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EXHIBIT A
CITY OF UNION CITY
AMENDED AND RESTATED
STATEMENT OF GOALS AND POLICIES
REGARDING USE OF THE
MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982
Section 1. Purpose and Scope
This document sets forth the goals and policies of the City of Union City (the “City”) concerning the use of the Mello-Roos Community Facilities Act of 1982, being Section 53311 and following of the California Government Code (the “Act”), with respect to the establishment of community facilities districts (“CFDs”). It has been prepared pursuant to the requirements of Section 53312.7 of the Act, and supersedes in its entirety all prior statements of goals and policies concerning CFDs, including those adopted in 1997.
The purpose of this Statement of Goals and Policies is to guide the financing of public facilities (“Facilities”) and/or public services (“Services”) within the City. The underlying principles behind this policy are the protection of the public interest, assuring fairness in the application of special taxes to property owners, assuring full disclosure of the existence of any special tax liens, ensuring the creditworthiness of any CFD special tax bonds, protecting the City’s credit and financial position, and assuring that applicants for CFD proceedings pay all costs associated with any CFD formation.
Section 2. Compliance with the Act
It is the policy of the City that, except as specifically limited by these goals and policies, the City Council may exercise all rights, powers, and authorities granted to it by the Act. Any inconsistency between these goals and policies and the Act shall be resolved in favor of the Act.
Section 3. Authorized Facilities and Services
Facilities eligible for financing are all authorized facilities outlined in the Act, including, but not limited to, parks and open space, water, sanitary, and storm sewer and related facilities, roads and interchanges, bridges and paseos, and related landscaping and lighting. Services eligible to be financed are any services allowed under the Act, including but not limited to services related to parks and open space, water, sanitary and storm sewer and related facilities, roads and interchanges, bridges and paseos, including related landscaping and lighting.
Section 4. Financing Priorities
The City shall prioritize financing City-owned facilities and funding City-provided services. The financing of facilities to be owned and operated by other public agencies through a Joint Community Facilities Agreement (JCFA) shall be evaluated on a caseby-case basis. In addition, the City shall prioritize the acquisition of developerconstructed facilities over City-constructed facilities, for which the City is responsible for complying with federal tax-exemption timing requirements.
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Section 5. Special Tax Requirements
a. Reasonable Basis of Apportionment.
Special taxes must be allocated and apportioned on a reasonable basis to all categories and classes of property (other than exempt property) within the CFD.
Exemptions from the special tax may be given to parcels that are publicly owned, are held by property owners’ associations, are used for a public purpose, such as permanent open space or wetlands, or are affected by public utility easements that make their utilization impractical for any purpose other than those outlined in the easement. b. Equity of Tax Allocation Formulas.
It is a goal that any special tax levied pursuant to the Act be allocated equitably against all similar use parcels within any CFD. Towards this end, the City will engage a qualified special tax consultant to assist in developing the rate and apportionment method for any special tax proposed in connection with a CFD.
c. Rate and Method of Apportionment of Special Taxes.
The rate and method of apportionment of the special tax for any CFD (each, a “Rate and Method”) shall adhere to the following requirements:
1. The Rate and Method must be structured to produce special tax revenues sufficient to (a) pay scheduled debt service on all bonds issued for the Facilities, (b) pay the annual cost of authorized Services, if applicable, (c) pay an amount equal to any anticipated shortfall in special tax revenues and/or bond debt service due to delinquencies or projected delinquencies in the payment of special taxes, (d) fund any amounts required to establish or replenish any reserve fund established for such bonds, (e) to pay for Facilities directly, so long as such levy does not increase the rate on any land use class other than Developed Property, (f) pay the costs of formation of each CFD or reimburse the City for the costs of formation of the district previously paid out of other City funds, and (g) pay annual administrative expenses of the CFD.
2. In any case, the Rate and Method must generally be structured such that the projected maximum special tax that could be levied in any Fiscal Year would produce special tax revenues at least equal to (a) 110% of projected annual debt service on all bonds for the calendar year commencing in such Fiscal Year, plus (b) projected administrative expenses of the CFD for the calendar year commencing in such Fiscal Year.
3. In general, the Rate and Method shall be structured in such a way that for each owner-occupied residential dwelling unit, the projected maximum special taxes plus all other estimated property taxes do not exceed 2% of the estimated value of the unit at the time of formation.
4. The Rate and Method may contain a mechanism by which the Maximum Special Taxes may be lowered without action by the City Council before the issuance of bonds.
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5. The Rate and Method may contain an option allowing the prepayment, in whole or in part, of the special tax obligation for an individual parcel for any portion of the special tax authorized to finance Facilities.
6. At its discretion, the City may permit annual escalation of the maximum special tax authorized to be levied on parcels within a CFD established for financing Facilities, in an amount not to exceed the maximum amount permitted under the Act. The City may permit annual escalation of the maximum special tax authorized to be levied on parcels within a CFD established for financing Services, in an amount determined (in the sole discretion of the City) to most accurately reflect the projected increase in the cost of financing such Services over the project life of the Services.
