CORONAVIRUS (COVID-19) ADVISORY
IMPORTANT INSTRUCTIONS ON HOW TO PARTICIPATE AND WATCH THE HERCULES CITY COUNCIL MEETING
On March 16, 2020, the Health Officer of Contra Costa County issued an Order through April 7, 2020 that directed that all individuals living in the county to shelter at their place of residence except that they may leave to provide or receive certain essential services or engage in certain essential activities and work for essential businesses and governmental services.
Under the Governor’s Executive Order N-25-20, this meeting may utilize teleconferencing or other virtual meeting platforms. Pursuant to the Governor’s Executive Order N-25-20, teleconferencing restrictions of the Brown Act have been suspended.
Beginning with the April 14, 2020 Hercules City Council meeting, the City Council will conduct its meeting utilizing ZOOM.
DUE TO THE SHELTER IN PLACE ORDERS AND PURSUANT TO EXECUTIVE ORDER N-25-20, direct public attendance or participation at council meetings has been suspended and the Council Chambers will be closed to the general public.
City Council and staff will participate virtually through the ZOOM application. Applicants, consultants, and others with matters before the Council will be allowed to participate via ZOOM but must make prior arrangements with the City Clerk. The public may log into the Zoom meeting to provide their public comment virtually.
Individuals wishing to address the City Council as part of the Zoom meeting are asked to provide the following information:
1. (Optional) - Name, address and contact information of person providing comments.
2. General topic or agenda item you wish to comment on.
PLEASE NOTE: For Special Closed Session meetings public comments must be submitted in written form either electronically via email, mailed in, or hand delivered prior to the meeting. The Zoom meeting credentials for closed session meetings are not shared publicly. Written public comments will be provided to City Council prior to the meeting and posted to the City’s agenda website.
For regular City Council meetings, all virtual public comments are allowed up to 3 minutes to relay their message or concern. All virtual public comments are recorded and become part of the public record. A limit of 30 minutes will be devoted to taking virtual public comment during the first public comment period on the agenda. If any speaker comments have not been accommodated prior to the initial 30 minute period, time will be reserved at the conclusion of the meeting for the remaining virtual public comments.
Please refer to the Zoom meeting information on the front cover of the Agenda.
How to watch the meeting from home:
1. Comcast Channel 28
2. Livestream online at https://hercules.legistar.com/Calendar.aspx
We are happy to accommodate written public comments. Written public comment will be accepted by email to [email protected] and will be available on the City’s website. Additional ways to provide your public comment is to mail your comment to City of Hercules, ATTN: City Clerk – Public Comment (Meeting Date), 111 Civic Drive, Hercules, CA 94547 via USPS in time to reach the City Clerk no later than 4:00 p.m. on the day of the meeting or by telephone by calling (510) 799-8215 no later than 4:00 p.m. on the meeting date. For written public comments:
1. Subject Line to contain the words “PUBLIC COMMENTS”
2. (Optional) - Name, address and contact information of person providing comments.
3. General topic or agenda item you wish to comment on.
All written comments received by the close of the public comment period will be available after the meeting as supplemental materials and will become part of the official meeting record, and they will not be read during the meeting. The City cannot guarantee that its network and/or the site will not be uninterrupted. To ensure that the City Council receives your written comments, you are strongly encouraged to submit your comments in writing in advance of the meeting by 4:00 p.m. on the day of the Council meeting.
Tuesday, January 18, 2022
7:00 PM
City of Hercules
111 Civic Drive
Hercules, CA 94547
Special Meeting
City Council
Mayor Dion Bailey
Vice Mayor Alexander Walker-Griffin
Council Member Dan Romero
Council Member Chris Kelley
Council Member Tiffany Grimsley
Dante Hall, City Manager
Patrick Tang, City Attorney
Lori Martin, City Clerk
Meeting Agenda
Zoom Meeting ID: 867 7617 2055
Zoom Passcode: 320898 Zoom Ph #: 1-669-900-6833
1 January 18, 2022City Council Meeting Agenda
To view webcast of meetings, live or on demand, go to the City's website at www.ci.hercules.ca.us I. SPECIAL MEETING – 7:00 P.M. CALL TO ORDER - ROLL CALL II. PLEDGE OF ALLEGIANCE
III. INTRODUCTIONS/PRESENTATIONS/COMMISSION REPORTS
IV. AGENDA ADDITIONS/DELETIONS
V. PUBLIC COMMUNICATIONS
In accordance with Executive Order N-25-20 and guidance from the California Department of Public Health on gatherings, remote public participation is allowed as follows:
The public may log into the Zoom meeting (refer to agenda cover for Zoom login information) and provide their public comment (3 minute time limit). When the public comment period is open for the item you wish to speak on, use the "raise hand" feature in Zoom (or press *9 if connecting via phone audio only) at the time the Mayor calls for public comment. Please wait your turn and once you are brought into the meeting, state your name and city of residence for the record.
