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HomeMy WebLinkAbout97-083 CC ResolutionRF.~OLUTION NO. 97-83 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEM~CULA ADOPTING LOCAL GOALS AND POLICIES FOR COMMUNITY FACILITIES DISTRICTS WHEREAS, Sections 53368.2(d) of the California Government Code requires that the City Council of the City of Temecula (the "City") adopt local goals and policies for community facilities districts ("CFDs") prior to the transfer of the governance of a community facilities district from the County of Riverside (the "County") to the City under the Mello-Roos Community Facilities Act of 1982, as amended, and, in particular Article 6 of Chapter 2.5 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Act"); and WHEREAS, this City Council intends to consider the transfer of the governance of the Community Facilities District No. 88-12 of the County of Riverside (Ynez Corridor) (the "Ynez Corridor CFD") from the County to the City, and desires at this time to adopt local goals and policies for CFDs so that it may satisfy a requirement of the Act necessary to be accomplished prior to the transfer of the governance of the Ynez Corridor CFD from the County to the City; and WHEREAS, City staff has caused to be prepared a draft of goals and policies for CFDs of the City (the "Goals and Policies"), the form of which is on file with the City Clerk, and this City Council has duly considered said Goals and Policies. NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Temecula that the Goals and Policies, in the form on file with the City Clerk, are hereby adopted as the local goals and policies of the City for CFDs, and are intended to meet the requirements of Section 53312.7(a) of the California Government Code. PASSED, APPROVED AND ADOPTED, by the City Council of the City of Temecula at a regular meeting held on the 22nd day of July, 1997. Patricia Birdsall, Mayor ATTEST: City Clerk [SEAL] Resos\97-83 1 STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE )cc CITY OF TEMECULA ) I, June S. Greek, City Clerk of the City of Temecula, HEREBY DO CERTIFY that the foregoing Resolution No. 97-83 was duly adopted at a regular meeting of the City Council of the City of Temecula on the 22nd day of July, 1997, by the following roll call vote: AYES: 4 COUNCILMEMBERS: Ford, Lindemans, Roberts, Stone NOES: 0 COUNCILMEMBERS: None ABSENT: 1 COUNCILMEMBERS: Birdsall City Clerk Resos\97-83 2 CITY OF TEMECULA LOCAL GOALS AND POLICIES FOR COMMUNITY FACILITIES DISTRICTS (Adopted July 22, 1997) I. INTRODUCTION. Section 53312.7(a) of the California Government Code requires that the City of Temecula (the "City") consider and adopt local goals and policies concerning the use of the Mello-Roos Community Facilities Act of 1982 (the "Act"), prior to the initiation of proceedings on or after January 1, 1994 to establish a new community facilities district ("CFD") under the Act. Section 53368.2(d) of the California Government Code requires that the City adopt such local goals and policies prior to the transfer of the governance of a CFD from the County of Riverside to the City. The following goals and policies are intended to satisfy the minimum requirements of the Act, and may be amended or supplemented by resolution of the City Council of the City as necessary or desirable with respect to any particular CFD. H. GOALS. The City will consider the use of the Act for financing of public facilities and services only in connection with development projects which will provide substantial economic benefits to the City, such as increased sales tax revenues. Any request for a CFD which is not integral to such a development project will be considered on a case by case basis. All City and consultant costs incurred in the evaluation of a new CFD will be paid by the proponents of the CFD or from unencumbered funds of the City. City staff shall use all reasonable efforts not to incur any expense for processing a CFD which is not eligible to be reimbursed from CFD special tax or CFD bond proceeds. Expenses incurred by the City that are not chargeable to the CFD shall be borne by the proponents of the CFD to the greatest extent practicable. m. ELIGIBLE PUBLIC FACILITIES AND SERVICES. The improvements eligible to be financed by a CFD must be owned by a public agency or public utility, and must have a useful life of at least five (5) years, except that up to five percent of the proceeds of an issue may be used for facilities owned and operated by a privately-owned public utility. The developmere proposed wiltfin a CFD must be consistent with the City's general plan and must have received any required zoning or specific plan approvals. A CFD shall not vest any rights to future land use on any properties, including those which are responsible for paying special taxes. The list of public facilities eligible to be financed by a CFD include, but are not limited to, the following: · Streets, highways and bridges · Street lighting · Traffic signals and safety lighting · Landscaping in public right-of ways · Governmental facilities · Sanitary sewer facilities · Storm drain facilities · Flood control facilities · Potable and reclaimed water facilities · Utility relocations · Elementary and secondary school sites and facilities · Libraries · Public utilities · Police and fire protection facilities · Parks and recreation facilities · Biological mitigation