HomeMy WebLinkAbout09/22/2005 Sp CC Reports
CITY OF LAKE ELSINORE
CITY COUNCIL STUDY SESSION
AGENDA
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ROBERT Eo "BOB" MAGEE, MAYOR
ROBERT L. SCHIFFNER, MAYOR PRO TEM
THOMAS BUCKLEY, COUNCILMAN
DARYL HICKMAN, COUNCILMAN
GENIE KELLEY, COUNCILWOMAN
ROBERT A. BRADY, CITY MANAGER
WWW.LAKE-ELSINORE.ORG
(951) 674-3124 PHONE
(951) 674-2392 FAX
LAKE ELSINORE CULTURAL CENTER
183 NORTH MAIN STREET
LAKE ELSINORE, CA 92530
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THURSDAY, SEPTEMBER 22, 2005 - 4:00 p.m.
If you are attending this Study Session please park in the Parking Lot
across the street from the Cultural Center. This will assist us in limiting
the impact of meetings on the Downtown Business District. Thank you
foryourcooperauon!
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CALL TO ORDER
ROLL CALL
PUBLIC COMMENTS - AGENDIZED ITEMS - 1 MINUTE
(Please read & complete a Speaker's Form at the Podium, prior to the Start
of the City Council Meeting. The Mayor will call on you to speak.)
DISCUSSION
a. CFD Policy
CITY MANAGER COMMENTS
CITY ATTORNEY COMMENTS
CITY TREASURER COMMENTS
COUNCIL COMMENTS
ADJOURNMENT
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CITY OF LAKE ELSINORE
. MEMORANDUM.
TO:
MAYOR AND CITY COUNCIL
ROBERT A. BRADY, CITY MANAGER~
MATT N. PRESSEY, DIRECTOR OF ADMINISTRATIVE SERVIC~
SEPTEMBER 21, 2005
FROM:
PREPARED BY:
DATE:
SUBJECT:
CFD POLICY STUDY SESSION
The City's financial consultants have met several times in preparation for the study session and will
be discussing three main topics:
o Tax Structure
o What to Finance
o Credit Quality of Financing
The presentation will give City Council a good overview of the policy, the process, and what the
Finance Team does to protect the best interest of the City and the residents. The presentation will
also highlight areas in the policy that City Council may consider changing.
Attached, please find the existing CFD policy adopted by the City Council on June 23, 1998. As you
will see by the table of contents to the policy, the above topics address the main sections in the policy
that Council will want to understand and consider changing. The remainder ofthe policy, such as
the definitions and disclosure requirements are standard language that parallels the requirements in
the Mello-Roos act. . The policy is 6 pages and is quick reading.
I look forward to the presentation and providing City Council with the information to allow for
informed decisions to be made on the future ofMello-Roos Community Facility Financing
As you are aware, the study session is tomorrow, September 22,2005, starting at 4:00 p,m. at the
Cultural Center.
c: City Treasurer
City Attorney
Department Directors
Division Managers
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CITY OF LAKE ELSmORE
STATEMENT OF GOALS AND POLICIES FOR TIlE USE OF
THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982
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TABLE OF CONTENTS
SECTION
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1.
mTRODUCTION
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ll. DEFINITIONS ....................................... 1
IlL EIJGffiLE PUBLIC FACILITIES AND PRlORrTIEs '. . . . . . . .. 2
IV. CREDIT QUALITY REQUIRED OF BOND ISSUES . . . . . . . " .. 2
V. DISCLOSURE REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 3
VI. EQUITY OF TAX ALLOCATION FORMULAS . . . . . . . . . . . . . . . 3
VIT.
VIII.
APPRAISALS ...............................
EXCEPTIONS TO THESE POLICIES ..........
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STATEMENT OF GOAlS AND POLICIES FOR THE USE
OF THE MELLO-ROOS COMMTJNTTY FACILITrRq ACT OF 19&2
I.
INTRODUCTION
The City of Lake Elsinore (the "City") has, developed the following Goals
and Policies on debt financing as guidelines to assist concerned parties in following the
City's approach to Community Facilities District debt financing. It is the City's goal
to support projects which address a public need and provide a public benefit, Proposed
projects requesting Community Facility Dirtlict debt finanCing will be evaluated to
determine if such fmancing is financially viable and in the best interest'of the City and
cunentand future City and project residents. These Goals and Policies are designed
to comply with Section 53312.7 of the Government Code.
The City will consider applications requ~sting the fonnation of community
facilities districts and the issuance of bonds to finance eligible public facilities pursuant
to the Mello-Roos Community Facilities Act of 1982, as amended. The City reserves
the right to request any additional reports, information or studies reasonably necessary
in evaluating these applications.
All City and any consultant costs incuned in evaluating applications
requesting the establishment of Districts will be paid by the applicant(s) by advance
deposit increments or as otherwise agreed in writing by the City. The City shall not
incur any non-reimbursable expense for processing such applications. Expenses not
chargMble to. the district shall be borne by the 'pplicant.
II.
