RECOMMENDED ACTION
Recommendations: That the City Council and CSD:
1. Conduct a Public Hearing to receive public comments on the City of Moreno Valley General Fund appropriations limit for Fiscal Year 2022/23.
2. Adopt Resolution No. 2022-XX, a resolution of the City Council of the City of Moreno Valley, California, establishing the appropriations limit for Fiscal Year 2022/23.
3. Conduct a Public Hearing to receive public comments on the Moreno Valley Community Services District’s appropriations limit for Fiscal Year 2022/23.
4. Adopt Resolution No. CSD 2022-XX, a resolution of the Moreno Valley Community Services District establishing the appropriations limit for Fiscal Year 2022/23.
SUMMARY
This report recommends that the City Council and the Community Services District Board of Directors conduct public hearings and adopt the resolutions to establish the Gann Appropriations Limits for both the General Fund and the Community Services District (District) for FY 2022/23. The Gann Appropriations Limit, the result of the passage of Proposition 4 in 1979, places limits on the amount of tax proceeds that can F.8
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be appropriated each year. For FY 2022/23 the limit for the General Fund is $158,758,113 and the limit for the District is $25,582,782. With revenues subject to the limit totaling $101,818,614 for the General Fund and $11,587,315 for the District there is still significant capacity to accommodate future revenue growth.
DISCUSSION
Section 7910 of the State Government Code requires a governing body to annually adopt by resolution, an Appropriation (Gann) Limit for the upcoming fiscal year. For FY 2022/23 the appropriation limit for the General Fund is $158,758,113 and the limit for the District is $25,582,782. With revenues subject to the limit totaling $101,818,614 for the General Fund and $11,587,315 for the District there is still significant capacity to accommodate future revenue growth. The Gann calculation is reviewed by the City’s external audit firm as part of the annual audit process.
In 2008, the available capacity between the appropriations limit and the appropriations subject to the limit for the City reached the lowest point at 6.34%. Over the next three years, appropriation levels were reduced as a result of the recession and declining revenues. Since then, as the local economy has improved, the remaining capacity has gradually increased to the current level of approximately 36% of the appropriations limit.
Based on projections from the Long Range Business Plan we expect capacity levels to remain relatively high and we do not foresee any issues going forward that would result in the City reaching the appropriations limit.
The Community Services District continues to maintain sufficient capacity related to the appropriations limit. In 2015, based on a ruling by the City Attorney, revenues that had previously been accounted for as non-proceeds of tax were reclassified as tax related revenues. This restatement resulted in reducing their appropriation capacity from 78% to 38%. Their available capacity is currently approximately 55%. Based on the projections from the Long Range Business Plan we anticipate that the capacity rate will remain in this relative range and we do not foresee any issues with the appropriations limit going forward.
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Adoption of the proposed resolutions will formalize the Gann Appropriations Limits for FY 2022/23.
ALTERNATIVES
1. Conduct a Public Hearing to receive public comments on the City of Moreno Valley General Fund appropriations limit for Fiscal Year 2022/23.
2. Adopt Resolution No. 2022-___, a resolution of the City Council of the City of Moreno Valley, California, establishing the appropriations limit for Fiscal Year 2022/23.
3. Conduct a Public Hearing to receive public comments on the Moreno Valley Community Services District’s appropriations limit for Fiscal Year 2022/23.
4. Adopt Resolution No. CSD 2022-__, a resolution of the Moreno Valley Community Services District establishing the appropriations limit for Fiscal Year 2022/23.
5. Do not conduct a Public Hearing to receive comments on the appropriation limits and do not adopt the proposed resolutions establishing the appropriations limits and provide staff with further direction.
Staff recommends Alternatives 1 through 4 since these actions will adopt the Gann Appropriations Limit in accordance with State law.
FISCAL IMPACT
There is no fiscal impact. Both the General Fund and the District are safely within their legal appropriations limits for Fiscal Year 2022/23.
NOTIFICATION
Notification regarding the adoption of the Gann Limit was published in the newspaper F.8
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on June 6, 2022. The documents were made available for public review on May 31, 2022.
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval
Launa Jimenez Brian Mohan
Financial Resources Division Manager Assistant City Manager Chief Financial Officer/City Treasurer
CITY COUNCIL GOALS
Revenue Diversification and Preservation. Develop a variety of City revenue sources and policies to create a stable revenue base and fiscal policies to support essential City services, regardless of economic climate.
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
ATTACHMENTS
To view large attachments, please click your “bookmarks” on the left hand side of this document for the necessary attachment.
1. FY2022-23 Gann Limit Resolution Gen Fund
2. FY2022-23 Gann Limit Resolution_CSD
3. 2022-23 GANN Public Counter Copy
APPROVALS
Budget Officer Approval ✓ Approved . 6/07/22 10:34 AM
City Attorney Approval ✓ Approved .
City Manager Approval ✓ Approved . 6/07/22 11:13 AM
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1 Resolution No. 2022-___
Date Adopted: June 21, 2022
RESOLUTION NO. 2022-__
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORENO
VALLEY, CALIFORNIA, ESTABLISHING THE
APPROPRIATIONS LIMIT FOR FISCAL YEAR 2022/23
WHEREAS, Article XIIIB of the California Constitution and Section 7910 of the California Government Code require that each year the City of Moreno Valley shall by resolution, establish an appropriations limit for the City for the following fiscal year; and WHEREAS, the City Council adopted the Budget for Fiscal Year 2022/23 a copy of which is on file in the Office of the City Clerk and is available for public inspection; and
WHEREAS, the said budget contains the estimates of the services, activities and projects comprising the budget, and contains expenditure requirements and the resources available to the City; and
WHEREAS, the City’s Financial & Management Services Department has heretofore prepared and submitted data and documentation required for and to be used in the determination of certain matters and for the establishment of an appropriations limit for the City for Fiscal Year 2022/23 and such data and documentation has been available to the public for at least fifteen days prior to adoption of this Resolution; and
WHEREAS, the City Council has elected to use the annual change in the Per Capita Personal Income as the cost of living factor, and WHEREAS, the City Council has considered pertinent data and documentation and made such determinations as may be required by law, and has adopted this Resolution at a regularly scheduled meeting of the City Council.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORENO
VALLEY, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:
1. That the appropriations limit for the City of Moreno Valley for Fiscal Year 2022/23, is hereby established at $158,758,113, and the total annual appropriations subject to such limitation for Fiscal Year 2022/23 is estimated to be $101,818,614.
2. The City Council hereby adopts the findings and methods of calculations set forth in Exhibit A, the Proceeds of Tax Calculation, Exhibit B, the Appropriations (Gann) Limit Calculation, and Exhibit C, the Summary of Annual Appropriation (Gann) Limits. To the extent permitted by applicable law, the City of Moreno Valley reserves the right to change or revise any gross factors associated with the calculation of the limit established pursuant to Article XIIIB of the California Constitution if such changes or revisions would result in a more advantageous appropriation limit in the present or future.
F.8.a
Packet Pg. 3661 Attachment: FY2022-23 Gann Limit Resolution Gen Fund (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR 2 Resolution No. 2022-___
Date Adopted: June 21, 2022
3. Pursuant to Section 53901 of the California Government Code, by no later than August 30, 2022, the City Clerk shall file a copy of this Resolution with the Auditor of the County of Riverside.
4. Within fifteen days after the adoption of this Resolution, the City Clerk shall certify to the adoption thereof and, as so certified, cause a copy to be posted in at least three public places within the City.
BE IT FURTHER RESOLVED that this Resolution shall take effect immediately upon the date of its adoption.
APPROVED AND ADOPTED this 21st day of June, 2022.
___________________________
Mayor of the City of Moreno Valley
ATTEST:
____________________________
City Clerk
APPROVED AS TO FORM:
____________________________
City Attorney
F.8.a
Packet Pg. 3662 Attachment: FY2022-23 Gann Limit Resolution Gen Fund (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR 3 Resolution No. 2022-___
Date Adopted: June 21, 2022
RESOLUTION JURAT
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF MORENO VALLEY )
I, Paul Bradvica, Deputy City Clerk of the City of Moreno Valley, California, do hereby certify that Resolution No. 2022-___ was duly and regularly adopted by the City Council of the City of Moreno Valley at a regular meeting thereof held on the 21st day of June, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
(Council Members, Mayor Pro Tem and Mayor)
___________________________________
CITY CLERK
(SEAL)
F.8.a
Packet Pg. 3663 Attachment: FY2022-23 Gann Limit Resolution Gen Fund (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR 1 Resolution No. CSD 2022-___
Date Adopted: June 21, 2022
RESOLUTION NO. CSD 2022-__
A RESOLUTION OF THE MORENO VALLEY
COMMUNITY SERVICES DISTRICT ESTABLISHING THE
APPROPRIATIONS LIMIT FOR FISCAL YEAR 2022/23
WHEREAS, Article XIIIB of the California Constitution and Section 7910 of the California Government Code require that each year the Moreno Valley Community Services District (District) shall by resolution, establish an appropriations limit for the District for the following fiscal year; and
WHEREAS, the City Council, acting in its capacity as the Board of Directors of the District, has adopted the Budget for Fiscal Year 2022/23 a copy of which is on file in the Office of the City Clerk and is available for public inspection; and WHEREAS, the said budget contains the estimates of the services, activities and projects comprising the budget, and contains expenditure requirements and the resources available to the District; and
WHEREAS, the District’s Financial & Management Services Department has heretofore prepared and submitted data and documentation required for and to be used in the determination of certain matters and for the establishment of an appropriations limit for the District for Fiscal Year 2022/23 and such data and documentation has been available to the public for at least fifteen days prior to adoption of this Resolution, and
WHEREAS, the City Council, acting in its capacity as the Board of Directors of the District, has elected to use the annual change in the Per Capita Personal Income as the cost of living factor. and
WHEREAS, the City Council, acting in its capacity as the Board of Directors of the District, has considered pertinent data and documentation and made such determinations as may be required by law, and has adopted this Resolution at a regularly scheduled meeting of the Board of Directors of the District.
NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE MORENO
VALLEY COMMUNITY SERVICES DISTRICT DOES HEREBY RESOLVE
AS FOLLOWS:
1. That the appropriations limit for the Moreno Valley Community Services District for Fiscal Year 2022/23 is hereby established at $25,582,782 and the total annual appropriations subject to such limitation for Fiscal Year 2022/23 is estimated to be $11,587,315.
2. The District’s Board of Directors hereby adopts the findings and methods of calculations set forth in Exhibit A, the Proceeds of Tax Calculation, Exhibit B, the Appropriation (Gann) Limit Calculation, and Exhibit C, the Summary of Annual F.8.b
Packet Pg. 3664 Attachment: FY2022-23 Gann Limit Resolution_CSD (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL 2 Resolution No. CSD 2022-___
Date Adopted: June 21, 2022
Appropriation (Gann) Limits. To the extent permitted by applicable law, the District reserves the right to change or revise any gross factors associated with the calculation of the limit established pursuant to Article XIIIB of the California Constitution if such changes or revisions would result in a more advantageous appropriations limit in the present or future.
3. Pursuant to Section 53901 of the California Government Code, by no later than August 30, 2022, the City Clerk, acting in the capacity of Secretary of the Moreno Valley Community Services District, shall file a copy of this Resolution with the Auditor of the County of Riverside.
4. Within fifteen days after the adoption of this Resolution, the City Clerk, acting in the capacity of Secretary of the Moreno Valley Community Services District, shall certify to the adoption thereof and, as so certified, cause a copy to be posted in at least three public places within the City.
BE IT FURTHER RESOLVED that this Resolution shall take effect immediately upon the date of its adoption.
APPROVED AND ADOPTED this 21st day of June, 2022.
___________________________
Mayor of the City of Moreno Valley,
Acting in the capacity of President of the
Moreno Valley Community Services District
ATTEST:
___________________________
_ Deputy City Clerk, acting in the
capacity of Secretary of the
Moreno Valley Community
Services District
APPROVED AS TO FORM:
___________________________
_ City Attorney, acting in the
capacity of General Counsel of the
Moreno Valley Community
Services District
F.8.b
Packet Pg. 3665 Attachment: FY2022-23 Gann Limit Resolution_CSD (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL 3 Resolution No. CSD 2022-___
Date Adopted: June 21, 2022
RESOLUTION JURAT
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF MORENO VALLEY )
I, Paul Bradvica, Secretary of the Moreno Valley Community Services District, Moreno Valley, California do hereby certify that Resolution No. CSD 2022- ___ was duly and regularly adopted by the Board of Directors of the Moreno Valley Community Services District at a regular meeting held on the 21st day of June, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
(Board members, Vice-President and President)
_________________________________
SECRETARY
(SEAL)
F.8.b
Packet Pg. 3666 Attachment: FY2022-23 Gann Limit Resolution_CSD (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL
COMPLETE DOCUMENTATION
FY 2022-23 APPROPRIATION (GANN) LIMITS
FOR THE CITY OF MORENO VALLEY
AND
MORENO VALLEY COMMUNITY SERVICES DISTRICT
Prepared by the Financial & Management Services Department Launa Jimenez, Financial Resources Division Manager
Date Available for Inspection: 5/26/22
F.8.c
Packet Pg. 3667 Attachment: 2022-23 GANN Public Counter Copy (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL
TABLE OF CONTENTS
GENERAL FUND
Exhibit A – Proceeds of Tax Calculation
Exhibit B – Limit Calculation
COMMUNITY SERVICES DISTRICT
Exhibit A – Proceeds of Tax Calculation
Exhibit B – Limit Calculation
Exhibit C - Summary of Annual Appropriations (Gann) Limit Date Available for Inspection: 5/26/22
F.8.c
Packet Pg. 3668 Attachment: 2022-23 GANN Public Counter Copy (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL
EXHIBIT A
BUDGETED BUDGETED
PROCEEDS NON-PROCEEDS TOTAL
REVENUE SOURCE OF TAX OF TAX REVENUE
Taxes
Property (1) $ 45,361,593 $ 45,361,593
Sales $ 27,727,324 27,727,324
Motor Vehicle In-Lieu $ - -
Business Gross Receipts $ 5,633,787 5,633,787
Utility Users $ 15,717,540 15,717,540
Other Taxes 3,810,000 3,810,000
Fees
Franchise 8,706,382 8,706,382
Development Fees 11,350,898 11,350,898
Other Fees, Permits & Licenses 2,154,349 2,154,349
Fines & Forfeitures 547,000 547,000
Administrative Charges 3,550,465 3,550,465
Intergovernmental - 345,000 345,000
Miscellaneous 288,900 288,900
Total $ 98,250,244 $ 26,942,994 $ 125,193,238
% of Total 78.48 21.52 100.00
Allocation of Interest 3,568,370 978,483 4,546,853
Adjusted Total $ 101,818,614 $ 27,921,477 $ 129,740,091 Revenues are based on FY 2022/23 Amended Budget
Notes:
(1) Includes Property Tax In-Lieu of Vehicle License Fees In-Lieu
CITY OF MORENO VALLEY
APPROPRIATIONS (GANN) LIMIT
PROCEEDS OF TAX CALCULATION
GENERAL FUND FY 2022/23
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Packet Pg. 3669 Attachment: 2022-23 GANN Public Counter Copy (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL
EXHIBIT B
APPROPRIATIONS SUBJECT TO THE LIMIT