For additional alternatives to providing public comments please refer to the Notice of Important Instructions on how to Participate and Watch the Hercules City Council Meeting on the front page of the agenda.
All public comments are allowed up to 3 minutes to relay their message or concern. A limit of 30 minutes will be devoted to taking public comment at this point in the agenda. If any speakers remain at the conclusion of the initial 30 minute period, time will be reserved at the conclusion of the meeting to take the remaining comments.
VI. DISCUSSION AND/OR ACTION ITEMS
1. 22-024
Continued Discussion Regarding Santa Clara Valley Housing Group's (SCVHG) Request to Form a Mello-Roos Community
Facilities District for the Hilltown Development
Recommendation: City Council to take the next step towards forming a Mello-Roos Community Facilities District to provide the financing needed for the Hilltown Development by directing staff to begin preparing the necessary documents for Council's future consideration; alternatively City Council inform the Developer, Santa Clara Valley Housing Group, that the City is electing not to proceed with the Mello-Roos Community Facilities District.
2 January 18, 2022City Council Meeting Agenda
Staff Report - Hilltown Mello Roos 01182021 Rev4-PT
Attach 1 - Hilltown Mello-Roos Presentation for 1.18.22 CC Mtg Attach 2 - Hilltown- Letter to City Council regarding Mello Roos CC meeting 1.18.22 Att 3 - Hercules Mello-Roos Analysis
Att 4 - CFD Memorandum (9-29-21)
Attach 5 - Staff Report - Hilltown Mello Roos 10192021
Attach 5a - Hilltown Mello Roos Presentation (2)
Attach 5b - Hilltown Project Update (2)
Attach 5c - CBG Memo on Hilltown Site Challenges (3)
Attach 5d - CBG Hilltown Phase 1 Cost Estimate
Attach 5e - Mello Roos Qualifying Infrastructure 10082021 Attach 5f - Hilltown Mello Roos Tax Scenarios
Attachments:
VI. PUBLIC COMMUNICATIONS
This time is reserved for members of the public who were unavailable to attend the Public Communications period during Section X of the meeting, or were unable to speak due to lack of time. The public speaker requirements specified in Section X of this Agenda apply to this Section.
VII. ADJOURNMENT
The next Regular Meeting of the City Council will be held on Tuesday, January 25, 2022 at 7:00 p.m. virtually via Zoom.
Agendas are posted in accordance with Government Code Section 54954.2(a) or Section 54956.
Members of the public can view electronic agendas and staff reports by accessing the City website at www.ci.hercules.ca.us and can receive e-mail notification of agenda and staff report postings by signing up to receive an enotice from the City’s homepage. Agendas and staff reports may also be obtained by contacting the Administrative Services Department at (510) 799-8215. (Posted: January 12, 2022)
THE HERCULES CITY COUNCIL ADHERES TO THE FOLLOWING POLICIES,
PROCEDURES AND REGULATIONS REGARDING CITY COUNCIL MEETINGS
1. SPECIAL ACCOMODATIONS: In compliance with the Americans with Disabilities Act, if you require special accommodations to participate at a City Council meeting, please contact the City Clerk at 510-799-8215 at least 48 hours prior to the meeting.
2. AGENDA ITEMS: Persons wishing to add an item to an agenda must submit the final written documentation 12 calendar days prior to the meeting. The City retains the discretion whether to add items to the agenda. Persons wishing to address the City Council otherwise may make comments during the Public Communication period of the meeting.
