Loading...
HomeMy WebLinkAboutItem G_1 AGENDA REPORT SUMMARY OF REQUEST: Authorize staff to initiate the formation of a community facilities district (CFD), to accept a $30,000 deposit from John Laing Homes for consultants to the City, and to authorize staff and City Attorney to enter into appropriate agreements for consultant services. When the Hellman Ranch development agreement was signed, it was contemplated that a CFD would be created to help finance some of the public improvements necessary for the effective development of the Hellman Ranch. The proposed CFD will include all parcels located in the Hellman Ranch development, and will issue bonds to finance certain public improvements (including certain public improvements normally finananced through development fees). Once the CFD has been formed, a special tax will be levied against each residential parcel in the development. This tax will be paid by homeowners, and the proceeds of the tax will be used to make debt service payments on the bonds issued by the CFD. At this juncture, staff requests direction from the City Council to proceed with the formation of the CFD. This staff report will introduce the nature of the CFD, the steps staff is envisioning as part of the creation of the CFD, the key personnel in the creation of the CFD (both Staff & Hellman representatives), and the improvements which will be financed though the CFD. Nature of a CFD A Community Facilities District is a special tax district authorized to levy a special tax in order to finance the acquisition or construction of public improvements. Typically, a CFD issued bonds in order to raise immediately available funds, uses the proceeds of these bonds to acquire or construct improvements, and then levies an annual tax against properties in order to retire and pay debt service on the bonds. The special tax is Agenda Item &O-J. /o DATE: jugxett9 001 TO: Honorable Mayor and City Council THRU: John B. Bahorski, City Manager FROM: Mac Cummins, Assistant Planner SUBJECT: Hellman Ranch Community Facility's District SUMMARY OF REQUEST: Authorize staff to initiate the formation of a community facilities district (CFD), to accept a $30,000 deposit from John Laing Homes for consultants to the City, and to authorize staff and City Attorney to enter into appropriate agreements for consultant services. When the Hellman Ranch development agreement was signed, it was contemplated that a CFD would be created to help finance some of the public improvements necessary for the effective development of the Hellman Ranch. The proposed CFD will include all parcels located in the Hellman Ranch development, and will issue bonds to finance certain public improvements (including certain public improvements normally finananced through development fees). Once the CFD has been formed, a special tax will be levied against each residential parcel in the development. This tax will be paid by homeowners, and the proceeds of the tax will be used to make debt service payments on the bonds issued by the CFD. At this juncture, staff requests direction from the City Council to proceed with the formation of the CFD. This staff report will introduce the nature of the CFD, the steps staff is envisioning as part of the creation of the CFD, the key personnel in the creation of the CFD (both Staff & Hellman representatives), and the improvements which will be financed though the CFD. Nature of a CFD A Community Facilities District is a special tax district authorized to levy a special tax in order to finance the acquisition or construction of public improvements. Typically, a CFD issued bonds in order to raise immediately available funds, uses the proceeds of these bonds to acquire or construct improvements, and then levies an annual tax against properties in order to retire and pay debt service on the bonds. The special tax is Agenda Item collected as part of a homeowner's property tax bill, and the amount of the tax may vary from year to year in order to meet the principal and interest payments due on outstanding bonds. Proposition 13 generally limits ad valorum property taxes (Le. taxes based on property values) to I% of property value. However, this limit does not apply to special taxes, such as those levied by a CFD. Including the proposed CFD special tax, staff envisions that the maximum effective tax burden for homes within the District will be approximately 1.8% (including the general ad valorum tax and all special taxes levied by other government agencies). The special tax will be structured such that the effective tax burden would never be expected to exceed 2 %. This rate is fairly typical of new development which is taking place in Orange County (Ladera Ranch, 1.96°/x). In some parts of the County, the tax rate can climb over 2% (Newport Coast, 2.2 %). Infill projects tend to experience higher effective tax rates because infill land costs are generally higher than land costs in areas slated for initial development. With a higher land cost, the developer is left with less revenue to pay for public improvements. As such, CFD's or assessment districts are created to deal with the necessities of public improvements. The CFD is expected to generate bond proceeds in the approximate amount of $4.6 Million. Major Steps in a Community Facilities District Financing. 