Agenda Item: 1
CITY OF SANTA CLARITA
AGENDA REPORT
PUBLIC HEARINGS
CITY MANAGER APPROVAL:
DATE: October 8, 2024
SUBJECT: PROPOSED AMENDMENTS TO THE TESORO DEL VALLE
PROJECT - MASTER CASE 24-176
DEPARTMENT: Community Development
PRESENTER: David Peterson
RECOMMENDED ACTION
City Council:
1. Receive staff presentation;
2. Open the public hearing to receive testimony from the public;
3. Adopt a resolution amending the conditions of approval for the Tesoro Del Valle project;
4. Approve a modification to the Pre-Annexation Agreement between BLC Tesoro, LLC, and the City of Santa Clarita affecting the timing for the completion of the construction of the Copper Hill Bridge widening as it relates to the issuance of Certificates of Occupancy for the development;
5. Adopt a resolution approving amendments to the Joint Community Facilities Agreement and Acquisition Funding Agreement; and
6. Find the modifications to conditions of approval, the pre-annexation agreement, and community facilities district are exempt from review under the California Environmental Quality Act (CEQA) pursuant to the General Rule Exemption Section 15061(b)(3) of CEQA.
BACKGROUND
On November 12, 2019, the City Council authorized the submittal of an application requesting the Local Area Formation Commission initiate proceedings for the annexation of the Tesoro Del Valle project (Project). Originally approved by the County of Los Angeles, the completed Project included approvals for two separate phases. The first phase included approximately 1,786
acres, an elementary school, and the 2.25-acre Tesoro Adobe Historic Park, as well as private recreational amenities, such as a community swimming pool, clubhouse, a private park, and trails. The second phase, commonly known as the Tesoro Highlands, includes 820 units that are currently under construction. To date, just over 200 units have been completed. The second phase also includes additional recreation areas, amenities, parks, and trails.
On May 24, 2022, the City Council approved a Pre-Annexation Agreement (PAA) between BLC Tesoro, LLC (Developer), and the City of Santa Clarita (City). The PAA accepted the development of the Tesoro Highlands project, as approved by Los Angeles County, upon annexation to the City in exchange for support of the City’s annexation efforts. In addition, there were a number of agreements between the Developer and the City regarding the transfer of open space to the City, the Copper Hill Bridge (Bridge) widening construction, the construction of trails, as well as authorization to allow for the creation and administration of a Mello-Roos Community Facilities District (CFD) and levy special taxes for the Tesoro Highlands development via the California Municipal Finance Authority (CMFA) Bond Opportunities for Land Development (BOLD) Program, as well as approving a Joint Community Facilities Agreement (JCFA) with CMFA and an Acquisition Funding Agreement with CMFA and the Developer (Acquisition Agreement). The CFD was formed within the City’s jurisdiction by CMFA. The CMFA administers the CFD and oversees the issuance of CFD bonds. Staff worked with CMFA to ensure the BOLD Program met City goals. The CFD includes a separate service special tax over the project to be levied in perpetuity to fund the management and maintenance of the open space, generating approximately $50,000 per year in revenue each year with a Consumer Price Index escalator.
The annexation of Tesoro Del Valle became effective on November 14, 2022.
An amendment to the PAA was approved by the City Council on January 24, 2023, to provide more certainty to prospective home builders regarding the number of units that could be completed prior to the completion of the Bridge widening, as well as to address uncertainties of the economy and the global supply chain. The PAA originally identified the Bridge expansion being completed prior to the issuance of the first certificate of occupancy in Tesoro Highlands.
The adopted amendment to the PAA identified that the Bridge had to be completed prior to the issuance of the 342nd certificate of occupancy.
REQUEST AND ANALYSIS
The Developer is requesting the following amendments to the Project:
1. Amendment to the Original Conditions of Approval: The Developer is proposing an amendment to Condition of Approval 50 (COA50). Currently, COA50 requires the construction of 254 age-restricted housing units within Tesoro Highlands to be constructed prior to the recordation of a future phase map that would allow the construction of an additional 108 market-rate units within the Project.
The proposed amendment would allow the recordation of the map once building permits for at least 198 of the 254 age-restricted units have been issued. It would also require the additional 108 market-rate units to be converted to age-restricted units. The amendment
would allow the Developer to begin construction sooner than currently allowed by COA50, and the request is based on the Developer’s intent to be ready to construct the additional 108 units prior to completing all 254 age-restricted units.
Proposed amendment language to COA50 is attached.
2. Second Amendment to the PAA: Section H.2. of the first amendment to the PAA details the agreement between the Developer and the City regarding the commencement and completion of the Bridge widening project. The current PAA allows up to a maximum of 342 Certificates of Occupancy (COOs) of the approved 820 units to be issued prior to completion of the Bridge widening. The Developer is requesting to obtain up to 585 COOs upon completion of the bridge deck concrete pour. The City will not issue any of the remaining COOs (units 586 through 820) until the completion of the Bridge widening, which is defined as all improvements per approved plans, excluding Bridge lights and streetlights on Copper Hill Drive.
A proposed redline-strikethrough version of the PAA is attached.
3. Amendment to the Community Facilities District: Improvements, including fees for improvements, to be financed by the CFD pursuant to the JCFA and Acquisition Agreement included the extension of Avenida Rancho Tesoro (estimated cost $4.5 million), storm drain improvements in Avenida Rancho Tesoro (estimated cost $3.5 million), storm drain improvements, In-tracts (estimated cost $13.9 million), debris basins (estimated cost $2.3 million), and a portion of the Valencia Bridge and Major Thoroughfare Construction Fee District fees imposed upon the Project (estimated $11.2 million - amount calculated at time less credit for the Bridge).
At the time of CFD formation, the Bridge improvements were estimated to cost approximately $4.8 million and were not included as part of improvements to be financed by the CFD. However, now based on bids received by the Developer, those costs are expected to be in excess of $12.7 million. The Developer has requested an amendment to the JCFA and the Acquisition Agreement to add the Copper Hill Bridge as an eligible improvement to be financed through the CFD bond issuance with a corresponding reduction of anticipated Bridge & Thoroughfare (B&T) fees that will be financed by the CFD (now estimated at $4.5 million). Additionally, the Developer has requested CFD eligible improvements including the addition of trail improvements (estimated $2.5 million), and the removal of all storm drain improvements (estimated $17.4 million).
All requirements of the Developer to be responsible for the improvements and B&T fees remain the same. The amendments would move the Bridge improvements to a CFD- financed improvement and lower the amount of B&T fees to be financed by the CFD. It would also recognize the increased B&T fee credit to be given for the increased cost of the Bridge and reconcile B&T fees already paid to date, as well as outline how and when surplus B&T credits will be issued. Such amendments do not increase the special tax amounts previously authorized for the CFD nor the authorized amount of special tax bonds. Special taxes are currently being levied on the CFD.
ENVIRONMENTAL
An Environmental Impact Report was certified for this Project by the County of Los Angeles.
The proposed revisions are exempt from CEQA under the General Rule Exemption as the proposed changes are minor in nature and do not have any potential to cause significant impacts.
ALTERNATIVE ACTION
Other actions as determined by the City Council.
FISCAL IMPACT
There is no fiscal impact to the General Fund associated with the recommeded action. All requirements of the Developer to be responsible for improvements and Bridge & Thoroughfare fees remain the same. The amendments do not increase the special tax amounts previously authorized for the CFD nor the authorized amount of special tax bonds.
ATTACHMENTS
Resolution - Conditons of Approval
Resolution - Community Facilities District
Condition of Approval 50
Pre-Annexation Agreement