Term Sheet: Rate and Method of Apportionment of Special Tax for the Proposed East of Highway 101 CFD
Outlined below is the preliminary Term Sheet for the proposed East of Highway 101 Community Facilities District (“CFD”) to be established within the City of South San Francisco (the “City”).
The Rate and Method of Apportionment of Special Tax (the “RMA”) shall be drafted consistent with the provisions below, subject to approval by the City Council.
Assignment to Special Tax Categories [Capitalized term to be defined in RMA] Each Fiscal Year, the Administrator shall identify the current Assessor’s Parcel numbers for all Taxable Parcels in the CFD. In order to identify Taxable Parcels, the Administrator shall confirm the buildings in the CFD for which a Building Permit has been issued. The Administrator shall then identify the Residential Square Footage, Warehouse/Industrial Square Footage, and Other Non-Residential Square Footage on each Taxable Parcel. The Square Footage Categories shall be classified based on City GIS or Building Permit information, County land use codes, site visits, or other sources of information.
Table 1
Special Tax Categories
Square Footage Category Land Use Class
Residential Square Footage For-Sale Residential and Rental Residential Warehouse/Industrial Square Footage Warehouse and Industrial Property Other Non-Residential Square Footage Office, R&D, Retail, Hotels, & Other Commercial Maximum Special Taxes
Once the Square Footage Category has been identified, the Maximum Special Tax for each Taxable Parcel shall be determined based on reference to Table 2 below.
Table 2
Maximum Special Tax for Taxable Property
Square Footage Category Maximum Special Tax*
Residential Square Footage $0.XX per Square Foot
Warehouse/Industrial Square Footage First 25,000 SF: $0.XX per Square Foot Middle 25,001 to 50,000 SF: $0.XX per Square Foot
Above 50,000 SF: $0.XX per Square Foot
Other Non-Residential Square Footage $0.XX per Square Foot * The Maximum Special Tax rates shown above for each Square Footage Category shall escalate as set forth in the “Changes to the Maximum Special Tax” section below.
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Attachment 2
Changes to the Maximum Special Tax
1. Annual Escalation of the Maximum Special Tax
The Maximum Special Tax rates identified in Table 2 are applicable for fiscal year 2024-25.
Beginning July 1, 2025 and each July 1 thereafter, the Maximum Special Taxes shall be increased by an amount equal to two percent (2%) of the amount in effect in the prior Fiscal Year.
2. Changes in Land Use on a Taxable Parcel
If Square Footage on a Parcel that had been taxed as Residential Square Footage, Warehouse/Industrial Square Footage, or Other Non-Residential Square Footage in a prior Fiscal Year is rezoned or otherwise changes Land Use, the Administrator shall calculate the Maximum Special Tax for the Assessor’s Parcel based on the new Land Use(s). If the amount determined is greater than the Maximum Special Tax that applied to the Assessor’s Parcel prior to the Land Use Change, the Administrator shall increase the Maximum Special Tax to the amount calculated for the new Land Uses. If the amount determined is less than the Maximum Special Tax that applied prior to the Land Use Change, there will be no change to the Maximum Special Tax for the Assessor’s Parcel. Under no circumstances shall the Maximum Special Tax on any Taxable Parcel be reduced, regardless of changes in Land Use or Square Footage on the Parcel, including reductions in Square Footage that may occur due to demolition, fire, water damage, or acts of God.
In addition, if a Taxable Building within the CFD that had been subject to the levy of Special Taxes in any prior Fiscal Year becomes all or part of an otherwise Exempt Use, the Parcel(s) shall continue to be subject to the Maximum Special Tax that had applied to the Parcel(s) before they became an Exempt Use.
Method of Levy of the Special Tax
Each Fiscal Year, the Special Tax shall be levied Proportionately on each Taxable Parcel up to 100% of the Maximum Special Tax for each Parcel for such Fiscal Year until the amount levied on Taxable Parcels is equal to the Special Tax Requirement. “Special Tax Requirement” means the amount necessary in any Fiscal Year to: (i) pay principal and interest on Bonds that are due in the calendar year that begins in such Fiscal Year; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement, liquidity support and rebate payments on the Bonds, (iii) create and/or replenish reserve funds for the Bonds to the extent such replenishment has not been included in the computation of the Special Tax Requirement in a previous Fiscal Year; (iv) cure any delinquencies in the payment of principal or interest on Bonds which have occurred in the prior Fiscal Year; (v) pay Administrative Expenses; and (vi) pay directly for Authorized Facilities. The amounts referred to in clauses (i) and (ii) of the preceding sentence may be reduced in any Fiscal Year by: (i) interest earnings on or surplus balances in funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against such costs pursuant to the Indenture; (ii) DRAFT
in the sole and absolute
discretion of the City, proceeds received by the CFD from the collection of penalties associated with delinquent Special Taxes; and (iii) any other revenues available to pay such costs as determined by the Administrator.
Collection of Special Tax
The Special Taxes shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that prepayments are permitted and provided further that the City may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner, and may collect delinquent Special Taxes through foreclosure or other available methods.
The Special Tax shall be levied and collected from the first Fiscal Year in which an Assessor’s parcel is designated as a Taxable Parcel until the principal and interest on all Bonds have been paid, the City’s costs of constructing or acquiring Authorized Facilities from Special Tax proceeds have been paid, and all Administrative Expenses have been paid or reimbursed. Notwithstanding the foregoing, the Special Tax shall not be levied on any Square Footage in the CFD for more than thirty-five (35) Fiscal Years, except that a Special Tax that was lawfully levied in or before the final Fiscal Year and that remains delinquent may be collected in subsequent Fiscal Years.
Exemptions
Special Taxes shall not be levied in any Fiscal Year on the following: (i) Public Property, except Taxable Public Property, (ii) Owners Association Property, except Taxable Owners Association Property, (iii) Welfare Exemption Property, except Taxable Welfare Exemption Property, (iv) Parcels that are owned by a public utility for an unmanned facility, (v) Parcels that are subject to an easement that precludes any other use on the Parcel, and (vi) for purposes of levying the Special Tax, Parcels that have fully prepaid the Special Tax obligation assigned to the Parcel.
Prepayment of Special Tax
The Special Tax obligation applicable to a Parcel in the CFD may be fully prepaid or partially prepaid and the obligation of the Parcel to pay the Special Tax permanently satisfied, provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Parcel at the time of prepayment.
Interpretation of the RMA
The City reserves the right to make minor administrative and technical changes to this document that do not materially affect the rate and method of apportioning Special Taxes. In addition, the interpretation and application of any section of this document shall be left to the City’s discretion.
Interpretations may be made by the City by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in this RMA.
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