HomeMy WebLinkAbout9/8/2004 - STAFF REPORTS (3) DATE: September 8, 2004
TO: City Council
FROM: Assistant City Manager - Administration—Tg.-
SUBJECT: Approve Consultant Services Agreement with MuniFinancial to provide Fiscal
Impact Analysis and Community Facilities District Formation Services
RECOMMENDATION:
It is recommended that the City Council approve a Consultant Services Agreement with
MuniFinancial in an amount not-to-exceed $25,500 to prepare a Fiscal Impact Analysis to
support the establishment of a Community Facilities District (CFD) for Public Safety Services.
It is further recommended that the City Council approve a budget amendment of $25,500
from Fund Balance to cover the cost to perform this analysis and to provide district formation
services.
SUMMARY:
Growth and development directly impact the delivery of critical city services to residents,
workers, and visitors. To offset potential service costs associated with new development,
many cities are forming Community Facilities Districts (CFD) to finance the cost of public
services. In July, the City Council voted to impose, as a condition of approval on new
residential projects, a requirement that the project developer cooperate with the City in the
formation of Public Safety Assessment District to cover the cost of police and fire services for
residents within these new developments.
BACKGROUND:
Like many cities in the Coachella Valley, Palm Springs is experiencing a phenomenal surge
in building activity. Approximately 3,500 dwelling units (single and multi-family) have already
been approved and are in various stages of construction. An additional 2,500 single and
multi-family units have been proposed and are currently going through the entitlement
process. The Strategic Planning Department has conservatively estimated that an additional
2,550 units are possible over the next five years.
The fiscal impact of development is the effect of new investment, new construction, new
employment, new population, and other changes on a government's budget. When new
businesses start, new houses are built, and new people move into a community, local
governments receive additional revenue. The business owners and homeowners pay new
property taxes. New residents pay new sales taxes and motor vehicle taxes. New people
and businesses pay more charges, fines and fees. But these new people and businesses
also create new costs. New businesses and housing developments may require new roads,
sewers, police and fire protection. New residents may demand new parks. Greater traffic
congestion may require more roads, traffic lights and police patrols.
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Although new development typically generates additional property taxes and other revenues, it
hardly comes close to covering the actual cost of public services that are provided. This is
especially true for low and mid-priced single family housing. According to a study conducted
by Bexar County in Texas for every dollar in taxes paid by residential development, it costs
local government $1.15 to provide public services to residents within these developments.
To mitigate the costs of providing public services to new development, the City Council has
started to impose, as a condition of approval on all new residential projects, a specific
requirement that these projects will cooperate with the City in the formation of a special
assessment district for public safety services. A Mello-Roos Community Facilities District
("CFD") is a special taxing authority that may be formed to finance certain designated public
services and capital facilities by levying special taxes which are continuing liens levied
against the real property within the service area. Facilities and/or services which may be
funded by a CFD include:
• Police and Fire Protection Services • Elementary and Secondary Schools
• Ambulance and Paramedic Services • Libraries
• Cultural Facilities • Museums
By law the amount charged against property owners cannot be directly based on the value of
the property. Instead the assessment is based on a mathematical formula that takes into
account property characteristics such as the use of the property, square footage of the
structure and lot size.
In order to determine and justify the amount of the assessment to be levied against property,
a fiscal impact analysis is typically performed. A fiscal impact analysis compares the cost of
public facilities and services needed to serve new development, to the revenues generated
by growth. The result of this comparison is net revenues or costs to the local government.
Fiscal impact analysis most commonly uses the per capita method, or average costs per new
resident and per job. Another technique is the case study method, in which the true marginal
costs of growth are captured. This is important where the capacity of expensive public
facilities such as fire or police stations is an issue.
Staff does not have the necessary expertise to perform a fiscal impact analysis and requires
the assistance of a consultant specializing in this field. To this end, staff contacted
MuniFinancial which provides financial and economic consulting to public agencies coast to
coast, to provide a proposal to perform a fiscal impact analysis and to assist the City in the
formation of a CFD.
MuniFinancial is proposing a two phased workplan. In Phase One, MuniFinancial will
develop revenue and cost inputs for the fiscal impact model. Each revenue and cost input
will be developed using either the per capita or case study approach. Once the model has
been developed, they will test it against a full range of land use scenarios to determine the
negative fiscal impact of a project. The results of this model will provide an estimate of the
per-unit assessment that will be needed to offset the cost of public safety services. The cost
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of this phase is $14,000. MuniFinancial is estimating that it will take approximately 11 to 13
weeks to complete this phase of the workplan due to the complexity of the model.
In Phase Two, the consultant will use the results of the fiscal impact analysis to assist the
City with the formation of a CFD. By law, a CFD cannot be formed without a two-thirds (2/3)
majority vote of the property owners living within the proposed district boundaries. Or, if there
are fewer than 12 residents, the vote is instead conducted of current landowners. In many
cases, that may be a single owner or developer.
