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HomeMy WebLinkAbout030390 CC AgendaAe~NDA TBI(BCUL~ CXTY COUNCXL AN AD,,TOURMBD REGULAR MEETXNG TO BE HELD &T TH:B TBMBC~JLJl, VALLEY HX6H SCHOOL PBRFORXZNG ARTS CENTER MARCH 3; 3,990 9:00 ~ C~LLTO ORDER: Invocation Flag Salute ROLL CALL: COUNCIL BUBXNBB8 Birdsall, Lindemarts, Parks Moore, Muhoz, XeXXo Roos Ad Hoo Negotiating Committee Report a. Summary Report on Status of Current Negotiations Presentation by City Manager F. D. Aleshire b® Memo from Traffic Consultant John Kain. Kunzman and Associates C® ReDort from Finance Consultant Presentation by Douglas Ford d. Memo from City Attorney e. Review of Report by K. Lindemans dated February 27. 1990 f. Public Comments g. Council Discussion 2/agenda j030390 I 03/02/90 RECOMMENDATION: 1.1 Motion to direct City Manager to negotiate a final position and place a Resolution of Intent on the agenda for City Council action March 13, 1990 or 1.2 Direct City Attorney to prepare Resolution requesting the County of Riverside to abandon CFD 88-12. RBCBSB CITY MAN~GBItS RBPORT CITY COUNCIL ~PORTS ~D~OUP~BNT Next meeting: March 6, 1990, 7:00 p.m., Rancho California Water District Community Room, 28061 Diaz Road, Temecula, California 2/agencla/030390 2 03/X:)2/<JO FROM: DATE: C1'TY OF TEMECULA CITY COUNCIL FRANK ALESHIRE o /o /9o MELLO ROOS CFD 88-12 The Council needs to make a go, no-go decision on the Mello Roos District by March 13, 1990 at the latest. It is very unfortunate that this highly complex issue has been forced on the Council before you can possibly be prepared to deal with all of the inter related issues, but such is the fate of new cities. You have a no-win decision to make. ff you approve a scaled-down project in order to deal with critical traffic/development issues you will be accused of favoring developers and you risk the possibility that some parts of this project may not work out as represented. If you abandon the project you will be criticized for failure to handle traffic problems and for discouraging commercial developments. In either case you cannot be positive at the time you make the decision what the true facts are. After the discussion today, it is recommended that the Council give direction to staff to either work out the best deal possible and go ahead, or draw up an agenda item to abandon the CFD on March 13, 1990. This is a tough decision--akin to whether you want to have major surgery or tough it out and hope for a cure. I have spent a great deal of time in the past few months trying to understand the issues. I did not expect to be so involved because my main job is to get the City ready for self-government. You have not asked, but I feel obliged to give you my opinion of what course I believe would be best for the City as a whole. I would recommend you approve the scaled-down program in concept and direct the City Manager to negotiate the best deal possible and that a resolution of intention spelling our the details be put on Council Agenda March 13, 1990. l\rt~mo\030290.tcc -1- REASONS FOR APPROVAL: Trat/le. The Apricot bridge, 1-15 loops and Ynez widening are all projects needed now. Traffic will get worse if you delay. Financing. Temecula has significant needs for public facilities of all types, traffic, parks, public buildings. The City cannot meet these needs without borrowing money just like most people have to borrow to buy a house. A pay-as-you-go program won't get the job done in Temecula. The Mello-Roos plan has one giant advantage for the City. The 17 landowners in CFD 88- 12 in effect are guaranteeing to pay for the improvements and have liens on their lands as security for the bonds. They are taking the risk, not the City. I am confident that the City cannot find a better financing vehicle than Mello Roos bonds at this time. Timing. There are too many projects already in the pipeline that are dependent upon the Mello Roos project. To name a few: the super regional mall, Advanced Cardiovascular Systems expansion, and auto dealers. To abandon the project completely would in my opinion probably cause some or all of the proposed projects to die and would send an anti- growth message to developers. It would also put the City in more of a "catch up" mode in regard to traffic improvements. Another timing issue is the fact that the City is in no position to devote time and staff to picking up the pieces and figuring out a new plan. Let the County finish