3. AGENDA POSTING: Agendas of regular City Council meetings are posted at least 72 hours prior to the meeting at City Hall, the Hercules Swim Center, Ohlone Child Care Center, Hercules Post Office, and on the City’s website (www.ci.hercules.ca.us),
3 January 18, 2022City Council Meeting Agenda
4. PUBLIC COMMUNICATION: Persons who wish to address the City Council should complete the speaker form prior to the Council's consideration of the item on the agenda.
Anyone who wishes to address the Council on a topic that is not on the agenda and is relevant to the Council should complete the speaker form prior to the start of the meeting. Speakers will be called upon during the
4 STAFF REPORT TO THE CITY COUNCIL
DATE: Special Meeting of January 18, 2022
TO: Members of the City Council
VIA: Dante Hall, City Manager
SUBMITTED BY: Michael Roberts, Public Works Director/City Engineer
SUBJECT: Continued Discussion Regarding Santa Clara Valley Housing Group’s (SCVHG) Request to form a Mello-Roos Community Facilities District for the Hilltown Development
RECOMMENDED ACTION:
City Council take the next step towards forming a Mello-Roos Community Facilities District to provide the financing needed for the Hilltown Development by directing staff to begin preparing the necessary documents for Council’s future consideration ; alternatively, City Council inform the Developer, Santa Clara Valley Housing Group, that the City is electing not to proceed with a Mello- Roos Community Facilities District.
FISCAL IMPACT OF RECOMMENDATION:
There is no cost to the City associated with the recommended action. Staff time and associated expenses are being reimbursed by the Developer through a deposit account.
BACKGROUND:
The Hill Town Project is an approved but not yet constructed mixed-use project on a 44.2-acre site to consist of up to 598 residential dwelling units and approximately 4,200 square feet of neighborhood commercial uses. The site is located at 4200 San Pablo Avenue, which is bounded by John Muir Parkway, San Pablo Avenue, and Interstate 80. On September 14, 2021, City Council approved a minor subdivision dividing the site into 4 separate parcels to allow the development to be constructed in phases. Santa Clara Valley Housing Group (SCVHG) has indicated they would like to begin grading on the first phase as soon as Spring 2022 if they are able to obtain financing through a Mello- Roos Community Facilities District (CFD).
SCVHG initially requested the City form a Mello-Roos Community Facilities District (CFD) for their Hill Town Project during their update and presentation at the May 11, 2021 Council meeting. This request was then subsequently discussed in detail at the Special “Shirtsleeves” Meeting of October 19, 2021 (Att #5). At that time, Council directed staff to bring the item back at a future meeting for further discussion.
5 A Mello-Roos CFD is a governmental entity that can be formed by a city to finance facilities and services with special taxes. A CFD can issue low-interest, tax-exempt bonds that are then repaid through special taxes levied on the properties in the district which are paid at the same time as ad valorem taxes. Examples of eligible facilities for Hilltown include grading; public infrastructure including parks, utilities, streets and associated improvements; and payment of impact fees. Eligible services could include police services, recreation program services, and maintenance and operation of storm protection services.
SCVHG has provided a preliminary engineer’s estimate indicating the Hilltown development could qualify for up to $51.6M in M ello-Roos infrastructure costs (Att #5). They also have provided scenarios for different special tax rates, which are estimated to amount from $3,450 to $4,950 per year for a $750,000 residential unit sale price, in addition to the current ad valorem amount (Att #3).
Whether or not to form a Mello Roos Community Facilities District, including the amount and facilities/services to be financed, is a negotiation between the City and SCVHG. If Council directs staff to begin preparing the documents to form a Mello-Roos CFD for Council’s future consideration, it would constitute one of a series of required actions and would not at this juncture constitute a binding commitment to proceed with a CFD.
DISCUSSION:
Previous discussion points as well as staff recommendations are summarized below for Council’s consideration.
Reasons Council may wish to consider for forming a Mello Roos CFD:
SCVHG believes a Mello-Roos CFD is need ed for the approved Project to advance - Per SCVHG’s most recent correspondence of January 4, 2022 (Att #2), financing is required for the project to advance at this time. Like the handful of other remaining undeveloped lands in Hercules, this project has unique characteristics that makes it especially cha llenging and therefore costly to develop; specifically, the large amount of earthwork needed to make the site buildable as well as the steep topography which increases the infrastructure costs such as grading, streets, and retaining walls.