1. City authorizes contracts with financing consultants and enters into service contracts with consultants. 2. Consultants, in conjunction with City Staff and Developer, prepare rate and method of apportionment for special tax, develop program of improvements, and establish community facilities district goals and guidelines for City. 3. City Council Approves Resolutions of Intention to form CFD and to authorize the incurrance of bonded indebtedness. 4. After giving proper notice by mail and by publication, City Council holds public hearing and adopts resolutions forming district, authorizing issuance of debt, and calling election. With landowner consent, election is held at same City Council meeting in a landowner election. City Council then certifies results of election and passes first reading of ordinance levying the special tax. This meeting takes place approximately one moths following the adoption of the Resolutions of Intention. 5. City Council adopts Ordinance Levying Special Tax 6. Bond Underwriter, in conjunction with City Staff and Consultants, designs bond solution to meet goals of City, and enters into purchase agreement to purchadse bonds from the City. 7. Bonds close and funds become available for acquisition or construction of improvements. Key Personnel information of Hellman Ranch CFD: City Of Seal Beach: Lead City Liason/project manager: Mac Cummins City Manager: John Bahorski Director of Development Services: Lee Whittenberg Director of Public Works /City Engineer: Doug Dancs City Attorney: Quinn Barrow Bond Counsel: Robin Harris/Mark Mandell (Richards, Watson & Gershon) City Consultant Team ✓ Financial Consultant: Larry Rollapp (Fieldman, Rollapp, & Associates) ' pecial Tax Consultant: David Taussig (David Taussig & Associates) , ✓/Appraiser: Steve White Underwriter: Dawn Vincient (Stone & Youngberg) Mr. Cummins will be taking the lead on creating and supervising the process to create a CFD at the Hellman Ranch, and be the primary point of contact between the City and the developer's team. He will guide the project through to completion in terms of coordination of the necessary legal documents from the City Attorney's office, through the public hearing process at the City Council, and handle the day to day aspects of the project. The Director of Public Works will be involved in this process due to his expertise in the design of the public facilities which will be completed. The City has identified several public improvements which must be completed, and the City Engineer will be involved in making sure that the design and implementation of those facilities is done properly and up to his specifications. The Director of Development Services will be utilized when needed or as directed from the City Manager or City Council. The City Attorney's office will provide bond counsel and legal services as necessary to ensure that the CFD creation meets state law. Hellman Ranch CFD Team: Hellman Ranch Point of Contact: Dave Bartlett Hellman Ranch Development Company Contact: Jerry Tone John Laing Homes Contact: Joanie Madrid & David Dirienzo Improvements to be completed through CFD: A. Storm Drain Improvements Storm drain improvements included in the CFD provide drainage for the public improvements of a portion of Seal Beach Boulevard. The storm drains convey surface runoff from the streets through closed conduit and environmental filters to detention basins near the project. B. Roadway Improvements The CFD proposes to construct roadway improvements in conformance with the Hellman Ranch Specific Plan. Currently, Seal Beach Boulevard is not improved to the extent required by the Specific Plan. A meandering five -foot wide sidewalk along the project frontage and offsite southerly to Balsa Avenue is required. The existing signal system at the entry must be upgraded and a left -tum median pocket added. Also, existing striping will be modified. C. Park, Access, Landscape and Wall Improvements The CFD proposes to construct landscape improvements. The construction of these improvements is a requirement of the Specific Plan. These improvements will consist of landscaping, an access roadway to Gum Grove Park, park improvements and a park Interpretive Center. A parking lot for park visitors near the tract entry will also be provided. This will provide outdoor recreation for project residents as well as the citizens of the City of Seal Beach. The CFD will construct perimeter block walls along the Seal Beach Boulevard frontage. An eight -foot high wall will be constructed for most of the frontage, with a ten -foot high wall shielding the frontage of the oil well production site. D. Water Improvements The CFD proposes to construct water facilities to serve the project. Water