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Home My WebLink About03/23/2004 PFA Reports r' AGENDA PUBLIC FINANCE AUTHORITY MEETING CITY OF LAKE ELSINORE 183 NORTH MAIN STREET LAKE ELSINORE, CALIFORNIA TUESDAY, MARCH 23, 2004 -7:00 P.M. ......................................................................... CALL TO ORDER ROLL CALL PUBLIC COMMENTS - AGENDIZED ITEMS CONSENT CALENDAR 1. Minutes a. February 24, 2004. /"""'. RECOMMENDATION: Approve. 2. Amendment to Land Development Agreement, Temporary Land Transfer Agreement and Irrevocable Escrow Instructions with Wasson Canyon Investment, L.P. RECOMMENDATION: Approve Agreements & Authorize Chairperson to execute necessary documentation. PUBLIC COMMENTS - NON-AGENDIZED ITEMS EXECUTIVE DIRECTOR COMMENTS AUTHORITY MEMBER COMMENTS LEGAL COUNSEL COMMENTS ",.- ADJOURNMENT ,......, MINUTES PUBLIC FINANCE AUTHORITY MEETING CITY OF LAKE ELSINORE 183 NORTH MAIN STREET LAKE ELSINORE, CALIFORNIA TUESDAY, FEBRUARY 24, 2004 ......................................................................... CALL TO ORDER The Public Finance Authority Meeting was called to order by Chairman Magee at 7 :46 p.m. ROLL CALL PRESENT: AUTHORITY MEMBERS: HICKMAN, KELLEY, SCHIFFNER, MAGEE /""" ABSENT: AUTHORITY MEMBERS: BUCKLEY Also present were: City Manager Watenpaugh, Assistant City Manager Best, City Attorney Leibold, Administrative Services Director Pressey, Community Development Director Brady, Community Services Director Sapp, Fire Chief Gallegos, Lake/Aquatic Resources Director Kilroy, Police Chief Walsh, Engineering Manager Seumalo, and City Clerk/Human Resources Director Kasad. PUBLIC COMMENTS - AGENDIZED ITEMS No Comments. CONSENT CALENDAR Chairman Magee indicated that he would be abstaining from vote on the Minutes as they predated his term in office. ,..-- MOVED BY SCHIFFNER, SECONDED BY KELLEY AND CARRIED BY A VOTE OF 3 TO 0 WITH BUCKLEY ABSENT AND AfiENOA ITEM NO. \. CL. PAGE.LOF3 Page Two - Public Finance Authority Minutes.,- February 24, 2004 "-" MAGEE ABSTAINING FROM VOTE TO APPROVE THE FOLLOWING MINUTES AS PRESENTED: 1. The following Minutes were approved: a. June 24, 2003. b. November 25,2003. MOVED BY SCHIFFNER, SECONDED BY KELLEY AND CARRIED BY UNANIMOUS VOTE OF THOSE PRESENT TO RATIFY THE WARRANT LIST AS PRESENTED. 2. Warrant List - February 12,2004. PUBLIC COMMENTS - NON-AGENDIZED ITEMS "-" No Comments. EXECUTIVE DIRECTOR COMMENTS No Comments. AUTHORITY MEMBER COMMENTS No Comments. LEGAL COUNSEL COMMENTS No Comments. ADJOURNMENT THE PUBLIC FINANCE AUTHORITY MEETING WAS "-" A8ENDA ITEM NO. 1, 0-' - PAGE ChoF ~ r" Page Three - Public Finance Authority Minutes - February 24, 2004 ADJOURNED AT 7:49 P.M. ROBERT MAGEE, CHAIRMAN PUBLIC FINANCE AUTHORITY ATTEST: VICKI KASAD, CLERK OF THE AUTHORITY PUBLIC FINANCE AUTHORITY /'""" /'""" AGENDA ITEM NO..J I CL. PAGE---3... OF_ ., CITY OF LAKE ELSINORE ~ REPORT TO CITY COUNCIL AND PUBLIC FINANCE AUTHORITY TO: MAYOR AND CITY COUNCIL CHAIRPERSON AND MEMBERS OF THE PUBLIC FINANCE AUTHORITY FROM: RICHARD J. WATENPAUGH, CITY MANAGER DATE: MARCH 23, 2004 SUBJECT: AMENDMENT TO LAND DEVELOPMENT AGREEMENT, TEMPORARY LAND TRANSFER AGREEMENT AND IRREVOCABLE ESCROW INSTRUCTIONS WITH WASSON CANYON INVESTMENTS, L.P. BACKGROUND /"""', In 1993, the City Council acting on behalf of Communities Facilities District No. 90-3, authorized the issuance of $4,162,928 in bonds. The bonds were to be repaid from special taxes assessed on undeveloped land within CFD No. 90-3 that is located in Wasson Canyon. As the Council knows, the land development stalled and the bonds were ultimately consolidated with the other underperforming CFD debt in a long term work out plan. However, the properties within CFD No. 90-3 remained subject to the special tax burden which has been in a continued state of delinquency for several years. In an effort to aid in the development of these properties, the City Council and Public Finance Authority approved, on November 11,2003, an agreement with Wasson Canyon Investments, L.P. which provided for partial relief of the delinquent special tax obligation on certain properties within CFD No. 90-3. With respect to Wasson Canyon Investments, the parties agreed to the following payment schedule: 1. $20,000 within 10 days of execution ofthe agreement; 2. $151,000.00 within 24 months (December 2, 2005) or the City's approval of the first tentative tract map on the property, whichever occurs first; and 3. $684,000.00 within 48 months (December 2, 2007) or City's approval of the first final tentative tract map on a property, whichever occurs first. The developer has already made the first payments. However, an unexpected difficulty arose when the developer attempted to obtain relief from the County Tax Assessor for accumulated penalties and interest on delinquent ad valorem taxes. While the County was amenable to releasing the developer fromthese penalties and interest, it could only do so upon two conditions. ~ ..