MuniFinancial will prepare the required notices, resolutions and public report which provides
a description of the services to be provided, cost estimates, incidental expenses, the rate and
method of apportionment, and any other information necessary to meet the requirement of
the Community Facilities Act of 1982. In addition, MuniFinancial will hold information
meetings with current landowners and/or developers to explain the purpose of the CFD and
the proposed assessment. Finally, the consultant will conduct the election and depending on
the outcome assist the City in placing the assessment against each property on the tax rolls.
The cost of this phase is $11,500 and can take between 4 to 5 weeks to complete.
The total cost of the project is $25,500. Since this was not a budgeted expense a budget
amendment will be required if the City Council wishes to proceed with the project. It should
be noted however, that staff believes that the City can recover the cost of this project through
the CFD once it has been established.
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Troy . Butzlaff, si t nt City Manager- Administration
APPROVED
City Manager
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Attachments:
1. Minute Order
2. Budget Resolution
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200 Pine Avenue
Suite 300
Long Beach
California 90802
Tel (562)435-5551
Fax (562)435-5735
Memo
To: Troy Butzlaff, City of Palm Springs
From: Jonathan Brown, Adler Public Affairs
CC: Jeffrey Adler
Date: 7 September 2004
Re: UUT Public Education Budget and Schedule
In our original proposal,we budgeted for three newsletter-style mailers to be sent to all postal stops in the City of Palm Springs.
Per the City Council's request, I am providing additional options for size and quantity.
Quantity Specifications COST' Per Unit
39,000 22"x 17"folded to 8.5"x 11" $20,300 $0.52
39,000 11"x 17"folded to 11"x 5.67" $17,540 $0.45
20,000 22"x 17"folded to 8.5"x 11" $15,000 $0.75
20,000 11"x 17"folded to 11"x 5.67" $12,700 $0.64
"Cost is inclusive of writing, designing,printing and postage
The 39,000 quantity will allow for mailing to every postal stop in the City of Palm Springs. The 20,000 quantity will allow for
mailing to every registered voting household in the City of Palm Springs.
The City Council has expressed interest in including information about other ballot measures in these public education
materials. If the Council wishes to do so, it is our recommendation that the larger format be utilized.
Our experience is that a minimum of three mailers is required to ensure that the information is disseminated sufficiently and the
information is retained by recipients.
We recommend mailers arrive on or about:
Tuesday October 5, 2004 (Approval Deadline: September 28)
Friday, October,15, 2004 (Approval Deadline: October8)
Wednesday, October 27, 2004 (Approval Deadline: October 20)
We are grateful to the Council and Staff for selecting Adler Public Affairs to perform this important function on their behalf. We
look forward to working with you.
4=102 /11 c/
. ALEsHIRE &
WYNDER, LLP
ATTORNEYS AT LAW
www.awartoracys.com
INTER-OFFICE MEMORANDUM
TO: DAVID READY, CITY MANAGER
TROY BUTZLAFF,ASSISTANT CITY MANAGER
FROM: DAVID J.ALESHIRE, CITY ATTORNEY
DOUGLAS P.HAUBERT,DEPUTY CITY ATTORNEY
DATE: SEPTEMBER 3,2004
FILE: 1003-001
RE: MAILING INFORMATION TO REGISTERED VOTERS REGARDING UTILITY TAX
MEASURE
According to Jonathon Brown, there is a general "rule" that if the City sends
informational literature to people prior to the election, then such literature must be sent to "all
postal stops," rather than simply households with registered voters. Mr. Brown is trying to find
out where he heard this rule,but I have not heard back from him.
If the City mails to "all postal stops," then the mailing universe is approximately 40,000
households. If the City mails only to residences where there is at least one registered voter, then
the mailing universe is approximately 20,000 households. The mailing universe for those who
voted in the 2004 Primary election is smaller, approximately 8,500 households. Since voter
turnout in Presidential election years is very high—often around 80% -- it may not make sense to
go with a universe smaller than all registered voters.
We read Mr. Brown's email citing Stanson v. Mott (1976) 17 Cal.3d 206, as saying
targeted mailings are improper. In Stanson, the California Supreme Court held that expenditures
by a government agency for (or against) a ballot measure were illegal. Furthermore, public
officials who authorized such expenditures, if such authorization was negligent, may be held
personally liable for such illegal expenditures.
Stanson did not address any issues related to the target group receiving the improper
literature. Rather, Stanson discusses the content of informational literature (which is permitted)
as compared to campaign mailings (which is prohibited). By its discussion of the law in other
states, Stanson supports the position that dissemination of balanced information to voters is
permissible:
"It does not necessarily follow, however, that the department was without power
to incur any expense at all in conicetion with the bond election. In Citizens to
Protect Pub. Funds v. Board of Education . . . [the New Jersey Supreme Court
decision written by future U.S. Supreme Court Justice Bremmen], while
cZA S'
01003/0001/34321.01
David Ready, City Manager
September 3, 2004
Page 2
condemning the school board's use of public funds to advocate only one side of
an election issue, at the same time emphatically affirmed the school board's
implicit power to make "reasonable expenditures for the purpose of giving voters
relevant facts to aid them in reaching an informed judgment when voting upon the
proposal." (Emphasis added.)
