on March 15, 2006, and the original
developer commenced with construction of on-site and off-site improvements. The
developer also constructed approximately 129 of the 211 condominium units. However,
further completion of the 'Palermo' project did not continue as a result of the economic
recession, and the 82 remaining condominium units have not been constructed. All of
the previously constructed condominium units were sold by the original developer and
are individually owned.
In its letter of November 17, 2016, the new developer (Arroyo Vista Partners, LLC) has
requested that the City allow public financing through the SCIP for the following
development impact fees: $5,576 per lot for Quimby park fees, and $3,000 per lot for
sewer connection fees. The total request for public financing is $703,150 which would
result in an estimated special assessment levy of $450 annually for the 82 remaining
condominium units. A copy of the new developer's request letter is included as
Attachment 4.
The issue here for City Council consideration is that with approval of SCIP public
financing for the 82 remaining condominium units, these units will carry a higher
property tax rate (estimated at $450 or more annually) than the 129 existing
condominium units within the development.
In response to certain questions raised by the City Council at the January 18, 2017,
meeting, the new developer provided an e-mail on February 7, 2017, to further explain
the basis for its request for public financing of Quimby park fees and sewer connection
fees. A copy of the e-mail is included as Attachment 5.
ENVIRONMENTAL IMPACT:
The requested City Council action is not a 'Project' as defined by the California
Environmental Quality Act (CEQA). Pursuant to Section 15378(a), a 'Project' means the
whole of an action, which has a potential for resulting in either a direct physical change
in the environment, or a reasonably foreseeable indirect physical change in the
environment. The requested action is to consider authorizing public financing for
payment of development impact fees, and is exempt from CEQA pursuant to Section
15378(b), in that a 'Project' does not include: (5) Organizational or administrative
activities of governments that will not result in direct or indirect physical changes in the
environment.
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SCIP Funding Request—Agave/ Palermo Projects
FISCAL IMPACT:
The State CSCDA is responsible for administering, financing, and levying the special
assessments, hence, no fiscal expenses for the City.
SUBMITTED
UAN /
M rcus L. Fuller, MPA, P.E., P. .S. David H. Ready, Esq.
Assistant CityManager/City Engineer City Manager
I ACI
Douglas FOand
City Attorney
Attachment:
1. 2002 Policy on Public Financing of New Development Projects
2. October 1, 2014, staff report and Resolution 23671
3. "Agave" Project Request Letter
4. "Palermo" Project Request Letter
5. Arroyo Vista Partners, LLC, Email
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Attachment 1
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SPECIAL ASSESSMENT AND COMMUNITY FACILITY DISTRICT
FINANCING PROGRAMS
STATEMENT OF POLICIES AND PROCEDURES FOR
NEW DEVELOPMENT PROJECTS
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APRIL 2002
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CITY OF PALM SPRINGS
Special Assessment District and
Community Facilities
Financing Programs
TABLE OF CONTENT'S
Section Page
1. Background . . . . . . . . . . . . . . . . .
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3
3. General Policy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4
4. Minimum Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5
5. Special Districts Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. Eligible Public Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
7. Value-to-Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7
8. Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
9. Special Tax Formula . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
10. Terms and Conditions of Bands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9-10
11. District Cost Deposits and Reimbursements . . . . . . . . . . . . . . . . . . . . .10-12
12. Origination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
13. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12-13
14. Use of Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
15. Acquisition Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-14
16. Disclosure to Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
17. Property Owner Support . . . . . . . . .
18. Land Use Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
19. Joint Financing Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
20. Treatment of Delinquencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
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21. Exceptions to These Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
22. Application Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15-16
23. Special Assessment District Formation Proceedings . . . . . . . . . . . . . . . . . .16-17
24. Mello-Roos Community Facilities District Formation Proceedings . . . . . . . . .17-19
j25. Special Districts Flow Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
26. Mello-Roos Flow Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
27. Chart - Allowable Uses of Assessment Laws . . . . . . . . . . . . . . . . . . . . . . . . .22
28. District Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22-25
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I. BACKGROUND
Since the City was incorporated in 1938 there have been over 150 assessment districts
formed by property owners for various public improvements in Palm Springs. Typical
improvements are for streets, sewers, storm drains, neighborhood street lighting,
parkways maintenance or other improvements in the public right-of-way. Those types of
property owner initiated projects will continue to occur as needs arise in neighborhood
situations when the "petition" the City for the improvements.
j The first California legislature in 1850 authorized special assessments in the act providing
I for the incorporation of cities. The legislature authorized the paving of streets and the
construction of sewers, making the cost thereof payable by the owners of fronting
properties. The Assessment Acts since 1850 have been widely used and enhanced. The
current enabling legislative Acts of 1911, 1913, 1915, 1972 and 1982 are the basis of
current Assessments and Community Facilities Districts,with the expenses of the Districts
being passed on to the benefiting properties. State taw also provides funding sources for
certain governmental operational and maintenance expenses.
The most recent trend in private development techniques is for California developers to
approach governmental agencies and request financing assistance via Community Facilities
Districts (C.F.D.'s). These are commonly called "Mello-Roos" districts.
In 1982 Henry Mello and Mike Roos,two California Legislators,authored the Mello-Roos
Community Facilities Act. This act was more or less a direct result of government
financing shortfall problems that arose after the passage of Proposition 13(the Jarvis/Gann
California Initiative that became law in 1978). The Proposition 13 property tax cuts and
j limits to future tax increases began to severely restrict local governments' ability to build
infrastructure and public facilities. The following are examples of the types of
improvements or funding allowable under Mello-Roos (C.F.D.'s):
0 Streets, sidewalks, Bridges etc.
o Sewers, Storm Drains, Flood Control
0 Traffic Signals, Street Lighting
0 Water, Electric, Gas Utilities
o Parking Lots
0 Pedestrian Malls
o Parks and Parkways
o Recreation Facilities (Public)
o Schools, Libraries
v Transportation and related public improvements
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REASON FOR SPECIAL DISTRICTS POLICY
II The City has received requests from private developers who wish to form Mello-Roos
C.F.D.'s in Palm Springs. When staff received the requests we contacted other
cities/agencies in California to find out how others handled the process. We contacted
some 24 municipalities or County agencies to obtain pro and con input and obtain copies
of their written policies. Generally the agencies with the most experience established
written policies to control the process and avoid financial losses.
Note that those cities we contacted generally prefer to use Mello-Roos C.F.D.'s only on
commercial/industrial projects because of the many property owner complaints they have
received on past residential single family(subdivision)type districts. Residents don't like
the term "Special Tax" on their annual tax rolls and there have been many problems with
disclosure. This has generally not been a problem for high-end commercial/industrial
projects.
One of the first California public agencies to prepare a written policy and procedure on
Mello-Roos and Acquisition Districts was the County of Riverside. Since then many other
cities/agencies have adopted variations of the concepts originated by the County.
In nearly all of the adopted policies we received from other agencies, the basic formats are
similar to our proposed policy.
2. DEFINITIONS
Unless the context otherwise requires, the terms employed in the following policies shall
have the meaning specified below:
"A.D." means Assessment District under the Improvement Acts of 1911, 1913 or 1915.
j "Bonds"mean bonds authorized an issued under the Mello-Roos Community Facilities Act
of 1982 or the Municipal Improvement Act of 1911 and the Improvement Bond Act of
1915.
"C.F.D." means Community Facilities District under the Mello-Roos Community
l Facilities Act of 1982.
"City" means the City of Palm Springs.
"District" means a Community Facilities District formed under the Mello-Roos
Community Facilities Act of 1982 or an Assessment District formed under the
Improvement Act of 1911 or the Municipal Improvement Act of 1913.
"Public Facilities" means improvements authorized to be constructed or acquired under
j the Mello-Roos and Municipal Improvement Acts including, but not limited to, fees for
capital facilities imposed by public agencies as a condition to approval of the development
encompassed by the district or as a condition to service the district.
"Value" or "Fair Market Value" means the amount of cash or its equivalent which
property would bring if exposed for sale in the open market under conditions in which
neither buyer nor seller could take advantage of a difficulty of the other and both have
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knowledge of all of the uses and purposed to which the property is adapted and for which
it is capable of being used and of the enforceable restrictions upon uses and purposes.
3. GENERAL POLICY STATEMENT
The City does not wish to encourage assessment district or community facilities district
financing but will consider its implementation in certain circumstances which are clearly
beneficial to the City.
Developer Initiated Districts:
The City encourages the development of upscale commercial, mixed-use, and high wage
producing industrial property. The City Council will consider the use of community
facilities districts ("C.F.D.'s") or special benefit assessment districts ("Assessment
Districts") to assist these types of development.
Where, in the City Council's opinion the public facilities or other regional amenities of
a residential development represents a significant public benefit, Assessment District
financing may also be considered to assist such a residential development. Mello-Roos
C.F.D.'s will not be permitted for residential development districts due to many current
industry problems associated with single family ownerships in those districts. The City
will, however, consider the use of 1913 and 1915 Act "Acquisition" districts for
residential development type districts.
a Neighborhood Initiated Districts:
Neighborhood assessment districts requested by existing property owners will continue to
be processed on a case-by-case basis when the residents petition the City for the
improvements. Those would be for typical street, sewer, storm drain and street lighting
under the 1911, 1913 and 1915 Acts or Landscape and Lighting Maintenance under the
1972 Act. Those neighborhood districts will not be subject to up front fees or cash
deposits associated with developer requested districts primarily addressed in this policy
and procedure document.
City Initiated Districts:
Assessment Districts and Mello-Roos C.F.D.'s initiated by the City will not be governed
by the development requirements addressed in the Special District Policy and Procedures.
4. MINIMUM REQUIREMENTS
For a private development project to qualify for City-assisted financing via an Assessment
District(1911, 1913,or 1915 Act)or Community Facilities District(Mello-Roos C.F.D.),
the following minimum criteria is required:
1. BENEFIT - That the proposed public facilities to be financed must meet a public
need:
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A. The proposed project shall provide major infrastructure improvements that
significantly benefit the general public, and/or
B. The project shall provide significant financial benefit to the City.
The determination of benefit will be at the sole discretion of the City of
Palm Springs.
2. QUALIFICATIONS AND FINANCIAL STATUS
A. The proposed development project must be consistent with the City's
General Plan and secure appropriate land use approvals from the City to
allow for the implementation of the ultimate development of the area.
B. The project must be reviewed and approved by the Special Districts
Committee and the City's Financial Advisor must determine that the project
is a sound investment for the City.
C. Bond Sale Minimum - That the total proposed bond sale, including
construction and all incidental costs, be at least $2,000,000 or greater for
reasons of cost effectiveness. In special circumstances City Council may
approve lesser bond amounts by formal action.
3. AGREEMENT - That the following elements have been properly completed:
i A. Application- (Development Projects)- To be completed by developer.
B. Petition- Signed by sufficient property owners.
C. Boundary Map - Submitted by developer's engineer.
D. Cash Deposit - Costs deposited up-front by developer to cover City and
City consultant costs during the formation process. This would be
sufficient to cover all City administrative costs prior to the Public Hearing
and Bond Sale process.
E. Agreement-Executed in a form satisfactory to the City and consistent with
this policy and special district proceedings.
5. SPECIAL DISTRICTS CON IITT'EE
Special Districts committee will be established to review all proposed Assessment District
and Communities Facilities Districts (Mello-Roos)projects. The committee shall consist
of at least the following staff:
City Manager
Assistant City Manager
Finance Director
City Engineer
Director of Planning & Building
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Director of Economic Development
City Attorney
Resources Consultants to the City:
Bond Counsel (May be City Attorney)
Assessment Engineer
Special Tax Consultant (May be Assessment Engineer)
Financial Advisor
Appraiser
Bond Underwriter
Trustee/Paying Agent (Bank)
Market Absorption Study Consultant
6. ELIGIBLE PUBLIC FACILITIES
Facilities to be financed must be public facilities for which the City, or a public agency
as determined appropriate by the City, will be the owner or will have normal operating
and maintenance responsibility. The types of facilities eligible to be financed are:
A. Streets, Roads and Infrastructure
All public roads and facilities to be maintained by the City, including
streets, curbs and gutters, sidewalks, sewers, storm drains, street lights,
traffic signals and other public facilities within the City right-of-way
B. Utilities and Drainage Facilities
As permitted by law, provided they are located within an eligible road(as
defined in "A") or within public right-of-way or easements, or otherwise
provide significant public benefit.