DEFINITIONS
"Bonds" means bonds authorized and issued under the Mello-Roos
Community Facilities Act of 1982.
"City" means the City of Lake Elsinore.
"District" means a Community Facilities District formed under the Mello-
Roos Community Facilities Act of 1982, as amended.
"Public Facilitiesll means improvements authorized to be constructed or
acquired under the Mello-Roos Act including, but not limited W, 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 distlict.
"Value" or "Fait A1or-ket Valuell means the amount of cash Or its equivalent
which property would bring if e"posed for sale in the open market under conditions in
which neither buyer nor selle,' could take advantage of a difficulty of the other and both
have knowledge of all of the uses and purposes to which the property is adapted and
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for which it is capable of being used and of the enforceable restrictions upon uses and
purposes.
ill.
ElJGIBLE PUBLIC FACU,ITIES AND PRIORI':'lES
. The improvements eligible to be fmanced must be owned by a public
agency or public utility, and must have a useful life of at least five (5) years. In an:,'
event, no bonds shall be issued with a maturity date greater than the useful life of the
facilities or improvements being financed, The development J..roposed "ithin the
district must be consistent with the City's general plan, if any, and must ha\'e received
any reqUired zoning or specific plan approvals.
The list of public facilities eligible to be financed by a district include, but
are not limited to, the following:
. Streets} highways and bridges . Flood control facilities
. Street lighting . Libraries
. Traffic signals and safety . Public utilities
. lighting
. Police and flre protection
. Parks facilities
. Governmental facilities . Recreation facilities, including
golf courses
. Sanitary SeWer facilities
. Biological mitigation measures
. Storm drain'facilities involving land acquisition,
dedicating and revegation
. Potable and reclaimed water
facilities
'In general, none of these t:Yl'es of facilities will have priority over tbe
others; howl)ver, the City ha.s final determination as to any f~cility'S eligibility for
financing, a;: well as the .prioritization of facilities to be included within a fInancing
district,
N.
CREDIT QUALITY HEQUIRED OF BOND ISSUES
. In evaluati.ng a proposed Bond issuence, the Cit)' wiII require that the
City's Independent Financing Consultant has re\'iewed and appro\'ed the proposed
issuance of the Bonds.
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DISCLOSURE REQUIREMENTS
(1) Disclosure Reauirement for DevoloDers. The applicant will be
required to demonstrate, to the satisfaction of the City, that there
will be full disclosure of the Mello-Roos special taxes and 8l1O' other
special tax, assessment, overlapping special taxes or assessment of
other districts, Or other liens on individual parcels to existing and
futur~ property owners, and to prospective purchasers of property
including interim purchasers and sales to merchant builders
(Section 53341.5 of the Government Code). In addition to all
requirements of law, the City shall roquire the applicant to provide
disclosure of such infonnation 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 le'~ed within the District, facilities to be constructed, the
foreclosure process and the terms and conditions of Bond issues On
behalf of the District. Such disclosure shall include home buyer
notifications requiring signature prior to borne purchases, as well
as methods to notify subsequent home purchasers.
(2) Comoliance with Federal Securities Laws. The City shall use all
reasonable meens to ensure compliance with applicable federal
securities laws in connection with the issuance of debt and the
provision of annual information regarding any District established.
by the City \vith respect to which Bonds have been issued,
inclUding requiring any developer in a District who is material to
the Bond issue to transmit "ppropriate information to the City or
its designee for disclosure to Bond investors.
VI.
EQ'UITY OF TAX AlLOCA'I'ION FORMULAS
The rate and method of apportionment of the special to., must be both
reasonable and equitable in apportioning the costs of the public facilities to be financed
to each of the parcels within the boundaries of the proposed District. The City prefers
. that this apportionment of costs be based on the henefit that each parcel is to receive
from the public facilities.
Th. rate and method of apportionment of the special tax is to pro\~de for
the administrative expenses of the proposed District, including, but not limited to, thoM
expenses necessary for the enrollment and collection of the special tax and Bond
administration,
Ail property not otherwise exempted by the Mello-Roos Act from taxation
shaU b. subject to the special tax. The rate and method of apportlownent may provide
for exemptions to be extended to parcels that are to be dedicated at a future date to
public entities~ held by a. home owner's association, or, designated open space.
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. The an.oualspecial tax levy On each residential parcel developed to its final
land use shall be approximately equal each year, except that a variation for
admlnJstrative expenses will be allowed. The City will allow an annual escalation factor
on parcels within a District.
, The maxmuun a.nnua.I special t~J togMher with ad vfl10rem propett;r
taxQS, special a.s.sOs.sments or tax9S for an overlapping fio.4Dcing district, or any other
charg0s, taxes, or foea payable from and :!ecu.red by the property, including potential
eharge3, t.axes, 01' fee~ relating to authorized but unjssued debt of public entities other
than the City, In relation to the expected assessed value of each parcel upon completion
of the private hnprovements to the parcel is of great importance to the City in
evaluating the proposed financing.