the job under City direction. ALTERNATIVE As suggested by the City Attorney, we could abandon this project and set up a new Mello Roos under City jurisdiction. This is not a bad idea, but it would produce delay and I don't think the City Staff can be ready to take on this task this year. SLIMMARY This is not easy, but it is important. The way the Council handles this matter will surely be an indication of how well the people chose their leaders. The test of a Council is how they handle the tough ones-do they pull together or do they pull apart. Temecula needs leadership and vision right now. I think the original Mello Roos proposal was a "sweetheart deal" for the developers. That deal has been gutted by the Council and your consultants. The negotiated, scaled-down version could become an early Christmas present for Temecula. It's your call. DO IT!! l\mcmo\O30290.tce -2- SINGLE PHASE COUFfY CO~UNITY FACILITIES DISTRICT88-12 Purpose: To provide Regional Traffic Improvements in the Ynez Corridor between Rancho California Road and Winchester Road using the Mello-Roos financing device and the property owner's underlying land pledge to underwrite the bond payments and guarantee any shortage of revenue to make these bond payments. The property owners will be repaid for these Regional Traffic improvements through the use of 25% of the City's share of the sales tax generated from this district for a period of ten (10) years from the first payment due on the bonds. Eventually the property owners will be repaid by proceeds from a Regional Traffic Mitigation Fee that will replace the sales tax source. Regional Traffic Improvements: The district will provide the following Regional Improvements: Construction of the Apricot Street Overcrossing from Ynez to Jefferson. This includes the acquisition of all the right-of-way required on both sides of 1-15. Estimated to cost five (5) million dollars. Construction of the freeway loop-ramp at the southeast quadrant of Rancho California Road and 1-15. This includes the acquisition of the required right-of-way. Estimated to cost one (1) million dollars. Construction of the loop-ramp at the southeast quadrant of Winchester Road and 1-15. This includes the acquisition of the required right-of-way. Estimated to cost one (1) million dollars. Acquisition of improvements located at the Solana/Ynez intersection area necessary to support auto park. Estimated to cost five hundred thousand dollars. Construction of Ynez to a six lane width with turning pockets at the various intersections commencing from the North end of Advance Cardiovascular Systems south to Rancho California Road. This includes the acquisition of right-of-way, utility relocations, and utility crossing (i.e.; storm sewers, sanitary sewers, water mains, gas mains, electrical facilities, traffic signal facilities relocation, telephone and cable television facilities). Estimated to cost three (3) million dollars. e Two (2) million dollars for acquisition of Park land and/or facilities buildings and equipment. Bond financing costs and capitalized interest for 18 months estimated total 26%. Total estimated cost $16,000,000. Financing of the Regional Improvements The above Regional Improvements in the Single Phase County CFD will be financed as follows: Community Facilities District bonds will be sold in a single phase in an amount estimated to be $16,000,000 as soon as possible (Summer or early Fall, 1990). This Bond issue will include the required reserve funds issuance costs, discounts, and capitalized interest for eighteen (18) months. In the event the property owners advance funds for the formation of the district and to expedite the design and construction of the named facilities, the bond issue will provide reimbursement funds with interest equal to the cost of those funds. The timing and size of the bond issue, will be determined by the County in consultation with their Bond Counsel, property owners, Financial Consultant and the City. The bonds issued for this CFD will contain call provisions or may be subsequently defeased at a later date based on the recommendations of the Bond Counsel and Financial Consultant. Sales Tax Aqreement Between the County. City of Temecula and the Property Owners The Sales Tax Agreement (STA) will provide that the property owners will be reimbursed up to twenty five percent (25%) of the sales tax to retire the bonds for a period of ten (10) years from the date the