4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 Subject
Special Assessment and
Community Facilities District Goals
and Policies
CITY OF MENIFEE
City Council Policy
Effective Date: 9/6/11
Last Modified:
4/15/20__/__/25
Policy Number: CC-20
Approving Authority:
City Council
Page | 1
1. PURPOSE
Pursuant to Section 53312.7 of the California Government Code, the City Council of the City o f M enifee ( hereafter t he “ City C ouncil”) h ereby s tates i ts g oals a nd p olicies concerning the use of Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (hereafter the “Mello Roos Act”) in providing adequate public c apital i nfrastructure, f acilities a nd e quipment f or t he r esidents o f t he C ity o f Menifee ( the “ City”). T he f ollowing g oals a nd p olicies s hall a pply t o a ll c ommunity facilities districts (each a “Community Facilities District”) and to all assessment districts (each an “Assessment District” and together with any Community Facilities District, the “Districts” or individually, a “District”) under the improvement acts of 1911, 1913, 1915 and 1 972 ( the “ Improvement A cts”) h ereafter f ormed by t he City. Any policy or g oal stated herein may be supplemented or amended or deviated from upon a determination by t he C ity C ouncil t hat s uch s upplement, a mendment o r d eviation i s n ecessary o r desirable, a nd a ny p olicy o r g oal s tated h erein s hall b e d eemed a mended o r supplemented i n t he e vent, a nd a s o f t he d ate, i f e ver, t hat s uch a mendment o r supplement is required to ensure compliance with the Act or any other laws of the State of California or federal laws of the United States of America.
2. POLICY
The C ity h as d eveloped t he f ollowing P olicies a nd P rocedures o n d ebt f inancing a s guidelines t o a ssist c oncerned p arties i n f ollowing t he C ity’s a pproach t o s pecial assessment a nd c ommunity f acilities d istrict d ebt f inancing. I t i s t he C ity’s g oal t o support p rojects t hat a ddress a p ublic n eed a nd p rovide a p ublic b enefit. P roposed projects requesting special assessment or community facility district debt financing will be evaluated to determine if such financing is financially viable, and in the best interest of t he C ity, a nd c urrent a nd f uture C ity a nd p roject r esidents. T hese P olicies a nd Procedures are designed to comply with Section 53312.7 of the Government Code.
The C ity o f M enifee w ill c onsider d eveloper o r p roperty o wner i nitiated a pplications requesting the formation of community facilities or special assessment districts and the issuance of bonds to finance eligible public facilities and/or public services necessary to serve n ewly d eveloping r esidential p rojects, a nd m ay c onsider c ommercial a nd/or industrial projects. The following criteria will be applied to all districts by the City staff with final determination and findings to be made by the City Council:
A. When tax-exempt f inancing of project public f acilities will result in a significant public benefit.
City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies B. When a S pecific P lan h as b een a dopted o n t he p roperty o r t he C ity h as negotiated a nd e xecuted a D evelopment A greement a ddressing p roject implementation either of which includes requirements to form a District to finance public improvements or services.
C. Each time a District is formed for the benefit of a development project where the maintenance r equirements w ill e xceed n ormal C ity s tandards o r w here s uch development requires the provision of additional services, the City will require the creation o f a n a lternative f inancing m echanism t o p ay f or s uch m aintenance requirement or such additional services, including but not limited to annexation to a City maintenance District.
D. Existing neighborhoods may apply to the City for the use of a District to finance local or neighborhood serving facilities. The City will apply applicable provisions of these policies to those financing programs for existing neighborhoods.
E. The City shall m ake t he determination as t o whether a proposed District shall proceed under the provisions of the Improvement Acts or the Mello-Roos Act.
The City may confer with consultants and the applicant to learn of any unique district r equirements s uch a s f acilities s erving t he r egional a rea o r l ong-term development phasing prior to making any final determination.
F. All C ity a nd c onsultant c osts i ncurred i n t he e valuation o f n ew d evelopment district a pplications a nd t he e stablishment o f d istricts w ill b e p aid b y t he applicant(s) b y a dvance d eposit i ncrements. T he C ity s hall n ot i ncur a ny non-reimbursable e xpense f or p rocessing a ssessment o r c ommunity f acilities districts. Expenses not chargeable to the district shall be borne by the applicant.
G. The City shall not offer CFD financing for projects that consist of condo or single family homes where 5% or more of the proposed units are intended for or used as rental property unless the developer receives express advance approval from the C ity. T he f oregoing r estriction s hall n ot a pply t o m ultifamily r esidential o r commercial property.