FY 2022/23 Total Revenue * $ 129,740,091
Less: Non-Proceeds of Tax 27,921,477
A) Total Appropriations Subject to the Limit $ 101,818,614
APPROPRIATIONS LIMIT
B) FY 2021/22 Appropriations Limit $147,750,687
C) Change Factor ** % Increase Factor
Cost of Living (Per Capital Personal Income)-COL 7.55 1.0755 Population Adjustment - PA (0.09) 0.9991
Change Factor (COL x PA) 1.0745
D) Increase in Appropriations Limit 11,007,426
E) FY 2022/23 Appropriations Limit (B x C) $ 158,758,113
REMAINING APPROPRIATIONS CAPACITY
(E - A) $ 56,939,499
Remaining Capacity as a Percent of the FY 2022/23 Appropriations Limit 35.87% * Revenues based upon FY 2022/23 Adopted Budget
** State Department of Finance
Percent of Change in California Per Capita Income
Percent of Change in City of Moreno Valley Population
CITY OF MORENO VALLEY
APPROPRIATIONS (GANN) LIMITS
LIMIT CALCULATION
GENERAL FUND FY 2022/23
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Packet Pg. 3670 Attachment: 2022-23 GANN Public Counter Copy (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL
EXHIBIT A
BUDGETED BUDGETED
PROCEEDS NON-PROCEEDS TOTAL
REVENUE SOURCE OF TAX OF TAX REVENUE
Taxes
Zone A - Parks & Recreation $ 8,271,219 $ 8,271,219
Zone A - Parks & Recreation Rest. Assets $ - -
CFD No 1 - Parks $ - -
LMD 2014-01 - Residential Lights $ 131,600 131,600
Zone C - Arterial Lights $ 673,000 673,000
Zone D - Standard Landscaping $ - -
Zone E - Extensive Landscaping $ - -
LMD 2014-02 $ - -
CFD 2014-01 $ - -
Zone L - Library Services $ 2,400,000 2,400,000
Zone M - Median Fund $ - -
Zone S - Sunnymead Blvd. $ - -
Fees
Zone A - Parks & Recreation $ 1,191,129 1,191,129
Zone A - Parks & Recreation Rest. Assets $ - -
CFD No 1 - Parks $ - -
LMD 2014-01 - Residential Lights $ 972,750 972,750
Zone C - Arterial Lights $ - -
Zone D - Standard Landscaping $ 1,210,000 1,210,000
Zone E - Extensive Landscaping $ 154,000 154,000
LMD 2014-02 $ 2,126,600 2,126,600
CFD 2014-01 $ - -
Zone L - Library Services $ 30,000 30,000
Zone M - Median Fund $ 142,100 142,100
Zone S - Sunnymead Blvd. $ 66,200 66,200
Miscellaneous
Zone A - Parks & Recreation $ 25,200 25,200
Zone A - Parks & Recreation $ 910,755 910,755
Zone A - Parks & Recreation $ - -
Zone A - Parks & Recreation $ - -
Zone B - Residential Lights $ - -
Zone E - Extensive Landscaping $ - -
LMD 2014-02 $ - -
Zone D - Standard Landscaping $ - -
Zone L - Library Services $ 10 10
Zone L - Library Services $ 30,000 30,000
Transfers In
Zone A - Parks & Recreation $ 991,362 991,362
Zone A - Parks & Recreation Rest. Assets $ - -
CFD No 1 - Parks $ - -
LMD 2014-01 - Residential Lights $ 552,868 552,868
Zone C - Arterial Lights $ 281,443 281,443
Zone D - Standard Landscaping $ - -
Zone E - Extensive Landscaping $ - -
LMD 2014-02 $ 231,525 231,525
CFD 2014-01 $ - -
Zone L - Library Services $ 475,000 475,000
Zone M - Median Fund $ 181,500 181,500
Zone S - Sunnymead Blvd. $ - -
Total $ 11,475,819 $ 9,572,442 $ 21,048,261
% of Total 54.52 45.48 100.00
Allocation of Interest * 111,496 93,004 204,500
Adjusted Total $ 11,587,315 $ 9,665,446 $ 21,252,761
CITY OF MORENO VALLEY
APPROPRIATIONS (GANN) LIMIT
PROCEEDS OF TAX CALCULATION
COMMUNITY SERVICES DISTRICT FY 2022/23
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Packet Pg. 3671 Attachment: 2022-23 GANN Public Counter Copy (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL
EXHIBIT B
APPROPRIATIONS SUBJECT TO THE LIMIT
FY 2022/23 Total Revenue * $ 21,252,761
Less: Non-Proceeds of Tax 9,665,446
A) Total Appropriations Subject to the Limit $ 11,587,315
APPROPRIATIONS LIMIT
B) FY 2021/22 Appropriations Limit 23,809,011
C) Change Factor ** % Increase Factor
Cost of Living (Per Capital Personal Income)-COL 7.55 1.0755 Population Adjustment - PA (0.09) 0.9991
Change Factor (COL x PA) 1.0745
D) Increase in Appropriations Limit 1,773,771
E) FY 2022/23 Appropriations Limit (B x C) $ 25,582,782
REMAINING APPROPRIATIONS CAPACITY
(E - A) $ 13,995,467
Remaining Capacity as a Percent of the FY 2022/23 Appropriations Limit 54.71% * Revenues based upon FY 2022/23 Adopted Budget
** State Department of Finance
Percent of Change in California Per Capita Income
Percent of Change in Population
CITY OF MORENO VALLEY
APPROPRIATIONS (GANN) LIMITS
LIMIT CALCULATION
COMMUNITY SERVICES DISTRICT FY 2022/23
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Packet Pg. 3672 Attachment: 2022-23 GANN Public Counter Copy (5831 : PUBLIC HEARING ESTABLISHING APPROPRIATIONS ("GANN") LIMIT FOR FISCAL
EXHIBIT C
COST OF APPROPRIATIONS APPROPRIATIONS
FISCAL LIVING POPULATION APPROPRIATIONS SUBJECT TO REMAINING APPROPRIATIONS SUBJECT TO REMAINING
YEAR CHANGE CHANGE LIMIT THE LIMIT CAPACITY LIMIT THE LIMIT CAPACITY 1984/85 - - $8,000,000 $1,489,525 $6,510,475 $1,000,000 $225,224 $774,776 1985/86 3.74% - 8,299,200 5,801,524 2,497,676 1,037,400 366,257 671,143 1986/87 2.30% 13.34% 10,739,623 7,182,998 3,556,625 1,730,616 571,404 1,159,212 1987/88 3.40% 21.27% 13,419,869 8,186,487 5,233,382 2,162,519 514,685 1,647,834 1988/89 3.93% 13.98% 15,897,098 9,117,625 6,779,473 2,561,707 595,770 1,965,937 1989/90 4.98% 11.53% 18,612,989 10,193,243 8,419,746 2,999,354 973,431 2,025,923 1990/91 4.21% 12.34% 21,790,136 12,168,319 9,621,817 3,511,329 1,447,368 2,063,961 1991/92 4.14% 9.53% 25,184,125 12,702,824 12,481,301 4,058,248 1,068,016 2,990,232 1992/93 -0.64% 4.74% 26,209,119 21,751,950 4,457,169 4,223,419 1,127,115 3,096,304 1993/94 2.72% 3.69% 27,915,333 22,167,783 5,747,550 4,498,364 1,090,166 3,408,198 1994/95 0.71% 2.56% 28,833,747 22,191,470 6,642,277 4,646,360 839,650 3,806,710 1995/96 4.72% 2.66% 30,999,161 21,770,020 9,229,141 4,995,302 1,018,520 3,976,782 1996/97 4.67% 1.91% 33,066,805 22,117,750 10,949,055 5,328,489 952,480 4,376,009 1997/98 4.67% 0.19% 34,677,158 22,635,500 12,041,658 5,587,986 952,480 4,635,506 1998/99 4.15% 4.44% 37,718,345 23,919,000 13,799,345 6,078,052 1,000,500 5,077,552 1999/00 4.53% 2.29% 40,328,454 26,298,904 14,029,550 6,498,653 1,796,366 4,702,287 2000/01 4.91% 3.36% 43,728,143 27,701,784 16,026,359 7,046,489 1,831,589 5,214,900 2001/02 7.82% 5.68% 49,823,846 30,910,955 18,912,891 8,028,770 2,074,425 5,954,345 2002/03 -1.27% 3.88% 51,099,336 34,456,312 16,643,024 8,234,307 2,244,708 5,989,599 2003/04 2.31% 3.72% 54,226,615 37,805,936 16,420,679 8,738,247 2,465,590 6,272,657 2004/05 3.28% 4.17% 58,342,415 42,094,636 16,247,779 9,401,480 2,727,571 6,673,909 2005/06 5.26% 6.59% 65,460,190 48,100,800 17,359,390 10,548,461 3,016,336 7,532,125 2006/07 3.96% 5.59% 71,855,651 59,592,475 12,263,176 11,579,046 3,987,532 7,591,514 2007/08 4.42% 3.38% 77,568,175 72,653,027 4,915,148 12,499,580 4,615,504 7,884,076 2008/09 4.29% 2.79% 83,153,084 68,506,576 14,646,508 13,399,550 4,685,689 8,713,861 2009/10 0.62% 1.83% 85,198,650 56,124,960 29,073,690 13,729,179 4,108,012 9,621,167 2010/11 -2.54% 1.40% 84,193,306 50,777,288 33,416,018 13,567,175 3,059,579 10,507,596 2011/12 2.51% 3.66% 89,463,807 54,120,708 35,343,099 14,416,480 3,146,478 11,270,002 2012/13 3.77% 1.05% 93,811,748 57,930,634 35,881,114 15,117,121 3,146,049 11,971,072 2013/14 5.12% 1.23% 99,825,081 59,511,085 40,313,996 16,086,128 3,193,939 12,892,189 2014/15 0.80% 1.12% 101,751,705 61,132,366 40,619,339 16,396,590 3,661,696 12,734,894 2015/16 3.82% 1.28% 107,002,093 68,270,362 38,731,731 17,242,654 10,686,758 6,555,896 2016/17 5.37% 2.35% 115,401,757 71,329,731 44,072,026 18,596,202 10,733,417 7,862,785 2017/18 3.69% 0.67% 120,456,354 74,479,064 45,977,290 19,410,716 11,119,754 8,290,962 2018/19 3.67% 1.64% 126,924,860 76,753,778 50,171,082 20,453,071 11,321,286 9,131,785 2019/20 3.86% 1.09% 133,245,718 84,305,457 48,940,261 21,471,634 10,837,005 10,634,629 2020/21 3.73% 0.80% 139,321,723 80,536,602 58,785,121 22,450,741 11,473,096 10,977,645 2021/22 5.73% 0.30% 147,750,687 91,420,924 56,329,763 23,809,011 12,922,169 10,886,842 2022/23 7.55% -0.09% 158,758,113 101,818,614 56,939,499 25,582,782 11,587,315 13,995,467 Note (1) During 2014 the City Attorney made a ruling that certain revenues which had previously been shown as Non-Proceeds of Tax should be shown as Proceeds of Tax instead. That ruling is reflected in data beginning with FY 2015/16.
CITY OF MORENO VALLEY
SUMMARY OF ANNUAL APPROPRIATION (GANN) LIMITS
GENERAL FUND AND COMMUNITY SERVICES DISTRICT
GENERAL FUND COMMUNITY SERVICES DISTRICT
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Packet Pg. 3673 Attachment: 2022-23 GANN Public Counter Copy (5831 : PUBLIC HEARING ESTABLISHING $0
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Millions
Appropriations Limit Trend
General Fund
Appropriations Limit
Appropriations Subject to the Limit
$0
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$8
$10
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$14
$16
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$28
Millions
Appropriations Limit Trend
Community Services District
Appropriations Limit
Appropriations Subject to the Limit
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Packet Pg. 3674 Attachment: 2022-23 GANN Public Counter Copy (5831 : PUBLIC HEARING ESTABLISHING Report to City Council
ID#5849 Page 1
TO: Mayor and City Council
FROM: Brian Mohan, Assistant City Manager
AGENDA DATE: June 21, 2022
TITLE: JOINT PUBLIC HEARING RE PROPOSED COMMITMENT
TO SELL, AND SALE OF, CERTAIN REAL PROPERTY
APN 482-161-026 BY THE MORENO VALLEY HOUSING
AUTHORITY; PRELIMINARY AWARD LETTER BY
MORENO VALLEY HOUSING AUTHORITY ISSUED TO
COURTYARDS AT COTTONWOOD II, LP, A CALIFORNIA
LIMITED PARTNERSHIP, TO PROVIDE SITE CONTROL
AND PART OF AN ENFORCEABLE FINANCIAL
COMMITMENT RELATING TO PROPOSED
DEVELOPMENT OF PHASE II OF THE COURTYARDS AT
COTTONWOOD, A 32-UNIT MULTIFAMILY AFFORDABLE
HOUSING PROJECT
RECOMMENDED ACTION
Recommendations:
1. Conduct Joint Public Hearing of City Council and Housing Authority re Proposed Commitment to Sell Real Property APN 482-161-026.
2. Adopt City Council Resolution #2022-XX Approving Commitment to Sell and the Sale of Certain Real Property.
3. Adopt Housing Authority Resolution #2022-XX Approving a Preliminary Award Letter issued by the Moreno Valley Housing Authority to Courtyards At Cottonwood II, LP for Development of Phase II of The Courtyards at Cottonwood Affordable Housing Project that Includes Authority for Executive Director in Consultation with City Attorney to Execute and Implement the Preliminary Award Letter.
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SUMMARY
This report recommends the City Council and Housing Authority conduct a joint public hearing and thereafter adopt resolutions, by which the City approves the commitment to sell, and the sale, of the Site and the Housing Authority approves the same and the Preliminary Award Letter (“Award Letter”) issued by the Moreno Valley Housing Authority to Courtyards at Cottonwood II, LP (“Developer”) in connection with the proposed development of Phase II of The Courtyards at Cottonwood affordable housing project.
Phase I of The Courtyards at Cottonwood is 81-unit intergenerational affordable rental housing project currently in construction and scheduled to be completed in July 2022.
The proposed Phase II Project is a 32-unit multifamily rental affordable housing development on the adjacent 1.61-acres located at the northeast corner of Cottonwood Avenue and Indian Street (“Site”), which parcel is owned in fee by the Housing Authority and restricted for development of affordable housing.
DISCUSSION
After undertaking the procedures under the Surplus Land Act, Government Code Section 54220, et seq. (“SLA”), including issuance of the required notice of availability, excepting the notice of interest from the Developer, the Authority did not receive other compliant notices of interest concerning the development of affordable housing on the Site. Pursuant to the SLA, the Developer submitted a notice of interest to develop the Phase II Project; thus, with the objective to develop affordable housing on the Site, the Housing Authority desires to issue to Developer a Preliminary Award Letter to provide part of an “enforceable financial commitment” and “site control” for construction, development, and operation of the Phase II Project as required by the California Tax Credit Allocation Committee (“TCAC”) and the California Debt Limit Allocation Committee (“CDLAC”). First, Developer will apply to TCAC for a reservation of 9% Tax Credits, and if unsuccessful, will apply for a reservation of 4% Tax Credits paired with an application to CDLAC for an allocation to issue multifamily housing revenue bonds (“Bonds”) under the respective Tax Credit Rules and CDLAC Regulations.
Developer proposes to plan, design, construct, complete and operate a new 32-unit multifamily affordable housing Phase II Project as a part of The Courtyards at Cottonwood. This development will include two, 2-story buildings, each with 16 apartments, along with amenities and reciprocal access and use of driveways, gated entrances, basketball court, and other site amenities that are currently under final construction for Phase I. This Phase II project will include 32 on-site parking spaces and will not require any offsite improvements.
When Developer receives a reservation of Tax Credits (and Bonds, if applicable), the Housing Authority and Developer will negotiate and implement the Phase II Project under an Affordable Housing Agreement (“AHA”) by which Developer will acquire the Site from the Authority and develop and operate the Phase II Project to be maintained F.9
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and managed in accordance with the AHA and other implementing instruments for the 55-year Affordability Period. The AHA will append an Authority Regulatory Agreement that will be recorded against the Site as a senior encumbrance, nonsubordinate to monetary liens to preserve the development of affordable housing for the 55-year Affordability Period.
Prior to the sale or lease of real property, including the commitment to sell, and the sale of, the Site under the Award Letter, the City Council and Housing Authority will conduct a joint public hearing and present a summary report in compliance with Health and Safety Code Sections 33433 and 34312.3.
The proposed sale of the Site and development of the Phase II Project will further the goals and objectives set forth in the City’s Housing Element of the General Plan, will achieve additional covenanted housing units to satisfy in part the City’s Regional Housing Needs Assessment obligation and allocation, and will implement state law for continued development of affordable housing in the community.
ALTERNATIVES
Alternative 1: Conduct joint public hearing and adopt resolutions, respectively, by which the City Council approves the commitment to sell, and the sale of, the Site, and the Housing Authority approves the Award Letter and its implementation through development of the Phase II Project authorizing the City Manager and Executive Director of the Housing Authority to execute project-related documents and carry out the Phase II Project. Staff recommends this alternative as it will allow the Housing Authority to continue to development of affordable housing on the Site.
Alternative 2: Do not conduct the joint public hearing and do not adopt resolutions approving the commitment to sell, and the sale, of the Site and do not approve the Award Letter, nor authorize the City Manager and Executive Director of the Housing Authority to execute and carry out the Phase II Project. Staff does not recommend this alternative.
FISCAL IMPACT
As disclosed by the summary report including with this agenda report and pursuant to the Award Letter, the Developer will pay appraised fair market value for the Site, when the Housing Authority sells the Site. The purchase price for the Site will be paid by Developer through a carry-back, residual receipts loan (“Authority Loan”).
The Authority Loan will be evidenced by an Authority Note and secured by an Authority Deed of Trust subordinate to the Developer’s Primary Loan for construction and permanent financing, albeit the Authority Regulatory Agreement will remain a senior encumbrance to preserve the use and operation of affordable housing.
NOTIFICATION
The public has been notified through publication twice of a Notice of Hearing published in the Press Enterprise on June 7, 2022 and June 14, 2022, and through the posting of F.9
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the agenda for this joint public meeting of the City Council and Housing Authority.
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval:
Dena Heald Brian Mohan
Deputy Finance Director Assistant City Manager / Chief Financial Officer / City Treasurer
CITY COUNCIL GOALS
None
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
ATTACHMENTS
To view large attachments, please click your “bookmarks” on the left hand side of this document for the necessary attachment.
1. Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft
2. Summary Report Relating to Proposed Commitment to Provide Site Control
3. Site location - Phase II
4. Resolution 2022-XX_City
5. Resolution HA 2022-XX_Housing Authority
APPROVALS
Budget Officer Approval ✓ Approved . 6/09/22 11:52 AM
City Attorney Approval ✓ Approved .
