HomeMy WebLinkAbout2017-12-04 e-packet@7:00Monday, December 4, 2017
7:00 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
Municipal Services Building, Council Chambers
33 Arroyo Drive, South San Francisco, CA
Special City Council
Special Meeting Agenda
December 4, 2017Special City Council Special Meeting Agenda
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of
California, the City Council of the City of South San Francisco will hold a Special Meeting on Wednesday,
December 4, 2017, at 7:00 p.m., in the City Council Chambers, Municipal Services Building, 33 Arroyo Drive,
South San Francisco, California.
Purpose of the meeting:
Call to Order.
Roll Call.
Agenda Review.
Public Comments - comments are limited to items on the Special Meeting Agenda.
CLOSED SESSION
Closed Session:
Conference with Legal Counsel - Anticipated Litigation
Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of
Government Code Section 54956.9: one case
1.
PUBLIC HEARING
Report regarding a Community Facilities District Public Hearing, Resolution of
Formation of Community Facilities District and Resolution Calling Special Landowner
Election for Community Facilities District. (Richard Lee, Director of Finance and
Steve Mattas, Assistant City Attorney)
2.
Resolution of formation of Community Facilities District, City of South San Francisco
Community Facilities District No. 2017-01 (Public Services and Facilities).
2a.
Resolution calling special landowner election for Community Facilities District, City of
South San Francisco Community Facilities District No. 2017-01 (Public Services and
Facilities).
2b.
STUDY SESSION
Report regarding a City Council study session on the proposed Oyster Point mixed-use
residential development. (Sailesh Mehra, Chief Planner and Marian Lee, Assistant City
Manager)
3.
Adjournment.
Page 2 City of South San Francisco Printed on 12/7/2017
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:17-1146 Agenda Date:12/4/2017
Version:1 Item #:1.
Closed Session:
Conference with Legal Counsel - Anticipated Litigation
Significant exposure to litigation pursuant to paragraph (2) of subdivision (d) of Government Code Section
54956.9: one case
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City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:17-1025 Agenda Date:12/4/2017
Version:1 Item #:2.
Report regarding a Community Facilities District Public Hearing,Resolution of Formation of Community
Facilities District and Resolution Calling Special Landowner Election for Community Facilities District.(
Richard Lee, Director of Finance and Steve Mattas, Assistant City Attorney)
RECOMMENDATION
Staff recommends that the City Council (a)hold the continued public hearing on the proposed
establishment of a community facilities district to be known as the “City of South San Francisco
Community Facilities District No.2017-01 (Public Services and Facilities)”(the “CFD”),(b)adopt the
Resolution of Formation of Community Facilities District,and (c)adopt the Resolution Calling Special
Landowner Election for Community Facilities District.
BACKGROUND/DISCUSSION
In March 2011,the City of South San Francisco (“City”)and the former Redevelopment Agency of the City of
South San Francisco (“Agency”)entered into a Development Agreement (“DA”)and Disposition and
Development Agreement (“DDA”),respectively,with Oyster Point Ventures,LLC (“OPV”)to form a
public/private partnership to redevelop approximately 80+acres at Oyster Point.Pursuant to that DDA,the
Agency,City and the developer will fund and construct public improvements including new roads and utilities
and public recreational and open space improvements in the Oyster Point marina area with an estimated value
in excess of $44,900,000 (a sum of Phase IC improvements at $44,100,000 and Phase IIC Cap Repair at
$890,000).In addition,the developer is also constructing other public improvements such as streets and
utilities,a sewer pump station and enhanced landscaping within development phases III and IV with an
estimated cost in excess of $20,000,000.
In 2016,OPV sold its interest to a new development group,Oyster Point Development,LLC (“OPD”),and the
assignment of the DDA and DA to OPD was subsequently approved by City Council.The land use
entitlements related to the DA and DDA also provides for the construction of a hotel on City-owned Parcel 6.
The City is presently in the process of selecting a hotel developer for the proposed hotel.In addition,the City
is currently in the process of conducting a programming study for the City-owned Parcel 5.The potential
noncommercial uses applicable to Parcel 5 include parks and open space and the potential commercial uses
include commercial recreational uses and potentially some retail.The DDA does provide that OPD has a right
of first refusal for Parcel 5 if the City pursues commercial recreational uses,retail or other private development
on Parcel 5.
Also,in March 2011,the City and Agency entered into an agreement with the San Mateo County Harbor
District related to the proposed development at and adjacent to Oyster Point (“Harbor District Agreement”).
Recently,the City and Harbor District entered into an Implementation Agreement related to the Harbor District
Agreement which provided,in part,for the repair and replacement of the fuel system at Oyster Point Marina
and specified that the City would consider the formation of a CFD to finance the fuel system repair and
replacement.
This staff report relates only to City of South San Francisco Community Facilities District No.2017-01
discussed herein.The DA with OPD also provided for the potential creation of a CFD applicable to the OPDCity of South San Francisco Printed on 11/29/2017Page 1 of 6
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discussed herein.The DA with OPD also provided for the potential creation of a CFD applicable to the OPD
and City properties for specific infrastructure to be constructed at Oyster Point.Formation of a separate CFD
applicable to those improvements and applied only to the OPD and City property will be presented to the City
Council in 2018.
Pursuant to the Mello-Roos Community Facilities Act of 1982 (“Mello-Roos Act”),a CFD is a defined
geographic area in which the City is authorized to levy annual special taxes to be used to either finance
directly the costs of specified public improvements and/or public services,or to pay debt service on bonds
issued to finance the public improvements, as well as to pay costs of administering the CFD.
The City is initiating the formation of this CFD.OPD has consented to the formation of the CFD,and the City,
as property owner of lands within the proposed CFD,has also consented to the formation of the CFD.Since
June of this year,City staff has met with and held discussions several times with representatives of the third
property owner Kashiwa Fudosan America,Inc.(“Kashiwa Fudosan”)regarding the proposed CFD,but as of
now Kashiwa Fudosan opposes the proposed application of the CFD to its property.During those discussions
with Kashiwa Fudosan’s representatives,City staff shared several documents as part of those meetings.
Specifically,the City shared preliminary cost estimates of the CFD with Kashiwa Fudosan in July as part of its
meetings with Kashiwa Fudosan.On August 24,2017,the City first shared the Seifel Report (discussed below)
with Kashiwa Fudosan’s legal representatives.On October 5,2017,the City posted the Rate and Method of
Apportionment of Special Tax (RMA)for the CFD to its website,and on November 15,2017,the City posted
the Taussig CFD report to its website.
The City has had Seifel and Associates (“Seifel”)prepare a report that analyzes the economic benefit and value
enhancement to existing properties included within the proposed CFD boundaries from the construction and
continued maintenance of the public infrastructure improvements discussed above.The report concludes that
“the potential value premium from approximately $70 million in capital investment in these new amenities and
smart growth design features of the proposed new development will likely offset the additional burden from
the maximum CFD special tax of $0.39 per building square foot,and could provide additional value
enhancement to existing properties.”A copy of the August 22,2017 report prepared by Seifel is included as
Attachment 1.Kashiwa Fudosan has advised City staff that it has retained consultants to also analyze the
proposed CFD on the Kashiwa Fudosan properties and has provided the City with reports from these
consultants (see letters from counsel for Kashiwa Fudosan in Attachment 4 and Attachment 5).Seifel has
prepared a supplemental report,a copy of which is attached hereto as Attachment 6,that responds to the issues
presented in the reports prepared by Kashiwa Fudosan’s consultants.Staff believes the public improvements in
the Oyster Point Marina area that are being funded by OPD and the Agency will enhance the value of the
properties included within the proposed CFD.
City staff has been working with a team of consultants to commence CFD formation proceedings.At its
meeting on October 11,2017,the City Council adopted Local Goals and Policies guiding the City’s use of the
Mello-Roos Act,and a Resolution of Intention to Establish a Community Facilities District,which expressed
the City Council’s intention to form the CFD and set today’s meeting as the time for the public hearing.Notice
of the original public hearing was published in a paper of general circulation within the City prior to the
original public hearing and formal notice was also sent to property owners whose property would be within the
proposed CFD.Notice of this continued hearing was also posted and provided to representatives of the
affected property owners on November 28, 2017.
As required by the Mello-Roos Act,a CFD report has been prepared which contains,among other things,a
brief description of the public facilities and services by type which will be required to adequately meet the
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brief description of the public facilities and services by type which will be required to adequately meet the
needs of the CFD and the estimated cost of providing those facilities and additional services.
The boundary map of the CFD was recorded with the County Assessor’s Office on October 27,2017,and an
amended boundary map was subsequently recorded to remove certain property that will be exempt from the
special tax.The CFD report prepared by Taussig &Associates,Inc.is included as Attachment 2 to this staff
report. The amended boundary map is included as Attachment 3.
November 20, 2017 Public Hearing
At the November 20th City Council meeting,the City Council held public hearing to take public testimony by
any interested persons or taxpayers regarding the establishment of the district,the extent of the district,the
type of facilities or services to be provided,or the regularity or sufficiency of the proceedings.During this
public hearing,Seema Max Samimi,counsel for Kashiwa Fudosan,and other Kashiwa Fudosan
representatives spoke in opposition to the formation of the CFD as it applied to the Kashiwa Fudosan property.
In addition to the oral protest,Kashiwa Fudosan submitted a protest letter dated November 17,2017
(Attachment 4).In order to provide Kashiwa Fudosan with additional time to study the proposed CFD,the
City Council continued the public hearing to December 4,2017 at 7:00 pm.Following the City Council’s
continuance of the matter,Kashiwa Fudosan submitted a supplemental protest letter,dated November 27,2017
(Attachment 5).
Summary of Kashiwa Fudosan Protest Letters
Kashiwa Fudosan’s protest letters argue against the formation of the CFD based on a belief that the CFD is
legally inadequate because there are no “additional services”that will be enjoyed by Kashiwa and because the
tax is unreasonable.Kashiwa Fudosan’s protest also alleges that the Seifel and Taussig reports are flawed,the
proposed CFD is a taking,violates CEQA,violates equal protection,and is premature because it requires
approval from the Bay Conservation and Development Commission (“BCDC”) first.
City Response to Kashiwa Fudosan
City staff has reviewed the Kashiwa Fudosan protest letters and has consulted with its special CFD counsel at
Jones Hall and Seifel.Based on the City’s review and expert analysis,City staff believes that the CFD is
procedurally and legally valid.Additionally,despite Kashiwa Fudosan’s allegations that the August 22,2017
Seifel report is flawed,staff believes that the Seifel report is valid.In response to the assertions in the
November 17th and November 27th letters from counsel for Kashiwa Fudosa,Seifel has prepared a
supplemental report, a copy of which is included as Attachment 6.
Furthermore,Kashiwa Fudosan’s protest letters mischaracterize the nature of the City staff communications
regarding the Seifel consultant work performed for the City.The City entered into contract negotiations with
Seifel following a competitive process,whereby the City sought quotes for the proposed scope of work from
three consultants.City staff evaluated the three quotes and ultimately determined that the proposed scope of
work offered by Seifel provided the best combination of price,quality and service for the CFD economic
benefit analysis.At the same time,the City also needed third party economic analysis for ongoing
Development Agreement amendment negotiations with Oyster Point Development.Originally,the staff
member tasked with drafting and executing the consultant services agreements with Seifel had these two
separate scopes of work combined into one contract.However,because these two tasks were separate and
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distinct, the City ultimately executed two separate agreements with Seifel for these two scopes of work.
Seifel is not,as Kashiwa Fudosan,alleges,a consultant who is working for Oyster Point Development that is
being “spoon fed”its conclusions.Rather,Seifel is a third party economic consultant conducting its own
independent analysis,doing so at the request of the City.Economic consultants often times need information
to complete their analysis that only the developer involved in the project at issue or the City has at its disposal.
It is not uncommon for economic consultants to consult with a number of sources,including a project
developer,to complete their economic analysis.Lastly,City staff initiated the economic analysis pertaining to
the benefits that the Kashiwa Fudosan properties would receive as a direct response to discussions with
Kashiwa Fudosan’s representatives who asked to better understand how this CFD would benefit their
properties.
December 4, 2017 Continued Public Hearing
At this meeting,the City Council will reopen the noticed public hearing that was continued from November
20th,in order to take further public testimony regarding the formation of the CFD.At the conclusion of the
public hearing, the City Council will consider the adoption of the resolutions described below.
Recommendations
1. Adopt a Resolution of Formation of the CFD
This Resolution forms the CFD in the area designated by the boundary map and describes the public facilities
and services proposed to be financed by the CFD pursuant to the Act.
2. Adopt a Resolution Calling Special Landowner Election for the CFD
This Resolution establishes the date and place of the special landowner election by the three landowner voters
within the CFD at the City Council meeting to be held on March 14, 2018.
Analysis
Public Hearing.Oral or written protests may be made at the public hearing by any interested persons or
taxpayers against the establishment of the district,the extent of the district,the type of facilities or services to
be provided,or the regularity or sufficiency of the proceedings.Protests about the regularity or the sufficiency
of the proceedings must be in writing and filed with the City Clerk prior to the hearing,and must specify the
irregularities or defects. Written protests may be withdrawn at any time before the conclusion of the hearing.
Resolution of Formation.The Resolution of Formation establishes the CFD,designates the name of the CFD,
identifies the services and facilities to be funded by the CFD,and states the City’s intention to levy a special
tax annually on property within the CFD to pay for these services and facilities.The Resolution of Formation
incorporates the recorded boundary map of the CFD,which was originally recorded following the adoption of
the Resolution of Intention,and subsequently amended by a revised map that removed certain property from
the CFD boundaries that will be exempt from the special taxes.
The Resolution of Formation includes two exhibits:Exhibit A,which describes the proposed services and
facilities that are authorized to be funded by the CFD;and Exhibit B,the Rate and Method of Apportionment
of Special Tax (“RMA”)for the CFD,which details how the special tax will be levied on properties within the
CFD, and sets the maximum special tax rates that can be levied within the CFD.
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The Resolution Calling Special Landowner Election.The Resolution Calling Special Landowner Election
establishes the date of the required special tax election by the landowner voters within the CFD at the City
Council meeting to be held on March 14,2018.The Resolution designates the City Clerk as the official to
conduct the election and to receive all ballots.The election will be conducted by mailed or hand-delivered
ballots to the three landowner voters who are the sole qualified voters within the CFD:(1)OPD,(2)Kashiwa
Fudosan and (3)the City.Each landowner voter has one (1)vote for each acre or portion thereof that such
landowner owns in the CFD.
The Resolution Calling Special Landowner Election includes Exhibit A as the form of landowner ballot that
will be used in the election.
Environmental Review
Formation of a CFD is not a “Project”for purposes of the California Environmental Quality Act (“CEQA”),
and therefore is exempt from CEQA review.Case law has held that community facilities district formation is
generally excluded from CEQA review.(Kaufman &Broad-South Bay,Inc.v.Morgan Hill Unified Sch.Dist.
(1992)9 Cal.App.4th 464.)Kashiwa Fudosan points out that the Kaufman &Broad-South Bay,Inc.case
leaves open the possibility that “a community facilities district might be formed to fund a specific project and
therefore trigger the need for CEQA review.”However,that is not applicable for this proposed CFD formation.
Formation of the proposed CFD does not commit the City to construct any of the planned improvements;
rather,the CFD is only a financing mechanism to finance services for those public improvements,if and when
constructed,as well as the replacement and renovation of the publicly owned fuel dock and related
appurtenances,if and when that project is carried out.The formation of this CFD is not the critical requirement
for any of the improvements identified in the CFD to proceed.
Moreover,even if formation of this CFD is considered a “Project”under CEQA,no further environmental
review is required.The appropriate environmental review has already taken place for the development plan for
the larger Oyster Point development.In March 2011,a Final Environmental Impact Report was certified by the
City,which included all construction improvements for parks,landscaping,roadway improvements,open
space,recreational area and Bay Trail improvements for the Oyster Point Specific Plan and Phase IC
improvements.Additionally,the proposed replacement of the fuel line would be categorically exempt under the
provisions of CEQA,Class 1,Section 15301,Existing Facilities.Therefore,CEQA review on the formation of
this CFD is therefore not required.
FISCAL IMPACT
Staff estimates that,during the first Fiscal Year in which the Special Taxes will be levied (Fiscal Year 2018-
19), the CFD will generate approximately $178,363 in annual special tax revenues.
CONCLUSION
The proposed CFD will assess development their proportionate share of providing services to the new
development.The Rate and Method of Apportionment has calculated those impacts at $0.39 per square foot for
Residential Property and has calculated those impacts at $0.39 per square foot for Non-Residential Property
(the sums of Component A Maximum and Component B Maximum).
Attachments:
1.Report prepared by Seifel and Associates
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2.Community Facilities District Report prepared by Taussig & Associates, Inc.
3.Amended Boundary Map of the CFD
4.Kashiwa November 17, 2017 Protest Letter
5.Kashiwa November 27, 2017 Supplemental Protest Letter
6.Supplemental Seifel and Associates Report, dated November 29, 2017
7.CFD Powerpoint
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580 California Street 12th Floor San Francisco CA 94104 | 415-618-0700 | www.seifel.com
Memorandum
Date August 22, 2017
To: Steven Mattas, Meyers Nave
Cc: Marian Lee and Alex Greenwood, City of South San Francisco
From: Seifel Consulting Inc.
Re: Economic Benefit and Value Enhancement to Existing Properties from Oyster Point
Capital Improvements
The City of South San Francisco requested Seifel Consulting (Seifel) to evaluate the potential economic
benefits and value enhancement to existing properties from the new mixed-use development of Oyster
Point and its associated major capital investments, which are planned to accomplish the following:
• Construct a compact, sustainably designed community that will include office, research &
development, hotel, retail and currently proposed residential uses.
• Create a new gateway entrance to Oyster Point.
• Upgrade the circulation system and reconfigure development to emphasize views of San Francisco
Bay and the shoreline park and provide multi-modal access to the entire area.
• Improve and expand the open space and trail system.
• Enhance pedestrian, bicycle and transit access.
A key purpose of this analysis is to inform the City’s process to create a Mello-Roos Community
Facilities District (CFD) and to charge CFD special taxes to help maintain and operate these facilities.
In order to perform this work, Seifel reviewed historical information on the plans and agreements related
to Oyster Point, recent development applications submitted by its developer (Oyster Point Development,
LLC, or OPD) and the City’s conceptual proposal for the CFD special tax levels. Seifel also analyzed
relevant market data and researched publications and academic research to evaluate the potential
economic benefits and real estate value premiums arising from improvements similar to those proposed
for Oyster Point.
This memorandum is organized into the following sections and is accompanied by an attached set of
exhibits that represent the latest information available to the City on the proposed development:
A. Summary of Findings
B. Overview of Oyster Point Development and Capital Improvements
C. Proposed Formation of Mello-Roos Community Facilities District
D. Overview of Existing Development and Market Conditions
E. Research and Analysis of Potential Economic Benefits and Value Enhancement
F. Conclusion
ATTACHMENT 1
Page 2
A. Summary of Findings
Oyster Point is poised to transform into a sustainably designed, mixed use community featuring:
• An attractive new gateway entrance with sweeping views of San Francisco Bay.
• Well-designed multi-modal circulation system that will enhance transit, vehicular, walking and
bicycle access.
• Extensive trail system, which will offer views of the water and open space to users.
• Well-designed plazas, parks and open space featuring recreational amenities that will encourage
active use and promote retail activity.
• Compact, mixed use development that will attract thousands of new employees and residents to
Oyster Point.
The City of South San Francisco (City) and OPD will invest about $70 million in new capital
improvements throughout Oyster Point, which will provide upgraded access, open space and other
amenities to existing properties. At full build-out, the investment value of these capital improvements will
be equal to about $18 per building square foot across the approximately 3.8 million square feet (SF) of
existing and new development.
The proposed Mello Roos Community Facilities District (CFD) special taxes will help pay for the
operation and maintenance of a portion of these improvements. The initial maximum annual combined
special tax rate of $.39 per square foot (SF) of floor area represents a small fraction (about one-tenth of
one percent, or 0.1%) of the existing property values for office buildings in the Oyster Point and
Peninsula market area, which currently range from about $400 to $500/SF.
This combined investment will increase the economic competitiveness of Oyster Point and also generate
economic benefits to surrounding properties, enhance property values and increase rents according to
numerous publications and academic research.
In conclusion, the potential value premiums from about $70 million in capital investment in these new
amenities and smart growth design features of the proposed new development will likely offset the
additional annual burden from the maximum CFD special tax of $0.39 per building square foot, and could
provide additional value enhancement to existing properties.
B. Overview of Oyster Point Development and Capital Improvements
The Oyster Point Specific Plan (OPSP) and related entitlements were approved in 2011 to allow for a
public-private partnership between the City and OPD to develop 2.25 million square feet of
office/research & development (R&D) uses across an approximately 41.4-acre site owned by OPD and to
construct infrastructure and open space improvements on the OPD site and across the adjacent 40-acre
site owned by the City of South San Francisco (City).
The Oyster Point development is planned to be constructed in four major phases, and the first phase of
infrastructure and open space improvements has already been approved. OPD is currently processing an
application to amend the OPSP and the City’s General Plan to allow residential uses to be developed in
the third and fourth phases, instead of Office/R&D uses. In addition, the developer is processing a Precise
Plan that outlines the detailed design of the improvements within future phases.
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Upon build-out of all four phases, the proposed new mixed-use development is proposed to include:
• About 1.6 million square feet of office/R&D space.
• About 1,200 new residential units housing.
• About 50,000 square feet of commercial/retail/services space.
• New hotel uses (350 rooms)
• Retail fronting on landscaped plazas and mews to provide new gathering spaces.
Each of the phases of development is referenced in terms of the respective property ownership among the
developer and the City. For example, the City’s portion of Phase I is referred to as Phase IC, while the
developer’s portion is known as Phase ID. The attached Exhibits 1 to 4 show the land uses and
development phasing as currently proposed, which consist of the following:
• Phase I– Phase ID is planned for approximately 508,000 square feet of Office/R&D buildings on a
site of approximately 10 acres, and Phase IC is proposed to include infrastructure and open space
improvements across approximately 25 acres. The Phase I Precise Plan, which outlined the detailed
design of Phase ID and Phase IC, was approved at the same time as the OPSP in 2011. A new
gateway entrance will be created that affords sweeping views of San Francisco Bay and an upgraded
Oyster Point Crescent Park and Beach. Existing roads will be reconfigured and improved with trees
and landscaped walkways, medians, transit stops and bicycle lanes. These gateway improvements will
establish a new identity and brand for Oyster Point that leverages its location along the Bay.
Exhibits 5 through 9 show the gateway and circulation improvements.
• Phase II– Phase IID is currently proposed to include approximately 1,070,000 square feet of
Office/R&D buildings, including approximately 28,000 square feet of retail, amenity and/or flex-use
space across a total of 20.2 acres. Phase IID will be consistent with the OPSP (as adopted in 2011),
but it will require a Precise Plan that outlines the detailed design of the improvements.
• Phase I Improvements will include infrastructure and open space improvements consisting of the
continuation of new streets, sidewalks and utilities from Phase IC, a new sewer pump station, bicycle
facilities, shuttle bus stops and new open space, including courtyards, plazas, pocket parks, and
improvements to the San Francisco Bay Trail. Based on recent cost estimates, these improvements are
projected to cost about $44 million. In addition, OPD will make landscape and open space
improvements adjacent to their Phase II private development.