Alternative Projects were previously explored but did not advance due to site constraints – The Developer previously explored alternative developments, including a large commercial center, which did not advance given the site constraints. Based upon those efforts, the most feasible use for the site is the approved project because residential developments have smaller structures with more flexible uses, which is the most adaptable to the site constraints (i.e. on a large hill).
Historically the housing market is cyclical and there is a current window of opportunity - As was discussed in the May 2021 Council meeting, historically the housing market has been cyclical. The market is strong at this time and conducive to development. This window of opportunity most likely will close in the future for a period of time and the project site has remained unimproved for many years.
6 Mello Roos CFDs are in widespread use – Examples of communities that have utilized Mello- Roos in the greater Bay Area include Antioch, Brentwood, Oakley, Fairfield, Dublin, San Ramon, Tracy, Vacaville, Vallejo, and American Canyon.
SCVHG is well-suited to build the project – SCVHG is an experienced developer, having been in business for over 50 years and built over 50,000 residential units.
Additional Housing - The project will provide up to 598 new residential dwelling units, of which 5% or 30 units are required to be affordable housing units sold at a moderate-income level.
$3M in Sports Facilities Fees - Per the development agreement for the project, SCVHG is required to pay a $5,000 Sports Facility Fee per residential dwelling unit, up to approximately $3M in total for the Project, at issuance of building permits. The City shall use all Park and Recreation In-Lieu Fees collected from the Project for any park or recreation use consistent with the City’s General Plan.
There is very little financial risk to the City to form a Mello-Roos CFD - Recourse for the bonds is to the land and homes. There is some level of “headline” risk if a Mello Roos CFD defaults, but it does not impact the City’s financial position. A market absorption study will be required. There is no impact to the City’s credit rating and the bonds are expected to be unrated. The City’s ability to utilize its own General and Enterprise Funds is not impacted.
Alternatively, reasons Council may wish to consider for not proceeding with a Mello-Roos CFD:
Mello-Roos is new to the Project – When the Project was originally approved, the decision did not include consideration of a Mello Roos CFD. With the inclusion of the Mello Roos CFD, the Project may no longer be viewed favorably.
Potential Consequences of Additional Tax Burden – The Mello Roos special tax, along with the estimated $300-$350/month Homeowners Association fee (Att #2, Section #4), may cause tax fatigue and contribute to the property owners’ unwillingness to vote for future tax measures or assessments.
Perception of Inequality/Unfairness – Hilltown’s future residents may have the perception the Mello Roos CFD is unfairly burdening them with costs that should be borne by all the residents in the City, regardless that all the financing will be spent on-site. Unlike other Mello Roos CFDs, the financing is not be ing used to construct new facilities, like schools or waterparks, whose construction is fully funded by the District but available to all residents.
Divisive for the Community – There is potential for the Mello Roos CFD to divide the City between those who pay it and those who don’t, which was discussed in a prior meeting.
The statutory requirements for forming a Mello Roos CFD specify the Council complete a series of actions similar to the City’s Lighting and Landscaping Assessment Districts and is outlined in Att #4. Staff estimates the process would take a minimum of 6 months given statutory timelines 7 and other work commitments unless the property owner waives certain time periods in which case it could take as little as three (3) months.
Lastly, it should be noted that in their January 4th correspondence (Att #2), SCVHG recommends proceeding with Scenario #3 which is at a 2.00% maximum tax rate, since it would generate the largest amount of funding. For this scenario, $28M of the total infrastructure cost would be covered by Mello Roos while the Developer would fund $58.5M.
However, if the CFD advances staff would recommend consideration be given to Scenario #1 for a 1.80% max tax rate since it results in the lowest tax amount to future property owners. In this case, the CFD would fund $20M while the Developer would fund $66.5M. Per the Tax Rate Alternatives that SCVHD provided (Att #3), the annual CFD tax for a $750K residence at this tax rate is estimated to be $3,450 or approximately $300/month.