City Manager Approval ✓ Approved . 6/10/22 6:11 PM
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[on Moreno Valley letterhead]
4855-3874-8703v4/200382-0006
June 21, 2022
Courtyards at Cottonwood II, L.P.
27700 Kalmia Avenue
Rancho Belago, CA 92555-5200
Attn: William Leach
Re: Preliminary Award Letter by the Moreno Valley Housing Authority as a Commitment to Provide Certain Authority Assistance, Including Sale of a Certain
1.61-Acre Site and an Authority Loan to Evidence Site Control and the Authority Loan Part of an Enforceable financial Commitment for Developer’s Intended Planning, Construction, Development and Long Term Operation of the New Construction and Operation of a 32-Unit Multifamily Affordable Housing Project pursuant to California Code of Regulations, Title 4, Division 17, Chapter 1, Sections 10322 and 10325, in Connection with One or More Applications by Courtyards at Cottonwood II, L.P. to the California Tax Credit Allocation Committee for a Reservation of 9% Tax Credits, and if Unsuccessful a Reservation of 4% Tax Credits Paired with a Bond Allocation from the California Debt Limit Allocation Committee
Dear Mr. Leach:
This Preliminary Award Letter (“Award Letter”) is dated as of June 21, 2022 (“Date of Award Letter”) and is issued to Courtyards at Cottonwood II, L.P., a California limited partnership (EIN: 87-4009840), which entity includes partners: (i) KDI Courtyards, LLC a California limited liability company or its authorized Affiliate (“Managing General Partner”), (ii) RBD Cottonwood, LLC, a California limited liability company (“Administrative General Partner”, and (iii) Rancho Belago Developers, Inc., a California corporation (“Limited Partner”), (herein, together, “Developer”), by the Moreno Valley Housing Authority, a public body corporate and politic (“Authority”). Herein, each of the Authority and Developer is a “Party” and together the “Parties”. The Limited Partner will be replaced by an investor limited partner (“Investor Limited Partner”) at the time of Closing of Financing (defined herein) and syndication of the Tax Credits.
This Award Letter sets forth the basic terms between the Parties to fulfill the requirements for the commitment of part of an “enforceable financial commitment” and “site control” (together, “Authority Assistance” as further described herein) for construction, development, and operation of the certain Phase II Project (defined herein) as required by the following governmental agencies: (1) the California Tax Credit Allocation Committee (“TCAC”) and its Tax Credit Rules1, in particular California Code of Regulations, Title 4, Division 17, Chapter 1, Section 10325, in connection with Developer first seeking a reservation of 9% Tax Credits, and if unsuccessful (2) to TCAC seeking a reservation of 1 “Tax Credit Rules” shall mean Section 42 of the Internal Revenue Code and/or California Revenue and Taxation Code Sections 17057.5, 17058, 23610.4 and 23610.5 and California Health and Safety Code Section 50199, et seq., as applicable, as the foregoing may be amended from time to time, and the rules and regulations implementing the foregoing, including Title 4 Cal Code Regs Section 10300, et seq.
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Packet Pg. 3679 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
William Leach, President
Kingdom Development, Inc.
June 21, 2022
Page | 2
4855-3874-8703v4/200382-0006
4% Tax Credits paired with an application to the California Debt Limit Allocation Committee2 (“CDLAC”) for an allocation to issue multifamily housing revenue bonds (“Bonds”) under the respective program requirements, Tax Credit Rules as to TCAC and CDLAC Regulations as to CDLAC. These rules and regulations require Developer to evidence “site control” and an “enforceable financial commitment” when making application to TCAC for a reservation of Tax Credits, and as applicable to CDLAC for an allocation to issue Bonds, and, if awarded, to undertake the Phase II Project.
The Authority Assistance committed by the Authority to the Developer under this Award Letter includes: (1) the terms and conditions for the sale of certain real property owned in fee by the Authority that is approximately 1.61 acres and located in the City (“Site”)3, and (2) the Authority Loan described herein. The Authority Assistance, both the sale of the Site and issuance of the Authority Loan, is further described herein and will be set forth in detail in that certain implementing contract, an “Affordable Housing Agreement” or “AHA”, and is subject to all terms and conditions herein and therein.
1. Term of Award Letter. This Award Letter shall expire automatically on the earliest to occur of (i) June 30, 2024, or (ii) Developer’s failure to satisfy the Award Letter Condition Precedent (defined below) prior to June 30, 2024 (“Award Letter Expiration Date”), at which time the terms set forth herein shall be null and void, unless prior to the Award Letter Expiration Date this Award Letter is amended and extended in writing by the Authority Executive Director (“Executive Director”), which decision to amend and extend, or not, is and shall remain in the sole and absolute discretion the Executive Director.
2. Phase II Project Description; Background and Connection to Phase I Project.
Courtyards at Cottonwood, L.P. (“Phase I Developer”) has undertaken, completed and operates an existing 81-unit intergenerational affordable housing development that includes both family and senior apartments on a 6.79-acre parcel directly adjacent to the Site (“Phase I Project”). Under this Award Letter, Developer commits to plan, design, construct, complete and operate a new a 32-unit multifamily affordable housing project that will be the second phase (“Phase II Project” or “Project”) of an overall development called The Courtyards at Cottonwood. The Phase II Project will be a gated community with two 2-story buildings each with 16 rental apartments. Each floor of the two buildings will have a laundry room; the amenities will include, without limitation, community gardens for residents’ use; there will be drought-tolerant landscaping throughout and passive areas that 2 Division 1, Chapter 11.8 of the California Government Code, Section 8869.80, et seq. and the implementing regulations in Title 4, Cal Code Regs Section 5000, et seq. https://www.treasurer.ca.gov/cdlac/ (together, CDLAC”).
3 The Site is located on the east side of Indian Street, north of Cottonwood Avenue, in the City of Moreno Valley, Riverside County, California. As set forth in the Phase I Project affordable housing agreement, the Site is a remnant parcel of a former 8.40-acre site that was subdivided into a 6.79-acre site and the subject 1.61-acre Site that abuts the public high school adjacent north. The southern site was rezoned by the City from R5 to R10 residential zone and entitled for low income housing. The Site remains zoned P-Public Facilities and was intended for acquisition and use by the adjacent public school district building; however, the school district declined to acquire the Site and the parcel has been rezoned by application of the Phase I Developer for the Phase II Project.
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Packet Pg. 3680 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
William Leach, President
Kingdom Development, Inc.
June 21, 2022
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include seating, tables and chairs, and BBQs for the residents. A joint use and/or reciprocal easement agreement(s) (“REA” or “Joint Use Agreement”) shall be negotiated and entered into between the Phase I Developer and Phase II Developer for joint access and use of driveways, gated entrances, basketball court, other site amenities, the community building, and the Phase I onsite manager’s unit will provide services to the Phase I and Phase II development. The Phase I community building that will be part of such Joint Use Agreement contains management, leasing, tenant services and maintenance offices, maintenance garage, computer lab, laundry room, common rest rooms, mail kiosk and a full kitchen. The Phase II Project will include 32 on-site vehicular parking spaces. Vehicular ingress will be provided via the existing Cottonwood Avenue gated driveway and there will be two (2) gated driveways for egress, one each on Cottonwood Avenue and Indian Avenue.
2.1 Unit Mix: Income Levels, Unit Size, Affordable Rent. (a) Phase II Project with 9% Tax Credits. In connection with and if awarded a reservation of 9% Tax Credits, the unit mix based on number of bedrooms, income category, and rent for 32 units at the Phase II Project is set forth in subsections (i) to (xiii) inclusive and subsection (b) below. Each and all Housing Units shall be leased at an Affordable Rent based on the Riverside County Area Median Income (“AMI”) applicable to the Housing Unit all in accordance with the following unit mix:
(i) Two (2) 2-bedroom Housing Units for 30% AMI Extremely Low Income Households;
(ii) Two (2) 2-bedroom Housing Units for 40% AMI Very Low Income Households;
(iii) Two (2) 2-bedroom Housing Units for 45% AMI Very Low Income Households;
(iv) Four (4) 2-bedroom Housing Unit for 50% AMI Very Low Income Households;
(v) Six (6) 2-bedroom Housing Units for 60% AMI Lower Income Households;
(vi) Two (2) 3-bedroom Housing Unit for 30% AMI Extremely Low Income Households;
(vii) One (1) 3-bedroom Housing Units for 45% AMI Very Low Income Households;
(viii) Two (2) 3-bedroom Housing Units for 50% AMI Very Low Income Households;
(ix) Six (6) 3-bedroom Housing Units for 60% AMI Lower Income Households;
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Packet Pg. 3681 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
William Leach, President
Kingdom Development, Inc.
June 21, 2022
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(x) (One (1) 4-bedroom Housing Unit for 30% Extremely Low Income Households;
(xi) One (1) 4-bedroom Housing Unit for 40% Very Low Income Households;
(xii) One (1) 4-bedroom Housing Unit for 45% Very Low Income Households; and
(xiii) One (1) 4-bedroom Housing Unit for 50% Very Low Income Households.
(b) Income Categories for 9% Tax Credit Phase II Project. For a 9% Tax Credit transaction, the tenants at the Phase II Project shall qualify as to household gross income based on the income category applicable to his/her/their Housing Unit, which range of and category levels for households are defined below. Actual rent charged may be less than such maximum rent.
(i) “Extremely Low Income Households” means those households earning not greater than thirty percent (30%) AMI, adjusted for household size as defined by the Tax Credit Rules.
(ii) “Very Low Income Households” means those households earning not greater than fifty percent (50%) AMI, adjusted for actual household size as defined by the Tax Credit Rules, and shall include: (A) very low income households; (B) 30% Extremely Low Income Households; (C) 40% AMI Very Low Income Households; (D) 45% AMI Very Low Income Households; and (iv) 50% AMI Very Low Income Households, as defined by the Tax Credit Rules.
(iii) “Lower Income” means: (i) lower income households at or below 60% AMI as defined in the Tax Credit Rules. Lower Income Households at or below 60% AMI shall include Very Low Income Households and Extremely Low Income Households as defined in the Tax Credit Rules.
(iv) “30% AMI Extremely Low Income Households”, and “30% AMI Households” mean those households earning not greater than thirty percent (30%) AMI, adjusted for household size that is set forth annually by regulation of TCAC. (v) “40% AMI Very Low Income Households” and/or “40% AMI Households” shall mean those households earning not greater than forty percent (40%) AMI, adjusted for household size that is set forth annually by regulation of TCAC. Further, 40% AMI Households also include 30% AMI Households.
(vi) “45% AMI Very Low Income Households” and/or “45% AMI Households” shall mean those households earning not greater than forty-five percent (45%) AMI, adjusted for household size that is set forth annually by regulation of TCAC.
Further, 45% AMI Households also include 40% AMI Households and 30% AMI Households.
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Packet Pg. 3682 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
William Leach, President
Kingdom Development, Inc.
June 21, 2022
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4855-3874-8703v4/200382-0006
(vii) “50% AMI Very Low Income Households” and/or “50% AMI Households” shall mean those households earning not greater than fifty percent (50%) AMI, adjusted for household size that is set forth annually by regulation of TCAC. Further, 50% AMI Households include 45% AMI Households, 40% AMI Households and 30% AMI Households.
(viii) “60% AMI Lower Income Households” and/or “60% AMI Households” shall mean those households earning not greater than sixty percent (60%) AMI, adjusted for household size that is set forth annually by regulation of TCAC.
Further, 60% AMI Households include 50% AMI Households, 45% AMI Households, 40% AMI Households, and 30% AMI Households.
(c) Phase II Project with 4% Tax Credits Paired with Bonds. For a transaction awarded 4% Tax Credits and Bonds, all Phase II Housing Units shall be rented to income-qualified tenants, including 30% AMI Extremely Low Income Households (8 units) and 80% AMI Low Income Households (24 units), at an Affordable Rent as defined in subsection (d) below. As to income-level and unit size the housing mix shall include:
(i) three (3) 2-bedroom 30% Extremely Low Income
Housing Units;
(ii) five (5) 3-bedroom 30% AMI Extremely Low Income
Housing Units;
(iii) thirteen (13) 2-bedroom 80% Low Income Housing Units; (iv) seven (7) 3-bedroom 80% AMI Low Income Housing Units; and (v) four (4) 4-bedroom 80% AMI Low Income Housing Units. (d) Affordable Rent for Phase II Project with 4% Tax Credit and Bonds.
For a transaction awarded 4% Tax Credits and Bonds, “Affordable Rent” has the meaning set forth by regulation of TCAC for the 30% AMI Extremely Low Income Households and 80% AMI Low Income Households. Actual rent charged may be less than such maximum rent.
(e) “Household size appropriate to the unit” has the meaning set forth by regulation of TCAC. The minimum and maximum occupancy limits are set forth in Section
12.8 below and are different than the Household size appropriate to the unit.
3. Sources of Financing. As provided in Section 5. below, Developer shall seek and obtain the following prior to the Award Letter Expiration Date, which, if awarded, shall be paired with the Investor Limited Partner’s equity investment:
3.1 Second Round 2022 for 9% Tax Credits. Developer shall prepare and summit an application to TCAC in the second round 2022 for a reservation of 9% Tax Credits.
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Packet Pg. 3683 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
William Leach, President
Kingdom Development, Inc.
June 21, 2022
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3.2 Second Round 2022 for 4% Tax Credits with Bonds. If Developer’s application in 3.1 is not successful, then Developer shall prepare and submit an application to TCAC in the 2022 second round for a reservation of 4% Tax Credits paired with an application to CDLAC for the Moreno Valley Housing Authority to issue tax exempt multifamily housing revenue Bonds.
3.3 2023 Application for 9% Tax Credits. If Developer’s applications in 3.1 and
3.2 are not successful, then in 2023 Developer shall prepare and submit one or more new applications to TCAC for a reservation of 9% Tax Credits.
3.4 2023 Application for 4% Tax Credits with Bonds. If Developer’s applications in 3.1, 3.2 and 3.3 are not successful, then Developer shall prepare and submit one or more new applications to TCAC for a reservation of 4% Tax Credits paired with an application to CDLAC for an allocation of Bonds.
3.5 2024 Application. If Developer’s applications in 3.1, 3.2, 3.3, and 3.4 are not successful, then prior to the Award Letter Expiration Date Developer shall prepare and submit final application(s) to TCAC in the 2024 first round seeking again a reservation of 9% Tax Credits, OR, for a reservation of 4% Tax Credits paired with an application to CDLAC for an allocation of Bonds.
3.6 Carry-Back Financing. Once and if awarded a reservation of Tax Credits, and as applicable an allocation to issue the Bonds, as described above in 3.1 to 3.5 above, Developer will receive a carry-back, purchase money loan issued to Developer by the Authority in connection with disposition and sale of the Site (“Authority Loan”).
3.7 County of Riverside Funding. In the event of a successful reservation of Tax Credits by TCAC, and, as to the 4% Tax Credits, an allocation of Bonds as applicable to Sections 3.1 to 3.5 above, concurrently with such financing by TCAC and as applicable CDLAC, Developer shall receive and maintain a loan commitment from the County of Riverside (“County”) sourced from Permanent Local Housing Allocation funds (“PLHA”) (“County Loan”).
(a) Project-Based Vouchers from County. Further, if the awards by TCAC and CDLAC, as applicable, Developer shall also receive and maintain the award by the County of eight (8) Section 8 project-based vouchers (“PBVs”). In connection with each application Developer also shall seek other federal, state, regional and/or other funding sources to undertake the Phase II Project.
4. Affordable Housing Agreement. Developer has applied to the Authority for issuance of this Award Letter, and subject to the satisfaction of the Award Letter Condition Precedent (defined below) and certain additional conditions precedent described herein, desires to implement this Award Letter and (i) enter into the AHA, (ii) obtain the Authority Loan, and (ii) acquire the Site pursuant to the AHA. The complete terms, conditions, and provisions of the AHA will be negotiated and entered into between Authority and Developer at a time concurrent with (a) the closing of Developer’s construction F.9.a
Packet Pg. 3684 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
William Leach, President
Kingdom Development, Inc.
June 21, 2022
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financing, (b) entering into a limited partnership agreement between Developer and its Investor Limited Partner, and (c) related actions for commencing construction of the Project (together, “Closing of Financing”). If the Award Letter Condition Precedent is satisfied by Developer, then under the AHA Developer will construct, operate, manage, and maintain the Phase II Project on the Site.
5. Award Letter Condition Precedent. Developer shall apply for and use diligent good faith efforts to pursue the funding sources for the Project as described in subsections
3.1 to 3.5 above, along with the additional funding sources also described in Section 3.
The applications for and award of such funding sources shall constitute the “Award Letter Condition Precedent” referred to herein.
5.1 Applications to TCAC and as Applicable CDLAC for Project Funding. (a) During the Term of this Award Letter, Developer shall prepare and submit one or more applications to TCAC for:
(i) a reservation of 9% federal Tax Credits awarded by TCAC to Developer; and if not successful,
(ii) a reservation of 4% federal Tax Credits awarded by TCAC to Developer, paired with,
(A) An allocation and authorization by CDLAC for the
California Housing Finance Agency (“CalHFA”) to issue tax-exempt multifamily housing revenue Bonds.
