TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Ivan Holler, Assistant City Manager
PREPARED BY: Javier Carcamo, Finance Director
SUBJECT: Amended and Restated Community Facilities District Goals and
Policies
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RECOMMENDATION
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Adopt Resolution No. 23-4708 entitled: A Resolution of the City Council of the City of Murrieta, California, Adopting an Amended and Restated Community Facilities District Goals and Policies.
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PRIOR ACTION/VOTE
On January 21, 2003, the City Council adopted the Land Secured Financing Policy for Special Assessment and Mello-Roos Community Facilities District Financing (Vote: 5-0).
On April 5, 2016, the City Council adopted a Resolution amending the Land Secured Financing Policy (Vote: 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
The purpose of the Community Facilities District (CFD) Goals and Policies is to establish a set of guidelines for the formation of CFDs, including the sale of CFD bonds to finance the acquisition or construction of public infrastructure, the provision of authorized public services, and the subsequent administration of CFDs. The primary objective of a CFD is to ensure that infrastructure or other operational costs associated with the proposed development are funded in a timely fashion to serve the expected growth. It is the City of Murrieta’s (City) goal to support development projects that address a public need and provide a public benefit to the City and its residents. Proposed development projects requesting CFD debt financing will be evaluated to determine if such financing is financially viable and in the City’s and its residents’ best interest.
On January 21, 2003, the City Council adopted the local goals and policies (Land Secured Financing Policy) in accordance with the provisions of the Mello-Roos Community Facilities Act of 1982 (Mello-Roos Act). The policy has not been updated since April 5, 2016 (Attachment 1). To ensure the policy complies with the Mello-Roos Act and California Government Code Section 53312.7, City staff is recommending amending and restating the CFD Goals and policies to include further clarification and update key components of the policy with the most significant changes as follows:
• Expand the purpose section of the policy and identify the various Acts and Government Code sections governing the formation of CFDs;
• Expand criteria for staff to make the final determination on whether a proposed District shall proceed under the provisions of the Improvement Acts (e.g., various California Code sections pertaining to the formation of different types of financing districts) or the Mello-Roos Act;
• Include a list of eligible facilities that can be financed with CFD bonds;
• Include Development Impact Fees as an eligible cost to be financed by the district;
• Increase the deposit from $10,000 to at least $50,000 to cover city costs associated with the CFD formation;
• Include an escalator for CFDs that are used for operation or maintenance purposes in a manner as determined by the City (e.g., Cost of Living Index) as necessary to cover annual estimated increases in the costs of providing such services;
• Establish a maximum of two percent (2%) of the greater of the assessed value or appraised value of such property, which is increased from 1.8% in prior policy [to incentivize developers and accommodate increased services costs and potential service CFDs and assessment districts];
• Allow annual escalators of the special tax by 2% per year for facilities, as determined by the City;
• Replace restriction on requiring 50% certificate of occupancy for all homes or credit enhancement when bonds are issued with requirement for any property owner responsible for more than 20% of the special tax liability to post letter of credit or cash deposit worth two years of special tax obligation. City still has discretion when to issue;
• Include the proceedings format for the special assessment district and Mello-Roos CFD and include an application; and
• Limit bond issuances to 30 years.
To ensure the development and financing of public infrastructure and services within the City are managed using sound fiscal policy for the benefit of residents, it is recommended that the City Council adopt Resolution No. 23-4708 (Attachment 2) amending and restating CFD Goals and Policies.
FISCAL IMPACT
There is no fiscal impact associated with this item.
ATTACHMENTS
1. Land Secured Financing Policy 2016
2. Resolution No. 23-4708