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May 7, 2024
ITEM TITLE
Community Facilities District: Formation of Community Facilities District 16M (El Dorado Ridge) to Finance Maintenance and Monitoring of Open Space
Report Number: 24-0144
Location: East of Brandywine, south of Sequoia Street and north of Main Street (APNs 644-010-61 and 644- 010-62)
Department: Development Services
G.C. § 84308: Yes
Environmental Notice : The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act (“CEQA”) State Guidelines . T herefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Conduct a public hearing and A) Adopt a resolution establishing Community Facilities District No. 16M (El Dorado Ridge); B) Adopt a resolution calling an election relating to the levy of a special tax and establishment of an appropriations limit within Communi ty Facilities District No. 16M (El Dorado Ridge); C) Adopt a resolution declaring the results of said election; D) Place an ordinance on first reading relating to the levy of a special tax within Community Facilities District No. 16M (El Dorado Ridge). (First Reading)
SUMMARY
On March 19, 2024, the City Council approved the resolution of intention to form Community Facilities District No. 16M (El Dorado Ridge) (“CFD No. 16M”) and set the public hearing for May 7, 2024.
The owner of the El Dorado Ridge property, CVHI, LLC (“Developer”) is required to finance the maintenance of on- and off-site open space in perpetuity as mitigation for approved Design Review permit No. DR-05-22 to construct 104 townhomes (the “Project”). The Project included conditions requiring that a long -term financing mechanism be in place prior to the issuance of the grading permit. The formation of this Community Facilities District 16M (El Dorado Ridge) (“CFD 16M”) will generate funds for the required maintenance and monitoring of the open space in perpetuity.
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Tonight’s action will continue the formal proceedings leading to the establishment of CFD No. 16M and the levy of special taxes therein.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with CEQA and has determined that the activity is not a project as defined under Section 15378 of the State CEQA Guidelines because the proposed activity consists of a governmental fiscal/administrative activity which does not result in a physical change in the environment. Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable
DISCUSSION
Previous Actions
In accordance with the Mello-Roos Community Facilities Act of 1982 (the “Act”), the Developer has submitted a petition requesting that the City conduct proceedings to consider the approval of the formation of CFD 16M.
A condition of the Project’s Design Review approval requires that a long -term financing mechanism be established to maintain open space prior to the issuance of a grading permit. The formation of a CFD meets this requirement.
To facilitate the Developer’s petition, the City Council previously declared its intention to establish CFD 16M, set the public hearing date to be May 7, 2024, and approved the boundaries of CFD 16M at its March 19, 2024 meeting via Resolution No. 2024-43.
Prior to tonight’s meeting, NBS, the City’s special tax consultant, prepared a report on CFD 16M in accordance with Government Code section 53321.5. The report contains a description of the services to be financed by the CFD, and an estimate of the costs to be financed through the CFD. The report is included as Attachment 1 of the staff report.
Project Description
The El Dorado Ridge Project will consist of 104 three story attached townhomes on two vacant parcels comprising approximately 11.5 acres. A General Plan Amendment and Rezone were approved by City Council on December 13, 2005 and January 17, 2006, respectively, to accommodate clustering of the townhomes to avoid sensitive species. A Tentative Map (PCS-03-01) and Mitigated Negative Declaration were approved January 10, 2006 . The Project is required to create a 4 -acre natural open space easement within the 11.5- acre project site to protect environmentally sensitive habitat. In addition to the on-site open space easement, the Project must provide an additional 5.5 -acre off-site to mitigate f or the Project’s biological impacts . The Mitigation Monitoring and Reporting Program (“MMRP”) for the Project details the management and monitoring required each year to comply with federal and state environmental regulations for each parcel.
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Description of the Proposed CFD and Proposed Special Taxes The CFD will fund long -term maintenance in perpetuity by levying an annual special tax which will be collected on the property tax bill of the subject properties. The funds collected will be transferred to the City and used to perform the maintenance and monitoring of the open space mitigation areas.
The proposed boundaries of CFD 16M encompass two parcels comprising the El Dorado Ridge Project, located east of Brandywine Avenue, south of Sequoia St reet, and north of Main Street . The Developer owns 100% of the property within the proposed CFD.