Attachments:
1. Developer Presentation
2. SCVHG January 2, 2022 Correspondence
3. Mello-Roos Alternative Rate Analysis
4. CFD Formation Process
5. October 19, 2021 Staff Report
8 HERCULES HILLTOWN DEVELOPMENT PROJECT
MELLO-ROOS CFD AUTHORIZATION
SANTA CLARA VALLEY HOUSING GROUP
9 SITE PLAN
T otal Project: 597 units
Phase 1: 206 townhomes
Phase 2: 124 townhomes
Phase 3: 70 townhomes
Phase 4: 197 apartments/condominiums
10 WHY ARE WE REQUESTING A MELLO-ROOS?
We are here this evening to formally request City Council approval for the formation of a Mello-Roos Community Facilities District for the Hilltown Development Project. The project cannot move forward without this financing mechanism.
As you are all aware, the Hilltown site faces significant development issues related to grading. There are approximately $86.5 million dollars of public improvement costs and impact fees that render the project financially unfeasible without utilizing this commonly used public improvement funding mechanism. We are requesting that the City Council approve use of a Mello-Roos Community Facilities District on this long- awaited marque project for the City of Hercules. Use of a Mello-Roos will be the catalyst for moving the Hilltown Project forward in 2022.
11 ASSUMPTIONS FOR SCENARIOS #1-3
* The Bond Interest Rate is an assumption and subject to change to reflect the market at the time of the Bond sale.
ASSUMPTIONS
Sales Price $650,000 $750,000
Expected Residential Units 200 200
Current Total Tax Rate 1.34% $8,710 $10,050
Bond Interest Rate* 4.50%
Capitalized Interest 12 Months
Annual % Increase in Special Tax 2.00%
12 SCENARIO #1
13 SCENARIO #2
14 SCENARIO #3 (RECOMMENDED OPTION)
15 CONCLUSION
We request that the City Council approve Scenario #3. This Scenario provides a significant financial contribution toward the public improvements while keeping the Mello-Roos cost for future homeowners at a sustainable level. The recommended Scenario #3 Mello-Roos would provide approximately $28 million for construction costs for the public improvements. Santa Clara Valley Housing Group will provide the remaining $58.5 million (approximately 70% of the total costs). We respectfully request that the City Council approve the creation of a Mello-Roos Community Facilities District for the Hilltown Development Project with a maximum tax of 2.00% so that we may commence the project. 16 17
18 Sales Price $650,000 $750,000
Expected Residential Units 200 200
Current Total Tax Rate 1.34% $8,710 $10,050
Bond Interest Rate 4.50%
Capitalized Interest 12 Months
Annual % Increase in Special Tax 2.00%
Proposed Total Tax Rate 1.80% $11,700 $13,500
Proposed CFD Tax $2,990 $3,450
Expected Maximum Tax Revenues $1,288,000
Construction Costs Funded by Bonds $19,837,270
Reserve Fund $2,079,401
Capitalized Interest $1,089,779
Issuance Costs / Underwriter's Discount $1,210,866
Total $24,217,316
Proposed Total Tax Rate 1.90% $12,350 $14,250
Proposed CFD Tax $3,640 $4,200
Expected Maximum Tax Revenues $1,568,000
Construction Costs Funded by Bonds $24,156,467
Reserve Fund $2,532,152
Capitalized Interest $1,327,058
Issuance Costs / Underwriter's Discount $1,474,509
Total $29,490,186
Proposed Total Tax Rate 2.00% $13,000 $15,000
Proposed CFD Tax $4,290 $4,950
Expected Maximum Tax Revenues $1,848,000
Construction Costs Funded by Bonds $28,460,550
Reserve Fund $2,983,319
Capitalized Interest $1,563,507
Issuance Costs / Underwriter's Discount $1,737,230
Total $34,744,606
Goodwin Consulting Group, Inc. 11/04/2021
SCENARIO 1: 1.80%
SCENARIO 3: 2.00%
ASSUMPTIONS
City of Hercules
Tax Rate Alternatives
SCENARIO 2: 1.90%
19 Steps for Creating a Community Facilities City and Imposing a Special Tax I. OUTLINE OF STEPS
The following is a summary of the steps that the City must take in order to create a CFD and impose a special tax, each of which is discussed in detail later in this memorandum.
1. The City Council adopts local goals and policies for CFDs.
2. The City Council adopts a Resolution of Intention and a Resolution of Bonded Indebtedness (if applicable) and sets the date for a public hearing on the consideration of the CFD to be held within 30 to 60 days.
