HomeMy WebLinkAbout4/3/2002 - STAFF REPORTS (17) DATE: April 3, 2002
1 TO: City Council
FROM: Director of Finance/Treasurer and Grants and Government Affairs Manager
APPROVE RESOLUTION AMENDING ADOPTED CITY POLICY REGARDING SPECIAL
ASSESSMENT AND COMMUNITY FACILITY DISTRICT MUNICIPAL BOND FINANCING
RECOMMENDATION:
It is recommended that City Council review adopted City policy and procedures regarding
municipal bond financing for selected development projects and consider adoption of a
resolution making certain revisions to the; Policies and Procedures for Special Districts and
Mello-Roos Community Facility District (CFD) Financing Programs (originally adopted by
Resolution No. 17774 in January, 1992).
SUMMARY:
City Council adopted Policies and Procedures for Special District financing programs for new
development projects in 1992, setting guidelines for municipal bond financing on qualified
development projects in Palm Springs. During the past 10 years, some State guidelines for Special
Districts and Mello-Roos CFDs have been amended, making itnecessary for the City to upgrade
it's 1992 adopted policies and procedures for selected special districts.
BACKGROUND:
On January 22, 1992 City Council adopted a Statement of Policies and Procedures for constructing
public improvements for New Development Projects via Special Assessment Districts or Community
Facility District. The two City adopted mechanisms for municipal bond financing for development
projects are:
A. Special Assessments under the 1911 1913 and 1915 Acts:
(Commonly used to construct public sewers, storm drains and street improvements for existing
developments that may have been in existence prior to such public improvements. Citizens must
petition for these special districts; requiring min.60% property owner support)
B. Mello-Roos Community Facility District Act of 1982:
(Can be used to finance Public Improvements such as: Streets, Bridges, Sewers, Storm Drains,
Flood Control, Traffic Signals,Water&Utilities, Parking Lots, Pedestrian Malls, Parks&Parkways,
Public Recreational Facilities, Schools, Libraries, Transportation and other eligible Public
Improvements).Overthe years,CFDs became popularwith developers, in some areas of California,
who wished to defer public infrastructure costs over a period of years. Developers exercised the
1982 CFD Act,requesting municipal bond financing(usually for Streets, Sewers and Storm Drains)
for 15 to 20 years or more. Property Owners within such developments then pay for the deferred
public improvements on theirannual tax bill,usually ata lower interest rate than traditional mortgage
financing rates.
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Special District and CFD Policy and Procedures, Page 2
It was due to the above developer initiated bond issues that concerned public agencies adopted
Policies and Procedures to administer such special bond issues. In 1989 the County of Riverside
became the first public agency to adopt Policy and Procedures for CFDs in California. In 1992 Palm
Springs became the first public agency to adopt Policy and Procedures for CFDs and Special
Districts in Coachella Valley.
City staff reviewed the current Policy and Procedures for Special Districts and CFDs with the City
Attorney, Bond Council and Financial Advisor. After taking into consideration changes in State
regulations for such special districts and in reviewing the City's specific limitations above and
beyond State requirements, it is recommended that City Council review the 1992 document and
consider amendments to the current CFD and Special District Policies and Procedures.
On March 13, 2002 at a Council Study Session, City staff and the City's Financial Advisor made a
presentation to City Council, explaining the background of the current 1992 policy document and
reviewing options to consider for updating the City's policy. A 1-page comparison of current and
possible amendments is attached for Council's consideration (EXHIBIT "A"). In addition a phone
survey was made to other Coachella Valley municipal agencies to list their current Special District
and CFD Policies and Procedures (EXHIBIT "B").
Also attached for City Council's consideration is a resolution authorizing amendments to the current
policy. The most significant change in current policy, would be the possible inclusion of Single
Family Subdivisions as a new eligible category for CFD Bond Financing in addition to Commercial
and Industrial projects. The proposed addition of Single Family Subdivisions to eligible CFD bond
financing may be a possible development attraction for the City of Palm Springs; especially in the
highly competitive home market in Coachella Valley.The City Attorney, Bond Counsel and Financial
Advisor have offered advice and suggested policy language regarding safeguards to permit such
inclusion of Single Family projects to the CFD eligibility list. The current Policies and Procedures
are attached (EXHIBIT "C"). .