(iii) During the term of this Award Letter, Developer shall obtain and maintain a loan commitment issued by the County to award PLHA funds and the County Loan as part of the construction and permanent financing for the Phase II Project, and a commitment by the County to enter into an Agreement to enter into a Housing Assistance Payment contract (“AHAP”) for the applicable number of PBVs and then to enter into a Housing Assistance Payment contract for award of the PBVs (“HAP Contract”). (b) The Parties acknowledge that in the event no reservation of Tax Credits is received in calendar year 2022, each subsequent application to TCAC, and if applicable to CDLAC, will require at the time of each application in 2023 and 2024 an updated and complete evaluation of the scope of the Project, including potential for change in design, number of units, unit mix with income and affordable rent levels, funding source(s), and a Financial Gap Analysis (defined in Section 14). (i) In the event that a Financial Gap Analysis for a revised development project shows a financial gap and Developer intends to seek additional subsidy(ies) from the Authority, then upon written request of Developer to the Authority the Parties may enter into negotiations toward mutually agreed terms and conditions of an amendment to this Award Letter (or an amended and restated award letter) so that the Authority may consider and approve (or disapprove) the request; provided however, this F.9.a
Packet Pg. 3685 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
William Leach, President
Kingdom Development, Inc.
June 21, 2022
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Award Letter and each and any decision to amend, or not, shall be presented to the Moreno Valley Housing Authority Board (“Authority Board”) and, to the extent required under applicable law, the Moreno Valley City Council (“City Council”), at a duly noticed public meeting and hereby the Authority Board (and thereby City Council, if applicable) reserve sole, independent discretion and judgment to approve, or disapprove, each and any amendment that modifies the Authority Assistance and any other potential subsidy(ies) by the Authority (and/or City) that may allow Developer to make application for a reservation of Tax Credits (and as applicable an allocation of Bonds) as a part of the funding for the Phase II Project.
(A) In connection thereto, the Parties are not obligated to reach agreement on an amendment to, or amendment and restatement, this Award Letter.
Developer and Authority agree to negotiate in good faith toward such amendment of this Award Letter; provided however, their decisions, respectively, shall be and remain in the sole and absolute discretion of each deciding Party and, as to Moreno Valley, such amendment shall be presented to the Authority Board and City Council as a condition precedent thereto.
6. Authority Assistance is Part of an Enforceable financial Commitment; Site Control Provided through Authority’s Commitment to Sell the Site to Developer.
6.1 Part of Enforceable Financing Commitment. By this Award Letter and subject to the Award Letter Condition Precedent, the Authority intends to provide the Developer the Authority Loan for Developer to meet part of Developer’s obligation secure the enforceable financing commitment required by the TCAC Rules. In furtherance thereof, Developer agrees to apply for and obtain all additional and necessary funds to meet the requirement to satisfy its enforceable financing commitment.
6.2 Site Control. By this Award Letter and pursuant to TCAC Rules and CDLAC Regulations, as applicable, the Authority intends to provide the Developer “site control” of the Site by its commitment to sell the Site, subject to satisfaction of the Award Letter Condition Precedent and the terms and conditions herein, including Section 10325 of the Tax Credit Rules.
7. Land Use Entitlement. As of the date of this Award Letter, Developer has submitted to the City and received the discretionary land use entitlement for development and operation of the Phase II Project on the Site, including:
7.1 Planning Commission Actions. On December 9, 2021 the Planning Commission considered and recommended to the City Council of the City of Moreno Valley (“City Council”) approval of the discretionary land use entitlement for the Phase II Project after a duly noticed public hearing at an open meeting by adoption of the following resolutions: (a) PC Resolution No. 2021-48 to certify a Mitigated Negative Declaration and approve a mitigation monitoring and reporting program pursuant to the California Environmental Quality Act and implementing regulations (together, “CEQA”); (b) PC Resolution No. 2021-49 for General Plan Amendment (PEN 21 0113) to amend the F.9.a
Packet Pg. 3686 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
William Leach, President
Kingdom Development, Inc.
June 21, 2022
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General Plan Land Use Map to change the land use designation from Public (P) to Residential 15 (R15); (c) PC Resolution No. 2021-50 to amend the City Zoning Atlas to change the zone from Public (P) to Residential 15 (R15); and (d) PC Resolution No. 2021- 51 to approve Plot Plan PEN21-0112.
7.2 City Council Actions. On January 18, 2022 the City Council considered and approved the land use entitlement for the Phase II Project at an open meeting by adoption of an ordinance and resolutions including findings as follows: (a) Council Resolution No. 2022-12 certifying the Mitigated Negative Declaration and approving the mitigation monitoring and reporting program pursuant to CEQA; (b) Council Resolution No. 2022-13 approving a General Plan Amendment (PEN 21 0113) amending the General Plan Land Use Map and changing the land use designation from Public (P) to Residential 15 (R15); and (d) Council Resolution No. 2022-14 approving the Plot Plan (PEN21-0112). Further, on January 18, 2022 and February 1, 2022, the City Council conducted first and second readings, respectively, of Ordinance No. 986 that amended the City Zoning Atlas to change the zone from Public (P) to Residential 15 (R15) for the Phase II Project. (a) The foregoing actions described in 7.1 and 7.2 above including the 22-page “Final Conditions of Approval” appended thereto comprise the (“Land Use Entitlement”) for the Phase II Project.
(b) In addition to such Final Conditions of Approval, the Phase II Project development plans, including plans and specifications, shall be subject to the City’s Building Plan Check process, and implementation of the conditions of approval for the Land Use Entitlement in connection with construction of the Phase II Project in compliance with and subject to the City’s development standards, zoning, other laws and regulations, and the requirements of the AHA.
7.3 Development Fees.
(a) City Development Impact Fees. The City fees shall apply to the proposed development of the Phase II Project, with the exception that the City reserves all rights and discretion to waive up to 50% of the development impact fees applicable thereto, which shall be determined after the Developer satisfies the Award Letter Condition Precedent.
(b) Transportation Fees. The City and/or County transportation fees, including as applicable, TUMF fees and Quimby fees, imposed by the City and/or County of Riverside may be waived or other exempt pursuant to applicable regulations and the City and/or County’s exercise of their respective discretion, which shall be determined after the Developer satisfies the Award Letter Condition Precedent.
7.4 Density Bonus Implementation. In connection with implementation of the Land Use Entitlement, Developer, with the written consent of the Authority, as applicable, shall prepare and submit to the City and Authority for approval by the City Attorney the documents to implement the California Density Bonus Law, Government Code Section F.9.a
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65915, et seq. and the Moreno Valley Municipal Code Section 9.03.050, et seq. (together, “DBL”). Developer shall enter into that certain City/Developer Density Bonus Agreement that shall be recorded in the County of Riverside Official Records in non-subordinate, senior lien priority.
(a) Under the DBL, the Phase II Project is eligible for a thirty-five percent (35%) density bonus; i.e., the proposed development has a base density of fifteen (15) dwelling units per acre that may be increased to 20.25 dwelling units per acre, and as such, the density may be increased from 15 dwelling units per acre to 19.88 dwelling units per acre that may result in the ability to construct 32 dwelling units on the 1.61-acre Site.
8. Authority Assistance.
8.1 Authority Loan. Subject to the conditions described herein, the original principal amount of the Authority Loan will be not less than the appraised fair market value of the Site (“Authority Loan Amount”), which as of December 7, 2021 was valued by an independent appraiser at $230,0004, which will be evidenced by the Authority Loan Note and secured by the Authority Loan Deed of Trust. Depending on the timing and date of each application to TCAC and/or CDLAC as described in Section 5. above, the fair market value of the Site may require review and update of the appraisal to comply with the Tax Credit Rules, CDLAC Regulations, as applicable, and other applicable laws.
The Authority Loan Amount shall be not less than the appraised fair market value of the Site, which appraised value will be stated in the one or more applications to TCAC, and as applicable CDLAC, and in compliance with applicable laws and regulations.
8.2 Commitment to Provide the Authority Loan. The Authority Loan is a part of Developer’s enforceable financing commitment and is intended to facilitate, the planning, design, construction, completion, operation, management and maintenance of the Project for not less than the 55-year Affordability Period described herein and hereafter in the AHA, subject to satisfaction of the Award Letter Condition Precedent. The sale of the Site by the Authority to Developer and the Authority Loan Amount is hereby committed to the Project subject to satisfaction of the Award Letter Condition Precedent and the other terms and conditions of this Award Letter. The final Authority Loan Amount shall be determined after Developer meets the Award Letter Condition Precedent, based on updated fair market value, the updated Financial Gap Analysis, and subject to a subsidy layering analysis, which shall occur prior to the Closing of Financing. In this regard, the Authority will evaluate and establish more specifically in the AHA the terms and conditions of the Authority Loan, the Authority Note, the Authority Deed of Trust, including its subordinate lien position of such monetary lien (provided that the Authority Regulatory Agreement shall be and remain senior and nonsubordinate to all monetary liens), and other implementing instruments, 4 CBRE Group appraisal prepared for the City dated December 7, 2021 re “Proposed Residential Site E/S Indian Street, N/O Cottonwood Avenue Moreno Valley, California 92553”, CBRE File No. 21-251PS-5295-1.
Pursuant to Tax Credit Rules and CDLAC Regulations, the appraisal of the Site may (or may not) need to be updated. The Authority Loan Amount shall be not less than the appraised value of the Site.
F.9.a
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Kingdom Development, Inc.
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which will take into consideration all sources of financing, in particular governmental funding and the applicable program requirements therefor.
(a) Authority Loan Repaid from Residual Receipts. The Authority Loan will be a “Residual Receipts” loan in a lien position subordinate to the deed of trust securing the Developer’s loan obtained for construction financing and the loan take-out permanent financing (each a “Primary Loan”) and as will be more fully set forth in the AHA. (i) In the event, the County (State HCD through the
PLHA Guidelines) or other governmental entity funding sources do not require a share of Residual Receipts, the Authority Loan shall be repaid from not less than fifty percent (50%) of Residual Receipts and the Developer will retain not more than fifty percent (50%) of Residual Receipts.
(A) The term “Residual Receipts” will be fully defined in the AHA, but generally is defined as Project annual revenue less the sum of defined and eligible: (1) operating expenses; (2) debt service on the Primary Loan, (3) required operating and capital reserve deposits, (4) repayment of permitted operating, development, or capital loans, if any, (5) property management fee, (6) eligible partnership related fees including an asset management fee, and (7) unpaid Deferred Developer Fee. (ii) If the County (State HCD through the PLHA Guidelines) or other governmental funding sources require an allocation of Residual Receipts as between and/or among the Authority, Developer, and other governmental entity(ies), if any, the split thereof shall be established after Developer satisfies the Award Letter Condition Precedent and after the Financial Gap Analysis described herein, provided however the percentage allocations among the governmental funding entities shall be established in a fair, reasonable manner and in compliance with applicable legal requirements.
9. Compliance with Law; Statutory Requirements. Developer acknowledges, and the AHA will affirm, that the Site assembly, acquisition, and site preparation costs were paid for, in whole or in part, with monies sourced from and subject to the HAL, Health and Safety Code (HSC) Section 33000, et seq. including HSC Section 33334.2 pre-dissolution of the Moreno Valley Redevelopment Agency (“Former Agency”) and HSC Section 34176.1 applies post-dissolution by the Authority, as the housing successor under the Dissolution Law, as amended by Senate Bill 341. Therefore, this Award Letter, and then the AHA, and all other implementing documents and instruments are and shall remain subject to the applicable requirements of, and Developer covenants to comply with, all applicable requirements of: (i) HAL, (ii) Dissolution Law, (iii) the affordable housing and related statutes affirmed and reinstated under the requirements of Senate Bill 341 and HSC Section 33000, et seq., (iv) Environmental Laws (as defined in AHA), and (v) all other applicable federal, state, and local laws and regulations.
9.1 Prevailing Wage Laws; Labor Compliance. If applicable, the Developer will comply with California Labor Code Section 1720, et seq., and, if applicable, federal prevailing wage laws and regulations (together, “Prevailing Wage Laws”). In this regard, F.9.a
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Authority and Developer acknowledge that such laws and regulations include certain exemptions that may, or may not, apply to the Project; however, under the AHA Developer will assume all responsibility, liability, obligation for payment and will indemnify, hold harmless, and pay for all claims, suits, and liabilities affecting Authority (and City and their Indemnitees) relating to Prevailing Wage Laws as such may be applicable to the Project, to Developer, its General Contractor and all Subcontractors. Further, the Project may be subject to a negotiated “Project Labor Agreement” that may be entered into between or among the Developer and one or more building trades.
9.2 SB 341 Compliance. Subject to the Award Letter Condition Precedent and the Financial Gap Analysis described herein, as of the Date of Award Letter the Phase II Project will include eight (8) 30% AMI Extremely Low Income Housing Units, and based on the Authority Loan Amount, the Authority will meet the income targeting requirements set forth in HSC Section 34176.1(a)(3)(A).
9.3 Receipt of Subsidy Layering Review Approval from TCAC. The Phase II Project and all sources of funding therefor are subject to subsidy layering review (“SLR”) under applicable federal and state laws to ensure that excessive public assistance is not used when combining public assistance from federal, state, or local agencies including through Tax Credits. Pursuant to federal and state notices, TCAC may, and is now, performing SLRs for and on behalf of HUD, and TCAC may authorize the local jurisdiction to prepare the SLR for its review and approval.
10. Project Proforma. As of the date of this Award Letter, the Authority Assistance has been evaluated and determined, and this Award Letter is provided, based on the Authority’s material reliance on and review of the Developer's application for the Authority Assistance and Developer’s Project proformas, one for a development with 9% Tax Credits and the other for a development with 4% Tax Credits with Bonds, with proposed sources of funding and financing, development costs, and 55-year projected cash flows for the Project.
Each of the proformas is dated as of May 10, 2022 (together, “May 10 Proformas”).
The May 10 Proformas presume approval of the funding sources listed above based on Developer’s applications to the County for PLHA and PBV subsidies, and to TCAC for a reservation of Tax Credits (and as applicable, to CDLAC for the allocation of Bonds).
Developer shall update the applicable Phase II Project proforma based on and after the Award Letter Condition Precedent is satisfied, which will be a part of the updated Financial Gap Analysis and applicable SLR in connection with preparation of and entering into the AHA concurrent with the Closing of Financing.
10.1 May 10 Proformas. Copies of Developer’s May 10 Proformas for the proposed 4% Tax Credits and 9% Tax Credits developments are attached as Exhibit A1 and Exhibit A-2 and are fully incorporated by this reference. Authority has materially relied and has issued this Award Letter, in part, based on the financial assumptions set forth in the May 10 Proformas.
F.9.a
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Kingdom Development, Inc.
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11. Funding Applications; Cooperation. The Parties shall cooperate in good faith in connection with Developer’s application(s) to the County for PLHA funds, to TCAC for the Tax Credits, and to CDLAC for the Bonds.
12. Affordable Housing Agreement. Subject to the Developer’s satisfaction of the Award Letter Condition Precedent, the Authority and Developer will negotiate and enter into the AHA. The AHA will set forth a series of “Conditions Precedent”, to be satisfied by the Developer, as applicable, and Authority, as applicable.
12.1 Approval and Execution of AHA. The final form of the AHA shall be approved by Developer in its sole and absolute discretion; and, the Executive Director, is hereby authorized to approve and execute in her/his sole discretion, provided however, she/he may elect in her/his sole and absolute discretion to present the AHA to the Authority Board (and if applicable City Council) for consideration and action. The AHA is also subject to approval as for form by the City Attorney/general counsel and shall be attested by the Authority Secretary.
12.2 Summary of Certain AHA Terms. A summary of the topics and basic terms to be set forth in the AHA will include the following:
(a) Authority Loan. The Authority Loan shall be fully described in the AHA, including:
(i) Interest Rate. Principal amount of Authority Loan shall bear interest at the following rates: (A) as to amounts paid when due one percent (1%) per annum, simple interest, and (B) as to amounts not paid when due, the lesser of (1) seven percent (7%) per annum, simple interest, and (2) the maximum rate permitted by applicable law.
(ii) Term of Authority Loan. Remaining principal and accrued interest on the Authority Loan shall be due in full upon the 55th anniversary of the completion of construction of the Project or earlier upon transfer, sale, non-permitted refinancing, or default as will be set forth in the AHA. (iii) Monetary Lien Priorities. The lien position of the Authority Loan will be subordinate to the Developer’s Primary Loan for construction and permanent financing of the Project;
(iv) Residual Receipts Allocation. Repayment of the Authority Loan shall be from Residual Receipts as described above. Calculation of Residual Receipts will be subject to and calculated after payment of eligible operating expenses, approved debt service, Deferred Developer Fee, if any remaining, and eligible partnership related fees, also as provided above.
12.3 Additional AHA Terms and Conditions Precedent. The AHA will include additional terms and set forth a series of conditions precedent to the Closing of Financing, including without limitation:
F.9.a
Packet Pg. 3691 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
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Kingdom Development, Inc.
