Item 12.2– CC/LRA – 04/22/2025
RIVERBANK CITY COUNCIL / LOCAL REDEVELOPMENT AUTHORITY
AGENDA ITEM NO. 12.2
SECTION 12: NEW BUSINESS
Meeting Date: April 22, 2025
Subject: Resolution to Consider a Proposed Alternative Financing District to the City’s CFD 2016-1 for the Mixed Use (MU-1) Portion of the Crossroads West Specific Plan and, if Approved, Authorizing the City Manager and City Attorney to Finalize and Execute the Operating Memorandum #2
From: Marisela H. Garcia, City Manager
RECOMMENDATION
City Council to consider a Resolution on the proposed alternative financing district for the MU-1 Portion of the Crossroads West Specific Plan and authorize the City Manager and City Attorney to finalize the draft Operating Memorandum #2.
SUMMARY
Pursuant to Article 7 of the Development Agreement between the City of Riverbank and Western Pacific Holdings, a proposal for an alternative financing district to the City’s CFD 2016-1 has been submitted for consideration. If approved, this alternative financing district would be applicable only to the MU-1 portion of the Crossroads West Specific Plan.
BACKGROUND
In 2016, the City created a Community Facilities District (CFD 2016-1) to be able to fund certain public services related to new development. The intent of the CFD was to provide a financing mechanism to be able to offset the costs of maintaining public improvements and provide services such as Police Services, Landscape Maintenance, Park Maintenance, Drainage Maintenance, and Street Maintenance. All new developments are required to participate in the CFD 2016-1 unless otherwise expressly excluded by the City Council. An annual fee is assessed on each property and paid via property tax payments and used to offset these costs.
Item 12.2– CC/LRA – 04/22/2025
On March 26, 2019, the City Council adopted Ordinance No. 2019-004 which approved a development agreement between the City and Western Pacific Holdings, Inc. The Development Agreement provides for the parameters under which the property can be developed and establishes certain development rights.
Article 7 City Maintenance Finance District of the Development Agreement provides three alternatives for the establishment of a maintenance district applicable to the MU-1 development for the residential and commercial development:
1. Residential:
a. Annex such residential portion into City’s existing Financing District to operate and maintain streetlights, parkway landscaping, parks and other landscape areas, storm drainage systems, street maintenance as well as provide funding for police protection maintenance (CFD 2016-1), b. form a new community facility district, or
c. form an alternative, equivalent financing mechanism requested by Developer and reasonably approved by City.
2. Commercial:
a. Annex such commercial portion into CFD 2016-1,
b. Form a new community facility district to operate and maintain streetlights, landscape areas along property frontage, and storm drainage systems, or c. Form an alternative, equivalent financing mechanism requested by Developer and reasonably approved by City to operate and maintain streetlights, landscape areas along frontage and storm drainage systems necessary to serve the commercia portion of the Subject Property.
ALTERNATIVE FINANCING MECHANISM PROPOSAL
Western Pacific Holdings, Inc. has submitted a proposal (the “Proposal”) for an alternative financing mechanism to fund the ongoing maintenance obligations and police protection services, similar to a formal maintenance and community facilities district (Attachment 1).
Given the additional revenue anticipated to be received by the City in both Sales Tax and Property Tax as a result of the project, the Proposal requests the use of these additional revenues as the alternative and equivalent method of financing any maintenance, repair, and replacement items not otherwise being reimbursed as outlined below:
I. Street Lighting: Although the adjacent roadways are regional roadways benefiting the entire City, the Project will pay for the direct electrical metering cost of the streetlights on its adjacent property frontage on Claribel, Oakdale and Machado Parkway. Given the regional nature of the roadways, the City will pay for the ongoing repair and replacement of the light fixtures and related lighting systems.
II. Landscaping Along Property Frontage: The Project will pay for the water metering costs and maintenance of the adjacent street frontage landscape area on Claribel, Oakdale and Machado Parkway (landscaping between the
Item 12.2– CC/LRA – 04/22/2025
street curb and sidewalk only), even though the City was previously responsible for the same. The Oakdale Road median landscaping shall continue to be maintained, repaired, and replaced at the City’s sole cost and expense.