3. The City publishes notice of the public hearing in a newspaper of general circulation or provides notice by mail to the registered voters and landowners in the proposed CFD at least seven days before the hearing.
4. The City holds the public hearing and considers any protests. If there is no majority protest, the City Council adopts a Resolution of Formation and a Resolution Calling the Election.
5. Within three days of adopting the Resolution of Formation and Resolution Calling the Election, the City sends the election official the formation documents. 6 The election is held 90 to 180 days after the Resolution of Formation,1 and the tax is authorized if two-thirds of the votes are cast in favor of the tax.
7. Following a successful election, the City Council adopts a Resolution Determining Election Results and introduces an ordinance to levy the special tax, which requires a first reading at one City Council meeting and formal adoption at a second meeting.
8. The City records a notice of special tax lien with the county recorder.
The two most important dates are the date of the Resolution of Formation and the date of the election. All of the other dates flow from these two dates.
The Resolution of Formation must be adopted 90 to 180 days before the election.
However, because the concurrence of the elections official is required if there is less than 125 days between the adoption of the Resolution of Formation and the election, the City should plan on adopting the Resolution of Formation between 125 and 180 days before the election.
1 If the election is held less than 125 days after the Resolution of Formation, the concurrence of the election official is required.
20 Steps for Creating a Community Facilities City and Imposing a Special Tax
The Resolution of Intention and Resolution of Bonded Indebtedness must be adopted 30 to 60 days before the hearing on the formation of the CFD.
The local goals and policies of the City for CFDs must be adopted before the Resolution of Intention, but this can be done at the same meeting.
II. DISCUSSION
A. The City has the power to create a CFD
The City has the power to create a CFD because it is a “local agency” that has the power to provide the facilities or services that a CFD is authorized to provide. (Gov. Code §§ 53316- 53317). The City can use a CFD to finance facilities and services that it is already authorized to provide.
A CFD can finance many services, including police protection; fire protection and suppression; recreation programs; maintenance and lighting of parks, parkways, streets, roads and open space; flood and storm protection services; remediation of hazardous substances; and maintenance and operation of real or tangible property with an estimated useful life of five years or longer. (Gov. Code § 53313.) CFDs can also finance the purchase, construction, expansion, improvement, or rehabilitation of real or other tangible property with an estimated useful life of five years or longer. (Gov. Code § 53313.5.)
B. Territory of the CFD
While the City can only create a CFD within its territorial boundaries (Gov. Code § 53316), the CFD does not have to be contiguous, and it can be less than the total area of the City. (Gov. Code § 53325.5.) The City thus has flexibility to propose an area for a CFD that will have the best chance of obtaining the required two-thirds vote.
Land that is dedicated to agricultural, open space, or conservation uses cannot be included in a CFD that provides facilities or services for sewers, nonagricultural water use, or streets and roads without consent of the landowner. (Gov. Code § 53312.8.) And land that is devoted primarily to the commercial production of agricultural, timber, or livestock products can only be included in a CFD if that land is contiguous to other land in the CFD and the City Council finds that the land will be benefitted by the CFD. (Gov. Code § 53325.6.)
21 Steps for Creating a Community Facilities City and Imposing a Special Tax
C. Procedure for creating a CFD
1. City Council Meeting #1 – Adoption of “local goals and policies” Before the City can begin the proceedings to create a CFD, the City Council must first adopt “local goals and policies” for CFDs. (Gov. Code § 53312.7.) These goals and policies must include all of the following:
The priority of facilities and services to be financed through a CFD. The credit quality to be required of bond issues.
The steps to be taken to ensure that future property purchasers are fully informed of their taxpaying obligations to a CFD.
The criteria for evaluating the equity of tax allocation formulas and the desirable and maximum amounts of special tax to be levied on any parcel by a CFD.
The definitions, standards, and assumptions that will be used to determine the maximum amount of any bonds in relation to the value of the property securing the bonds.
2. City Council Meeting #2 – Resolution of Intention and Resolution to Incur Bonded Indebtedness
a. Resolution of Intention
The City Council begins the proceedings to create a CFD by adopting a Resolution of Intention. (Gov. Code §§ 53318, 53321). While it is customary to adopt the local goals and policies and the Resolution of Intention at two distinct meetings, the Act only requires the local goals and policies to be adopted prior to the Resolution of Intention. Both could be adopted in a single meeting if necessary.