C. City and Regional Public Facilities
As permitted under the Mello-Roos Community Facilities Act, such as
parks, freeways, schools, libraries and fire stations.
D. Development Fees
City sewer connection fees, City/County drainage fees, CVAG/County
Transportation Uniform Mitigation fees(TUMF)and Palm Springs Unified
School district fees.
The City has final determination as to any facility's eligibility for financing, as well as the
prioritization of facilities to be included within a financing district. Use of bond proceeds
for grading and right-of-way acquisition will be reviewed by the City and Bond Counsel
on a case-by-case basis.
7. VALUE-TO-LIEN RATIO
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j The district(or improvement area) property value-to-lien ratio should be a least 4:1 after
calculating the value of the financed public improvements to be installed and considering
any prior or pending special taxes or improvement liens. A project may be approved with
a ratio between 4:1 and a minimum of 3:1 if the ratio is recommended by the City's
Financial Advisor, Appraiser and Bond Counsel. Acceptance by the City of the value-to-
lien ratio will be dependent upon an appraisal with recommendations from bond counsel,
financial advisor and the underwriter with consideration of the project and diversification
of land ownership.
The value-to-lien ratio shall be determined based upon an appraisal of the proposed
district. The appraisal shall be coordinated by, under the direction of, and addressed to
the City. All costs associated with the preparation of the appraisal report shall be paid by
the applicant through the advance deposit mechanism. The appraisal shall be conducted
in accordance with criteria established by the City, based upon the recommendations
received by the underwriter and financial advisor designated by the City. In every case,
the appraisal shall reflect nationally recognized appraisal standards and employ all, or a
combination of. a discounted cash flow, bulk sale comparables,raw land value as is, and
project build-out values.
Upon receiving an appraisal if the district wide value-to-lien ratio is 4:1 or greater, the
district shall not require letters of credit or other security to secure payment of the special
taxes to be levied annually on properties within the district. However, letters of credit or
other security may be required for individual parcels within a district that have a value-to-
lien ratio of less than 4:1.
The City will require a market absorption study, and will retain a consultant to prepare a
report to verify market absorption assumptions and projected sales prices of the properties
which may be subject to the maximum special tax or assessment in the district.
8. SECURITY
For new developments,the applicant or property owner must demonstrate its financial plan
and ability to pay all assessments and/or special taxes before full build-out has taken place.
I Additional security such as credit enhancement may be required by the City in certain
instances. The City's Financial Advisor shall review and recommend all proposed credit
enhancements to determine appropriateness and eligibility for the district.
If the City requires letters of credit or other security, the credit enhancement shall be
f issued by an institution in a form and upon terms and conditions satisfactory to the City.
All fees payable on the letter of credit or other security shall be the sole responsibility of
the district applicant or developer, not the City or district. Any security required to be
provided by the applicant shall be discharged by the City upon the opinion of a qualified
appraiser retained by the City, that a value-to-lien ratio of 4:1 has been retained.
A project may be approved with a ratio between 4.1 and a minimum of 3:1 if the ratio is
recommended by the City's Bond Counsel, Underwriter, the Financial Advisor and
Appraiser. The final determination will be made by the City, not by the developer's
{ consultants.
9. SPECIAL TAX FORMULA
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The maximum amount of special taxes to be levied on any parcel of property within a
community facilities district, in any given fiscal year to pay debt service bonds, together
with the general property taxes and other special taxes and assessments levied on such
parcel, shall not exceed an amount equal to two-percent(2%)based on the full cash value
of the parcel estimated at the time of sale and consistent with the market absorption study
for all homes. Special tax allocation formulas or methodologies with respect to the levy
of special taxes to pay for public facilities will specify maximum amounts of special tax
for all categories of taxable property which will be used for private residential purposes.
The dollar amount will be established no later than the date on which the parcel is first
subject to the Ievy of special taxes because of its use for private residential purposes.
The maximum special tax shall establish for undeveloped land tax rates corresponding to
the adopted land use designation for each parcel. Undeveloped land shall not be taxed at
a rate below that of developed properties of the same land use designation for a period
exceeding seven years from the formation of the C.F.D.
The maximum special tax formula shall adhere to the following requirements:
A. The maximum special tax shall include the annual costs incurred by the
City to administer the district, including consultant costs.
B. The special tax formula shall not include escalator rates allowing annual tax
increases above the maximum special tax established upon district
formation.
C. The maximum special tax shall establish for underdeveloped land tax rates
corresponding to the adopted land use designations on each parcel.
Undeveloped land shall be taxed at rates equal to developed properties of
the same land use designation.
D. The City shall have discretion to allow a special tax in excess of the
established limits for any land within the C.F.D. which are designated as
commercial or industrial.
E. For residential districts, once issuance of building permits commences, the
City will not take any actions to modify the established tax formula.
F. A backup special tax to protect against changes in densities resulting in
insufficient annual special tax revenues to pay annual debt service and
administrative expenses shall be required.
The City shall retain a special tax consultant to prepare a report which:
A. Recommends a special tax for the proposed C.F.D.
B. Evaluates the special tax proposed to determine its ability to adequately
fund identified public facilities, City administrative costs, services (if
applicable)and other related expenditures. Such analysis shall also address
the resulting aggregate tax burden of all proposed special taxes plus
existing special taxes, ad valorem taxes and assessments on the properties
within the C.F.D. The rate and method of special tax apportionment shall
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be designed to ensure sufficient revenues are produced in case of final
development at lower densities than anticipated.
C. Consultants shall not have performed an aggregate of $250.00 worth of
services for any owner in the proposed district within the twelve months
prior to retention and shall perform no work for any owner during the term
of retention in order to avoid any conflict of interest to the Fair Political
Practices Commission and Section 87100 of the California Government
Code.
10. TERMS AND CONDITIONS OF BONDS
All terms and conditions of the bonds shall be established by the City. The City will
control, manage and invest or direct the management and investment of all district issued
bond proceeds. Each bond issue shall he structured to adequately protect bond owners and
to not negatively impact the bonding capacity or credit rating of the City through the
special taxes or assessments, credit enhancements, foreclosure covenant, and special
reserve. Unless otherwise authorized by the City, the following shall serve as bond
requirements.
A. A reserve fund equal to an amount of ten percent (10%) or maximum
annual debt service or 125% of average annual debt service, whichever is
less shall be established.
I B. The special taxes or special assessment shall be levied for the first fiscal
terest
shall not be funded casale of phe bonds for which italized) beyond the earliest tam interest be levied.
a payment date
(capitalized) Y PY
for which sufficient special tax revenues will be available for payment of
interest.
C. The repayment of principal shall begin on the earliest principal payment
date for which sufficient special tax revenues can be made available.
D. Beginning with the commencement of the repayment of principal, annual
debt services shall be level. The City will consider an increasing annual
debt service for commercial and/or industrial districts only, but such
increases shall not exceed two percent (2%) per year for the term of the
bonds.
E. The maximum special tax shall be established to assure that the annual
revenue produced by levy of the maximum special tax shall be equal to at
least 110% of the average annual debt service.
F. Prior to the issuance of the bonds,the City shall authorize its bond counsel
to commence and process to final judgement an actio establishing the
validity of the proceedings, special tax and issuance of bonds, unless
advised to the contrary by such bond counsel.
G. In instances where multiple series of bonds are to be issued, the first series
shall include public facilities of highest priority to the City, as determined
by the City.
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H. All statements and materials related to the sale of special assessment or
community facilities district bonds shall emphasize and state that neither the
good faith, credit nor the taxing power of the City is pledged to security or
repayment of the bonds. The sole source of revenues to secure bond
owners are special taxes, annual assessments or foreclosure proceedings.
DISTRICT COST DEPOSITS AND REMBURSEMENTS
All City and consultant costs incurred in the evaluation of district applications and the
establishment of districts will be paid by the applicant by advance deposit increments. The
City shall not incur any non-reimbursable expenses for processing and administering
assessment districts or C.F.D.'s. Expenses not chargeable to the district shall be directly
borne by the applicant.
Each application for formation of an assessment district of C.F.D. shall be accompanied
by an initial deposit in the amount determined by the City to fund initial staff and
consultant costs associated with district review and implementation. if additional funds
are needed to off-set costs and expenses incurred by the City, the City shall make written
demand upon the applicant for such funds and the applicant shall comply with each
demand within seven (7) calendar days of receipt of such notice. If the applicant fails to
make any deposit of additional funds for the proceedings, the City may suspend all
proceedings until receipt of such additional deposit.
The deposits shall be used by the City to pay for costs and expenses incurred by the City
incident to the proceedings relating to the district. Typical district costs prior to the sale
of bonds, to be funded by the applicant by the advance deposit mechanism, may be 5%
to 10% of the estimated project expenditures. Expenses vary with the complexity of the
project. Expenses to be funded typically include: required notification, printing,
publication, assessment engineering, special tax report, bond counsel, appraisals, market
absorption study, traffic study, miscellaneous tests and studies, financial advisors, city
staff administration and design engineering.
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DEPOSITS AND FEES:
A. Development Districts: (Initiated by Private Developers):
1. Application Fee - $10,000.00 (non-refundable) deposited with
Initial Special District Application. (See application process.)
2. Deposit-An advance deposit to cover all anticipated City and City
consultant costs to be incurred prior to Bond Sale. Amount to be
determined prior to district formation based on size and scope of the
proposed project.
B. Neighborhood Districts: (Initiated by existing Property Owners):
1. Non-development type districts formed by existing property owners
for traditional 1911, 1913, and 1915 Act A.D.'s or 1972 Act
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Maintenance Districts will be exempt from the above deposits and
fees.
j C. City Initiated Districts:
I
Special Districts initiated by the City will be exempt from the above fees
and deposits.
The district shall refund any unexpended portion of the deposits upon the following
conditions:
lA. The district is not formed;
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B. Bonds are not issued and sold by the district;
C. The proceedings for formation of the district or issuance of bonds is
disapproved by the City; or
D. The proceedings for formation of the district or issuance of bond is
abandoned in writing by the applicant.
Except as otherwise provided herein, the applicant shall be entitled to reimbursement for
all reasonable costs and expenses incident to the proceedings and construction of the public
facilities as provided under the Mello-Roos Community Facilities Act of 1982 or the
Municipal Improvement Act of 1911 or 1913 and the Improvement Bond Act of 1915,
provided that all such costs and expenses shall be verified by the City as a condition of
reimbursement.
The applicant or property owner shall not be entitled to reimbursement from bond
proceeds for any of the expenses specified as follows:
A. In-house administrative and overhead expenses incurred by the applicant;
B. Interest expense incurred by the applicant on deposits advanced or
expended during the proceedings and construction of public facilities; and
C. Any other costs and expenses incurred by the applicant which are not
otherwise authorized for reimbursement under the Mello-Roos or
Improvement Acts.
The City shall not accrue or pay any interest on any portion of the deposit refunded to the
applicant or the costs and expenses reimbursed to the applicant or property owner from
any funds other than the proceeds of bonds issued by the district.
12. ORIGINATION FEE (For Development Type Districts)
For any developer-requested improvement district in which the improvements are to be
financed by issuance of assessment district bonds, bonds may be authorized and issued by
authority of City Council under the provisions of the 1911 Act, the 1913 Act, 1915 Act
or the 1982 Mello-Roos Community Facilities Act.
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.... . . ................_..................
For any such issuance, an Origination Fee of two (2) percent of the amount of the total
bond issue (unless otherwise approved by City Council) shall be paid to the City's
Assessment District Reserve Fund to be used exclusively for the financing of assessment
districts as authorized by the City Council. Such fee shall be paid out of the proceeds of
the sale of bonds, and shall be in addition to any other applicable fees, charges or
incidental expenses. The fee will be reviewed on an annual basis and may be adjusted by
Council action due to inflation or other economic changes.
The Origination Fee does not apply to non-developer type neighborhood districts formed
by existing property owners for typical 1911, 1913, 1915 Act Districts or 1972 Act
Maintenance Districts or City initiated districts.