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(a) Readiness for Construction. All grading permits shall have been issued, or be ready to issue with payment of fees, and the City shall have issued a letter stating that building permits are ready to issue with payment of fees, subject only to the completion of grading of the Site for the Project.
(b) Primary Loan. Developer shall have secured all necessary institutional financing and funding for the Primary Loan to undertake and complete construction and thereafter operation of the Project and as approved by the Authority. The Primary Loan shall be sufficient to pay all development costs of the Project, through lease-up, as set forth in a final budget and approved by the Authority. (i) Developer will cause the lenders for the Primary Loan to provide Authority staff and legal counsel Word versions of all drafts of the loan documents, including the intercreditor and/or subordination agreements related only to monetary lien(s) to be negotiated among the parties thereto.
(c) Insurance. Developer shall have provided evidence to Moreno Valley that the Developer has obtained insurance policies, certificates, and additional insured or other endorsements acceptable to the Authority, the City Attorney, and City risk management staff for both Developer, its General Contractor and Subcontractors. (d) Indemnities. Developer shall provide certain indemnifications of Authority and City, both general indemnity, Environmental Laws, indemnity, and compliance with Prevailing Wage Laws indemnity.
(e) Construction Security. Developer shall have provided construction security naming and in favor of the Authority and City, which may include:
(i) a completion guarantee from an entity (or person) with adequate capital and available liquid assets to and as the guarantor is approved by the Executive Director and legal counsel in their sole discretion; in this regard, by way of example, the guarantor will have a Dun & Bradstreet PAYDEX score of 80 to 100; or (ii) an unconditional standby letter of credit, or
(iii) payment and performance bonds from the general contractor and subcontractors for the Project, or
(iv) some combination of any or all of (i), (ii) or (iii) above), in an amount sufficient to ensure the Project will be completed, all invoices paid, and all workers paid in conformity with applicable federal and state labor laws, including Prevailing Wage Laws, and applicable Project documents and agreements, and placed in service within the time set forth in the schedule for the Project as approved by the Authority. (f) Additional Contracts. Developer shall submit and obtain approval of the Authority and legal counsel (which approval shall not be unreasonably withheld, conditioned or delayed) for:
F.9.a
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Kingdom Development, Inc.
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(i) the construction contract with its General Contractor and the subcontracts therefor;
(A) Construction of the Project must be competitively bid in accordance with applicable federal, state and local laws and regulations, in particular the State, County, HUD and local requirements, if any.
(ii) the limited partnership agreement, as amended and/or amended and restated for the awarded development, for the limited partnership entity; (iii) property management contract for Phase II Project, which shall be the same entity as operating and managing the Phase I Project, to operate and manage The Courtyards at Cottonwood (81 units at Phase I and 32 units at Phase II); (iv) identification, qualifications and experience of the provider of social services for the Social and Supportive Services Plan (defined below) and the contract(s) with social service provider(s);
(A) the detailed social and supportive services plan that describes the social and supportive services, goals and objective, with a detailed budget therefor (“Social Services Plan”);
(B) The Social Services Plan shall include a robust level of social services offered at the Phase II Project and suitable for the residents’ needs and provided by professionally trained staff. Services must include an assessment of clients’ needs, link to services and verification of services obtained. The Social Services Plan must also provide clear outcome measurements related to services provided and must clearly identify if services will be provided by the Developer or by third party entity(ies); (C) For services, if any, to be provided by the Developer, the Social Services Plan shall clearly identify the budget and resources available for the services. For services to be provided by third party entity(ies), the Social Services Plan must include copies of the agreements or memoranda of understanding that govern provision of the services; and
(v) Marketing and Tenant Selection Plan. The marketing and tenant selection plans for the Phase II Project, including the Authority’s reasonable preferences waterfall;
(A) Authority and Developer will implement a residency
preference plan that prioritizes occupancy for families who were previously displaced by a Moreno Valley public entity, and who live, work or have been hired to work in Moreno Valley, subject to applicable Fair Housing laws. (B) Developer shall coordinate with property management of the Phase I Project to implement the marketing and tenant selection plans for the Phase II Project.
F.9.a
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Kingdom Development, Inc.
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(g) Cost Savings. Cost savings from the Project, if any, and/or permanent funding sources in excess of project costs and payment of any deferred Developer Fee shall be used and applied to pay down the Authority Loan, first toward principal then accrued interest, subject to compliance with the applicable regulations for TCAC and CDLAC financing.
(h) Permitted Refinancing, Sale, Transfer; Authority Due Certain Share of Net Sale or Refinancing Proceeds. Sale, transfer, and refinancing will be subject to the terms of the Authority Loan and AHA.
(i) Post-Closing Conditions. The AHA will set forth terms and conditions related to construction and construction monitoring from commencement through completion, operations, financing, refinancing, transfer, management and maintenance of the Project.
(j) Third Party Costs. The AHA will set forth terms and conditions for Developer’s payment and reimbursement for Moreno Valley’s third party costs incurred for professional services in connection with implementation of this Award Letter and administration and oversight of the Phase II Project.
12.4 Multifamily Project. No housing units within the Project shall be restricted on the basis of age; this is not a “senior” development.
12.5 Affordable Housing Unit Mix; Income and Rent Levels. A unit matrix of all units in the 32-unit Project is described above in Section 2.1.
12.6 Nonsubordinate Authority Regulatory Agreement; Affordability Period.
All Housing Units at the Project will be restricted as set forth herein and in the AHA for a minimum of fifty-five (55) years (“Affordability Period”) and as set forth in a separate “Authority Regulatory Agreement” with conditions, covenants and restrictions affecting the use, ownership, operation, management, maintenance, transfer and financing of the Project on the Site. The Authority Regulatory Agreement will be recorded in the Official Records, County of Riverside, State of California as, and shall remain, a senior, nonsubordinate encumbrance against the Site and, to the extent permitted by the Tax Credit Rules, will cross-reference the “Combined Site” to ensure that the Phase I Project and Phase II Project are operated and managed jointly, subject to applicable legal requirements. All monetary liens, including the Primary Loans issued for construction and permanent financing, shall be subject to and remain subordinate to the Authority Regulatory Agreement.
12.7 Affordable Rent. The AHA will require that the Developer will not charge more and shall state in each lease agreement with a tenant that monthly rent shall be an “Affordable Rent” as applicable to the 9% Tax Credits or the 4% Tax Credits with Bonds for all Housing Units at the Project. The term “Affordable Rent” is defined in Section 2.1 above. (a) For purposes of Affordable Rent, the monthly housing payment shall mean the total of monthly payments by each tenant household of a Housing Unit, inclusive F.9.a
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Kingdom Development, Inc.
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of payments attributable to Section 8 portable vouchers under the Housing Choice Voucher (“HCV”) program, other rental subsidies, or other public subsidies by the Authority or any other local, state, or federal governmental agency for use and occupancy of a Housing Unit and facilities associated therewith, including a reasonable allowance for utilities for an adequate level of service.
(i) Developer will accept tenants holding Section 8 portable vouchers or other tenant-based rental assistance certificates (each a “portable voucher”); provided however, each lease for a tenant holding a portable voucher shall state that monthly rent is the Affordable Rent, not fair market rent (“FMR”).
12.8 Minimum and Maximum Occupancy Standards. The minimum occupancy of the Housing Units shall be not be less than one person per bedroom. The maximum occupancy of the Housing Units shall not exceed more than such number of persons as is equal to two persons per bedroom, plus one; thus: (i) for the two (2) bedroom Housing Units the minimum occupancy is two (2) persons and the maximum occupancy shall not exceed five (5) persons; (ii) for the three (3) bedroom Housing Units the minimum occupancy is three (3) persons and the maximum occupancy shall not exceed seven (7) persons; (iii) for the four (4) bedroom Housing Units the minimum occupancy is four (4) persons and the maximum occupancy shall not exceed nine (9) persons.
12.9 Developer Fee; Deferred Developer Fee. In connection with the development of the Project and subject to compliance with the Tax Credit Rules and CDLAC Regulations, the Developer will be entitled to a total Developer Fee in such amount as may be consistent with the applicable May 10 Proforma. Receipt of a portion of the Developer Fee will be deferred (“Deferred Developer Fee”), in such amount as is described in the applicable May 10 Proforma.
12.10 Annual Monitoring Fee. Annually and concurrently with the delivery of each annual report and compliance certificate that will be required under the AHA, Developer shall pay a per unit fee with annual adjustment (“Annual Monitoring Fee”) to Authority that shall compensate Authority for its costs incurred to monitor Developer’s compliance with the AHA.
12.11 Annual Financial Report. The AHA will require Developer to submit an “Annual Financial Report”, which is a certified financial statement by Developer for the Project using generally accepted accounting principles (“GAAP”) and as separately accounted for by Developer.
12.12 Joint Use Agreement and/or Reciprocal Easement Agreement between Phase I Project and Phase II Project. Phase I Developer (Courtyards at Cottonwood, L.P.) and Developer (Courtyards at Cottonwood II, L.P.) shall negotiate the terms of and enter into one or more joint use or reciprocal easement agreement(s) for use of driveways, gated entrances, site amenities, and the community building, each and all subject to the prior reasonable review and consent of Authority (and City).
F.9.a
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13. Environmental Compliance.
13.1 CEQA and NEPA. Developer shall comply with applicable federal and state laws and regulations affecting environmental review of the Project pursuant to all, including the California Environmental Quality Act (“CEQA”) and, as and if applicable, the National Environmental Protection Act (“NEPA”) and approval thereof.
13.2 Environmental Laws. Developer shall comply “Environmental Laws” including, all applicable laws, ordinances, statutes, codes, rules, regulations, orders and decrees of the United States, the State of California, County of Riverside, City of Moreno Valley, or any other political subdivision, agency, or instrumentality exercising jurisdiction over the Developer, the Authority, the City or the Site and Project.
14. Financial Gap Analysis. This Award Letter for the Authority Assistance has been determined based on a “Financial Gap Analysis” of the proposed development and operation of the Project, including all funding and financing sources, and the May 10 Proformas, and other supporting documentation. This Award Letter is and shall remain subject to the Award Letter Condition Precedent and the Financial Gap Analysis. After the Award Letter Condition Precedent is satisfied by Developer, Moreno Valley will re-review and analyze all awarded and committed funding sources for all costs of development and operation of the Phase II Project. Developer shall update the applicable May 10 Proforma based on the award of Tax Credits and provide to the Authority requested supporting documentation. The Financial Gap Analysis may be conducted by the Authority or Moreno Valley’s economic and housing consultant to evaluate, without limitation, supportable debt (construction and permanent financing), structure and terms for the issuance of the Bonds, market value of Tax Credits, County Loan of PLHA funds, Investor Limited Partner tax credit investment, Deferred Developer Fee, and other subordinate debt, if any, and the terms therefor. Developer agrees to cooperate with the Authority and its agents and provide complete, truthful supporting documentation in connection with conducting the Financial Gap Analysis. Developer and Authority agree to cooperate in good faith toward achieving a financially feasible Project and to that end each shall provide the other and their respective agents with complete, truthful, and timely supporting documentation in connection with conducting the Financial Gap Analysis.
15. Authorization to Implement Award Letter.
15.1 Executive Director Authority. By consideration and action to approve this Award Letter, the Authority (and City) hereby authorizes the Executive Director to sign this Award Letter on behalf of the Authority. Further the Executive Director is authorized to cause to be prepared and executed the AHA, in implementation hereof, so long as the terms and provisions of the AHA and each and all implementing agreements and instruments therefor are substantially, and materially consistent, financially and legally, with this Award Letter.
(a) Further, the Executive Director (or her/his duly authorized representative) is authorized to implement the AHA and take all further actions and execute F.9.a
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all documents referenced therein and/or necessary and appropriate to carry out the transaction contemplated by this Award Letter, and thereafter the AHA, including all exhibits, instruments and implementing agreements thereto. To the extent necessary during the implementation hereof and thereof, the Executive Director, in consultation with the City Attorney (or special counsel) is authorized to make technical or minor changes and interpretations of this Award Letter, and thereafter the AHA, as reasonably necessary in her/his sole and absolute discretion, to properly implement and carry out the Phase II Project provided any and all such changes shall not in any manner substantially or materially affect Moreno Valley’s rights and obligations, or increase the value and monetary amount(s) that comprise the Authority Assistance under this Award Letter and the AHA, all subject to the Award Letter Condition Precedent.
(b) In addition, the Executive Director is authorized, on behalf of the Authority, to sign all other documents necessary or appropriate to carry out and implement this Award Letter and the AHA, including all exhibits thereto and including causing the issuance of warrants in implementation thereto, and to administer Moreno Valley’s obligations, responsibilities and duties to be performed thereunder so long as substantially and materially consistent with this Award Letter and the AHA. Any and all substantive changes, including monetary adjustments, if any, that may increase the Authority Assistance, to this Award Letter or to the terms and provisions of the AHA and implementing agreements and instruments thereto shall require the consideration and action of the Authority Board (and/or City Council), as applicable.
16. Compliance with HSC Section 33433 and Related Laws for Proposed Commitment to Sell the Site. Prior to the Authority’s action to approve (or disapprove) in its sole judgment and discretion this Award Letter, and related to the Authority providing Developer site control of the Site and to sell the Site, all subject to satisfaction of the Award Letter Condition Precedent, the City Council and Authority board shall have duly noticed, and held a joint public hearing and considered a written report about the proposed disposition of the Site, all pursuant to HSC Section 33433 and related applicable laws.
17. Authority Board Action. The governing board of the Moreno Valley Housing Authority is comprised of the elected members of the City Council (“Authority Board”). The Authority Board has reviewed Developer’s requests for each component of the Authority Assistance described in this Award Letter, and on June 21 at a duly noticed and posted public meeting of the Authority Board, the Authority authorized and approved issuance of this Award Letter to evidence the preliminary award of the Authority Assistance, commitment related to site control for sale of the Site by the Authority to Developer, and related matters described herein to satisfy the requirements of the Tax Credit Rules.
Should you have any questions or require additional information, please contact Dena Heald, Deputy Finance Director, Financial & Management Services, City of Moreno Valley at 951.413.3063 or by email at [email protected].
Sincerely,
F.9.a
Packet Pg. 3697 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
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Kingdom Development, Inc.
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Mike Lee, Executive Director and City Manager
Moreno Valley Housing Authority and City of Moreno Valley cc: Dena Heald, Deputy Finance Director, Financial & Management Services Brian Mohan, Assistant City Manager/Chief Financial Officer/City Treasurer Steve Quintanilla, Esq., City Attorney and Authority General Counsel Celeste Stahl Brady, Esq., Special Counsel, Stradling Yocca Carlson & Rauth Robert Mills, Esq., Goldfarb & Lipman
James M. Jernigan
[Developer Signature Block on Next Page]
F.9.a
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The MOU/Award Letter to
Courtyards at Cottonwood, II, L.P. is:
AGREED AND ACCEPTED
this __th day of June 2022:
COURTYARDS AT COTTONWOOD II, L.P.,
a California limited partnership
By: KDI Cottonwood, LLC,
a California limited liability company,
its Managing General Partner
By: Kingdom Development, Inc.,
a California nonprofit public benefit corporation,
its managing member
By:
William Leach, President
By: RBD Cottonwood, LLC,
a California limited liability company,
its Administrative General Partner
By: Rancho Belago Developers, Inc.,
a California corporation,
its sole member and manager
By:
James M. Jernigan, President
F.9.a
Packet Pg. 3699 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
4855
-3874-8703v4/200382-0006
Exhibit A-1
9% Tax Credits May 10 Proforma
(attached)
F.9.a
Packet Pg. 3700 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
4855
-3874-8703v4/200382-0006
Exhibit A-2
4% Tax Credits May 10 Proforma
(attached)
F.9.a
Packet Pg. 3701 Attachment: Preliminary Award Letter for Phase II of the Courtyards at Cottonwood Affordable Housing Project - Draft [Revision 2] (5849 :
4885‐4544‐0289v3/200382‐0006
HEALTH AND SAFETY CODE SECTION 33433 SUMMARY REPORT RELAING TO
PROPOSED COMMITMENT TO PROVIDE SITE CONTROL AND TO SELL
CERTAIN REAL PROPERTY PURSUANT TO A PRELIMINARY AWARD LETTER
ISSUED BY THE MORENO VALLEY HOUSING AUTHORITY TO COURTYARDS AT COTTONWOOD II, L.P., A CALIFORNIA LIMITED PARTNERSHIP FOR THE
PHASE II COTTONWOOD AFFORDABLE HOUSING
I. INTRODUCTION
The following Summary Report is prepared in compliance with and pursuant to California Health and Safety Code (“HSC”) Section 33433 and sets forth certain details of the proposed Preliminary Award Letter (“Award Letter”) between the Moreno Valley Housing Authority (“Authority”) and Courtyards at Cottonwood II, L.P., a California limited partnership (“Developer”).
The Award Letter furthers the goals of the Authority as well as the goals of the City in that it will facilitate the creation of affordable housing that will serve residents and the City.