• Phases III and IV– Phases IIID and IVD will include approximately 1,472,000 square feet of mixed-
use development consisting of about 1,191 residential units and 22,000 square feet of retail, amenity
and/or flex-use space. The maximum dwelling unit density would be approximately 100 units/acre
across the combined site of 12.4 acres. If residential uses are not ultimately approved, these phases
can be developed as allowed by the 2011 OPSP, which allows for an additional 672,000 square feet of
Office/R&D development. Public realm improvements are consistent with those approved in the
OPSP in 2011 and will include substantial improvements along the Oyster Cove Marina shoreline
waterfront and the Bay Trail (subject to BCDC guidelines and approval). Based on the proposed plans
submitted by OPD, the City estimates the costs of these public realm improvements is between
$25 million and $30 million, which will be funded by OPD. OPD will pay for the maintenance of
these improvements and the costs of maintenance for these improvements is not included in the
proposed CFD discussed herein.
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In summary, the planned capital improvements across all four phases will consist of the following three
major categories of improvements.
New Gateway With Beautiful Views and Major Circulation Improvements (See Exhibits 5-11)
• A new gateway entrance will offer sweeping views of San Francisco Bay and the improved Crescent
Park and Beach area.
• Roads will be reconfigured and improved to be “complete streets” with trees and landscaped
walkways, medians and bicycle lanes.
• These gateway improvements will establish a new identity and brand for existing properties and new
development in Oyster Point, which will highlight its location along the Bay and its beautiful natural
features and marina atmosphere.
Open Space (See Exhibits 1, 2, 4, 11-18)
• Crescent Beach and Park will be improved and expanded (about 1 acre), including the creation of new
lawn area and flexible multi-use area that will accommodate a broad variety of activities.
• New recreational improvements along the shoreline will feature additional picnic tables, benches,
barbecues, restroom facilities and bicycle storage.
• More than 4,000 feet of the Bay Trail around Oyster Point will be re-graded and widened to 18 feet to
improve pedestrian and bike access along the shoreline to existing and new development.
• About 8,500 feet of additional trails with varying widths will also be added throughout Oyster Point.
Trails and Transit Accessibility (See Exhibits 1, 2, 4, 11-18)
• New bus transit stops will be created along the major roadways that will facilitate direct shuttle
connections to rapid transit stations for both Caltrain and BART.
• The improved Bay Trail and new connection trails from the north to south will provide easier access
to the Oyster Point Ferry Terminal from existing properties.
• This coupled with the significant intensification of development will encourage transit ridership,
which could result in increased ferry and shuttle services.
C. Proposed Formation of Mello-Roos Community Facilities District
The Mello-Roos Community Facilities Act of 1982 authorizes the City of South San Francisco to
establish community facilities districts (CFD) and to levy approved special taxes within the boundaries of
a CFD to fund a variety of public improvements (facilities) and services. CFDs can provide funding for
the purchase, construction, expansion, rehabilitation and/or maintenance and operation of open space,
parks, recreation programs, flood protection, storm water and drainage systems, streets, roads, parkways,
police and fire protection, and ambulance and paramedic services.
The City intends to form a series of CFDs to finance capital improvements and to pay for the maintenance
and operation of certain improvements on publicly owned properties. OPD will be responsible for the
payment of special taxes that will finance a substantial portion of the planned capital improvements
through a separate CFD that will only apply to OPD properties. Oyster Point Development and other
existing property owners are proposed to be responsible for a Public Services and Facilities CFD, referred
to as CFD No. 2017-01.
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The proposed CFD special tax Rate and Method of Apportionment (RMA) for CFD No. 2017-01 consists
of two special tax requirements that would be collected for the following purposes:
• Component A–Operations and maintenance costs for new municipal services for Phases IC and
IIC. Component A will pay for operation and maintenance services for publicly owned properties.
These new services are projected to total approximately $1 million annually in new costs at build-out,
with an additional 20 percent in annual costs for administration, legal and an operating reserve fund.
Altogether, this brings the estimated total to $1.2 million annually. One particular cost component—
hydroseeding and erosion prevention for the hotel site—will be transferred to the hotel developer
once the developer takes over the site (estimated to be Q3 of 2018). Once transferred, the annual cost
of new enhancements will decrease by approximately $130,000, contingent upon the successful
transfer of the maintenance burden to the hotel developer. The proposed special tax for Component A
is currently proposed to be $.32 per square foot of existing and future development, which is
anticipated to decrease by about 10 percent once the hotel developer takes over the site. The
Component A special tax is subject to annual increase of a maximum of the lesser of CPI or 5 percent
per year.
• Component B– Fuel system replacement and maintenance. This will fund the replacement of the
fuel system at the Oyster Point Marina, which will provide improved services to recreational boaters
in the marinas, enhance water quality safety and provide long-term resources for public safety
agencies that utilize the marina fueling system. The proposed special tax for Component B is
currently proposed to be $.07 per square foot of existing and future new development. The
Component B special tax will terminate once the fuel system replacement costs have been funded.
The Component B special tax is subject to annual increase of 2 percent per year.
In summary, the initial maximum annual combined CFD special tax rate on existing and new properties is
proposed to be $.39 per square foot (SF) of floor area, and the special tax rate is proposed to decrease
once the new hotel developer takes over the site.
D. Overview of Existing Development and Office Market Conditions
Existing development currently consists of office, R&D, retail and hotel uses that are located on both
private and public properties. All of the existing properties that OPD owns or has leased via a long-term
ground lease from the San Mateo County Harbor District will be demolished and rebuilt according with
the plans described above.
The remaining existing development consists of two office buildings owned by Kashiwa Fudosan, which
are called Oyster Point Marina Plaza. According to the property’s website, Oyster Point Marina Plaza has
467,358 rentable SF of office space in two five-story Class A LEED Platinum office buildings. Building
amenities include a 2,000 SF cafeteria-style restaurant/deli, dry cleaners, fitness centers, locker room &
showers and building conference centers. The buildings are adjacent to the San Francisco Bay Trail and
located to the north of Oyster Point Park and Beach. Current asking rents are reported to be
$3.15/SF/month or about $38/SF/year.
Oyster Point is located within northern San Mateo County (referred to as North County) on the
San Francisco Bay Area Peninsula that extends from Silicon Valley to San Francisco. Oyster Point is
located to the east of Highway 101, about six miles north of San Francisco International Airport and
about twelve miles south of downtown San Francisco.
San Mateo County is one of the most active and robust office and R&D markets in the United States
according to the real estate brokerage firms CBRE, Cushman & Wakefield, and Kidder Matthews.
South San Francisco offers a broad variety of office and R&D space, with a particular focus on businesses
involved in the biotechnology, computer software, cloud computing and associated service providers.
Page 6
Office vacancy rates in most parts of San Mateo County have declined in the first two quarters of 2017
according to these brokerage firms. According to CBRE, quarterly net office absorption for Q2 2017 has
risen to the highest mid-year levels in two years, and average asking rents for Class A office space in
South San Francisco are $3.50/SF/month or $42/SF/year, about 5 percent higher than the North County
average of $40/SF/year and significantly below the Peninsula1 average of $77/SF/year.2
Cushman & Wakefield reports slightly higher lease rates for Class A Office in South San Francisco of
about $44/SF/year and indicates that the combined average annual lease rates for Office and R&D space
in South San Francisco are currently $54/SF/year, likely reflecting the strong biotechnology and
technology presence in South San Francisco. Class A office space in San Mateo County is reported to
average about $61/SF/year, after taking into account the significantly higher office rents in the southern
portions of San Mateo County. Cushman & Wakefield reports that about 1.3 million in Office and R&D
space is currently under construction in South San Francisco3, much of which has been pre-leased
according to the City of South San Francisco based on information provided by knowledgeable real estate
professionals active in the South San Francisco market.
Kidder Matthews (KM) reports slightly lower average asking rents for Class A office space in South
San Francisco at $41/SF/year, below the San Mateo countywide average of $54/SF/year. KM reports that
the office market in San Mateo County has strengthened over the past year as evidenced by a decline in
vacancy rates, an increase in average asking rents, and positive net absorption.4 According to Kidder
Matthews, sales prices for office buildings in San Mateo County have ranged from about $500/SF to
$650/SF with cap rates averaging between about 5 and 6 percent over the past two years. This is
consistent with average cap rates reported by IRR 2016 Viewpoint for Class A office space in suburban
San Francisco of 5.50 percent.
Based on the market data reported by these three brokerage firms, asking rents for Class A office space in
South San Francisco likely currently average about $42/SF/year as compared to about $57/SF/year for
San Mateo County. Based on market data reported by these brokerage firms and other real estate sources,
sales values for Class A midrise office buildings in South San Francisco likely range from about $400/SF
to $500/SF currently, as shown below in Table 1.5
1 CBRE defines the Peninsula market to include both San Mateo County as well as the City of Palo Alto that is located in
Santa Clara County. Other brokerage firms distinguish the San Mateo County market from Silicon Valley further south, which
they assume includes Palo Alto.
2 https://www.cbre.com/research-and-reports/San-Francisco-Peninsula-Office-MarketView-Q2-2017.
3 http://www.cushmanwakefield.com/~/media/marketbeat/2017/07/SanMateo_Americas_MarketBeat_Office_RD_Q22017.pdf
4 http://www.kiddermathews.com/downloads/research/office-market-research-peninsula-2017-2q.pdf
5 The valuation estimates assumes a standard office vacancy allowance of 10 percent, which is in between the overall direct
vacancy rates indicated by Cushman & Wakefield and Kidder Matthews (of 4.1% and 6.4% respectively) and the 11% vacancy
rate for Class A office space indicated by CBRE.
Page 7
Table 1
Market Value Estimates (Per Building Square Foot)
Class A Office Space in South San Francisco
E. Research and Analysis of Potential Economic Benefits and Value
Enhancement
As described earlier, new development at Oyster Point is being sustainably-designed6 as a compact,
mixed use community with green design features including new roadways with improved transit, bike and
pedestrian access and a broad variety of open space, parks, plazas and other amenities. Assuming that the
proposed residential development is approved, this new development will support about 4,000 employees
and 3,500 new residents, which will catalyze significant new local spending and spur new economic
activity in the vicinity of the existing Kashiwa Fudosan office buildings.
Seifel reviewed published research regarding the economic benefits of similar types of sustainably-
designed developments and the value premiums associated with parks and open space, increased
walkability, transit access, and other types of public improvements in order to assess the potential value
premium on development values that could occur from the planned improvements in Oyster Point.
6 Per the March 23, 2011 Development Agreement, Exhibit E-1, prior to issuance of any building permit for any tenanted
building, OPD shall provide evidence demonstrating that, if constructed in accordance with the approved design and
construction plans, the building will meet minimum standards required to achieve at least a LEED version 3 (LEED v3) Silver
certification. Within one year of the issuance of a certificate of occupancy for any tenanted building, Developer shall provide
evidence demonstrating that the building has been certified as at least LEED v3 Silver.
CBRE
Cushman
&
Wakefield
Kidder
Matthews
Average
Market
Rent
Office Rental Revenue (Q2 2017)
Monthly Lease Rate $3.50 $3.66 $3.42 $3.53
Annual Lease Rate $42.00 $43.92 $41.04 $42.32
Less: Vacancy Allowance $4.20 $4.39 $4.10 $4.23
Effective Gross Rent (EGR)$37.80 $39.53 $36.94 $38.09
Less: Operating Expenses $11.34 $11.86 $11.08 $11.43
Net Operating Income $26.46 $27.67 $25.86 $26.66
Cap Rate 5.50%5.50%5.50%5.50%
Capitalized Value (Rounded)$481 $503 $470 $485
Cap Rate 6.00%6.00%6.00%6.00%
Capitalized Value (Rounded)$441 $461 $431 $444
Key Pro Forma Assumptions
Average Market Rent Based on average lease rents from three brokerage firms.
Vacancy Rate:10%of lease revenues
Operating Expenses:30%of effective gross rent
Note: Numbers may not calculate precisely due to rounding.
Source: CBRE, Cushman & Wakefield, Kidder Matthews, Seifel Consulting.
Page 8
“Walk instead of drive. Reuse rather than discard. Buy local rather than shop two towns over.” According
to recent research by Nielsen, more people are recognizing that these are simple but effective ways to
reduce our carbon footprint and contribute to a greener planet. Today, it’s widely regarded as everyone’s
responsibility to protect the environment and give back socially. And consumers think that corporations
are no exception. Corporate social responsibility, also referred to as corporate citizenship or conscious
capitalism, is practiced by companies dedicated to making a positive social or environmental impact on
society. More and more, consumers expect companies to be corporate citizens, and younger employees
(aged 49 and below) prefer by wide margins to work for companies that make a conscious effort to put
sustainable practices into action.7
According to a recent study by Bain & Company that surveyed employees in six major countries8 across
the globe, commitment to sustainability made by a potential employer ranks as an increasingly visible and
important factor in hiring and retaining top talent. Seventy percent of employees surveyed in the Bain
study stated greater concern for sustainability practices as compared to a similar study three years
earlier—likely due to greater awareness of global trends/issues and a perceived higher sense of urgency
for companies to play a role in addressing them.9
According to similar studies, there is increasing evidence in multiple geographies that a climate-friendly
and sustainable real estate sector can both preserve and increase asset value. Market research and
academic publications demonstrate an emerging correlation between green building characteristics and
investment performance, linking “green real estate” positively with investment fundamentals, including
increased client demand, lower vacancy rates, lower obsolescence, reduced rates of depreciation, lower
operational costs, and higher liquidity. Recent data also shows that green and energy certified office and
residential buildings have a lower risk of mortgage default compared to that of non-certified properties.
Buildings that do not have such characteristics may in some cases suffer from “brown discounting.”10
Sustainable real estate has evolved from simply creating green buildings to looking holistically at the
environmental footprint of real estate development as a whole. In addition to promoting and recognizing
the importance of green building, the US Green Building Council and World Green Building Council
have developed standards for “smart growth,” which are used to evaluate development projects.
The following are key characteristics of sustainably designed, smart growth real estate developments,
which are consistent to what is being proposed at Oyster Point:11
• Smart Location– Redevelopment of previously developed properties (especially historically
contaminated brownfields) as new infill development within suburban and urban areas.
• Efficient Development– Compact mixed-use development that uses land efficiently by clustering
housing, jobs and retail together while preserving and expanding open spaces.
• Design with Nature– Designing development that is sensitive to its natural setting and protects
local environmental quality.
7 http://www.nielsen.com/content/dam/nielsenglobal/apac/docs/reports/2014/Nielsen-Global-Corporate-Social-Responsibility-
Report-June-2014.pdf
8 The survey consisted of 746 employees split equally among six countries: three developed (U.S., U.K. and Germany) and three
emerging market countries (China, India and Brazil), and across 20 industries
9 http://www.bain.com/about/press/press-releases/employee-sustainability-study-press-release.aspx
10 https://www.unpri.org/download_report/13715
11 https://www.nrdc.org/sites/default/files/citizens_guide_LEED-ND.pdf
Page 9
• Connected Neighborhoods– Multi-modal transportation systems that connect new development
efficiently minimize vehicle miles traveled (particularly by single occupancy vehicles) and
promote the use of public transit, cycling and walking.
According to numerous professional publications and analyses, suburban development needs to feature
compact, walkable mixed-use communities (a.k.a. smart growth developments) in order to remain
economically competitive. Quality of life, vibrant communities and transportation choices are no longer
simply nice add-ons; they are essential to economic competitiveness and growth:
• [T]he configuration of the suburbs is not standing still… exhibit[ing] many of the attributes of an
18-hour city. These are typically in metro areas where close-in suburbs can both access center-
city job growth and act as employment nodes in their own right…. Three out of four millennials
preferred such close-in (within 20 minutes of the city) locations. [W]ith interest in shorter
commutes and general walkability growing, here is where infrastructure improvement meets the
18-hour city and the densifying suburb. Places that address this intersection well will trend
upward. Places that don’t will be competitively disadvantaged.12
• Walkability is no longer something that is merely nice to have or a luxury; it is a key to
economic competitiveness…. A Transportation for America survey shows that 80 percent of 18-
to 34-year-olds want to live in walkable neighborhoods….Walkability even has a role in the
innovation and startup economy, with a majority of venture capital going to center cities or
walkable suburbs. Even the CEO of Twitter and other tech players are talking about the appeal of
an urban campus.13
• Economic development now depends on building great places that draw and anchor talent.
Quality of life, vibrant communities, and transportation choices are no longer simply nice add-
ons; they are essential to economic growth and prosperity in communities large and small.14
• Unlike the old distinction of city and suburbs, “what applies today is whether it’s walkable
urban.”15
• Companies, employees, and residents are looking for a dynamic and stimulating environment
to live and work, and suburbs aren’t typically that, so they’re looking for suburbs that are
already that way or are repositioning themselves…. Desirable communities make it easy to get
where you want to without a car. Biking and walking infrastructure “is the first amenity we put in
new communities.”16
12 http://uli.org/wp-content/uploads/ULI-Documents/Emerging-Trends-in-Real-Estate-United-States-and-Canada-
2016.pdf
13 https://urbanland.uli.org/sustainability/houston-economic-case-walkability/
14http://t4america.org/2016/12/14/helping-governors-save-money-and-attract-talent-through-a-fresh-approach-to-
transportation/
15 Christopher Leinberger, chair of the Center for Real Estate and Urban Analysis at George Washington University.
https://urbanland.uli.org/development-business/making-investment-case-smarter-urban-growth/
16 Assembled from quotes by developers in article. https://urbanland.uli.org/economy-markets-trends/open-space-
walkability-multifamily-future-suburbs/
Page 10
Businesses and residents are willing to pay more for property in walkable neighborhoods that offer
urban amenities such as a mix of retail and land uses including employment, housing, and
entertainment. Premiums ranged from 5 percent to more than 100 percent depending on product
type and area characteristics.
• Compact, walkable development projects, especially those with good transit access, have an
established record of generating higher rents and sales prices for developers and investors
because buyers are willing to pay a premium for them.17
• Economic research demonstrates mixed-use development that promotes a walkable built
environment can…increase private investment, lead to higher property values, promote tourism,
and support the development of a good business climate.18
• Research on WalkUPs in the Boston metropolitan area indicates, on average, all of the product
types studied—including office, retail, hotel, rental apartments, and for-sale housing—have
higher values per square foot in walkable urban places than in low-density drivable locations.
Price premiums of 20 to 134 percent per square foot indicate the pent-up demand for walkable
urbanism.19
• Research on Boston WalkUPs also indicates a substantial shift towards walkable urban
development for office and associated value premiums. (The 2014 valuation premium for office
was 134 percent compared to drivable sub-urban areas.)20 The WalkUPs study for Washington
D.C. demonstrated similar findings.21
People and businesses are willing to pay more to be located near a nice park or public space.
Premiums from open space improvements ranged from 3 percent to 15 percent. Water views have
similarly been found to enhance property values between 5 and 130 percent depending on
proximity and type of water environment:
• Based on a review of more than 20 research studies (one of which compiled results from 30
studies22), premiums from open space improvements ranged from 3 percent to 15 percent.23
• Although the main criteria for choosing office space consists of geographic location, proximity to
transport links and cost, access to open spaces ranks fifth and is deemed more important than
amenities and building aesthetics when choosing a commercial property.24
17 https://www.epa.gov/smartgrowth/smart-growth-and-economic-success-benefits-real-estate-developers-investors-
business-and
18 http://www.completecommunitiesde.org/planning/landuse/mixed-use-benefits/
19 “The WalkUP Wake-Up Call: Boston”. Chris Leinberger. The George Washington University School of Business.
http://old.smartgrowthamerica.org/documents/walkup-wake-up-call-boston.pdf
20 Ibid.
21 “The WalkUP Wake-Up Call: DC”. Chris Leinberger. The George Washington University School of Business.
http://old.smartgrowthamerica.org/documents/Walkup-report.pdf
22 https://www.tpl.org/measuring-economic-value-city-park-system#sm.0001ic2wav1deuei1uykxe2fwngsb
23 http://transbaycenter.org/uploads/2014/01/TJPA_Doc_FinalDraft_131218_lores.pdf
24 https://www.gensler.com/uploads/document/220/file/Open_Space_03_08_2011.pdf
Page 11
• In a survey of 350 real estate developers, investors, consultants and public sector workers across
Europe, 95 percent of respondents not only believe that good open space adds value to
commercial property, but are also prepared to pay at least 3 percent premium to be in close
proximity to it.25
• Economic research indicates that views of water enhance property values by between 5 and
130 percent depending on proximity and type of water environment.26
Walkability enhances economic performance, and active transportation infrastructure such as
trails and bike lanes not only enhance the attractiveness of developments but also add value to
adjacent properties:
• More walkable places perform better economically. For neighborhoods within metropolitan
Washington, as the number of environmental features that facilitate walkability and attract
pedestrian increase, so do office, residential, and retail rents, retail revenues, and for-sale
residential values.27
• Trails can generate business impacts and create new jobs by attracting visitors, especially
overnight visitors. As more communities create distinct destinations that are also attractive
places to live and work, a growing body of research shows how trails can contribute to their
success.28
• Property owners frequently see higher property values along improved bikeways. A 2011 study by
the GreenSpace Alliance and the Delaware Valley Regional Planning Commission found that
properties within a quarter-mile of the Radnor Trail (a 2.4-mile trail in Radnor Township, PA)
were valued on average at about $69,000 higher than other properties further away.29
• Active transportation infrastructure can catalyze real estate development. Trails, bike lanes, and
bicycle-sharing systems can improve pedestrian and bicyclist access to employment centers,
recreational destinations, and public transit facilities, thereby enhancing the attractiveness of
developments along active transportation corridors.30
• The Center for Transit Oriented Development (CTOD) examined a range of studies to determine
the impact of transit investments on real estate values and found that transit premiums ranged
from a few percent to over a 150 percent increase. The increases in property values near transit
were most dramatic for office and retail spaces.31
25 Ibid.
26 https://www.zillow.com/research/what-is-waterfront-worth-7540/
27 https://www.brookings.edu/research/walk-this-waythe-economic-promise-of-walkable-places-in-metropolitan-
washington-d-c/
28 https://headwaterseconomics.org/wp-content/uploads/trails-library-business-impacts-overview.pdf
29 “Active Transportation and Real Estate: the Next Frontier”. ULI. http://uli.org/wp-content/uploads/ULI-
Documents/Active-Transportation-and-Real-Estate-The-Next-Frontier.pdf
30 http://uli.org/wp-content/uploads/ULI-Documents/Active-Transportation-and-Real-Estate-The-Next-Frontier.pdf
31 http://www.apta.com/resources/statistics/Documents/NewRealEstateMantra.pdf
Page 12
• The benefits of having good connectivity to the rest of the region...get capitalized into the market
value of land....Where market conditions are conducive and pro-development policies are in
place... land-value impacts can be substantial.32
Based on the economic research and literature summarized above, the proposed design, development
features and extensive capital improvements planned for Oyster Point will enhance the value of existing
development in Oyster Point by doing the following:
• The proposed smart growth development of Oyster Point, featuring compact, sustainably-
designed mixed-use development, will enhance Oyster Point’s economic competitiveness and its
attractiveness to businesses who increasingly understand that corporate sustainability policies are
a key to attracting and retaining top talent.