<. AGENDA ITEM NO. ~ -...., PAGE \ OF '2> First, the County pointed to Revenue and Taxation Code section 4986.3 which would allow the County to release such penalties and interest only if the City is the fee owner of the properties. Secondly, the County would only accept payment of the unreleased ad valorem taxes if the developer cleared all of the past due special taxes. Of course, as originally proposed, the existing special tax lien for CFD No. 90-3 would not have been cleared until the final $684,000 payment had been made. ......". The developer again requested assistance from the City on these two fronts. DISCUSSION The parties have prepared a proposed agreement, the attached Temporary Land Transfer Agreement, for consideration by the City Council. Pursuant to this agreement, the City would temporarily take title to the properties for the sole purpose of satisfying the County's ownership requirement to forgive the penalties and interest on delinquent ad valorem taxes. This will not have a financial impact on the City. The agreement requires that the developer indemnify the City and provide insurance during a short City "ownership" period. Regardless of whether the County ultimately grants release of the penalties and interest on the delinquent ad valorem taxes, the properties will be transferred back to the developer. The second order of business was to assure monetary compensation to the City in exchange for the immediate release of the special tax lien on the properties. Thus, the contingent monetary obligation agreed to in the Land Development Agreement is now an unconditional developer obligation. In order to accomplish this, the parties have prepared a proposed amendment to the original Land Development Agreement and escrow instructions. ......" Those agreements require that the developer deposit $732,400 into an irrevocable escrow to be paid to the City/Public Finance Authority upon the earlier of December 2,2005 or the City's approval of the first tentative tract map on the properties. The proposed deposit is $102,600 less than the payment originally contemplated under the Land Development Agreement. The developer has stated two rationales for this requested reduction which equates to a 15% discount of the above-referenced third payment. First, the payments by the developer are no longer at risk should the developer abandon development. Thus, even if the developer walks away from the properties, the City is assured of payment. Secondly, the payment will likely be made sooner. The outside date of the final third payment under the original agreement was December 2, 2007; under the amendment, payment will be made no later than December 2,2005 - two years earlier. As noted in the November 11, 2003 staff report, City staff and the finance team had not expected development to occur for several more years in CFD No. 90-3. While the City's level of involvement in the work-out has been increased beyond that originally contemplated, the currently proposed structure provides reasonable safeguards against City liability and now assures a significant financial payment to the City irrespective of whether or not the properties are ultimately developed. ......" AGENDA ITEM NO._ ~ " PAGEL OF 3 FISCAL IMP ACT "....... The properties will be relieved of both special tax delinquencies and future special taxes related to CFD No. 90-3; however, those taxes rendered the properties unviable for development such that the prospect of payment was extremely remote. Under the proposed amended buyout, the City will receive $732,400 (in addition to the already deposited $20,000) and will also receive $10,000 for City administrative and attorneys' fees related to the additional City assistance as contemplated in the attached documents. RECOMMENDATION 1. That the City Council approve the First Amendment to the Land Development Agreement, the Temporary Land Transfer Agreement and the Irrevocable Escrow Instruction attached hereto subject to any minor modifications as may be approved by the City Attorney and authorize the Mayor to execute the same. 2. That the City Council authorize the Mayor to execute the quitclaim deed substantially in the form set forth in Attachment No.2 to the Temporary Land Transfer Agreement and further authorize the City Manager to execute the Certificate of Acceptance substantially in the form set forth in Attachment No.1 to the Temporary Land Transfer Agreement. "....... 2. That the Public Finance Authority concur with the City Council and approve the attached agreements subject to any minor modifications as may be approved by the City Attorney. The Chairperson is authorized to execute the agreements if determined necessary by the City's Bond Counsel. PREPARED BY: David H. Mann, Assistant City Attorney APPROVED BY: Dick Watenpaugh, City Manager APPROVED FOR LISTING BY: J City Manager's Office/Exe tive Director /""" AGENDA ITEM NO. ~_?..- PAGE~ OF ~