POWER POINTS
CITY COUNCIL
MEETING
OCTOBER 17, 2023
October 17, 2023
1 City Council Regular Meeting
October 17, 2023
10/18/2023
City Council Regular Meeting
October 17, 2023
CLOSED SESSION IN PROGRESS
10/18/2023
1 2
October 17, 2023
2 Pledge of Allegiance
10/18/2023
10/18/2023
3 4
October 17, 2023
3 City Council Meeting
October 17, 2023
P1-Talus Project Update
5 6
October 17, 2023
4 City Council Meeting
October 17, 2023
S1 – Land-Based Financing and Policy
Discussion
What is Land-Based Financing?
• Utilizing the value of land and improvements
to raise money for infrastructure and/or
services
• Many different forms such as Assessment
Districts (AD), Community Facilities Districts
(CFD), Enhanced Infrastructure Financing
Districts (EIFD)
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October 17, 2023
5 Why Now?
Potential undertakings that may require financing
options:
• Annexation of Sphere of Influence
• Electrical Infrastructure
• Utility Undergrounding
• Developer-requested as needed for residential
projects
Policy Update
• Adopted in 1999
• EIFD law established 2014
• Does not allow for use of land-based financing
for residential areas
• Changing economic climate and Council
priorities
9 10
October 17, 2023
6 Fieldman,Rolapp & Associates
James Fabien, Principal Chelsea Redmon, Asst Vice Pres.
City Council Meeting
– Study Session
October 17, 2023
11 12
October 17, 2023
7 Table of Contents
• Section I Overview of District & Project • Section II Overview of Financing & Repayment Plan • Section III Conclusion
Table of Contents
Section I. Introduction
Section II. Overview of Land Secured
Financing Section III. Utility Undergrounding
Districts
13 November 28, 2022
Section I
Introduction
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October 17, 2023
8 15
Our Team
CHELSEA REDMON
949.660.7306 direct
949.564.6802 cell
[email protected]
PRINCIPAL ASSISTANT VP
JAMES FABIAN
415.489.2860 direct
949.246.2344 cell
[email protected]
November 28, 2022
Section II
Overview of Land-Secured Financing
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October 17, 2023
9 1717
California Statutes & Constitution
Assessment District (AD)
Primarily 1913 & 1915 Acts for capital
projects
Primarily 1972 & 1982 Acts for maintenance
and public services
Article XIIID of California Constitution
Section 53753 of the Government Code
Community Facilities District (CFD)
Mello-Roos Community Facilities Act of 1982
Articles XIIIA & XIIIC of CA Constitution
Charter cities can use legislative powers
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Eligible Capital Facilities to Finance
Assessment District (Utility Ungrounding Districts)
Authorized public improvements
Must provide local, special benefits to property
Community Facilities District
Public improvements with useful life of 5 years
or longer
Can finance facilities:
oOwned/controlled by issuer and/or
oOwned, operated and maintained by other
public entities
• JCFAs with other public agencies
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October 17, 2023
10 1919
AD vs. CFD
Assessment District
Sets a fixed lien for every parcel
Annual payment reduces lien
Term of payments = term of bonds
Community Facilities District
Sets a maximum annual special tax rate
Maximum tax rate may escalate
Term of tax may outlive term of bonds
2020
Special Benefits vs. Reasonableness
Special Benefits - ADs
Assessment based on the direct and
special benefit each property receives
from improvements
Reasonableness - CFDs
Special tax is not a special assessment
May be allocated on any “reasonable”
basis, as determined by the legislative
body
Cannot be an ad valorem tax
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October 17, 2023
11 2121
AD vs. CFD Comparison - Similarities
Issue ADs CFDs
Permitted and fairly
common
1913 Act - Not
common but
possible
1972 Act – Permitted
and fairly
common
Pay-as-you-go
finance
Allowed if included
in RMA
Automatically
allowed by State
statute
Pay-off or
Prepayment of Lien
Usually level or
escalating debt
service
Almost universally
level debt service
Debt Service
Structure
No State statutory
limit. Standard is not
to exceed 2%
No State statutory
limit. Standard is not
to exceed 2%
Maximum
Residential Property
Tax Burden as % of
Sales Price
2222
AD vs. CFD Comparison - Differences
Issue ADs CFDs
May be expanded
through future
annexations
1913 Act - Boundaries are
generally fixed once
assessment confirmed
1972 Act – Annexation
permitted
District
Boundaries
Special taxes
generally adapt to
changes in land
use
1913 Act - Lien
apportionments cannot
easily be modified
1972 Act – Annual assessment
can adapt
Land Use
Changes
Special taxes
between
undeveloped and
developed land
can differ
1913 Act - Assessments on
undeveloped land is based
on potential development
1972 Act – Annual assessments
generally differ between
undeveloped and
developed parcels
Assessment of
Undeveloped
Property
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October 17, 2023