• New plazas, parks and open space, along with an enhanced trail system and adjacent recreational
amenities, will encourage active use by employees and residents, promote retail activity, and
generate value premiums (of 3% or more) to surrounding properties.
• The proposed multi-modal transportation upgrades to the Oyster Point circulation system and its
extensive trail system will improve its transit access, walkability and bike access, which
individually have been shown to generate rent and valuation premiums of three percent or more.
• The new gateway entrance with sweeping views of San Francisco Bay and the expanded open
space along the shoreline, and the eco-friendly design features of the new development, will
substantially upgrade Oyster Point’s identity and its corporate sustainability brand.
• The planned investment of about $70 million in gateway, open space, trail and multi-modal
transportation improvements will be equal to about $18 per building SF across the approximately
3.8 million square feet (SF) of existing and new development that is envisioned at build-out.
• Significant new economic activity, catalyzed by new spending from about 4,000 employees and
3,500 new residents at build-out.33
• In summary, the planned new development and associated amenities will bring new activity,
vibrancy and improved accessibility, qualities that will drive value premiums in an area with
limited current prestige and attractiveness.
The financial performance and ultimate value of an office property is primarily determined by several key
factors: rental rates, occupancy levels34, annual operating costs (and how much may be passed through to
tenants) and a measurement of the risk and cost of capital, which is often translated into a capitalization
rate (or cap rate). Based on the project information and economic research presented above, Seifel
Consulting concludes that the smart growth development of Oyster Point along with the associated capital
improvements will improve Oyster Point’s economic competitiveness and increase property values as the
result of higher rents, lower vacancy rates and cap rate compression, due to its sustainability features and
increased attractiveness to business tenants.
Table 2 presents a financial pro forma analysis that demonstrates the economic benefits and valuation
premiums from the proposed smart growth development and improvements at Oyster Point. As shown in
this table, the current asking rents for the existing properties (Oyster Point Marina Plaza) are currently
about ten percent (%) below average market rents for Class A office space in South San Francisco
32 Cervero, Robert. “Effects of Light and Commuter Rail Transit on Land Prices: Experiences in San Diego
County.” University of California, Berkeley. December 2003, pages 2 and 20.
33 Based on population and employment estimates provided by the City of South San Francisco consistent with those used in the
environmental review process of the proposed development.
34 Occupancy levels are the inverse of vacancy rates, i.e. 8 percent vacancy rate is equal to a 92 percent occupancy rate.
Page 13
($3.15 versus $3.53 per square foot per month) according to brokerage firms active in the area. Given the
economic research described above, we believe it is reasonable to assume the following potential
enhancements to financial performance for the existing properties:
• Rent increase of 3% above asking rents at Oyster Point Marina, which is still below average
market rents for Class A office space in South San Francisco.
• Modest decrease in assumed vacancy rates from 10% to 9%, which is still within the range of
vacancy rates reported by brokers active in the South San Francisco area.
• Modest cap rate compression, equivalent to a 5% decrease in assumed cap rates. When using the
higher end of the reported cap rates for Class A office space of 6%, this results in a cap rate that is
still above the average cap rate of 5.5% reported by IRR 2016 Viewpoint.
Table 2
Effect of CFD Special Tax on Oyster Point Marina Plaza Given Potential Premium Adjustments
Class A Office Space in South San Francisco (Per Building Square Foot)
Taking all of this into account, the economic benefits and value enhancements associated with the
proposed development and improvement of Oyster Point will likely offset the additional imposition of the
maximum Mello-Roos CFD special tax of $0.39 per building square foot and could provide additional
value enhancement to existing properties, as shown in Table 2.
Potential Premium Adjustments
Average
Market
Rent
Oyster Point
Marina Plaza:
Current
Asking Rents
3%
Increase in
Rent
Vacancy
Decrease to
9%
5%
Decrease in
Cap Rate
Office Rental Revenue (Q2 2017)
Monthly Lease Rate $3.53 $3.15 $3.24 $3.24 $3.24
Annual Lease Rate $42.32 $37.80 $38.93 $38.93 $38.93
Less: Vacancy Allowance $4.23 $3.78 $3.89 $3.50 $3.50
Effective Gross Rent (EGR)$38.09 $34.02 $35.04 $35.43 $35.43
Less: Operating Expenses $11.43 $10.21 $10.51 $10.63 $10.63
Less: CFD Special Tax $0.00 $0.00 $0.39 $0.39 $0.39
Net Operating Income $26.66 $23.81 $24.14 $24.41 $24.41
Cap Rate 5.50%5.50%5.50%5.50%5.23%
Capitalized Value (Rounded)$485 $433 $439 $444 $467
Percent Value Adjustment 1%3%8%
Cap Rate 6.00%6.00%6.00%6.00%5.70%
Capitalized Value (Rounded)$444 $397 $402 $407 $428
Percent Value Adjustment 1%3%8%
Key Pro Forma Assumptions
Average Market Rent:Based on average lease rents from Table 1.
Vacancy Rate:10%of lease revenues (and with adjustments)
Operating Expenses:30%of effective gross rent
Premium adjustments: Premium adjustments are made cumulatively across the three columns.
Note: Numbers may not calculate precisely due to rounding.
Source: CBRE, Cushman & Wakefield, Kidder Matthews, Seifel Consulting.
Page 14
F. Conclusion
In conclusion, Oyster Point is poised to transform into a sustainably designed, mixed use community.
The City of South San Francisco (City) and OPD will invest about $70 million in new capital
improvements throughout Oyster Point, which will provide upgraded access, open space and other
amenities to existing properties. This combined investment will increase the economic competitiveness of
Oyster Point and also generate economic benefits to surrounding properties, enhance property values and
increase rents according to numerous publications and academic research. The potential value premiums
from the smart growth design features of the planned new development and the associated amenities
would likely offset the additional imposition of the maximum Mello-Roos CFD special tax of $0.39 per
building square foot and could provide additional value enhancement to existing properties.
Exhibit 1
OVERALL SITE PLAN
Exhibit 2
OVERALL SITE PLAN
Exhibit 3
OYSTER POINT
MASTERPLAN PHASES
South San Francisco5
0 300
N
IIID + IVD
ID
IID
IC
IIC
C = City-owned
D = Developer-owned
Phases
IC
ID
IIC
IID
IIID + IVD
Design Schedule
2017
2017
Visioning 2017
TBD
2017
Construction Schedule
2017 - 2018
2018 - 2019
TBD
TBD
2018-2021 (PH IIID)
FUTURE
HOTEL
SITEFUTURE OPEN
SPACE / PARK
Ma
r
i
n
a
B
l
v
d
O
y
s
t
e
r
P
o
i
n
t
Oyster Point Blvd Gateway
B
l
v
d
Exhibit 4
0 300
N
LEGEND
VEHICULAR CIRCULATION
PROPOSED BAY TRAIL
PROPOSED TRAIL CONNECTION
EXISTING BAY TRAIL
*Additional North-South connection to be considered in future improvements.
EXISTING BRIDGE
South San Francisco6
OYSTER POINT
MASTERPLAN
CIRCULATION
0 300
N
Ma
r
i
n
a
B
l
v
d
Oy
s
t
e
r
P
o
i
n
t
B
l
v
d
Oyster Point Blv
d
Gateway
G
u
l
l
D
r
Exhibit 5
Exhibit 6
0 300
N
LEGEND
VEHICULAR CIRCULATION
PROPOSED BAY TRAIL
PROPOSED TRAIL CONNECTION
EXISTING BAY TRAIL
*Additional North-South connection to be considered in future improvements.
EXISTING BRIDGE
South San Francisco6
OYSTER POINT
MASTERPLAN
CIRCULATION
0 300
N
Ma
r
i
n
a
B
l
v
d
Oy
s
t
e
r
P
o
i
n
t
B
l
v
d
Oyster Point Blv
d
Gateway
G
u
l
l
D
r
Exhibit 7
Exhibit 8
OYSTER POINT DEVELOPMENT OYSTER POINT DEVELOPMENT LLC | SOM | STEINBERG | JAMES CORNER FIELD OPERATIONS
A dream place to live
by the water ..
Exhibit 9
South San Francisco8
OYSTER POINT
PHASE IC
BIKE AND PEDESTRIAN
CIRCULATION
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Future Open Space/Park
Parking (139 Spaces)
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DESIGNATED BIKE CIRCULATION
PEDESTRIAN CIRCULATION
PEDESTRIAN CROSSING
BIKE CROSSING
LEGEND
Exhibit 10
PARKVIEW – BOULEVARD
Exhibit 11
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OYSTER POINT DEVELOPMENT OYSTER POINT DEVELOPMENT LLC | SOM | STEINBERG | JAMES CORNER FIELD OPERATIONS
PUBLIC REALM –EAST-WEST CONNECTOR
OYSTER POINT DEVELOPMENT SOUTH SAN FRANCISCO | 2017.07.18 OYSTER POINT DEVELOPMENT LLC | SOM | STEINBERG | JAMES CORNER FIELD OPERATIONS
Exhibit 14
OYSTER POINT DEVELOPMENT OYSTER POINT DEVELOPMENT LLC | SOM | STEINBERG | JAMES CORNER FIELD OPERATIONS
PUBLIC REALM –THE MEWS
OYSTER POINT DEVELOPMENT SOUTH SAN FRANCISCO | 2017.07.18 OYSTER POINT DEVELOPMENT LLC | SOM | STEINBERG | JAMES CORNER FIELD OPERATIONS
Exhibit 15
OYSTER POINT DEVELOPMENT OYSTER POINT DEVELOPMENT LLC | SOM | STEINBERG | JAMES CORNER FIELD OPERATIONS
III. RENDERINGS –MARINA NORTH WATERFRONT
Exhibit 16
OYSTER POINT DEVELOPMENT OYSTER POINT DEVELOPMENT LLC | SOM | STEINBERG | JAMES CORNER FIELD OPERATIONS
III. RENDERINGS -URBAN PLAZA
Exhibit 17
OYSTER POINT DEVELOPMENT OYSTER POINT DEVELOPMENT LLC | SOM | STEINBERG | JAMES CORNER FIELD OPERATIONS
III. RENDERINGS –PARK VIEW WATERFRONT
Exhibit 18
COMMUNITY FACILITIES
DISTRICT REPORT
City of South San Francisco
Community Facilities District
No. 2017-01
(Public Services and Facilities)
November 15, 2017
Associates, Inc. &
DAVID
TAUSSIG
Public Finance
Public Private Partnerships
Urban Economics
Clean Energy Bonds
Newport Beach
San Jose
San Francisco
Riverside
Dallas
Houston
COMMUNITY FACILITIES DISTRICT REPORT
MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO. 2017-01
(PUBLIC SERVICES AND FACILITIES)
Prepared for
CITY OF SOUTH SAN FRANCISCO
400 Grand Avenue
South San Francisco, California 94080
Prepared by
DAVID TAUSSIG & ASSOCIATES, INC.
1302 Lincoln Avenue, Ste 204
San Jose, California 95125
TABLE OF CONTENTS
Section Page
I. INTRODUCTION..............................................................................................................1
II. PROJECT DESCRIPTION ..............................................................................................2
III. DESCRIPTION AND ESTIMATED COST OF PUBLIC FACILITIES ....................3
A. Description of Proposed Public Facilities ....................................................................3
B. Estimated Cost of Proposed Public Facilties ...............................................................3
IV. DESCRIPTION AND ESTIMATED COST OF PUBLIC SERVICES........................5
A. Description of Proposed Public Services .....................................................................5
B. Estimated Cost of Proposed Public Services ...............................................................5
V. INCIDENTAL EXPENSES ..............................................................................................7
A. No Bond Sales..............................................................................................................7
B. Incidental Expenses to be Included in the Annual Levy of Special Taxes ..................7
VI. RATE AND METHOD OF APPORTIONMENT ..........................................................8
VII. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT ....................................9
VIII. GENERAL TERMS AND CONDITIONS ....................................................................10
A. Substitution of Facilities ............................................................................................10
B. Substitution of Services .............................................................................................10
APPENDICES
Appendix A Rate and Method of Apportionment
Appendix B CFD No. 2017-01 Boundary Map
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 1
I. INTRODUCTION
WHEREAS, under the Mello-Roos Community Facilities Act of 1982, Chapter 2.5 of Part 1 of
Division 2 of Title 5, commencing at Section 53311, of the California Government Code (the
“Act”), this City Council is authorized to establish a community facilities district and to act as its
legislative body; and
WHEREAS, this City Council, having previously adopted Resolution No. 17-981 expressing an
intention to form a community facilities district, now desires to proceed with the establishment
of such community facilities district to finance costs of certain public services and public
facilities required to meet the demands of development of lands in the City; and
This community facilities district being City o f South San Francisco Community Facilities
District No. 2017-01 (Public Services and Facilities) shall hereinafter be referred to as:
“CFD No. 2017-01”; and
RESOLUTION NO. 17-981 RESOLUTION OF INTENTION TO ESTABLISH A
COMMUNITY FACILITIES DISTRICT CITY OF SOUTH SAN FRANCISCO COMMUNITY
FACILITIES DISTRICT NO. 2017-01 (PUBLIC SERVICES AND FACILIT IES) (hereinafter
referred to as the “Resolution of Intention”), was adopted by the City Council on October 11,
2017.
WHEREAS, the Resolution of Intention, in its Section 8, directed:
The City Manager (or deputy or designee thereof) is hereby directed to study the proposed
Services and Facilities and to make, or cause to be made, and file with the City Clerk, a report in
writing (the “CFD Report”), which shall be a part of the record of the public hearing hereinafter
specified and which shall present the following:
1) A description of the Services and Facilities that will be required to adequately meet
the needs of CFD No. 2017-01;
2) An estimate of the fair and reasonable cost of the Services and Facilities and
incidental expenses in connection therewith, and all other related costs;
NOW, THEREFORE, David Taussig & Associates, Inc. does hereby submit the Report.
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 2
II. PROJECT DESCRIPTION
CFD No. 2017-01 encompasses approximately 75.16 gross acres of land adjacent to the Oyster
Point Channel in the City of South San Francisco (the “City’). CFD No. 2017-01 is located
generally north of Forbes Boulevard and generally south of the Brisbane Marina, generally west
of the Oyster Point Channel Basins, and generally east of Bayshore Freeway. A map showing
this territory is provided as Appendix B of this report.
Ownership and the projected use for the parcels can be found below in Table 1.
Table 1 – Parcels and Intended Use
CFD No. 2017-01 Parcels
Owner APN/Lot No. Intended Use
City of South San Francisco Parcel 5 Open Space/Recreation/Commercial Retail
Development
Parcel 6 Hotel
Oyster Point Development, LLC
LLA Parcel A
Proposed Oyster Point Project, an integrated
office, R&D, and mixed-use development.
015-010-240
Parcel 1
Parcel 3
Parcel 4
Kashiwa Fudosan America Inc 015-010-290 Commercial Office
015-010-290 Commercial Office
Within the CFD, a Special Tax1 shall be levied only on Developed Property as set forth in the
Rate and Method of Apportionment (“RMA”), attached herewith as Appendix A.
1 Please note that all capitalized terms used herein, unless otherwise indicated, shall have the meanings defined in
the Rate and Method of Apportionment for CFD No. 2017 -01.
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 3
III. DESCRIPTION AND ESTIMATED COST OF FACILITIES
A. Description of Proposed Public Facilities
A community facilities district (“CFD”) may provide for the purchase, construction,
expansion, or rehabilitation of any real or tangible property, including p ublic facilities
and infrastructure improvements, with an estimated useful life of five (5) years or longer.
It is intended that CFD No. 2017-01 will be authorized to finance all or a portion of the
costs of any of the following improvements to be owned by the City, including but not
limited to, the replacement and renovation of the publicly owned fuel dock and related
appurtenances located at the Oyster Point Marina, and the related publicly owned fueling
system consisting of fuel lines, underground gasoline and diesel storage tanks currently
located at the intersection of East Basin Road and Marina Boulevard, and related
appurtenances, and, if circumstances so warrant as determined by the City, removal and
remediation of all or a portion of the fuel system.
CFD No. 2017-01 may also finance any of the following: (i) appurtenances to and
improvements related to the Authorized Facilities, (ii) related utility lines, pipes, and
conduits; acquiring rights-of-way (including any right-of-way intended to be dedicated by
the recording of a final map), (iii) design, architecture, engineering, and planning, (iv)
any environmental review, studies, remediation, and mitigation, (v) traffic studies,
surveys, geotechnical studies, soils testing, or other studies related to the Authorized
Facilities, (vi) permits, plan check, and inspection fees, (vii) insurance, legal, and related
overhead costs, (viii) project management, coordination, and supervision, and (ix) the
expansion, improvement, or rehabilitation of any of the Authorized Facilities, and to
reimburse the City or any third parties for advances made to purchase, construct, expand,
improve, or rehabilitate any of the Authorized Facilities.
CFD No. 2017-01 may also finance reimbursement of costs related to the formation of
CFD No. 2017-01 advanced by the City or any other party, as well as reimbursement of
any costs advanced by the City or any other part, for facilities, capital related fees, or
other purposes of CFD No. 2017-01.
The preceding facilities are all facilities which the legislative body creating CFD No.
2017-01 or another public agency is authorized to own, construct, operate, provide, or
finance, and which are required to adequately meet the needs of development expected to
occur within CFD No. 2017-01. The Special Taxes required to pay for the construction
and acquisition of said facilities will be apportioned as described in the Rate and Method
of Apportionment for CFD No. 2017-01.
B. Estimated Costs of Proposed Public Facilities
The maximum special taxes that could be levied in CFD No. 2017-01 for Authorized
Facilities presently would be $0.07 per square foot of Residential Floor Area, and $0.07
per square foot of Non-Residential Floor Area; however, this amount is subject to annual
escalation. The actual amount to be levied will be determined by the City Council on an
annual basis. The maximum total collections of the Special Tax for Authorized Facilities
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 4
Component Estimated
Repair Cost
Estimated Replacement
Cost (incl. Demolition)1
Floating Dock N/A $769,000
Pay Shack N/A N/A
Flotation N/A N/A
Piles and Pile Guides N/A $215,000
Utilities: Electrical $5,000 $82,000
Utilities: Water & Fire N/A $26,000
Utilities: Wastewater N/A $37,000
Fuel System N/A $780,200
Approach Structure: General N/A $185,000
Approach Structure: Girders $20,000 N/A
Gangway: Structure N/A $85,000
Gangway: Walking Surface $4,000 N/A
Subtotal Construction $29,000 $2,179,200
Additional Soft Costs $40,000 $281,200
Additional Admin Expenses N/A $289,600
Grand Total $69,000 $2,750,000
1. Cost estimates derived from Condition Assessment Summary dated May 26, 2017 . All estimated
costs are in 2017 dollars and include overhead and contingency.
(plus administrative costs) is limited to $2,750,000, and the levy of the Special Tax for
Authorized Facilities will cease once the $2,750,000 in cumulative costs have been
collected, or unless no longer required to pay for Authorized Facilities as determ ined at
the discretion of the City.
Itemized cost estimates for the proposed public facilities can be found below in Table 2.
Table 2 – Projected Fuel Dock Costs
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 5
IV. DESCRIPTION AND ESTIMATED COST OF SERVICES
A. Description of Proposed Public Services
The services authorized to be funded by the CFD and paid by the Special Taxes levied
within the CFD (the “Authorized Services”) are described below. For purposes of the
CFD, the Authorized Services shall incorporate and have the meaning given to the term
“services” in section 53313 of the Mello-Roos Community Facilities Act of 1982.
(a) Police protection services.
(b) Maintenance and lighting of parks, parkways, streets, roads, and open space,
including without limitation:
• Roadway maintenance,
• Streetlight maintenance and operations,
• Traffic signal maintenance and operations,
• Parks, waterfront, and Bay Trail maintenance,
• Landscaping, parkway, median and open space maintenance, including erosion
prevention,
• Public surface parking maintenance, and
• Operation and maintenance of public restroom buildings.
(c) Operation and maintenance of storm drainage systems.
The cost of the Authorized Services shall include all related administrative costs and
expenses, necessary utility (water and electricity) costs, and related reserves for
replacement of vehicles, equipment, and facilities.
CFD No. 2017-01 shall only fund the above listed services only to the extent that they are
in addition to existing services provided within the boundaries of CFD No. 2017-01
before creation of the CFD. The Special Taxes required to fund the annual costs of those
public services will be apportioned as described in the Rate and Method of
Apportionment of the Special Tax for CFD No. 2017-01.
B. Estimated Costs of Proposed Public Services.
The intent of the CFD is to fund the anticipated revenue shortfall in providing the public
services listed above. The maximum Special Taxes that could be levied in CFD No.
2017-01 to fund Authorized Services presently would be $0.32 per square foot of
Residential Floor Area, and $0.32 per square foot of Non-Residential Floor Area;
however, this amount is subject to annual escalation. The actual amount to be levied will
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 6
TOTAL AREAS
Phase I 947,293$
Phase IIC 50,907$
SUBTOTAL1 998,200$
Administrative Fees (5% of subtotal)49,910$
Legal (5% of subtotal)49,910$
Operating Reserves Fund (10% of subtotal)99,820$
TOTAL $ 1,197,840
1. Cost estimates for enhanced maintenance areas provided by City staff.
OPD Phases I and IIC - Enhanced Maintenance Areas
be determined by the City Council on an annual basis. Cost estimates by enhanced
maintenance areas are detailed in Table 3 below.
C. Estimated Costs of Administering CFD No. 2017-01
While the actual costs of administering CFD No. 2017-01 may vary, it is anticipated that
the amount of Special Taxes which can be collected within CFD No. 2017-01 will be
sufficient to fund at least $25,000 in annual administrative expenses.
Table 3 – Projected Public Services Costs
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 7
V. INCIDENTAL EXPENSES
A. No Bond Sales
CFD No. 2017-01 is not authorized to sell bonds.
B. Incidental Expenses to be Included in the Annual Levy of Special Taxes
Pursuant to Section 53340 of the Act, the proceeds of any Special Tax may onl y be used
to pay, in whole or part, the cost of providing public facilities, services, and incidental
expenses. As defined by the Act, incidental expenses include, but are not limited to, the
cost of planning and designing public facilities to be financed, including the cost of
environmental evaluations of those facilities. As there is no intention or authorization for
CFD No. 2017-01 to sell bonds, the incidental expenses to be funded through Special
Taxes shall be limited to the costs associated with the creation of the CFD, determination
of the amount of Special Taxes, collection of Special Taxes, payment of Special Taxes,
or costs otherwise incurred in order to carry out the authorized purposes of the CFD.
While the actual cost of administering CFD No. 2017-01 may vary, it is anticipated that
the amount of Special Taxes that can be collected will be sufficient to fund the CFD ’s
annual administrative expenses.
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 8
VI. RATE AND METHOD OF APPORTIONMENT
Pursuant to Section 53325.3 of the Act, the tax imposed in a CFD “is a special tax and not a
special assessment, and there is no requirement that the tax be apportioned on the basis of benefit
to any property.” The Special Tax “may be based on benefit received by parcels of real property,
the cost of making facilities or authorized services available to each parcel, or other reasonable
basis as determined by the legislative body,” although the Special Tax may not be apportioned
on an ad valorem basis pursuant to Article XIIIA of the California Constitution. The adopted
Rate and Method of Apportionment (“RMA”), attached herewith as Appendix A, provides
information sufficient to allow each property owner within CFD No. 2017-01 to estimate the
maximum annual Special Tax he or she will be required to pay.
