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HomeMy WebLinkAbout4/6/2005 - STAFF REPORTS (11) CITY COUNCIL April 6, 2005 LEGISLATIVE ITEM Subject: PALM SPRINGS CLASSIC COMMUNITY FACILITIES DISTRICT NO. 1 Initiated by: Public Works and Engineering Department SUMMARY: An application was filed with the City on February 13, 2004, for formation of a Communities Facilities District pursuant to the Mello-Roos Community Facilities Act of 1982 for the Palm Springs Classic project, previously approved as Case 5.0666B, PD- 231, and Tentative Parcel Map 30928 on July 16, 2003, and subsequently approved as Tentative Tract Map 32233 on November 17, 2004. This development is being constructed by Palm Springs Classic, LLC, Lennar Homes of California, Inc., its Manager. The project consists of an 18-hole golf course, hotel, vacation ownership units, single family homes, and multi-family homes (with a maximum total of 1,450 units), office and retail uses, and a fire station site. The City has established Policies and Procedures for Special Assessment and Mello-Roos Community Facility District (CFD) Municipal Bond Financing for Public Improvement for Development Projects that outlines the minimum criteria for Special Assessment or Community Facility Districts formed in the Cii.y, as well as the guidelines and process for their formation. The Policy established a Special Districts Committee comprised of various staff members, and it is the Committee's responsibility to review the Community Facilities District application and render an opinion regarding the City Council's approval or denial of its formation. RECOMMENDATION: (1) That the City Council approve the application for further processing of the formation of Community Facilities District No. 1 ("CFD 1"), submitted by Palm Springs Classic, LLC, in accordance with the City's Policies and Procedures for Special Assessment and Mello-Roos Community Facility District (CFD) Municipal Bond Financing for Public Improvement for Development Projects (the "Policy"); (2) authorize staff to select and negotiate contracts with consultants for an assessment engineer's report, appraisal and market absorption study; and collect necessary deposits from the applicant to fund consultant contracts; and (3) approve, in a form acceptable to the City Attorney, a Memorandum of Understanding with Lennar Homes of California regarding certain developer contributions to be made to the City in conjunction with the formation of the Community Facilities District. STAFF ANALYSIS: Palm Springs Classic, LLC, by Lennar Homes of California, Inc., its Manager, is the developer of the Palm Springs Classic, now known as "Escena Palm Springs", Tentative Tract Map 32233, located on the east side of Gene Autry Trail south of Vista Chino. This development consists of an 18-hole golf course, hotel, vacation ownership units, single family homes, and multi-family homes (with a maximum total of 1,450 units), office and retail uses, and a fire station site. Shayne Morgan of David Taussig & Associates, Inc., acting on behalf of Lennar Homes, submitted an application for formation of a Community Facilities District pursuant to the Mello-Roos Community Facilities Act of 1982 (the "Act"). In accordance with the Policy, a pre-application conference with staff was held and the applicant submitted a $10,000 initial application fee. The original application and fee were submitted to the City for Palm Springs Classic Community Facilities District No. 1 April 6, 2005 Page 2 initial review on February 13, 2004, with a completed formal submittal received on November 9, 2004. On December 2, 2004, the applicant met with the City's Special Districts Committee to review the proposed application. Subsequent meetings with the applicant and the Committee to further refine the application and requested public financing were held on January 20, 2005, and finally on March 4, 2005. The proposed application represents the first Mello-Roos Community Facilities District for the City of Palm Springs. The significant difference with a Mello-Roos CFD and a standard Special Assessment District is that a Mello-Roos CFD has a broader range of items that can be included in the District, and the improvements, fees, and other costs are considered of general benefit to the District, rather than "special benefit" that a standard Special Assessment District indicates. Further, a Mello-Roos CFD places a special tax on the properties within the District, while a standard Special Assessment District places a lien against the properties until the levy (special assessment) is paid. The applicant is proposing that CFD 1 fund public sewer improvements, water improvements, reclaimed waterline improvements, traffic signal improvements, sewer fees, water fees, pay-off of the existing Assessment District 155 assessments (AD 155 was established by the City for construction of the Gene Autry Trail and associated improvements), Quimby Act park fees, Traffic Uniform Mitigation Fees (TUMF), and all district formation and financing costs. The total estimated bond amount for CFD 1 is $15,552,808 (see Attachment 1). The controlling criteria established in the Policy is outlined under Section 4, "Minimum Requirements," Section 1, "Benefit". This section indicates that the City should consider formation of Special Assessment or Community Facility Districts if the following minimum "benefit" criteria are met: 1. The proposed project shall provide major infrastructure improvements that significantly benefit the general public, and/or 2. The project shall provide significant financial benefit to the City. Determining whether the proposed Community Facilities District application meets these two general criteria is somewhat subjective. The Palm Springs Classic will, with or without public financing provided by CFD 1, be constructing significant public improvements along Gene Autry Trail and Vista Chino, including enhanced landscaped parkways, bikepaths, new traffic signals, and other public improvements required of the development. Further, the project, with or without public financing provided by CFD 1, is likely to generate a significant financial