DATE:
May 17, 2022
TO:
Mayor and Council Members
FROM:
Nils Bentsen, City Manager
BY:
Rachel Molina, Assistant City Manager
Casey Brooksher, Director of Administrative Services
SUBJECT:
Adoption of a Resolution Establishing the Formation and Certifying the Election Results of Community Facilities District No. 2022-1 (Non-Residential Maintenance and Services)
RECOMMENDED ACTION
It is recommended that the City Council conduct the Public Hearing and after receiving public testimony and deliberation and: 1) Adopt a Resolution Establishing the Formation of the City of Hesperia Community Facilities District No. 2022-1 (Non-Residential Maintenance and Services) (“CFD 2022-1”) and Future Annexation Area, 2) Adopt a Resolution Calling a Special Election and 2) Adopt a Resolution Declaring the Results of a Special Landowner Election and Directing the Recording of a Special Tax Lien.
BACKGROUND
The Mello-Roos Community Facilities Act of 1982 (Government Code Section 53311 and following) (the “Act”) contains the statutory framework pursuant to which the City of Hesperia (the “City”) or other local agencies may form a community facilities district (“CFD”) for the purpose of financing the purchase, construction, expansion, improvement or rehabilitation of public facilities or the provision of certain authorized public services or maintenance. A CFD may finance such public facilities, services or maintenance through the levy of special taxes within the geographic boundaries of the CFD. Additionally, to the extent a CFD is formed to pay for public facilities, bonds secured by such special taxes may be issued for a CFD. No bonds may be issued for a CFD formed to fund services. The property owner has filed a petition requesting the formation of the CFD.
During May 2021, the City and its consultant NBS completed the Fiscal Impact Analysis for Citywide Future Development (FIA). This analysis identified the fiscal impacts of new development to the City. Additionally, the study looked to determine a funding mechanism for enhanced police protection services as well as funding for enhanced roadway maintenance services for future non-residential development.
To mitigate the negative fiscal impacts associated with these enhanced services, the City is currently considering the formation of CFD 2022-1 to fund maintenance and associated services related to new non-residential development. The City adopted Local Goals and Policies related to the use of CFDs at the April 1, 2008 City Council meeting as Resolution No. 2008-032, as required by the Act. The next step in in the process of forming CFD 2022-1 is to adopt the Resolution of Intention (the “ROI”).
The ROI includes a description of the services to be provided, a map of the boundary of CFD 2022-1, including Future Annexation Area, and the Rate and Method of Apportionment (the “RMA”) which details the manner in which special taxes may be levied within CFD 2022-1.
A Future Annexation Area allows future developments within the area to annex by unanimous written consent of the property owner.
ISSUES/ANALYSIS
Resolution of Intention
This action relates to the ROI, which formally states the City’s intent to form CFD 2022-1. The ROI does not actually form CFD 2022-1 or authorize the levy of the special taxes; rather, the ROI initiates proceedings. The ROI also approves the boundary map, including Future Annexation Area, for the proposed CFD 2022-1, which is attached hereto as Attachment B, and is on file with the City Clerk. The ROI includes the following information, as required by statute:
declares the intention to form CFD 2022-1, and describes generally the boundaries; adopts the boundary map, including Future Annexation Area, for CFD 2022-1; states that the full name of CFD 2022-1 shall be “City of Hesperia Community Facilities District No. 2022-1 (Non-Residential Maintenance and Services).” describes the services to be funded;
states that, except where funds are otherwise available, a special tax sufficient to pay for all services, secured by recordation of a continuing lien against all nonexempt real property in the district, will be annually levied within the area, and specifies the rate and method of apportioning the special tax, subject to voter approval; fixes a time and place for a public hearing on the establishment of the CFD, which is proposed to be May 17, 2022, at 6:30 pm; describes the proposed voting procedure; and
describes future annexation by unanimous written consent of property owners in the future annexation area where applicable.
Rate and Method of Apportionment
The ROI includes a description of the rate and method of apportioning the special tax. The City has been working with its special tax consultant to prepare a Rate and Method of Apportionment (the “RMA”) setting forth a methodology for CFD 2022-1’s proposed special tax. The RMA is attached to the ROI as Exhibit “A” thereto.
Pursuant to the RMA, the proposed special tax is to be levied on all taxable, non-exempt parcels within the District’s service area. Specifically, the RMA includes proposed special taxes for various land use categories as follows:
MAXIMUM SPECIAL TAX RATES FISCAL YEAR 2022/23*
Property Type
Maximum Special
Tax Rate
Per
Industrial Property
$0.15
Building Square Foot
Industrial Parking Facility Property
$0.15
Improved Square Foot
Mixed Use Property
$0.15
Building Square Foot
*On each July 1, commencing on July 1, 2023, the Maximum Special Tax Rate shall be increased by the Tax Escalation Factor.
The special taxes set forth in the table on the previous page are proposed to be levied within the boundaries of CFD 2022-1 alone. The RMA includes additional details on inflationary increases for special taxes, procedures for appeals, exemptions, and other relevant information.
Next Steps
Adopting the ROI is the first formal step in forming CFD 2022-1. This action only declares the intention to form CFD 2022-1, but additional steps will be required to form CFD 2022-1 and impose the special taxes.
At the May 17, 2022 meeting, the City will hold a joint public hearing and provide an opportunity for public testimony on the formation of CFD 2022-1 and the establishment of a future annexation area. Notice must be published prior to the date of that hearing. At the hearing, if oral or written protests are filed by 50% or more of the registered voters within CFD 2022-1 or Future Annexation Area or the owners of more than 50% of the property within the proposed CFD 2022-1 or Future Annexation Area, the City must terminate proceedings. If not, the City will adopt a resolution forming CFD 2022-1, and call a special election and the City will form the Future Annexation Area where property owners will be permitted to join the CFD by unanimous written consent to the special taxes. The Unanimous written consent essentially serves as an election for a limited number of property owners where it is applicable. The Future Annexation Area will affect new non-residential development within the City.
If two-thirds of the votes cast are in favor of imposing the special tax, CFD 2022-1 may begin to impose the tax, and will file forms with the County for collection of the tax.
FISCAL IMPACT
In order to provide enhanced law enforcement and roadway services, the Fiscal Impact Analysis identified the necessary funding amount of $371.44 per 1,000 building square feet, or $0.37 per building square foot. As a policy matter with a goal of not hindering new non-residential development, the City has determined to set an initial maximum special tax rate of $0.15 per building square foot for Industrial and Mixed-Use land uses. The following table includes the estimated budget to fund the enhanced services as well as the costs to administer CFD 2022-1.
Description
Value
Total Estimated Square Footage
$3,745,429
Maximum Special Tax Rate Per Building Square Foot
0.15 $ 561,814
CFD Administration and County Collection Costs
5,509
Total Initial CFD Budget
$567,323.55
The cost of formation of CFD 2022-1 is approximately $17,000, which will be borne by the City. Subsequently, should any development be annexed into the district, those costs are approximately $4,000 and will be paid by the owner of the property being annexed.
ALTERNATIVE(S)
The City Council may provide alternative direction to staff.
ATTACHMENT(S)
Resolution Establishing the Formation of the CFD
Resolution Calling for a Special Election
Resolution Declaring the Results of a Special Landowner Election Ordinance Authorizing the Levy of Special Taxes in a Community Facilities District CFD Special Tax Report
City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT
Staff Report to the City Council
Adoption of Resolution of Establishing Formation and Certifying the Election Results for CFD 2022-1 May 17, 2022