The RMA requires that all Assessor’s Parcels within CFD No. 2017-01 be categorized as
Developed Property, Undeveloped Property, Property Owner Association Property, or Public
Property. The principal assumption inherent in the calculation of Special Taxes as defined in the
RMA is that the level of budgetary shortfall impacting the City is the primary result of
development within the City. These determinations are based on an evaluation of the City’s
recurring costs and revenues. No Special Taxes will be levied on Undeveloped Property,
Property Owner Association Property, or Public Property.
Each Fiscal Year, the Special Tax levy shall be calculated in an amount sufficient to cover the
costs required to meet the financial needs for the proposed Authorized Services and Authorized
Facilities, but not to exceed the maximum Special Tax for Developed Property. The maximum
annual Special Tax for Authorized Services (designated as Component A within the RMA) that
can be levied within the CFD on Developed Property shall increase annually by the lesser of the
change in the San Francisco Urban Consumer Price Index during the twelve (12) months ending
in December of the Fiscal Year prior to the Fiscal Year in which the Special Tax is being levied,
or five percent (5.00%).
The maximum annual Special Tax for Authorized Facilities (designated as Component B within
the RMA) that can be levied within the CFD on Developed Property shall increase annually by
two percent (2.00%). The RMA specifies that the maximum total collections of the Special Tax
for Authorized Facilities (plus administrative costs) is limited to $2,750,000, and the levy of the
Special Tax for Authorized Facilities will cease once the $2,750,000 in cumulative costs has
been collected, or unless no longer required to pay for Authorized Facilities as determined at the
discretion of the City. Commencing with Fiscal Year 2017-18 and for each following fiscal
year, the City Council shall levy the annual special tax proportionately for each Assessor’s
Parcel of Developed Property at up to 100% of the applicable maximum Special Tax, until the
amount of special taxes equals the special tax requirement.
In order to establish the Maximum Special Tax rates for CFD No. 2017-01 as set forth in the
Rate and Method of Apportionment, David Taussig & Associates, Inc. has relied on information
regarding land-use types, geographic location, and Taxable Property provided to it by others.
David Taussig & Associates, Inc. has not independently verified such data and disclaims
responsibility for the impact of inaccurate data, if any, on the Rate and Method of
Apportionment for CFD No. 2017-01, including the inability to meet the financial obligations
within CFD No. 2017-01.
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 9
VII. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT
The amended boundaries of CFD No. 2017-01 include all land on which the Special Taxes may
be levied. A reduced scale amended map showing the boundaries of CFD No. 2017-01 is
provided as Appendix B. The amended full-scale map is on file with the San Mateo Recorder’s
Office and was recorded on ______________________ in the San Mateo Recorder’s Office at
Book _____ of Maps of Assessment and Community Facilities Districts at Pages
______________________ (Instrument No. 2017-__________). Furthermore, the original
boundary map that will be superseded by the amended boundary map in Appendix B is on file
with the San Mateo Recorder’s Office and was accepted on October 24, 2017 and recorded at
10:51AM on October 27, 2017 in the San Mateo Recorder’s Office at Book 18 of Maps of
Assessment and Community Facilities Districts at Pages 50 (Instrument No. 2017-900132).
The boundaries of CFD No. 2017-01 were modified to exclude Parcel 2 as noted on Parcel Map
No. 17-0002 (Oyster Point) recorded on September 25, 2017 in Book 83 of Parcel Maps at Page
50 through 54 as File No. 2017-900124 in the official records of the County of San Mateo.
Parcel 2 is public right-of-way.
City of South San Francisco November 15, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 10
VIII. GENERAL TERMS AND CONDITIONS
A. Substitution of Facilities
The descriptions of the Authorized Facilities, as set forth herein, are general in their
nature. The City will determine the final nature, location, and costs of improvements and
facilities upon the preparation of final plans and specifications. The final plans may
show substitutes, in lieu of modifications to the proposed work in order to accomplish the
work of improvement, and any such substitution shall not be a change or modification in
the proceedings as long as the public facilities provide a service substantially similar to
that as set forth in this Report.
B. Substitution of Services
The description of the Authorized Services, as set forth herein, is general in their nature.
The final nature and location of the specific services to be funded by the CFD will be
determined by the City Council. The actual services funded may show substitutes, in lieu
or modifications to the proposed services that benefit the CFD, and any such substitution
shall not be a change or modification in the proceedings as long as the services provided
are of a type substantially similar to that as set forth in this Report.
APPENDIX A
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO. 2017-01
(PUBLIC SERVICES AND FACILITIES)
RATE AND METHOD OF APPORTIONMENT
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 1
RATE AND METHOD OF APPORTIONMENT FOR
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO. 2017-01
(PUBLIC SERVICES AND FACILITIES)
CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATEO,
STATE OF CALIFORNIA
A Special Tax as hereinafter defined shall be levied on all Assessor’s Parcels of Taxable Property
in City of South San Francisco Community Facilities District No. 2017-01 (Public Services and
Facilities), City of South San Francisco, County of San Mateo, State of California (“CFD No.
2017-01”) and collected each Fiscal Year commencing in Fiscal Year 2017-18, in an amount
determined by the City Council through the application of the appropriate Special Tax for
“Developed Property,” as described below. All of the real property in CFD No. 2017-01, unless
exempted by law or by the provisions hereof, shall be taxed for these purposes, to the extent and
in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre” or “Acreage” means the land area of an Assessor’s Parcel as shown on an
Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the
land area shown on the applicable final subdivision map, parcel map, condominium plan,
record of survey, or other map or plan recorded with the County. The square footage of an
Assessor’s Parcel is equal to the Acreage of such parcel multiplied by 43,560.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being
Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California.
“Administrative Expenses” means the following actual or reasonably estimated costs
directly related to the administration of CFD No. 2017-01: the costs of computing the
Special Taxes and preparing the annual Special Tax collection schedules (whether by the
City or any designee thereof or both); the costs of collecting the Special Taxes (whether by
the City or otherwise); the costs to the City, CFD No. 2017-01, or any designee thereof of
complying with CFD No. 2017-01 or obligated persons disclosure requirements associated
with the Act; the costs associated with preparing Special Tax disclosure statements and
responding to public inquiries regarding the Special Taxes; the costs to the City, CFD No.
2017-01, or any designee thereof related to an appeal of the Special Tax; and the City’s
annual administration fees and third party expenses. Administrative Expenses shall also
include amounts estimated or advanced by the City or CFD No. 2017-01 for any other
administrative purposes of CFD No. 2017-01, including attorney’s fees and other costs
related to commencing and pursuing to completion any foreclosure of delinquent Special
Taxes.
“Assessor’s Parcel” or “Parcel” means a lot or parcel shown on an Assessor’s Parcel Map
with an assigned Assessor’s Parcel number.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 2
“Assessor’s Parcel Map” means an official map of the Assessor of the County designating
parcels by Assessor’s Parcel number.
“Authorized Facilities” means those facilities eligible to be financed by CFD No. 2017-
01, as defined in the Resolution of Formation.
“Authorized Services” means those services eligible to be funded by CFD No. 2017-01,
as defined in the Resolution of Formation and authorized to be financed by CFD No. 2017-
01 pursuant to Section 53313 and Section 53313.5 of the Act. CFD No. 2017-01 shall
finance Authorized Services only to the extent that they are in addition to those provided
in the territory of CFD No. 2017-01 before CFD No. 2017-01 was created and such
Authorized Services may not supplant services already available within CFD No. 2017-01
when CFD No. 2017-01 was created.
“Building Permit” means a permit issued by the City or other governmental agency for
the construction of a residential or non-residential building on an Assessor’s Parcel.
“CFD Administrator” means an official of CFD No. 2017-01, or any designee thereof,
responsible for determining the Special Tax Requirement for Municipal Services and the
Special Tax Requirement for Fuel System Replacement and Maintenance calculations and
providing for the levy and collection of the Special Taxes.
“CFD No. 2017-01” means City of South San Francisco Community Facilities District
No. 2017-01 (Public Services and Facilities), City of South San Francisco, County of San
Mateo, State of California.
“City” means the City of South San Francisco, California.
“City Council” means the City Council of the City.
“County” means the County of San Mateo.
“Component A” means the Special Tax Component to be levied in each Fiscal Year on
each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement for
Municipal Services.
“Component A Maximum” means the Component A maximum, determined in
accordance with Section C below that can be levied by the City in any Fiscal Year on any
Assessor’s Parcel of Taxable Property.
“Component B” means the Special Tax Component to be levied in each Fiscal Year on
each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement for Fuel
System Replacement and Maintenance.
“Component B Maximum” means the Component B maximum, determined in
accordance with Section C below that can be levied by the City in any Fiscal Year on any
Assessor’s Parcel of Taxable Property.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 3
“Component Maximum” means the Component A Maximum and/or Component B
Maximum, as applicable.
“Developed Property” means, for each Fiscal Year, all Assessor’s Parcels for which a
Building Permit was issued on or before May 1 of the Fiscal Year preceding the Fiscal
Year for which the Special Taxes are being levied.
“Fiscal Year” means the period starting July 1 and ending on the following June 30.
“Non-Residential Floor Area” means the total building square footage of the non-
residential building(s) or the non-residential portion of a building with both residential and
non-residential areas located on an Assessor’s Parcel of Developed Property, measured
from outside wall to outside wall, not including space devoted to stairwells, public
restrooms, lighted courts, vehicle parking and areas incident thereto, and mechanical
equipment incidental to the operation of such building. The determination of Non-
Residential Floor Area shall be made by reference to the Building Permit(s) issued for such
Assessor’s Parcel and/or to the appropriate records kept by the City’s Building Division,
as reasonably determined by the CFD Administrator.
“Non-Residential Property” means any and each Assessor’s Parcel of Developed
Property for which a Building Permit permitting the construction of one or more non-
residential units or facilities has been issued by the City or some other governmental
agency.
“Proportionately” means, for Component A, the ratio of Component A to Component A
Maximum is equal for all Assessor’s Parcels of Developed Property and, for Component
B, the ratio of Component B to Component B Maximum is equal for all Assessor’s Parcels
of Developed Property.
“Property Owner Association Property” means, for each Fiscal Year, any Assessor’s
Parcel within the boundaries of CFD No. 2017-01 that is owned by or irrevocably offered
for dedication to a property owner association, including any master or sub-association,
not including any such property that is located directly under a residential or non-residential
structure.
“Public Property” means, for each Fiscal Year, (i) any property within the boundaries of
CFD No. 2017-01 that is owned by or irrevocably offered for dedication to the Federal
government, the State, the City, or any other public agency; provided however that any
property leased by a public agency to a private entity and subject to taxation under Section
53340.1 of the Act, as such section may be amended or replaced, shall be taxed and
classified in accordance with its use; or (ii) any property within the boundaries of CFD No.
2017-01 that is encumbered by an unmanned utility easement making impractical its
utilization for other than the purpose set forth in the easement.
“Rate and Method of Apportionment” or “RMA” means this Rate and Method of
Apportionment of Special Tax.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 4
“Residential Floor Area” means all of the square footage of living area within the
perimeter of a residential structure located on Residential Property, not including any
carport, walkway, garage, overhang, patio, enclosed patio, public areas and building
administrative areas such as the lobbies, amenities for resident use only, homeowner
association and building management offices or similar area and not including any Non-
Residential Floor Area. The determination of Residential Floor Area shall be made by
reference to the Building Permit(s) issued for such Assessor’s Parcel and/or to the
appropriate records kept by the City’s Building Division, as reasonably determined by the
CFD Administrator.
“Residential Property” means all Assessor’s Parcels of Developed Property for which a
Building Permit permitting the construction thereon of one or more residential facilities
has been issued by the City or some other governmental agency.
“Resolution of Formation” means the resolution forming CFD No. 2017-01.
“San Francisco Urban Consumer Price Index” means, for each Fiscal Year, the
Consumer Price Index published by the U.S. Bureau of Labor Statistics for All Urban
Consumers in the San Francisco – Oakland – San Jose Area, measured as of the month of
December in the calendar year that ends in the previous Fiscal Year. In the event this index
ceases to be published, the San Francisco Urban Consumer Price Index shall be another
index as determined by the CFD Administrator that is reasonably comparable to the
Consumer Price Index for the San Francisco – Oakland – San Jose Area.
“Special Tax” or “Special Taxes” means the special tax or special taxes to be levied in
each Fiscal Year on each Assessor’s Parcel of Developed Property to fund the Special Tax
Requirement for Municipal Services and/or the Special Tax Requirement for Fuel System
Replacement and Maintenance.
“Special Tax Component” means a component of the Special Tax to be levied in each
Fiscal Year on each Assessor’s Parcel of Developed Property to fund the Special Tax
Requirement for Municipal Services and/or the Special Tax Requirement for Fuel System
Replacement and Maintenance.
“Special Tax Levy” means the total Special Tax to be listed on the property tax rolls and
levied for each Assessor’s Parcel of Taxable Property in a given Fiscal Year to fund the
Special Tax Requirement for Municipal Services and the Special Tax Requirement for Fuel
System Replacement and Maintenance.
“Special Tax Requirement for Municipal Services” means that amount of Component
A to be collected in any Fiscal Year for CFD No. 2017-01 to pay for certain costs as
required to meet the needs of CFD No. 2017-01 in that Fiscal Year. The costs to be covered
shall be the direct costs for (i) Authorized Services, including the establishment of reserves
for future costs of Authorized Services, (ii) Administrative Expenses, (iii) an amount to
cover anticipated delinquencies for the payment of the Special Tax Levy, based on the
delinquency rate for the preceding Fiscal Year; less (iv) a credit for funds available to
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 5
reduce the annual Special Tax Levy, if any, as determined by the CFD Administrator; and
less (v) a reduction in costs to Authorized Services, as determined by the CFD
Administrator, contingent upon the successful transfer of hotel-site maintenance
responsibilities related to hydro-seeding and erosion control, estimated to cost $131,600 in
Fiscal Year 2016-2017, to the developer of the hotel site, on Parcel 6 of Parcel Map No.
17-0002 (Oyster Point) recorded on September 25, 2017 in Book 83 of Parcel Maps at Page
50 through 54 as File No. 2017-900124 in the official records of the County of San Mateo.
Under no circumstances shall the Special Tax Requirement for Municipal Services include
debt service payments for debt financings by CFD No. 2017-01.
“Special Tax Requirement for Fuel System Replacement and Maintenance” means
that amount of Component B required, if any, in any Fiscal Year for CFD No. 2017-01
to: (i) pay directly for fuel system replacement and maintenance, as well as for Authorized
Facilities and Authorized Services eligible under the Act; (ii) pay for Administrative
Expenses; (iii) an amount to cover anticipated delinquencies for the payment of the Special
Tax Levy, based on the delinquency rate for the preceding Fiscal Year; less (iv) a credit
for funds available to reduce the annual Special Tax Levy, if any, as determined by the
CFD Administrator. Under no circumstances shall the Special Tax Requirement for Fuel
System Replacement and Maintenance include debt service payments for debt financings
by CFD No. 2017-01. The cumulative amount of the Component B special tax to be
collected shall not exceed $2,750,000.
“State” means the State of California.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD
No. 2017-01 which are not exempt from the Special Tax pursuant to law or Section E
below.
“Undeveloped Property” means, for each Fiscal Year, all property not classified as
Developed Property, Property Owner Association Property, or Public Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessor’s Parcels within CFD No. 2017-01 shall be classified by the
CFD Administrator as Developed Property, Undeveloped Property, Property Owner
Association Property, or Public Property, and shall be subject to annual Special Taxes in
accordance with this Rate and Method of Apportionment as determined by the CFD
Administrator pursuant to Sections C and D below. The CFD Administrator’s allocation
of property to each type of Land Use Class shall be conclusive and binding. However,
only Developed Property shall be subject to annual Special Taxes in accordance with the
Rate and Method of Apportionment as determined pursuant to Sections C and D below.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 6
C. MAXIMUM SPECIAL TAX RATE
1. Component A of the Special Tax
a. Developed Property
(1) Component A Maximum
The Component A Maximum for Fiscal Year 2017-18 for Developed Property is
shown below in Table 1.
TABLE 1
Component A Maximum for Developed Property
For Fiscal Year 2017-18
Community Facilities District No. 2017-01
Land Use
Class Land Use Fiscal Year 2017-2018
Component A Maximum
1 Residential Property $0.32 per Square Foot of
Residential Floor Area
2 Non-Residential Property $0.32 per Square Foot of
Non-Residential Floor Area
(2) Multiple Land Use Classes
In some instances, an Assessor’s Parcel of Developed Property may contain more
than one Land Use Class. The Component A Maximum that can be levied on an
Assessor’s Parcel shall be the sum of the Component A Maximum that can be
levied for all Land Use Classes located on that Assessor’s Parcel.
(3) Increase in the Component A Maximum
On each July 1, commencing on July 1, 2018, the Component A Maximum for
Developed Property shall be increased annually by the lesser of the change in the
San Francisco Urban Consumer Price Index during the twelve (12) months prior
to December of the previous Fiscal Year, or five percent (5.00%).
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 7
2. Component B of the Special Tax
a. Developed Property
(1) Component B Maximum
The Component B Maximum for Fiscal Year 2017-18 for Developed Property is
shown below in Table 2.
TABLE 2
Component B Maximum for Developed Property
For Fiscal Year 2017-18
Community Facilities District No. 2017-01
Land Use
Class Land Use Fiscal Year 2017-2018
Component B Maximum
1 Residential Property $0.07 per Square Foot of
Residential Floor Area
2 Non-Residential Property $0.07 per Square Foot of
Non-Residential Floor Area
(2) Multiple Land Use Classes
In some instances, an Assessor’s Parcel of Developed Property may contain more
than one Land Use Class. The Component B Maximum that can be levied on an
Assessor’s Parcel shall be the sum of the Component B Maximum that can be
levied for all Land Use Classes located on that Assessor’s Parcel.
(3) Increase in the Component B Maximum
On each July 1, commencing on July 1, 2018, the Component B Maximum for
Developed Property shall be increased by two percent (2.00%) for any given
Fiscal Year.
3. Undeveloped Property
No Special Taxes shall be levied on Undeveloped Property.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 8
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2017-18 and for each following Fiscal Year, the City
Council shall levy the annual Special Tax Proportionately for each Assessor’s Parcel of
Developed Property at up to 100% of the applicable Component Maximum, until the
amount of Special Taxes equals the summation of the Special Tax Requirement for
Municipal Services and the Special Tax Requirement for Fuel System Replacement and
Maintenance.
E. EXEMPTIONS
In addition to Undeveloped Property being exempt from annual Special Taxes, no Special
Tax shall be levied on Public Property or Property Owner Association Property. However,
should an Assessor’s Parcel no longer be classified as Public Property or Property Owner
Association Property, such Assessor’s Parcel shall, upon each reclassification, no longer
be exempt from Special Taxes.
F. INTERPRETATION OF SPECIAL TAX FORMULA
The City reserves the right to make minor administrative and technical changes to this
document that may immaterially 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 Rate and Method of
Apportionment.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as
ordinary ad valorem property taxes; provided, however, that the City may directly bill the
Special Tax, may collect Special Taxes at a different time or in a different manner if
necessary or otherwise advisable to meet its financial obligations for CFD No. 2017-01,
and may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels
as permitted by the Act.
H. TERM OF SPECIAL TAX
The Component A Special Tax shall be levied in perpetuity as necessary to meet the Special
Tax Requirement for Municipal Services, unless no longer required to pay for Authorized
Services as determined at the discretion of the City. The Component B Special Tax shall
be levied and collected until the costs of constructing or acquiring Authorized Facilities
from Component B Special Tax proceeds have been paid, and all Administrative Expenses
have been paid or reimbursed. Additionally, the Component B Special Tax shall have a
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 9
sunset based upon the 2030 tax year no later than June 30, 2031. Such sunset date shall be
advanced or extended for the same period that construction of the OPD development is
advanced or delayed, so as to be coterminous with the Component B Special Tax having
produced an amount not exceeding $2,750,000, or such lesser amount as actually is
authorized by the City and expended on the Authorized Facilities.
I. CREDIT FOR OVERPAYMENT FOR AUTHORIZED FACILITIES
If the remaining balance of the aggregate payments of Special Tax attributable to the
Authorized Facilities at the end of a fiscal year exceed by fifteen percent (15%) or more
the approved budget for such fiscal year, the funds exceeding fifteen percent (15%) of the
approved budget for such fiscal year shall be credited ratably, by the CFD Administrator,
to those who pay Special Tax attributable to the Authorized Facilities and applied to such
property owners’ future Special Taxes as they become due with the funds applied first any
Special Tax due for the Authorized Facilities.
APPENDIX B
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO. 2017-01
(PUBLIC SERVICES AND FACILITIES)
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City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 2
61475572v2
Kashiwa presents this comment letter in opposition to being included within the boundaries of
the CFD. To be clear, Kashiwa would not have opposed the CFD had it only included the land
that would actually benefit from the CFD (the OPD Property and the City Property). However,
the City has purposefully gerrymandered the borders of the CFD to include an innocent
bystander (without enough voting power to stop the imposition of the CFD) that will be
obligated to pay this special tax without receiving any benefit. This is illegal. This violates
several of Kashiwa's guaranteed rights. And Kashiwa asks that the City Council not let it stand.
This comment letter consists of three parts. Part one addresses the legal flaws of the CFD, and
why the CFD cannot legally include Kashiwa within its boundaries. Part two addresses the flaws
of the report conducted by Seifel Consulting, Inc. ("Seifel Report") and the Rate and Method of
Apportionment ("RMA"), both of which played a role in the determination of the amount of the
special tax that would be imposed upon Kashiwa. This part presents Kashiwa’s own economic
consultant's conclusions as a counterbalance to the Seifel Report.Part 3 offers conclusions for
the Council’s consideration prior to taking a vote on the CFD formation.
1.LEGAL INADEQUACIES OF THE CFD
(a)No "Additional" Services of Facilities Not Already Enjoyed by Kashiwa
There are important restrictions on both the type and level of services that may be authorized by
a landowner vote CFD. Government Code section 53313 provides, in relevant part:
A community facilities district tax approved by vote of the landowners of
the district may only finance the services authorized in this section to
the extent that they are in addition to those provided in the territory
of the district before the district was created. The additional services
shall not supplant services already available within that territory
when the district was created. [emphasis added]
The purpose of a CFD is to create a way for the developer or the City to finance improvements
within the new development area --not to create a new tax for existing properties that have
already enjoyed the facilities, services, and use for a long time. The special tax does not comply
with the requirement that services financed by a CFD must be “in addition to those provided in
the territory of the district before the district was created” and “shall not supplant services
already available within that territory when the district was created.” (Govt. Code 53313) As
such, the CFD, as applied to Kashiwa, fails. The CFD cannot be used to force the CFD
landowners to take on the financial burden of services the local agency is already providing.
In this case, there are absolutely no additional services that would accrue to the Kashiwa
Property or its tenants that they do not already enjoy. No additional facilities are provided to the
Kashiwa Property. Regarding services, the Kashiwa Property is already serviced by
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 3
61475572v2
transportation, police, fire and emergency services. The two office buildings on the Kashiwa
Property site are not buildings that require frequent calls to service, and there will be absolutely
no new demand for any such services as a result of the CFD.