3. FINANCE COMMITTEE
All proposed Districts shall be reviewed by the City Finance staff for adherence to policy prior to being presented to the Finance Committee and/or City Council. Any variances from policy as well as any other material information will be noted by the Finance staff and reported to the City Council with recommendation for action.
4. RESOURCE CONSULTANTS
Bond Counsel Financial
Advisor Assessment
Engineer Special Tax
Consultant Appraiser
Economist/Market Absorption Specialist
Bond Underwriter
4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 Police and fire protection facilities
Street lighting
Governmental facilities
Libraries
Recreation facilities, including golf
courses
Streets, highways and bridges
Sanitary sewer facilities Biological mitigation measures involving land acquisition, dedication
and revegetation
Traffic signals and safety lighting
Flood control facilities
Storm drain facilities
Public utilities
Disclosure Counsel
Fiscal Agent
The City shall have the sole discretion as to selection of consultants and determination of fees and expenses of all consultants necessary for the formation of a Special District and the issuance of bonds. Prior consent of the Proponent(s) shall not be required in the d etermination b y t he C ity o f t he c onsulting a nd f inancing t eam. C osts o f t he Proponent(s) and any costs of consultants working on behalf of the Proponents(s) are not eligible for reimbursement form a future issuance of bonds, No f irm m ay s erve a s b oth d esign e ngineer a nd e ngineer o f w ork a nd a ssessment engineer or special tax consultant on the same project, pursuant to Section 87100 of the Government Code.
5. PROCEDURE
A. ELIGIBLE PUBLIC FACILITIES; PRIORITY
Priority f or C ommunity F acilities D istrict f inancing s hall b e g iven t o p ublic facilities directly benefiting the City as well as those improvements identified by the City as the most necessary to serve the specific needs of the portion of the City in which the Community Facilities District will be located. The financing of public facilities to be owned and operated by public agencies other than the City shall be considered on a case by case basis. The list of eligible public facilities include but are not limited to the following and may include facilities included as part of the City’s or another public agencies development impact fee programs to the extent permitted by the Mello Roos Act or the Improvement Acts:
Potable and reclaimed water facilities Landscaping
Parks
In g eneral, s treets, h ighways a nd b ridges; s treet l ighting; t raffic s ignals a nd safety lighting; parks; and storm drain facilities will have priority over the others, however, t he C ity w ill e valuate t he n eeds o f t he p roject a rea a nd h as f inal determination a s t o a ny f acility’s e ligibility f or f inancing, a s w ell a s t he prioritization of facilities to be included within a financing district. Use of bond proceeds f or g rading a nd r ight-of-way a cquisition w ill b e r eviewed b y t he C ity and bond counsel on a case-by-case basis.
City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies It is secondarily t he policy of t he City t o assist in the provision of other public facilities when to do so is necessary, in the sole discretion of the City Council acting a s t he l egislative b ody o f t he a ffected C ommunity F acilities D istrict, t o serve taxpayers residing within or owning property within the City boundaries.
Additionally, t he C ity m ay f inance a ny o ne o r m ore o f t he t ypes o f s ervices specified in Section 53313 of the Act. Priority for Community Facilities District financing s hall b e g iven t o s ervices p rovided b y o r d irectly b enefiting t he C ity and, if multiple services are to be financed, with no service having priority over another service; provided, however, t he City has f inal determination as t o any service’s eligibility for financing. The City shall not finance services on behalf of other public agencies.
It is acknowledged the Mello-Roos Act permits the financing of fee obligations imposed by governmental agencies, the proceeds of which fees are to be used to f und p ublic c apital i mprovements. T he C ity w ill c onsider a pplications t o finance f ee o bligations o n a c ase-by-case b asis. T he C ity m ay c ondition t he financing o f f acilities i ncluded a s p art o f t he C ity’s o r a nother p ublic a gency’s development impact fee programs on the applicant’s agreement to participate in the financing of City services for public safety.
When i t i s d etermined b y t he C ity t hat f ees a re t o b e f inanced, t he C ity m ay collect a p remium o f t he t otal f ees t o b e f inanced. S uch p remium s hall n ot exceed twenty percent (20%) of the total fees to be financed. The City may use the premium to finance public facilities and improvements directly benefiting and identified by the City as the most necessary to serve the specific needs of the portion of the City in which the Community Facilities District will be located.
B. CREDIT QUALITY – VALUE-TO-LIEN RATIO
Credit q uality w ill b e d etermined i n p art b y t he D istrict ( or i mprovement a rea) property value-to-lien ratio which will be at a minimum 4:1, including the value of the f inanced p ublic i mprovements t o b e i nstalled, a nd c onsidering a ll p rior o r pending s pecial t axes o r i mprovement l iens a nd d ebt. V alue-to-lien r atios o f individual parcels will be reviewed to analyze credit quality. Acceptance by the City o f t he v alue-to-lien r atio w ill b e d etermined b y a n a ppraisal w ith recommendations from bond counsel, any financial advisor, and the underwriter with consideration of the project and diversification of land ownership.
