Agenda Report
Fullerton City Council
MEETING DATE: AUGUST 15, 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, 2023 and held a public hearing on August 1, 2023. This item is the next step in the CFD No. 3 formation process.
RECOMMENDATION
1. Adopt the following resolutions:
RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA, FORMING 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, 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, CALIFORNIA, CALLING SPECIAL ELECTION CITY OF FULLERTON COMMUNITY FACILITIES DISTRICT NO. 3 (THE PINES AT SUNRISE VILLAGE)
2. Conduct Special Election and announce results.
3. Adopt the following resolutions:
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, CALIFORNIA, 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)
4. 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
This Ordinance is a continuation of the establishment of the CFD No. 3.
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, are intended to fully cover the costs of City staff and its 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 Rate and Method of Apportionment (“RMA”) attached as Exhibit B (Attachment 2) to the Resolution of Formation in order to pay for the costs of facilities, debt service on bonds and administration of CFD No. 3. Any bonds issued by CFD No. 3 are not obligations of the City and will be secured solely by the special taxes levied on residential parcels in CFD No. 3.
DISCUSSION
The Applicant owns a 12.52-acre commercial retail property within the City (located at the intersection of Euclid Street and Rosecrans Avenue on the southwest corner) which they intend to redevelop into a mixed-use site intended to include 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 to levy on residential parcels within the Project. City Council adopted Resolutions of Intention on June 20, 2023 to establish and incur bonded indebtedness for CFD No. 3. City Council held a public hearing on August 1, 2023. This item provides the next step in the CFD No. 3 formation process.
Project Background
The Planning Commission approved the Project on December 7, 2022 and City Council approved on January 3, 2023. The project rezoned 9.93 acres 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. Parcels 3, 4 and 5 will de-annex from the CFD No. 3 boundaries once a final map becomes available. The project 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 to fund new public infrastructure or in infill areas undergoing redevelopment. The RMA establishes a Special Tax to use to finance public infrastructure and annual administrative expenses. New property owners assume the responsibility to pay the Special Tax in the amount specified in the RMA as homes sell,.
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 the 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 facilities to be provided and the RMA, which sets forth the formula for calculating special taxes levied in CFD No. 3. Staff has amended the description of the Facilities in the Resolution of Intention Exhibit A in the Resolution of Formation at the request of the developer to remove school facilities owned and operated by the Fullerton Joint Union High School District and the Fullerton School District and to clarify that the street improvements include undergrounding of utilities. This does not change the Special Tax rates presented on June 20, 2023. City Council also adopted Resolution No. 2023-046, stating its intention to incur bonded indebtedness for CFD No. 3 in an amount not to exceed $9,500,000 and held a Public Hearing on August 1, 2023 to take public comment.
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 further defines the facilities and facilities fees to authorize for financing through the issuance of bonds for CFD No. 3. (Attachment 13) Staff requests City Council adopt the Resolution of Formation and the Resolution Determining the Necessity to Incur Debt which, together, approves the formation of CFD No. 3 and the levy of the special taxes in accordance with the RMA and determines the necessity for the City to issue bonds for CFD No. 3 in an amount not to exceed $9,500,000. The Resolution of Formation amends the description of authorized facilities previously approved with the Resolution of Intention at the request of the Applicant to exclude the financing of School Facilities and to clarify that the street improvements include undergrounding of utilities. (Recommendation Nos. 1 and 2) If City Council approves the recommendations be approved, staff requests City Council adopt a Resolution Calling Special Election to submit a ballot measure to the qualified landowner voter in CFD No. 3 regarding approval of the special taxes, the issuance of the bonds and an appropriations limit for CFD No. 3.
The City Clerk has a Certificate of the Registrar of Voters of Orange County on file certifying that no registered voters reside within the boundaries of CFD No. 3. Under the Act, 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. 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.
If City Council adopts the Resolution Calling Special Election, the City Clerk will conduct the election at the August 15, 2023 meeting and announce the election results. Staff requests City Council then 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 8).
Lastly, staff requests City Council introduce an Ordinance authorizing the levy of the special tax within CFD No. 3 in accordance with the RMA with adoption of the Ordinance anticipated at the September 19, 2023 City Council Meeting.
Following these actions 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 be reimbursed for costs of the improvements 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 ask City Council to 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 maximum bonded indebtedness of CFD No. 3 will be set at $9,500,000. This is a “not to exceed” amount; 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 – PowerPoint Presentation
Attachment 2 – Draft Resolution No. 2023-XXX – CFD Formation Attachment 3 – Draft Resolution No. 2023-XXX – Bonded Indebtedness Attachment 4 – Draft Resolution No. 2023-XXX – Call Election Attachment 5 – Draft Resolution No. 2023-XXX – Declaring Election Results Attachment 6 – Draft Resolution No. 2023-XXX – Reimbursement Agreement Attachment 7 – Draft Ordinance No. XXXX
Attachment 8 – Notice of Special Tax Lien
Attachment 9 – Notice of Public Hearing to Incur Bonded Indebtedness Attachment 10 – Notice of Public Hearing to Establish a Community Facilities District 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 15, 2023 - Page 3