ROBERT L. MOHLER THOMAS M. KANARR
Grants and Government Affairs Manager Director of Finance/Treasurer
APPROVED: `
City Manager-
Attachments:
1. Resolution
2. Exhibit "A" (Comparison of Current vs. Proposed Mello-Roos CFD Policies & Procedures)
3. Exhibit "B" (Survey of other Coachella Valley Agency Special District Policy & Procedures)
4. Exhibit "C" (Current -1992 Adopted Special District and CFD Policies & Procedures- 26 pgs.)
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Cry 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)
CURRENT POLICY: PROPOSED POLICY:
A. MUNICIPAL BONDS can be issued for A. (Same as current policy).
Public Improvements for development Mello-Roos Community Facility Districts
projects, providing financing assistance to CI FDs) and Assessment 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 CFD developments can use CFD bond financing.
financing.
C. 4:1 VALUE TO LIEN RATIO: The ratio can C. (Same- no changes) Note:1.1 ratio is only
be as low as 3:1 (w/credit 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 Fair 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
$5,000 deposit pays for City administration $10,000 for initial City administration costs to
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. 3
HBobM\halalBccumenl\CFOPolicy.CCStudySession 3-13-02.frmO wpb Exhibit "A"
City of Palm Springs
CITY COUNCIL STUDY SESSION MARCH 13, 2002
SURVEY OF COACHELLA VALLEY CITIES/AGENCIES
SPECIAL ASSESSMENT and COMMUNITY FACILITY DISTRICT (CFD)
MUNICIPAL BOND FINANCING PROGRAMS
CITY OR AGENCY: POLICY REGARDING DEVELOPER DISTRICTS:
CITY OF PALM SPRINGS Written Policy for Assessment District and CFD
bond financing adopted by City Council on
January 22, 1992. (Resolution #17774). City
policy is very similar to County of Riverside's.
CITY OF CATHEDRAL CITY No written policy. City will permit CFD financing
for Single Family Developments.
(i.e. $12 Mil. for 1,362 unit subdivision- new)
CITY OF RANCHO MIRAGE No CFDs are permitted. City will allow 1913 Act
Assessment Districts for streets & sewers
for existing single family subdivisions.
CITY OF PALM DESERT Written policy adopted in about 1992. (Indian
Ridge project largest single family project).
CITY OF INDIAN WELLS No CFDs are permitted in City.
CITY OF LA QUINTA Written Policy has 2 categories: 1. Developer
driven districts, 2. City driven districts. One
CFD in 1997 (Century Homes- Single Family).
CITY OF INDIO No written policy, but 3 Single Family CFD
bonded developments built in past 2 years.
CITY OF COACHELLA No CFDs proposed in City. Do not encourage.
COUNTY OF RIVERSIDE 1st Public Agency in California to adopt a
written policy on CFDs &Assessment Districts
in about 1989. CFDs permitted for Single Family
bond financing with 4:1 Value to Lien Ratio. $1
Million minimum bond issue.
H BobWData\Cocument\CFDPolicy Survey CC Cities 3-13-32.frmD wpd
Exhibit "B"
SPECIAL ASSESSMENT AND COMMUNITY FACILITY DISTRICT
FINANCING PROGRAMS
STATEMENT OF POLICIES AND PROCEDURES FOR
NEW DEVELOPMENT PROJECTS
JANUARY, 1992
ip d �
(Page 1 of 26 Pages)
Exhibit "C"
RESOLUTION NO. 17774
OF THE CITY COUNCIL OF THE CITY OF
PALM SPRINGS, CALIFORNIA, ADOPTING A
POLICY A14D PROCEDURE FOR THE
ADMINISTRATION OF SPECIAL
ASSESSMENTS UNDER THE 1911, 1913 AND
1915 ACTS AND THE MELLO-ROOS
COMMUNITY FACILITIES ACT OF 1982.