The appraisal shall be coordinated by, under the direction of, and addressed to the City. The applicant shall pay all costs associated with the preparation of the appraisal r eport t hrough a n a dvance d eposit o f f unds w ith t he C ity. T he appraiser should be credentialed by the State of California Office of Real Estate Appraisers a nd b e a M ember o f t he A ppraisal I nstitute ( MAI). T he a ppraiser should h ave d emonstrated p rior e xperience i n a ppraising p roperty s ubject t o special assessments or taxes in conjunction with a bond offering.
The a ppraisal s hall b e c onducted i n a ccordance w ith c riteria, s tandards a nd assumptions i n a ccordance w ith t he C alifornia D ebt a nd I nvestment A dvisory 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies Commission Appraisal Standards for Land-Secured Financings, and based upon the r ecommendations f rom t he C ity’s f inancing t eam. I n e very c ase, t he appraisal s hall r eflect n ationally U niform S tandards o f P rofessional A ppraisal Practice o f t he A ppraisal F oundation a nd e mploy a ll, o r a c ombination o f:
discounted cash f low, bulk sale comparable, raw land value as is, and project build-out values.
Upon receiving an appraisal, determining the value-to-lien ratio, and evaluating the project and current underwriting criteria, the City will require letters of credit or other security to secure payment of the special taxes to be levied annually on properties w ithin t he D istrict. L etters o f c redit o r o ther s ecurity m ay a lso b e required for individual parcels of specific property ownership within a District.
For p rojects w ith a s ignificant a mount o f d evelopment o r t he r efunding o f outstanding s pecial a ssessment a nd c ommunity f acilities d istrict d ebt, t he assessed value of property or other mass appraisal techniques may be options for the establishment of credit quality.
Depending on the circumstances of the development, a market absorption study may b e r equired. C ity w ill r etain t he c onsultant t o p repare a r eport t o v erify market absorption assumptions and projected base sales prices of the properties subject t o t he s pecial t axes o r a ssessments i n t he D istrict. T he m arket absorption study shall be completed prior to completion of the appraisal, and the appraisal shall take into consideration the conclusions of the market absorption study. T he C ity m ay r equire a m ortgage s tudy t o a nalyze e xisting t ypes o f mortgages i n t he D istrict t o p rovide a dditional i nformation t o p otential b ond investors.
C. SECURITY
The C ity m ay, a t i ts d iscretion, r equire a dditional c redit e nhancement t o b e provided b y o ne o r m ore d evelopers a nd/or l andowners t o i ncrease t he credit quality of any CFD bond issue and to reduce the potential for a bond default.
Such c redit e nhancements m ay b e r equired i n s ituations w here t here i s a n insufficient value-to-lien ratio, where a substantial amount of the property within a CFD i s u ndeveloped, w here p roperty o wnership i s c oncentrated, w here t ax delinquencies are present in parcels within the CFD, and in any other situation as required by the City. The form of any credit enhancement is subject to the approval b y t he C ity, a nd t he C ity s hall i mpose s pecific r equirements w ith respect t o s uch c redit e nhancement; h owever, s uch c redit e nhancement w ill generally b e i n t he f orm o f a n i rrevocable s tandby l etter-of-credit o r a c ash deposit, will be required to be in an amount not less than 200% of the share debt service or a 2-year security payment of the special tax requirement allocable to the a pplicable d eveloper-owned p arcels f or which s uch c redit e nhancement i s required, and will be required to remain in effect until the share of debt service allocable to such developer-owned parcels is less than 20% of the annual debt service o n a ll o utstanding b onds f or s uch C FD. T he c redit e nhancement w ill generally b e r equired t o b e i ssued o r g uaranteed b y a n e ntity, t he l ong-term 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies unsecured obligations of which are rated at least “A” by Moody’s Investor Service or S&P Global Ratings.