first bond interest and/or principle payment is due. Reimbursement will be limited to the actual amount of interest and principal due in any one year. The sales tax revenue used for the above reimbursement will be derived solely from sales tax generated in the CFD and limited to the City of Temecula's portion of that sales tax. The sales tax reimbursement will be administered as follows: a. The sales tax generated on any developed parcel will first be credited to the CFD tax assessed on that parcel. Developed parcel is defined as having curb and gutter in front or adjacent to the parcel benefited by that improvement. b. Any excess above the amount needed to pay individual property owner's Special Tax will be credited on a pro rata basis to the other undeveloped property owners in the district. The Sales Tax Agreement will also provide that Regional Traffic Mitigation Fees (RTMF) collected to solve these and other regional traffic problems will be used to pay and reimburse the Special Tax of the individual property owners for the Regional Traffic Improvements constructed under this CFD. Special tax obligations paid by property owners in the district will be reimbursed or credited in an equal amount to the amount of RTMF paid by the same property owners. These reimbursement payments will be made in amounts equal to ratio of the Regional Traffic Improvements in this CFD to other Regional Traffic Improvements authorized for improvement under the Regional Traffic Mitigation Fee Program. The credit established for each property owner's fee paid will be at full value but will be reimbursed in the ratio described above until fully repaid. The Sales Tax Agreement will also provide that the City of Temecula may decide to pay any portion or all of the Special Tax due through the entire term of the bond issue(s) from funds generated from the Regional Traffic Mitigation Fees. Reqional Traffic Mitigation Fees (RTMF) and Reqional Community Facilities District (RCFD) The property owners in this CFD agree that, while reserving their right to exercise their vote and other property rights, they will support the adoption of an equitable Regional Traffic Mitigation Fee (RTMF) to be imposed on all classes of property at the time the building permit is issued for a particular improvement. The property owners agree that, while reserving their right to exercise their vote and other property rights, they will support the creation of a Regional Community Facilities District (RCFD) to correct and solve the subject traffic problems and other regional traffic problems within the (RCFD) to be formed. March 1, 1900 Mr. Frank Aleshire City Manager City of Temecula 43172 Business Park Drive Temeoula, CA 92390 Dear Mr. Aleshire: Pursuant to your request, I have reviewed the Draft Ynez Corridor CFD - Restructure Outline for consistency with the recommendations contained in the Ynez Corridor Traffic Analysis. Our analysis included two specific recommendations (see Page 4 of the February 15, 1990 report), which may be summarized as follows: Refine the CFD roadway improvement strategy to focus on improvements which yield an areawide benefit. The Restructure Outline notes that developer-related items are deleted from the CFD. The CFD facilities now focus on the Apricot Overcrossing and Loop On-Ramps to the 15 Freeway. These facilities account for about 65 percent of the construction cost estimates. Ramp improvements, the overcrossing, and Ynez are all highlighted on Figure 33 of our February 15, 1990 report. All of these improYements would yield significant benefits to the existing street system. Establish a citywide fee structure for all new development to contribute to other critical roadway improvements. The CFD improvements discussed above are part of the solution, but other construction efforts are needed. Again, F].gure 33 of our February 15, 1990 report establishes the priority needs, such as interchange bridge improvements on both Winchester Road and Rancho California Road to achieve three through travel lanes in each direction. The Ynez Corridor CFD-Restructure Outline indicates that developers and landowners will participate in a fee system. In summary, the Restructure Outline appearm to be consistent with our analysi.~ recommendations. Because of the t~me required to design improvements, process CalTrans and other jur.