13. AGREEMENTS
Agreements will be prepared incidental to district proceedings in a form satisfactory to the
City and consistent with these policies. These agreements shall include,but not be limited
to:
A. Reimbursement Agreements.
B. Covenants, Conditions, Restrictions and Easements (C.C.&R's)
C. Agreements with any other public agency entitled to receive any portion of
the bond proceeds or entitled to own and operate any of the public facilities
financed by bond proceeds.
As a condition to the issuance and sale of bonds, all of the agreements specified shall be
duly approved and executed by the parties thereto. Prior to execution of any
agreements,such agreements shall be reviewed by the Special Districts Committee, Bond
Counsel and the City Attorney, and approved by the City Council. Such approval by the
City Attorney shall be indicated thereon.
14. USE OF CONSULTANTS
The City shall have the sole discretion as to selection of consultants and determination of
fees and expenses of all consultants necessary for the formation of the district and the
issuance of bonds, including the underwnter(s), bond counsel, financial advisor,
assessment engineer,appraiser,trustee,paying agent,market absorption study consultant,
and the special tax consultant after reasonable consultation with the applicant. Prior
consent of the applicant shall not be required in the determination by the City of the
consulting and financing team.
The City shall also be responsible for determining the structure of the bonds to be issued,
including the method of sale (negotiated or competitive), the need for bond ratings,
investment of bond proceeds, and all other terms and conditions incidental to structuring
and closing an assessment or community facilities bond issue.
No firm may serve as both design engineer or engineer of work and assessment engineer
or special tax consultant on the same district pursuant to Section 87100 of the Government
Code.
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15. ACQUISITION PROVISIONS
The City generally supports acquisition districts to limit financial exposure and
administrative efforts by the City. The City shall have final determination as to whether
it will allow the financing of public facilities through acquisition, and will grant rare
exceptions where an overriding Justification exists concerning public benefit, safety or
health. Such waiver shall be subject to City Council approval.
In the event the acquisition provisions of the Municipal Improvement Act of 1913 or the
Mello-Roos Act are utilized, the City, at its sole discretion, will determine the facilities
to be acquired and the method of determining reasonable acquisition costs. A funding and
acquisition agreement shall be required and approved by the City Council prior to the
adoption of the resolution of intention to form the district. Bidding and prevailing wage
requirements are extensive.and will be addressed during the preparation of the funding and
acquisition agreement.
The City has determined (pursuant to Section 53329.5(c) of the Government Code) that
the public interest will not be served by allowing property owners to elect to enter into
agreements with the City to perform construction work after the publication by the City
of the notice of the award of the contract for such work. The City Council will make such
a determination in the resolution of intention regarding the formation of a community
facilities district.
! 16. DISCLOSURE TO PURCHASERS
The applicant or property owner will be required to demonstrate to the satisfaction of the
City that there will be full disclosure of the assessment or Mello-Roos special taxes and
any other special tax, assessment or other liens on individual parcels to existing and future
property owners, including interim purchasers and sales to merchant builders. In addition
to all requirements of law, the City shall require the applicant to provide disclosure of
such information as the City deems appropriate to the purchasers of property within the
district with respect to the existence of the district, maximum and/or backup special taxes
to be levied within the district facilities to be constructed, the foreclosure process and the
terms and conditions of bond issued on behalf of the district. Such disclosure statement
shall include homebuyer notifications requiring signature of the (attached) Disclosure
Statement prior to home purchases, as well as notification of subsequent home purchasers
through the C.C.&R.'s via a covenant that runs with the title of each individual parcel of
property. (See Exhibit "B"). All project advertising, recorded media advertising, signage
and other advertising shall disclose that the project includes Mello-Roos Community
Facilities District C.F.D. Municipal bond financing for the public improvements.
If a Mello-Roos Community Facilities District is formed, the City will file and record a
Notice of Special Tax Lien, as required by Streets and Highways Code Section 3114.5.
The City shall prepare a disclosure form guideline to be used by special district
developers. All initial sales will require that an original signed and dated disclosure form
must be submitted to the City from each new property owner.
17. PROPERTY OWNER SUPPORT
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In the instance of multiple property owners, the district applicant shall be required to
produce letters evidencing other property owners' support for the scope and establishment
of the district as an attachment to the district application. The district must have
concurrence of a substantial percentage of the other property owners to be included in the
proposed district, wiless there is an overriding need for the public facilities, or the
applicant is willing to separately fund the facilities on the non-participating property(s).
18. LAND USE APPROVALS
Proposed district properties must possess a land use determination such that proposed
development land uses and specific facility requirements can be adequately assessed. The
City will accept application for assessment and/or Mello-Roos financing for residential
properties only when they are included in an approved development plan.
19. JOINT FINANCING POLICY
In certain cases a development may wish to enter into joint financing agreements with
other agencies or utility companies in order to include certain fees or costs in the incidental
expenses and bond sale of a special district.
The City and its related Districts will not enter into a Joint Financing Agreement with
regard to a community facilities district or a Utility Agreement(pursuant to Section 10110
of the Streets & Highways Code) with regard to a non-City initiated special assessment
district unless the project meets the City's minimum Special Districts Policy and
Procedures requirements.
An administrative review will be made by the City's Special Districts Committee of all
non-City initiated community facilities districts or special assessment districts subject to
minimum requirements. Only those requests not satisfying the minimum requirements
would be brought before the Special Districts Committee for special consideration.
20. TREATMENT OF DELINQUENCIES
The City will develop a foreclosure covenant to be signed by all developers and property
owners within a private development special district. The foreclosure covenant will
address(1)the amount of the delinquency; (2)the duration of the delinquency; and(3)the
condition of the reserve fund. The specific details of the covenant will depend upon the
size and duration of the bond issue along with the concentration of the special tax base at
the time of bond issuance. The purpose of the policy is to foreclose when necessary to
protect the credit quality of the bonds and to hold the property owners accountable to
terms addressed in the covenant.
21. EXCEPTIONS TO THESE POLICIES
The City may find in limited and exceptional instances that a waiver to any of the above
stated policies is reasonable given identified special City benefits to be derived from such
waiver. Such waivers are granted only by action of the City Council and based upon
specific public purpose and/or health and safety findings.
22. APPLICATION PROCESS
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Early communication with the City is encouraged to assist applicants in evaluating the
feasibility of available financing programs and to discuss program procedures.
1. Pre-Application Conference: Applicant meets with City to discuss the
proposed project and application procedures.
' 2. Application Submission: Applicant submits an initial application and a
$10,000 non-refundable application fee for review by City Staff.
3. Project Review: Applicant and City staff meet to discuss initial
application, including any issues raised and further information that might
be required. If necessary, applicant submits revised application.
4. Application Processing: Upon City determination that application is
complete, staff prepares a staff report which forwards the request for
district formation and project financing and staff recommendation to the
City Council.
5. City Council Consideration: The City Council grants or denies the
application, selects consultants (if approval is granted) and either approves
contracts or directs staff to negotiate contracts, authorizes staff to receive
the selection and directs staff to collect the applicant's deposit.
6. Project Initiation: Staff submits consultant contracts, reimbursement
agreements and other similar items for City Council consideration.
7. Project Implementation: Applicant,staff and consultants meet to determine
preliminary project schedule and begin work necessary to initiate district
formation.
23. SPECIAL ASSESSMENT DISTRICT FORMATION PROCEEDINGS
j1913 Act Assessment Districts
Assessment district proceedings under the Municipal Improvement Act of 1913 normally
provide for the construction of improvements by the City and the financing of such
improvements with improvement bonds, which are secured by a fixed lien on the benefited
property. In certain instances, if authorized by the City, the developer may construct the
improvements (or portion thereof)which would be acquired by the City as provided in the
proceedings. This procedure requires the developer to enter into an Acquisition and
Financing Agreement with the City and to pay all administrative and consultant costs
which may be incurred.
The formation proceedings are subject to, and contingent upon satisfaction of all
environmental zoning and land use regulations.
I
j 1. Initiation of Proceedings. The district is initiated by an applicant or
landowner petition for City Council action. Upon initiation, the design
engineer prepares plans, specifications and cost estimates of the proposed
public improvements. The assessment engineer begins preparing the
Engineer's Report, including the assessment diagram, assessment roll,
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description of improvements and preliminary cost spread. The EIR
consultant begins processing the appropriate environmental documentation
for the public improvements.
2. Presentation of Report. Upon completion of the preliminary engineering
work, the CityCouncil adopts a resolution of intention to form the
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assessment district, approves the Engineer's Report, calls for construction
bids, authorizes the future sale of bonds, sets the date, time and place for
the public hearing and directs assessment notices to be mailed.
3. Bid Process. Finance Department receives construction bids. Assessment
Engineer modifies the assessment roll and Engineer's Report and notifies
property owners of revised assessments.
4. Public Hearing. City Council holds public hearing at which written
protests are presented and public testimony is taken. If no protests have
been received, or if the City Council determines to overrule such protests,
City Council approves district formation, awards bids,orders construction
work, confirms the assessments, directs Treasurer to mail assessment bills
and approves the bond sale.
5. Cash Collection Period. Treasurer may receive cash payments during the
30 days following confirmation if property owners elect to pay off the
assessment or portion thereof prior to the issuance of bonds.
6. Authorize Issuance of Bonds. City Council determines the balance of
unpaid assessments and provides for the issuance of bonds to be secured
thereby.
7. Sale of Bonds. Bonds are issued in exchange for the cash proceeds of the
sale, which are held by the City or its fiscal agent (or paying
agent/registrar) and utilized for the purposes described in the Engineer's
Report.
24. MELLO-ROOS COMMUNITY FACILITIES DISTRICT FORMATION
PROCEEDINGS
A Community Facilities District ("C.F.D.") is a legally constituted governmental entity
created for the purpose of financing public facilities and services. It is similar in effect
to an assessment district except that the resulting security for debt in an assessment district
is a fixed lien,while under a C.F.D. it is a special tax. A C.F.D. may finance a broad
range of facilities, including facilities which benefit an area in a general way as opposed
to benefiting specifically identified properties as required in an assessment district.
The formation proceedings are subject to, and contingent upon satisfaction of all
environmental, zoning and land use regulations.
1. Initiation of Proceedings. Proceedings must be instituted when a written
request is made by a petition signed by ten percent(10%)of the registered
voters (or ten percent (10%) of the landowners by area if less than twelve
(12) registered voters)within the proposed C.F.D. The written request or
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petition shall be accompanied by payment of a fee determined by the City
Council to be sufficient to pay for costs incurred in conducting the
proceedings. The Local Agency Formation Commission("LAFC")has no
jurisdiction over the formation of or annexation of territory to, or
detachment of, territory from a C.F.D.
2. Resolution of Intention. Within ninety (90) days of the receipt of a
written request or petition, the City Council must adopt a resolution of
intention to establish a C.F.D., stating the name of the proposed C.F.D.,
the types of facilities or services to be financed and that, except where
funds are otherwise available, a special tax to pay for such facilities and
services will be annually levied. The resolution of intention shall also fix
a time and place for a public hearing between thirty(30)and(60)days after
the adoption of the resolution of intention, describe the method of levy and
apportionment of the special tax and describe the proposed voting
procedure. In addition, the resolution may specify conditions under which
the obligation to pay the special tax may be prepaid and permanently
satisfied. The City Council directs its responsible officers to study the
proposed district and to file a report at or before the public hearing
describing the proposed public facilities and services and an estimate of
costs.
3. Public Hearing. Protests against the establishment of the C.F.D., the
extent of the C.F.D. or the furnishing of specified types of public facilities
or services may be trade orally or in writing by interested persons or
taxpayers. If fifty percent (50%) or more of the registered voters, or six
(6) registered voters, whichever is more, residing within the proposed
C.F.D. or the owners of one-half(1/2) or more of the area of land in the
proposed C.F.D. file written protests against the establishment of the
C.F.D., the proceedings are abandoned. If the protests are directed toward
certain types of facilities or services, or against a specified special tax,
those specific items may be eliminated from the resolution forming the
C.F.D. The hearing may be continued for up to thirty (30) days without
special findings and up to six (6) months if the City Council makes
specified findings.
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j 4. Resolution of Formation. If the City Council decides to establish the
C.F.D., it shall adopt a resolution of formation containing similar
information as contained in the resolution of intention.
