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HomeMy WebLinkAbout6/16/2004 - STAFF REPORTS (18) DATE: June 16, 2004 TO: City Council FROM: Director of Public Works/City Engineer ASSESSMENT DISTRICT 162 RECOMMENDATION: On a previous item on tonight's agenda, Council considered an Amendment to its Rules concerning consideration of a previous action. Should Council approve said Rule Amendment, and should a member from the prevailing side of the previous action make a motion for reconsideration, and provided that motion passes, it is recommended that after consideration of a review of the Assessment District application, the City Council consider one of the following options: 1. Approve the application for further processing of the formation of Assessment District 162, submitted by Ironwood Homes, doing business as Palm Springs Modern Homes, and allowthe formation of Assessment District 162 to proceed with an initial estimated bond amount less than the $2,000,000 minimum established by the City's Policies and Procedures for Special Assessment and Mello-Roos Community Facilitiy District (CFD) Municipal Bond Financing for Public Improvements for Development Projects; 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. 2. Deny the application for further processing of the formation of Assessment District 162, submitted by Ironwood Homes, doing business as Palm Springs Modern Homes. SUMMARY: An application has been filed with the City in October2003 and modified in February2004 for formation of a 1913 Act Assessment District using 1915 Act Bonds for two separate development projects: "The Villas", Tract No.29077, located on the south side of Tahquitz Canyon Way west of Cahuilla Road; and "48 @ Baristo", Tract No. 30941, located on Baristo Road west of Sunrise Way. These developments are being constructed by Ironwood Homes, doing business as Palm Springs Modern Homes. The City has established Policies and Procedures for Special Assessment and Mello-Roos Community Facility District(CFD)Municipal Bond Financing for Public Improvements for Development Projects that outlines the minimum criteria for Assessment Districts formed in the City, as well as the guidelines and process for their formation. The subject application requires special consideration with regard to the minimum bond amount, as well as a review of the potential benefit to the City as a result of the Assessment District formation. No prejudice will result to any party as a result of reconsidering this action at this meeting. BACKGROUND: Ironwood Homes, doing business as Palm Springs Modern Homes, is the developer for Tract No.29077 located on the south side of Tahquitz Canyon Way west of Cahuilla Road. The Tract Map was approved and recorded in September 2003 and consists of 47 single family residential lots. They are also the developer of Tract No. 30941 located on Baristo Road west of Sunrise Way which consists of 48 condominium units. Assessment District 162 June 16. 2004 Page 2 Ernie Vincent, Vice-President of Palm Springs Modern Homes, has submitted an application for formation of a 1913 Act Assessment District using 1915 Act Bonds for the public improvements for both of their approved developments. In accordance with the City's Statement of Policies and Procedures for Special Assessment and Mello-Roos Community Facility District(CFD) Municipal Bond Financing for Public Improvements for Development Projects, a pre-application conference with staff was held and the applicant submitted a $10,000 initial application fee. On February 27, 2004, the applicant met with the City's Special Districts Committee to review the proposed application. The applicant is proposing that the Assessment District fund public sewer improvements, water improvements, street improvements, sewer fees, drainage fees, water fees, engineering costs, and all district formation and financing costs for both development projects. In addition, relatively extensive utility undergrounding adjacent to the property being developed as Tract No. 29077 is proposed to be funded by the Assessment District. The total estimated bond amountforTract No.29077, known as"The Villas"is$1,083,626 and the total estimated bond amount for Tract No. 30941, known as "48 @ Baristo" is $418,208 for a total Assessment District bond amount of $1,501,834. The Committee noted that this total was less than the $2,000,000 minimum bond amount established by the City's Policy. This minimum bond amount was established by City Council for reasons of cost effectiveness, because there are certain fixed costs associate with all district formations. These fixed costs are a higher percentage of the overall district improvement costs, when the districts consisted of relatively limited amounts of improvements. The developer is requesting an exception to the minimum bond amount requirement, which is allowed by formal action by the Council, as specified by the Policy in Section 4(2)(C). The main reason the developer is requesting the exception is that they are proposing to complete the utility undergrounding work in and around the neighborhood adjacentto Tract No. 29077 including construction of new underground services to existing residential and commercial properties, if the Assessment District is approved. The City Council, as a requirement of its conditional approval of Tentative Tract Map 29077, required the developer to underground all overhead utilities on or adjacent to the site. However, the overhead utilities on the south property line have overhead service connections to existing properties, which would require 100% property owner concurrence to allow the developer to enter onto the properties and convert the overhead services to underground services for each existing property. The developer is proposing to fund these on-site conversion costs, if the Assessment District is approved, thereby resulting in the undergrounding of all adjacent overhead utilities. The utility undergrounding of the overhead lines adjacent to Tract No. 29077 was a commitment that was made to the neighborhood by the original tract developer. The current developer subsequently acquired the property from the original developer after it was entitled and the requirement to underground the existing overhead utilities was imposed. Additionally, improvements to the west end of Tahquitz Canyon Way(near Museum Way) were an important item discussed during the entitlement process for Tentative Tract Map 29077. The current proposal by the developer includes removal of existing street improvements and