measures involving land acquisition and dedication Resos\97-83 3 The funding of public facilities to be owned and operated by public agencies other than the City shall be considered on a ease-by-case basis. If the proposed financing is consistent with a public facilities financing plan or development agreemere approved by the City, or the proposed facilities are otherwise deemed to be appropriate for financing by a CFD and are consistent with approved land use plans for the property, the City shall consider entering into a joint financing agreement or joint powers authority in order to finance these facilities. A joint agreement with the public agency that will own and operate any such facility must be entered into prior to the resolution of formation relating to the formation of any CFD, unless otherwise permitted under the Act. The City will consider on a case-by-case basis CFDs established for the provisions of services eligible to be funded under the Act. Eligible services are as specified in the Act. IV. PRIORITIES FOR CFD FINANCING. Priority for CFD financing shall be given to public facilities which: (a) are necessary for development to proceed in an orderly fashion, or Co) are otherwise coordinated to correspond to the phasing of the related private development project. If appropriate, the City shall prepare a public facilities financing plan as a part of the specific plan or other land use document that identifies the public facilities required to serve a project, and the type of financing to be utilized for each facility. The City will attempt to schedule construction of CFD financed facilities in a manner such that private development will not occur ahead of the installation of public infrastructure necessary to support that development. V. CREDIT QUALITY REQUIREMENTS FOR CFD BOND ISSUES. CFD bond issues should have at least a three to one property value to public lien ratio after calculating the value of the financed public improvements to be installed and any private improvements for which financing is assured to the satisfaction of the City. Property value may be based on either an appraisal or on assessed values as indicated on the County Assessor's tax roll. Any appraiser shall be selected by the City, and the appraisal shall be based on standards promulgated by the State of California and otherwise determined applicable by City staff and consultants. The appraisal should be dated within six months of the date the bonds are issued. The public lien amount shall include the bond issue currently being sold plus any public indebtedness secured by a fixed lien on real property currently existing against the properties to be taxed. A reserve fund equal to the lesser of (i) ten percent of the original proceeds of the bond issue, (ii) the maximum annual debt service on the bonds, or ('fii) one hundred twenty-five percent of the average annual debt service on the bonds shall be required for all bond issues for CFDs where less than fifty percent of the buildable acreage has been developed. A smaller reserve fund may be required by the City for bond issues in CFDs where over fifty percent of the buildable acreage has been developed. Less than a three to one property value to public lien ratio, excessive tax delinquencies, or projects of poor economic viability may cause the City to disallow the sale of bonds or require credit enhancemere prior to bond sale. The City may consider exceptions to the above policies for bond issues that do not represent an unusual credit risk, either du_e to credit enhancement or other reasons specified by the City, or which otherwise provide identified public benefits, to the extent permitted by and subject to any applicable requirements of the Act. 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. Any security required to be provided by or on behalf of the landowners may be discharged by the City upon the opinion of a qualified appraiser, retained by the City, that a value-to-lien ratio of three to one has been attained or based upon other Re~os\97-83 4 criteria (such as diversity in ownership) specified by [he City. As an alternative to providing other security, a portion of [he bond pro~xts may be placed in escrow with a corporate trust agent in an amount sufficient to assure a value-to-lien ratio of at least three to one on the outstarding bonds. The proceeds shall be released from [he escrow at such times and such amounts as may be necessary to assure a value-l~>-lien ratio of at least lhree to one on [he aggregate outstanding bonds and other indebtedness secured by real property liens as required. VI. DISCLOSURE REQUIREMENTS. A. Disclosure Requirements for Developers. Developers who are selling lots or parcels that are within a CFD shall provide disclosure notice to prospective purchasers that complies with all applicable requirements of Section 53341.5 of [he Government Code. All such disclosure notices must be provided to prospective purchasers of property at or prior to [he time [he contract or deposit receipt for [he purchase of property is executed. Developers shall keep an executed copy of each disclosure document as evidence that disclosure has been provided to all purchasers of property within a CFD. B. Disclosure Requirements for the Resale of Lots. The Finance Director of [he City (or her designee) shall provide a notice of special taxes to sellers of property (other