5. Election. If the City Council determines to form the C.F.D., it submits
the question of whether special taxes should be levied to an election of the
voters (or land owners if less than 12 registered voters) of the proposed
C.F.D. Combined with the tax proposition, there may be a proposition on
the question of incurring bonded indebtedness. The tax, in order to be
levied, must be approved by two-thirds (2/3) of the votes cast and
thereafter levied by adoption of an ordinance of the City Council. The Act
provides that the election shall be at the next general election or at a special
election to be held between 90 and 180 days following the close of the
protest hearing. The election time limits may be shortened by the
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unanimous consent of the qualified electors within the proposed district and
the concurrence of the election official conducting the election.
6. Improvement Bonds. A C.F.D. may be created solely to provide the
services permitted by statute. However, most C.F.D.'s have been created
specifically for the purpose of levying special taxes to service bonded
indebtedness incurred by the C.F.D. in order to finance the construction of
facilities. The proceedings to authorize and incur bonded indebtedness
usually parallel the proceedings for formation of the C.F.D. and the
authorization to levy the special tax, although the bond proceedings should
be conducted separately and at a later date. The proceedings to authorize
bonded indebtedness involve a resolution of intention, public hearing and
election, all conducted in a manner very similar to proceedings to form the
C.F.D. and levy the tax. C.F.D. bonds may be sold competitively or
through negotiated sale and may bear fixed or variable interest rates. In
some cases, specified facilities may be provided by a C.F.D. for only a
portion of the land within the C.F.D. In that event, the Act provides for
the formation of improvement areas for which separate elections are
conducted and to which a specified special tax applies.
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City of Palm Springs
CITY COUNCIL STUDY SESSION MARCH 13, 2002
DISCUSS REVISED POLICY& PROCEDURES FOR:
SPECIAL ASSESSMENT and COMMUNITY FACILITY DISTRICT (CFD)
MUNICIPAL BOND FINANCING PROGRAMS
(Originally Adopted by Council Resolution No.17774 in January, 1992)
J _ POLICY: O z POL CY: Gu��e
A. MUNICIPAL BONDS can be issued"for A.(Same as current policy).
! Public Improvements for development Mello-Roos Community Facility DEstricts
Projects', providing financing assistance"to Cf FDs)and Assessinent Districts are
Qualifying private developments in City. approved bond financing methods in City.
B. ELIGIBLE DEVELOPMENTS: Commercial B. Commercial, Industrial and Residential
and Industrial Developments can use C_D developments can use CFD bond financing.
fnancing.
j
l C.4 1 VALUE TO LIEN RATIO: The ratio can C.(Same-no changes).Noto: 3_1 ratio is only
be as low as 3:1 (wfcredit enhancements)if allowed if additional security Is provided by
recommended by City's Financial Advisor, letter of credit or other form of credit
Market Absorption Analyst and Bond Counsel. enhancement to increase value to lien ratio.
D. ELIGIBLE PUBLIC IMPROVEMENTS: D. (Same), but add Eligible Development Fees:
1. Streets, Roads &Infrastructure 1.Sewer Connection Fee
2. Utilities &Drainage Facilities 2. Drainage Fees
3. City& Regional Public Facilities 3.TUMF Fees(need financing agreement)
(Parks, Parking Lots, Schools, Libraries, etc.) 4.School Fees(need financing agreement)
E.SPECIAL TAX FORMULA;Shall not exceed E.--Maximum Special Taxes shall not exceed
1 of appraised Fair Market Value of property 2% of appraised EaIr Market Value of property, "
and not exceed 2%of appraised property including combined general property taxes
values,including ad valorem taxes. and CFD special taxes: Allow"undeveloped
(Undeveloped and developed lands are taxed land to be taxed at a lower rate than
at equal rates), developed land for a period up to 7 years.
F.DEVELOPER DEPOSIT: Non-refundable F. (Same policy), but increase amount to
$6,000 deposit pays for City administration $10,000 for initial City administration coststo
costs during initial formation process.A 4-pg. assist with CFD formation process.
application Is completed by developer. Note
the developer must also fund new Real Estate
Appraisal Report&'Market Absorption Study.
n:ooamo,. amcForw�,ccswo�sK.w at3-Q.fMD.WPa
Rw- Iz/o3 31
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CITY OF PALM SPRINGS
ASSESSMENT DISTRICT POLICIES
City Council Adopted
Land Secured Financing Policies
And in 1992 Amended Policies in
2003 to include Residential Prol ects
Policy Goals:
Encourage Development
• Set Minimum Lien to Value Standards
of 4 to 1 at time of bond issue
• Set Maximum Property Tax Rate at 2%
of Home Sale Price
Existing Assessment Districts: y
• AD 166 (Commercial)
• AD 157 (SFR/Commercial)
• AD 158 (Andreas Hills)
AD 161 (Mountain Gate)
Typical Improvements/Fees Financed:
• Water and Sewer Fees
• Development Impact Fees
• Undergrounding Utilities
• Landscaping
Benefit to Homeowner
Lowers down payment requirement
while costing approximately the
same over a 30 year mortgage
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Attachment 2
33
ppLM 8p
O� Pay
Q
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Cg411rou `P CITY COUNCIL STAFF REPORT
DATE: OCTOBER 1, 2014 PUBLIC HEARING
SUBJECT: AUTHORIZING THE CITY TO JOIN THE STATEWIDE COMMUNITY
INFRASTRUCTURE PROGRAM; AUTHORIZING THE CALIFORNIA
STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY TO
ACCEPT APPLICATIONS FROM PROPERTY OWNERS, CONDUCT
SPECIAL ASSESSMENT PROCEEDINGS AND LEVY ASSESSMENTS
WITHIN THE TERRITORY OF THE CITY OF PALM SPRINGS;
APPROVING FORM OF ACQUISITION AGREEMENT FOR USE WHEN
APPLICABLE; AND, AUTHORIZING THE CITY MANAGER TO
EXECUTE ALL DOCUMENTS RELATED TO THE AGREEMENTS
FROM: David H. Ready, City Manager
BY: Community & Economic Development Department
SUMMARY
This resolution approves the City of Palm Springs' participation in the Statewide
Community Infrastructure Program ("SCIP"), which is sponsored by the California
Statewide Communities Development Authority ("CSCDA"). The statute requires the
City Council hold a public hearing to take public testimony on SCIP and bonds to be
issued by CSCDA, and consideration of a resolution making the findings and
authonzM participation in SCIP.
RECOMMENDATION:
1. Open the public hearing.
2. Adopt Resolution No. "A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF PALM SPRINGS AUTHORIZING THE CITY TO JOIN THE
STATEWIDE COMMUNITY INFRASTRUCTURE PROGRAM; AUTHORIZING
THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
TO ACCEPT APPLICATIONS FROM PROPERTY OWNERS, CONDUCT
SPECIAL ASSESSMENT PROCEEDINGS AND LEVY ASSESSMENTS WITHIN
THE TERRITORY OF THE CITY OF PALM SPRINGS; APPROVING FORM OF
ACQUISITION AGREEMENT FOR USE WHEN APPLICABLE;" and
ITEM NO.
Statewide Community Infrastructure Program ("SCIP")
October 1, 2014
Page 2
3. AUTHORIZE THE CITY MANAGER TO EXECUTE ALL DOCUMENTS
RELATED TO THE ABOVE AGREEMENTS.
Background:
CSCDA is a joint powers authority sponsored by the League of California Cities and the
California State Association of Counties. The member agencies of CSCDA include
approximately 356 cities and 57 counties throughout California, including the City of
Palm Springs (the "City").
SCIP was instituted by CSCDA in 2002 to allow owners of property in participating cities
and counties to finance the payment of development impact fees payable by property
owners receiving development entitlements or building permits. The program has since
been expanded to include financing of public capital improvements directly. If a
property owner chooses to participate, the selected public capital improvements and the
development impact fees owed to the City will be financed by the issuance of tax-
exempt bonds by CSCDA. CSCDA will impose a special assessment on the owner's
property to repay the portion of the bonds issued to finance the fees and the cost of
public capital improvements.
The benefits to the property owner include:
• Only property owners who choose to participate in the program will have
assessments imposed on their property.
• Instead of paying cash for public capital improvements and/or development impact
fees, the property owner receives low-cost, long-term tax-exempt financing of those
fees, freeing up capital for other purposes.
• The property owner can choose to pay off the special assessments at any time.
For home buyers, paying for the costs of public infrastructure through a special
assessment is superior to having those costs "rolled" into the cost of the home.
Although the tax bill is higher, the amount of the mortgage is smaller, making it
easier to qualify. Moreover, because the special assessment financing is at tax-
exempt rates, it typically comes at lower cost than historic mortgage rates.
Owners of smaller projects, both residential and commercial, can have access to
tax-exempt financing of infrastructure. Before the inception of SCIP, only projects
large enough to justify the formation of an assessment or community facilities district
had access to tax-exempt financing.
The benefits to the City include:
• As in conventional assessment financing, the City is not liable to repay the bonds
issued by CSCDA or the assessments imposed on the participating properties.
• CSCDA handles all district formation, district administration, bond issuance and
bond administration functions. A participating city can provide tax-exempt financing
to property owners through SCIP while committing virtually no staff time to
administer the program.
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Statewide Community Infrastructure Program("SCIP")
October 1, 2014
Page 3
• Providing tax-exempt financing helps participating cities and counties cushion the
impact of rising public capital improvements costs and development impact fees on
property owners.
• The availability of financing will encourage developers to pull permits and pay fees in
larger blocks, giving the participating city immediate access to revenues for public
infrastructure, rather than receiving a trickle of revenues stretched out over time. As
part of the entitlement negotiation process, the possibility of tax-exempt financing of
fees can be used to encourage a developer to pay fees up front.
• In some cases, the special assessments on successful projects can be refinanced
through refunding bonds. Savings achieved through refinancing will be directed
back to the participating city for use on public infrastructure, subject to applicable
federal tax limitations.
The proposed resolution authorizes CSCDA to accept applications from owners of
property within the City to apply for tax-exempt financing of public capital improvements
and development impact fees through SCIP. It also authorizes CSCDA to form
assessment districts within the City's boundaries, conduct assessment proceedings and
levy assessments against the property of participating owners. It approves the form of
an Acquisition Agreement, attached to the resolution as Exhibit B, that provides the
terms and conditions under which financing for public capital improvements will be
provided and to establish the procedure for disbursement of bond proceeds to pay for
completed facilities. The proposed resolution also authorizes miscellaneous related
actions and makes certain findings and determinations required by law.
Attached to the resolution as Exhibit A is a "Form of Resolution of Intention to be
Adopted by CSCDA". This is for informational purposes and does not require action by
the Council.
FISCAL IMPACT
Selected public capital improvements and certain development impact fees owed to the
City may be financed by the issuance of tax-exempt bonds by CSCDA thorough this
program. This does not create any financial obligation on the part of the City.
Conversely, the availability of financing will encourage developers to pull permits and
pay fees in larger blocks, giving the City immediate access to revenues for public
infrastructure, rather than receiving a trickle of revenues stretched out over time.
-PK � r
J n S. ay n , Director of David H. Ready, City a
m nity & conomic Development
Attachments:
1. SCIP Resolution
2. Public Hearing Notice
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RESOLUTION NO. 23671
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, AUTHORIZING THE CITY
TO JOIN THE STATEWIDE COMMUNITY
INFRASTRUCTURE PROGRAM, AUTHORIZING THE
CALIFORNIA STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY TO ACCEPT
APPLICATIONS FROM PROPERTY OWNERS, CONDUCT
SPECIAL ASSESSMENT PROCEEDINGS, AND LEVY
ASSESSMENTS WITHIN THE TERRITORY OF THE CITY
OF PALM SPRINGS, AND APPROVING THE STANDARD
FORM ACQUISITION AGREEMENT FOR USE WHEN
APPLICABLE.