6. EQUITY OF SPECIAL TAX FORMULAS AND MAXIMUM SPECIAL TAXES Special tax formulas for Community Facilities Districts shall provide for minimum special tax l evels w hich s atisfy t he f ollowing e xpenses o f a ll C ommunity F acilities D istricts:
(a) at l east 1 10 p ercent d ebt s ervice c overage f or a ll C ommunity F acilities D istrict bonded indebtedness, (b) the reasonable and necessary administrative expenses of the Community F acilities D istrict, a nd ( c) amounts e qual t o t he d ifferences b etween expected earnings on any escrow fund and the interest payments due on bonds of the Community Facilities District. Additionally, the special tax formula may provide for the following: ( a) any a mounts r equired t o e stablish o r r eplenish a ny r eserve f und established i n a ssociation w ith t he i ndebtedness o f t he C ommunity F acilities D istrict, (b) the accumulation of funds reasonably required for future debt service, (c) amounts equal to projected delinquencies of special tax payments, (d) the costs of remarketing, credit e nhancement and liquidity f acility f ees, (e) the cost of acquisition, construction, furnishing o r e quipping o f f acilities, ( f) lease p ayments f or e xisting o r f uture f acilities, (g) costs a ssociated w ith t he r elease o f f unds f rom a n e scrow a ccount, a nd ( h) any other costs or payments permitted by law, including, but not limited to, financing any one or more of the types of services specified in Section 53313 of the Mello Roos Act.
The special tax formula shall be reasonable and equitable in allocating public facilities’ costs to parcels within the Community Facilities District. Unless the City determines that special circumstances warrant a change, the special tax formula originally accepted for the C ommunity F acilities D istrict s hall r emain t he s ame i n o rder t o e nsure e quity a s originally envisioned at the time of Community Facilities District formation. At the time of formation of the Community Facilities District, exemptions from the special tax may be given to parcels which are publicly owned, are held by a property owner’s association, are used for a public purpose such as open space or wetlands, are affected by public utility easements making impractical their utilization for other than the purposes set forth in the easements, or have insufficient value to support bonded indebtedness.
It i s t he g oal o f t he C ity t hat m aximum s pecial t axes o r a ssessments o n r esidential owner-occupied property, when taken together with ad valorem taxes, any other special taxes levied pursuant to the Act and assessments applicable to such property, do not exceed in any year two percent (2%) of the greater of the assessed value or appraised value o f s uch p roperty. N evertheless, s pecial t axes o n r esidential o wner-occupied property, w hen t aken t ogether w ith ad v alorem taxes, a ny o ther s pecial t axes l evied pursuant to the Act and assessments applicable to such property, may exceed in any year two percent (2%) of the greater of the assessed value or appraised value of such property if the City determines at the time of formation of a Community Facilities District that over the term of the bonds, the special taxes, ad valorem taxes and assessments are e xpected t o a verage t wo p ercent ( 2%) o r l ess p er y ear o f t he g reater o f t he assessed value or appraised value of such property. It is further the policy of the City to comply with the provisions of Section 53321 of the Act with respect to the escalation of maximum taxes.
4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies Special t axes w ill o nly b e l evied o n a n e ntire C ounty A ssessor’s p arcel, a nd a ny allocation o f s pecial t ax l iability o f a C ounty A ssessor’s p arcel t o l easehold o r possessory interest in the fee ownership of such County Assessor’s parcel shall be the responsibility of the fee owner of such parcel (except where the City is the fee owner of the p arcel a nd h as, s ubsequent t o t he d ate o f a doption o f t hese g oals a nd p olicies, leased the parcel pursuant to a lease with a term of at least 5 years, in which case the lessee shall have the responsibility for the special tax liability) and the City shall have no responsibility therefor and has no interest therein. Failure to pay or cause to be paid any s pecial t axes i n f ull w hen d ue s hall s ubject t he e ntire p arcel t o f oreclosure i n accordance with the Act.
The C ity s hall h ave a r eport p repared w hich: ( a) recommends s pecial t ax r ates a nd methods of allocation among parcels in the proposed Community Facilities District, and (b) evaluates t he s pecial t ax p roposed t o d etermine i t a bility t o a dequately f und identified p ublic f acilities, C ity a dministrative c osts, s ervices ( if a pplicable) a nd o ther related expenditures.
A. The City shall retain a special tax consultant to prepare a Rate and Method of Apportionment and the report described above which:
B. Recommends a special tax formula for the proposed community facilities district.
C. Evaluates t he s pecial t ax p roposed t o d etermine i ts a bility t o a dequately f und identified p ublic f acilities a nd p roposed s ervices, C ity a dministrative c osts, services (if applicable) and other related expenditures. The Rate and Method of Apportionment of special taxes shall be designed to ensure sufficient revenues are produced in case of final development at lower densities than anticipated.
D. The special tax consultant shall also address the resulting aggregate tax burden of all proposed special taxes plus existing special taxes, ad valorem taxes levies and assessments on the properties within the community facilities district.