~sdi~.tion approvals, obtain right of way, finalize construction cc~ntr'act:~, ~rld actually build facilities, the CFD improvements could be expected to be ready to carry traffic within the next two to five years. Should you have any q~estions, or if we can be of f~l~cher assistance, ples. se do not hesitate to call. Sincerely, KUNZMANASSOCIATES n Kain, AICP #1690b VIrNTt. IFIA COUN?¥ OlrlrlCI' ~.~10 F'ONUI'fiC).~A DPlI¥~' ~, I.I I? £ I AlkAli LLO, CALIFOIqNt& (~O~l g87-34~ March 1, 1990 Honorable Mayor and Members of the City Council City of Temecula 43172 Business Park Drive Temeoula, CA 92390 Re: Ynez corridor Community Facilitie~ Distr~Qt Honorable Mayor and Councilmembers: Now that we have had the opportunity to review the , · proposed scaled-down Mello Roos D~s_rict, we would like to offer the following comments: Advantages and disadvant__aqes of fqrming a new The Resolution of Formation the County 'adopted does not include the regional traffic improvements west of 1-15 identified in the Kunzman Report. Construction of these improvements would require another financing mechanism. However, there is no assurance that the property owners iD the present CPD would participate in another CFD for west of 1- 15 improvements. Under the present CFD, the county holds the ~ole discretionary authority to revise the scheduling of infrastructure and the determination of bond issuance timing. Of course, the County's discretion will be substantially limited by the sales tax agreement between the city and the property owners. Honorable Mayor and Members of the City Council March l, 1990 Page 2 Nonetheless, the City would be better able to administer its own CFD. The City could ask the County to dissolve the present CFD and reform its own. Besides being under the City's exclusive control, a new CFD could include the area west of 1-15. Creating a new CFD could delay the project. However, if the property owners waived certain time limits, we believe the project could be returned to the same time schedule. Dissolving the CFD would affect the bond counsel and undei-writer who have already put time and effort into the present proposal in anticipation of receiving compensation from the bond issuance. However, their work product could be purchased by a new CFD, or they could be retained by the new CFD. Repayment of s~les 'tax p~oceeds.through mitiq~tion The Council contemplates repayment of any sales tax through a City-wide mitigation fee program. However, at this time many properties are "vested" through development agreements or vesting tentative maps. This means they are only subject to those laws in effect at the time they were vested. consequently, it would be speculative to assume that sales tax proceeds could be r~paid through impact fees. ~lterna~ive t~ a CFD. The chief advantage to a CFD is that the land of the property owners is pledged to support the bond issuance. Although the I~onorabl~ Mayor and Mombers of the city Council March 1, 1990 Page 3 City has not pledged its general fund, it has agreed to commit its sales tax on an annual basis to fully repay the special tax on the land through a side sales tax agreement between the city and the property owners. However, instead of the CFD, the City e . could create a financing au_horlty to build the improvements. Instead of u~ing private land as collateral to support a bond sale the City could pledge its general fund on an annually renewable basis to repay the bonds. Tho City could still use the sale~ tax increment and any impact fees, to re~ay the bonds.The chief advantage of this ls that the bonds can be sold at a lower interest rate. The chief disadvantage is that the general fund has been pledged. We hope these comments prove helpful in your consideration of the ¥nez Corridor Mello-Roos District. Respectfully submitted, Scott F. Field City Attorney CITY oF TEMECULA s f f/LTR14422 '. bj j cc: F. D. Aleshire, City Manager REPORT/SUMMARY ON MELLO ROOS PROPOSAL. By Karel F. Lindesans The reason that I make so much work from this topic is very simply. In essence I have put my reputation (as a financial consultant] on the line when I ~poke out against it. I also want to state that only after examining it carefully and spending at many, many hours of research on this very complicated proposal did ! come to this conclusion. This also prompted me to write in my campaign statement; "For the record. ! am against borrnwing money unless absolutely necessary, ! also feel that the owner of the 'improved property' should pay for it, not