Specifically, the Award Letter provides site control through a commitment to sell, subject to certain conditions precedent, that certain 1.61-acre parcel of real property located on the east side of Indian Street, north of Cottonwood Avenue, in the City of Moreno Valley, Riverside County, California (“Site”) and to provide the Authority Loan, which is part of the enforceable financing commitment required by the California Tax Credit Allocation Committee (“TCAC”) and its implementing Tax Credit Rules.
II. PROPOSED PHASE II PROJECT.
The purpose of the proposed sale of the Site is for Developer to plan, design, construct, operate and manage a new 32-unit multifamily rental affordable housing project, which would be second phase of the development called Courtyards at Cottonwood (“Phase II Project”).
Developer intends to apply for, and if it receives a reservation of 9% Tax Credits from the California Tax Credit Allocation Committee (“TCAC”), then the proposed Phase II Project would be restricted for occupancy and tenancy by households with incomes ranging among 30% Area Median Income (“AMI”), 40% AMI, 45% AMI, 50% AMI and 60% AMI all at an Affordable Rent as defined by the TCAC Rules. And, if Developer receives a reservation of 4% Tax Credits paired with an allocation to issue multifamily housing revenue bonds (“Bonds”) from the California Debt Limit Allocation Committee (“CDLAC”), then the units will be restricted for occupancy and tenancy by households with income not greater than 70% AMI as to twenty-four (24) units and not greater than 30% AMI as to eight (8) units all at an Affordable Rent.
The Authority proposes to provide the Developer with a carry-back, residual receipts loan for the appraised value of the Site (“Authority Loan”), which as of the preparation of this Summary Report is Two Hundred Thirty Thousand Dollars ($230,000.00) (“Authority Loan Amount”), as set forth in the Award Letter. The terms for repayment of the Authority Loan are included in the Award Letter. The Award Letter also provides for long term affordability restrictions to be recorded against the Site on a basis senior to any financing.
F.9.b
Packet Pg. 3702 Attachment: Summary Report Relating to Proposed Commitment to Provide Site Control (5849 : JOINT PUBLIC HEARING RE PROPOSED HSC 33433 SUMMARY REPORT
Page | 2
4885-4544-0289v3/200382-0006
III. BACKGROUND RE SITE ASSEMBLY AND COSTS
The Authority-owned Site was acquired by the now dissolved Moreno Valley Redevelopment Agency (“Former Redevelopment Agency”) with property tax increment housing set aside funds; thus, the proposed conveyance of the Site may be subject to HSC Section 33433 and the public hearing, disclosure, and reporting requirements described therein.
HSC Section 33433 provides that a (former) redevelopment agency, now its housing successor, that desires to sell or lease real property acquired with tax increment funds of a former agency prepare a report to disclose information about the provisions of the disposition.
Here, the proposed Award Letter sets forth the terms and conditions of the proposed sale of the Site and outlines the reasons for disposition of that property. Under HSC Section 33433, the approval of the City Council is necessary prior to the disposition of property by the Authority, as housing successor under HSC 34176. While it is not clearly established as a matter of law that HSC Section 33433 applies to the sale of lease of real property by a housing authority acting as the housing successor where the property was originally acquired by a former redevelopment agency, pursuant to Senate Bill 341, in an abundance of caution, and for transparency to the public about the proposed sale of the Site, the Authority staff has prepared this Summary Report.
IV. SUMMARY REPORT.
A. This Summary Report describes and specifies all of the following:
1. The cost of the proposed Award Letter and implementing Affordable Housing Agreement (“AHA”) referenced therein to the Authority, including the land acquisition costs, clearance costs, relocation costs, the costs of any improvements to be provided by the Authority, plus the expected interest on any loans or bonds to finance the agreements.
2. The estimated value of the Site to be conveyed to be determined at the highest and best uses permitted.
3. The estimated value of the Site to be conveyed to be determined at the use and with the conditions, covenants, and development costs required by the sale. If the sale price is less than the fair market value of the interest to be conveyed, determined at the highest and best use consistent with the redevelopment plan, then the Authority shall provide as part of the summary as explanation of the reasons for the difference.
4. An explanation of why the sale of the Site will assist in the elimination of blight, with reference to all supporting facts and materials relied upon in making this explanation.
It is the intent of this Summary Report to meet all these requirements and provide the necessary information and data.
B. This Summary Report is organized into the following sections:
1. Salient Points of the Award Letter: This section summarizes the major responsibilities imposed upon the Developer and Authority by the Award Letter.
F.9.b
Packet Pg. 3703 Attachment: Summary Report Relating to Proposed Commitment to Provide Site Control (5849 : JOINT PUBLIC HEARING RE PROPOSED HSC 33433 SUMMARY REPORT
Page | 3
4885-4544-0289v3/200382-0006
2. Cost of the Award Letter to the Authority: This section details the cost to the Authority (and the Former Redevelopment Agency) associated with implementing the Award Letter.
3. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted under the Property’s zoning: This section estimates the value of the interest to be conveyed determined at the highest use permitted under the requirements imposed by the zoning in place on the Site.
4. Estimated Reuse Value of the Interests to be Conveyed: This section summarizes the valuation estimate for the Site based upon the required scope of development and the other conditions and covenants required by the Award Letter.
5. Consideration Received and Comparison with Established Value:
This section describes the compensation to be received by the Authority, and explains any difference between the compensation to be received and the established value of the Site.
6. Blight Elimination: This section describes the existing blighted conditions on the Site and explains how the Award Letter will assist in alleviating the blighting influence.
V. SALIENT POINTS OF THE PROPOSED AWARD LETTER
A. Description of the Site
1. The Site is known as that certain 1.61-acre parcel of real property located on the east side of Indian Street, north of Cottonwood Avenue, in the City of Moreno Valley, California.
B. Authority Responsibilities
1. Under the Award Letter, the Authority will provide Developer site control of the Site and commit to sell the Site to Developer at the appraised fair market value of such real property, subject to certain conditions precedent, including the Award Letter Condition Precedent.
a. The Authority will loan to the Developer approximately [$230,000] (“Authority Loan Amount”) as more particularly set forth in the Award Letter.
C. Developer Responsibilities
1. Under the Award Letter, Developer will prepare and submit one or more applications to TCAC first seeking a reservation of 9% Tax Credits, and if unsuccessful one or more applications to TCAC for a reservation of 4% Tax Credits paired with application(s) to CDLAC for an allocation to issue multifamily housing revenue bonds, all in order to comply with Section 10325 of the California Code of Regulations, Title 4, Division 17, Chapter 1, for the Authority to provide “site control” to Developer as to the Site and as a part of Developer’s obligation to have an enforceable financing commitment.
F.9.b
Packet Pg. 3704 Attachment: Summary Report Relating to Proposed Commitment to Provide Site Control (5849 : JOINT PUBLIC HEARING RE PROPOSED HSC 33433 SUMMARY REPORT
Page | 4
4885-4544-0289v3/200382-0006
2. The purpose of the proposed sale of the Site will be for Developer to plan, design, construct and operate a 32-unit multifamily rental affordable housing project, which would be Phase II of the development called Courtyards at Cottonwood.
3. If Developer receives a reservation of 9% Tax Credits from TCAC, then the proposed Phase II Project would be restricted for occupancy and tenancy by households with incomes ranging among 30% Area Median Income (“AMI”), 40% AMI, 45% AMI, 50% AMI and 60% AMI all at an Affordable Rent as defined by the TCAC Rules. And, if Developer receives a reservation of 4% Tax Credits paired with an allocation to issue multifamily housing revenue bonds (“Bonds”) from the California Debt Limit Allocation Committee (“CDLAC”), then the units will be restricted for occupancy and tenancy by households with income not greater than 70% AMI as to twenty-four (24) units and not greater than 30% AMI as to eight (8) units all at an Affordable Rent.
4. The terms for repayment of the Authority Loan are included in the Award Letter. The Award Letter also provides for 55-year, long-term affordability restrictions to be recorded against the Site on a basis senior to any monetary liens and financings.
VI. COST OF THE AGREEMENT TO THE AUTHORITY
A. The Authority will loan to the Developer approximately $230,000 (“Authority Loan Amount”) as more particularly set forth in the Award Letter.
1. The Former Redevelopment Agency was dissolved pursuant to ABx1 26, as created by the California Legislature in 2011 (“2011 Dissolution Enactment”). The dissolution of redevelopment agencies was further prescribed by AB 1484, Chapter 26 of Statutes of 2012, HSC Section 34160, et seq. and Section 34170 et seq. (“AB 1484” and, together with the 2011 Dissolution Enactment as amended by AB 1484, SB 341, and other subsequent legislation, the “Dissolution Law”).
a. The Site was transferred to the Authority by notice of: (i) action by City designating Authority as the housing successor entity pursuant to Section 34176 of the Dissolution Law, and (ii) action by each of the successor agency to the Redevelopment Agency (“Successor Agency”) and the Oversight Board to the Successor Agency as created pursuant to Section 34179.6 of the Dissolution Law.
2. The Site is approximately 1.61 acres in size. The cumulative total costs to the Former Redevelopment Agency to purchase the Site was $223,600. a. The City and Authority’s holding costs have been nominal. b. Thus the total costs of the Award Letter related to disposition of the Site is estimated to be $233,600.
3. As a result of this investment and the commitment to sell the Site to the Developer for the Phase II Project, the Site will be developed and operated for a 55-year Affordability Period as a multifamily affordable rental housing project of 32 Housing Units as more fully set forth in the Award Letter. Also, with this investment, the Authority eliminates the blighted conditions that currently exist on the Site.
F.9.b
Packet Pg. 3705 Attachment: Summary Report Relating to Proposed Commitment to Provide Site Control (5849 : JOINT PUBLIC HEARING RE PROPOSED HSC 33433 SUMMARY REPORT
Page | 5
4885-4544-0289v3/200382-0006
VII. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE PROPERTY’S ZONING
A. Based on an independent, professional appraisal of the Site, the value of the Site for multifamily residential development is estimated to be $3.28 per square foot or $230,000.
VIII. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED A. The reuse value has not been determined as the sale of the Site under the Award Letter is proposed to be at the appraised fair market value.
IX. CONSIDERATION RECEIVED AND COMPARISON WITH ESTABLISHED VALUE A. Under the proposed Award Letter, the Authority will convey the Site to the Developer and the Authority will provide the Authority Loan to Developer, which will be a carry-back, Residual Receipts loan for the Authority Loan Amount of $230,000.
X. BLIGHT ELIMINATION
A. Conveyance of the Site and development of the Phase II Project on the Site will eliminate blight within the neighborhood and develop an affordable rental housing project of 32 units, as described above and in the Award Letter. The Phase II Project will enhance the area by improving long blighted properties and providing affordable housing. Therefore, the Project will further the overall goal of Authority to create affordable housing opportunities and crePate an attractive environment for City residents.
F.9.b
Packet Pg. 3706 Attachment: Summary Report Relating to Proposed Commitment to Provide Site Control (5849 : JOINT PUBLIC HEARING RE PROPOSED 376.2
315.5
WGS_1984_Web_Mercator_Auxiliary_Sphere
0 157.74 315.5 Feet
Courtyards @ Cottonwood - Phase II
DISCLAIMER: The information shown on this map was compiled from the City of Moreno Valley GIS and Riverside County GIS. The land base and facility information on this map is for display purposes only and should not be relied upon without independent verification as to its accuracy. Riverside County and City of Moreno Valley will not be held responsible for any claims, losses or damages resulting from the use of this map.
Notes:
Legend
Print Date: 2/10/2021
Image Source: Nearmap
Public Facilities
Public Facilities
Fire Stations
Parcels
City Boundary
Sphere of Influence
F.9.c
Packet Pg. 3707 Attachment: Site location - Phase II (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND 1 Resolution No. 2022-XX
Date Adopted: June 21, 2022
RESOLUTION NO. 2022-XX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MORENO VALLEY, CALIFORNIA APPROVING THE SALE
OF CERTAIN REAL PROPERTY BY THE MORENO
VALLEY HOUSING AUTHORITY TO COURTYARDS AT
COTTONWOOD II, L.P. AND MAKING CERTAIN OTHER
FINDINGS
WHEREAS, the Moreno Valley Housing Authority (“Authority”) owns certain real property, approximately 1.61-acres in size, and generally located on the east side of Indian Street, north of Cottonwood Avenue, in the City of Moreno Valley, County of Riverside, California (“Site”); and
WHEREAS, the Authority maintains a Low and Moderate Income Housing Asset Fund (“Housing Asset Fund”) pursuant to Health and Safety Code (“HSC”) Sections 34176 and 34176.1, which funds are available to the Authority to assist in the development and operation of rental housing in the City that is affordable to persons and families of low, very low and extremely low income; and WHEREAS, after undertaking the procedures under the California Surplus Land Act, Government Code Section 54220, et seq. (“SLA”), including issuance of the required notice of availability, excepting the notice of interest from Courtyards at Cottonwood II, L.P. (herein, “Phase II Developer”), the Authority did not receive other compliant notices of interest concerning the potential development of affordable housing on the Site pursuant to the SLA; and
WHEREAS, the Developer and its general partners are experienced in the construction, development, operation and management of high quality housing in Southern California; and
WHEREAS, on December 9, 2021 the Planning Commission considered and recommended to the City Council approval of the discretionary land use entitlement for the Phase II Project after a duly noticed public hearing at an open meeting by adoption of the following resolutions: (i) PC Resolution No. 2021-48 to certify a Mitigated Negative Declaration and approve a mitigation monitoring and reporting program pursuant to the California Environmental Quality Act and implementing regulations (together, “CEQA”); (ii) PC Resolution No. 2021-49 for General Plan Amendment (PEN 21-0113) to amend the General Plan Land Use Map to change the land use designation from Public (P) to Residential 15 (R15); (iii) PC Resolution No. 2021-50 to amend the City Zoning Atlas to change the zone from Public (P) to Residential 15 (R15); and (iv) PC Resolution No. 2021-51 to approve Plot Plan PEN21-0112; and WHEREAS, on January 18, 2022 the City Council considered and approved the land use entitlement for the Phase II Project at an open meeting by adoption of an ordinance and resolutions including findings as follows: (i) Council Resolution No. 2022-12 certifying the Mitigated Negative Declaration and approving the mitigation F.9.d
Packet Pg. 3708 Attachment: Resolution 2022-XX_City [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 2 Resolution No. 2022-XX
Date Adopted: June 21, 2022
monitoring and reporting program pursuant to CEQA; (ii) Council Resolution No. 2022- 13 approving a General Plan Amendment (PEN 21-0113) amending the General Plan Land Use Map and changing the land use designation from Public (P) to Residential 15 (R15); and (iv) Council Resolution No. 2022-14 approving the Plot Plan (PEN21-0112); and
WEHREAS, on January 18, 2022 and February 1, 2022, the City Council conducted first and second readings, respectively, of Ordinance No. 986 that amended the City Zoning Atlas to change the zone from Public (P) to Residential 15 (R15) for the Phase II Project; and
WHEREAS, the Authority desires to issue to the Phase II Developer, and Developer desires to implement that certain Preliminary Award Letter dated as of June 21, 2022 (“Award Letter”) that sets forth the basic terms between the parties to fulfill the requirements for the commitment of part of an “enforceable financial commitment” and “site control” (therein, “Authority Assistance”) for construction, development, and operation of the certain 32-unit new construction multifamily affordable housing project (“Phase II Project”) as required by the following governmental agencies: (1) the California Tax Credit Allocation Committee (“TCAC”) and its Tax Credit Rules , in particular California Code of Regulations, Title 4, Division 17, Chapter 1, Section 10325, in connection with Developer first seeking a reservation of 9% Tax Credits, and if unsuccessful (2) to TCAC seeking a reservation of 4% Tax Credits paired with an application to the California Debt Limit Allocation Committee (“CDLAC”) for an allocation to issue multifamily housing revenue bonds (“Bonds”) under the respective program requirements, Tax Credit Rules as to TCAC and CDLAC Regulations as to CDLAC; and WHEREAS, it is contemplated under the Award Letter, and thereby the implementing Affordable Housing Agreement (“AHA”), as hereafter negotiated and proposed, that Developer will acquire the Site from the Authority and develop and operate on the Site the Phase II Project to be maintained and managed in accordance with the AHA and other implementing instruments to be entered into between the Authority and Developer with respect to the Phase II Project, throughout the 55-year Affordability Period; and
WHEREAS, the City Council desires to authorize the Authority’s commitment to sell the Site and thereafter to sell the Site to Developer for the Phase II Project; and WHEREAS, the Project is vital to and in the best interest of the City and the health, safety and welfare of its residents, and is in accordance with the public purposes of applicable state and local laws and requirements; and WHEREAS, the City and/or Authority have prepared such notices, plans and reports as may be required in connection with its consideration of this matter and has made available for public inspection all such matters prior to its consideration of and action on this matter; and
F.9.d
Packet Pg. 3709 Attachment: Resolution 2022-XX_City [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 3 Resolution No. 2022-XX
Date Adopted: June 21, 2022
WHEREAS, the Authority and City Council held a joint public hearing to consider the transaction contemplated by the Award Letter in accordance with the HSC Section 33000, et seq., including HSC Section 33433, and Division 24, Part 1.85 of the HSC, Section 34170, et seq. (“Dissolution Law”); and
WHEREAS, the City desires to authorize the Authority to commit to sell, and thereafter to sell, the Site to Developer pursuant to the Award Letter and the AHA described therein; and
WHEREAS, the City Council has duly considered all terms and conditions of the proposed sale of the Site and believes the Phase II Project is in the best interests of the City and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORENO
VALLEY, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:
Section 1: The foregoing recitals are true and correct and constitute a substantive part of this Resolution.