WHEREAS the City of Palm Springs has received petitions from private
developers and properly owners who wish to form special assessment districts in
order to make public improvements on or fronting their properties; and
WHEREAS the private developers and property owners have requested financing
- assistance from the City by means of the issuance of municipal improvement
bonds in order to defer costs over a period of years at low interest; and
WHEREAS developer requested Special Districts must provide significant benefit
to the general public in order to qualify for City assistance in the municipal
improvement bond financing; and
WHEREAS all costs associated with the Special Districts will be home solely by
.lhe developers or property owners and all City related costs are paid for in the
form of cash deposits and/or incorporated in the bond sales; and
WHEREAS the Municipal Improvement Acts of 1911, 1913 and 1915 and the
Mello-Roos Community Facilities Act of 1982 are the appropriate California laws
under which the assessment districts should be formed; and
WHEREAS a Special Districts Committee of City Administrators and City
Consultants should be forme to review and approve all proposed Special
Districts; and
WHEREAS a Policy and Procedure should be adopted for the administration of
Special Districts for the City of Palm Springs.
NOW THEREFORE BE 1T RESOLVED by the City Council of the City of Palm
Springs, as follows:
Section 1. That the City Council of the City of Palm Springs does hereby
adopt a policy and procedure for the administration of Special
Assessments under the Municipal Improvement Acts of 1911, 1913
and 1915 and Oe Mello-Roos Community Facilities Act of 1982.
Section 2. That a Special Districts Committee be established to review all
proposed developer related Special Districts and that professional
appraisals, Financial Advisors and other appropriate consultants be
utilized to determine financial soundness of the proposed districts.
That all costs associated with the review process for developer
type districts will be paid for in the form of up front cash deposits
RESOLUTION NO. 17774
Page 2
from the developer. That the Special Districts Committee be
comprised of the following:
City Slaff City Qgnullarlts
Contracts Administrator Bond Counsel(City Attorney)
City Manager Assessment Engineer
Assistant City Manager Special Tax Consultant
Finance Director Financial Advisor
Director of Public Works Appraiser
City Engineer Bond Underwriter
Director of Planning Trustee/Paying Agent (Bank)
Dir. of Economic Development
Special Projects Coordinator
City Attorney
ADOPTED this 22nd day of January, 1992
AYES: Councilmembers Murawski, Neel and Mayor Bono
NOES: Councilmembers Broich and Hodges
A13SENT: None
ATTEST:
CITY FPALMSPRI LIFORNIA
By
City Clerk ty an er
REVIEWED&APPROVED
IM7
CITY OF PALM SPRINGS
Special Assessment District and
Community Facilities
Financing Proerams
TABLE OF CONTENTS
Section Page
1. Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-2
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 Bonds .9-10
It. District Cost Deposits and Reimbursements . . . . . . . . . . . . . . . . . . . . . .10-12
12. Origination Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 . .12
13. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..12-13
14. Use of Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
15. Acquisition Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13-14
16. Disclosure to Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
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17. Property Owner Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
18. Land Use Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
19. Joint Financing Agreements . . . .15
20. Treatment of Delinquencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
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
25. 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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1. 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.
The first California legislature in 1850 authorized special assessments in the act providing
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 law 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 .reo,ie& 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 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.
0 Sewers, Storm Drains, Flood Control
0 Traffic Signals, Street Lighting
0 Water, Electric, Gas Utilities
0 Parking Lots
0 Pedestrian Malls
0 Parks and Parkways
0 Recreation Facilities (Public)
0 Schools, Libraries
0 Transportation and related public improvements
M/0
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REASON FOR SPECIAL DISTRICTS POLICY
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 frrst.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.
"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
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.
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VN)J
"Public Facilities" means improvements authorized to be constructed or acquired under
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
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:
TbP 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.
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.
I /sox/apx*,
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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:
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:
A. Application - (Development Projects)- To be completed by developer.
B. Petition - Signed by sufficient property owners.
C. Boundary Map - Submitted by developer's engineer. 13
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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 COMMITTEE
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:
Assessment Disticts&Grants Manager(Administers Special Districts for the City)
City Manager
Assistant City Manager
Finance Director
Public Works Director (Director of Transportation)
City Engineer
Director of Planning & Building
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
5 1
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.
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
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
6 IrAIT"
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. 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
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 applicantshall be.discharged by the City upon We 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
For Mello-Roos Community Facilities Districts (C.F.D.), the maximum special tax
submitted to the qualified electors of the C.F.D. shall not exceed one percent (1%) of
the appraised Fair Market Value of the subject properties at the time of district
formation. Furthermore, the total of the following items appearing on the property tax
bill, shall not exceed two percent (2%) of the appraised Fair Market Value of the subject
properties:
A. Ad valorem property taxes levied by the County.
B. Voter approved ad valorem taxes levied by the County in excess of one
percent (1%) of the Fair Market Value, including voter approved debt
service.