There are three sections in the analysis showing that the City has not satisfied the requirements
of Government Code section 53313. First, the City has actually admitted that there is no benefit
being provided to Kashiwa, as evidenced by its own internal emails. Second, analogous case law
supports Kashiwa's position that no additional services are being provided. Third, as to the
proposed fuel systems facilities, there is absolutely no nexus or rational relationship between
those facilities and the Kashiwa Property.
(i)Internal City Emails Confirm No Benefit to Kashiwa
The City has acknowledged in writing that there are no additional services or facilities being
provided that are of benefit to Kashiwa. This was a key point of concern after the City hired
Seifel Consulting to do an economic analysis of the CFD. In the initial emails exchanged
between the City and Seifel Consulting (which Kashiwa has obtained in response to a Public
Records Act request), it was clear that both the City and Seifel Consulting were struggling with
how to invent a justification for imposing the special tax on Kashiwa.
Once Seifel Consulting started its work, it started asking questions of the City regarding what
benefit Kashiwa would get, and raised this question on phone calls and in emails. This is most
clearly evidenced in an internal email from Eliza Manchester (Management Analyst, Economic
and Community Development Department),to Billy Gross (Senior Planner) and Marian Lee
(Assistant City Manager). Here, Ms. Manchester had spoken to the City's economic experts at
Seifel Consulting after they had a chance to review the initial documents. It wasn't clear to
Seifel Consulting (again, this is the hired economic expert who is trained in these matters)
that there was any benefit being provided to Kashiwa. That is why Seifel Consulting had to
make this inquiry to the City, which resulted in a telling exchange of emails. Ms. Manchester
writes:
I need to provide the following items to Seifel Consulting today, if you
have these files or know where they are located could you please help
me to gather these as soon as possible?
* CFD/Project Benefits to Kashiwa related to open space, trail and
other public improvements
(Exhibit 1, Tuesday, August 08, 2017 email string between Eliza Manchester, Management
Analyst, Economic and Community Development Department, Billy Gross, Senior Planner, and
Marian Lee, Assistant City Manager [emphasis added].)
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 4
61475572v2
In Billy Gross' response to the above email, the Senior Planner interlineates a response to the
"Benefits to Kashiwa" item, saying: "I do not have any information on this –maybe Alex has
something? If not, you might also check with Mike F." (See Exhibit 1 [emphasis added].) This
is yet another City staff member intimately involved in the CFD formation process who had no
idea on what benefit would go to Kashiwa. This makes sense that he would have no information
on any benefit to Kashiwa –because there was and is no benefit to Kashiwa.
Finally, Marian Lee, the Assistant City Manager, chimes in saying: "it’s the assumption that all
of the project improvements being made for Phase IC will benefit and be used by the
tenants in the Kashiwa building. Because of this, Kashiwa would be able to charge their
tenants more and the value of their property would go up. In terms of the project
improvements, it is the scope of Phase IC." (See Exhibit 1 [emphasis added].)
In other words, where Seifel Consulting couldn't come up with any benefit to Kashiwa, it turned
to the City for help. The City then spoon-fed the "assumption" regarding Kashiwa being "able to
charge their tenants more and the value of their property will go up." (See Exhibit 1.) Thus, if
the assumption that was spoon-fed to Seifel from the City is actually analytically wrong (which
will be shown in Part 2 below), then there is no "reasonable basis" for the conclusions in the
Seifel Report, or in the RMA. The "assumption" does not take into account the fact that raising
rent will make the Kashiwa Property less competitive for tenants in that office market. The
falsity of that "assumption" is discussed in detail in Part 2 below. However, for the purposes of
this discussion in this section, suffice it to say that Seifel Consulting, the expert in charge of the
economic analysis of the CFD, was unable to come up with any benefit to Kashiwa until the
Assistant City Manager invented one (with no factual, scientific, or economic basis), and Seifel
Consulting simply adopted that assumption in its analysis.1
This was not the end of the discussion, however. It gets worse. After the City sent this newly
invented "assumption" to Seifel Consulting, Seifel Consulting had additional questions relating
to the benefit to Kashiwa, and the improvements surrounding the Kashiwa Property. Billy
Gross, Senior Planner, explains that:
First, I’ve attached an aerial from Google Earth that shows the existing
configuration, and highlighted where the existing Bay Trail is, and the
sections that will be upgraded as part of the OPD project. The Bay Trail is
currently in place for the entire area –the OPD project will ensure that
those portions in Phase IC and III-IV are upgraded to meet current Sea
Level Rise projections, while the portion in Phase IIC is currently shown
as being repaved only, but the City will likely wait until we can get
enough funding to upgrade the Phase IIC portion to also meet Sea Level
1 The bias of Seifel Consulting, who was recommended to the City directly by OPD, is discussed
in Part 2.
City of Culver City and Culver City Planning
Commission
November 17, 2017
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Rise projections. The portion of the Bay Trail that surrounds the
Kashiwa Fudosan buildings (and is on their property) would not be
revised, but the proposed improvements would be designed to
transition to the existing trail.
(See Exhibit 2, Wednesday, August 9, 2017 email string between Libby Seifel and Billy Gross,
Senior Planner [emphasis added].)
The above graphic is the Google Earth attachment from the Billy Gross email, and in that
graphic, the Kashiwa Property is conspicuously missing any upgrades surrounding its Property.
Yet, the City claims that the Kashiwa tenants will benefit from the upgrades to the bike baths and
open spaces, and thus, can charge higher rents?
Libby Seifel responds by confirming that the improvements will happen everywhere "except for
along the Kashiwa property":
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 6
61475572v2
In summary, bike access will be improved along the roadways but the
bike/ped access along the Bay Trail will remain the same. However, the
Bay Trail will be improved (except for along the Kashiwa property) to:
* address sea level rise
* be better landscaped?
* and widened to 18 feet?
(See Exhibit 2 [emphasis added].)
First, it is concerning that the Bay Trail is being raised on the City’s and OPD's property to
address climate change/sea level rise but no such improvements are being done to the Bay Trail
on the Kashiwa Property. Given the nature of sea level rise, a parcel-specific approach to sea
level related improvements is inappropriate.
From the beginning, when Seifel Consulting was first hired to do the economic analysis of the
CFD, one of the biggest issues was how they would be able to justify bringing Kashiwa within
the boundaries of the CFD, so that they would be forced to share in the tax burden. Yet, rather
than actually organizing the CFD in a way so that it would actually benefit Kashiwa,the City
(and Seifel Consulting) took the approach of inventing an unsubstantiated basis for Kashiwa's
inclusion. Although the flaws of the economic reasoning and the bias of Seifel Consulting is
discussed in Part 2, the important point for the purposes of this section is the following: there are
no additional services or facilities being provided to Kashiwa.
Legally, the CFD may only finance services “to the extent they are in addition to those
provided within the area of the district before the district was created,” and the “additional
services may not supplant services already available within that territory when the district
was created.” (Govt. Code 53313). The exchanges above and the factual circumstances
surrounding the CFD both make it clear that this legal requirement cannot be met. Thus, the
CFD fails to satisfy Government Code section 53313, and accordingly, the CFD cannot be used
to force Kashiwa to take on this additional financial burden.
(ii)Analogous Case Law Makes Clear That There are No Additional
Services or Facilities
An analogous case relating to "additional services," Building Industry Assn. of Bay Area v. City
of San Ramon (2016) 4 Cal. App. 5th 62 ("Building Industry Assn.") is instructive. Building
Industry Assn. is a case in which homeowners within a new development challenged a tax on the
basis that services (police, maintenance, etc.) were not "additional" because all other areas of the
City already had those services. The court held that because landowner-approved taxes can be
used to fund an increased demand for existing services, a tax that created a CFD to fund
additional services necessitated by a new townhouse development complied with this section's
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 7
61475572v2
additional services requirement. This was the case even though some services already existed
and the additional services would not be superior to the services provided outside the district.
The takeaway from Building Industry Assn. is that the special tax may be used to fund an
increased demand for services that are created by a new development. This makes sense because
in that case, there was a single-voter landowner –the developer. The association challenging the
CFD were representing the very people getting the additional services, and the very people
creating the demand for additional services. In our case, Kashiwa is a third-party bystander.
Neither Kashiwa nor the Kashiwa Property are generating any additional demand for services.
Using Building Industry Assn. as precedent, no court would find that Kashiwa is required to foot
the bill for additional services that are generated by a neighboring development.
(iii)The Portion of the Special Tax Funding Component B Fuel Systems
Facilities Cannot be Applied to Kashiwa
One significant element of any CFD is the "Rate and Method of Apportionment of the Special
Tax," or “RMA." The RMA defines the tax structure and explains the basis for each special tax
that is imposed. Here, the RMA for the CFD separates the special tax into Components A and B.
“Component B”means the Special Tax Component to be levied in each Fiscal Year on each
Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement for Fuel System
Replacement and Maintenance. (RMA Definitions).
There is absolutely no nexus that can be drawn to connect Kashiwa with paying for "Fuel System
Replacement and Maintenance." According to the RMA, Component B consists of 7 cents per
square foot of additional taxes that must be paid by Kashiwa to fund Fuel System repairs that
have absolutely nothing to do with an established property that has been enjoying its use at the
same location for approximately 40 years.
The RMA is a flexible document, and now is the right time to rectify some of its problems. The
City Council may use this opportunity to modify the RMA allocations, and at the very least, even
if the City does not agree that Kashiwa should be removed from the boundaries of the CFD
completely, then the 7 cent tax relating to Fuel System maintenance should be removed.
Thus, in this case, both the factual scenario and the legal analysis makes clear that the CFD does
not satisfy the requirement for "additional" services or facilities. The CFD, as applied to
Kashiwa, therefore fails.
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 8
61475572v2
(b)Taxes Imposed on Kashiwa are Unreasonable
Government Code section 53325.3 provides:
A tax imposed pursuant to this chapter is a special tax and not a special
assessment, and there is no requirement that the tax be apportioned on the
basis of benefit to any property. However, a special tax levied pursuant to
this chapter may be on or based on a benefit received by parcels of real
property, the cost of making facilities or authorized services available
to each parcel, or some other reasonable basis as determined by the
legislative body.[emphasis added]
We have already established that there is no benefit received by the two Kashiwa Property legal
parcels. We have also established that the cost of making the facilities is no way related to the
Kashiwa Property parcels. The code also allows for "some other reasonable basis" upon which
the City must base its decision to impose the tax on each parcel. The City has not shown that
there is a "reasonable basis"for which to include Kashiwa within the boundaries of the CFD, or
for requiring Kashiwa to pay the special tax.
Kashiwa has engaged an expert economic consultant, whose analysis is addressed in Part 2
below, to address the issue of whether there is any reasonable basis for which to include Kashiwa
within the CFD boundaries. Because we will show that there is no reasonable basis for the
apportionment of the special tax, the CFD and the RMA both violate Government Code section
53325.3.
To make matters worse, the City is self-dealing by bootstrapping a CFD to pay for the
development of its own property, in which it plans to profit handsomely by selling/leasing to a
hotel developer, after forcing Kashiwa to foot the bill. Although Cities often have wide
discretion when acting in a regulatory or governmental capacity, the standards are different when
the City is acting in its proprietary capacity (the City's decisions are given a higher level of legal
scrutiny, and for example, governmental immunity doesn't apply). (See, e.g., Bettencourt v. State
of California (1954) 123 Cal. App. 2d 62; Board of Trustees of The California State University
and Colleges v. City of Los Angeles (1975) 49 Cal. App. 3d 48.) Here, the City is acting in its
proprietary capacity in connection with its ownership of the land that it will use to develop a
hotel. The City is not using the CFD to regulate unrelated third party developers,but rather, is
including its own property, which will not be dedicated to public purposes (future hotel).
What is the reasonable basis for which Kashiwa should pay for the development of its neighbors'
private and for-profit properties (the City's hotel and OPD residences/offices)?
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 9
61475572v2
(c)The Formation of This CFD is a Project Requiring CEQA Analysis
Under normal circumstances, the formation of a CFD is not a "project" that requires CEQA
review. However, the case law in this area leaves open the possibility that there are CFDs that
would potentially qualify as a project, and would therefore require CEQA review:
Here, as noted earlier, formation of CFD 1 does not commit the District to
any definite course of action. It does not dictate how funds will be spent,
or in any way narrow the field of options and alternatives available to the
District. In cases such as this where funding issues alone are involved,
courts should look for a binding commitment to spend in a particular
manner before requiring environmental review. While we can envision a
situation where a community facilities district might be formed to
fund a specific project and therefore trigger the need for CEQA
review, that is not the case here. …There is simply not enough specific
information about the various courses of action available to the District to
warrant review at this time.
(Kaufman & Broad-South Bay, Inc. v. Morgan Hill Unified Sch. Dist.(1992) 9 Cal. App. 4th
464, 475 [emphasis added].) The situation envisioned by Kaufman is precisely the situation we
have here. In other words, we have a specific project that is being funded, it will clearly have
major impacts, such as roadway improvements to address traffic conditions and that in turn
triggers the need for CEQA review. Therefore, in this situation the CFD requires CEQA review.
(d)The Formation of This CFD is a Regulatory Taking
The CFD, as applied to Kashiwa, is a regulatory taking. The special tax clouds title, raises
expenses/costs/rents for Kashiwa (as discussed in detail in Part 2), and would make it more
difficult for Kashiwa to sell its land. Under Penn Central Transportation Company v. City of
New York (1978) 438 US 104, even if a governmental regulation does not cause a physical
invasion or deprive a landowner of all economically beneficial use, it may nonetheless go too far
in placing what should be a public burden on private shoulders. Penn Central established an ad
hoc, fact-based inquiry that addresses three factors to be used in determining whether this type of
regulatory taking has occurred: (1) the economic impact of the regulation on the claimant, (2) the
extent to which the regulation has interfered with distinct investment-backed expectations, and
(3) the nature of the governmental action. (Id.at 124.)
As to factor numbers 1 and 2 above, they are addressed in detail in Part 2 of this letter. As to
factor 3, the nature of the governmental action is the imposition of a special tax on an innocent
bystander receiving no benefit therefrom. The factors are normally applied to zoning and land-
use regulations, but are applicable by analogy to a CFD being imposed, and negatively effecting
Kashiwa's economic position.
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 10
61475572v2
To the extent that Kashiwa is included in the CFD boundaries, it is a regulatory taking that will
require just compensation, which Kashiwa will pursue.
(e)Including Kashiwa Within the Boundaries of the CFD Would Violate Equal
Protection
The CFD boundaries appear completely arbitrary in terms of the way that the City has decided
which properties to include and which properties not to include, and the City has not been able or
willing after extensive discussions to articulate a legally acceptable rationale for its
gerrymandering of this CFD. Indeed, there was a discussion regarding this very issue at the
October 11, 2017 City Council hearing regarding the Resolution of Intent for the CFD. When the
City Manager was asked by City Council members at the hearing why other similarly situated
properties were not also included in the CFD if they were presumably getting the same "benefits"
as Kashiwa, the City Manager was at a loss for an explanation. Rather, he just stated that if they
had tried to bring in additional property owners, it would have complicated the voting, and it
would have been more difficult to approve the CFD. In other words, the City Manager
essentially admitted that the only reason that Kashiwa was singled out was that they had decided
to pick one unlucky property owner to share a very substantial burden of the special tax costs,
without actually benefiting from it, even though all of the other properties along Oyster Point
Drive would presumably be in the exact same position. David Cincotta also spoke to this very
issue during his public comments on behalf of Kashiwa.
The City is required to provide a rational basis for including Kashiwa within the CFD, as
opposed to the other properties. The rational basis test requires that the classification be a
demonstrably effective means for furthering some actual valid government interest. (E.g., City
of Cleburne v. Cleburne Living Center (1985) 473 U.S. 432, 440.) Here, there is no real
justification for singling out Kashiwa, and there certainly is no rationale that the City has been
able to point to (other than doubling down on the fact that it specifically gerrymandered the
boundaries to get the votes that it needed) that would survive equal protection scrutiny (under
either Federal Law or California Law).
(f)Establishment of the CFD Is Premature Without Final Permit Approval by
Bay Conservation and Development Commission (“BCDC”)
Portions of the improvements proposed to be undertaken by the CFD require the permit approval
and such approval is only in the preliminary review process and not even scheduled to be
approved until 2018. Moreover, the final plans are not even known to BCDC and without the
final plans it cannot be known with certainty what the cost of the improvements in the CFD will
be.
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 11
61475572v2
The Design Review Board of BCDC saw an application for improvements for only Phases 1C
and 1D on July 10, 2017. Multiple questions were raised by Board members. Among those
questions were concerns about a public access path from Gull Drive to the park and regarding
access to the hotel site. Some questions could not be answered because the plans for Phase II C
were not even submitted to BCDC,and BCDC does have jurisdiction of a small portion of Phase
II C. The application was only officially submitted to BCDC in September and there is a
tentative hearing scheduled for December 7, 2017. Final approval of any permit by BCDC is not
even scheduled in 2018. So how can the CFD adopt a budget or a plan without knowing what the
final plans will contain?While there are proposals for landscaping, new sand for the beach,
public restrooms and facilities, etc.,there is no final action on the permit so the extent of all these
improvements cannot be known.
Without a final approval by BCDC, the assumptions for the CFD cannot be known with certainty
and the City would be assessing taxes without knowing the actual budget.In addition, BCDC
may require a CEQA analysis for the project, either the same analysis as that discussed above or
a supplementary analysis of those areas within BCDC jurisdiction.
2.THE SEIFEL REPORT AND THE RMA ARE FLAWED
(a)Biased nature of report
To put into context the Seifel Report, it should be noted that Clara Tang, the Executive Vice
President for OPD, is the one who made the recommendation to the City to use Libby Seifel for
its analysis in the first place. In a July 10, 2017 email from Clara Tang to Marian Lee, Assistant
City Manager, entitled "Financial consultant recommendation -Libby Seifel," OPD states the
following:
Following up from our conversation on Friday, we would like to recommend
Libby Seifel of Seifel Consulting (http://www.seifel.com/) as a third party
financial consultant to assist in overseeing the residential “open book” review
process. Ms. Seifel has extensive experience working with public and private
sector clients providing integrated financial and economic services in real
estate development. She has acted in a similar role for several projects
throughout the Bay Area. The specific tasks Seifel Consulting will be helpful
with include the following:
Review and evaluate OPD’s summary residential proforma and budget on
behalf of the City of SSF
Review assumptions based on current market conditions for rents, sales
prices and construction costs
Confirm the final analysis is a reflection of market conditions for a project
of such size and with multiple phases
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 12
61475572v2
Provide additional support as needed for impact fee analysis and
affordable in lieu fee
We think Libby will be a great addition in helping both sides reach a
resolution. Please let me know if you need anything else to further this idea.
(Exhibit 3, July 10, 2017 email from Clara Tang, OPD, to Marian Lee, Assistant City Manager,
entitled "Financial consultant recommendation -Libby Seifel,".) If the relationship were to stop
after the initial introduction, that would be understandable, and even excusable. However, even
after the initial introduction, Clara Tang was included on other emails where the City asked OPD
for approvals, suggestions, and comments relating to the scope of work and the contract that
Seifel Consulting would have with the City (see, e.g., Exhibit 4, email from Tuesday, July 25,
2017 4:12:00 PM, from Eliza Manchester to Clara Tang, asking for "suggestions or revisions" to
the scope of work and contract with Seifel).
It also appears that Seifel was in close and regular contact with OPD:
I understand that you [Libby Seifel] met with OPD and also that you may
have talked to Steve or Mare about their needs. At this point, my new
direction is to split your contract into two parts. OPD would like the
economic analysis of the existing property owners to be a separate
contract from the one they are involved with regarding their proforma
analysis. So, I will need to redraft the contracts and get those over to you
this week.
(Exhibit 5, Monday, July 31, 2017 10:07 AM email, from Eliza Manchester, Management
Analyst, Economic and Community Development Department to Libby Seifel.) Although
cryptic in nature, it's clear that Seifel was meeting with and talking to OPD about its "needs," and
as a result of those needs, the economic analyses were shifted. Indeed, the economic analyses
were divided into two separate contracts.
Also, as discussed in detail above, Siefel Consulting also relied heavily on "assumptions" that
were provided to them by the City, rather than coming up with their own conclusions based on
sound economic analysis.
Thus, the entire relationship between Seifel Consulting, OPD, and the City, is suspect. The
objectivity of the Seifel Report is suspect. It is important to take this into consideration, as the
Seifel Report formed the basis upon with the RMA was adopted.
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 13
61475572v2
(b)The CFD's Economic Analysis is Flawed, as Evidenced by Both the Seifel
Report, and the Final RMA
Kashiwa has been put in a position where it will lose over $180,000 a year in special taxes if the
City's CFD is established as currently proposed. As such, Kashiwa hired its own economic
experts, Timothy Lowe, of Waronzof Associates, and Stanley R. Hoffman, of Stanley R.
Hoffman & Associates (collectively, "Waronzof"), to conduct an economic analysis of the CFD,
and particularly, the soundness of the Seifel Report and the RMA ("Waronzof Memo").
It is important to note that Kashiwa, through its counsel, requested that the City provide
additional time for its economic experts to do a thorough review and analysis of the CFD.
Kashiwa requested that the hearing be continued, even if it were just for a couple of weeks, in
order to give time for a more robust review and report. However, the City did not agree to
continue the November 20 hearing, and Waronzof was only able to conduct a limited scope of
work within the short timeframes.
The Waronzof Memo sets forth its conclusion regarding the shortcomings of the Seifel Report in
no uncertain terms:
In its memorandum, Seifel concludes (at page 14 of the memorandum)
“The potential value premiums from the smart growth design features of
the planned new development and the associated amenities would likely
offset the additional imposition of the maximum Mello-Roos CFD special
tax of $0.39 per building square foot and could provide additional value
enhancement to existing properties.” In short,we conclude that the
Seifel analysis of the impact of the CFD on existing properties
(including our Subject property) is not well-founded and does not
reliably or appropriately evaluate either the benefits (if any) of “the
project” or the impacts of the new development and the proposed
CFD upon existing properties. It should not be relied upon at this point
in the municipal approval process by City of South San Francisco staff,
elected officials or the public.[emphasis in original]
(Exhibit 6, Waronzof Memo, p. 2.)
The Waronzof Memo is attached hereto as Exhibit 6, and explains in detail the flaws of the Seifel
Report and the RMA, and how the findings in those documents have faulty assumptions and are
not supported by substantial evidence.
The Seifel report does not include any analysis that is sufficiently specific to the Kashiwa
Property to form reliable and competent opinions about the impact of the CFD and associated
new development upon its value (p. 3)
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 14
61475572v2
The sources of information that Seifel has relied upon to suggest that the “…potential value
premiums from the smart growth design features of the planned new development and the
associated amenities would likely offset the additional imposition of the maximum Mello-
Roos CFD special tax of $0.39 per building square foot and could provide additional value
enhancement to existing properties.” are inadequate and certainly not legally sufficient to
measure any change in value arising from the imposition of the proposed CFD (p. 3)
This is the assumption that was spoon-fed to Seifel Consulting by the City, as discussed
in Part 1 above.