7. TERMS AND CONDITIONS OF BONDS
The C ity s hall e stablish a ll t erms a nd c onditions o f t he b onds. T he C ity will c ontrol, manage a nd i nvest a ll D istrict i ssued b ond p roceeds. E ach b ond i ssue s hall b e structured to adequately protect bond owners and to not adversely impact the bonding capacity o r c redit r ating o f t he C ity. U nless o therwise a uthorized b y t he C ity, t he following shall serve as bond requirements:
A. A reserve f und equal to the lesser of (i.) 10% of the issue price of the bonds, (ii.) maximum annual debt service or (iii.) 125% of average annual debt service, or as otherwise deemed appropriate by the City.
B. For Districts containing residential property, the timing of bond sales(s) and/or Rate and Method of Special Tax Apportionment shall be such that special taxes or special assessments are levied no later than the first fiscal year following the occupancy o f r esidential u nits. F or a ll D istricts, i nterest s hall n ot b e f unded 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies (capitalized) beyond what is permitted in the Mello Roos Act or the Improvement Acts.
C. The repayment of principal shall begin on the earliest principal payment date for which sufficient special tax revenues can be made available.
D. Beginning with t he commencement of t he repayment of principal, annual debt service shall be level. The City may consider an increasing annual debt service, but such increases shall not exceed 2% per year for the term of the bonds.
E. The maximum special tax shall be established to assure that the annual revenue produced by levy of the maximum special tax shall be equal to at least 110% of the maximum annual debt service plus administration. Under no circumstances shall the coverage be used to support the issuance of Bonds.
F. Prior to the issuance of the bonds, the City shall authorize its bond counsel to commence and process to f inal judgment an action establishing the validity of the p roceedings, s pecial t ax a nd i ssuance o f b onds, u nless a dvised t o t he contrary by such bond counsel.
G. In instances where multiple series of bonds are to be issued, the first series shall include public facilities of highest priority acceptable to the City.
H. All s tatements a nd m aterials r elated t o t he s ale o f s pecial a ssessment o r community f acilities d istrict b onds s hall e mphasize a nd s tate t hat n either t he good f aith, n or t he t axing p ower o f t he C ity i s p ledged t o t he s ecurity o r repayment of the bonds. The sole sources of revenues to secure bond owners are special taxes, annual assessments or foreclosure proceeds.
8. AGREEMENTS
Agreements w ill b e p repared i ncidental t o D istrict f ormation p roceedings i n a f orm satisfactory t o t he C ity a nd c onsistent w ith t hese p olicies. T hese a greements m ay include, but not be limited to:
A. Deposit and Reimbursement Agreement.
B. Funding and Acquisition Agreement.
C. Joint Community Facilities Agreements with any other public agency entitled to receive any portion of the bond proceeds or entitled to own and operate any of the public facilities financed by bond proceeds.
Prior to the formation of a District, all of the agreements specified shall be duly approved and e xecuted b y t he r elevant p arties; p rovided t hat a ny J oint C ommunity F acilities Agreement m ay b e a pproved a nd e xecuted p rior t o t he a pproval o f t he i ssuance o f bonds. Prior to execution of any agreements, such agreements shall be reviewed and approved by bond counsel and the City Attorney and approved by the City Council. 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies
9. USE OF CONSULTANTS
The City shall have the sole discretion as to selection of consultants and determination of fees and expenses of all consultants necessary for the formation of the District and the i ssuance o f b onds, i ncluding t he u nderwriter(s), b ond c ounsel, f inancial a dvisor, assessment engineer, appraiser, trustee, paying agent, market absorption consultant, and t he s pecial t ax consultant after reasonable consultation with t he applicant. Prior consent o f t he a pplicant s hall n ot b e r equired i n t he d etermination by t he City of t he consulting and financing team.
The C ity s hall a lso b e r esponsible f or d etermining t he s tructure o f t he b onds t o b e issued, i ncluding t he m ethod o f s ale ( negotiated o r c ompetitive), t he n eed f or b ond ratings, t he n eed f or e scrow p rovisions, i nvestment o f b ond p roceeds, a nd a ll o ther terms and conditions incidental to structuring and closing a bond issuance.
Consultants o f t he C ity f or t he District shall comply with t he requirements of t he Fair Political Practices Commission and of the California Government Code.
10. ACQUISITION PROVISIONS
The City shall have final determination as to whether it will allow the financing of public facilities through acquisition or if the improvements will be constructed by the City.
In the event the acquisition provisions of the Municipal Improvement Act of 1913 or the Mello-Roos Act are utilized, the City, at its sole discretion, will determine the facilities to be a cquired, t he p riority o f a cquisition o f c ompleted f acilities a nd t he m ethod o f determining r easonable a cquisition c osts A pplicable b idding a nd p revailing w age requirements are extensive and will be addressed during the preparation of the funding and acquisition agreement.