Section 2: The actions hereunder are within the envelope of the City Council’s CEQA findings and related approvals as described above and such prior CEQA determinations adequately analyzed the Phase II Project and that no further environmental review, action or findings under CEQA are required.
Section 3: The City Council finds and determines after conducting the public hearing and based on the documentation, testimony and other evidence in the record before it, that (a) the Preliminary Award Letter, and implementing Affordable Housing Agreement, for disposition of the Stie and development of the Phase II Project will assist in the elimination of blight by allowing land (i.e., the Site) constrained access and infrastructure deficiencies to be developed with a new 32-unit multifamily affordable rental housing project, and (b) the consideration being paid to the Authority is not less than the fair market value at the use and with the covenants and conditions and development costs to be set forth in the implementing Affordable Housing Agreement.
Section 4: The City Council hereby approves the commitment to sell, and thereafter the sale of the Site pursuant to the Preliminary Award Letter, substantially in the form submitted and authorizes and directs the City Manager to take such actions as are necessary or convenient to implement such sale, and as necessary the implementing Affordable Housing Agreement described therein. The City Manager is authorized to approve modifications to the sale that do not materially change the terms and conditions of such sale in consultation with legal counsel.
Section 5: This Resolution shall be effective immediately upon adoption.
Section 6: The City Clerk shall certify to the adoption of this Resolution.
F.9.d
Packet Pg. 3710 Attachment: Resolution 2022-XX_City [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 4 Resolution No. 2022-XX
Date Adopted: June 21, 2022
APPROVED AND ADOPTED this 21st day of June, 2022.
___________________________
Dr. Yxstian A. Gutierrez
Mayor
City of Moreno Valley
ATTEST:
____________________________
Paul Bradvica, Deputy City Clerk
APPROVED AS TO FORM:
____________________________
Steven Quintanilla, Interim City Attorney
F.9.d
Packet Pg. 3711 Attachment: Resolution 2022-XX_City [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 5 Resolution No. 2022-XX
Date Adopted: June 21, 2022
RESOLUTION JURAT
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF MORENO VALLEY )
I, Paul Bradvica, Deputy City Clerk of the City of Moreno Valley, California, do hereby certify that Resolution No. 2022-XX was duly and regularly adopted by the City Council of the City of Moreno Valley at a regular meeting thereof held on the 21st day of June, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
(Council Members, Mayor Pro Tem and Mayor)
___________________________________
PAUL BRADVICA, DEPUTY CITY CLERK
(SEAL)
F.9.d
Packet Pg. 3712 Attachment: Resolution 2022-XX_City [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 1 Resolution No. HA 2022-XX
Date Adopted: June 21, 2022
RESOLUTION NO. HA 2022-XX
A RESOLUTION OF THE BOARD OF DIRECTORS OF
THE MORENO VALLEY HOUSING AUTHORITY,
CALIFORNIA APPROVING THE COMMITMENT TO SELL
AND THE SALE OF CERTAIN REAL PROPERTY;
APPROVING THAT CERTAIN PRELIMINARY AWARD
LETTER ISSUED TO COURTYARDS AT COTTONWOOD
II, L.P.; AND, MAKING OTHER FINDINGS
WHEREAS, the Moreno Valley Housing Authority (“Authority”) owns certain real property, approximately 1.61-acres in size, and generally located on the east side of Indian Street, north of Cottonwood Avenue, in the City of Moreno Valley, County of Riverside, California (“Site”); and
WHEREAS, the Authority maintains a Low and Moderate Income Housing Asset Fund (“Housing Asset Fund”) pursuant to Health and Safety Code (“HSC”) Sections 34176 and 34176.1, which funds are available to the Authority to assist in the development and operation of rental housing in the City that is affordable to persons and families of low, very low and extremely low income; and WHEREAS, after undertaking the procedures under the California Surplus Land Act, Government Code Section 54220, et seq. (“SLA”), including issuance of the required notice of availability, excepting the notice of interest from Courtyards at Cottonwood II, L.P. (herein, “Phase II Developer”), the Authority did not receive other compliant notices of interest concerning the potential development of affordable housing on the Site pursuant to the SLA; and
WHEREAS, the Developer and its general partners are experienced in the construction, development, operation and management of high quality housing in Southern California; and
WHEREAS, the Authority desires to issue to the Phase II Developer, and Developer desires to implement that certain Preliminary Award Letter dated as of June 21, 2022 (“Award Letter”) that sets forth the basic terms between the parties to fulfill the requirements for the commitment of part of an “enforceable financial commitment” and “site control” (therein, “Authority Assistance”) for construction, development, and operation of the certain 32-unit new construction multifamily affordable housing project (“Phase II Project”) as required by the following governmental agencies: (1) the California Tax Credit Allocation Committee (“TCAC”) and its Tax Credit Rules , in particular California Code of Regulations, Title 4, Division 17, Chapter 1, Section 10325, in connection with Developer first seeking a reservation of 9% Tax Credits, and if unsuccessful (2) to TCAC seeking a reservation of 4% Tax Credits paired with an application to the California Debt Limit Allocation Committee (“CDLAC”) for an allocation to issue multifamily housing revenue bonds (“Bonds”) under the respective program requirements, Tax Credit Rules as to TCAC and CDLAC Regulations as to CDLAC; and F.9.e
Packet Pg. 3713 Attachment: Resolution HA 2022-XX_Housing Authority [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 2 Resolution No. HA 2022-XX
Date Adopted: June 21, 2022
WHEREAS, it is contemplated under the Award Letter, and thereby the implementing Affordable Housing Agreement (or “AHA”), as hereafter negotiated, that Developer will acquire the Site from the Authority and develop and operate on the Site the Phase II Project to be maintained and managed in accordance with the AHA and other implementing instruments to be entered into between the Authority and Developer with respect to the Phase II Project, throughout the 55-year Affordability Period; and WHEREAS, on December 9, 2021 the Planning Commission considered and recommended to the City Council of the City of Moreno Valley (“City Council”) approval of the discretionary land use entitlement for the Phase II Project after a duly noticed public hearing at an open meeting by adoption of the following resolutions: (i) PC Resolution No. 2021-48 to certify a Mitigated Negative Declaration and approve a mitigation monitoring and reporting program pursuant to the California Environmental Quality Act and implementing regulations (together, “CEQA”); (ii) PC Resolution No. 2021-49 for General Plan Amendment (PEN 21-0113) to amend the General Plan Land Use Map to change the land use designation from Public (P) to Residential 15 (R15); (iii) PC Resolution No. 2021-50 to amend the City Zoning Atlas to change the zone from Public (P) to Residential 15 (R15); and (iv) PC Resolution No. 2021-51 to approve Plot Plan PEN21-0112; and
WHEREAS, on January 18, 2022 the City Council considered and approved the land use entitlement for the Phase II Project at an open meeting by adoption of an ordinance and resolutions including findings as follows: (i) Council Resolution No. 2022-12 certifying the Mitigated Negative Declaration and approving the mitigation monitoring and reporting program pursuant to CEQA; (ii) Council Resolution No. 2022- 13 approving a General Plan Amendment (PEN 21-0113) amending the General Plan Land Use Map and changing the land use designation from Public (P) to Residential 15 (R15); and (iv) Council Resolution No. 2022-14 approving the Plot Plan (PEN21-0112); and WHEREAS, on January 18, 2022 and February 1, 2022, the City Council conducted first and second readings, respectively, of Ordinance No. 986 that amended the City Zoning Atlas to change the zone from Public (P) to Residential 15 (R15) for the Phase II Project; and
WHEREAS, the Project is vital to and in the best interest of the City and the health, safety and welfare of its residents, and is in accordance with the public purposes of applicable state and local laws and requirements; and WHEREAS, the Authority and City have prepared such notices, plans and reports as may be required in connection with its consideration of this matter and has made available for public inspection all such matters prior to its consideration of and action on this matter; and
WHEREAS, the Authority and City Council held a joint public hearing to consider the transaction contemplated by the Award Letter in accordance with the HSC Section F.9.e
Packet Pg. 3714 Attachment: Resolution HA 2022-XX_Housing Authority [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 3 Resolution No. HA 2022-XX
Date Adopted: June 21, 2022
33000, et seq., in particular HSC Section 33433, and Division 24, Part 1.85 of the HSC, Section 34170, et seq. (“Dissolution Law”); and
WHEREAS, the Authority desires to approve the Award Letter, to commit to sell the Site, and thereafter, subject to the Award Letter Condition Precedent, to sell the Site to Developer pursuant to the Award Letter and the AHA described therein; and WHEREAS, the Authority has duly considered all terms and conditions of the Award Letter and believes that the Phase II Project is in the best interests of the City and the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements.
NOW, THEREFORE, THE MORENO VALLEY HOUSING AUTHORITY,
CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:
Section 1: The foregoing recitals are true and correct and constitute a substantive part of this Authority Resolution.
Section 2: The actions hereunder are within the envelope of the City Council’s CEQA findings and related approvals as described above and such prior CEQA determinations adequately analyzed the Phase II Project and that no further environmental review, action or findings under CEQA are required.
Section 3: The Authority Board hereby finds and determines, after conducting the public hearing, and all documentation, testimony and other evidence in the record before it, that (a) the Award Letter, and implementing Affordable Housing Agreement, for disposition of the Site and development of the Phase II Project on the Site will assist in the elimination of blight by allowing land (i.e., the Site) constrained access and infrastructure deficiencies to be developed with a new 32-unit multifamily affordable rental housing project, and (b) the consideration being paid to the Authority is not less than the fair market value at the use and with the covenants and conditions and development costs to be set forth in the implementing Affordable Housing Agreement.
Section 4: The Authority Board hereby approves the Preliminary Award Letter between the Authority and Developer, with such changes as may be mutually agreed upon by the Authority Executive Director (or his or her designee), the City Attorney (or special counsel), and the Developer, respectively, as are minor and in substantial conformance with the form of the Preliminary Award Letter submitted herewith. The Executive Director is authorized to execute the Preliminary Award Letter, and subsequently and subject to compliance with the conditions set forth in the Preliminary Award Letter, negotiate the terms and conditions of the Affordable Housing Agreement and the other and various implementing agreements and instruments on behalf of the Authority so long as in substance consistent with the transaction contemplated by the Preliminary Award Letter. In such regard, the Executive Director (or his designee) is authorized (a) to sign the final version of the Preliminary Award Letter after completion of non-substantive, minor revisions, if any, and (b) to negotiate and execute the final versions of the Affordable Housing Agreement and other instruments implementing the F.9.e
Packet Pg. 3715 Attachment: Resolution HA 2022-XX_Housing Authority [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 4 Resolution No. HA 2022-XX
Date Adopted: June 21, 2022
Phase II Project as set forth in the Preliminary Award Letter, as determined to be appropriate and in substantial conformity with the terms and conditions of the Preliminary Award Letter. Copies of the final form of the Preliminary Award Letter, when duly executed, shall be placed on file in the office of the Authority Secretary/City Clerk. Further, the Executive Director (or his designee) is authorized to implement the Preliminary Award Letter and take all further actions and execute all documents referenced therein and/or necessary and appropriate to carry out the transaction contemplated by the Preliminary Award Letter. The Executive Director (or his designee) is hereby authorized to the extent necessary during the implementation of the Preliminary Award Letter to make technical or minor changes and interpretations of the Preliminary Award Letter after execution, as necessary to properly implement and carry out the Preliminary Award Letter, including exhibits, if any, thereto, provided any and all such changes shall not in any manner materially affect the rights and obligations of the Authority under the Preliminary Award Letter. The Executive Director, in his sole discretion, may present the Affordable Housing Agreement and/or other implementing agreement(s) or instruments to the Authority as and if he or she deems necessary and shall present such document(s) for Authority consideration and action if materially and/or substantively beyond the terms and conditions of the Preliminary Award Letter.
Section 5: The provisions of this resolution shall be incorporated into each Request for Proposals seeking to sell Housing Authority-owned surplus or exempt surplus real property and into each purchase and sale agreement for the sale of Housing Authorityowned surplus or exempt surplus real property.
Section 6: This Resolution shall be effective immediately upon adoption.
Section 7: The Authority Secretary shall certify to the adoption of this Resolution.
BE IT FURTHER RESOLVED that this Resolution shall take effect immediately upon its adoption.
APPROVED AND ADOPTED this 21st day of June, 2022.
___________________________
Mayor of the City of Moreno Valley,
Acting in the capacity of Chairman of the
ATTEST: Moreno Valley Housing Authority
____________________________
City Clerk, acting in the capacity of
Secretary of the Moreno Valley
Housing Authority
APPROVED AS TO FORM:
____________________________
City Attorney, acting in the capacity
of General Counsel of the Moreno
Valley Housing Authority
F.9.e
Packet Pg. 3716 Attachment: Resolution HA 2022-XX_Housing Authority [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) 5 Resolution No. HA 2022-XX
Date Adopted: June 21, 2022
RESOLUTION JURAT
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF MORENO VALLEY )
I, Paul Bradvica, Secretary of the Moreno Valley Housing Authority of the City of Moreno Valley, California, do hereby certify that Resolution No. HA 2022-XX was duly and regularly adopted by the Commissioners of the Moreno Valley Housing Authority at a regular meeting thereof held on the 21st day of June, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
(Council Members, Vice Chairman and Chairman)
___________________________________
PAUL BRADVICA, DEPUTY CITY CLERK
(SEAL)
F.9.e
Packet Pg. 3717 Attachment: Resolution HA 2022-XX_Housing Authority [Revision 1] (5849 : JOINT PUBLIC HEARING RE PROPOSED COMMITMENT AND SITE) Report to City Council
ID#5741 Page 1
TO: Mayor and City Council
FROM: Michael Lloyd, Public Works Director/City Engineer AGENDA DATE: June 21, 2022
TITLE: PUBLIC HEARING REGARDING THE NATIONAL
POLLUTANT DISCHARGE ELIMINATION SYSTEM
(NPDES) REGULATORY RATE SCHEDULE FOR NEW
AND EXISTING RESIDENTIAL, COMMON INTEREST,
COMMERCIAL, INDUSTRIAL, AND QUASI-PUBLIC USE
DEVELOPMENT PROPOSED FISCAL YEAR (FY)
2022/2023 ANNUAL RATES
RECOMMENDED ACTION
Recommendations:
1. Conduct a Public Hearing to review and confirm annual regulatory rate schedule for the National Pollutant Discharge Elimination System Program for New Residential, Common Interest, Commercial, Industrial and Quasi-Public Land Uses.
2. Adopt Resolution No. 2022-XX, a Resolution of the City Council of the City of Moreno Valley, California, Authorizing and Approving the Levy of the National Pollutant Discharge Elimination System (NPDES) Regulatory Rate for New and Existing Residential, Common Interest, Commercial, Industrial, and Quasi-Public Use Development of the County of Riverside Property Tax Roll.
3. Authorize the Chief Financial Officer to adjust the rates levied on the property tax bills in the event there are any parcel changes between the City Council meeting date and the date the fixed charges are submitted to the County of Riverside or other adjustments, provided the applied rate does not exceed the maximum rate, is in compliance with the ballot for each parcel, and is consistent with the adopted budget.
SUMMARY
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This report recommends that the City Council conduct a Public Hearing to receive public testimony on the proposed maximum and applied National Pollutant Discharge Elimination System (NPDES) Regulatory Rates for Fiscal Year (FY) 2022/2023. The proposed maximum rates have been adjusted for inflation reflecting the latest applicable Consumer Price Index, as previously approved by the property owners. NPDES Regulatory Rate revenues support specific services provided by the Storm Water Management Program and have been included in the FY 2022/2023 proposed budget.
The Finance Subcommittee was provided the staff report that provided the details regarding the annual inflationary adjustments proposed to be applied to the maximum assessment rates, as previously authorized by the property owners. The meeting was scheduled for February 22, 2022 but was cancelled. Staff did not receive any questions regarding this item.
The applied parcel charges may reflect a change in amount based upon adjustments in service levels. Revenue received from the NPDES rates is restricted and can only be used within the Storm Water Management program.
DISCUSSION
The Clean Water Act of 1987 established requirements for the discharge of Urban Runoff from Municipal Separate Storm Sewer Systems under the NPDES program. The Santa Ana Regional Water Quality Control Board administers the NPDES program through the issuance of a Permit. The NPDES program requires public agencies to obtain coverage under the Permit to discharge urban storm water runoff from municipally owned drainage facilities, including streets, highways, storm drains, and flood control channels. The City’s current NPDES Permit requires all new development projects comply with storm water management requirements.