The very general scope of the information that Seifel has relied on for its broad estimate of
“the economic benefits of similar types of sustainably-designed developments and the value
premiums associated with parks and open space, increased walkability, transit access, and
other types of public improvements in order to assess the potential value premium on
development values that could occur from the planned improvements in Oyster Point” is
insufficient to reliably measure any enhancement or impairment in the value of the Kashiwa
Property (pp. 3-4.)
There is no analysis regarding the methodology of which properties benefit from the CFD,
and therefore the determination of who should pay for the benefits, and how those monies are
collected, is unreliable and unsupported. (pp. 4-6)
Failure to appropriately evaluate the impact of the CFD and proposed development upon the
Kashiwa Property in a structured and comprehensive manner. The proposed CFD will result
in additional direct and immediate operating costs. Further, due to the age of the Kashiwa
Property, the additional competition that will result from the construction of a now-planned
1.6 million square feet of office space will likely trigger the need for very substantial capital
investment in the existing structure in order to maintain (not increase) its current market
position. The present value impacts of the proposed annual assessment, coupled with the
disruption in operating income from necessary capital improvements and the direct capital
investment, will be adverse, and most likely to cause a significant impairment in the value of
the Subject property. (p. 5)
In the end, the Waronzof Memo concludes that "a proper and comprehensive analysis will show
that when all of the costs and all of the benefits of new public and private investment are
considered, and the timing of these costs and benefits are considered, the result will be a net
impairment in value, not a value enhancement."(p. 5)
The Waronzof Memo also warns the City Council not to rely on the Seifel Report, as it does not
reliably evaluate or estimate the impacts of the CFD. The Waronzof Memo's conclusions,
coupled with the biased nature of the Seifel Consulting group (who was apparently in direct
contact with OPD during its analysis), are both troubling, and raise serious concerns regarding
whether any decisions made by the City Council on the basis of the RMA and the Seifel Report
can truly be based on substantial evidence.
City of Culver City and Culver City Planning
Commission
November 17, 2017
Page 15
61475572v2
The City Council should commission a third party independent consultant (not Seifel Consulting)
who can conduct a proper economic analysis of the CFD. In addition, the City Council should
delay making any determination regarding the CFD until Kashiwa's economic experts have had
an opportunity to do their full scope of work (which they have not had an opportunity to
complete, given the short timeframes).
3.CONCLUSION
The record cannot be more clear as to the fact that the City has purposefully gerrymandered the
boundaries of the CFD to get Kashiwa to foot the bill for a special tax, even though it is
admittedly (through the City's own admission in its emails) not getting any benefit from the
CFD. The economic analysis from the experts affirms this. Not only is the inclusion of Kashiwa
within the CFD illegal and discriminatory, it is also illogical and defies rationality.
The City Council now has an opportunity to rectify the legal errors made in the early stages of
the formation of the CFD by removing Kashiwa from within the boundaries of the CFD. In
other words, should the City Council actually adopt the resolution, it should first modify the
resolution to remove the Kashiwa Property from the boundaries of the CFD.
If the City Council does not use this opportunity to correct the abundant legal errors contained in
the RMA, Seifel Report, and CFD formation documents, Kashiwa will be forced to seek relief
from the courts.
Very truly yours,
BENJAMIN M. REZNIK
DAVID P. CINCOTTA
SEENA MAX SAMIMI for
Jeffer Mangels Butler & Mitchell LLP
cc:
Steven T. Mattas, Meyers Nave (smattas@meyersnave.com)
Scott R. Ferguson, Jones Hall (sferguson@joneshall.com)
EXHIBIT1
From:Lee, Marian
To:Gross, Billy; Manchester, Eliza
Cc:Greenwood, Alex
Subject:RE: Oyster Point Documents Needed Today
Date:Tuesday, August 08, 2017 11:14:20 AM
Regarding question one, it’s the assumption that all of the project improvements being made for
Phase IC will benefit and be used by the tenants in the Kashiwa building. Because of this, Kashiwa
would be able to charge their tenants more and the value of their property would go up. In terms of
the project improvements, it is the scope of Phase IC.
If Libby is looking for the exact improvements, they are reflected in the 100% drawings that Billy has
provided.
Mare
From: Gross, Billy
Sent: Tuesday, August 08, 2017 8:14 AM
To: Manchester, Eliza; Lee, Marian
Cc: Greenwood, Alex
Subject: RE: Oyster Point Documents Needed Today
Eliza,
Marian is out of the office until Friday. My initial answers in red below. Please let me know if you
need anything else.
Billy
From: Manchester, Eliza
Sent: Tuesday, August 8, 2017 7:46 AM
To: Gross, Billy; Lee, Marian
Cc: Greenwood, Alex
Subject: Oyster Point Documents Needed Today
Good Morning,
I need to provide the following items to Seifel Consulting today, if you have these files or know
where they are located could you please help me to gather these as soon as possible?
* CFD/Project Benefits to Kashiwa related to open space, trail and other public improvements – I do
not have any information on this – maybe Alex has something? If not, you might also check with
Mike F.
* BCDC request for enhanced north/south access to Ferry Terminal (through hotel parcel to Park and
Rec property?) - We do not have anything in writing yet regarding this request, as it has not been
finalized. It was mentioned at the July 10th BCDC DRB meeting, but will not be discussed in more
detail until we meet with BCDC staff again on August 16th.
* Landscape plan for Oyster Point area (including improvements on OPD, City and Harbor land that
will be funded by OPD and CFD) - The landscape plans that have been prepared so far are for Phases
1C and 1D. I’ve attached the 100% Schematic Design Plans to this email.
Thank you for your help!
Eliza Manchester
Management Analyst,
Economic and Community Development Department
City of South San Francisco
400 Grand Avenue l South San Francisco, CA 94080
Direct: 650.829.6616 Mobile: 650.288.7541 Fax: 650.829.6623
Eliza.manchester@ssf.net
Website: www.ssf.net | follow us on facebook
EXHIBIT2
From:Gross, Billy
To:"Libby Seifel"
Cc:Shay Fitzpatrick; Kohki Shiga
Subject:RE: South SF Oyster Point Documents Uploaded to Dropbox
Date:Wednesday, August 09, 2017 8:40:21 AM
Attachments:BCDC DRB Staff Report - 6.30.17.pdf
Libby,
I’ve attached the BCDC Design Review Board staff report – it has the most in-depth description of
existing vs proposed for the BCDC area improvements. I hope this gives you what you need.
Billy
From: Libby Seifel [mailto:libby@seifel.com]
Sent: Wednesday, August 9, 2017 8:21 AM
To: Gross, Billy
Cc: Shay Fitzpatrick; Kohki Shiga
Subject: Re: South SF Oyster Point Documents Uploaded to Dropbox
Thanks so much for finding these graphics, which are much clearer.
In summary, bike access will be improved along the roadways but the bike/ped access along
the Bay Trail will remain the same. However, the Bay Trail will be improved (except for along
the Kashiwa property) to:
* address sea level rise
* be better landscaped?
* and widened to 18 feet?
Could you please confirm or update what is written above? By any chance, is there a staff
report or any other written document that explains this well?
Best, Libby
On Aug 9, 2017, at 8:09 AM, Gross, Billy <Billy.Gross@ssf.net> wrote:
Libby,
I’ve attached a more up-to-date graphic from our Bicycle Master Plan that was adopted
a few years ago – it shows existing and proposed facilities. You will see that the Bay
Trail is already considered an existing bicycle path.
I was also able to find another presentation from JCFO that has better graphics related
to circulation at the site. It has four sheets:
· Page 1 shows the proposed phasing.
· Page 2 shows the masterplan circulation – it is a bit misleading, because the
bay trail exists currently. The area shown as “proposed bay trail” is where OPD
will be improving the trail as part of Phase IC and Phases III-IV. The Phase IIC
area will be part of City improvements in the future. The Kashiwa Fudosan
property’s portion of the bay trail will not be improved as part of this project.
Thanks so much for
· Page 3 shows the bike and ped circulation more closely. The orange lines show the
designated bicycle lanes that will be on Oyster Point Blvd itself, but the wide blue line at the
top (which is the bay trail) would also allow bicycle traffic, as it will be 18’ in width.
· Page 4 shows typical street cross sections of the area, including the sidewalks and bike
lanes. The bay trail is not shown in any of these sections.
Regards,
Billy
From: Libby Seifel [mailto:libby@seifel.com]
Sent: Tuesday, August 8, 2017 7:42 PM
To: Gross, Billy
Cc: Shay Fitzpatrick; Kohki Shiga
Subject: Re: South SF Oyster Point Documents Uploaded to Dropbox
Thanks so much for your explanation below and for including the graphic attachments
(especially the annotation re: BCDC trail as much clearer).
Please see a follow up question regarding the bike improvements imbedded in your email
below.
Greatly appreciate all your help.
On Aug 8, 2017, at 6:28 PM, Gross, Billy <Billy.Gross@ssf.net> wrote:
Libby,
Thanks for the email and the graphic. First, I’ve attached an aerial from Google Earth
that shows the existing configuration, and highlighted where the existing Bay Trail is,
and the sections that will be upgraded as part of the OPD project. The Bay Trail is
currently in place for the entire area – the OPD project will ensure that those portions
in Phase IC and III-IV are upgraded to meet current Sea Level Rise projections, while the
portion in Phase IIC is currently shown as being repaved only, but the City will likely
wait until we can get enough funding to upgrade the Phase IIC portion to also meet Sea
Level Rise projections. The portion of the Bay Trail that surrounds the Kashiwa Fudosan
buildings (and is on their property) would not be revised, but the proposed
improvements would be designed to transition to the existing trail.
The attached map is excerpted from the bike plan on the City’s
website: http://www.ssf.net/DocumentCenter/Home/View/834
The plan indicates that a bike path is planned along Oyster Point along the Bay Trail. Has this
already occurred, or are bike improvements part of the OPD improvements?
Will this be another case where the improvements will be done up to the Kashiwa property
line only?
I’ve also attached a landscape graphic that better shows the proposed recreational
facilities within Phase IC. If your arrow is pointing specifically at the gray area, this is
intended to be a decomposed granite area where food trucks or other events could be
located on a temporary basis. It would be a multi-purpose area.
This is exactly what I wanted to know; will provide some new level of activity for the area.
Finally, the north/south path that you’ve identified is actually an existing path that will be upgraded
as part of the Phase IC work. BCDC staff has requested an additional north/south connection that
would better connect the bridge across the slough to the area to the northwest – I’ve tried to show
that with a yellow line on the pdf you sent. BCDC staffs’ intent is not to connect to the ferry terminal
(the existing trail does that relatively directly), but to give another way to get to the waterfront and
beach landscaping improvements and the Phase ID and other office/lab buildings.
This is much clearer, and thanks for clarifying above.
I hope this helps – feel free to email/call me tomorrow morning with additional questions.
Billy
From: Libby Seifel [mailto:libby@seifel.com]
Sent: Tuesday, August 8, 2017 5:15 PM
To: Gross, Billy
Cc: Shay Fitzpatrick; Kohki Shiga
Subject: Re: South SF Oyster Point Documents Uploaded to Dropbox
Thanks so much for uploading this information, which is very helpful. Per my voice mail, I
wanted to clarify a few points regarding the OP improvements, which are shown in red call
out boxes on the attached plan. (The attachment is an excerpt from the Specific Plan, which
seems to be the best comprehensive representation of what is proposed to be built at Oyster
Point.)
Many thanks, Libby
Libby Seifel | Seifel Consulting Inc.
580 California Street 12th Floor | San Francisco CA 94104
415.618.0700 x707 phone | 415.618.0707 fax
www.seifel.com
This message is intended for the indicated recipient and may contain information that is
privileged, confidential and non-disclosable under applicable law. If you received this
message in error, please email or call our office at 415.618.0700 and then delete all copies
of the message. Thank you.
On Aug 8, 2017, at 3:50 PM, Gross, Billy <Billy.Gross@ssf.net> wrote:
Libby,
I’ve uploaded the following files to Dropbox:
· Excerpt from Specific Plan Appendix (2017 OP_Specific_Plan – Excerpt). This is
a couple of pages, one with a narrative explaining the difference between the
project that was entitled in 2011 and the proposed Residential project for
2017. The second page shows the proposed site plan for the 2017 application.
· Phase IC and ID Landscape Plans – 100% Schematic Design
(2017_0628_PH1C_SD_Plan Closure Documents & 2017_0628_PH1D_SD_Plan
Closure Documents). Prepared by James Corner Field Operations (JCFO).
· Design Review Board Presentation for July 18, 2017
(20170711_OP_DRB_SA_JCFO). This presentation includes the most up-to-
date graphics we’ve received regarding the open space improvements
proposed as part of the Phase 3-4 OPD Residential Project application.
· North/South Connection through Hotel/Open Space Parcels (2017-08-08-BCDC
N-S CONNECTION). This is not a public document, as we haven’t officially
agreed to it yet (as shown, it would go through the proposed hotel parcel,
which may or may not happen). But it does show how a connection could be
designed through the site.
· 2011 Disposition and Development Agreement (CC9B-3.1 DDA Resolution).
This document is huge, but starting on page 95 of 236, there are graphics and
tables that identify the specific improvements that are proposed in Phase 1D
and 1C. Of course all of these improvements and costs are from the 2011
approvals – the specific improvements are now what JCFO has proposed (which
are shown in the 100% Schematic Design drawings for the Landscape Plan), and
the costs have increased due to 2017 prices. But this might be helpful as to the
level of detail that was originally contemplated. Pages that deal with Open
Space and Trail improvements include:
Phase IC
o Exhibit 3.2.1E: Grading/Construction of Recreation Area (p 117-119)
o Exhibit 3.2.1G: Landscaping of Beach/Park (p 123-125)
o 3.2.1H: Landscaping at Bay Trail and Palm Promenade (p 126-128)
Phase IIC
o 3.3.2C: Repaving of Existing Parking at Phase IIC (p 162-164)
o 3.3.2D: Landscaping Tuneup at Existing Parking at Phase IIC (p 165-167)
o 3.3.2D: Landscaping at BCDC Area of Phase IIC (p 168-170)
· Transportation Demand Management Program for 2011 Project (Preliminary
Oyster Point TDM Plan). This shows the location of TDM measures for the
Phase 1D site, but also includes general info related to the overall site as of
2011. Since that time, the Ferry Terminal has opened, and there
are Commute.Org and Genentech shuttles that connect the Ferry Terminal to
the overall East of 101 area.
Please call me if you have any questions on any of these documents or want to talk
through other items related to the overall project – I’ll be around until around 6pm this
evening, and then in the office and available tomorrow morning from 7-11am. I will be
out of the office and unavailable tomorrow afternoon.
Regards,
Billy
<image004.png>Billy Gross | Senior Planner | AICP
City of South San Francisco | Economic & Community Development Department
PO Box 711 |South San Francisco, CA 94083-0711
( Main (650) 877-8535 | 7 (650) 829-6639 | * billy.gross@ssf.net
<image003.jpg>
<OP - Existing Bay Trail Graphic.jpg><Draft Phase1C - BCDC Concept 1.pdf>
<OPImpts_2017 OP_Specific_Plan - Excerpt- BG Comments.pdf>
<SSF Bicycle Master Plan - Existing and Proposed Bicycle Facilities.pdf><JCFO Presentation
- Phasing and Circulation Graphics.pdf>
EXHIBIT2A
EXHIBIT3
From:Clara Tang
To:Lee, Marian
Subject:Financial consultant recommendation - Libby Seifel
Date:Monday, July 10, 2017 6:30:56 AM
Good morning Mare,
Following up from our conversation on Friday, we would like to recommend Libby Seifel of Seifel
Consulting (http://www.seifel.com/) as a third party financial consultant to assist in overseeing the
residential “open book” review process. Ms. Seifel has extensive experience working with public and
private sector clients providing integrated financial and economic services in real estate
development. She has acted in a similar role for several projects throughout the Bay Area. The
specific tasks Seifel Consulting will be helpful with include the following:
Review and evaluate OPD’s summary residential proforma and budget on behalf of the City of
SSF
Review assumptions based on current market conditions for rents, sales prices and
construction costs
Confirm the final analysis is a reflection of market conditions for a project of such size and
with multiple phases
Provide additional support as needed for impact fee analysis and affordable in lieu fee
We think Libby will be a great addition in helping both sides reach a resolution. Please let me know
if you need anything else to further this idea.
Best regards,
Clara
Clara Tang
Executive Vice President
Oyster Point Development, LLC
401 Marina Blvd., Suite 200
South San Francisco, CA 94080
(O) +1 650 878 6636
(C) +1 310 424 8380
Email: ClaraTang@greenlandusa.com
EXHIBIT4
From:Manchester, Eliza
To:Lee, Marian; Greenwood, Alex
Cc:"Mattas, Steven"; Clara M. Tang (ClaraTang@greenlandusa.com); Lappen, Mike
Subject:RE: OPD Follow Up
Date:Tuesday, July 25, 2017 4:12:00 PM
Attachments:Seifel - SSF ShortFormAgreementContract.pdf
Hi Marian and Clara,
Per Marian’s request, attached is the proposed contract and scope of work for Seifel Consulting. The
language seems broad enough to serve our needs for upcoming public meetings or additional
services. Please let us know if you have any suggestions or revisions.
Sincerely,
Eliza
From: Lee, Marian
Sent: Tuesday, July 25, 2017 12:40 PM
To: Greenwood, Alex
Cc: Manchester, Eliza; 'Mattas, Steven'; Clara M. Tang (ClaraTang@greenlandusa.com)
Subject: OPD Follow Up
Hi Alex,
I have included Clara in this email.
2 ticklers:
- When you are ready, can you share with OPD the Seifel workscope so we are synced up
before Seifel proceeds with their work
- Also, can you send OPD the AMI spread as required by our ordinance
Thank you.
Mare
Marian Lee, AICP
Assistant City Manager/Chief Sustainability Officer
City of South San Francisco
400 Grand Avenue
South San Francisco, CA 94080
650.822.4400 (cell)
650.829.6619 (office)
marian.lee@ssf.net
EXHIBIT5
From:Libby Seifel
To:Manchester, Eliza
Cc:Kohki Shiga; Shay Fitzpatrick
Subject:Re: Contract Update
Date:Monday, July 31, 2017 7:19:35 PM
Attachments:dP-SSF-OysterPoint-072017-rev-tracked 7.31Seifel.docx
Hi, Eliza. Thanks so much for the edits, and we are happy to divide our work scope document
in two parts, as you requested.
Please see the attached document for suggested edits on the main document (before splitting it
up). As we discussed earlier today, we don’t want to include a specific list of documents in the
contract, as the contract is a public document and many of these documents are subject to the
NDA. We have already identified the key information needs for Task 2 in the first five bullets,
so believe this is sufficient. OPD also indicated in this afternoon’s meeting that they no longer
need us to include such a list in the contract, as the list itself is subject to the NDA.
On the Task 3 schedule, given that we’ve not yet been able to connect with Steve and Mare,
and we’ve received so little information to date, we are not going to be able to present
anything substantive in time for the August 7th meeting. OPD indicated in today’s meeting
that Mare and Alex do not plan to present any written documents from us at the August 7
meeting, particularly as more discussions will be happening this week with OPD, and no other
public meetings on OPD will be held until September.
Thanks, Libby
On Jul 31, 2017, at 3:38 PM, Manchester, Eliza <Eliza.Manchester@ssf.net>
wrote:
Hi Libby, I am attaching the scope of work for your team to break into two documents
with your letterhead etc. I am awaiting changes to the amended contracts from Steve
and will send them back over to you.
Sincerely,
Eliza
From: Manchester, Eliza
Sent: Monday, July 31, 2017 10:07 AM
To: 'Libby Seifel'
Cc: Kohki Shiga; Shay Fitzpatrick
Subject: Contract Update
Hi Libby,
I understand that you met with OPD and also that you may have talked to Steve or
Mare about their needs. At this point, my new direction is to split your contract into
two parts. OPD would like the economic analysis of the existing property owners to be
a separate contract from the one they are involved with regarding their proforma
analysis. So, I will need to redraft the contracts and get those over to you this week.
Additionally, they would like a list of the documents that you believe you will need to
conduct the analysis to be included in the contract for OPD work.
Thanks so much for all of your help!
Eliza Manchester
Management Analyst,
Economic and Community Development Department
City of South San Francisco
400 Grand Avenue l South San Francisco, CA 94080
Direct: 650.829.6616 Mobile: 650.288.7541 Fax: 650.829.6623
Eliza.manchester@ssf.net
Website: www.ssf.net | follow us on facebook
<dP-SSF-OysterPoint-072017-rev-tracked 7.31.docx>
Libby Seifel | Seifel Consulting Inc.
580 California Street 12th Floor | San Francisco CA 94104
415.618.0700 x707 phone | 415.618.0707 fax
www.seifel.com
This message is intended for the indicated recipient and may contain information that is
privileged, confidential and non-disclosable under applicable law. If you received this
message in error, please email or call our office at 415.618.0700 and then delete all copies
of the message. Thank you.
EXHIBIT6
W ARONZOF A SSOCIATES, I NC. V 310.322.7744
400 CONTINENTAL BOULEVARD, SIXTH FLOOR F 424.285.5356
EL SEGUNDO, CA 90245 WWW.WARONZOF.COM
Memorandum
To: Benjamin J. Reznik, Esq.
Jeffer Mangels Butler & Mitchell, LLP
From: Timothy Lowe, Waronzof Associates
Stanley R. Hoffman, Stanley R. Hoffman & Associates
Date: November 17, 2017
Re: Oyster Point Community Facilities District –
Seifel Analysis Review & Comment
Cc: Seena Samimi, Esq.
Introduction
At your request and on behalf of your client, Kashiwa Fudosan America, Inc. (“KFA”) we have
completed an initial review of two documents and the circumstances surrounding the formation of a new
Community Facilities District at Oyster Point, a commercial and industrial neighborhood area in the
community of South San Francisco, CA. The key documents we have reviewed are:
•The Seifel Consulting, Inc. Memorandum, Economic Benefit and Value Enhancement to Existing
Properties from Oyster Point Capital Improvements to Marian Lee and Alex Greenwood, City of
South San Francisco, August 22, 2017 (the “Seifel report”).
•The Rate and Method of Apportionment for City of South San Francisco Community Facilities
District No. 2017-01, undated (the “RMA”).
The City of South San Francisco (“CSSF”) proposes the formation of Community Facilities District
(“CFD”) No. 2017-01 (Public Services and Facilities) in order to levy two separate special taxes to fund
operations and maintenance (O&M) cost charges upon: 1) the new, mixed use Oyster Point Development
(OPD), and 2) the existing Oyster Point Marina Plaza (owned by KFA and our “Subject property”). The
proposed special taxes include:
•Component A – A Special Tax for municipal services of $0.32 per square foot of existing and
future development; the special tax would cover ongoing O&M costs related to public
improvements to the circulation, trails, roads, beaches, open space and marina areas within the
CFD boundary; Special Tax A would continue in perpetuity as necessary.
Benjamin J. Reznik, Esq.
Oyster Point Community Facilities District – Seifel Analysis Review & Comment
November 17, 2017
Page 2
W ARONZOF A SSOCIATES, I NC.