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C. The maximum annual special taxes levied by any existing C.F.D. for
payment of bonded indebtedness or on-going services.
D. Annual equivalent assessments levied for any special assessment district
or maintenance district for the payment of bonded indebtedness or
services.
E. The annual equivalent maximum special tax for the proposed 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 undeveloped 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
8 I r17
apportionment shall 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 be 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.
B. The special taxes or special assessment shall be levied for the first fiscal
year following sale of the bonds for which they may be levied. Interest
shall not be funded (capitalized) beyond the earliest interest payment date
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.
9 , !r/9',9
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.
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.
11. DISTRICT COST DEPOSITS AND REEMURSEMENTS
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.
l0 1 � /�
DEPOSITS AND FEES:
A. Development Districts: (Initiated by Private Developers):
1. Application Fee - $5,000.00 (non-refundable) deposited with
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
Maintenance Districts will be exempt from the above deposits and
fees.
C. City Initiated Districts:
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:
A. The district is not formed;
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.
11 / 04)0
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 anydriterest.on.any portion-of ahe 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 he "uthorized 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.
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 indtiated 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)
12 '044
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.haveihe 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 underwriter(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.
15. ACQUISITION PROVISIONS
The City generally supports acquisition districts to limit financial exposure and
administrative efforts by the City. The Cityshall 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.
13 ' � �
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 ao merchantbuilders. 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,should include homebuyer notifications requiring signature prior to home
purchases; as well as methods to notify subsequent home purchasers. Appropriate
disclosure information shall be provided in the C.C.&R's.
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
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, unless 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.
14 /SOMAZ
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 sign d 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
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.
15 �
2. Application Submission: Applicant submits an initial application and a
$5,000 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
1913 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.
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
16 /S79WA57
Engineer's Report, including the assessment diagram, assessment roll,
description of improvements and preliminary cost spread. The FIR
consultant begins processing the appropriate environmental documentation
for the public improvements.
2. Presentation of Report. Upon completion of the preliminary engineering
work, the City Council adopts a resolution of intention to form the
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
17
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 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 made 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
18 7
without special findings and up to six (6) months if the City Council
makes specified findings.
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
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.
19 50*44
1
TYPICAL 1913 ACT ASSESSMENT
PROCEEDING
DAYS
ELAPSED
IMT[ATfON• 180 Days Health Of ODays
ti0%Pditian Ci Counttl Officer
Dctermmarion Lotter
IMPROVEMENT pte
DESIGDESIGN" 45 Days ECom le
nom le n " 180 Days
Design of Pudic
Improvements
PRESENTATION OF Present Engineers 225 Days
REPORT, Report to Gty
RESOLUTION OF 30 Days Council
INTENTION
� Wtrucioa Bond
RECEIVE BIDS Bids Bid`
255 Days
15 Days
PUBUC HEARING,
CONFIRM Public Hcadng
ASSESSMENTS
270 Days
CASH COLLECTION
PERIOD'**
Cash Collection
Period
30 Days
300 Days
DETERMINE City Council
UNPAID Authorizes Bond
ASSESSMENTS AND (sstuna
AUTHORIZE
ISSUANCE OF
BONDS
20 Days
320 Days
CLOSING Closing
•Proceeded by application of developer and application approval by the City Council-
•'Asscssmcas may be based on estimates to attain faux thus shortening this period
`•May be waived by 100%of property owner
20 , ;�
TYPICAL MELLO-ROOS COMMUNITY
FACILITIES DISTRICT PROCEEDING
Initiated By:
PETTTTON-Signed
PETTTTON-Signed by by landowners of
10%of voters 10%of the area.
Within 90 Days:
CITY COUNCIL adopts a resolution of
intention to establish a Community
Facilities District
Not less than 30 nor more
than 60 days thereafter:
CITY COUNCIL conducts public hearing
and reviews written protests.
ABANDON if 50%of ABANDON at PROCEED WITH
voters or landowners discretion of establishment by
protest legislative body. adopting a resolution
of formation.