supply is proposed to be looped through the site, with two connections to existing mains in Seal Beach Boulevard and one connection to Adolfo Lopez Drive. This not only will serve the public safety of the project and its surrounding area, it will also increase the City's water system performance in the vicinity of the project. E. Sewer Improvements The CFD proposes to construct sewer facilities including gravity pipelines, lift station and force mains to serve the proposed CFD and adjacent properties. There will also be improvements to the City owned sewer pump station. Grading Improvements The CFD proposes to grade the storm drainage detention basin, the access road to the park, the road along the north property line that serves as an emergency access and a storm drain, sewer and water maintenance road. The CFD will also construct the bio -swale system. This system serves as the key element of the Water Quality Management Plan (WQMP). Storrs drainage low flows and "first flush" of storm events will pass through this natural type of cleansing system. G. Dry Utilities The CFD proposes to construct regional dry utilities in Seal Beach Boulevard by undergrounding the overhead wires and eliminating the poles adjacent to the project. Also included are the on -site joint trench facilities and the street lights along Seal Beach Boulevard, as well as the interior street lights. The scope and extent of each of these improvements remains to be finalized, depending on the amount of proceeds which will become available to the City as a result of bond issuance. FISCAL IMPACT: None. All staff time and incidental costs associated with to project will be billed to the developer, and the costs of the public facilities and consultants will be paid for with bond proceeds the bond. The developer has already paid a deposit of $30,000 to the City. This $30,000 will be replenished m soon as it drops below $5000. RECOMMENDATION: Direct staff to continue preparing the necessary documents for the creation of a Community Facilities District at the proposed development at Hellman Ranch. Authorize the City Manager to enter into agreements with City Consultants to begin work on the creation of the Community Facilities District. NOTED AND ac Cummins John B. ahor Assistant Planner City ager Attachments: (2) 1. Letter from Jerry Tone 2. Potential Schedule Attachment 1 Letter from Jerry Tone, Agent, Hellman Properties LLC ®002 HELLMAN PROPERTIES, LLC do F. Jerome Tone 980 Fifth Avenue, Suite 202 San Rafael, CA 94901 (o) 415- 454.0400 (f) 415.454-0403 August 29, 2001 Mr. John Bahorsky, City Manager CITY OF SEAL BEACH 211 8a Street Seal Beach, CA 90740 Re: Community Facilities District Formation Hellman Ranch Residential Development Dear John: This letter formally requests the initiation of public financing proceedings as authorized under Section 3.2.2 et. seq. of the First Amended and Restated Development Agreement between Hellman Properties LLC and the City of Seal Beach, adopted by the City Council on April 9, 2001. As we move forward we int end to comply with all relevant provisions of the Development Agreement as it relates to this issue. It is our desire to proceed under the Cc nummity Facilities District Act of 1982 (CID) as Amended (Section 53311 at seq. of the California Government Code). The public facilities to be financed are included in the draft report that was provided to your office. We would anticipate meeting with you and the City's finance team to prioritize the improvements ensuring the City's financing and policy goals would be implemented with this project As you know, CFD's are commonly used throughout southern California and have become more prevalent in "infill" projects where land, entitlements, litigation and other costs have made it necessary to finance public improvements. They have been implemented in several north Orange County cities as well as is the planned communities of south Orange County. We will work with the City's bond counsel so the bond program will inmrporate adequate assurances for bond reserve funds, capitalized interest and sufficient value to lien ratios. Further, we are committed to keeping the total direct and overlapping debt on the 70 homes Wow the 2% level and will target 18%. We will fully cooperate with the City staff, consultant team and City Council throughout the formation and funding process. Thank you for your consideration. Sincerely, HELLMAN PROPERTIES, LC 1" J ome T e, Agent RUG -31 -2001 0949 4154614250 972 P.02 Attachment 2 Potential Schedule Proposed City of Seal Beach CFD 2001 -1 (Hellman Ranch) Calendar of Events DRAFT September 5, 2001 September 10 City Manager presents JLH request to City Council; Council directs manager to obtain proposals for City Finance team; obtain initial deposit and prepare preliminary financing goals and objectives. City Council approves City finance teams; receives initial deposit and accepts CFD position and waiver from landowner. October 8 City council approves Rate and Method of Taxation