Agenda Report
Fullerton City Council
MEETING DATE: AUGUST 1, 2023
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: SUNAYANA THOMAS, DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT
RAUL GODINEZ, INTERIM DIRECTOR OF PUBLIC WORKS
ELLIS CHANG, DIRECTOR OF ADMINISTRATIVE SERVICES
PREPARED BY: SUNAYANA THOMAS, DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT
STEPHEN BISE, CITY ENGINEER / ASSISTANT PUBLIC WORKS DIRECTOR
ELLIS CHANG, DIRECTOR OF ADMINISTRATIVE SERVICES
SUBJECT: CITY OF FULLERTON COMMUNITY FACILITIES DISTRICT NO. 3 (THE PINES AT SUNRISE VILLAGE) FORMATION
SUMMARY
City Council adopted Resolutions of Intention to establish and incur bonded indebtedness for City of Fullerton Community Facilities District No. 3 (The Pines at Sunrise Village) (“CFD No. 3”) on June 20. This item is the next step in the CFD No. 3 formation process which requires holding public hearings and a special landowner election.
RECOMMENDATION
Adopt the following resolutions:
RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF THE CITY OF FULLERTON, CALIFORNIA, FORMING COMMUNITY FACILITES DISTRICT NO. 3 (THE PINES AT SUNRISE VILLAGE) RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTOn, CALIFORNIA, DETERMINING NECESSITY TO INCUR BONDED INDEBTEDNESS CITY OF FULLERTON Community Facilities District No. 3 (The Pines at Sunrise Village) RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALFORNIA, CALLING SPECIAL ELECTION CITY OF FULLERTON Community Facilities District No. 3 (The Pines at Sunrise Village) RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA, DECLARING RESULTS OF SPECIAL ELECTION AND DIRECTING RECORDING OF NOTICE OF SPECIAL TAX LIEN CITY OF FULLERTON Community Facilities District No. 3 (The Pines at Sunrise Village) RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALFORNIA, APPROVING AN IMPROVEMENT AND REIMBURSEMENT AGREEMENT AND AUTHORIZING AND DIRECTING ACTIONS WITH RESPECT THERETO CITY OF FULLERTON Community Facilities District No. 3 (The Pines at Sunrise Village) Introduce Ordinance No. XXXX for first reading by title only and waive further reading of the ordinance.
ORDINANCE NO. XXXX – AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF FULLERTON CALIFORNIA, LEVYING SPECIAL TAXES WITHIN THE CITY OF FULLERTON COMMUNITY FACILITIES DISTRICT NO. 3 (THE PINES AT SUNRISE VILLAGE)
CITY MANAGER REMARKS
The City Manager recommends approval of the CFD No. 3 formation.
PRIORITY POLICY STATEMENT
This item matches the following Budget Policy Priority Statements:
Fiscal and Organizational Stability
Infrastructure and City Assets.
FISCAL IMPACT
The City received an initial deposit (the “Initial Deposit”) from the Applicant in 2021 and a subsequent deposit (the “Subsequent Deposit”) in 2023 to initiate proceedings to form a community facilities district. The Initial Deposit and Subsequent Deposit, together with any additional deposits required pursuant to the terms of the Deposit and Reimbursement Agreement, should fully cover the cost for City staff and consultants to form the community facilities district. CFD No. 3 will annually levy special taxes on all the residential taxable properties within CFD No. 3, in accordance with the Amended Rate and Method of Apportionment (“RMA”) attached to the Resolution of Formation to pay for the costs of facilities, debt service on bonds and administration of CFD No. 3. Any bonds issued by CFD No. 3 do not become obligations of the City. Special taxes levied on residential parcels in CFD No. 3 will solely secure the bonds.
DISCUSSION
The Applicant owns a 12.52-acre commercial retail property within the City (located at the southwest corner of Euclid Street and Rosecrans Avenue) and intends to redevelop into a mixed-use site with 113 residential units and 23,000 square-feet of commercial space known as The Pines at Sunrise Village (the “Project”). The Applicant has petitioned the City to form CFD No. 3 in accordance with the Mello-Roos Community Facilities Act of 1982 (the “Act”), as amended, to secure bond financing in an amount not to exceed $9,500,000 secured by special taxes levied on residential parcels within the Project. City Council adopted Resolutions of Intention to establish and incur bonded indebtedness for CFD No. 3 on June 20, 2023. This public hearing marks the next step in the CFD No. 3 formation process.
Project Background
The Planning Commission approved the project on December 7, 2022. City Council approved the project on January 3, 2023. The Applicant has re-zoned 9.93 of the 12.52 acres to Planned Residential, consisting of Parcels 1 and 2 for the 113 dwelling units. Parcels 3, 4 and 5 will remain General Commercial zoning designation. The City would de-annex Parcels 3, 4 and 5 from the CFD No. 3 boundaries upon availability of a final map. The Applicant intends to levy CFD No. 3 special taxes on the dwelling units in the Planned Residential area only.
Community Facilities District (CFD) Background
A CFD is a special district formed pursuant to the Act that allows for the levy of a special tax on property within the district to fund the purchase, construction, expansion or rehabilitation of any real or tangible property, including public facilities and infrastructure improvements with an estimated useful life of five years or longer. CFDs typically form in undeveloped areas in order to fund new public infrastructure or for infill areas undergoing redevelopment. The RMA establishes a Special Tax used to finance public infrastructure and annual administrative expenses. New property owners assume the Special Tax payment in the amount specified in the RMA when they purchase the home.