you)" I also want to admit that sometimes I doubted myself - wondering if I had overlooked somethinG. Remember the County of Riverside already had approved the entire proposal together with the sales tax agreement and I remember the City Council ~eetinG of ~ecember 20th, with the wonderfu~ slide show, the many experts, the reports and the promises of the mountains of ~oney the City would get as a result of this. To make ~atters worse Bedford did not even object to the hiring of consultants in fact they did not object to pay th~ faes for the consultants ($24,000) Did this undermine my self confidence? Of course! Nevertheless the report(s) report reyesled the following. FROM MR. FORD. The financial anal¥si~ states that~ the City would have assumed a financial burdam of $26,600,000 in subsidy burden with public benefit~ of am estimated $9,500,000. 2. The developer(s)/lando~ners have indicated a willingness and expectation to pay approximately $14,500,000 in special tax payments for the CFD, in addition to the sales tax supplements. The analysis summarized in Table 6 indicates the actual expected payments under a 50 per cent agreement are lower, ranging from $4,700,000 to $!1,600,000. 3. As far as the regional mall ]s concerned: please read page 16. and ! quote: "The i~ducc-ment effect of the cu[rent CFD proposal on the regional mall is modest. For this analysis, we have assigned a l0 per cent likelihood to establish an stated value increment. Page 2. FROM KUNZMAN ASSOCIATES° For 1991 conditions, the planned 15 Freeway interchange signals and spot roadway improvements will adequately serve estimated traffic for the short term. However, timely implementations of the planned improvements is critical. 2. For 1993 conditions the district improvements as well'ms the short term improvements, (the p13nned 15 freeway interchange signals and spot roadway improvements) together will be approaching design capacities without the Apricot street overcrossing. 3. For the year 2000 traffic conditions, loop on-ramps are needed at the interchanges to serve future traffic volumes. OBSERVATIONS. No financing was found for the widening of the Winchester road bridge nor the Rancho California Road Bridge. Most important figure in the report was figure 5 where the effects of the AD 161, the North Plaza Conditions and the SP 199 conditions were shown. These are means of financing already ip place. Also it became evident that in this proposed Mellow Roos Dtstrlct the only true public benefit improvements were the "overpass ($3,500,000) and the loops (],500,000). Total $5,000,000. To perhaps -speed matters up- and to reduce this to a monltory figure, $2,783.000 was used. Also to give the regional mall a dollar figure $1,500,000 was used and the auto dealership was valued at $300,000 in todays value. Todays value was used throughout the report as a measure, of course this is one way of approaching this problem. However there are other ways. If you take a $60,000,000 Me!1o Roos bond issue .~_over 20 years one will repay over these 20 years $180,000,000. The developers were willing to pay: between $4,700,000 and $11,500,000. Let's take the avgrage of $8,100,000 paid in the first 10 years for a total of $16,000,000. One can now calculate that the city would have been out $164,000,000 in order to gain a small fraction of this amount for public benefits. pa~e 3 That we are dealing with developers/land owners, who mean business is clear. For the record I remind you of the Public Opinion SurYe¥, done between February 3 and 4th 1990 where the following {condensed by me) statements were made. asked: 'There has been a proposal for $60 Million in Major Traffic Improvements in the area" "Many of the traffic improvements planned as part of the Mello Roos proposal must be built before a regional mall could be built in Temecula. If the imp£ovements are not built, then the mall probably would be built in another community. Here the word "probably" is used while there is a 90% change that it will be built elsewhere anyway. Furthermore the "phasing" of the issue was questioned since the proposed Mello Roos included infra structure financed for 1356 apartments and 75 townhouses. RE-NEGOTIATE (?) Before any serious re-negotiation will be done I believe that we.