III. Storm Drainage System: The Project shall maintain all the on-site drainage basin facilities, and the cleaning of all on-site catch basin, filters, and manholes located on the Project (except for any facilities located within the PUE). All storm drain pipe and manholes located offsite and/or within a PUE (including those within the Project’s property lines) will be maintained by the City at its sole cost and expense.
IV. Street Maintenance: Street maintenance is not a required obligation or requirement under the Development Agreement on the commercial portion of the Project. In addition, CFDs cannot be imposed on existing infrastructure such as Oakdale Road and Claribel pursuant to CFD 2016-1.
Given the regional nature of Machado Parkway, which substantially benefits and is required for the access to the City, it shall be the City’s responsibility to maintain, repair and replace such roadway. If necessary, the City shall use a portion of the Project’s sales tax revenue and/or property tax increment as an alternative and equivalent method of financing this portion of the CFDs.
V. Park Maintenance: In accordance with the Development Agreement, commercial properties do not participate in the park maintenance or any park maintenance CFD. In addition, Section 5.02(c) (Parks) of the Development Agreement and Section 8.5.2 of the Specific Plan provides that if Developer proposes to construct residential units on the Property, the City may reasonably determine that the park requirements for the residential projects are satisfied based on the construction of other publicly benefiting improvements in the Project, such as outdoor patios, plazas, outdoor recreational areas, gardens, gathering spaces, common courtyard, fire pits, water, fountains, or other type of meeting areas for use by the residential development at the Project.
In this case, the Project will include outdoor patios, gathering places (for example, in the multifamily project there will be a pool, lawns and other open spaces, a clubhouse, and a sports court), plazas and a common courtyard and other types of meeting areas for use by the residential development of the Project. Since many of these items are planned to be included in the Project, and paid for directly by the Developer, the CFD for parks shall not apply to the Project. The City finds that the foregoing Project improvements provide an alternative and equivalent approach, and therefore the Project shall not participate in the park portion of the CFD.
VI. Police Services: In the Development Agreement, commercial properties are not required to participate in the police services CFD. Furthermore,
Item 12.2– CC/LRA – 04/22/2025
pursuant to the Development Agreement, the requirement for participation in the police services CFD category only applies to “for sale” residential projects (as evidenced by the reference to homeowners associations), which is not being constructed at the Project. Notwithstanding the above with respect to the residential component on the Project, the following alternative and equivalent approaches are sufficient to release the Project from reimbursing the police services portion of the CFD: (i) being a gated, secure project, (ii) having full-time on-site personnel to handle tenant issues and complaints, and (iii) having a robust security camera program. If necessary, the City shall use a portion of the Project’s sales tax revenue and/or property tax increment as an alternative and equivalent method of financing this portion of the CFDs.
STRATEGIC PLAN
This item is directly related to the City Council’s adopted Strategic Plan Goal to “Support Economic Development that Promotes Job-Housing Balance” including the objective to “Complete the Crossroads West Development.
FINANCIAL IMPACT
The Alternative Financing Mechanism proposes the use of new revenues received from Sales Tax and Property Tax in order to fund any the on-going operating or maintenance costs associated with the public improvements and public services.
