City of Hesperia
STAFF REPORT
DATE: June 20, 2023
TO: Mayor and Council Members
FROM: Rachel Molina, City Manager
BY: Casey Brooksher, Director of Administrative Services
SUBJECT: Adoption of a Resolution of Intention to Form Community Facilities District No. 2023-1 (Silverwood Maintenance and Services)
RECOMMENDED ACTION
It is recommended that the City Council: 1) Adopt a Resolution of Intention With Respect to the Formation of Proposed City of Hesperia Community Facilities District No. CFD 2023 -1 (Silverwood Maintenance and Services) (“CFD 2023-1”).
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 certain authorized public services or maintenance. A CFD may finance such 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 owners have filed petitions requesting the formation of the CFD.
In 2022, the City and its consultant NBS completed the Fiscal Impact Analysis (FIA) for the Silverwood Development. This analysis identified the fiscal impacts of the new development to the City. Additionally, the study looked to determine a funding mechanism for enhanced public safety services as well as funding for enhanced roadway maintenance services and trail maintenance for future Silverwood development.
To mitigate the negative fiscal impact s associated with these enhanced services, the City is currently considering the formation of CFD 2023-1 to fund maintenance and associated services related to the new Silverwood 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 the process of forming CFD 2023-1 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 2023-1, and the Rate and Method of Apportionment (the “RMA”) which details the manner in which special taxes may be levied within CFD 2023-1.
Staff Report to the Mayor and Council Members
Adoption of Resolution of Intention for CFD Formation
June 20, 2023
ISSUES/ANALYSIS
Resolution of Intention
This action relates to the ROI, which formally states the City’s intent to form CFD 2023-1. The ROI does not actually form CFD 2023-1 or authorize the levy of the special taxes; rather, the ROI initiates proceedings. The ROI also approves the boundary map for the proposed CFD 2023-1, 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:
(a) declares the intention to form CFD 2023-1 , and describes generally the boundaries;
(b) adopts the boundary map for CFD 2023-1;
(c) states that the full name of CFD 2023-1 shall be “City of Hesperia Community Facilities District No. 2023-1 ( Silverwood Maintenance and Services).”
(d) describes the services to be funded;
(e) 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;
(f) fixes a time and place for a public hearing on the establishment of the CFD, which is proposed to be August 1, 2023, at 3:00 pm; and (g) describes the proposed voting procedure.
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 2023-1’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 shown below. The RMA also includes additional details on inflationary increases for special taxes, procedures for appeals, exemptions, and other relevant information.
The developer will be utilizing BOLD Financing Bonds under a separate CFD, CFD No. 2023-11 (City of Hesperia – Silverwood), of which $200 will be allocated to the City for a total of $600. The RMA includes transition language once the CMFA CFD No. 2023-11 Bonds have been fully repaid and the District determines that no additional BOLD Financing bonds are to be issued. As a result, the initial maximum special tax rates prior to the transition year will be $400 for Non- Age Qualified Single-Family Detached Property, which is approximately 67% of the $600 maximum special tax rate as shown in Table 1. Accordingly, all other rates were reduced by approximately 33% in order to determine the maximum special tax rates prior to the transition year as shown in Table 2, which includes the $400 from CFD 2023-1 and $200 previously issued from BOLD. After the transition year, the Maximum Special Tax for each parcel of Taxable Property will increase as shown in Table 2 below:
Staff Report to the Mayor and Council Members
Adoption of Resolution of Intention for CFD Formation
June 20, 2023
TABLE 1 – PRIOR TO THE TRANSITION YEAR
MAXIMUM SPECIAL TAX RATES
FISCAL YEAR 2023/24*
Land Use Category
Maximum
Special Tax Rate Per
Non-Age Qualified Apartment Property $340.00 Unit
Non-Age Qualified Single-Family Attached Property 360.00 Unit Non-Age Qualified Single-Family Detached Property 400.00 Unit Age Qualified Single-Family Attached Property 360.00 Unit Age Qualified Single-Family Detached Property 380.00 Unit Hotel Property 0.09 BSF
Retail/Restaurant Property 0.14 BSF
Office Property 0.23 BSF
*On each July 1, commencing on July 1, 2024, the Maximum Special Tax Rate shall be increased by the Tax Escalation Factor.