WHEREAS, the California Statewide Communities Development Authority (the
"Authority") is a joint exercise of powers authority the members of which include
numerous cities and counties in the State of California, including the City of Palm
Springs (the "City ); and
WHEREAS, the Authority has established the Statewide Community
Infrastructure Program ("SCIP") to allow the financing of certain development impact
fees (the "Fees") levied in accordance with the Mitigation Fee Act (California
Government Code Sections 66000 and following) and other authority providing for the
levy of fees on new development to pay for public capital improvements (collectively,
the "Fee Act") through the levy of special assessments pursuant to the Municipal
Improvement Act of 1913 (Streets and Highways Code Sections 10000 and following)
(the "1913 Act") and the issuance of improvement bonds (the "Local Obligations") under
the Improvement Bond Act of 1915 (Streets and Highways Code Sections 8500 and
following) (the "1915 Act") upon the security of the unpaid special assessments; and
WHEREAS, SCIP will also allow the financing of certain public capital
improvements to be constructed by or on behalf of property owners for acquisition by
the City or another public agency (the "Improvements"); and
WHEREAS, the City desires to allow the owners of property being developed
within its jurisdiction ("Participating Developers") to participate in SCIP and to allow the
Authority to conduct assessment proceedings under the 1913 Act and to issue Local
Obligations under the 1915 Act to finance Fees levied on such properties and
Improvements, provided that such Participating Developers voluntarily agree to
participate and consent to the levy of such assessments; and
WHEREAS, in each year in which eligible property owners within the jurisdiction
of the City elect to be Participating Developers, the Authority will conduct assessment
proceedings under the 1913 Act and issue Local Obligations under the 1915 Act to
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Resolution No. 23671
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finance fees payable by such property owners and improvements and, at the conclusion
of such proceedings, will levy special assessments on such property within the territory
of the City;
WHEREAS, there has been presented to this meeting a proposed form of
Resolution of Intention to be adopted by the Authority in connection with such
assessment proceedings (the "ROI"), a copy of which is attached hereto as Exhibit A,
and the territory within which assessments may be levied for SCIP (provided that each
Participating Developer consents to such assessment) shall be coterminous with the
City's official boundaries of record at the time of adoption of each such ROI (the
'Proposed Boundaries"), and reference is hereby made to such boundaries for the plat
or map required to be included in this Resolution pursuant to Section 10104 of the
Streets and Highways Code; and
WHEREAS, there has also been presented to,this meeting a proposed form of
Acquisition Agreement (the "Acquisition Agreement"), a copy of which is attached hereto
as Exhibit B, to be approved as to form for use with respect to any Improvements to be
constructed and installed by a Participating Developer and for which the Participating
Developer requests acquisition financing as part of its SCIP application; and
WHEREAS, the City will not be responsible for the conduct of any assessment
proceedings; the levy or collection of assessments or any required remedial action in
the case of delinquencies in such assessment payments; or the issuance, sale or
administration of the Local Obligations or any other bonds issued in connection with
SCIP; and
WHEREAS, pursuant to Government Code Section 6586.5, notice was published
at least five days prior to the adoption of this resolution at a public hearing, which was
duly conducted by this Council concerning the significant public benefits of SCIP and
the financing of the Improvements and the public capital improvements to be paid for
with the proceeds of the Fees.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,
CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:
SECTION 1. The City hereby consents to the conduct of special assessment
proceedings by the Authority in connection with SCIP pursuant to the 1913 Act and the
issuance of Local Obligations under the 1915 Act on any property within the Proposed
Boundaries; provided, that
(1) Such proceedings are conducted pursuant to one or more Resolutions of
Intention in substantially the form of the ROI; and
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(2) The Participating Developers, who shall be the legal owners of such property, ;
execute a written consent to the levy of assessment in connection with SCIP by the
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Resolution No.23671
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Authority and execute an assessment ballot in favor of such assessment in compliance
with the requirements of Section 4 of Article XIIID of the State Constitution.
SECTION 2. The City hereby finds and declares that the issuance of bonds by
the Authority in connection with SCIP will provide significant public benefits, including
without limitation, savings in effective interest rate, bond preparation, bond underwriting
and bond issuance costs and the more efficient delivery of local agency services to
residential and commercial development within the City.
SECTION 3. The Authority has prepared and will update from time to time the
"SCIP Manual of Procedures" (the "Manual"), and the City will handle Fee revenues and
funds for Improvements for properties participating in SCIP in accordance with the
procedures set forth in the Manual
SECTION 4. The form of Acquisition Agreement presented to this meeting is
hereby approved, and the (Mayor] is authorized to execute and the City Clerk is
authorized to attest the execution of a completed Acquisition Agreement in substantially
said form and pertaining to the Improvements being financed on behalf of the applicable
Participating Developer.
SECTION 5. The appropriate officials and staff of the City are hereby authorized
and directed to make SCIP applications available to all property owners who are subject
to Fees for new development within the City and/or who are conditioned to install
Improvements and to inform such owners of their option to participate in SCIP;
provided, that the Authority shall be responsible for providing such applications and
related materials at its own expense. The staff persons listed on the attached Exhibit C,
together with any other staff persons chosen by the City Manager from time to time, are
hereby designated as the contact persons for the Authority in connection with the SCIP
program.
SECTION 6. The appropriate officials and staff of the City are hereby authorized
and directed to execute and deliver such closing certificates, requisitions, agreements
and related documents, including but not limited to such documents as may be required
by Bond Counsel in connection with the participation in SCIP of any districts, authorities j
or other third-party entities entitled to own Improvements and/or to levy and collect fees
on new development to pay for public capital improvements within the jurisdiction of the
City, as are reasonably required by the Authority in accordance with the Manual to p
implement SCIP for Participating Developers and to evidence compliance with the
requirements of federal and state law in connection with the issuance by the Authority of
the Local Obligations and any other bonds for SCIP. To that end, and pursuant to r
Treasury Regulations Section 1.150-2, the staff persons listed on Exhibit C, or other
staff person acting in the same capacity for the City with respect to SCIP, are hereby E
authorized and designated to declare the official intent of the City with respect to the
public capital improvements to be paid or reimbursed through participation in SCIP. s
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SECTION 7. This Resolution shall take effect immediately upon its adoption.
The City Clerk is hereby authorized and directed to transmit a certified copy of this
resolution to the Secretary of the Authority.
ADOPTED THIS 1ST DAY OF OCTOBER, 2014.
i
David H. Ready, Ci r
ATTEST:
es Thompson, City Clerk
CERTIFICATION
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF PALM SPRINGS )
I, JAMES THOMPSON, City Clerk of the City of Palm Springs, California, hereby
certify that Resolution No. 23671 was adopted by the Palm Springs City Council at a
regular meeting held on the 1"' of October, 2014, by the following vote:
AYES: Councilmember Foat, Councilmember Lewin, Councilmember Mills,
Mayor Pro Tern Hutcheson, and Mayor Pougnet.
NOES: None.
ABSENT: None.
ABSTAIN: None.
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mes Thompson, City Clerk
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Resolubon No. 23671
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EXHIBIT A TO THE RESOLUTION
FORM OF RESOLUTION OF INTENTION
TO BE ADOPTED BY CSCDA
RESOLUTION OF INTENTION OF THE CALIFORNIA
STATEWIDE COMMUNITIES DEVELOPMENT
AUTHORITY TO FINANCE IMPROVEMENTS AND/OR THE
PAYMENT OF DEVELOPMENT IMPACT FEES FOR
PUBLIC CAPITAL IMPROVEMENTS IN THE PROPOSED
ASSESSMENT DISTRICT NO. (COUNTY OF
RIVERSIDE, CALIFORNIA), APPROVING A PROPOSED
BOUNDARY MAP, MAKING CERTAIN DECLARATIONS,
FINDINGS AND DETERMINATIONS CONCERNING
RELATED MATTERS, AND AUTHORIZING RELATED
ACTIONS IN CONNECTION THEREWITH
WHEREAS, under the authority of the Municipal Improvement Act of 1913 (the
"1913 AW), being Division 12 (commencing with Sections 10000 and following) of the
California Streets and Highways Code, the Commission (the "Commission") of the
California Statewide Communities Development Authority (the "Authority") intends to
finance, through its Statewide Community Infrastructure Program, the payment of
certain development impact fees for public capital improvements as described in Exhibit
A attached hereto and by this reference incorporated herein (the °Fees") and to finance
certain public capital improvements to be constructed by or on behalf of the property
owner(s) and to be acquired by the City or another local agency (the "Improvements"),
all of which are of benefit to the property within the proposed Assessment District
No. (County of Riverside, California) (the "Assessment District"); and
WHEREAS, the Commission finds that the land specially benefited by the Fees
and the Improvements is shown within the boundaries of the map entitled "Proposed
Boundaries of Assessment District No. (County of Riverside, California)," a
copy of which map is on file with the Secretary and presented to this Commission
meeting, and determines that the land within the exterior boundaries shown on the map
shall be designated "Assessment District No. (County of Riverside,
California)".
NOW, THEREFORE, BE IT RESOLVED that the Commission of the California
Statewide Communities Development Authority hereby finds, determines and resolves
as follows:
1. The above recitals are true and correct, and the Commission so finds and
determines.
2. Pursuant to Section 2961 of the Special Assessment Investigation,
Limitation and Majority Protest Act of 1931 (the 1931 Act"), being Division 4
(commencing with Section 2800) of the California Streets and Highways Code, the
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Resolution No. 23671
Page 6
Commission hereby declares its intent to comply with the requirements of the 1931 Act
by complying with Part 7.5 thereof.
3. The Commission has or will designate a registered, professional engineer
as Engineer of Work for this project, and hereby directs said firm to prepare the report
containing the matters required by Sections 2961(b) and 10204 of the Streets and
Highways Code, as supplemented by Section 4 of Article MID of the California
Constitution.
4. The proposed boundary map of the Assessment District is hereby
approved and adopted. Pursuant to Section 3111 of the California Streets and
Highways Code, the Secretary of the Authority is directed to file a copy of the map in the
office of the County Recorder of the County of Riverside within fifteen (15) days of the
adoption of this resolution.
5. The Commission determines that the cost of the Fees and Improvements
shall be specially assessed against the lots, pieces or parcels of land within the
Assessment District benefiting from the payment of the Fees and the provision of the
Improvements. The Commission intends to levy a special assessment upon such lots,
pieces or parcels in accordance with the special benefit to be received by each such lot,
piece or parcel of land, respectively, from the payment of the Fees and the provision of
the Improvements.
6. The Commission intends, pursuant to subparagraph (f) of Section 10204
of the California Streets and Highways Code, to provide for an annual assessment upon
each of the parcels of land in the proposed assessment district to pay various costs and
expenses incurred from time to time by the Authority and not otherwise,reimbursed to
the Authority which result from the administration and collection of assessment
installments or from the administration or registration of the improvement bonds and the
various funds and accounts pertaining thereto.
7. Bonds representing unpaid assessments, and bearing interest at a rate
not to exceed twelve percent (12%) per annum, will be issued in the manner provided
by the Improvement Bond Act of 1915 (Division 10, Streets and Highways Code), and
the last installment of the bonds shalt mature not to exceed thirty (30) years from the
second day of September next succeeding twelve (12) months from their date.
8. The procedure for the collection of assessments and advance retirement
of bonds under the Improvement Bond Act of 1915 shall be as provided in Part 11.1,
Division 10, of the Streets and Highways Code of the State of California. j
9. Neither the Authority nor any member agency thereof will obligate itself to i
advance available funds from its or their own funds or otherwise to cure any deficiency i
which may occur in the bond redemption fund. A determination not to obligate itself shall
not prevent the Authority or any such member agency from, in its sole discretion, so
advancing funds.
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10. The amount of any surplus remaining in the improvement fund after
payment of the Fees, acquisition of the Improvements and payment of all claims shall
be distributed in accordance with the provisions of Section 10427.1 of the Streets and
Highways Code.
11. To the extent any Fees are paid to the Authority in cash with respect to
property within the proposed Assessment District prior to the date of issuance of the
bonds, the amounts so paid shall be reimbursed from the proceeds of the bonds to the
property owner or developer that made the payment.
[End of Form of Resolution of Intention]
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Resolution No. 23671
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EXHIBIT B TO THE RESOLUTION
FORM OF ACQUISITION AGREEMENT
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
STATEWIDE COMMUNITY INFRASTRUCTURE PROGRAM
ACQUISITION AGREEMENT
BY AND BETWEEN
CITY OF PALM SPRINGS
AND
[DEVELOPER]
Dated as of 20
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ACQUISITION AGREEMENT
Recitals
A. The parties to this Acquisition Agreement (the "Agreement") are the CITY
OF PALM SPRINGS, (the "Local Agency"), and [DEVELOPER], a [here indicate type of
legal entity] (the "Developer").