ATTACHMENTS
1. Resolution
2. Draft Operating Memorandum #2
CC/LRA – 04/22/2025
CC Resolution 2025-
CITY OF RIVERBANK
RESOLUTION 2025-
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF RIVERBANK, CALIFORNIA
APPROVING AN ALTERNATIVE FINANCING DISTRICT TO THE CITY’S CFD 2016-1 FOR THE MIXED USE (MU-1) PORTION OF THE CROSSROADS WEST SPECIFIC
PLAN AND AUTHORIZING THE CITY MANAGER AND CITY ATTORNEY TO FINALIZE AND EXECUTE OPERATING MEMORANDUM #2
THE CITY OF RIVERBANK CITY COUNCIL (HEREAFTER REFERRED TO AS THE “CITY COUNCIL”) DOES HEREBY RESOLVE THAT:
WHEREAS, in 2016, the City created a Community Facilities District (CFD 2016- 1) to be able to fund certain public services related to new development. The intent of the CFD was to provide a financing mechanism to be able to offset the costs of maintaining public improvements and provide services such as Police Services, Landscape Maintenance, Park Maintenance, Drainage Maintenance, and Street Maintenance; and
WHEREAS, all new developments are required to participate in the CFD 2016-1 unless otherwise expressly excluded by the City Council; and WHEREAS, On March 26, 2019, the City Council adopted Ordinance No. 2019- 004 which approved a development agreement between the City and Western Pacific Holdings, Inc. which provides the parameters under which the property can be developed and establishes certain development rights; and
WHEREAS, Article 7 City Maintenance Finance District of the Development Agreement provides three alternatives for the establishment of a maintenance district applicable to the MU-1 development for the residential and commercial development; and WHEREAS, Western Pacific Holdings, Inc. has proposed an Alternative Financing Mechanism to be applicable to both the residential and commercial portions of the MU-1 project (Exhibit A); and
WHEREAS, the financing mechanism to fund the ongoing maintenance obligations and police protection services will be Sales Tax and Property Tax generated by the project; and
WHEREAS, the City Council considers this proposal an acceptable alternative financing mechanism to the City’s CFD 2016-1 to fund the ongoing maintenance obligations and police protection services.
ATTACHMENT 1
CC/LRA – 04/22/2025
CC Resolution 2025-
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Riverbank does hereby declare:
1. Operating Memorandum #2 is an acceptable alternative financing mechanism to the City’s CFD 2016-1.
2. On an annual basis, the City will commit Sales Tax and Property Tax generated by the project to fund the ongoing maintenance obligations and police protection services.
3. The City Manager and City Attorney are authorized to finalize and execute Operating Memorandum #2.
PASSED AND ADOPTED by the City Council of the City of Riverbank at a regular meeting held on the 22nd day of April, 2025; motioned by Councilmember __________, seconded by Councilmember __________, and upon roll call was carried by the following City Council vote of ______:
AYES:
NAYS:
ABSENT:
ABSTAINED:
ATTEST: APPROVED:
________________________________ __________________________ Gabriela Hernandez, CMC Rachel Hernandez
City Clerk Mayor
Attachment(s): Exhibit A – Operating Memorandum #2
1 OPERATING MEMORANDUM #2
THIS OPERATING MEMORANDUM #2 is entered into by the City of Riverbank, a California municipal corporaƟon (“City”), and Western Pacific Holdings, Inc., a California corporaƟon (“Developer”), for the purpose of implemenƟng the intent of the Development Agreement dated March 26, 2019 by and between the City and Developer, and recorded in the Official Records of the County of Stanislaus as Document #19-0027480-00 on May 3, 2019 and the OperaƟng Memorandum between the City and Developer recorded in the Official Records of the County of Stanislaus as Document #2022-0078032 on December 13, 2022 (collecƟvely, the “Development Agreement”). (Developer and City may hereinaŌer be referred to individually as a “Party” and collecƟvely as the “ParƟes”).
RECITALS
A. The ParƟes entered into the Development Agreement in order to facilitate the development of the MU-1 porƟon of the Crossroads West Specific Plan, which shall include both the land and any improvements built thereon (the “Project”), and certain public infrastructure needed to serve the Project and the City.
B. SecƟon 3.05(a) of the Development Agreement provides that if the City finds that clarificaƟons, minor changes and adjustments are necessary or appropriate to further the purposes of the Development Agreement and implement the Project for items iniƟally covered in general terms in the Development Agreement, the ParƟes have administraƟve flexibility and may effectuate such clarificaƟons, minor changes and adjustments through one or more OperaƟng Memoranda.
C. SecƟon 3.05(c) of the Development Agreement provides that if the Developer makes a request for a minor amendment or modificaƟon to any of the Project Approvals, and the City’s Community Development Director determines that such amendment or modificaƟon is minor in the context of the Project, the Community Development Director may approve the minor amendment administraƟvely.