The City has determined (pursuant to Section 53329.5(c) of the Government Code) that the public interest will not be served by allowing property owners to elect to enter into agreements w ith t he C ity t o p erform c onstruction w ork a fter c ompetitive c onstruction bids h ave b een r eceived. T he C ity C ouncil w ill m ake s uch a d etermination i n t he resolution of intention regarding the formation of a community facilities district.
11. DISCLOSURE TO PURCHASERS
Developers who are selling lots or parcels that are within a Community Facilities District shall provide disclosure notice t o prospective purchasers t hat complies with all of the requirements s et f orth i n S ection 53341.5 o f t he G overnment C ode. T he d isclosure notice must be provided to prospective purchasers of property at or prior to the time the contract or deposit receipt for the purchase of property is executed. Developers shall keep an executed copy of each disclosure document as evidence that disclosure has been provided to all purchasers of property within a Community Facilities District.
Owners of land securing 20% or more of the debt service on bonds will be required to provide f inancial i nformation, a s d eemed a ppropriate b y t he C ity, f or i nclusion i n t he continuing disclosure document the City must provide annually and will also be required 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies to provide written undertakings to provide financial and operating data as required by the SEC’s Rule 15c2-12 and by the underwriter of the bonds.
Additionally, t he c ontinuing d isclosure d ocument s hall b e r eported t o C ity C ouncil annually, to receive and file.
12. PROPERTY OWNER SUPPORT
In the instance of multiple property owners, the applicant shall be required to produce letters evidencing other property owners’ support for the scope and establishment of the District as an attachment to the application. The applicant must have concurrence of at least 60% of the other property owners to be included in the proposed District, unless there is an overriding need for the public facilities, or the applicant is willing to separately fund the facilities for non-participating property.
13. LAND USE APPROVALS
Properties proposed f or inclusion in a District must possess a land use determination such t hat p roposed d evelopment l and u ses a nd s pecific f acility r equirements c an b e adequately assessed.
14. EXCEPTIONS TO THESE POLICIES
The City may find in limited and exceptional instances that a waiver to any of the above stated p olicies i s r easonable g iven i dentified s pecial C ity b enefits t o b e d erived f rom such waiver. Such waivers are granted only by action of the City Council based upon specific public purpose and/or health and safety findings.
A waiver of certain provisions of these policies may also be relevant for the refunding of outstanding special assessment and community facilities district debt.
15. APPLICATION PROCESS
Early communication with the City is encouraged to assist applicants in evaluating the feasibility of available financing programs and to discuss program procedures.
A. Preapplication Conference: Applicant meets with City to discuss the proposed project and application procedures.
B. Application Submission: Applicant/developer shall submit an application to the City with a deposit and reimbursement agreement in the amount of $50,000 to $70,000 ( as deemed necessary by staff, based on size of proposed District).
The d eposit w ill b e h andled a s s et f orth i n t he D eposit a nd R eimbursement Agreement as established by the City and approved by the applicant/developer.
This d eposit i s f or t he p urpose o f a pplication p rocessing, p reliminary c osts, retention of appropriate consultants, and the compensation of staff time devoted to the formation of the District. The City will conduct an initial evaluation of the application t o d etermine i f i t i s c omplete and whether additional information is required.
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Special Assessment and Community Facilities District Goals and Policies C. Project R eview: Applicant a nd C ity s taff m eet t o d iscuss i nitial a pplication, including a ny i ssues r aised a nd f urther i nformation t hat m ight b e r equired. I f necessary, applicant submits revised application.
D. Application Processing: Upon City determination that application is complete, staff prepares a staff report, which forwards the request for district formation and project financing and staff recommendation to the Finance Committee for review.
E. CITY C OUNCIL C ONSIDERATION: The C ity C ouncil g rants o r d enies t he application.
F. PROJECT I NITIATION: Staff s ubmits c onsultant c ontracts, r eimbursement agreements and other similar items for City Council consideration.
G. PROJECT I MPLEMENTATION: Applicant, s taff a nd c onsultants m eet t o determine p reliminary p roject s chedule a nd b egin w ork n ecessary t o i nitiate district formation. This document outlines district formation procedures.
16. SPECIAL ASSESSMENT DISTRICT FORMATION PROCEEDINGS FORMAT Assessment district proceedings under the Municipal Improvement Act of 1913 normally provide f or t he c onstruction o f i mprovements b y t he C ity a nd t he f inancing o f s uch improvements with improvement bonds, which are secured by a fixed lien assessment on the benefited property. In certain instances, if authorized by the City, the developer may construct the improvements (or portion thereof), which would be acquired by the City as provided in the proceedings.