The Resolution of Intention must include the following:
A description of the boundaries of the proposed CFD. (Gov. Code § 53321(a).)
The proposed name of the CFD as “Community Facilities City No. ____.” (Gov. Code § 53321(b).)
A description of the facilities and services to be financed by the CFD, including identification of any public facilities to be leased, purchased, or financed. (Gov. Code § 53321(c).)
A description of the tax to be levied through the CFD, including the rate, method of apportionment, and manner of collection. (Gov. Code § 53321(d).) 22 Steps for Creating a Community Facilities City and Imposing a Special Tax
The time and place for a public hearing on the formation of the CFD, which must be held within 30 to 60 days following adoption of the Resolution of Intention. (Gov. Code § 53321(e).)
The proposed voting procedure for the tax. (Gov. Code § 53321(e).) b. Resolution to Incur Bonded Indebtedness
If bonds are to be issued, their maximum amount and term must be specified in a Resolution to Incur Bonded Indebtedness, which must be passed along with the Resolution of Intention at the same meeting.
3. City Council Meeting #3 – Public hearing and Resolution of Formation (30 to 60 days after Meeting #2)
Thirty to sixty days after the adoption of the Resolution of Intention, the City must hold a public hearing to consider any objections to the proposed CFD. If there is no majority protest, the City Council then adopts a Resolution of Formation. a. Hearing Notice
The City must publish notice of the hearing on the formation of the CFD in a newspaper of general circulation (Gov. Code § 53322) or provide notice by mail to the registered voters and landowners in the proposed City (Gov. Code § 53322.4) at least seven days before the hearing.
The notice must include the text or a summary of the Resolution of Intention, the time and place of the hearing, and notice that testimony of all interested persons or taxpayers will be heard regarding the establishment and boundaries of the CFD and the specific facilities and services to be provided by the CFD. (Gov. Code § 53322.) Failure of any person to receive notice does not affect the validity of any proceedings or prevent the City Council from conducting the hearing. (Gov. Code § 53315.3.)
The City must also send a copy of the Resolution of Intention to the County. (Gov. Code § 53315.6.) However, because the Local Area Formation Commission (“LAFCo”) has no authority to review, approve, or deny a proposal to create a CFD, and does not have authority to annex territory to a CFD that is already within the boundaries of the City, LAFCo does not need to be notified of the public hearing on the formation of the CFD. (Gov. Code §§ 53316, 53318.5.)
b. Protests
At the hearing, protests regarding the establishment of the CFD, the extent of the CFD, or the furnishing of public facilities or services by the CFD may be made orally or in writing by any interested person, although protests pertaining to the sufficiency of the proceedings must be in 23 Steps for Creating a Community Facilities City and Imposing a Special Tax
writing. (Gov. Code § 53323.) If 50% or more of the registered voters within the proposed CFD or the owners of 50% or more of the property within the proposed CFD (and not exempt from the proposed special tax) file written protests against the creation of the CFD, then the City must postpone for at least one year the proceedings to create the CFD or to levy a special tax. (Gov.
Code § 53324.)2
c. Completion of the hearing and the adoption of the Resolution of Formation
In general, the hearing must be completed within 30 days, but it can be continued for up to six months if the City finds that the complexity of the CFD or the need for public participation requires additional time. (Gov. Code § 53325.) During the hearing, the City Council can eliminate proposed facilities or services from the CFD, reduce the proposed special tax, or amend the territory of the CFD. (Ibid.)3
After the public hearing, if there has not been a majority protest and the City Council decides to proceed with the CFD, it adopts a Resolution of Formation. The Resolution of Formation must contain the following:
All information contained in the Resolution of Intention. (Gov. Code § 53325.1(a).)
A statement that the proposed special tax was not precluded by majority protest. (Gov. Code § 53325.1(a)(1).)
The identification of facilities or services proposed to be funded by the special tax. (Gov. Code § 53325.1(a)(2).)
The name, address, and phone number of the office responsible for preparing an annual roll of special tax levy obligations by APN and for estimating future special tax levies. (Gov. Code § 53325.1(a)(3).)