D. Pursuant to SecƟon 7.01 of the Development Agreement, the Project elects to form an alternaƟve and equivalent financing mechanism to be reasonably approved by the City to operate and maintain street lighƟng, landscape areas along property frontages, and storm drainage system, street maintenance, park maintenance, and police services necessary to serve the Project (collecƟvely, the “CFDs”). Given the substanƟal commercial benefits from the development of the Project and overall composiƟon of Project, the Project should be treated enƟrely as a commercial project for purposes of assessing the CFDs, since the allocaƟon to non-commercial uses is less than 17%.
NOW, THEREFORE, in consideraƟon of the promises, covenants and provisions set forth herein, the ParƟes agree as follows:
1. Community Facility District DesignaƟon. The ParƟes agree that the enƟrety of the Project shall be labeled as “commercial” for purposes of assessing the CFDs against the Project.
2. City Findings:
A. It is well established in CFD 2016-1 and the Development Agreement that the ParƟes may enter into a separate agreement to finance ongoing maintenance obligaƟons and police protecƟon services, similar to a formal maintenance community faciliƟes district. The City finds and the Project is providing the following alternaƟve and equivalent financing mechanisms to the CFDs:
ATTACHMENT 2
2 I. Developer has privately funded over $22,000,000 of infrastructure necessary for the opening and operaƟon of the Project, and consistent with the Development Agreement, without requesƟng any upfront monetary assistance from the City or the creaƟon or implementaƟon of more expensive and more complicated financing mechanisms and assessment districts such as without limitaƟon Mello-Roos districts, and/or other bonds (general obligaƟon or revenue bond). This method of privately financed infrastructure improvements has substanƟally reduced the costs, risks, and reimbursable obligaƟons of the City, while adding a substanƟal higher cost and risk to the Developer. This private funding mechanism has also reduced the cost of reimbursable expenses to the City and other property owners in the City by millions of dollars.
II. The once completed Project as a whole is anƟcipated to provide new addiƟonal annual revenue of between and per year from the following sources, which shall provide new future sustainable revenue streams to the City:
(a) Build-out of the Project should generate between and in taxable sales. This level of taxable sales should
iniƟally generate a year of new sales tax
revenue to the City, which should conƟnue to grow annually with inflaƟon. (b) Once the Project is substanƟally completed, it should increase the property tax payable on the Project by a year. This should add
an addiƟonal per year of revenue to the City from its share of the increase in property tax revenue ( of the property taxable payable is received by City) which amount should increase up to a maximum B. The City finds that the necessary porƟon of the addiƟonal City revenues cited above are hereby considered an alternaƟve and equivalent method of financing any maintenance, repair, and replacement items not otherwise being equivalently reimbursed as outlined below:
I. Street LighƟng: Although the adjacent roadways are regional roadways benefiƫng the enƟre City, the Project will pay for the direct electrical metering cost of the street lights on its adjacent property frontage on Claribel, Oakdale and Machado Parkway. Given the regional nature of the roadways, the City will pay for the ongoing repair and replacement of the light fixtures and related lighƟng systems.
II. Landscaping Along Property Frontage: The Project will pay for the water metering costs and maintenance of the adjacent street frontage landscape area on Claribel, Oakdale and Machado Parkway (landscaping between the street curb and sidewalk only), even though the City was previously responsible for the same. The Oakdale Road median landscaping shall conƟnue to be maintained, repaired, and replaced at the City’s sole cost and expense.
III. Storm Drainage System: The Project shall maintain all of the on-site drainage basin faciliƟes, and the cleaning of all on-site catch basin, filters, and manholes located on the Project (except for any faciliƟes located within the PUE). All storm drain pipe and manholes located offsite and/or within a PUE (including those within the Project’s property lines) will be maintained by the City at its sole cost and expense.
3 IV. Street Maintenance: Street maintenance is not a required obligaƟon or requirement under the Development Agreement on the commercial porƟon of the Project. In addiƟon, CFDs cannot be imposed on exisƟng infrastructure such as Oakdale Road and Claribel pursuant to CFD 2016-1.
