STAFF REPORT
Meeting Date: May 20, 2025
To: Honorable Mayor & City Council
From: Jeff Muir, Director of Finance
Subject: Introduction to the Formation of a Community Facilities District (CFD) in Connection with the One Beverly Hills (OneBH)
Development
Attachments: None
INTRODUCTION
The One Beverly Hills (OneBH) project is a significant, ultra-luxury mixed-use development currently under construction on a 17.5-acre site adjacent to The Beverly Hilton, situated between Wilshire Boulevard and Santa Monica Boulevard. This landmark project is set to include:
• Two residential condominium towers.
• An Aman branded hotel, featuring guest suites, spa, and other amenities. • Approximately 12.7 acres of total open space, including 4.5 acres of publicly accessible botanical gardens and open space.
• Commercial space, including high-end retail and restaurant offerings. • A new conference center.
• Substantial subterranean parking.
• Renovations to the iconic Beverly Hilton hotel.
In late 2024, the developer of the OneBH project approached the City to express their interest in pursuing the establishment of a Community Facilities District (CFD). The primary purpose of the proposed CFD would be to finance a range of eligible public improvements necessitated by, or in support of, the OneBH development. These improvements include, but are not limited to:
• Off-Site Public Works: New and reconstructed pavement, curbs, and gutters; dedicated bike paths; enhanced landscaping and streetscape elements, including improvements to the Wilshire Boulevard median; new street lighting; upgraded traffic signals; and storm sewer manhole adjustments.
• Major Utility Relocations: Relocation of significant existing infrastructure such as a 30" Metropolitan Water District (MWD) main feeder line, a 60" Los Angeles County storm drain, and Southern California Edison (SCE) feeder lines.
Meeting Date: May 20, 2025
• Upgraded Utility Systems: Enhancements to local water system infrastructure and electrical utility systems, including new executive and tower circuits, and on-site transformers.
• On-Site Publicly Beneficial Improvements: Installation of a fire main loop, hydrants, and associated piping; new water, sanitary, and storm sewer lines within the project site; the relocation of Merv Griffin Way; and elements of the publicly accessible Botanical Gardens.
In response to the developer's request, the City has assembled a dedicated team of financial advisors and legal professionals to assist in evaluating this proposal and navigating the CFD formation process. There have been regular meetings between City staff, its consultants, and the developer's team to diligently develop the necessary legal documentation and the proposed rate and method of apportionment for the special tax, which are critical components needed to initiate CFD formation proceedings. Staff anticipates that these initiation proceedings will be presented to the City Council for consideration in the near future. Given that it has been many years since a new CFD was last approved in the City, this report aims to provide helpful introductory information to the Council in advance of those formal proceedings.
DISCUSSION
What is a Community Facilities District (CFD)?
A Community Facilities District (CFD), often referred to as a "Mello-Roos District," is a special financing district authorized under the Mello-Roos Community Facilities Act of 1982. CFDs allow local government agencies, such as cities, to fund public improvements, infrastructure, and/or services that benefit a specific area. Property owners within the CFD boundaries pay a special tax, which is in addition to their regular property taxes. This special tax is not based on the assessed value of the property but is levied according to a specific Rate and Method of Apportionment (RMA) determined at the time the CFD is formed. The special tax constitutes a lien on the properties within the district.
What Can CFDs Fund?
CFDs offer a flexible tool for financing a wide range of public improvements and some ongoing services. Eligible uses include, but are not limited to:
• Public Infrastructure: Construction, acquisition, rehabilitation, and expansion of streets, roadways, traffic signals, water and wastewater facilities, storm drains, parks, open space, landscaping, libraries, public safety facilities (police and fire stations), and other public buildings.
• Public Services: Provision of certain ongoing services such as police and fire protection, ambulance and paramedic services, maintenance of parks, parkways, and open spaces, and costs associated with the cleanup of hazardous substances.
For a project like OneBH, a CFD could potentially help fund public realm improvements, infrastructure enhancements necessitated by the project, and the ongoing maintenance of publicly accessible amenities.
How Are CFDs Formed?
The formation of a CFD is a public process governed by state law and typically involves the following key steps:
1. Initiation: The process can be initiated by the legislative body (City Council), or by petition from landowners or registered voters within the proposed district. For a development project, this is often a collaborative effort between the City and the Meeting Date: May 20, 2025
developer whereby the developer submits a petition requesting the City form the CFD on its behalf.
2. Resolution of Intention: The City Council would adopt a Resolution of Intention to form the CFD, defining its boundaries, the types of facilities and/or services to be financed, describing the proposed special tax and the intention to issue bonds to pay for the public facilities.
3. Public Hearing: A noticed public hearing is held to consider the formation of the CFD and the necessity to incur bonded indebtedness and to hear public testimony.
4. Election: The establishment of the CFD and the levying of the special tax and the issuance of bonds must be approved by a two-thirds (2/3) vote of qualified electors within the proposed district.
• If there are 12 or more registered voters residing within the proposed district, the vote is conducted among those registered voters.
• If there are fewer than 12 registered voters (which is common in areas slated for new development where the developer is the primary landowner), the vote is conducted among the landowners, with each landowner entitled to one vote for each acre or portion of an acre the landowner owns within the CFD. In such cases, the developer(s) are often the primary voters.
5. If the voters approve the levying of the special tax and the issuance of bonds, an ordinance is introduced after the public hearing and subsequently adopted levying the special tax on taxable property in the CFD
6. Notice of Special Tax Lien: If approved, a Notice of Special Tax Lien is recorded, formally establishing the CFD and the special tax obligation on properties within its boundaries.
FISCAL IMPACT
This is an informational report, and no immediate fiscal impact is associated with its receipt. It should be noted that the developer is paying for the City’s costs of consultants to form the CFD. The fiscal implications of forming a CFD, including revenue generation and administrative costs, will be analyzed and presented in detail during the upcoming Study Session and as part of the formal CFD formation proceedings.
RECOMMENDATION
It is recommended that the City Council receive a presentation introducing the concept of forming a Community Facilities District (CFD) in partnership with the developer of the One Beverly Hills (OneBH) project.
Jeff Muir,
Director of Finance
Approved By