A special tax authorized to pay for Services shall have no termination date unless otherwise established by the City Council.
Section 6. Credit Quality Requirements for Special Tax Bonds a. Terms and Conditions of Special Tax bonds.
All terms and conditions of any bonds issued by the City for any CFD, including, without limitation, the sizing, timing, term, interest rates, discount, redemption features, flow of funds, investment provisions, and foreclosure covenants, shall be established by the City. Each bond issue shall be structured to protect bond owners adequately and to avoid negatively impacting the City’s access to the municipal bond market. In general, the following shall serve as minimum bond requirements:
1. A reserve fund shall be established for each bond issue to be funded out of the bond proceeds in an amount consistent with federal tax law.
2. Interest shall be capitalized for a bond issue only so long as necessary to place the special tax installments on the County property tax roll; however, interest may be capitalized for a longer term to be established in the sole discretion of the City Council on a case-by-case basis, not to exceed an aggregate of 24 months.
3. In instances where multiple series of bonds are to be issued for a CFD, the City shall determine which facilities shall be financed from the proceeds of each series of such bonds.
4. The term of any bond issue shall not exceed 40 years.
5. The City shall not be required or expected to make any payment of the bonds out of its general funds or other available funds.
Section 7. Minimum Value-to-Debt Ratio
The City shall comply with the provisions of Section 53345.8 of the Act or any other applicable provisions of the Act pertaining to the Minimum Value-to-Debt Ratio applicable to the issuance of the bonds of any CFD. For purposes of this section, “Minimum Valueto-Debt Ratio” means the aggregate value of all of the properties within a CFD that are subject to the levy of special taxes to pay debt service on the proposed issuance of bonds (based on assessed values, appraised values or a combination thereof) will be at least A-4
three times the sum of (a) the proposed principal amount of such bonds and (b) the principal amount of all other bonds outstanding that are secured by a special tax levied on the taxable property within a CFD or a special assessment levied on taxable property within the CFD.
Section 8. Responsible Department
In the formation proceedings for each CFD, the City Council shall set forth the designated official of the City that will serve as the contact person and who is responsible for: (i) preparing the annual roll of special tax obligations with respect to any CFD; (ii) providing information to interested persons regarding the current and estimated future tax liability of owners or purchasers of real property subject to the special tax lien; and (iii) furnishing notices of special tax as required by Section 53340.2 of the Act.
Subject to the policies of the City, and as permitted by applicable law, the City may obtain the assistance of a qualified consultant to perform any of the duties set forth above or pertaining to the City.
Section 9. Transparency and Notification
The City will take the following steps to ensure that prospective property purchasers and others are fully informed about their taxpaying obligations imposed under the Act:
a. The City Council will conduct all proceedings required by the Act in the manner required by the Ralph M. Brown Act (Section 54950 and following of the California Government Code);
b. Staff will cause a map of the boundaries of any proposed CFD and/or future annexation area to be recorded in the Office of the County Recorder within the time periods specified in the Act;
c. Staff will give notice, pursuant to Section 53322 of the Act, prior to holding any public hearing on the establishment of a CFD;
d. Staff will record a notice of special tax lien in the form and manner specified by the Act.
e. Staff will, through the CFD Administrator, furnish a notice to any individual requesting the notice or any owner of property subject to a special tax, in the form set forth in Section 53340.2(c) of the Act, to a special tax levied by the local agency within five working days of a request for such notice. Records of receipt of the notice will be retained for future reference. The City may establish a reasonable fee for this service. f. Staff will annually file the disclosure report required by Section 53359.5(b) of the California Government Code, and, if applicable, the report required by Section 53359.5(c) of the California Government Code.
Section 10. Appraisal.
In general, the definitions, standards, and assumptions to be used in appraisals for CFDs established by the City have considered the provisions set forth in the Appraisal A-5
Standards for Land Secured Financings published by the California Debt and Investment Advisory Commission and originally dated May 1994, as subsequently modified or amended (the “CDIAC Guidelines”). Notwithstanding the foregoing, if there is a conflict between the definitions, standards, or assumptions in the CDIAC Guidelines and the corresponding definitions, standards, or assumptions in the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (“USPAP”), USPAP shall govern.
Section 11. Interpretation, Amendments, and Waivers.
This policy is intended to be general in nature, and the specific details will depend on the nature of each CFD formation and CFD bond financing. Any policy or goal stated herein shall be deemed amended or supplemented in the event, and as of the date, if ever, that such amendment or supplement is required to ensure compliance with bond underwriting requirements, the Act, or any other laws of the State of California, or federal laws of the United States of America. The City Council’s approval of any CFD formation or CFD bond financing shall be conclusive evidence of the City’s waiver of any conflicting provision herein.