construction of decorative pavers, a landscaped median, and other / ! aesthetic improvements within Tahquitz Canyon Way that will greatly enhance the public right-of-way. Assessment District 162 June 16, 2004 Page 3 A final factor to consider with regard to public benefit is the improvements related to flood control and storm drainage in the area. The existing property, when vacant, was subject to extensive flooding during severe storms. The runoff from the adjacent hillsides would subject downstream properties that were constructed 20, 30, and even 50 years ago to potential flooding. As a result of this project,flood control improvements are proposed that will redirect storm water runoff to existing storm drain facilities; and the development itself will collect and convey runoff in a manner that provides greater flood control protection for downstream properties than existed previously. The developer estimates that for"The Villas" project, the bond amount assessed to each lot will be $23,454 (approximate $1,383 annual payment per lot); and for the "48 @ Baristo" project, the bond amount assessed to each lot will be $8,578 (approximate $523 annual payment per lot)which are both below the City's policy requiring a value to lien ratio of 4 to 1. At a 4 to 1 ratio, the minimum property value for "The Villas" project would be $92,224; and the minimum propertyvalue forthe"48 @ Baristo"projectwould be$34,851. The developer has indicated that pre-sale prices of "The Villas" are approximately $600,000 and pre-sale prices for the "48 @ Baristo" project are approximately $400,000. The controlling criteria established in the City's policy on the formation of Assessment Districts is outlined under Section 4, "Minimum Requirements," Section 1, "Benefit". This section indicates that the City should consider formation of Assessment 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 Assessment District application meets these two general criteria is somewhat subjective. However, the application does propose to convert existing overhead utility lines to underground facilities which is a major infrastructure improvement that affects "The Villas" project as well as the adjacent properties. Furthermore, development of the vacant land into individual residential properties that may sell for$600,000 each at"The Villas"project and $400,000 each at"48 @ Baristo"project has some financial benefit to the City in terms of additional property tax revenue as well as the spill-over effect of additional property owners living and working in our City and contributing to the overall economy of the community. This item was previously considered by Council on March 24, 2004. The District was not approved for formation by a 2-2-1 vote. SUBMITTED: DAVID J. BARAKIAN Director of Public Works/City Engineer Assessment District 162 June 16, 2004 Page 4 APPROVED: DAVID H. READY City Manager ATTACHMENTS: 1. Assessment District Application 2. Resolution (approving formation of assessment district) 3. Minute Order (denying formation of assessment district) RESOLUTION NO. OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,CALIFORNIA,APPROVING THE APPLICATION FOR FURTHER PROCESSING OF THE FORMATION OF ASSESSMENT DISTRICT 162, SUBMITTED BY IRONWOOD HOMES, DOING BUSINESS AS PALM SPRINGS MODERN HOMES 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 Facilitiy District(CFD)Municipal Bond Financing for Public Improvements 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, including a minimum bond amount of $2,000,000; and WHEREAS,the City's Policies and Procedures establish minimum criteria forthe formation of Special Assessment and CFD municipal bond financing for public improvements for development projects requiring that proposed public facilities to be finance 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 Ironwood Homes, doing business as Palm Springs Modern Homes, for formation of a 1913 Act Assessment District using 1915 Act Bonds for two separate development projects: "The Villas", Tract No. 29077, located on the south side of Tahquitz Canyon Way west of Cahuilla Road; and "48 @ Baristo", Tract No. 30941, located on Baristo Road west of Sunrise Way; and WHEREAS, the proposed Assessment District includes construction of public improvements, costs, and fees with an initial total bond estimate of $1,501,834 which is less than the City's required minimum bond amount; and WHEREAS, Section 4, 2 (c) "Bond Sale Minimum," of the City's Policies and Procedures for the formation of Special Assessment and CFD municipal bond financing for public improvements for development projects authorizes the City Council to take formal action to allow a minimum bond amount below the $2,000,000 requirement; and WHEREAS, the proposed Assessment District includes conversion of existing overhead utility lines, construction of decorative pavers and other aesthetic improvements to West Tahquitz Canyon Way, and construction of storm drain and flood control improvements which are of benefit to the general public; WHEREAS,the proposed Assessment Districtwill facilitate public improvements forprivate development that will help stimulate the local economy and provide a financial benefit to the City. Resolution No. NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs that: 1. The City Council does hereby approve the application for further processing of the formation of Assessment District 162, submitted by Ironwood Homes, doing business as Palm Springs Modern Homes; and 2. The City Council does hereby allow the formation of Assessment District 162 to proceed with an initial estimated bond amount less than the $2,000,000 minimum established by the City's Policies and Procedures for Special Assessment and Mello-Roos Community Facilitiy District(CFD)Municipal Bond Financing for Public Improvements for Development Projects; and 3. 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 16" day of June, 2004. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED & APPROVED AS TO FORM: f MINUTE ORDER NO. DENYING THE APPLICATION FOR FURTHER PROCESSING OF THE FORMATION OF ASSESSMENT DISTRICT 162, SUBMITTED BY IRONWOOD HOMES, DOING BUSINESSAS PALM SPRINGS MODERN HOMES I HEREBY CERTIFY that this Minute Order, denying the application for further processing of the formation of Assessment District 162, submitted by Ironwood Homes, doing business as Palm Springs Modern Homes, was adopted by the City Council of the City of Palm Springs, California, in a meeting thereof held on the 161h day of June, 2004. PATRICIA A. SANDERS City Clerk