12 2323
Major Factors Favoring an AD
ADs are appropriate for:
Small, local infrastructure projects
with little “General Benefit”
Projects with multiple property
owners
Projects where a fixed lien is
important and property owner can
pay-off during formation process or
pre-pay in the future
2424
Major Factors Favoring a CFD
CFDs are appropriate for:
General benefit “community facilities”
Projects with few property owners, or broad
support
Projects requiring flexibility
oPhased land development projects
o Uncertainties about eventual land use
Projects needing targeted economic burden
oExempting publicly-owned parcels
oReducing burden on select categories of
parcels/uses
Projects requiring funding for eligible services
and maintenance & operation activities
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October 17, 2023
13 2525
CFD Special Election Process Conducted after Resolution of Formation This is an election under the Elections Code
Requires 2/3 approval of “qualified electors”
If 12 or more registered voters in CFD,
registered voter election
If less than 12 registered voters, landowner
election (one vote per acre or portion of acre) Record Notice of Special Tax Lien within 15 days of election
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Assessment Ballot Process Required by Proposition 218 Mailed with Notice of Public Hearing
This is not an election, not a secret
ballot Ballots opened and tallied after
hearing
Weighted by assessment amount More “no” than “yes”, then no assessment can be levied
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October 17, 2023
14 2727
Assessment Process After Formation
Recordation of Notice of
Assessment 30-Day Cash Collection Period
Mailed Notice to Pay Assessment
Cash payment discount
Paid / Unpaid List
2828
CFD Public Hearing Report Description and estimated costs of facilities and services being funded
Usually includes copy of Rate and
Method of Apportionment of
Special Tax
Must be filed with the Clerk prior to
public hearing
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October 17, 2023
15 2929
Rate and Method of Apportionment Approved by public agency at ROF and by 2/3 vote of qualified electors Describes methodology used to calculate the annual special tax levy
Must generate amount needed each
year to pay bond debt service and
admin expenses, to replenish reserve
fund, and to pay directly for facilities
and/or services
3030
CFD Special Tax Formulas:
Developed Property Special Tax
Bond market expects 110% debt service coverage
at buildout “Developed” trigger can be final map, building permit, certificate of occupancy, or other defined
event as of a specified date
Categories can be based on land use, home size,
lot size, density, or other “reasonable” criteria
Public agency policy limits maximum tax rate
Avoid variability in special taxes levied on
Developed Property
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October 17, 2023
16 3131
CFD Special Tax Formulas:
Undeveloped Property Special Tax
Applies to parcels that do not yet meet
definition of “Developed Property” Typically charged on a per-acre basis Provides coverage prior to buildout Should absorb variability in special tax levy prior to buildout
3232
CFD Special Tax Formulas:
Additional Items to Consider Rate of Escalation (facilities vs. services) Steps of Taxation
Backup Special Tax
Transition Event “PayGo” Special Tax Revenues Prepayment Formula 31 32
October 17, 2023
17 3333
Engineer’s Report
S&H Code §10204 (1913 Act) Plans & Specifications Estimate of Costs Assessment Diagram Assessment Methodology
Assessment Roll Annual Administration Costs
3434
Engineer’s Report
S&H Code §2960 (1931 Debt Limitation Act) Total principal amount of Unpaid Assessments on parcels Total true value of parcels Total Lien / Value (must be less than 50%, by Code)
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October 17, 2023
18 3535
Engineer’s Report Key information document in a dispute Prepared by a Registered Prof. Engineer Proposition 218 requirements General Benefit should be identified,
quantified and discussed
Special Benefit should be clearly defined
Assessment spread clearly detailed
Special treatment of public parcels should
be discussed
3636
Administration - Basic Steps
Community Facilities Districts Assign taxable parcels to appropriate tax category Calculate “Special Tax Requirement”
Debt Service
Administrative Expenses
Pay-as-you-go facilities costs
Services costs Apply RMA to determine special tax for each parcel Submit levy to county auditor’s office before deadline
With most CFDs, one-time ordinance at formation
allows for annual special tax levy without further
action of legislative body
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October 17, 2023
19 3737
Administration - Basic Steps