B. The effective date of this Agreement is , 20_.
C. The Developer has applied for financing of certain public capital
improvements (the "Acquisition Improvements") and capital facilities fees though the
Statewide Community Infrastructure Program ("SCIP") administered by the California
Statewide Communities Development Authority (the "Authority") and such application
has been approved by the Local Agency.
D. Under SCIP, the Authority intends to issue bonds to fund, among other
things, all or a portion of the costs of the Acquisition Improvements, and the portion of
the proceeds of such bonds allocable to the cost of the Acquisition Improvements to be
constructed and Installed by the Developer, together with interest earned thereon prior
to such acquisition, is referred to herein as the "Available Amount".
E. SCIP will provide financing for the acquisition by the Local Agency of the
Acquisition Improvements and the payment of the Acquisition Price (as defined herein)
of the Acquisition Improvements from the Available Amount. Attached hereto as
ExhibitA are descriptions of the Acquisition Improvements, which descriptions are
subject to modification by written amendment of this Agreement, subject to the approval
of the Authority.
F. The parties anticipate that, upon completion of the Acquisition
Improvements and subject to the terms and conditions of this Agreement, the Local
Agency will acquire such completed Acquisition Improvements with the Available
Amount.
G. Any and all monetary obligations of the Local Agency arising out of this
Agreement are the special and limited obligations of the Local Agency payable only
from the Available Amount, and no other funds whatsoever of the Local Agency shall be
obligated therefor.
H. In consideration of Recitals A through G, inclusive, and the mutual
covenants, undertakings and obligations set forth below, the Local Agency and the
Developer agree as stated below.
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Resolution No. 23671
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Agreement
ARTICLE I
DEFINITIONS; ASSESSMENT DISTRICT FORMATION AND
FINANCING PLAN
Section 1.D1.Definitions. As used herein, the following capitalized terms
shall have the meanings ascribed to them below:
"Acceptable Title" means free and clear of all monetary liens, encumbrances,
assessments, whether any such item is recorded or unrecorded, and taxes, except
those items which are reasonably determined by the Local Agency Engineer in his sole
discretion not to interfere with the intended use and therefore are not required to be
cleared from the title.
"Acquisition Improvements" shall have the meaning assigned to such tern in
Recital C and are described in Exhibit A.
-__ "Acquisition Price" means the amount paid to the Developer upon acquisition of
all of the Acquisition Improvements as provided in Section 2.03.
"Actual Cost" means the cost of construction of all of the Acquisition
Improvements, as documented by the Developer to the satisfaction of the Local Agency,
as certified by the Local Agency Engineer in an Actual Cost Certificate.
"Actual Cost Certificate" shall mean a certificate prepared by the Developer
detailing the Actual Cost of all of the Acquisition Improvement to be acquired hereunder,
as revised by the Local Agency Engineer pursuant to Section 2.03.
"Agreement" means this Acquisition Agreement, dated as of , 20_.
"Assessment District" means the assessment district established by the Authority
pursuant to SCIP which includes the Developer's property for which the Acquisition
Improvements are being funded.
"Authority" means the California Statewide Communities Development Authority.
"Available Amount" means the amount of funds deposited in the Developer
Acquisition Account by the Authority pursuant to SCIP, together with any interest
earnings thereon.
"Code" means the Streets and Highways Code of the State of California.
"Developer" means [Developer], a [here indicate type of legal entity].
"[Developer] Acquisition Account" means the account by that name established
by the Authority pursuant to SCIP for the purpose of paying the Acquisition Price of the
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Acquisition Improvements.
"Local Agency" means the City of Palm Springs.
"Local Agency Engineer" means the Director of Public Works of the Local Agency
(the "Director") or the designee of the Director, who will be responsible for administering
the acquisition of the Acquisition Improvements hereunder.
"Project" means the land development program of the Developer pertaining to the
Developer's property in the Assessment District, including the design and construction
of the Acquisition Improvements and the other public and private improvements to be
constructed by the Developer within or adjacent to the Assessment District.
"SCIP" means the Statewide Community Infrastructure Program of the Authority.
"SCIP Requisition" means a requisition for payment of funds from the [Developer]
Acquisition Account in substantially the form attached hereto as Exhibit B.
"SCIP Trust Agreement" means the Trust Agreement entered into by the
Authority and the SCIP Trustee in connection with the financing for the Acquisition
Improvements.
"SCIP Trustee" means Wells Fargo Bank, National Association, as trustee under
the SCIP Trust Agreement.
"Title Documents" means, for each Acquisition Improvement acquired
hereunder, a grant deed or similar instrument necessary to transfer title to any real
property or interests therein (including easements) necessary or convenient to the
operation, maintenance, rehabilitation and improvement by the Local Agency of that
Acquisition Improvement (including, if necessary, easements for ingress and egress)
and a Bill of Sale or similar instrument evidencing transfer of title to that Acquisition
Improvement (other than said real property interests) to the Local Agency, where
applicable.
Section 1.02.Participation in SCIP . Developer has applied for financing
thorough SCIP of the Acquisition Improvements, and such application has been
approved by the Local Agency. Developer and Local Agency agree that until and
unless such financing is completed by the Authority and the Available Amount is
deposited in the Developer Acquisition Account, neither the Developer nor the Local
Agency shall have any obligations under this agreement. Developer agrees to
cooperate with the Local Agency and the Authority in the completion of SCIP financing
for the Acquisition Improvements.
Section 1.03.Deposit and Use of Available Amount .
(a) Upon completion of the SCIP financing, the Available Amount will be
deposited by the Authority in the [Developer] Acquisition Account.
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(b) The Authority will cause the SCIP Trustee to establish and maintain
the [Developer] Acquisition Account for the purpose of holding all funds for the
Acquisition Improvements. All earnings on amounts in the [Developer] Acquisition
Account shall remain in the [Developer] Acquisition Account for use as provided herein
and pursuant to SCIP. The amounts in the [Developer] Acquisition Account shall be
withdrawn by the Local Agency in accordance with SCIP procedures upon completion of
the Acquisition Improvements within 30 days (or as soon thereafter as reasonably
practicable) of receipt by the Local Agency of the certification of the Local Agency
Engineer required by Section 2.03 of this Agreement, and subject to satisfaction of all
other conditions precedent to such acquisition pursuant to Section 2.04 of this
Agreement, to pay the Acquisition Price of such completed Acquisition Improvements,
as specified in Article ll,hereof. Upon completion of all of the Acquisition Improvements
and the payment of all costs thereof, any remaining funds in the [Developer] Acquisition
Account (less any amount determined by the Local Agency as necessary to reserve for
claims against such account) (i) shall be applied to pay the costs of any additional
improvements eligible for acquisition with respect to the Project as approved by the
Authority and, to the extent not so used, (ii) shall be applied by the Authority as provided
in Section 10427.1 of the Code to pay a portion of the assessments levied on the
Project property in the Assessment District.
Section 1.04. No Local Agency Liability; Local Agency Discretion: No
Effect on Other Agreements. In no event shall any actual or alleged act by the Local
Agency or any actual or alleged omission or failure to act by the Local Agency with
respect to SCIP subject the Local Agency to monetary liability therefor. Further, nothing
in this Agreement shall be construed as affecting the Developer's or the Local Agency's
duty to perform their respective obligations under any other agreements, public
improvement standards, land use regulations or subdivision requirements related to the
Project, which obligations are and shall remain independent of the Developer's and the
Local Agency's rights and obligations under this Agreement.
ARTICLE 11
DESIGN, CONSTRUCTION AND ACQUISITION OF ACQUISITION IMPROVEMENTS
Section 2.01.Letting and Administering Design Contracts. The parties
presently anticipate that the Developer has awarded and administered or will award and
administer engineering design contracts for the Acquisition Improvements to be
acquired from Developer. All eligible expenditures of the Developer for design
engineering and related costs in connection with the Acquisition Improvements (whether
as an advance to the Local Agency or directly to the design consultant) shall be
reimbursed at the time of acquisition of such Acquisition Improvements,. The Developer
shall be entitled to reimbursement for any design costs of the Acquisition Improvements
only out of the Acquisition Price as provided in Section 2.03 and shall not be entitled to
any payment for design costs independent of or prior to the acquisition of Acquisition
Improvements.
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Section 2.02. Letting and Administration of Construction Contracts. State
law requires that all Acquisition Improvements shall be constructed as if they were
constructed under the direction and supervision of the Local Agency. In order to assure
compliance with those provisions, except for any contracts entered into prior to the date
hereof, Developer agrees to comply with the guidelines of the Local Agency for letting
and administering said contracts. The Developer agrees that all such contracts shall
call for payment of prevailing wages as required by the Labor Code of the State of
California.
Section 2.03. Sale of Acquisition Improvements. The Developer agrees to
sell to the Local Agency the Acquisition Improvements to be constructed by Developer
(including any rights-of-way or other easements necessary for the operation and
maintenance of the Acquisition Improvements, to the extent not already publicly owned)
when such Acquisition Improvements are completed to the satisfaction of the Local
Agency for an amount not to exceed the lesser of (i) the Available Amount or (ii) the
Actual Cost of the Acquisition Improvements. Exhibit A, attached hereto and
incorporated herein, contains a list of each Acquisition Improvement. At the time of
completion of each Acquisition Improvement, the Developer shall deliver to the Local
Agency Engineer a written request for acquisition, accompanied by an Actual Cost
Certificate and executed Title Documents for the transfer of the Acquisition
Improvement, where necessary. In the event that the Local Agency Engineer finds that
the supporting paperwork submitted by the Developer fails to demonstrate the required
relationship between the subject Actual Cost and the related Acquisition Improvement,
the Local Agency Engineer shall advise the Developer that the determination of the
Actual Cost (or the ineligible portion thereof) has been disallowed and shall request
further documentation from the Developer. If such further documentation is still not
adequate, the Local Agency Engineer may revise the Actual Cost Certificate to delete
any disallowed items, and such determination shall be final and conclusive.
In the event that the Actual Cost is in excess of the Available Amount, the Local
Agency shall withdraw the Available Amount from the [Developer] Acquisition Account
and transfer said amount to the Developer. In the event that the Actual Cost is less
than the Available Amount, the Local Agency shall withdraw an amount from the
[Developer] Acquisition Account equal to the Actual Cost, and shall transfer said amount
to the Developer. Any amounts then remaining in the [Developer] Acquisition Account
shall be applied as provided in Section 1.03.
In no event shall the Local Agency be required to pay the Developer more than
the amount on deposit in the [Developer] Acquisition Account at the time such payment
is requested. j
Section 2.04.Conditions Precedent to Payment of Acguisition Price.
Payment by the Local Agency to the Developer from the [Developer] Acquisition
Account of the Acquisition Price for an Acquisition Improvement shall be conditioned
first upon the determination of the Local Agency Engineer, pursuant to Section 2.03,
that such Acquisition Improvement is all complete and ready for acceptance by the
i
i
49
0
Resolution No. 23671
Page 14
Local Agency, and shall be further conditioned upon prior satisfaction of the following
additional conditions precedent:
(a) The Developer shall have provided the Local Agency with lien releases
or other similar documentation satisfactory to the Local Agency as evidence that the
property which is subject to the special assessment liens of the Assessment District is
not subject to any prospective mechanics lien claim respecting the Acquisition
Improvements.
(b) The Developer shall be current in the payment of all due and payable
property taxes and installments for the special assessments of the Assessment District
on property owned by the Developer or under option to the Developer.
(c) The Developer shall certify that it is not in default with respect to any
loan secured by any interest in the Project.
(d) The Developer shall have provided the Local Agency with Title
Documents needed to provide the Local Agency with title to the site, right-of-way, or
easement upon which the subject Acquisition Improvements are situated. All such Title
Documents shall be in a form acceptable to the Local Agency (or applicable
governmental agency) and shall convey Acceptable Title. The Developer shall provide
a policy of title insurance as of the date of transfer in a form acceptable to the Local
Agency Engineer insuring the Local Agency as to the interests acquired in connection
with the acquisition of any interest for which such a policy of title insurance is not
required by another agreement between the Local Agency and the Developer. Each
title insurance policy required hereunder shall be in the amount equal to or greater than
the Acquisition Price.