benefit to the City through the generation of the sale of up to 1,450 single or multi-family homes, increased property tax revenues, and the associated revenues generated by additional residents of Palm Springs. It is important to note that the Palm Springs Classic development is obligated to provide the City with a dedication for a one acre fire station site, approved by the Fire Chief, that the residential units within the development be equipped with fire sprinklers due to the fact the area is beyond the 5-minute response time, and further, that the project agree to annex into the future Community Services District to be formed by the City to assess a special fee to new development for increased police and fire services caused by the development. Following the Special Districts Committee's meeting of March 4, 2005, an opinion was rendered that the proposed application generally meets the controlling criteria as outlined in the Policy. This opinion was possible following the applicant's proposal to provide certain developer contributions in conjunction with the formation of the CFD. Palm Springs Classic Community Facilities District No. 1 April 6, 2005 Page 3 The developer's contribution includes a one-time payment to the City of $1,100,000 and an agreement to provide and pay for services necessary to prepare construction drawings for the future fire station site located within the Palm Springs Classic development, at the north end of Bird Center Drive and off of its main entrance on Chia Road. These two contributions, which are outlined in the draft Memorandum of Understanding included as Attachment 2 (subject to further review and approval by the City Attorney), will allow the City to move forward with construction of the much needed fire station within the northeast section of the City. On this basis, the Special Districts Committee determined that the developer's contribution outside of CFD 1 meets the general criteria of the Policy, and recommends that City Council authorize further processing of CFD 1 for Palm Springs Classic, LLC. SUBMITTED: 091 — DAVID J. BARAKIAN Director of Public Works, City Engineer APPROVED:__e o m .� DAVID H. READY City Manager ATTACHMENTS: 1. Proposed Community Facilities District Bond Financed Facilities Summary 2. Draft Memorandum of Understanding MEMORANDUM OF UNDERSTANDING This MEMORANDUM OF UNDERSTANDING ("MOU"), dated as of March 21, 2005, is made by and between the CITY OF PALM SPRINGS ("City") and PALM SPRINGS CLASSIC, LLC, a Delaware limited liability company("Developer"), and is made with regard to the following: RECITALS A. Developer is the owner of certain property (the "Property") located in the City. The City and Developer are developing a 1,287-unit project on the Property known as Escena Palm Springs (the "Project"). The Project is governed by the Condition of Approvals for TTM 32233 approved by the Planning Commission of the City on October 13, 2004 and by the City Council of the City on November 17, 2004 (the"Development Conditions"). B. To offset the significant costs of major public improvements that are part of the Development Conditions for the Project, Developer has requested that the City form a community facilities district (the "CFD") pursuant to the Mello-Roos Community Facilities Act of 1982 (the "Act"). The CFD would be formed, bonds issued (the "Bonds"), and facilities and fees (collectively, the "Facilities") financed pursuant to the Act, and the City's Statement of Policies and Procedures for New Development Projects, adopted in January 1992, as amended (the "Policies"). A summary of the improvements and fees to be financed by the CFD is attached hereto as Exhibit A. C. Developer has also requested that the City enter into a Joint Community Facilities Agreement (the "JCFA") pursuant to Government Code Section 53316.2 of the Act with the Desert Water Agency (the "DWA"), setting forth the terns and conditions for financing by the CFD of the construction and/or acquisition of certain DWA public improvements and fees, as described in Exhibit A attached hereto. D. In consideration for forming the CFD, entering into the JCFA with DWA, and issuing the Bonds, the Developer desires to make certain contributions to the City outside of the CFD and to take certain actions, as described herein. The purpose of this MOU is to establish the terms of those contributions and actions of Developer in conjunction with the Project. NOW THEREFORE, it is agreed by the parties as follows: 1. City shall use its best efforts to form the CFD pursuant to the Act over the Property, to enter into the JCFA., and to issue Bonds in a principal amount sufficient to finance all of the Facilities described in Exhibit A to be owned by the City and DWA. As consideration for the foregoing, and to satisfy the "public benefit" requirement of the Policies, if, and only if, the Bonds are issued to finance all of the Facilities, the Developer shall perform the following tasks on a date that is after the date the Bonds are issued and delivered (the"Closing Date"): (a) Developer shall pay to City within fifteen (15) calendar days after the Closing Date, a hemp sum amount of One Million One Hundred Thousand Dollars ($1,100,000.00) to be used by the City for any propose the City deems necessary. (b) When the City is ready to proceed with the constriction of the proposed Fire Station (the"Fire Station"), the City shall deliver written notice to the Developer that it needs to promptly hire the architect and pay the architect fees for the design and construction of, provided that the maximum 1 amount paid by Developer for such architect and architect fees shall not exceed One Hundred Thousand Dollars ($100,000.00). 2. Developer shall convey to City an approximately one acre portion of lot 47 of Final Tract Map No. 32233-1, which portion is within the boundaries of the CFD and is described in Exhibit B attached hereto, upon which the Fire Station will be located. 