Assessment Districts Confirm prepayment of assessment liens Perform reapportionments as needed Identify Debt Service (principal & interest) for each parcel Determine Administrative Cost and allocate to each parcel Debt service + Administrative Cost = Annual Payment Submit levy to county auditor’s office before deadline Record release of assessment lien for prepayments With ADs, resolution at formation allows for annual assessment levy without further action of legislative body November 28, 2022
Section III –
Utility Undergrounding Districts
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October 17, 2023
20 Background On City of Laguna Beach Utility Undergrounding District The location, surrounding open space, limited access points, and terrain of Laguna make it one of the most vulnerable cities in California when it comes to wildfires and other natural disasters. In addition, many properties within Laguna Beach enjoy views of the ocean or the open space areas but the views are impacted by overhead utility lines. As such, the City of Laguna Beach is supportive of utility undergrounding projects that provide safety, reliability, and aesthetic benefits to the community. The City, in partnership with residents, Southern California Edison (SCE), and San Diego Gas and Electric (SDG&E), has done extensive work over the past decade to expedite moving dangerous and obstructive overhead utility wires underground. The City continues to identify projects to promote the undergrounding of utility lines to mitigate the threat of wildfires, improve critical evacuation routes, and improve service reliability, and neighborhood aesthetics throughout the community.
39 Background On City of Laguna Beach Utility Undergrounding District Utility Undergrounding Methods There are generally three methods to undergrounding utilities:
1. Rule 20A – The City collaborates with the utility companies to underground overhead facilities that provide the greatest benefit to the general public. These projects are funded through annually allocated credits provided by the utility companies.
2. Rule 20B – A project that is developed and funded by the City. Alternatively, property owners within a specific area vote to form an Assessment District to underground facilities within their neighborhood.
3. Rule 20C – Property owners work directly with the utility companies to privately underground facilities adjacent to their property. The City generally does not participate in this type of project since it is typically funded and managed by one or more property owners. However, the project design must be submitted to the Community Development Department for Design Review, construction requires a Public Works permit, and the conversion of individual meters to underground service requires electrical permits from the City’s Building Division. Each method listed above provides a mechanism for financing and implementing the underground projects. Utility undergrounding is a lengthy process and can take four to six years to complete depending on the number of active projects, coordination with the utility companies, and the level of support from affected residents. 40 39
40 October 17, 2023
21 Background On City of Laguna Beach Utility Undergrounding District 41 Woods Cove Utility Undergrounding Assessment District No. 2014-1 Project Description
AD 2014-2 is a proposed utility undergrounding assessment district. The district was petitioned in 2014 for portions of the Woods Cove neighborhood for the purpose removing all utility poles and placing existing, overhead utilities underground. The project will enter the Balloting phase in Fall 2023.
Schedule
Engineering designs and construction bidding have been completed. The proposed schedule for the Woods Cove project is as follows: September 14, 2023 - Districtwide Assessment Workshop, 6:00 p.m. at Community and Susi Q Center September 26, 2023 - City Council Meeting to Adopt Resolution of Intention and Resolution to Preliminarily Approve the Engineer's Report Early October - Ballots to be mailed to affected property owners December 12, 2023 (tentative) - City Council Meeting Public Hearing and Tally of Ballots Bond sale tentatively schedule for April of 2024 42 41
42 October 17, 2023
22 Questions/Discussions
43 43
44 October 17, 2023
23 City Council Meeting
October 17, 2023
B1 – Amendment No. 5 with
SilverRock Development Company
Background
• November 2014 Council approves Purchase,
Sale, and Development Agreement
• May through November 2017 golf course
realignment
• November 2018 Council approves
Amendment No. 3 updating schedule to
enable closing of $212 million construction
financing
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October 17, 2023
24 Background
• April 2019 through November 2019 mass
grading and site preparation
• March 2020 through April 2021 project
delays as a result of COVID-19 and cost
escalations as a result of the pandemic
• October 2021 City executed Amendment
No. 4 modifying development schedule,
decreasing TOT receipts 5% for 15-year
term.