The f ormation p roceedings a re s ubject t o a nd c ontingent u pon s atisfaction o f a ll environmental z oning a nd l and u se r egulations. T he f ollowing i s a s ummary o f t he proceedings u nder t he M unicipal I mprovement A ct o f 1 913 f or t he f ormation o f a n Assessment D istrict. A ll s uch p roceedings a re s ubject t o t he r equirements o f t he Improvement Acts, as applicable.
A. Initiation of Proceedings. An applicant or landowner petition for City Council action initiates the District. Upon initiation, the design engineer prepares plans, specifications a nd c ost e stimates o f t he p roposed p ublic i mprovements. T he assessment e ngineer b egins p reparing t he E ngineer’s R eport, i ncluding t he assessment d iagram, a ssessment r oll, d escription o f i mprovements a nd preliminary c ost s pread. I f r equired, t he E nvironmental I mpact R eport “ EIR” consultant begins processing the appropriate environmental documentation for the public improvements.
B. Presentation of Report. Upon completion of the preliminary engineering work, the City Council adopts a resolution of intention to form the assessment district, approves the Engineer’s Report, calls for construction bids, authorizes the future sale of bonds, sets the date, time and place for the public hearing and directs assessment notices to be mailed.
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Special Assessment and Community Facilities District Goals and Policies C. Bid P rocess. F inance D epartment r eceives c onstruction b ids. A ssessment engineer m odifies t he a ssessment r oll a nd E ngineer’s R eport a nd n otifies property owners of revised assessments.
D. Public Hearing. City Council holds public hearing at which written protests are presented a nd p ublic t estimony i s t aken. I f a m ajority p rotest h as n ot b een received, C ity C ouncil a pproves d istrict f ormation, a wards b ids, o rders construction work, confirms the assessments, directs Finance Director/Treasurer to mail assessment notices and approves the bond sale.
E. Cash C ollection P eriod. Treasurer m ay r eceive c ash p ayments d uring t he 30 days following confirmation if property owners elect to pay off the assessment or portion thereof prior to the issuance of bonds.
F. Authorize Issuance of Bonds. City Council determines the balance of unpaid assessments and provides for the issuance of bonds to be secured thereby.
G. Sale o f B onds. Bonds a re i ssued i n e xchange f or t he c ash p roceeds o f t he sale, which are held by the City or its fiscal agent (or paying agent/registrar) and utilized for the construction of public improvements described in the Engineer’s Report.
17. MELLO-ROOS COMMUNITY FACILITIES DISTRICT FORMATION PROCEEDINGS A Community Facilities District is a legally constituted governmental entity created for the purpose of financing public facilities and services.
The f ormation p roceedings a re s ubject t o a nd c ontingent u pon s atisfaction o f a ll environmental, z oning a nd l and u se r egulations. T he f ollowing i s a s ummary o f t he proceedings for the formation of a Community Facilities District under the Mello Roos Act. All such proceedings are subject to the requirements of the Mello Roos Act.
A. Initiation o f P roceedings. Proceedings m ust b e i nstituted w hen a w ritten request is made by a petition signed by 10% of the registered voters or 10% of the landowners by area. The petition shall be accompanied by payment of a fee determined b y t he C ity C ouncil t o b e s ufficient t o p ay f or c osts i ncurred i n conducting the proceedings.
B. Resolution of Intention. Within 90 days of the receipt of a written request or petition, t he C ity C ouncil w ill a dopt a r esolution o f i ntention t o e stablish a community f acilities district (“CFD”). T he resolution will state the name of the proposed CFD, the types of facilities or services to be financed and that, except where funds are otherwise available, a special tax to pay for such facilities and services will be annually levied. The resolution of intention shall also fix a time and place for a public hearing between 30 and 60 days after the adoption of the resolution o f i ntention, d escribe t he m ethod o f l evy a nd a pportionment o f t he special t ax a nd d escribe t he p roposed v oting p rocedure. I n a ddition, t he resolution may specify conditions under which the obligation to pay the special tax m ay b e p repaid a nd p ermanently s atisfied. T he C ity C ouncil d irects i ts 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies responsible officers to study the proposed district and to file a report at or before the public hearing describing the proposed public facilities and services and an estimate of costs.
