CITY OF COMMERCEAGENDA REPORTCITY OF COMMERCEAGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
CITY OF COMMERCE
AGENDA REPORT
TO: Honorable City Council
FROM: City Manager
SUBJECT: Resolutions Approving the Formation of the City of Commerce Community Facilities District 2026-1 (Modelo) Meeting Date: September 22, 2026
RECOMMENDATION:
Staff recommends that the City Council adopt the following resolutions:
A Resolution adopting local goals and policies relating to Community Facilities Districts; A Resolution of Intention to authorize the levy of a special tax to pay the costs of acquiring or constructing certain facilities and to pay debt service on bonded indebtedness; and Resolution of Intention to incur bonded indebtedness in an amount not to exceed $60,000,000 within the proposed City of Commerce Community Facilities District No. 2026-1 (Modelo).
BACKGROUND:
The developer of the Modelo project (“Project”) has requested that the City form a Community Facilities District (“CFD”) to assist with obtaining tax exempt financing to fund various infrastructure improvements that will support the Project. The city has engaged professional consultants to begin the CFD formation, including Stradling Yocca Carlso and Rauth (“Stradling”) as bond counsel, Kosmont Financial Services (“KFS”) as Municipal Advisor, and Goodwin Consulting Group (“Goodwin”) as special tax consultant. The proposed CFD will be called “City of Commerce Community Facilities District 2026-1 (Modelo)”.
Additionally, the developer of the property within the proposed CFD has engaged Development Planning and Financing Group (“DPFG”) to generate a boundary map for the proposed CFD, aid in the classification of property within the CFD, aid in the calculation of the special tax rates to be levied against the various properties and generate estimates for future funding capacity based on the estimated special tax rates. The CFD boundaries do not include any existing residences or land currently developed and are limited strictly to the boundaries of the Project.
Upon creating the special tax categories and improvements areas for the CFD, Goodwin created a Rate and Method of Apportionment (“RMA”) outlining the procedures for levying the special tax within the CFD, and Stradling generated the required formation resolutions for the initial steps of the CFD formation – including the attached Community Facilities District and Assessment District Goals and Policies, the Resolution The of Intention to establish the CFD, and the Resolution of Intention to Incur Bonded Indebtedness.
DISCUSSION:
The Proposed CFD:
The mixed-use development will include 740 market-rate apartments, 45 residential condominiums (to sell to multiple owner-users), and 98,050 sf of Lot 1 (airspace) for subsequent subdivision to 65 residential townhomes, a large shopping center with approximately 179,501-square feet of net rentable area with 27 retail suites, a 2,223-space (2-level) subterranean parking garage, and a museum which will be occupied by the City as part of the shared occupancy of the common areas of this large mixed-use center. The retail, residential tenants and the City will have designated parking within the parking garage. The retail suites will range from 845 to 36,494-square feet and will have an average of 6,648-square feet. There are four proposed large box retail spaces for these 27 retail suites ranging from 20,191 to 36,494-square feet with an average of 25,581-square feet.
Pre-Formation Requirements:
Before commencing CFD formation proceedings, the CFD law requires the City Council to adopt CFD local goals and policies to govern the formation and administration of community facilities districts. The local goals and policies outline various requirements for the use of CFD financing, including eligible facilities and services, special tax requirements, requirements of the RMA, maximum term of bonded indebtedness and minimum credit quality requirements for the issuance of CFD bonds, among other items.
The CFD goals and policies proposed for adoption have been used by other local agencies, provide considerable flexibility to the Council, are not binding and may be amended in the future, as needed. As a first step in the formation of the proposed CFD, the Council must vote to approve the local goals and policies as outlined in the Resolution.
Resolutions Authorizing the Usage of Community Facilities District:
Under the CFD law, being the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 of Part 1 of Division 2 of Title 5, commencing at Section 53311, of the California Government Code (the “Act”), the City is authorized to establish a community facilities district and to act as the legislative body for such community facilities district. The act allows the Council to utilize the CFD to finance certain public infrastructure improvements within the boundary of the proposed CFD. As an initial step in forming a community facilities district financing infrastructure, the Council needs to form the community facilities district.
Under the Act, it is a requirement that the Council, as the entity forming the CFD, adopt a resolution stating its intention to form the CFD, stating the types of public facilities to be financed on behalf of the CFD, setting forth the rate and method of apportionment of a proposed special tax to be levied in the CFD, and establishing the proposed boundary of the CFD.
A resolution meeting the requirements of the Act is presented at this meeting in the form of a Resolution of Intention of the City Council to establish a City of Commerce Community Services District No. 2026-1 (Modelo) and to authorize the levy of a special tax to pay the costs of acquiring or constructing certain facilities and to pay debt service on bonded indebtedness (the “Resolution of Intention to Form the CFD”).
It is also a requirement under the Act that the Council, as the entity forming the CFD, adopt a resolution stating its intention to issue bonds payable from the levy of a special tax within the CFD. A resolution meeting that requirement of the Act is presented at this meeting in the form of a Resolution of Intention of the City Council to incur bonded indebtedness in an amount not to exceed $60,000,000 within the proposed Community Facilities District No. 2026-1 (Modelo) (the “Resolution of Intention to Incur Bonded Indebtedness”).
Future Action:
Formation of a CFD requires multiple procedural steps, including actions at two Council Meetings, a public hearing, and eligible-voter election. Tonight’s actions set forth the Council’s intention to form the CFD and incur debt for the CFD and sets a date for a future public hearing. Adoption of the attached resolutions will set a public hearing for October 27, 2026. Following the close of the public hearing the Council will be asked to consider adoption of resolutions to establish the CFD and to determine the necessity of incurring debt for the CFD. Adoption of those resolutions will call for an election to be held on October 27, 2026. As there are no registered voters residing within the boundaries of the CFD, the election will be a landowner election where the Developer will have one vote for each acre of land (or portion thereof) that it owns in the CFD.
FISCAL IMPACT:
The recommended actions do not have a fiscal impact on the City’s General Fund. All costs associated with the formation of CFD No. 2026-1 (Modelo), including consultant services, legal counsel, municipal advisory services, are being funded by the developer through a deposit and reimbursement agreement. Should the CFD ultimately be formed and bonds be issued in the future, all debt service, administrative expenses, and ongoing costs of the CFD will be funded exclusively through special taxes levied within the district. Neither the City’s General Fund nor any other City fund will be pledged or obligated for repayment of the CFD debt.
The developer has previously provided a $75,000 deposit to fund CFD formation activities. Future costs associated with the CFD proceedings will be borne by the developer as required under the applicable agreements.
ALTERNATIVES:
Approve recommendation
Disapprove recommendation
Provide staff with further direction
Recommended by: Alvaro Castellon, Director of Finance
Approved as to form: Noel Tapia, City Attorney
Respectfully submitted: Ernie Hernandez, City Manager ATTACHMENTS:
Resolution adopting Local Goals and Policies
Local Goals and Policies
Landowner Petition
Resolution of Intention to Form the CFD
Resolution of Intention to Issue Debt
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