The Rate and Method of Apportionment (“RMA”) sets forth how the special taxes will be levied and in what amount. Each year the Annual Special Tax Requirement, as defined in the RMA, is determined, and then apportioned to each parcel within CFD 16M. The Annual Special Tax Requirement reflects the amount necessary to fund the services provided by CFD 16M. The special tax is levied first on residential property for which a building permit issued prior to June 30 of the preceding fiscal year. If additional monies are needed to satisfy the Annual Special Tax Requirement after the first step has been completed, an amount will be levied on each parcel of undeveloped pr operty. In no event shall the tax be levied in an amount higher than the Maximum Special Tax. The Project does not propose the construction of Accessory Dwelling Units; however, if they were added later, they would not be subject to the special tax. See table below of Maximum Special Tax Rates for fiscal year 2023-24:
MAXIMUM SPECIAL TAX RATES
FISCAL YEAR 2023-24
Description Maximum Special Tax Per
Residential Property $787.00 Dwelling Unit
Accessory Dwelling Unit $0.00 Dwelling Unit
Undeveloped Property $13,262.00 Acre
On July 1 of each Fiscal Year, commencing on July 1, 2024, the Maximum Special Tax rates shall be increased by a factor equal to the greater of the positive percentage change in the San Diego-Carlsbad, CA, CPI-U for the month of May, or 0%. These increases account for inflation and will allow the City to address increased costs for providing maintenance of on- and off-site open space in perpetuity.
Since the Developer is required to maintain and monitor the open space for five years prior to the CFD taking over the maintenance responsibility, it is anticipated that the special tax will be lower in the first few years.
The CFD may only collect the amount needed to perform the work described in the resolution and RMA. The expected maximum special tax at project build-out is shown in the table below:
PLANNED DEVELOPMENT AND TOTAL EXPECTED MAXIMUM SPECIAL TAX FISCAL YEAR 2023-24
Description Planned Development Expected Maximum
Special Tax
Residential Property 104 Dwelling Units $81,848.00
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Tonight’s Actions
Tonight’s actions constitute the next and final steps for the formation of CFD No. 16M and the levy of a special tax therein.
First, the City must open and hold a public hearing. The public hearing has been duly notic ed for 5:00 pm today, May 7, 2024 in the Council Chambers. The City has verified that the Developer is the only property owner within CFD 16M, and there are no registered voters within the boundaries of CFD 16M. As such, Developer is the only entity eligible to submit a protest. If Developer does not submit a protest, the City may adopt a resolution establishing CFD 16M.
Second, the City may adopt a resolution calling an election relating to the levy of special taxes within CFD 16M (as described above), and establishing an appropriations limit for CFD 16M. Typically, the election must occur between 90 to 180 days after the conclusion of the public hearing. However, in accordance with the Act, the Developer (as the sole property owner within CFD 16M) has waived all time limits and other matters relating to the conduct of the election. As such, the election may be held tonight, immediately after the conclusion of the public hearing by adopting the resolution calling an election.
Third, once Developer’s ballot is opened and counted, the City may adopt a resolution declaring the results of the election. This resolution makes official the results of the canvass of the ballot submitted by the qualified electors for CFD 16M, which includes only the Developer.
Fourth, assuming the election results in the passage of the special tax, the City will conduct a first reading on an ordinance authorizing the levy of the special tax within CFD 16M.
Future Actions
After tonight’s meeting, the City will hold a second reading and formal adoption of the ordinance authorizing the levy of the special tax within CFD 16M. Additionally, the City will file a notice of special tax lien against property within CFD 16M informing owners of property that the CFD exists, and that a lien for the payment of taxes is recorded against the property.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council members and has found no property holdings within 1,000 feet of the boundaries of the property which is the subject of this action. Consequently, this item does not present a disqualifying real property -related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(7) or (8 ), for purposes of the Political Reform Act (Cal. Gov’t Code §87100, et seq.). Staff is not independently aware, and has not been informed by any Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no current year fiscal impact to the General Fund or Development Services Fund as a result of this action. All CFD formation costs are borne by the applicant.
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ONGOING FISCAL IMPACT
There is no ongoing fiscal impact to the General Fund or Development Services Fund as a result of this action. Once the CFD is formed, ongoing maintenance will be funded by the CFD.
ATTACHMENTS
1. Special Tax Report
Staff Contact: Kim Elliott, Facilities Financing Manager Laura C. Black, AICP, Development Services Director