• Component B – Fuel system replacement and maintenance at $0.07 per square foot of existing
and future development; to fund the replacement of the fuel system at the Oyster Point Marina
which will provide improved services to recreational boaters in the marinas and other ancillary
benefits to marina users and public safety agencies; Special Tax B would terminate once the fuel
system replacement costs have been funded or shall have a sunset date of June 30, 2031,
whichever comes first.
As described in the Seifel report and the RMA, the boundary of the proposed CFD includes only land
owned by OPD, the CSSF and your client KFA. To the best of our knowledge, no other property owners
are included in the CFD. CSSF land consists largely of the Oyster Point Marina and nearby lands, some
of which are sub-leased to commercial users.1
The purpose of this memorandum is to provide comment and input to you and your client on the
suitability and reliability of the Seifel memorandum and its evaluation of the impact of the proposed CFD
upon our Subject property. In its memorandum, Seifel concludes (at page 14 of the memorandum) “The
potential value premiums from the smart growth design features of the planned new development and the associated
amenities would likely offset the additional imposition of the maximum Mello-Roos CFD special tax of $0.39 per
building square foot and could provide additional value enhancement to existing properties.” In short, we
conclude that the Seifel analysis of the impact of the CFD on existing properties (including our
Subject property) is not well-founded and does not reliably or appropriately evaluate either the
benefits (if any) of “the project” or the impacts of the new development and the proposed CFD upon
existing properties. It is not a reasonable basis upon which to conclude that an enhancement to
property value will result from adoption of the CFD. It should not be relied upon at this point in the
municipal approval process by City of South San Francisco staff, elected officials or the public.
Our scope of work has included:
(a) a meeting with representatives of your client and initial gathering of property information
about the Subject property and the proposed project;
(b) a physical inspection of the Subject property and the Oyster Point neighborhood area,
including areas within and adjacent to the proposed boundary of the CFD;
(c) a meeting with representatives of the OPD development team,
(d) an initial gathering of real estate market information;
(e) a review of certain CCSF/Seifel email communication provided by Jeffer Mangles and
(f) an initial review of the Oyster Point Specific Plan (dated 2011) and an accompanying
Development & Disposition Agreement for certain CSSF Redevelopment Agency owned or
controlled lands (generally lying within or consistent with the above-mentioned CSSF-owned
lands) dated March 2011.
Phase I of our work includes these initial steps leading to the preparation of this review and comment
memorandum; Phase II, as contemplated, includes the preparation of our own analyses of the impact of
the CFD upon existing properties, including a specific quantitative analysis of the impact of the CFD on
the Subject property.
1 An official boundary map of the CFD was not attached to the RMA; informal illustrative exhibits are included in the Seifel report.
Benjamin J. Reznik, Esq.
Oyster Point Community Facilities District – Seifel Analysis Review & Comment
November 17, 2017
Page 3
W ARONZOF A SSOCIATES, I NC.
Our Phase I work has been completed in anticipation of this memorandum being presented to the CCSF
along with public comment and input by Jeffer Mangels on behalf of KFA.
Through our initial work, we have learned that Seifel apparently has two simultaneous engagements
underway for CSSF; (1) an assignment evaluating a second, related community facilities district that will
incorporate approximately $106 million of capital improvements in the project area, and (2) an
assignment to evaluate the impact of the second O&M CFD on “existing properties.” The Seifel report
that is the subject of this memorandum is apparently intended to address only the O&M CFD and not the
larger $106 million CFD.2
As we conclude this introduction to our assignment and the property analysis problem at hand, we also
note the following:
1. According to press articles, but yet confirmed in our work, the private lands now owned or
controlled by the private Oyster Point Development (“OPD”) were purchased by an entity
known as Greenland USA from the original signatory to the DDA, Oyster Point Ventures, LLC in
2016.
2. We have been unable to locate or identify any detailed information about the scope of the
services or the specific annual budgets that are intended to be covered by the O&M CFD. For
example, we are unable to ascertain what services are being provided under the O&M CFD, who
or what improvements are receiving those services, what those services will cost, and how those
costs are incorporated into the proposed $0.39 per square foot of building area special tax.
3. We note, for the reader’s benefit, that the KFA-owned Subject property contains a reported
467,358 rentable square feet; application of a $0.39/sf special tax would result in an annual
expense of $182,270.
4. We note that it is our understanding that OPD has applied for an amendment to the existing 2011
Oyster Point Specific Plan to reduce the amount of office space approved under the plan and to
construct residential housing (1,200 dwelling units) in lieu of a portion of the commercial office
space already approved.
5. We note that the Seifel report makes no attempt to describe or explain the inter-relationship of
the two CFDs now planned for Oyster Point; our reading of their report suggests to us that even
they are mixing the costs and benefits of these two projects, let alone the benefits and costs of
related private development by OPD.
Our Initial Findings
• The Seifel report does not include any form of analysis that is sufficiently specific to the “existing
development” (i.e. only the KFA property as the CFD boundary is described) to form reliable and
competent opinions about the impact upon value of the Subject property of the CFD and
associated new development.
The sources of information that Seifel has relied upon to suggest that the “…potential value
premiums from the smart growth design features of the planned new development and the associated
2 This CFD is described in some detail in the Development & Disposition Agreement dated March 2011. The improvements to be
completed, comprising the $106 million budget, are described in substantial detail.
Benjamin J. Reznik, Esq.
Oyster Point Community Facilities District – Seifel Analysis Review & Comment
November 17, 2017
Page 4
W ARONZOF A SSOCIATES, I NC.
amenities would likely offset the additional imposition of the maximum Mello-Roos CFD special tax of
$0.39 per building square foot and could provide additional value enhancement to existing properties.” are
inadequate and certainly not legally sufficient to measure any change in value arising from the
imposition of the proposed CFD and/or the value impact of new development upon the KFA-
owned Subject properties (i.e. “the existing properties.”) Both professional valuation practices
and the statutory standards (in several contexts) set forth the appropriate standards for how
valuation change (impairment or enhancement) should be measured. The very general scope of
the information that Seifel has relied on for its broad estimate of “the economic benefits of similar
types of sustainably-designed developments and the value premiums associated with parks and open space,
increased walkability, transit access, and other types of public improvements in order to assess the potential
value premium on development values that could occur from the planned improvements in Oyster Point”3
is insufficient to reliably measure any enhancement or impairment in the value of “existing
properties.”
• At this point in our analysis, it also appears that insufficient analysis has been done by the CSSF
on ascertaining or defining the geographic range or zone of the benefit of the O&M CFD and in
the determination of the rate and method of apportionment; this results from what we believe is
an unreliable and unsupportable evaluation of (i) who benefits from the O&M CFD and (ii) who
should pay for any benefits of the O&M CFD and how monies to pay those costs should be
collected. Further, the RMA does not appear to take into consideration the positive fiscal benefits
from increased property taxes, retail sales taxes, hotel transient occupancy taxes and other
revenues that will result from new commercial and residential development, increased visitors
and users of the OPM and its surrounding open space, beaches and trails, and from positive
impacts on properties lying nearby but outside the proposed boundaries of the CFD.
The apparent scope of work of the Seifel report does not include any evaluation of the soundness
or appropriateness of the proposed boundary of the CFD and imposition of its special taxes. Had
Seifel undertaken such analysis, we believe that they would have reached the inevitable
conclusion that either (a) the rate and method of apportionment was unfair to existing properties
or (b) that the CFD does not result in benefits that are greater than the cost of the CFD, and
therefore are unlikely to result in any enhancement in the value of existing properties.
These findings and comments are based on this initial review, and may be revised and/or modified
incidental to the completion of Phase II of our work.
Comments on the Evaluation of the Impact of the O&M CFD on Existing Properties
The Seifel report provides an overview of literature from a number of cited articles and papers that
describe either (a) the benefits (as perceived by the authors) of certain kinds of design characteristics and
attributes of public improvements and/or private developments, or (b) quantitative analyses of the
employment, social, community and property benefits of certain sustainability and urban design
attributes. From this literature survey, they identify a range of benefit for projects like (“similar to”) that
proposed for OPD (i.e. “Premiums ranged from five percent to more than one hundred percent…”4 They
then apply assumptions of rent increase, decrease in vacancy and an assumption of cap rate compression
to support the opinion that the benefits of such development are greater than the assumed $0.39 per
square foot of building area special tax.
3 Seifel Memorandum, page 7
4 Seifel Memorandum, page 10.
Benjamin J. Reznik, Esq.
Oyster Point Community Facilities District – Seifel Analysis Review & Comment
November 17, 2017
Page 5
W ARONZOF A SSOCIATES, I NC.
The Seifel report does not take into account the actual circumstances of the “existing properties” (i.e. the
Subject property) in its analysis, nor does it measure valuation enhancement or impairment in a manner
consistent with measuring change in value used in other regulatory contexts. Quite simply, it attempts to
extrapolate, from general literature, a range of performance metrics, and then applies them selectively to
the Subject property. Because of the method they have used – selective application of performance
drawn from generalized or non-specific sources - to a specific property at a specific point in time (now)
their analysis of enhancement in property value fails; it is not reliable and it is not correct.
The most obvious omission in the Seifel analysis is their failure to appropriately evaluate the impact of
the CFD and proposed development upon the Subject property in a structured and comprehensive
manner. The proposed CFD will result in additional direct and immediate operating costs for the Subject
property. Further, due to the age of the Subject property, the additional competition that will result from
the construction of a now-planned 1.6 million square feet of office space will likely trigger the need for
very substantial capital investment in the existing structure in order to maintain (not increase) its current
market position. Quite simply, we anticipate that the present value impacts of the proposed annual
assessment, coupled with the disruption in operating income from necessary capital improvements to the
Subject property itself and the direct capital investment itself, will be adverse, and most likely to cause a
significant impairment in the value of the Subject property. Meanwhile, any benefits that might inure to
the Subject property from new development and/or the CFD amenities and public improvements are
speculative and deferred until (at the earliest) public improvements are fully completed and the new
OPD development phases are substantially completed. We anticipate that a proper and comprehensive
analysis will show that when all of the costs and all of the benefits of new public and private investment
are considered, and when the timing of these costs and benefits are considered, the result will be a net
impairment in value, not a value enhancement.
Comments on the RMA - Insufficient Analysis of the Geographic range or zone of Benefits; Insufficient
Analysis and Support for the Rate and Method of Apportionment
This portion of our review and analysis addresses the following key fiscal issues of the proposed Special
Taxes:
• The rationale for the proposed CFD boundary area and the beneficiaries
• The need for a comprehensive fiscal impact analysis of public revenues and costs
¨ Rationale for Proposed CFD Boundary Area and Selected Beneficiaries
We have noted that we understand that Seifel has not included a review of the RMA in their scope of
work, and apparently has accepted the RMA as presented. The RMA document does not provide any
rationale for the selection of the properties that are included in the proposed CFD boundary or any
rationale for why they are the only benefiting properties.
Based on a review of Exhibit 3, Overall Site Plan (Seifel report) (which is not an official CFD boundary
map), it appears that the boundary encompasses the new, mixed use Oyster Point Development (OPD) –
Phases ID and IID (R&D development), IIID and IVD (residential development), Phases IC (future hotel
site) and IIC (open space, Crescent Park and Beach and the public Marina), and the existing Oyster Point
Marina Plaza offices.
Benjamin J. Reznik, Esq.
Oyster Point Community Facilities District – Seifel Analysis Review & Comment
November 17, 2017
Page 6
W ARONZOF A SSOCIATES, I NC.
No rationale is provided for why a number of other beneficiaries were not included nor even discussed,
such as:
• Existing and new commercial and R&D/biotech employment to the west of the CFD.
• Marina boaters and recreational users – both public and private marinas - that benefit from the
fuel system replacement.
• Households and population from South San Francisco, primarily west of Highway 101 that
benefit from using the beach, park, trail and other amenities.
• Regional and tourist visitors from outside of South San Francisco that also benefit from these
same amenities.
Appropriate recognition of the beneficiaries of the CFD should result in a fair distribution of the
proposed CFD charges, for all of the public circulation and amenity benefits (including those that go
beyond adjacent properties as well as the specific properties included in the CFD boundary). The public
improvements and amenities appear to be constructed only on the new OPD project area, and within the
open space, park and trail areas; no public improvements or amenities are apparently planned for the
Subject properties.
The Subject properties may receive some benefit from these adjacent improvements and amenities, but so
will other properties to the west of the CFD, as well as household and visitor populations from outside of
Oyster Point. We note that the OPMP already has a public trail and landscaping around its perimeter
along the waterfront that it currently maintains at its own expense; no CFD special tax credit
consideration appears to be given for this expense.
The proposed method of apportionment is strictly on a per square foot basis of new or existing residential
or non-residential gross square footage. There should be some consideration of alternative approaches
that consider other methods, such as on a population or employment basis. Also, beneficiaries at the
OPM and of the marina fuel system replacement should be included and may participate in CFD expense
on a user-fee basis.
Additionally, an approach for capturing some of the benefits accruing to users of the public open space,
parks, trails and other amenities from other parts of CSSF and from outside the city should be considered
in order to more equitably spread the O&M cost burden. For example, in the Seifel report (page 7), the
new employment and residential development is expected to catalyze significant new local spending and
spur new economic activity.
¨ Need for Comprehensive Fiscal Impact Analysis of Public Revenues and Costs
A comprehensive fiscal impact analysis is needed to fully understand the increased General Fund
revenues versus the increased Oyster Point public improvements and amenity capital and operating
costs. The Seifel report did not address these potential net fiscal revenue impacts to the City of South San
Francisco as an offset to the proposed CFD special taxes. It is certainly possible that some of these net
fiscal revenues, from a wider array of beneficiaries, could be used to offset a portion of the estimated
increase in future public costs.
From a methodology point-of-view, a fiscal impact analysis would estimate the increase in annual public
revenues, such as property, retail and restaurant sales, transient occupancy (hotel), gasoline, business
Benjamin J. Reznik, Esq.
Oyster Point Community Facilities District – Seifel Analysis Review & Comment
November 17, 2017
Page 7
W ARONZOF A SSOCIATES, I NC.
license, and other identified revenues above what is currently being generated from the existing
development; it would also include the Measure W ½ cent sales and use tax increase that was approved
by voters on November 3, 2015. Then, the fiscal impact analysis would compare the estimated increase in
annual public costs for the operations and maintenance of the proposed improvements and amenities
above the existing O&M costs already being experienced in the proposed CFD boundaries. This
approach would also enable a more detailed understanding of the future public operations and
maintenance costs and to develop an appropriate method of allocating those costs so that specific land
uses that are adjacent to the proposed improvements and amenities pay their fair share
Concluding Comments
Based on our initial work and evaluation, we believe that the Seifel report does not reliably evaluate or
estimate the impact of the proposed public and private development on “existing properties” (i.e. our
Subject property). It is not a reasonable basis upon which to conclude that a value enhancement will
result from the adoption of the CFD. We anticipate that adoption of the CFD will likely lead to an
impairment in property value. Further, all indications are that the decisions that underlie the definition
of the O&M CFD boundary and its rate and method of apportionment are not sound and do not
appropriately consider either (i) the sources of revenues that may result from new public and private
development or (ii) the number and location of beneficiaries of the public improvements that are related
to the O&M CFD.
61498216v1
A Limited Liability Law Partnership Including Corporations / Los Angeles • San Francisco • Orange County
Seena Max Samimi
ssamimi@jmbm.com
1900 Avenue of the Stars, 7th Floor
Los Angeles, California 90067-4308
(310)203-8080 (310)203-0567 Fax
www.jmbm.com
November 27, 2017
VIA ELECTRONIC TRANSMISSION
City of South San Francisco
Attn: City Clerk, Krista Martinelli
krista.martinelli@ssf.net
400 Grand Ave
South San Francisco, CA 94080
Re:Supplemental Written Protest Regarding Establishment of City of
South San Francisco Community Facilities District No. 2017-01
(Public Services and Facilities)
Honorable Members of the City of South San Francisco City Council:
We are writing on behalf of Kashiwa to supplement our November 17, 2017 Protest Letter, based
on the direction of the City Council at the November 20, 2017 hearing.1 Please note that the
comments herein are in addition to, and not in lieu of, our prior correspondence. The main
purpose of this letter is to clarify some points raised at the November 20, 2017 hearing, and
respond to some of the rebuttals raised by the Assistant City Attorney.
1.NO ADDITIONAL SERVICES GENERATED BY OR NEEDED BY THE
EXISTING KASHIWA OFFICE BUILDINGS
Attached hereto as Exhibit 1 is a letter from Kashiwa's Property Manager, Jill Vivanco of
RiverRock Real Estate Group,which establishes the fact that the level of public services
provided to the existing Kashiwa Property have been and continue to be more than sufficient for
its uses. This baseline level of services includes police, fire, traffic circulation,public open
space, amongst others. The additional services to be provided by the new CFD are made
necessary by the proposed new development and would not provide Kashiwa with any additional
benefits.
The City has proposed over 1 million dollars of services and improvements that will be made in
the CFD as "additional services." None of those "additional services" will benefit the Kashiwa
Property. None of those "additional services" are generated by the Kashiwa Property. Indeed, as
the City has acknowledged, both orally and in writing, there will be no benefit to the Kashiwa
1 Capitalized terms used herein have the meanings defined in our November 17, 2017 letter.
City of Culver City and Culver City Planning
Commission
November 27, 2017
Page 2
61498216v1
Property. Moreover, the City's attempt to include Kashiwa in the CFD while leaving off the
similarly situated other properties along Oyster Point Boulevard,for the admitted reason that
adding the other properties would complicate the landowner vote and risk passage of the CFD,
constitutes arbitrary and capricious conduct by the City and undermines the legitimacy of the
process.
In addition to the lack of "additional services," the fuel systems facilities upgrades, needless to
say,also provide no benefit to Kashiwa, as discussed in prior correspondence.
2.THE SEIFEL REPORT AND THE RMA ARE FLAWED
The Assistant City Attorney, unable to dispute the content of the internal emails cited in
Kashiwa's November 17 protest letter, resorted to stating that the emails were "taken out of
context." As counsel for Kashiwa stated during public comment, we urge the City Council
members to review the full email strings, all of which were attached as exhibits to the November
17 protest letter. It will become clear that Kashiwa has not misrepresented any of the emails. It
is telling and significant that the Assistant City Attorney could not rebut the substance or content
of what was quoted in the Kashiwa letter.
Furthermore, please see the report from Scott Ennis of Cushman and Wakefield, attached hereto
as Exhibit 2. The Cushman and Wakefield report, taken in conjunction with the Waronzof report
(attached as Exhibit 6 to Kashiwa's November 17 protest letter), as well as the internal City staff
emails that contain several glaring admissions, all show that the Rate and Method of
Apportionment (RMA), and the Seifel Report (which provides the financial and economic basis
for the RMA) are severely flawed, and do not provide a sufficient basis upon which the City
Council can make an informed decision relating to the CFD. It is extremely important to note
that the RMA sets the basis for the allocations of the special tax for the parcels. If the RMA is
based on flawed and erroneous reasoning and analysis, then obviously, the RMA itself is also
unreliable and flawed.
Finally, Kashiwa maintains that it has not been given sufficient time to perform a thorough
economic analysis (especially given the Tausig report that was released on November 15, just 3
business days before the November 20 hearing on the CFD).
City of Culver City and Culver City Planning
Commission
November 27, 2017
Page 3
61498216v1
3.CONCLUSION
The City Council must use this opportunity to correct the abundant legal errors contained in the
RMA, Seifel Report, and CFD formation documents. Kashiwa is hopeful that the City Council
will act to either exclude Kashiwa from the CFD, or at a minimum, include the other properties
along Oyster Point Boulevard that are similarly situated to Kashiwa within the CFD, so that the
result will be a real landowner vote (as opposed to the current gerrymander which strong-arms
one unluckily singled-out property owner to foot the bill for the new development). The City
Council has an opportunity here to act in the interests of justice, take the correct action by
excluding Kashiwa from the CFD, and avoid litigation where the courts will undoubtedly
vindicate Kashiwa and reverse the myriad legal errors that the City has committed.
Very truly yours,
BENJAMIN M. REZNIK
DAVID P. CINCOTTA
SEENA MAX SAMIMI for
Jeffer Mangels Butler & Mitchell LLP
cc:
Steven T. Mattas, Meyers Nave (smattas@meyersnave.com)
Scott R. Ferguson, Jones Hall (sferguson@joneshall.com)
61497138v1
November 27, 2017
VIA ELECTRONIC TRANSMISSION
City of South San Francisco
Attn: City Clerk, Krista Martinelli
krista.martinelli@ssf.net
400 Grand Ave
South San Francisco, CA 94080
Re: Supplemental Written Protest Regarding Establishment of City of
South San Francisco Community Facilities District No. 2017-01
(Public Services and Facilities)
Honorable Members of the City of South San Francisco City Council:
I am Jill Vivanco, the General Manager of the property located at 395 & 400 Oyster Point
Boulevard and have overseen the operations of the property since April 2016. My oversight
includes the management, operations, tenant relations and maintenance of the above referenced
property.
I understand that there is a proposal pending before the City Council to include the Kashiwa
parcels within a Community Facilities District that will require Kashiwa to pay an additional 39
cents per square foot of rentable space. We have been told that the additional tax that is imposed
on Kashiwa relates to "additional services" that will be provided.
Based on my personal 1-1/2 years and my assistant property manager’s 13+ years of involvement
with the management of this property, I can unequivocally state that the level of services that are
being provided to the Kashiwa property are already more than adequate. First of all, the
Kashiwa property is the site of two traditional commercial office buildings that do not generate a
high volume of calls to service. With that said, the instances that I have heard of where there
have been calls to service have all had very quick response times, and there have been no
complaints. Secondly, the amount of services are adequate for the use at the Kashiwa property,
and the Kashiwa property is not generating any need for "additional services" and would not
benefit from any "additional services" being provided in the greater Oyster Point area. In other
words, to the extent that additional services are actually being provided, that additional need is
being generated by the new proposed development, and not by our building. We are currently
satisfied with our open space, roads, and our police, fire, and other emergency services. Finally,
additional services, to the extent that they actually exist, would not affect Kashiwa in any way.
2
61497138v1
Honorable Members of the City of South San Francisco City Council
City of South San Francisco
November 27, 2017
In fact, the only foreseeable effect on the Kashiwa Property is negative, because our tenants will
have to suffer through worse traffic (due to the extensive new development) in order to arrive at
the office. I see no benefit to this property from “additional services” that we do not and have not
required. I question why the Kashiwa property has been singled out to participate in the
Community Facilities District, where all of the additional services provided are being generated
by, and enjoyed by, other parties.
Why has the City singled out Kashiwa when there are other property owners all along Oyster
Point Blvd. that are in the exact same situation? We are hopeful that the City Council will use
this opportunity to rectify the injustice that is being imposed here.
Sincerely,
Jill Vivanco
General Manager
RiverRock Real Estate Group
As agent for Kashiwa Fudosan America, Inc
580 California Street 12th Floor San Francisco CA 94104 | 415-618-0700 | www.seifel.com
Memorandum
Date November 29, 2017
To: Steven Mattas, Assistant City Attorney, City of South San Francisco
Cc: Marian Lee, Richard Lee and Alex Greenwood, City of South San Francisco
From: Seifel Consulting Inc.