The Court in Stanson, which is still the seminal case on government expenditures in
connection with ballot measures, emphasized the importance of "advocacy" words designed to
urge a voter to cast a ballot in a certain way. Even without "expressed advocacy," Stanson held
that "the determination of the propriety or impropriety of the expenditure depends upon a careful
consideration of such factors as the style, tenor and tinting of the publication; no hard and fast
rule governs every case." (Emphasis added.) In other words, the core holding from Stanson is
that public agencies may send out fair, balanced, impartial, and relevant information to voters,
but should not try to persuade them to vote a certain way. It appears the most important issue is
the nature of the written materials and whether they are neutral, rather than to whom they are
directed.
In Schoeder v. Irvine City Council(2002) 97 Cal.App.4`" 174, the Court of Appeal upheld
a voter registration drive paid for by the City of Irvine to specifically encourage its citizens to
become involved in elections by registering to vote. Although the voter registration drive was
conducted immediately before the vote on a ballot measure affecting the proposed El Toro
Airport, a matter of great concern to members of the City Council (whom opposed the Airport),
the court held that since the expenditures did not advocate either side, they were neutral and,
therefore,pennissible.
Likewise, in FPPC Advice Letter A-92-102, the Fair Political Practices Commission
opined that the expenditures by the City of Carson for a "Get Out the Vote" drive were non-
partisan and did not amount to "political" activities. While the FPPC does not specifically give
advice on whether expenditures by government agencies are permissible under Stanson v. Mott,
the Court of Appeal in Schroeder found the advice given to the City of Carson instructive in its
holding that Irvine's voter registration drive was not for a"political purpose."
Because the courts have relied on FPPC advice, at least in part, in determining whether
expenditures by City governments are for a"political purpose," I contacted the FPPC. I obtained
telephonic advice fiom FPPC consultant Hal Dasinger that simply sending mail only to a limited
universe, such as households with a voter who voted in the last election, does not affect whether
or not the mailing is for a "political purpose" within the meaning of the Political Reform Act.
hi conclusion, an argument can be made (supported by the FPPC in a "nonbinding"
fashion) that so long as the materials are balanced and neutral, they do not become "political"
advocacy solely as a result of sending them to those eligible or likely to vote in an election. (Of
course, the result may be different if mailings are targeted at specific voter groups based on party
registration or other preferences.) However, given the likelihood of high turnout in the
01003/0001/3432L01
David Ready, City Manager
September 3, 2004
Page 3
November election, we think it may be safer to use a universe of all registered voters, rather than
some target group of likely voters, if there is a challenge based on the content of the materials.
Finally, we are not sure of the relative cost of mailings to 40,000 versus 20,000 or 8,500
households. This should be factored in and the mailing universe should be only diminished for
significant savings. can find no legal authority that suggests it is improper to send information
only to registered voters. Do not hesitate to contact us at (949) 223-1170, if you have any
questions or wish to discuss this matter further.
[END OF MEMORANDUM]
01003/0001/34321.01
MINUTE ORDER NO.
APPROVING A CONSULTANT SERVICES AGREEMENT WITH
MUNIFINANCIAL IN AN AMOUNT NOT-TO-EXCEED $25,500 TO
PROVIDE FISCAL IMPACT ANALYSIS AND DISTRICT FORMATION
SERVICES.
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I HEREBY CERTIFY that this Minute Order, approving a Consultant Services Agreement
MuniFinancial in an amount not-to-exceed $25,500 to provide fiscal impact analysis and district
formation services was adopted by the City Council of the City of Palm Springs, California, in a
meeting thereof held on the 81h day of September, 2004.
PATRICIA A. SANDERS
City Clerk
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RESOLUTION NO.
OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,
CALIFORNIA,AMENDING THE BUDGET FOR THE 2004-05
FISCAL YEAR.
WHEREAS Resolution 20973 approving the budget for the fiscal year 2004-05 was adopted
on June 9, 2004; and
WHEREAS the City Manager has recommended, and the City Council desires to approve,
certain amendments to said budget;
NOW THEREFORE BE IT RESOLVED that the Director of Finance is authorized to record
inter-fund cash transfers as required in accordance with this Resolution, and that Resolution
20973, adopting the budget for the 2004-05 fiscal year is hereby amended as follows
SECTION 1. ADDITIONS
Fund Activity Account Amount
001 1010 43200 $25,500
General City Council Contractual Services
Purpose To provide funds for the contract with Muni Financial Corporation far
preparation of documents for the formation of a Community Facilities District
SECTION 2. SOURCE
Fund Activity Account Amount
001 29301 $25,500
General Fund Balance
Adopted this day of 12004.
AYES:
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
By
City Clerk City Manager
REVIEWED AND APPROVED ( �