Amendment No. 5
Purpose
• Resets financial penalties for missed milestones.
• Allows for recapitalization of the project
• Updates Schedule of Performance
• Outlines TOT penalties
• Gives City additional oversight over how project
funding is expended.
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October 17, 2023
25 Amendment No. 5
Update Schedule
Amendment No. 5
Start Finish
Amendment No. 4
Start Finish
Project
Component
Luxury Hotel 8/30/21 9/30/23 8/30/21 3/31/25
Lifestyle Hotel 9/30/22 7/31/24 9/30/22 12/30/26
Conference and Shared 8/30/21 9/30/23 8/30/21 3/13/25
Golf Clubhouse and Range 8/30/21 11/1/22 8/30/21 11/25/24 Questions?
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October 17, 2023
26 City Council Meeting
October 17, 2023
B2 – Zoom Cloud Phone System
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October 17, 2023
27 Phone System Overview
• Existing Phone System – Mitel
• Phone Provider: Intelsys One
• Hardware and Software Challenges
Existing Challenges
Frequent Outages and
Failing Hardware
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October 17, 2023
28 Phone Options Reviewed
• Verizon One
• RingCentral
• 8x8
• Zoom Phone
ZoomPhone versus Mitel
Internet and Cellular redundancy
Softphone Functionality tested and
proven
Software Applications: Video,
Chat, Phone, Rooms/Webinar
Cost Efficient and Bundling of
Existing Contract
Dependent on Phone Lines
such as Frontier and Spectrum
Hardware issues and Softphone
issues
Mitel sold to RingCentral, analog
equipment being past its prime
with no support
MiCollab competitor considered
archaic for webinterface and
difficult licensing
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October 17, 2023
29 Discussion/Questions
57 58
October 17, 2023
30 City Council Meeting
October 17, 2023
B3 – Amendment to Chapter 2.60 of
Municipal Code - Conflict of Interest
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October 17, 2023
31 City Council Meeting
October 17, 2023
S2 – Discuss City Branded Merchandise
History
• City has previously distributed branded
merchandise at City hosted or supported events.
• Residents & visitors have requested the ability to
purchase promo items for many years.
• City receives requests to purchase postcards,
license plates, stickers, shirts, etc.
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October 17, 2023
32 Examples – City of Downey
Examples – City of Downey
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October 17, 2023
33 Examples – City of Beverly Hills
Examples – City of Laguna Beach
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October 17, 2023
34 City of La Quinta Swag
Proposed Options
• City creates online store where items are sold at
cost
• Create a non-profit that will allow the City to sell
merchandise and create General Fund revenue
• Continue with current process of handing out city
promo items at City events
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October 17, 2023
35 City Council Meeting
October 17, 2023
S3 – 51001 Eisenhower Drive Building
Use Discussion
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October 17, 2023
36 Building Acquisition
• 51001 Eisenhower Drive Acquired for historic
preservation purposes.
• Constructed in 1938, 12 years after La Quinta
Resort’s opening.
• Served for over 40 years as the La Quinta
Palms Realty building.
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October 17, 2023
37 Future of Building
• Currently being upgraded to ensure ADA
Compliance.
• Interest from Local Businesses
• Public/Private Partnerships to be explored.
Potential Uses
Entryway to Bear Creek Trail
Visitor’s Center
Leasable Space for Businesses
Visitor’s Center/Leased Space
Combo
City Facility w/ Conference
Space
Extension of Museum as
Cultural Campus Master Plan
Display of Future Art Exhibits
Other miscellaneous uses as
Directed by Council
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October 17, 2023
38 Direction for Staff
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