As a condition of approval for development projects, the City requires property owners to provide a funding source to support activities for the NPDES program requirements. The City Council adopted the NPDES residential regulatory rate on June 10, 2003, and the NPDES commercial/industrial regulatory rate on January 10, 2006. Revenue received from the rate supports the increased compliance activities related to development. It also reduces the financial impact to the General Fund to maintain compliance with the unfunded requirements of the NPDES Permit.
With revenue received from the NPDES commercial/industrial regulatory rate, the City annually inspects site design, source and treatment control Best Management Practices, monitors maintenance records for those on-site facilities that require periodic monitoring, and performs annual inspections of the affected areas to ensure compliance with federally mandated NPDES Permit requirements, as administered by the State. With revenue received from the NPDES residential rate, the City monitors residential developments by providing the necessary services for the continuous operation, enhancement, and maintenance of the storm water treatment system, and performs inspections of the affected areas to ensure compliance with federally mandated NPDES Permit requirements.
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The City offers the NPDES funding program to assist property owners in satisfying the funding requirement. After a property owner approves the City’s NPDES regulatory rate through a mail ballot proceeding, the City can levy the applicable rate on the annual property tax bill of the authorized parcel(s).
The attached resolution sets the proposed maximum and applied regulatory rates for both Residential Development and Common Interest, Commercial, Industrial, and QuasiPublic Use Development and authorizes the County to levy the applicable rates on the FY 2022/2023 property tax roll. The proposed applied regulatory rates are consistent with the programs and budgets included within the City’s FY 2022/2023 adopted budget.
Proposed Regulatory Rates
The proposed rates shall be levied against each assessable benefiting parcel of real property that is required to comply with the City’s NPDES Storm Water Management Program and whose property owners have previously approved by ballot to participate.
The FY 2022/2023 proposed maximum regulatory rates are calculated by applying an annual inflationary adjustment to the FY 2021/2022 maximum rates. The annual inflationary adjustment is based on the Consumer Price Index (6.57%), as approved by the property owners at the time they approved the rates to be applied to their annual property tax bill.
The proposed applied regulatory rate is the amount actually levied on the property tax roll. It is the amount necessary to fund the applicable service levels required to fund the costs of maintaining the improvements benefiting each parcel during the upcoming FY.
An individual analysis of each parcel, its current development status, and maintenance needs was completed to determine the necessary levels of service required. The applied regulatory rate can be lower than the maximum regulatory rate but it cannot be higher. The applied rates for each parcel were made available at the City Clerk’s Office as well as posted online at www.moval.org/city_hall/departments/pubworks/NPDES.shtml.
For FY 2022/2023, the proposed maximum regulatory rate per parcel for single-family Residential Development is $374.52. Table 1 outlines the service levels provided.
Table 1
Service Level
LEVEL I NPDES Administration and
Overhead
LEVEL II Water Quality Pond/Basin
Maintenance
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LEVEL II-A*
(Base FY
2008/2009)
Sand Filter Maintenance
LEVEL III Water Quality Pond/Basin
Remediation/Reconstruction
LEVEL IV Water Quality System Retrofit
For FY 2022/2023, the proposed maximum regulatory rate for Common Interest, Commercial, Industrial, and Quasi-Public Use Development is $282.02. Table 2 outlines the service levels provided.
Table 2
Service Level
LEVEL I NPDES Administration and overhead
LEVEL II
Storm water and non-storm water
runoff monitoring, inspection of the
project’s site design, source control
and treatment control BMPs;
evaluation of site storm water
compliance site activities; review
site-specific technical reports and
treatment control BMP maintenance
records
Conflict of Interest Analysis
Regarding a special finance program pertaining to the provision of a public service, a council member who lives in said district may participate in adjusting the amount of the district’s assessment so long as the increase or decrease is the same for everyone else living within the assessment district. This is known as the “Public Generally Exception.” FPPC Regulations § 18703. Public Generally.
(e) Specific Rules for Special Circumstances. The financial effect on a public official's financial interest is deemed indistinguishable from that of the public generally where there is no unique effect on the official's interest if the official establishes:
(1) Public Services and Utilities. The decision sets or adjusts the amount of an assessment, tax, fee, or rate for water, utility, or other broadly provided public services that is applied equally, proportionally, or by the F.10
Packet Pg. 3721
same percentage to the official's interest and all businesses, properties, or individuals subject to the assessment, tax, fee, or rate. This exception does not apply if the decision would impose the assessment, tax or fee, or determine the boundaries of a property, or who is subject to the assessment, tax, or fee. Under this exception, an official is only permitted to take part in setting or adjusting the amount of the assessment, tax, or fee, once the decisions to implement, and determine the property or persons subject to the assessment, tax, or fee, have already been made.
Approval of the maximum and applied parcel charges is a routine City Council action item. This action meets the Strategic Plan Priorities by managing and maximizing Moreno Valley’s public infrastructure to ensure an excellent quality of life, develop and implement innovative, cost-effective infrastructure maintenance programs, public facilities management strategies, and capital improvement programming and project delivery.
ALTERNATIVES
1. Conduct Public Hearing and approve the recommended actions as presented in this staff report. Staff recommends this alternative because these actions are needed to place the NPDES Regulatory Rates on the County property tax roll.
2. Do not conduct Public Hearing and do not approve the recommended actions as presented in this staff report. Staff does not recommend this alternative because the County of Riverside may challenge our ability to place the NPDES Regulatory Rates on the County property tax roll and increase General Fund obligations.
FISCAL IMPACT
With the recommended actions, property owners will pay the regulatory rate as a part of their annual property tax bill. The maximum regulatory rate, including inflationary adjustments where applicable, has been approved by the affected property owners through prior proceedings. The NPDES Regulatory Rates are only applied to the property tax bills of those parcels where the property owners previously approved the rates to be applied to the property tax bill.
Adoption of the recommended maximum and applied regulatory rates and authorization of the annual levy will ensure that the City receives its authorized funding from this source. With the implementation of the federally mandated NPDES program, the City uses NPDES Regulatory Rate revenues together with other funding sources (including the General Fund). The costs associated with the Storm Water Program are included in the City approved Operating Budget. Approving the FY 2022/2023 NPDES Regulatory Rate schedule will ensure this funding source is available for specific program costs.
Funds collected from the NPDES Regulatory Rate annual levy are restricted for use only within the Storm Water Management program.
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For FY 2022/2023, projected revenue from the applied NPDES Regulatory Rates is $764,174 and is included in the City’s FY 2022/2023 budget detail (Attachment 2).
Costs to maintain compliance with current NPDES regulations, that are not otherwise funded by the revenue from the NPDES Regulatory Rate, are subsidized by other funding sources, including the General Fund.
NOTIFICATION
-Publication of Agenda
-Newspaper advertising was published on June 7, 2022, and June 14, 2022, with information about the June 21, 2022 Public Hearing.
-FY 2022/2023 applied rates for each parcel are available at the City Clerk’s office as well as posted online at www.moval.org/city_hall/departments/pub-works/NPDES.shtml
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval:
Rae Beimer Michael Lloyd, P.E.
Storm Water Program Manager Public Works Director/City Engineer Concurred By: Concurred By:
Clement Jimenez, P.E. Melissa Walker, P.E.
Principal Engineer Engineering Division Manager/Assistant City Engineer
CITY COUNCIL GOALS
Revenue Diversification and Preservation. Develop a variety of City revenue sources and policies to create a stable revenue base and fiscal policies to support essential City services, regardless of economic climate.
Public Facilities and Capital Projects. Ensure that needed public facilities, roadway improvements, and other infrastructure improvements are constructed and maintained.
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
Objective 4.2: Develop and maintain a comprehensive Infrastructure Plan to invest in and deliver City infrastructure.
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ATTACHMENTS
To view large attachments, please click your “bookmarks” on the left hand side of this document for the necessary attachment.
1. Resolution 2022-XX NPDES Regulatory Rate FY 2022-2023
2. NPDES Regulatory Rate FY 2022-2023 Budget Detail
APPROVALS
Budget Officer Approval ✓ Approved . 6/09/22 11:50 AM
City Attorney Approval ✓ Approved .
City Manager Approval ✓ Approved . 6/09/22 1:52 PM
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1 Resolution No. 2022-XX
Date Adopted: June 21, 2022
RESOLUTION NO. 2022-__
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
MORENO VALLEY, CALIFORNIA, AUTHORIZING AND
APPROVING THE LEVY OF THE NATIONAL POLLUTANT
DISCHARGE ELIMINATION SYSTEM (NPDES)
REGULATORY RATE FOR NEW AND EXISTING
RESIDENTIAL, COMMON INTEREST, COMMERCIAL,
INDUSTRIAL, AND QUASI-PUBLIC USE DEVELOPMENT
OF THE COUNTY OF RIVERSIDE PROPERTY TAX ROLL
WHEREAS, as part of the 1972 Federal Clean Water Act, the federal government mandated that public agencies comply with the NPDES program to obtain permits to discharge storm water runoff into municipally owned drainage facilities; and WHEREAS, on January 29, 2010, the Santa Ana Regional Water Quality Control Board issued new requirements that cities must address, regarding the water pollution contained in storm water runoff to remain in compliance with federal mandates; and WHEREAS, the City Council introduced Ordinance No. 708, on January 10, 2006, to repeal and reenact Chapter 3.50 of Title 3 of the City of Moreno Valley Municipal Code relating to the establishment and collection of the NPDES regulatory rate for new and existing residential, common interest, commercial, industrial, and quasi-public use development based on the approved NPDES regulatory rate and authorization of subsequent rate adjustments by resolution; and
WHEREAS, Sections 5473 through 5473.8 of the California Health and Safety Code provides that such services may be funded, in whole or in part, by rates which may be collected on the tax roll in the same manner, by the same persons, at the same time as, and together with and not separately from, the general taxes of the City; and WHEREAS, the City Council, has determined, and hereby does determine, that it is in the interest of the City to have the NPDES regulatory rate on new and existing residential, common interest, commercial, industrial, and quasi-public use development be so collected on the County of Riverside property tax roll; and WHEREAS, the City Council has determined that levying a regulatory rate against each assessable parcel of real property that is required to comply with the NPDES Permit program, as hereinafter established, is necessary to fund the costs of the storm water management services for the discharge of storm water runoff into municipally owned drainage facilities for pollution control from these land uses; and WHEREAS, the City Council heretofore caused a report to be prepared that identified each parcel of real property, which is subject to the regulatory rate, and has caused notice of said report and of the public hearing thereon to be duly given; and F.10.a
Packet Pg. 3725 Attachment: Resolution 2022-XX NPDES Regulatory Rate FY 2022-2023 (5741 : PUBLIC HEARING REGARDING THE NATIONAL POLLUTANT 2 Resolution No. 2022-XX
Date Adopted: June 21, 2022
WHEREAS, the City Council held a Public Hearing on June 21, 2022, at which time all persons wishing to be heard were heard, and at which hearing the City Council heard and considered all objections and protests, if any; and WHEREAS, upon tabulation of the assessment ballots submitted, and not withdrawn, the City Clerk determined that the ballots submitted in opposition to the assessment do not exceed the ballots submitted in favor of the assessment; and WHEREAS, on June 21, 2022, the City Council reviewed and considered the NPDES regulatory rate for new and existing residential, common interest, commercial, industrial, and quasi-public use development to fund the federally mandated NPDES program; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORENO VALLEY, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:
1. That the foregoing recitals are true and correct and incorporated herein by this reference.
2. The City Council shall authorize collection of the NPDES regulatory rate on the County of Riverside tax bill for federally mandated NPDES requirements to address the discharge of storm water runoff into municipally owned drainage facilities.
3. The Chief Financial Officer is hereby authorized to adjust the amount in the Report to the extent that the adjustment is warranted due to corrections or parcel changes prior to submission for inclusion on the Riverside County tax roll.
4. The maximum rate to be collected for fiscal year (FY) 2022/2023 shall be $374.52 per parcel for new and existing residential development, which may be subject to an annual adjustment, if necessary, based on the percentage change calculated for the prior calendar year Consumer Price Index, as published by the Department of Labor’s Bureau of Labor Statistics.
5. The maximum rate to be collected for FY 2022/2023 shall be $282.02 per parcel for new and existing common interest, commercial, industrial, and quasi-public-use development, which may be subject to an annual adjustment, if necessary, based on the percentage change calculated for the prior calendar year in the Consumer Price Index, as published by the Department of Labor’s Bureau of Labor Statistics.
6. The NPDES regulatory rate, as herein confirmed, shall be collected on the tax roll at the same time and by the same persons, and in the same manner as, together with and not separately from, general taxes, and shall F.10.a
Packet Pg. 3726 Attachment: Resolution 2022-XX NPDES Regulatory Rate FY 2022-2023 (5741 : PUBLIC HEARING REGARDING THE NATIONAL POLLUTANT 3 Resolution No. 2022-XX
Date Adopted: June 21, 2022
be delinquent at the same time and thereafter be subject to the same delinquency penalties, as provided for in Sections 5473 through 5473.8 of the California Health and Safety Code.
7. The City Council made a finding that collection of the NPDES regulatory rate is in compliance with Proposition 218.
8. The effective date of this Resolution shall be June 21, 2022.
9. That all provisions heretofore adopted by the City Council that are in conflict with the provisions of this Resolution are hereby repealed.
10. That if any provision, section, paragraph, sentence or word of this Resolution be rendered or declared invalid by any final court action in a court of competent jurisdiction or be reason of any preemptive legislation, that such invalidity shall not affect other provisions of this Resolution that can be given effect without the invalid provision, and to this end the provisions of this Resolution are severable and that the City Council declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion of this Resolution.
11. That the City Clerk shall certify to the adoption of this Resolution.
APPROVED AND ADOPTED this 21st day of June, 2022.
___________________________
Mayor of the City of Moreno Valley
ATTEST:
____________________________
City Clerk
APPROVED AS TO FORM:
____________________________
City Attorney
F.10.a
Packet Pg. 3727 Attachment: Resolution 2022-XX NPDES Regulatory Rate FY 2022-2023 (5741 : PUBLIC HEARING REGARDING THE NATIONAL POLLUTANT 4 Resolution No. 2022-XX
Date Adopted: June 21, 2022
RESOLUTION JURAT
STATE OF CALIFORNIA )
COUNTY OF RIVERSIDE ) ss.
CITY OF MORENO VALLEY )
I, Paul Bradvica, Deputy City Clerk of the City of Moreno Valley, California, do hereby certify that Resolution No. 2022-XX was duly and regularly adopted by the City Council of the City of Moreno Valley at a regular meeting thereof held on the 21st day of June, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
(Council Members, Mayor Pro Tem and Mayor)
___________________________________
CITY CLERK
(SEAL)
F.10.a
Packet Pg. 3728 Attachment: Resolution 2022-XX NPDES Regulatory Rate FY 2022-2023 (5741 : PUBLIC HEARING REGARDING THE NATIONAL POLLUTANT ATTACHMENT 2
NPDES Reg Rate
Other City Funding
Sources
1. STREET SWEEPING 320,570.02 $ $ 270,395.96 50,174.06 $
2. STORMDRAIN MAINTENANCE 144,185.73 $ $ 121,618.48 22,567.25 $
3. NPDES MS4 ANNUAL PERMIT FEE 61,833.00 $ $ 52,155.20 9,677.80 $
4. RIVERSIDE COUNTY FLOOD CONTROL COST SHARE 67,987.00 $ $ 57,346.01 10,640.99 $
5. TMDL TASK FORCE_TMDL COMPLIANCE 63,927.00 $ $ 53,921.46 10,005.54 $
6. STORMWATER PROGRAM CONSULTANT 265,216.26 $ $ 223,705.90 41,510.36 $
7. ADMINISTRATION_STAFF TIME 155,723.23 $ $ 131,350.19 24,373.04 $
8. CSA 152 COUNTY ADMINISTRATION FEE 42,083.82 $ $ 42,083.82 - $
9. CSA 152 ANNUAL ANALYSIS_CONSULTANT 4,000.00 $ $ 4,000.00 - $
10. RESIDENTIAL WATER QUALITY POND/BASIN MAINTENANCE 247,062.06 $ 247,062.06 $ $ -
11. WATER QUALITY BASIN REMEDIATION/RECONSTRUCTION/RETROFIT 266,457.00 $ 266,457.00 $ $ -
12. COMMON INTEREST/COMMERCIAL/INDUSTRIAL/QUASI-PUBLIC USE BMPs MONITORING AND MAINTENANCE $ 40,493.28 40,493.28 $ $ -
13. GENERAL OVERHEAD_ADMIN_ISF (FUNDS 2008/1010) 263,319.45 $ $ 222,105.97 41,213.48 $ TOTAL PROJECTED 1,942,857.85 $ $ 1,178,682.99 764,174.86 $ Non-Fee Recovered Expenses
Revenues Source
CITY OF MORENO VALLEY
FISCAL YEAR 2022/2023 NPDES REGULATORY RATE - BUDGET DETAIL F.10.b
Packet Pg. 3729 Attachment: NPDES Regulatory Rate FY 2022-2023 Budget Detail (5741 : PUBLIC HEARING REGARDING THE NATIONAL POLLUTANT