~ should first examine the true cost of a borrowed $5,000,000. Especially since the "front load" is 30 to even up to 40% on these small issues. $5,000,000 if repaid in 5 years will cost the City another $5,000,000 in loan points and interest. Furthermore I understand that under the arbitrage rules applicable to any governmental agency money borrowed on these bond issues must be used within 2 years or the money cannot earn interest and I believe penalties are assessed. ! also believe that any propesed development project must be consistent with the City's general/ or specific plan. I like to remind you that this city does not have such an approved plan at this time. Further I remind you that administrating such a bond district is expe~]sive and that our county already ~s hurting for money. In order to make myself perfectly clear. I believe in the Apricot Overpass (although I might not care for the name) I further believe in the on and off ramp loops when and where they are needed. page 4 I also believe t_hat we should not question the validity of these findings in these reports prepared by experts. I also believe that we should not borrow money unless absolutely necessary and shop around for the least expensive way, if we indeed need to borrow. For this I Propose a "Debt Advisory Committee" made up by business man, bankers, etc. ! further have taken the liberty re; use ~ome figures taken from the Ford report to prove a point. It shows that: If you take 20% of the most favorable sales tax forecast over the next 10 years you can pay back a $5,000,000 indebtedness (it will cost the city a little under $12,000,000) If you save 20% of the most favorable sales tax forecast over-- the next 10 years you can pay for a $5,000,000 expenditure and have $9,926,192 left ove r. Also I propose to - post haste - order a city wide CFD together with a master plap for the entir~ city. Roads are a problem throughout the city not only on Ynez Road. I further urge the adoption of road fees as suggested by the Kunzman report Appendix C. ROAD FEES THE EL ~RO ROAD FEE PROGRAM. Low density Residential (less than 2 per acre) $780 /DU Medium Dansity Residential (2 to 6 1/2 per acre) 676 /DU High Density Residential (greater than 6 1/2 per acre 363 /DU Regional Shopping Center Neighborhood Shopping Center Office Commercial Industrial Park 20,800 /AC 46,800 /AC 11,700 /AC 4,056 /AC 50 ct sq.ft. 100 ct sq.ft. 25 ct sq.ft. 10 ct sq.ft. TEMBCULA. According to Mr. Bopf estimate, during the next 5 years the following dwelling units a!ld acreage will be consumed in the corridor. Houses Regzonal Shopping Centers Neighborhood shopping Centers office Commerical Industrial 9000 @ $ 600 5,400,000 11].5 acre @ $20,800 2,308,800 99.8 acre @ $46,800 4,633,200 50.68 @ $11,700 585,000 16.39 @ 4,056 64,896 12,991,896 QUESTION; Is this a source of income or what? a. Based on the sales tax produced by the proposed shopping center is hece in Temecula0 and the city gives up 20% of the sales tax on a Mella Eoos Bond District. b. Based on the sales tax produced by the proposed shopping center is here in Temecula, the city saves its money, accrues interest at 8% and pay as we go. c. According to Douglas Ford in the_~orst case, there is not CFD To repay In suvings Sales Tax the bond with 8% ~r~ ,~} 20% interest 1990 844,750 168,950 182,466. 199] 1,828,050 365,610 591,922' 1992 2,547,878 509,595 1,189,616 1993 2,908,243 581,648 1,771,264 1994 5,912,089 1,182,417 3,'343,012 1994 Apricot Overpass (3,500,000) 1995 7,166,997 1,433,399 1,531,117 1995 Apricot Overpass 1996 8,532,617 1,706,523 3,496,651 1997 9,447,582 ],889,516 5,817,060 1998 10,107,672 2,021,534 8,465,681 1999' 10,107,672 2,021,534 11,326,]92 Loop on/off ramps il,500,600) zero 9,826,192 Balance Sales tax In savings without with 8% the CFD Interest 844,750 182,466 - 1,828,050 591,922 2,382,503 1,068,422 2,734,600 i,700,845 2,994,874 2,630,512 4,103,922 5,316,387 6,070,541 6,561,779 6,561,779 3,451,296 (3,500,000) 1,095,738 2,492,509 4,098,453 5,832,872 (1,500,000) 4,332,872 * This figure was not supplied so we used the same figure as in ]998. a. The city will have paid 20% of the sales tax for the overpass and the loops. (this i~ a total of $11,880,706) b. The city will have paid fo~ the everpass and the loops and have $9,826,192 in the bank. c. The city will have paid for the overpass and the loops and have $4,332,872 in the hank. Figure 5 Other Roodway Improvement P!ens ~/' . ond Restriping Plaza ' (PoJm PIo~ _ . N 0 I000 Romp ~,jeni~q (5Pt99 Condj!ion~ / {nlerchonc;e 5iqc, els (C~un! y/Coltran9) -- ' ','~1 Ynez Rood ~<leninq Ro,3d Widening / \ \