The objective of tbG City is to limit the "overlappin~l debt burden On any
p.arc~l to two p9fcont (2%) of the OXPQchd 8.Beeeaed value of the parcel upon completion
of the improvemBnte. In evalUAting whether this objective can. be met, the Clty will
concider the aggr<>gate public .enice needs for the proposed project. It will consider
what public Improvements the appllcant is proposing to b. fmanced in relation to these
aggregate needs and decIde what is an appropriate amount to extend in public fInancing
to the identified public improvements.
This evaluation will b. based on information obroin.d from other affected
taring entities that havo jurisdiction to impose a levy on ~he propo.5ed project.
The total maximum annual so=ciaJ taxes that can be collected from t.axable
property In a Dlstrlct, taking into ac.count any potential changes in land use or
development density or rate, and less all projected administrative expenses, must be
equal to at least one hundred ten percent (110%) of the gross annual debt service On
any Bonds issued by or on behalf of the District in each year that said Bonds will
remain outstanding.
The rete end methocl of appOrtionment of the opecul ta;, shall include a
provioion or a hackup tax to protect against any cbanges in development that would
result in insufficient spoolaJ tex re',enues to tueet the debt servico requirements of the
dtstrlct. Such backup t.ax shall be structured in such a manner that it shall not violate
any provisions of the Mello Roos Act regarding cross-collateralization limitations for
residential properties.
A formula to providrao for tho prQPa.yment of the eptcial t.u may be
providodj however, neither t.he Oity nor the Oommunity.Facilitiee: District :shall be
obligated to pay for the e~t of determining the pre-pa)'IUent amount which is to be paid
by the applicant.
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VII. APPRAlSALS
A. Definition of Annraisa!. An appraisal Is a 'witten statement
independently and Impartially prepared by a qualified appraiser eetting forth an opinion
of defined value of an adequately described property as of a specific date, supported by
the presentation and analysis of relevant market information.
B. Standards ofAoDraisal. The format and level of documentation for
an appraisal depend on the complexity Jf the appraisal problem, A detailed appraisal
shall be prepared for complex appraisal problems. A detailed appraisal shall reflect
nationally recognized appraisal standards, including, to the e:ttent appropriate, the
UnifonnAppraisal Standards for Federal Land Acquisition. An appraisal must contain
sufficient documentation, including valuation data and the appraiser's analysis of the
data, to support his or her opinion of value. At a minimum, the appraisal shall conklin
the following items:
(1) The purpose and/or the function of the appraisal, a definition ofthe
estate being appraised, and a statement of the assumptions and
limiting conditions affecting the appraisal.
(2) An adequate deSCription of tbe pbysical characteristics of tbe
property being appraised, location, zoning,present use, an analysis
of the higbest and best use. .
(3) All relevant and reliable approaches to value consistent with
commoniy accepted professional appraisal practices. If a discounted
cash flow analysis is used, it sbould be supported with at least one
other valuation metbod such as a market approach using sales that
are at the same stage of land development. If more than one
approach is utilized, there shall be an analysis and reconciliation
of approaches to value that are sufficient to support the appraiser's
opinion of value.
(4) A description of comparable sales, including a description of all
relevant physical, legal, a..rid economic factors such as parties to the
transaction, source, and method of financing, and verification by a
party involved in the transaction.
(5) A statement of the value ofthe real property.
(6) The effeotive dat.e of valuation, date. of appraisal, signature, and
certification of the appraiser.
C. Conflict of 11lt.er~st. No appra.iser or reviaw appraiser shall have
any interest direct or indirect in the real proporty being appraIsed for the Agency that
would in any way conflict with the preparation' or review of the appraisaL
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Compensation for making an appraisal shall "ot be based On lhe amount of the
valuation.
D. 'Community FatUities District Annraisal Premises. The valuation
of proposed community facilities districts should be based on three premises:
(1) Raw Land Value (Premise No.1). The total land within the project
is valued lias is"
(a) With any existing infrastructure. '
(b) Without proposed infrastructure being financed.
(c) With existing parcel configuration.
(d) Considering planned densities allowed by the specific plan of
the project.
This is a typical type ofland valuation.
(2) Project Build Out Value (Premise No.2). The total land within the
project is valued under projected conditions:
(a) With proposed infrastructure being financed completely.
(b) At the planned densities allowed by the specific plan.
(c) Land development is at the stage of being marketed to
merchant builders or tentative tract maps ready to be filed.
This is a projected value based on project plans predicated on
market conditions continuing as projected.
(3) Buik Land Value (Premise No.3). The total land within the
project is valued under pT'oject~d conditions:
(a) With proposed infrastructure being financed completely.
. (b) With existing parcel configuration.
(c) Considering planned densities allowed by the specific plan of
the project.
This premise should consider a discounted or "quick sale" valuation'
considering time, costa, and the possibility of a per unit value based
on the total size of the ;>roject.
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EXCEPTIONS TO THESE POLICIES
The City may fmd in limited and exceptional instances that it waiver to
any of the above stated policies is reasonable given identified speciai City'benefits to
be derived from such waiver, Such waivers are granted only b), action of the City
Council based upon specific public purpose and/or health and safety findings.
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