Given the regional nature of Machado Parkway, which substanƟally benefits and is required for the access to the City, it shall be the City’s responsibility to maintain, repair and replace such roadway. If necessary, the City shall use a porƟon of the Project’s sales tax revenue and/or property tax increment as an alternaƟve and equivalent method of financing this porƟon of the CFDs.
V. Park Maintenance: In accordance with the Development Agreement, commercial properƟes do not parƟcipate in the park maintenance or any park maintenance CFD. In addiƟon, SecƟon 5.02(c) (Parks) of the Development Agreement and SecƟon 8.5.2 of the Specific Plan provides that if Developer proposes to construct residenƟal units on the Property, the City may reasonably determine that the park requirements for the residenƟal projects are saƟsfied based on the construcƟon of other publicly benefiƟng improvements in the Project, such as outdoor paƟos, plazas, outdoor recreaƟonal areas, gardens, gathering spaces, common courtyard, fire pits, water, fountains, or other type of meeƟng areas for use by the residenƟal development at the Project.
In this case, the Project will include outdoor paƟos, gathering places (for example, in the mulƟfamily project there will be a pool, lawns and other open spaces, a clubhouse, and a sports court), plazas and a common courtyard and other types of meeƟng areas for use by the residenƟal development of the Project. Since many of these items are planned to be included in the Project, and paid for directly by the Developer, the CFD for parks shall not apply to the Project. The City finds that the foregoing Project improvements provide an alternaƟve and equivalent approach, and therefore the Project shall not parƟcipate in the park porƟon of the CFD.
VI. Police Services: In the Development Agreement, commercial properƟes are not required to parƟcipate in the police services CFD. Furthermore, pursuant to the Development Agreement, the requirement for parƟcipaƟon in the police services CFD category only applies to “for sale” residenƟal projects (as evidenced by the reference to homeowners associaƟons), which is not being constructed at the Project. Notwithstanding the above with respect to the residenƟal component on the Project, the following alternaƟve and equivalent approaches are sufficient to release the Project from reimbursing the police services porƟon of the CFD: (i) being a gated, secure project, (ii) having full-Ɵme on-site personnel to handle tenant issues and complaints, and (iii) having a robust security camera program. If necessary, the City shall use a porƟon of the Project’s sales tax revenue and/or property tax increment as an alternaƟve and equivalent method of financing this porƟon of the CFDs.
D. The City finds that the alternaƟve and equivalent financing methods outlined above saƟsfy the Project’s obligaƟons to (i) reimburse the City for the CFDs and (ii) join the City’s exisƟng community faciliƟes district and/or form a new community faciliƟes district. The City hereby approves the Project’s alternaƟve and equivalent financing methods set forth above and the Developer and the Project is hereby released from all the CFDs requirement and any future CFDs requirement that may be assessed against the Project, including without limitaƟon any maintenance, repair, and/or replacement obligaƟons outlined in the Development Agreement, Crossroads West Specific Plan, and/or the CondiƟons of Approval. The City also finds that the alternaƟve and equivalent methods set forth above meet the Project’s burden to fund the 4 ongoing operaƟon and maintenance costs associated with the Project in accordance with SecƟon 9.5 of the Crossroads West Specific Plan.
E. The City finds that this OperaƟng Memorandum is minor and necessary to further the purposes of the Development Agreement and is consistent with the Development Agreement, Crossroads West Specific Plan, and other Project approvals.
[signatures on the following page]
5 This OperaƟng Memorandum, aŌer execuƟon by the City Manager and the Developer, will be recorded in the Official Records of Stanislaus County, aƩached to the Development Agreement, and shall thereaŌer be effecƟve and binding on the parƟes.
CITY
CITY OF RIVERBANK, a California
municipal corporaƟon
By: ___________________________
Marisela H. Garcia, City Manager
Approved as to Form:
By: ___________________________
Tom Hallinan, City AƩorney
WPH
WESTERN PACIFIC HOLDINGS, INC., a
California corporaƟon
By: _______________________
Darryl Browman, President