for CFD; Resolution of Intention, retains appraiser, approves preliminary joint financing ements if any. October 19 Landowner / JLH provides developer disclosure data Letter of Credit or Surety bond commitment letter if necessary October 29 Bond Counsel delivers first draft of legal documents November 5 Final Bond documents and draft preliminary official statement complete. November 26 CFD Public hearing, City Council approves joint financing agreement, disclosure requirements; Resolution of Formation and Bonded Indebtedness adopted' First reading of special tax ordinance adopted, Landowner election held; CFD Formed. December 14 CFD Boundary map recorded December 21 Distribute final appraisal report 2002 January 14 City Council approves second reading of special tax ordinance; funding and acquisition agreement with developer; Ordinance authorizing tax levy (30 day appeal period begins); fiscal agent agreement; preliminary official statement; Bond purchase agreement and continuing disclosure certificates required from developer. Jan 21 Preliminary Official Statement to printer January 28 Mail Preliminary Official Statement; Underwriter begins pre- marketing of Bonds to investors and conducts investor tours of project. February 4 Pre-pricing call February 8 Final Pricing call; city council executes Bond Purchase Agreement with underwriter. February 22 Special Tax appeal period ends March 1 Landowner /JLH deliver Letter of Credit of Surety Bond to bond counsel if required March 6 Pre -close at Bond Counsel office March 7 Close at Bond Council Office March 8 Bond roceeds delivered to Fiscal Agent Stephen G. White, MAI W. October 30, 2001 City of Seal Beach 211 Eighth St. Seal Beach, CA 90740 -6379 Attn: Mac Cummins Assistant Planner Dear Mr. Cummins /rPPkAt6f� — Me&""AU ftVX s7 as f -10-61 Real Estate Appraiser 1370 N. BREA BLVD.. SUITE 205 FULLERTON, CALIFORNIA 92035-4 17141 738 -1595 FAX 014 CITY OF SEAL BEACH OCT 3 12001 DEPARTMENT OF Re: Proposal for Appraisal of Hellman Ranch Community Facilities District In accordance with the request of Jim Fabian at Fieldman, Rolapp & Associates, I have given consideration to the above - referenced property for the purpose of estimating the fee and timing to complete an appraisal thereof. This property consists of vacant land which is planned for 70 single- family residential lots, ±6,000 s.f, minimum size, which are proposed to be developed with homes of ±_3,400 to 3,800 s.f. An appraisal of the property is needed as part of the formation of the Community Facilities District by the City. Relative to an appraisal, I have arrived at the following conclusions: SCOPE OF THE ASSIGNMENT: Perform a Complete Appraisal of the property in order to estimate the market value of the land in its as is condition, as of the appropriate date of value. The valuation would be based on the Sales Comparison Approach, considering recent sales of similar residential land in the general area. The as is condition would reflect the approval status of the tract map as well as the physical status of the land. Initially, a minimum market value of range of value will be provided to the City as pan of the Resolution of Intention to form the CFD. This would be submitted in a brief letter, referencing a report to come later. Thereafter, for the bond issuance, a Summary Appraisal Report will be prepared and distributed to the financing team. This report would first be submitted in draft form, with the final report submitted after any pertinent comments have been received and necessary revisions made. The report would include a summary of the pertinent data and analysis, and be of sufficient detail for use in the Official Statement. I will also participate as necessary in all -hands conference calls or meetings, and will sign the appropriate appraiser's certificate at the closing of the bond transaction. MR. MAC CUMMINS OCTOBER 30, 2001 PAGE 2 APPRAISAL FEE: Not to exceed $12,000. The actual fee, at or under the maximum amount, will be based on my time at $135 per hour and associate time at $75 per hour. A retainer of $5,000 is requested and the balance will be billed upon completion of the appraisal. TIMING: The letter with the minimum market value or range of value will be submitted in early December. The final appraisal and Summary Appraisal Report can be submitted as needed to support a bond sale next May or June. NEEDED INFORMATION: I assume that the needed maps, engineering cost information, and proposed product information can be obtained from the property owner. Any other relevant information about the property which you have might also be helpful. If the foregoing terms and conditions meet with your approval, please sign and return a copy of this letter, or provide other written authorization referencing this letter and the terms herein, together with the retainer. If you have any questions, please give me a call. udw SGW:sw cc: Jim Fabian Sincerely, N' 1,44 Stephen Gen G White, MAI (State Certified General Real Estate Appraiser No. A0013311)