than developers) which will enable [hem to comply wi[h any applicable notice requirements under Section 1102.6 of [he Civil Code. This notice shall be provided by [he Finance Director of fi~e City (or her designee) within five working days of receiving a written request for [he notice. A reasonable fee may be charged for providing [he notice, not to exceed any maximum fee specified in [he Act. C. Compliance With Federal Securities Laws. The City shall use all reasonable means to ensure compliance with applicable federal securities laws in connection with [he issuance of debt and [he provision of annual information regarding any CFD established by [he City with respect to which bonds have been issued, including requiring any developer in a CFD who is material to [he bond issue to transmit appropriate information to [he City or its designee for disclosure to bond investors. VII. EQUITY OF SPECIAL TAX FORMULAS AND MAXIMUM SPECIAL TAXES. Special tax formulas for CFDs shall provide for minimum special tax levels which satisfy [he following expenses of a CFD: (a) 110 percent gross debt service coverage for all CFD bonded indebtedness, (b) all administrative expenses of the City related to [he CFD, and (c) amounts equal to [he differences between expected earnings on any escrow fund and [he interest payments due on bonds of [he CFD. Additionally, [he special tax formula may provide for abe following: (a) any amounts required to establish or replenish any reserve fund established in association with [he indebtedness of [he CFD, (b) the accumulation of funds reasonably required for future debt service, (c) amounts equal to projected delinquencies of special tax payments, (d) [he costs of remarkefing, credit enhancement and liquidity facility fees, (e) [he cost of acquisition, construction, furnishing or equipping of facilities, (f) lease payments for existing or future facilities, (g) costs associated wi[h [he release of funds from an escrow account, and (h) any other costs or payments permitted by [he Act. The special tax formula shall be reasonable in allocating public facilities' costs to parcels within [he CFD. Exemptions from [he special tax may be given to parcels which are publicly owned, are held by a property owners' association, are used for a public purpose such as open space or wetlands, are affected by public utility easements making impractical [heir utilization for other than [he purposes set forth in [he easements, or have insufficient value to support bonded indebtedness. Rcao*\97-83 5 The total projected property lax levels for any CFD shall not exceed any maximum specified in the Act. The annual increase, if any, in the maximum special lax for any parcel shall not exceed any maximum specified in the Act. Special taxes may be subject to prepayment in whole or in part. The City may retain a special tax consultant to prepare a report which: (a) recommends a special tax for the proposed CFD, and (b) evaluates the special tax proposed to determine its ability to adequately fund identified public facilities, City and CFD 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 laxes, ad valorem laxes and assessments on the properties within the CFD. VIII. APPRAISALS. The definitions, standards and assumptions to be used for appraisals shall be determined by City staff on a case-by-case basis, with input from City consultants and CFD proponents, and by reference to relevant materials and information promulgated by the State of California. In any event, the value-to-lien ratio shall be determined based upon an appraisal of the land within the proposed CFD by an independent MAI appraiser. The appraisal shall be coordinated by and under the direction of the City. The City may 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 lax in the CFD. IX. TERMS AND CONDITIONS OF BONDS. All terms and conditions of any CFD bonded indebtedness shall be approved by the City. The City will control, manage and invest, or cause to be controlled, managed and invested, all CFD bond proceeds. Each bond issue shall be structured to not negatively impact the bonding capacity or credit rating of the City through the special laxes, credit enhancements, foreclosure covenant, and reserve funds. All statements and material related to the sale of bonds shall emphasize and slate that neither the faith, credit nor the laxing power of the City is pledged to the security or repayment of the bonds. The sole source of pledged revenues to repay CFD bonds shall be special taxes, bond proceeds and reserve funds held under the bond document, and the proceeds of foreclosure proceedings and additional security instruments provided at the time of bond issuance. X. USE OF CONSULTANTS. The City shall select all consultants necessary for the formation of the CFD and the issuance of bonds, including the underwriter(s), bond counsel, financial advisor, appraiser, market absorption study consullant and the special lax consultant. Prior consent of any CFD proponent or any land owner within a CFD shall not be required in the determination by the City of the consulting and financing team. XI. EXCEPTIONS TO THESE POLICIES. The City may find in limited inslances that a waiver of any of the above stated policies is reasonable given identified City benefits to be derived from such waiver. Such waivers only will be granted by action of the City Council of the City. R¢~os\97-83 6