Section 2.06.SCIP Requisition. Upon a determination by the Local
Agency Engineer to pay the Acquisition Price of the Acquisition Improvements pursuant
to Section 2.04, the Local Agency Engineer shall cause a SCIP Requisition to be
submitted to the SCIP Trustee and the SCIP Trustee shall make payment directly to the
Developer of such amount pursuant to the SCIP Trust Agreement. The Local Agency
and the Developer acknowledge and agree that the SCIP Trustee shall make payment
strictly in accordance with the SCIP Requisition and shall not be required to determine
whether or not the Acquisition Improvements have been completed or what the Actual
Costs may be with respect to such Acquisition Improvements. The SCIP Trustee shall
be entitled to rely on the SCIP Requisition on its face without any further duty of
investigation.
ARTICLE III
MISCELLANEOUS
Section 3.01. Indemnification and Hold Harmless. The Developer hereby
assumes the defense of, and indemnifies and saves harmless the Local Agency, the
Authority, and each of its respective officers, directors, employees and agents, from
50
Resolution No. 23671
Page 15
and against all actions, damages, claims, losses or expenses of every type and
description to which they may be subjected or put, by reason of, or resulting from or
alleged to have resulted from the acts or omissions of the Developer or its agents and
employees in the performance of this Agreement, or arising out of any contract for the
design, engineering and construction of the Acquisition Improvements or arising out of
any alleged misstatements of fact or alleged omission of a material fact made by the
Developer, its officers, directors, employees or agents to the Authority's underwriter,
financial advisor, appraiser, district engineer or bond counsel or regarding the
Developer, its proposed developments, its property ownership and its contractual
arrangements contained in the official statement relating to the SCIP financing (provided
that the Developer shall have been furnished a copy of such official statement and shall
not have objected thereto); and provided, further, that nothing in this Section 3.01 shall
limit in any manner the Local Agency's rights against any of the Developer's architects,
engineers, contractors or other consultants. Except as set forth in this Section 3.01, no
provision of this Agreement shall in any way limit the extent of the responsibility of the
Developer for payment of damages resulting from the operations of the Developer, its
agents and employees. Nothing in,this Section 3.01 shall be understood or construed
to mean that the Developer agrees to indemnify the Local Agency, the Authority or any
of its respective officers, directors, employees or agents, for any negligent or wrongful
acts or omissions to act of the Local Agency, Authority its officers, employees, agents or
any consultants or contractors.
Section 3.02.Audit. The Local Agency shall have the right, during normal
business hours and upon the giving of ten days' written notice to the Developer, to
review all books and records of the Developer pertaining to costs and expenses
incurred by the Developer (for which the Developer seeks reimbursement) in
constructing the Acquisition Improvements.
Section 3.03.Cooperation. The Local Agency and the Developer agree to
cooperate with respect to the completion of the SCIP financing for the Acquisition
Improvements. The Local Agency and the Developer agree to meet in good faith to
resolve any differences on future matters which are not specifically covered by this
Agreement.
Section 3.04.General Standard of Reasonableness. Any provision of this
Agreement which requires the consent, approval or acceptance of either party hereto or
any of their respective employees, officers or agents shall be deemed to require that
such consent, approval or acceptance not be unreasonably withheld or delayed, unless
such provision expressly incorporates a different standard. The foregoing provision
shall not apply to provisions in the Agreement which provide for decisions to be in the
sole discretion of the party making the decision.
Section 3.05.Third Party Beneficiaries. The Authority and its officers,
employees, agents or any consultants or contractors are expressly deemed third party i
beneficiaries of this Agreement with respect to the provisions of Section 3.01. It is y
expressly agreed that, except for the Authority with respect to the provisions of Section
3.01, there are no third party beneficiaries of this Agreement, including without limitation
i
51
Resolution No, 23671
Page 16
any owners of bonds, any of the Local Agency's or the Developer's contractors for the
Acquisition Improvements and any of the Local Agency's, the Authority's or the
Developer's agents and employees.
Section 3.06. Conflict with Other Agreements. Nothing contained herein
shall be construed as releasing the Developer or the Local Agency from any condition of
development or requirement imposed by any other agreement between the Local
Agency and the Developer, and, in the event of a conflicting provision, such other
agreement shall prevail unless such conflicting provision Is specifically waived or
modified in writing by the Local Agency and the Developer.
Section 3.07.Notices. All invoices for payment, reports, other
communication and notices relating to this Agreement shall be mailed to:
If to the Local Agencv:
City Manager
City of Palm Springs
3200 Tahquitz Canyon Way
P.O. Box 2743
Palm Springs, California 92262
If the Developer:
[Developer]
[Address to Come]
Either party may change its address by giving notice in writing to the other party.
Section 3.08.Severability. If any part of this Agreement is held to be
illegal or unenforceable by a court of competent jurisdiction, the remainder of this
Agreement shall be given effect to the fullest extent reasonably possible.
Section 3.09.Governing Law. This Agreement and any dispute arising
hereunder shall be governed by and interpreted in accordance with the laws of the State
of California.
Section 3.10.Waiver. Failure by a party to insist upon the strict
performance of any of the provisions of this Agreement by the other party, or the failure
by a party to exercise its rights upon the default of the other party, shall not Constitute a
waiver of such parry's right to insist and demand strict compliance by the other party
with the terms of this Agreement.
52
Resolution No. 23671
Page 17
Section 3.11.Singular and Plural: Gender. As used herein, the singular of
any word includes the plural, and terms in the masculine gender shall include the
feminine.
Section 3.12.Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original.
Section 3.13.Successors and Assigns. This Agreement is binding upon
the heirs, assigns and successors-in-interest of the parties hereto. The Developer may
not assign its rights or obligations hereunder, except to successors-in-interest to the
property within the District, without the prior written consent of the Local Agency.
Section 3.14.Remedies in General. It is acknowledged by the parties that
the Local Agency would not have entered into this Agreement if it were to be liable in
damages under or with respect to this Agreement or the application thereof, other than
for the payment to the Developer of any (i) moneys owing to the Developer hereunder,
or (ii) moneys paid by the Developer pursuant to the provisions hereof which are
I
misappropriated or improperly obtained, withheld or applied by the Local Agency.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that the Local
Agency shall not be liable in damages to the Developer, or to any assignee or
transferee of the Developer other than for the payments to the Developer specified in
the preceding paragraph. Subject to the foregoing, the Developer covenants not to sue
for or claim any damages for any alleged breach of, or dispute which arises out of, this
Agreement.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
53
Resolution No. 23671
Page 18
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year written above.
CITY OF PALM SPRINGS
By
ATTEST: City Manager
City Clerk
By
[DEVELOPER],
a [here indicate type of legal entity]
By
(Signature)
(Print Name)
54
Resolution No, 23671
Page 19
EXHIBIT A TO THE ACQUISITION AGREEMENT
DESCRIPTION OF ACQUISITION IMPROVEMENTS AND BUDGETED AMOUNTS
ACQUISITION IMPROVEMENTS BUDGETED AMOUNTS
1. $
2
3.
4.
55
Resolution No. 23671
Page 20
EXHIBIT B TO THE ACQUISITION AGREEMENT
FORM OF SCIP REQUISITION
To: Bond Logistix LLC
SCIP Program Administrator
777 S. Figueroa St., Suite 3200
Los Angeles, California 90017
Attention: Daniel Chang
Fax: 213-612-2499
Re: Statewide Community Infrastructure Program
The undersigned, a duly authorized officer of the CITY OF PALM SPRINGS hereby
requests a withdrawal from the [DEVELOPER]ACQUISITION ACCOUNT, as follows:
Request Date: [Insert Date of Request]
Name of Developer: [Developer]
Withdrawal Amount: [Insert Acquisition Price]
Acquisition Improvements: [Insert Description of Acquisition Improvement(s) from Ex. A]
Payment Instructions: [Insert Wire Instructions or Payment Address for Developer]
The undersigned hereby certifies as follows:
1. The Withdrawal is being made in accordance with a permitted use of such
monies pursuant to the Acquisition Agreement, and the Withdrawal is not being made
for the purpose of reinvestment.
2. None of the items for which payment is requested have been reimbursed
previously from other sources of funds.
3. If the Withdrawal Amount is greater than the funds held in the [Developer]
Acquisition Account, the SCIP Program Administrator is authorized to amend the
amount requested to be equal to the amount of such funds.
4. To the extent the Withdrawal is being made prior to the date bonds have been
issued on behalf of SCIP, this withdrawal form serves as the declaration of official intent
of the CITY OF PALM SPRINGS, pursuant to Treasury Regulations 1.150-2, to
reimburse with respect expenditures made from the Developer Acquisition Account
listed above in the amount listed above.
CITY OF PALM SPRINGS
By :
Title:
56
I
Resolution No. 23671
Page 21
EXHIBIT C TO THE RESOLUTION
CITY OF PALM SPRINGS CONTACTS FOR SCIP PROGRAM
Primary Contact
Name: Mr. John Raymond
Title: Director of Community and Economic Development
Mailing Address: P.O. Box 2743, Palm Springs, California 92263-2743
Delivery Address: 3200 E. Tahquitz Canyon Way, Palm Springs, California 92262
E-mail: john.raymond@palmspringsca.gov
Telephone: 760-323-8259
Fax:
Secondary Contact
Name:
Title:
Mailing Address:
Delivery Address (if different):
E-mail:
Telephone:
Fax:
(Add additional contacts as needed]
j
a
57
y I
i
Resolution No. 23671
Page 22
CERTIFICATION OF RESOLUTION
1, the undersigned, the duly appointed and qualified City Clerk of the City of Palm
Springs, do hereby certify that the foregoing Resolution No. was duly
adopted at a regular meeting of the City Council of the City of Palm Springs duly and
regularly held at the regular meeting place thereof on the day of
2014, of which meeting all of the members of said City Council had due notice and at
which a majority thereof were present.
An agenda of said meeting was posted at least 72 hours before said meeting at
, a location freely accessible to members of the public, and a
brief description of said resolution appeared on said agenda.
I have carefully compared the foregoing with the original minutes of said meeting
on file and of record in my office, and the foregoing is a full, true and correct copy of the
original resolution adopted at said meeting and entered in said minutes.
Said resolution has not been amended, modified or rescinded since the date of
its adoption and the same is now in full force and effect.
Dated: , 2014
[ 1
City Clerk
City of Palm Springs
By:
[Seal]
58
Attachment 3
59
Arroyo Vista Partners, LLC
November 17, 2016
Mr. David H. Ready, Esq, Ph.D.
City Manager
City of Palm Springs
3200 E. Tahquitz Canyon Drive
Palm Springs, CA 92262
Re: SCIP financing for Agave Tract 33161
Dear Mr. Ready,
We are the owners of 28 lots in Tract 33161, the project is named Agave. This development is
located at Rosa Parks Drive and El Dorado Blvd. in North Palm Springs. As you may know,
Agave is a partially built community that was suspended in 2008. It currently has four existing
residences and with the 28 unbuilt lots, a total of 32 lots in the project.
For the past two years, we have been marketing Agave to builders, but have been unable to
attract any interest to build out the remaining 28 lots in this project. Response from Builders
who have investigated the site expressed concerns relating to the high construction costs and
fees,the negative image of the North Palm Springs area and the loss of the College of the
Desert North Campus as reasons for not proceeding with the project. By applying to the SCIP
program we are attempting to reduce the upfront builder costs resulting from reduced fees and
thus make the project more attractive to small builders in the desert who will target much
needed, energy efficient entry level housing in Palm Springs.
By enrolling in the SCIP program, we anticipate that we can significantly reduce the builder's
costs for new homes in this community. The target price range for homes in Agave would be in
the mid $300's to the low$400's. This price range would qualify for attractive FHA, Fannie Mae
and Freddie Mae financing, allowing for low down payments and first time buyer qualifications,
a market segment which is severely absent for new homes in Palm Springs.
We are requesting that lots 1-15 and 20-32 of Tract 33161 be considered for participation in the
Statewide Communities Infrastructure Program financing or SCIP.The SCIP financing we are
seeking would be for the Park Fees of$5,576/per home and Sewer Facility Fee of$3,000/per
home for a total of$8,576/ per home to be included in SCIP. Based on 28 units the total
amount requested to be included in SCIP for this project would be $240,128. The resulting
special assessment levy per unit would be up to a maximum of$450/home/year. With only a
few homes built and a small additional annual tax impact, we expect no negative implications in
this development to instituting the SCIP program
556 S. Fair Oaks Ave.#337
Pasadena,CA 91105
626.263.4205 p 909,992,4003 f 60
Mr. David H. Ready, Esq, Ph.D.