C. Public Hearing. Protests against the establishment of the community facilities district, the extent of the community facilities district or the furnishing of specified types of public facilities or services may be made orally or in writing by interested persons o r t axpayers. I f 5 0% o r m ore o f t he r egistered v oters, 6 r egistered voters, w hichever i s m ore, r esiding w ithin t he p roposed c ommunity f acilities district o r t he o wners o f 1 /2 o r m ore o f t he a rea o f l and i n t he p roposed community facilities district file written protests against the establishment of the community facilities district, the proceedings are abandoned. If the protests are directed t oward c ertain t ypes o f f acilities o r s ervices, o r a gainst a s pecified special tax, those specific items may be eliminated from the resolution forming the community facilities district. The hearing may be continued for up to 30 days without special findings and up to 6 months if the City Council makes specified findings.
D. Resolution o f F ormation. If t he C ity C ouncil d ecides t o e stablish t he community f acilities d istrict, i t w ill a dopt a r esolution o f f ormation c ontaining similar information as contained in the resolution of intention.
E. Election. If the City Council determines to form the community facilities district, it submits the question of whether special taxes should be levied to an election of the voters ( or l and o wners i f l ess t han 1 2 registered voters preside within t he boundaries of the propose Community Facilities District for each of the 90 days prior t o t he d ate o f t he p ublic h earing) o f t he p roposed c ommunity f acilities district. Combined with the tax proposition, there may be a proposition on the question of incurring bonded indebtedness. The tax, in order to be levied, must be approved by two-thirds of the votes cast and thereafter levied by adoption of an ordinance of the City Council. The Mello-Roos Act provides that the election shall be at the next general election or at a special election to be held between 90 and 1 80 days f ollowing t he c lose o f t he p rotest h earing. T he u nanimous consent of the qualified electors within the proposed district and the concurrence of t he e lection o fficial c onducting t he e lection m ay s horten t he e lection t ime limits.
F. Special T ax B onds. A c ommunity f acilities d istrict m ay b e c reated s olely t o provide the services permitted by statute. However, most community facilities districts have been created specifically for the purpose of levying special taxes to service bonded indebtedness incurred by the community facilities district in order to f inance t he c onstruction o f f acilities. M aintenance D istricts m ay a lso b e created. The proceedings to authorize and incur bonded indebtedness usually parallel the proceedings for formation of the community facilities district and the authorization t o l evy t he s pecial t ax, a lthough t he b ond p roceedings c ould b e conducted separately and at a later date. The proceedings to authorize bonded indebtedness i nvolve a r esolution o f i ntention, p ublic h earing a nd e lection; a ll conducted i n a m anner v ery s imilar t o p roceedings t o f orm t he c ommunity facilities district and levy the tax. Community facilities district bonds may be sold 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies competitively or through negotiated sale and may bear fixed or variable interest rates.
In some cases, a community facilities district may provide specified facilities for only a portion of the land within the community facilities district. In that event, the A ct p rovides f or t he f ormation o f i mprovement a reas f or w hich s eparate elections are conducted and to which a specified special tax applies.
18. ROLES AND RESPONSIBILITIES
A. The Deputy City Manager or designee is responsible for administering this policy and procedure.
B. All employees are responsible for compliance with this policy and procedure.
C. The annual continuing disclosure document shall be reported to City Council, to receive and file.
D. An annual review of outstanding bonds shall be evaluated for refunding.
19. DEFINITIONS
Unless the context otherwise requires, the terms employed in the following policies shall have the meanings specified below:
“Bonds” means bonds authorized and issued under the Mello-Roos Community Facilities Act o f 1 982 o r t he M unicipal I mprovement A ct o f 1 911 a nd t he I mprovement Bond Act of 1915.
“City” means the City of Menifee.
“District” means a community facilities district formed under the Mello-Roos Community Facilities Act of 1982 or an assessment district formed under the Improvement Act of 1911 or the Municipal Improvement Act of 1913, as amended. “Improvement Acts” current enabling legislative Acts of 1911, 1913, 1915 and 1972. “Mello-Roos Act” Mello-Roos Community Facilities Act of 1982. “Public Facilities” means improvements authorized to be constructed or acquired under the M ello-Roos a nd I mprovement A cts i ncluding, b ut n ot limited t o, f ees f or capital f acilities i mposed b y p ublic a gencies a s a c ondition t o a pproval o f t he development encompassed by the district or as a condition to service the district. “Value” or “Fair Market Value” means the value established by the appraisal undertaken to establish value-to-lien ratios for a land-secured financing. 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 City of Menifee Policy CC-20
Special Assessment and Community Facilities District Goals and Policies 4929-4925-4992v1/200299-00004929-4925-4992v3/200299-0000 Comments
4/15/20 City Council Revision, Policy No. Changed to CC-20 Revision No.
0 9/6/11
Date
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20. Revision History
Original Policy (FN-9)
Approved By:
Bill Zimmerman, Mayor
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