At least 90 but not more
than 180 days thereafter*-
ELECTION-Voters or landowners vote
on formation of district and on levy
of special taxes;requires
two-thirds for approval.
TOTAL TIME: Up to 330 days
• Time period may be waived.
21 1�19
COMPARISON OF ALLOWABLE IMPROVEMENTS UNDER THE 1911,
1913 AND 1915 ACT ASSESSMENT DISTRICTS VS MELLO-RODS 1992
ACT COMMUNITY FACILITIES DISTRICTS.
d
Allowable uses of Assessment Laws U
W N c C
C =Capital Improvements n r g
W > O. PI C p 6LE 42
M=Operation and Maintenance €ch
s42 0 3 a a d o H
X =C+M Y � o 900 b � b o d e
fn VP 0W 8U. 0 Ma W o -1Q- aCV) EL F- rE
•Improvement Act of 1911 . . . . . . . . . . . . . . C X C C C C C X C C C C C C C X C
•Municipal Improvement A t of 1913 . . . . . . . C C C C C C C C C C C C C C C C C
•Improvement Bond Act of 1915 . . . . . . . . . . C C C C C C C C C C C C C C C C C
Benefit Assessment Act of 19B2 . . . . . . . . . . X M X
Mello-Roos Community Facilities Act of 1982 . . C C C X C C C C C C C C C X X C X• X C
Landscaping h Lighting Act of 1972 . . . . . . . . X X X X X
Vehicle Parking District Law of 1943 . . . . . . . C
Pedestrian Mall Law of 1960 . . . . .'. . . . . . . C
Map Act Areas of Benefit C C C C C
Geologic Hazard Abatement District . . . . . . . . X
County Service Area Law . . . . . . . . . . . . . . M M M X X X M M
Street Lighting Act of 1919 . . . . . . . . . . . . . M
Street Lighting Act of 1931 . . . . . . . . . . . . . M
Municipal Lighting Maintenance Act of 1927. . . M
22
DISTRICT APPLICATION
CITY OF PALM SPRINGS
Special Assessment and Mello-Roos District
Community Facilities District
Public Finance Program
Instructions:
L Please complete the following Sections in To be Completed by City
the spaces provided.
2. Attach additional sheets if necessary. CounrylDistrict Accounting No.
3. Attach S5,000 non-refundable application
fee.
A- Applicant Information Date Application Fee Received
Applicant Name
Name of Civil Eneineer for Pmiect to Date
Relationship
to landowner Name
Mating Address Contact
Address
Contact
Title Phone (_)
Phone (_)
B. Landowner Information
Preferred Proceedings (Check) Landowner Name
Improvement Act of 1911 Mailing Address
Improvement Acts of 1913115
Mello-Roos Community Facilities Act Contact
Undecided Title
Explanation Phone (�
Project Land Use Summary (Le.,number of
unns(atzes by land use category)
Name of Project Provide map identifying
zoning title or ordinance number.
-1- '.rA r
Additional Proiect Inforrnation
1. City planning approvals (subdivision approvals received to date including processing
numbers, dates of approval, current processing status and development agreement
reference,if any).
2 Previous names under which.this project has been known or processed by the City (list
names and dates).
3. Improvements or facilities proposed for assessment district or community facilities
district financing. (Provide a cost breakdown, map and construction timetable for each
facility or improvement proposed.)
4. All c;sting and proposed rates, assessments, liens or other secured interests on all
property within the proposed district- (Provide a copy of recent property tax bill.)
5. Estimated property value-to-lien ratio including the value of public improvements to be
financed(to be documented by letter from MA!appraiser or other qualified party).
6. Prior experience developer/landowner has bad with assessment and/or community
facilities district financing.
1 '1� 35
7. Other land development ventures by landowner and/or developer in the City of
Riverside and in California within the last five years(include location,land use summary,
period of construction,etc)
Other District Fortnation(FinancinE Information
1. Project's need for assessment and/or community facilities district financing.
2. Public entities anticipated to own, operate or maintain facilities or improvements
proposed.
3. Surrounding property owners which may be affected by or be included in the proposed
district financings and percentage of total acreage owned by applicant (Attach a map
identifying their property locations, affected facilities, and evidence indicating support
for the proposed district financing.)