Agave SCIP Request
Page 2 of 2
The application for SLIP financing will help lower the cost of development for the new units at
Agave 28 and help accelerate the built out of this project resulting in benefits to: the city; the
residents of Agave; and the new home buyers by having the opportunity to own an affordable
single family detached home in Palm Springs.
Sincerely,
Agave 28 Group, LP
By: Arroyo Vista Partners, LLC, Its: General Partner
Paul�Onufer
Its: Manager
CC: Ms. Suzanne Harrell, Harrell & Company Advisors
Nick Mosich, Arroyo Vista Partners, LLC
61
Attachment 4
62
Arroyo Vista Partners, LLC
November 17, 2016
Mr. David H. Ready, Esq, Phd
City Manager
City of Palm Springs
3200 E. Tahquitz Canyon Drive
Palm Springs, CA 92262
Re: SLIP financing for Palermo Tract 33561
Dear Mr. Ready,
We are the owners of 82 lots located in the Southern half(phases 6-10)of Palermo Tract 33561. This
development is located at the northeast corner of Indian Canyon and San Rafael Drive in Palm Springs.
As you may know, Palermo is a broken development that was partially developed in the 2006-2007 by,
Enterprise Companies. With the subsequent real estate recession,the lender foreclosed on the
property and we acquired the property from the lender in October 2012.
For the past few years,we have been unsuccessfully in our efforts to attract a homebuilder to build out
the remaining 82 lots. Builders have cited the high construction costs and fees,the negative image of
the North Palm Springs market, lack of 2 car garage for units and the loss of the College of the Desert
North Campus as reasons for not proceeding with the project. To address the product design issue,we
have worked with the Palermo HOA to redesign the units by making them larger,eliminating the costly
second story decks and designing more attached parking by incorporating two car garages for the
townhomes and attached garages for the villa units. These revised plans will be submitted to the City
once we have input from an interested builder.
By enrolling in the SLIP program,we anticipate that we can significantly further reduce the builder's
costs for new homes in this community. The target price range for homes in Palermo would be in the
mid$200,000's for the villa units and the low to mid$300,000's for the townhomes. This price range
would qualify for attractive FHA, Fannie Mae and Freddie Mae financing, allowing for low down
payments and first time buyer qualifications, a market segment which is severely absent for new homes
in Palm Springs today.
We are requesting that phases 6-10 of Tract 33561 be considered for participation in the Statewide
Communities Infrastructure Program financing or SCIP. The SCIP financing we are seeking would be the
Park Fees of$5,576/home and Sewer Facility Fee of$3,000/home for a total of$8,576/home to be
included in SCIP. Based on 82 units the total SCIP financing would be$703,150 plus associated costs and
fees. The resulting special assessment levy for homeowners would be up to a maximum of
$450/home/year, helping to reduce the owners' mortgage payments while increasing their homeowner
deductions for taxes.
The application for SCIP financing will help lower the cost of development for the new units at Palermo
and help in accelerate the built out of this broken project. This will bring benefits to the city,the
existing residents of Palermo and to new home buyers by being able to offer attractive and consistent
556 S. Fair Oaks Ave.#337
Pasadena, CA 91105
626.263.4205 p 909.992.4003 f 63
Mr. David H. Ready, Esq. Phd
SCIP Request Letter
Page 2 of 2
designed product with updated energy and water savings features while offering affordable new
housing in your community.
Sincerely,
Palermo 88 Group, LLC
By: San Rafael 1, LLC
Its: Managing Member
By: Arroyo Vista Partners, LLC
Its: Manager
Paul Onufer
Manager
CC: Ms. Suzanne Harrell, Harrell & Company Advisors
Nick Mosich,Arroyo Vista Partners,LLC
64
Attachment 5
69
Marcus Fuller
From: Nick Mosich <nmosich@avpre.net>
Sent: Tuesday, February 07, 2017 4:38 PM
To: Marcus Fuller
Cc: David Ready;Cindy Cairns; Paul Onufer
Subject: Resolution No 23671 and Arroyo Vista SCIP request
Attachments: Resolution No 23671.docx
Marcus;
I am writing to you today as a principal of Arroyo Vista Partners, the entity that requested the city
process our SCIP request for two projects in your City, Agave and Palermo.
I attended the January W city council meeting and appreciate the opportunity to speak on
behalf of my request.
Since the City Council has decided to continue this matter, and task City Staff with providing it
with additional information regarding the SCIP program, I wanted to bring some matters to your
attention and to address some additional items not covered in the Staff report to the city
council.
First of all, attached are the highlights of the resolution approved by city council on Oct 1, 2014.
Please note the sections in Bold and underlined. Namely
1. City has already consented to the issuance of local obligations ...on any property within the
City
2. City has found that bonds will provide significant benefit, (after all they are being used to
finance public improvements)
3. The Mayor is authorized to execute the acquisition agreement
4. City staff must make SCIP applications available to all property owners who are subject to
development fees.
Here is the basis of what we are trying to do:
Utilize an already approved financing vehicle to finance city DIF fees. These DIF fees, like any
bond issuance, need to be utilized within 3 years of the bonds being sold. So what we need, and
have already obtained, is acknowledgement by Parks, Sanitation District and other city agencies
that there is a use for these fees within the 3 year period after the bonds are sold.
We are pursuing this bond issuance because it gives us more leeway on financing options. One
of the biggest challenges in Palm Springs is affordable housing and procuring mortgages for
individuals with limited or impaired credit and who have limited down payments. As you know,
there have been very few new home developments in your city that address this market
segment. Why? Because of cost of construction and very tight lending guidelines for traditional
mortgages.
t 66
The two mortgage sources in the market, VA and FHA that provide attractive financing for first
time buyers or buyers without stellar credit. Having SCIP bonds in place enables part of the
development costs to be transferred to the property tax roles,freeing up mortgage capacity
where FHA and VA borrowing limits may otherwise restrict buyers from Qualifying.
Entry level housing will be attractive to municipal and city employees who are seeking to own
homes in your city and give buyers alternatives and access to new housing with dramatically
improved energy efficiency and few repairs, thus more predictable costs of ownership.
Like CFO bonds, the city received the proceeds when the bonds are sold, so fee are collected up
front, instead of dribbling in during the build out of a project, making improvement planning much
more predictable.
Unlike CFO bonds, the city does not have its name on the bonds, is not responsible for collections,
administration or dealing with the public. A state agency coordinates all this for the developer
and bond issuer. The costs of formation, issuance and financing are much much lower than for a
traditional CFO issuance...making everything much more affordable.
In instances such as Palermo or Agave where part of the community is built out, there should be
no issue a*4o part of the community having SCIP financing and part not having SCIP
financing. The homes financed with these bonds will be newer, larger and completely different
from the existing home inventory. The SCIP provision for a special district is a financing tool,
similar to having an additional mortgage. In addition, the city has plenty of instances where
neighbors have different assessed tax rates due to the city adding special districts after
2007. And, If you have purchased a home recently, you will know that the disclosure
requirements for things like special assessment districts are strictly enforced by the BRE and
Mortgage finance companies. The ability to hide special assessments has long ago vanished, see
the bottom of this email.
Marcus, this is a lot to take in, but with an already approved financing vehicle in place for SCIP,
the question should really be: can the agencies utilized these proceeds during the next 3 years or
not?
Additionally the ability of a property owner to consent to a special assessment against private
property is allowed under the 1911, 1913 and 1915 Acts. Furthermore, the SCIP program while it
establishes a special assessment district is not a CFO, and meets the general policy statement
guidelines of the City, ( see 2 above). The process for establishing a neighborhood assessment
district in the case of SCIP is already authorized under sections 1, 3 and 4 above.
Thus it appears that the City must honor its Resolution 23671 or revoke it for all uses, including
commercial development. 1 think this hurts any efforts at bringing affordable housing to your city
or for using for hotel and hospitality development.
Please let us know when you might be available to discuss this matter in greater detail.
Nick
Nick Mosich
Arroyo Vista Partners, LLC
556 South Fair Oaks Blvd, #337
Pasadena, CA 91105 & 7
2
T 626.263.4204
C 949.300.5029
Below is the disclosure statement for homes in Palermo:
52. Notice of Your Supplemental Property Tar.Bill. California property tax law requires the
Assessor to revalue real property at the time the ownership of the property changes. Because of this
law,you may receive one or two supplemental tax bills,depending on when your loan closes. The
supplemental tax bills are not mailed to your lender. If you have arranged for your property tax
payments to be paid through an impound account,the supplemental tax bills will not be paid by your
lender. It is your responsibility to pay these supplemental bills directly to the Tax Collector. If you
have any questions concerning this matter,please call your local Tax Collector's office.
53. Assessments. You may be subject to special taxes and assessments for community facilities districts,
landscaping and lighting districts and other purposes. Buyer should review all of his/her sales information
carefully to understand 4 of the taxes and assessments Buyer maybe obligated to pay. You should also visit
the Office of the County Tax Assessor and/or the City of Palm Springs for City-imposed assessments,
54. Communitvfacil'ties District to2005-SandOtherDistricts. Community Facilities District C'CFD"1
No. 2005-1 is a Mello-Moos Community Facilities District formed to provide police, fire and life safety
services. Mello-Roos Community Facilities Districts are created by local government agencies to finance
public improvements and services when no other source of funds is avai[able. Once formed and approved,the
3 68
WATERMARKE110MES
ln,H o me ur Y.-L,fe
February 6,2017
David Ready-City Manager of Palm Springs
Marcus Fuller-City Assistant Manager of Palm Springs
RE: Assistance for Home Builders in Palm Springs-1"& 2n°Builder Failed Projects in the Greatest Real
Estate Market of All Time
Dear David and Marcus,
Watermarke Homes,with its extensive homebuilding experience and homebuyer research knowledge in the City of Palm
Springs would like to express to the Mayor and City Council that the State of California SCIP Programs as well as Community
Facility Districts offer a great incentive not only for the required offsite infrastructure, school development, development impact
fees for the individual communities within,but also to the City in which the home owners reside and benefit. Throughout the last
twelve years the City of Palm Springs has had numerous first and second builder"Failed' projects that potentially,with the benefit
of a SCIP Program, Improvement District/Community Facility District,these projects could have avoided the ultimate demise that
took place in one of the greatest real estate markets of all time. The following is a list of Palm Springs projects that came to a halt
and ultimately had to be lender forclosed and restructured to continue to fruition:
I. Tuscany Heights 16. Tangerine
2. Las Palmas Vista Estates 17. South Vista Las Palmas
3. San Jacinto Village(Now Agave) 18. Escena(Developer Went Bankrupt)
4. Port Lawrence 19. Palermo
5. Palomino 20. Luminaire
6. Alta at South Palm Canyon 21. Avalon(Now Miralon)
7. Terra Hermosa 22. Monte Serene,
8. Estancias at South Palm Canyon 23. Murano
9. The Enclave at Sunrise 24. Palm Springs Country Club
10. Village Traditions 25. The Racquet Club of Palm Springs
11. OCEO at Palm Springs 26. 132 @ Pedregal
12. Alexander Country Club Estates 27. Eagle Canyon on South Palm Canyon
13. Vintage Palms at Palm Springs 28. The Cove-West Palm Springs Area
14. Shadow Rock 29. The Previous Boulders Project
15. The Previous Crescendo Project
During that same period Mountain Gate(504 Homes)and Villas of Palm Springs(48 Homes)had Improvement Bonds
and were the only projects that succeeded the first time.
I would like to set up a meeting to discuss the benefit that projects have had and the potential utilization of such programs
that are supported by the State of California as well as water municipalities including CV WD and Mission Springs and school
districts including Palm Springs Unified and Desert Sands. Thank you for your time and consideration and I look forward to
meeting with you in the near future.
Sincerely,
WATERMARKS HOMES, LC
BY: LIFESTYL HOMES INC.,its m i ag `
BY:
Jo I 41*k,Presrdent Date
1505 Sovu;"D" ST=T,Sui #200,SaoTEEuqAFxnq6,CA 92408;TEL: 909-381-6OW7; FAY 909-381-0041