A statement that upon recordation of a notice of special tax lien, a continuing lien to secure each levy of the special tax will attach to all nonexempt real property in the CFD, which will continue until the special tax obligation is permanently satisfied or collection of the tax ceases. (Gov. Code § 53325.1(a)(4).)
The book and page in the book of Maps of Assessments and Community Facilities Districts where the boundary map of the proposed CFD has been recorded. (Gov. Code § 53325.1(a)(5).)
2 There are also special provisions for situations where a majority protests only a specific facility, service, or tax. In those instances, the protested facility, service, or tax may be removed from the Resolution of Formation, while the CFD formation otherwise proceeds. (Gov. Code §53324.)
3 The City Council may reduce the proposed CFD to include less territory than was presented in the hearing notice, but it cannot add territory to the CFD. (Gov. Code 53325.5.) 24 Steps for Creating a Community Facilities City and Imposing a Special Tax
A determination by the City Council that all proceedings were valid and in conformity with the requirements of the Act. (Gov. Code § 53325.1(b).) D. Election on the special tax (90 to 180 days after the Resolution of Formation)
1. Resolution Calling the Election
After the City Council adopts the Resolution of Formation, it can begin the process of levying the special tax. Usually, the City Council will pass a Resolution Calling the Election for the tax at the same meeting at which it adopts the Resolution of Formation. The Resolution Calling the Election will designate the official to conduct the election (generally the county clerk or registrar of voters), and will submit the special tax to a vote of the electorate in the next general election or special election within 90 to 180 days of approval of the Resolution of Formation. (Gov. Code § 53326(a).) If the election is to be held within 125 days of the approval of the Resolution of Formation, the concurrence of the election official is required. (Ibid.) Within three business days of adopting the Resolution of Formation, the election official must be provided with the following (Gov. Code § 53326(a)):
The Resolution of Formation.
The Resolution to Incur Bonded Indebtedness (if adopted). A certified map of sufficient scale and clarity showing the CFD boundaries. A sufficient description of the CFD to allow the election official to determine the CFD’s boundaries.
2. Adjustment of the appropriations limit
When the City submits the tax to the electorate, it should also submit to the electorate a measure to increase the appropriations limit of the City to accommodate the special tax. (Cal.
Const. Art. XIII B; Gov. Code § 53325.7.)
3. Voting
Voting is by registered voters within the CFD. (Gov. Code § 53326(b).)4 If the City submits the tax to the voters in a special election, the election can be conducted by mail. (Gov.
Code § 63326(d).)
4 If the area of a proposed CFD has less than 12 registered voters, the Act allows for a vote by just the landowners.
The constitutionality of this provision, however, is in question. (See City of San Diego v. Shapiro (2014) 228 Cal.App.4th 756.)
25 Steps for Creating a Community Facilities City and Imposing a Special Tax
The tax is authorized if two-thirds of the votes cast are in favor of the tax. (Gov. Code § 53328.) If the tax does not pass, the City Council cannot take any further action with respect to the tax for one year. (Gov. Code § 53329.)
4. City Council Meetings #4 and #5 – Resolution Determining Election Results and Ordinance Levying Special Tax
If the election is successful, the City must first adopt a Resolution Determining Election Results, and then introduce an ordinance to levy the special tax. The ordinance must undergo a “first reading” at one meeting, and then can be formally adopted after a “second reading” at the next meeting. The Act provides the City with authority to enact an ordinance, even if the City does not otherwise have that authority. (Gov. Code § 53316.) The ordinance should include the designation of the office that will annually prepare the special tax levy. (Gov. Code § 53340.2.) The special tax may only be levied at the same or lower rate and in the manner of apportionment specified in the Resolution of Formation. (Gov. Code § 53330.5.)
5. Recordation of Notice of a Special Tax Lien
Concurrently with the passage of the Resolution Determining Election Results and the Ordinance Levying Special Tax, the City must record a notice of special tax lien in the office of the county recorder of each county in which the CFD is located. (Gov. Code 53328.3.) The language required in the notice is set forth in section 3114.5 of the Streets and Highways Code and must include a description of the special tax and the name of the owner of each assessor’s tax parcel in the City. This document has the potential to be lengthy, and the City should consider the amount of time it will take to prepare.
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