TABLE 2 – COMMENCING IN THE TRANSITION YEAR
MAXIMUM SPECIAL TAX RATES
Land Use Category
Maximum
Special Tax Rate Per
Non-Age Qualified Apartment Property $510.00 Unit
Non-Age Qualified Single-Family Attached Property 540.00 Unit Non-Age Qualified Single-Family Detached Property 600.00 Unit Age Qualified Single-Family Attached Property 540.00 Unit Age Qualified Single-Family Detached Property 570.00 Unit Hotel Property 0.13 BSF
Retail/Restaurant Property 0.21 BSF
Office Property 0.34 BSF
*On each July 1, commencing on July 1, 2024, 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 2023-1 alone.
Additionally, the City and the Developer has agreed to periodically review the aforementioned rates on the following schedule based on the Developer’s phasing of development:
• After completion of Phase 1
• Prior to the start of Phase 5
• Prior to the start of Phase 6
Staff Report to the Mayor and Council Members
Adoption of Resolution of Intention for CFD Formation
June 20, 2023
Next Steps
Adopting the ROI is the f irst formal step in forming CFD 2023-1. This action only declares the intention to form CFD 2023-1, but additional steps will be required to form CFD 2023-1 and impose the special taxes.
At the August 1, 2023, meeting, the City will hold a joint public hearing and provide an opportunity for public testimony on the formation of CFD 2023-1. 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 2023-1 or the owners of more than 50% of the property within the proposed CFD 2023-1, the City must terminate proceedings. If not, the City will adopt a resolution forming CFD 2023-1, and call a special election. If two-thirds of the votes cast are in favor of imposing the special tax, CFD 2023-1 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 public safety , roadway and trail maintenance services , the Fiscal Impact Analysis identified the necessary funding amounts by development type. As a policy matter with a goal of not hindering new Silverwood development, the City has determined to set an initial maximum special tax rate of $ 600 for Non-Age Qualified Single- Family Detached Property, which is approximately 70% of the rate identified in the Fiscal Impact Analysis. As so, all other rates were reduced by approximately 30% in order to determine the initial maximum special tax rates.
However as mentioned above, the developer will be utilizing BOLD Financing under a separate CFD, CFD No. 2023-11 (City of Hesperia – Silverwood). As a result, the initial maximum special tax rates prior to the transition year will be $400 for Non- Age Qualified Single-Family Detached Property, which is approximately 67% of the $600 maximum special tax rate as shown in Table
1. Accordingly, all other rates were reduced by approximately 33% in order to determine the maximum special tax rates prior to the transition year as shown in Table 2. The RMA includes transition language once the CMFA CFD No. 2023 -11 bonds have been fully repaid and th e District determines that no additional BOLD Financing bonds are to be issued. After the transition year, the Maximum Special Tax for each parcel of Taxable Property will increase as shown in Table 3 below. The following table includes the estimated budget to mitigate negative fiscal impacts and provide services as well as the costs to administer CFD 2023-1.
TABLE 3 – COMMENCING IN THE TRANSITION YEAR
Description
Maximum
Special Tax
Rate
Anticipated
Number of
Units
Estimate
Special Tax
Revenue
Non-Age Qualified Apartment Property $510.00 1,328 $677,280 Non-Age Qualified Single-Family Attached Property 540.00 1,709 922,860 Non-Age Qualified Single-Family Detached Property 600.00 8,097 4,858,200 Age Qualified Single-Family Attached Property 540.00 454 245,160
Staff Report to the Mayor and Council Members
Adoption of Resolution of Intention for CFD Formation
June 20, 2023
Description
Maximum
Special Tax
Rate
Anticipated
Number of
Units
Estimate
Special Tax
Revenue
Age Qualified Single-Family Detached Property 570.00 4,075 2,322,750 Hotel Property 0.13 270,000 35,100
Retail/Restaurant Property 0.21 750,000 157,500
Office Property 0.34 350,000 119,000
Undeveloped Property 1,844.58 N/A Acre
CFD Administration Costs 6,000
$9,343,850
The cost of formation of CFD 2023- 1 is approximately $38,500, which will be borne by the Petitioners.
ALTERNATIVE(S)
1. The Council may provide alternative direction to Staff.
ATTACHMENT(S)
1. Resolution of Intention to Form Community Facilities District No. 2023-1
2. Fiscal Impact Analysis
3. Rate and Method of Apportionment for Community Facilities District No. 2023-1
4. Boundary Map for Community Facilities District No. 2023-1
5. Petitions signed by property owners and accepted by City Clerk requesting City form the CFD