The City previously created CFD No. 1 and CFD No. 2 to fund certain infrastructure improvements in the Amerige Heights neighborhood. The proposed CFD No. 3 complies with the City’s Amended and Restated Local Goals and Policies adopted by City Council on September 20, 2011 (“Local Goals and Policies”).
Formation
City Council adopted Resolution No. 2023-045 on June 20, 2023 stating its intention to establish CFD No. 3 for financing certain public facilities and facilities fees required under the conditions of approval for the Project. The Resolution of Intention incorporated a map of the proposed boundaries of CFD No. 3, a description of the provided facilities and the RMA which sets forth the formula for calculating special taxes to levy in CFD No. 3. This action would amend the previously-approved RMA to reduce the Special Tax rates, at the Applicant’s request. City Council adopted Resolution No. 2023-046 stating the intention to incur bonded indebtedness for CFD No. 3 in an amount not to exceed $9,500,000 and set a Public Hearing for August 1, 2023 at 5:30 p.m. in the Fullerton City Council Chamber.
DTA (the City’s Special Tax Consultant) has prepared a Public Report relating to CFD No. 3, its authorized uses and expected costs. This report defines the facilities and facilities fees to authorize for financing through the CFD No. 3 bond issuance. (Attachment 12) Staff requests City Council adopt the Resolution of Formation and the Resolution Determining the Necessity to Incur Debt which, together, approve the CFD No. 3 formation and the levy of the special taxes in accordance with the RMA and determine the necessity for the City to issue bonds for CFD No. 3 in an amount not to exceed a$9,500,000. The Resolution of Formation amends the RMA previously approved at the request of the Applicant with the Resolution of Intention to lower the maximum special tax rates to exclude the financing of School Facilities.
Following adoption of the Resolution of Formation and the Resolution Determining the Necessity to Incur Debt, staff requests City Council adopt the Resolution Calling Special Election to submit a ballot measure to the qualified landowner voter in CFD No. 3 to approve the special taxes, issuance of the bonds and an appropriations limit for CFD No. 3.
The Registrar of Voters of Orange County certified that no registered voters reside within the CFD No. 3 boundaries. Only property owners owning land in the District may vote at the election with each owner having one vote for each acre (or portion thereof) that they own within CFD No. 3, under the Act. The Applicant has executed a consent and waiver of certain election procedures, including certain timing requirements with respect to the election, all in accordance with the Act. The City Clerk will conduct the election if City Council approves the Resolution Calling Special Election. The City Clerk will announce the election results and City Council may adopt the Resolution Declaring Results of Special Election. The Resolution Declaring Results of Special Election directs the City Clerk to record a notice of special tax lien on the property within CFD No. 3 if two-thirds of the votes cast are in favor of the ballot measure. (Attachment 9). Lastly, staff requests City Council introduce an ordinance for first reading and waive further reading of the ordinance authorizing levy of the special tax within CFD No. 3 in accordance with the RMA. Staff will agendize second reading of the Ordinance at the August 15, 2023 City Council Meeting assuming City Council approves the first reading.
Should City Council adopt the resolutions and introduce the ordinance to form CFD No. 3, staff requests City Council adopt a resolution approving the Improvement and Reimbursement Agreement between the City and the Applicant, which sets forth the terms, among others, pursuant to which the Applicant will receive reimbursement for improvement costs in CFD No. 3 from certain funding sources of the CFD, primarily, proceeds of the bonds when issued in the future.
The formation of CFD No. 3 does not obligate the City to issue bonds. Ultimately, should the Applicant or subsequent developer desire to initiate bond financing, staff would request City Council take the third step to consider approval of bond issuance at a future meeting once development of the Project has progressed. Any such financing would meet all adopted City goals and policies. The City would set the maximum bonded indebtedness of CFD No. 3 at “not to exceed” $9,500,000. The actual bond issuance amount may be lower than this amount. Additionally, if the cost of authorized facilities exceeds the maximum bonded indebtedness or the maximum amount supported by Special Taxes levied in CFD No. 3, the City shall not be responsible for the additional cost. The bonds shall be issued in such series and bear interest payable semi-annually or in such other manner as City Council determines, at a rate not to exceed the maximum rate of interest as may be authorized by applicable law at the time of sale of such bonds and shall mature no later than 40 years after their date of issuance.
Attachments:
Attachment 1 – Presentation
Attachment 2 – Draft Resolution - CFD Formation
Attachment 3 – Draft Resolution – Incur Bonded Indebtedness Attachment 4 – Draft Resolution - Call Special Election Attachment 5 – Draft Resolution – Election Results
Attachment 6 – Draft Resolution – Reimbursement Agreement Attachment 7 – Draft Ordinance No. XXXX
Attachment 8 – Notice of Special Tax Lien
Attachment 9 – Incur Bonded Indebtedness Notice
Attachment 10 – Establish a Community Facilities District Notice Attachment 11 – CFD Report
Attachment 12 – Recorded Project Boundary Map
Attachment 13 – Improvement and Reimbursement Agreement cc: City Manager Eric J. Levitt
CFD No. 3 (The Pines at Sunrise Village) Formation
August 1, 2023 - Page 3