3. Developer acknowledges,and agrees that the City intends to form another community facilities district encompassing all or part of the Property for purposes of financing the costs of certain services for fire and public safety(the"Public Safety CFD"), provided that the maximum annual special tax that may be levied by the Public Safety CFD does not exceed Three Hundred Dollars ($300)per unit. 4. If any provision of this MOU shall be held invalid, illegal or unenforceable, the remaining portions shall not in any way be affected or impaired, and shall remain in full force and effect. 5. This MOU may not be amended except in writing by Developer and City, duly executed by their authorized agents. 6. The Exhibit attached hereto is deemed incorporated into this MOU in its entirety by reference. 7. Time is of the essence in this MOU and in each and every tern,provision and condition hereof. S. Any notice to either party shall be in writing and given by delivering the same to such party in person or sending the same by registered mail, return receipt requested, with postage prepaid, to the following addresses: If to Developer: Palm Springs Classic, LLC c/o Lennar Homes of California, Inc. 391 N.Main St., Ste. 301 Corona, CA 92880 (951) 817-3649 (951) 817-3679 Fax If to City: 3200 E. Tahquitz Canyon Way P.O. Box 2743 Palm Springs, CA 92263-2743 ( Fax Either Either party may change its mailing address at any time by giving written notice of such change to the other party in the manner provided herein. All notices under this MOU shall be deemed given, received, made or communicated on the date personal delivery is effected, or, if mailed, on the delivery date or attempted delivery date shown on the return receipt. 9. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. The waiver or failure to enforce any provision of this MOU shall not operate as a waiver of any future breach of such provision or of any other provision hereof. 2 10. The parties hereto acknowledge and agree that each has been given the opportunity to review this MOU with legal counsel independently, and/or has the requisite experience and sophistication to understand, interpret, and agree to the particular language of the provisions hereof In the event of an ambiguity in or dispute regarding the interpretation of any provision of this MOU, the interpretation of this MOU shall not be resolved by any rule of interpretation providing for interpretation against the party who causes the uncertainty to exist or against the draftsman. 11. This MOU has been negotiated and executed in the State of California and shall be governed and construed by the laws of the State of California without regard to the conflicts of laws principles. 12. This MOU is by and between the parties named herein, and unless expressly provided in the foregoing provisions, no third party shall be benefited hereby. This MOU shall not be enforced by anyone other than a party hereto or a successor to such party who has acquired his/her/its interest in a way permitted by the above provisions. 13. hi the event of any action or proceeding brought by either party against the other under this MOU, the prevailing party shall be entitled to recover its reasonable attorneys' fees and all fees, costs and expenses incurred for prosecution, defense, consultation or advice in such action or proceeding. In addition to the foregoing, the prevailing party shall be entitled to its reasonable attorneys' fees and all fees, costs and expenses incurred in any post judgment proceedings to collect or enforce the judgment. This provision is separate and several and shall survive the merger of this MOU into any judgment on this MOU. 14. This MOU may be executed in one or more counterparts, each of which shall be considered an original. IN WITNESS WHEREOF, the parties have executed this MOU as of the day and year first above written. PALM SPRINGS CLASSIC, LLC, a Delaware limited liability company By: Lennar Homes of California, Inc., A California corporation, Its Manager By: Name: Its: CITY OF PALM SPRINGS, By: Name: Its: Attest: 3 RESOLUTION NO. 21243 OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING THE APPLICATION FOR FURTHER PROCESSING OF THE FORMATION OF COMMUNITY FACILITIES DISTRICT NO. 1, SUBMITTED BY PALM SPRINGS CLASSIC, LLC WHEREAS, the City of Palm Springs adopted Resolution No. 17774 on January 22, 1992, amended by Resolution No. 20304 on April 3, 2002, establishing Policies and Procedures for Special Assessment and Mello-Roos Community Facility District (CFD) Municipal Bond Financing for Public Improvement for Development Projects; and WHEREAS, the City's Policies and Procedures establish minimum criteria for the formation of Special Assessment and CFD municipal bond financing for public improvements for development projects requiring that proposed public facilities to be financed must meet a public need, including the provision of major infrastructure improvements that significantly benefit the general public, and/or the provision for significant financial benefit to the City; and WHEREAS, the City has received an application from Palm Springs Classic, LLC, for formation of a Community Facilities District pursuant to the Mello-Roos Community Facilities Act of 1982 for the "Palm Springs Classic", now known as "Escena Palm Springs" development (Tentative Tract Map 32233), located south of Vista Chino and east of Gene Autry Trail; and WHEREAS, the proposed Community Facilities District will facilitate public improvements for private development, provide for future major infrastructure improvements that significantly benefit the general public, and provide significant financial benefit to the City. NOW THEREFORE BE IT RESOLVED as follows: Section 1. The City Council does hereby approve the application for further processing of the formation of Community Facilities District No. 1, submitted by Palm Springs Classic, LLC. Section 2. The City Council hereby authorizes staff to select and negotiate contracts with consultants for an assessment engineer's report, appraisal and market absorption study; and to collect necessary deposits from the applicant to fund consultant contracts. ADOPTED this 61h day of April, 2005. AYES: Members McCulloch, Mills, Pougnet and Mayor Oden NOES: None ABSENT: Member Foat ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By: City Clerk City Manager