Miscellaneous
1. Indicate whether an application for assessment and/or community facilities district
financing has ever been previously denied by the City Council for this property. If so,
explain the cfratmstaucts and reasons.
Z. Indicate whether the landowner/developer and/or joint venture participant has ever
been party to an abandoned, defaulted and/or court challenged assessment or
community facilities district financing. If so,state when,where,issue size, circumstances
and reasons.
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3. Do you foresee any unusual requirements, problems, unique opportunities, etc_, that
may east in the requested financing of the project?
4. Provide recent financial statements of landowner, developer, joint venture, etc, or
provide lead banker lender references or other information demonstrating past financial
performance.
Submitted By.
Firm
Name
Title
Date
Signature
1
A3r
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RESOLUTION NO.
OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,
CALIFORNIA, APPROVING A RESOLUTION AMENDING THE
CITY'S ADOPTED POLICY AND PROCEDURES REGARDING
SPECIAL ASSESSMENT AND MELLO-ROOS COMMUNITY
FACILITY DISTRICT (CFD) MUNICIPAL BOND FINANCING FOR
DEVELOPMENT PROJECTS(REF:PREVIOUS RESOLUTION NO.
17774 ADOPTED JANUP RY 22, 1992).
WHEREAS,the City of Palm Springs adopted Resolution No. 17774 on January 22, 1992 approving
Policies and Procedures for Special Assessment and Mello-Roos Community Facility District(CFD)
municipal bond financing for public improvements for development projects; and
WHEREAS, the State of California has amended State regulations regarding Mello-Roos CFDs,
necessitating the need to update the City's adopted Policies and Procedures for CFDs; and
WHEREAS, the City of Palm Springs wishes to upgrade the adopted Policies and Procedures for
Special Assessment and Mello-Roos Community Facility Districts to comply with State standards
as well as allowing qualified residential single-family developments (in addition to commercial and
industrial projects)to be financed by Municipal Bonds by amending current Resolution No. 17774.
NOW THEREFORE BE IT RESOLVED that the City Council of the City of Palm Springs approves
the following amendments to current Policies and Procedures adopted by Resolution No. 17774:
(ref. Policies and Procedures for Special Assessment and Community Facility Districts):
1. Eligible Developments: (Add to Section 3 [page 3]):
Add: D. Qualified Single-Family Residential Subdivisions can be financed with Mello-Roos CFD
municipal bonds In addition to Commercial/ Industrial development projects.
2. Eligible Public Improvement Costs: (Add to Section 6 [page 6], following item C.).
Add: D. The following development fees may be financed via municipal bonds, in addition to listed
public improvements: a. City Sewer Connection Fees, b. City/County Drainage Fees, c.
CVAG/County Transportation Uniform Mitigation Fees(TUMF)and d. Palm Springs Unified School
District Fees. (Note Financing Agreements required for c. & d.);
3. Special Tax Formula: (Revise Section 9 [page 7]-first paragraph to read)
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 on 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 consistant 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 levy of special taxes because of its use for private residential
purposes.
(Also replace par. C to read): The maximum special tax shall establish for undeveloped land tax
rates corresponding to the adopted land use designations on 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. IS Q i
Revised CFD Policy and Procedures-Resolution, Pg.2
4. Application Fee: Revise Section 11A.1. (Page 11)to read: 1. Application Fee- $10,000 (non-
refundable) deposited with initial Special District Application. (See application process).
The above recommendations were provided by the City's Financial Advisor, City Attorney, Bond
Counsel and City staff as a result of consensus meetings in March, 2002 . (Refer to Exhibit "A" ,
when adding or revising language indicated in 1., 2., 3. above).
Adopted this day of 12002.
AYES.
NOES:
ABSENT:
ATTEST: CITY OF PALM SPRINGS, CALIFORNIA
by
City Clerk City Manager
REVIEWED & APPROVED AS TO FORM
Attachment: Exhibit "A"
(Special Assessment and Community Facility District Financing Programs- Statement of Policies
and Procedures for New Development Projects).Adopted by City Council on January 22, 1994(by
Resolution No. 17774)- 26 pages
H:0.lsers\BobM\Data\Document\Mello-Roos CFD.Policy&Procedures.Resolution.4-03-02.res.wpd