Re: Response to Written Protest Provided by Jeffer Mangels Butler & Mitchell on
November 17, 2017 Regarding Establishment of the City of South San Francisco
Community Facilities District No. 2017-01
On November 17, 2017, the City of South San Francisco received a letter of written protest from Jeffer
Mangels Butler & Mitchell (JMBM), attorneys for Kashiwa Fudosoan America (KFA), regarding the
establishment of the Oyster Point Community Facilities District No. 2017-01. In addition, the City
received subsequent correspondence from JMBM on November 27, 2017.
At the request of the City, we have prepared this memorandum to respond to key points raised in the
JMBM letters and attached exhibits that specifically pertain to the economic analysis presented in our
August 22, 2017 memorandum regarding the “Economic Benefit and Value Enhancement to Existing
Properties from Oyster Point Capital Improvements.”
The November 17 JMBM letter summarizes findings by its consultants, Waronzof Associates and Stanley
R. Hoffman & Associates, and it includes a memorandum prepared by these two firms on the last pages
of the attached exhibit (referred to as the Waronzof memo in this letter). The November 27 JMBM letter
contains separate comments from RiverRock Real Estate Group, which manages the two existing office
buildings owned by KFA, as well as Cushman & Wakefield, which handles leasing for these buildings.
This memorandum begins with a description of the purpose of our August 2017 economic analysis and
then responds to key points raised in the JMBM letters and attached exhibits. As our August 22, 2017
memorandum is referred to as the “Seifel report” in some of the exhibits to the JMBM letters, we also use
this reference in this memorandum, as well as we refer to it as “our report”.
In summary, this memorandum includes the following:
1. Clarifies the purpose of our August 2017 economic analysis contained in the “Seifel report”
2. Specifically responds to points raised in the JMBM letters and attached exhibits by explaining
that we undertook the following analysis, in contrast to what is implied by the JMBM letters and
exhibits:
• Describes the extensive level of proposed improvements at Oyster Point that would
benefit the KFA properties including a new gateway identity that features views of
San Francisco Bay, reconfiguration of roadways to provide for multi-modal circulation,
which will enhance transit, bike and pedestrian access, expansion of trails, open space
and recreational amenities, among other improvements. KFA will not need to pay for
any of the $70 million investment for these capital improvements at Oyster Point, but
rather Oyster Point Development (OPD) and the South San Francisco Successor Agency
will pay for them.
Page 2
• Describes the City’s intention to form a series of CFDs to finance capital improvements
and pay for maintenance and operation of certain improvements on publicly owned
properties and specifically clarifies the purpose of Oyster Point Community Facilities
District No. 2017-01, which is focused on paying for the additional maintenance and
operation services, but not capital costs, required to maintain the proposed improvements
at Oyster Point and to pay for replacement and repair of the existing fueling system at
Oyster Point.
• Provides significant research and analysis to describe the potential economic benefits
and value premiums that could occur from proposed improvements at Oyster Point,
accompanied by additional observations and updated analysis in response to comments
the City received.
1. Purpose of Economic Analysis and Process to Assemble Relevant Information
The City requested Seifel Consulting (Seifel) to evaluate the potential economic benefits and value
enhancement to existing properties from the new mixed-use development of Oyster Point and its
associated major capital investments. A key purpose of our August 2017 analysis has been to inform the
City’s process to create the Oyster Point Community Facilities District No. 2017-01 and to charge CFD
special taxes to existing properties to help maintain and operate these additional public improvements.
In order to perform this analysis, we reviewed and analyzed information provided by the City and OPD to
evaluate if and how the proposed capital improvements would improve Oyster Point and whether these
improvements would provide an economic benefit and value enhancement to existing properties, which
would help offset the additional annual costs associated with the CFD. By necessity, this required
electronic communication, telephone calls and/or meetings with representatives of the City as well as
OPD. In no case was information “spoon fed” as inaccurately stated on page 14 of the JMBM letter, but
rather we performed extensive research and due diligence in order to compile the information that was
presented in the Seifel report and was used to conduct our economic analysis. 1 During this process, we
also gathered information on the two existing office buildings owned by KFA, as further described below.
2. Response to Observations by KFA Representatives
The JMBM letter and Waronzof memo raise several key points regarding the economic analysis presented
in our report, and more broadly regarding the CFD. Each of the following sections presents a response to
key points raised in the JMBM letter and Waronzof memo, which are shown in blue indented text at the
beginning of each section.
a. Seifel Report describes the proposed capital improvements at Oyster Point and the City’s
intention to form a series of CFDs to finance capital improvements and pay for maintenance and
operation of certain improvements on publicly owned properties.
[T]he Seifel report makes no attempt to describe or explain the inter-relationship of the two CFDs
now planned for Oyster Point. (p. 3 of Waranzof memo)
In contrast to what is indicated in the Waranzof memo, the Seifel report specifically describes the capital
improvements that will be undertaken in Oyster Point and explains that these capital improvements will
not be funded by CFD No. 2017-01, but rather CFD No. 2017-01 will be used to provide services
necessary to maintain a portion of these new improvements, and a separate CFD, which does not include
1 As indicated on page 1 of our August 2017 memorandum, we reviewed historical information on the plans and agreements
related to Oyster Point, recent development applications submitted by its developer (Oyster Point Development, LLC, or OPD)
and the City’s conceptual proposal for the CFD special tax levels. We also analyzed relevant market data and researched
publications and academic research to evaluate the potential economic benefits and real estate value premiums arising from
improvements similar to those proposed for Oyster Point.
Page 3
the KFA properties, will be used to help pay for the capital improvements. As explained on pages 4 of the
Seifel report:
The City intends to form a series of CFDs to finance capital improvements and to pay for the
maintenance and operation of certain improvements on publicly owned properties. OPD will be
responsible for the payment of special taxes that will finance a substantial portion of the planned
capital improvements through a separate CFD that will only apply to OPD properties. Oyster
Point Development [OPD] and other existing property owners are proposed to be responsible for
a Public Services and Facilities CFD, referred to as CFD No. 2017-01.
The following bullet points summarize what is presented in the Seifel report on pages 2 to 5 regarding the
proposed capital improvements at Oyster Point, the key components of CFD No. 2017-01 and the
associated special taxes on existing properties, and describes that OPD will also be responsible for the
payment of special taxes that will finance a substantial portion of the planned capital improvements
through a separate CFD that will only apply to OPD properties:
• All of the capital improvements to the public realm are being paid for by the South San Francisco
Successor Agency and Oyster Point Development LLC (OPD) at a total investment of
approximately $70 million, and none of these capital costs are included in CFD No. 2017-01.
o Phase I improvements include infrastructure and open space improvements consisting of
the continuation of new streets, sidewalks and utilities from Phase IC, a new sewer pump
station, bicycle facilities, shuttle bus stops and new open space, including courtyards,
plazas, pocket parks, and improvements to the San Francisco Bay Trail. Based on recent
cost estimates, these improvements are projected to cost about $44 million, and all of
these improvements are on publicly owned land. (In addition, OPD will make landscape
and open space improvements adjacent to their Phase II private development.)
o Phase III and IV public realm improvements are consistent with those approved in the
OPSP in 2011 and will include substantial improvements along the Oyster Cove Marina
shoreline waterfront and the Bay Trail (subject to BCDC guidelines and approval). Based
on the proposed plans submitted by OPD, the City estimates the costs of these public
realm improvements is between $25 million and $30 million, which will be solely funded
by OPD.
• The City intends to form a series of CFDs to finance capital improvements and to pay for the
maintenance and operation of certain improvements on publicly owned properties.
o OPD will be responsible for the payment of special taxes that will finance a substantial
portion of the planned capital improvements through a separate CFD that will only apply
to OPD properties.
o OPD and other existing property owners are proposed to be responsible for a Public
Services and Facilities CFD, referred to as CFD No. 2017-01, with the only facility
included therein being the fuel line replacement.
• The specific purpose of CFD No. 2017-01 is to fund (1) the operation and maintenance of the
new services the City will provide to maintain the the Phase I capital improvements on publicly
owned properties to improve circulation, open space, trails and the beach in the public realm and
(2) replacement of the existing fuel line system that serves boating community in the Oyster Point
Marina area including first responders. .
o The proposed CFD special tax Rate and Method of Apportionment (RMA) for CFD No.
2017-01 consists of two special tax requirements that would be collected for two specific
purposes.
Page 4
o The initial maximum annual combined CFD special tax rate on existing and new
properties is proposed to be $.39 per square foot (SF) of floor area, and the special tax
rate is proposed to decrease once the new hotel developer takes over the site.
o OPD will pay for the maintenance of capital improvements to private properties, and the
costs of maintenance for improvements on private properties is not included in CFD No.
2017-01.
• Although CFD No. 2017-01 will not be used to pay for any of the capital improvement costs,
existing properties will benefit from the approximately $70 million in capital investment in these
new amenities and public realm improvements.
b. Seifel Report provides significant research and analysis to describe the potential economic
benefits and value premiums that could occur from planned improvements at Oyster Point.
The very general scope of the information that Seifel has relied on for its broad estimate of “the
economic benefits of similar types of sustainably-designed developments and the value premiums
associated with parks and open space, increased walkability, transit access, and other types of
public improvements in order to assess the potential value premium on development values that
could occur from the planned improvements in Oyster Point” is insufficient to reliably measure
any enhancement or impairment in the value of the Kashiwa Property. (pp. 3-4 of Waranzof
memo)
In contrast to what is indicated in the Waranzof memo, the Seifel report presents significant research and
analysis on pages 3 to 4 and pages 7 to 12, which describes the potential economic benefits and value
premiums that would likely occur from the planned improvements at Oyster Point report, as summarized
below.
• The $70 million in proposed capital improvements at Oyster Point would significantly improve
the public realm and provide expanded public access and multi-modal travel options to those who
work, visit or live in Oyster Point in the following key ways:
o Create an attractive new gateway entrance for Oyster Point and upgrade the circulation
system to emphasize views of San Francisco Bay, Crescent Park and the Beach (also
referred to as Oyster Point Park).
o Reconfigure and improve existing roads to create a multi-modal circulation system with
enhanced transit, vehicular, walking and bicycle access, including improved access to the
WETA ferry service, BART and Caltrain.
o Improve and expand the open space and trail system, which will include new recreational
amenities and restrooms at Crescent park, extensive trail system throughout Oyster Point,
and well-designed plazas, parks and open space that will encourage active use and
promote retail activity.
• Furthermore, the proposed smart growth development of Oyster Point, featuring compact,
sustainably-designed mixed-use development, will enhance Oyster Point’s economic
competitiveness and its attractiveness to businesses who increasingly understand that corporate
sustainability policies are a key to attracting and retaining top talent.
• As described in the prior section above, this $70 million investment in proposed improvements
will be undertaken at the sole cost of the City of South San Francisco and OPD, but these
improvements will benefit all existing properties, including KFA. At full build-out, the
investment value of these capital improvements will be equal to about $18 per building square
foot across the approximately 3.8 million square feet (SF) of existing and new development.
Page 5
• Our report presents a series of citations to research reports and articles from well-respected
authorities regarding how values in real estate development and business operations are positively
affected by the types of improvements proposed in Oyster Point, which will collectively enhance
walkability, multi-modal connectivity, open space and park amenities, trails and sustainability
features, including the Urban Land Institute, Bain and Company, Nielsen, Brookings Institute,
Center for Real Estate and Urban Analysis, Trust for Public Land and numerous reports cited by
the U.S. Environmental Protection Agency and Department of Transportation. A few key points
made in these publications and presented in greater detail in our report are worth emphasizing:
• Suburban development needs to feature compact, walkable mixed-use communities (a.k.a.
smart growth developments) in order to remain economically competitive.
• Companies, employees, and residents are looking for a dynamic and stimulating environment
to live and work…so they’re looking for suburbs that are already that way or are
repositioning themselves.
• Compact, walkable development projects, especially those with good transit access, have an
established record of generating higher rents and sales prices for developers and investors
because buyers are willing to pay a premium for them.
• Businesses and residents are willing to pay more for property in walkable neighborhoods
that offer urban amenities such as a mix of retail and land uses including employment,
housing, and entertainment. Premiums ranged from 5 percent to more than 100 percent
depending on product type and area characteristics.
• Based on a review of more than 20 research studies (one of which compiled results from 30
studies2), premiums from open space improvements ranged from 3 percent to 15 percent.3
• Although the main criteria for choosing office space consists of geographic location,
proximity to transport links and cost, access to open spaces ranks fifth and is deemed more
important than amenities and building aesthetics when choosing a commercial property.
• As more communities create distinct destinations that are also attractive places to live and
work, a growing body of research shows how trails can contribute to their success.
Based on the research and findings in these publications, the Seifel report finds that the planned new
development and associated amenities will bring new activity, vibrancy and improved multi-modal
accessibility to Oyster Point, qualities that will drive value premiums in an area with limited current
prestige and attractiveness.
c. Seifel Report specifically analyzes the actual circumstances of the existing properties.
The Seifel report does not take into account the actual circumstances of the “existing properties” (i.e.
the Subject property) in its analysis, nor does it measure valuation enhancement or impairment in a
manner consistent with measuring change in value used in other regulatory contexts. (p. 5 of
Waranzof memo)
In contrast to what is indicated in the Waranzof memo, the Seifel report specifically includes a discussion
on page 5 of the “actual circumstances” of the two existing office buildings owned by Kashiwa,
indicating: [a]ccording to the property’s website, Oyster Point Marina Plaza has 467,358 rentable SF of
2 https://www.tpl.org/measuring-economic-value-city-park-system#sm.0001ic2wav1deuei1uykxe2fwngsb
3 http://transbaycenter.org/uploads/2014/01/TJPA_Doc_FinalDraft_131218_lores.pdf
Page 6
office space in two five-story Class A LEED Platinum office buildings. Building amenities include a 2,000
SF cafeteria-style restaurant/deli, dry cleaners, fitness centers, locker room & showers and building
conference centers. The buildings are adjacent to the San Francisco Bay Trail and located to the north of
Oyster Point Park and Beach. Current asking rents are reported to be $3.15/SF/month or about
$38/SF/year. Of note, the Waronzof memo similarly reports 467,358 rentable SF as the amount of office
space in the Kashiwa properties, and Scott Ennis of Cushman & Wakefield confirmed that $3.15 per
rentable square foot (rsf) is the current rental rate during his written comments on November 20.
The Seifel report presents information on pages 5 to 7 regarding the existing KFA buildings and market
data on office properties in South San Francisco and San Mateo County, as summarized below.
• Recent market data from three brokerage firms (including Cushman and Wakefield who handles
leasing for KFA) presents current market conditions for office and R&D property in
South San Francisco and San Mateo County in order to understand the potential financial impact
of CFD No. 2017-01 on the KFA holdings. This market data is used to estimate the current
market value for office buildings in South San Francisco and to undertake the real estate pro
forma analysis that is used to evaluate the potential economic cost of CFD No. 2017-01 and
potential economic benefits to KFA property from improvements to Oyster Point.
• Average asking rents for office space in South San Francisco were reported by these three
brokerage firms as ranging between $3.32 to $3.66/SF per month or about $41 to $44/SF per
year.4 These rents were used to estimate a range of current market values for office buildings
based on standard financial assumptions for vacancy rates (10% of lease revenues), operating
expenses (30% of effective gross rent) and cap rates (5.5% to 6%). As further described in our
report and shown in Table 1, market values for Class A midrise office buildings in South
San Francisco are estimated to currently range from about $400/SF to $500/SF. In contrast to
what Mr. Ennis indicates, the market data that we used do not reflect rents or values for
biotech/R&D space but are focused on office space.
• As indicated on page 12 of our report, the financial performance and ultimate value of an office
property is primarily determined by several key factors: rental rates, occupancy levels, annual
operating costs (and how much may be passed through to tenants) and a measurement of the risk
and cost of capital, which is often translated into a capitalization rate (or cap rate). The
extensive economic literature cited in our report demonstrate that improvements in walkability,
multi-modal connectivity, open space and park amenities, trails and sustainability features,
generate positive impacts on real estate performance and enhance economic competitiveness,
which are specifically translated into increased rental rates, decreased vacancy rates (or enhanced
occupancy rates) and lowered (compressed) cap rates.
• Based on the project information and economic research presented in our report, we find that the
smart growth development of Oyster Point along with the associated capital improvements will
likely improve Oyster Point’s economic competitiveness and increase economic performance
(and property values) at Oyster Point Marina Plaza as the result of higher rents, lower vacancy
rates and cap rate compression, which will in turn likely offset the costs of the annual CFD
special tax, as demonstrated in the pro forma analysis shown in Table 2 on page 13 of our report.
• At the November 20 hearing and in his November 27 letter, Scott Ennis of Cushman &
Wakefield, made several points about market conditions at the existing buildings and in South
San Francisco, which we also want to address here.
Page 7
• Mr. Ennis indicates that rents are typically 10-20% less in rents than nearby office buildings
in the Gateway, Bayhill and Sierra Point (Brisbane). Our report specifically indicates on
page 12 that current asking rents at the KFA properties appear to be about 10% below
average market rents for South San Francisco as reported by the three brokerage firms. (Of
note, according to these three brokerage firms, average asking rents in Brisbane tend to be
about 7-10% higher than South San Francisco, which likely explains the 20% difference that
Mr. Ennis points out.) Similar to Mr. Ennis in his November 20 letter, we did not use the term
“asking rents” in all instances in our report, but rather we used this term at the beginning of
the section that discussed the market rent data, and specifically noted it with respect to the
KFA property. (Mr. Ennis specifically refers to “rental rates at Oyster Point Marina
Plaza…are currently at $3.15/rsf per month in 2017, a rise of 80% since the low in 2008.”
• Mr. Ennis indicates that access to Highway 101, BART and CalTrain are very important to
attracting tenants and achieving higher rents. The proposed improvements at Oyster Point are
designed to enhance vehicular, transit, bike and pedestrian access to Oyster Point, which will
improve multi-modal accessibility for the KFA buildings.
• Mr. Ennis indicates that having retail and a park facility over one mile away will have no
impact on KFA’s office tenants, but he neglects to indicate that the proposed improvements
to Crescent Park and the Beach will be immediately to the south of the KFA properties within
a short walking distance, and the Bay trail improvements will provide enhanced access to the
ferry terminal and the proposed transit stops at Oyster Point. Based on the literature cited in
our report, these types of improvements have been shown to help increase rents and enhance
property values.
• Mr. Ennis indicates that the comparison in our report of the special tax of $.39 to the
estimated market values for office buildings in South San Francisco (about one-tenth of one
percent, or 0.1%) to be misleading, but this is a common way that Mello Roos special tax
rates are measured in California, as a percentage of property values similar to property tax
rates, which is why we did this comparison.
• Mr. Ennis indicates that the value for the KFA buildings is much lower than estimated in our
report but did not provide specific operating performance data on the KFA property other
than indicating that net operating income (NOI) is $6.1 million. Based on 467,358 rsf, this
implies annual net operating income of about $13/rsf, which appears quite low given current
market conditions and does not appear to correspond with typical rent levels, vacancy rates,
and operating expense ratios for similar office properties in the area.
• As noted in our report and above, the proposed improvements will significantly upgrade
Oyster Point and improve multi-modal access. Given Mr. Ennis’s comments regarding the
current challenges with leasing and operating performance of the KFA buildings, these
improvements could be very important to enhancing KFA’s competitiveness compared to
other properties in South San Francisco and other parts of northern San Mateo County.
• As we did not have and still do not have actual operating performance data on the KFA
property, we used KFA’s reported monthly rental rate of $3.15/SF to estimate the value of the
KFA buildings, along with a consistent set of market assumptions commonly used and
reported by brokerage firms and other real estate professionals for vacancy rates, operating
expenses and cap rates. (Of note, the City provided our report to KFA in late August/early
September and KFA did not provide any specific input or feedback on these assumptions
until his November 27 letter. As noted above, Mr. Ennis used a 5.5% cap rate assumption in
his letter and Mr. Matt Williams indicated a cap rate of 6% in his public testimony on
November 20, consistent with the range used in our report.)
Page 8
• In response to Mr. Ennis’s observations, we prepared an updated version of Table 2, which is
included as Exhibit 1 to this memorandum. Exhibit 1 includes an additional scenario whereby
there is no assumed premium adjustment in rents, vacancy or cap rates from the proposed
improvements to help offset the Mello Roos special tax and an additional scenario that
attributes a portion of the investment benefit of the $70 million investment in improvements
to the KFA properties. These two additional scenarios indicate an impact on value ranging
from -2% to 3% (in addition to the range of 1% to 8% shown in Table 2 in our report).
Conclusion
We recognize that real estate professionals may differ in terms of how they would assess the potential
economic benefits and potential value premiums from the proposed improvements at Oyster Point. Based
on the information that we have compiled and the analysis that we performed, we continue to find that the
potential value premiums from about $70 million in capital investment in these new amenities and smart
growth design features of the proposed new development will likely offset the additional annual burden
from the maximum CFD special tax of $0.39 per building square foot, and could provide additional value
enhancement to existing properties.
In a final note, although the Waronzof memo indicates that a comprehensive fiscal analysis of public
revenues and costs is needed to fully understand the increased City General Fund revenues versus the
increased Oyster Point public improvements and amenity capital and operating costs, this was not a focus
of our analysis or our report. However, as the City indicated during the November 20 public hearing, the
operation and maintenance services that will be provided and funded by CFD No. 2017-01 are
specifically related to the City’s costs for providing additional increased services for the new public
improvements. As such, the CFD services are not related to the City’s general existing service
obligations and fiscal costs to service development (for example to provide police, fire and
emergency services to existing and new buildings).
Exhibit 1 (Based on Table 2 of Seifel Report)
Effect of CFD Special Tax on Oyster Point Marina Plaza Given Potential Premium Adjustments and Oyster Point Capital Investment Benefit
Class A Office Space in South San Francisco (Per Building Square Foot)
Potential Premium Adjustments November 2017 Analysis
Average
Market
Rent
Oyster Point
Marina Plaza:
Current
Asking Rents
3% Increase
in Rent
Vacancy
Decrease to
9%
5% Decrease
in Cap Rate
No Premium
Adjustment
Assumed
With Allocated
Investment
from Proposed
Oyster Point
Improvements
Office Rental Revenue (Q2 2017)
Monthly Lease Rate $3.53 $3.15 $3.24 $3.24 $3.24 $3.15 $3.15
Annual Lease Rate $42.32 $37.80 $38.93 $38.93 $38.93 $37.80 $37.80
Less: Vacancy Allowance $4.23 $3.78 $3.89 $3.50 $3.50 $3.78 $3.78
Effective Gross Rent (EGR)$38.09 $34.02 $35.04 $35.43 $35.43 $34.02 $34.02
Less: Operating Expenses $11.43 $10.21 $10.51 $10.63 $10.63 $10.21 $10.21
Less: CFD Special Tax $0.00 $0.00 $0.39 $0.39 $0.39 $0.39 $0.39
Net Operating Income $26.66 $23.81 $24.14 $24.41 $24.41 $23.42 $23.42
Cap Rate Scenario 1 5.50%5.50%5.50%5.50%5.23%5.50%5.50%
Capitalized Value per SF $485 $433 $439 $444 $467 $426 $426
Estimated Building Value $202,370,000 $205,170,000 $207,510,000 $218,260,000 $199,090,000 $199,090,000
Oyster Point Investment Benefit $8,410,000
Estimated Value (With OP Investment)$207,500,000
Difference from Current Value $2,800,000 $5,140,000 $15,890,000 -$3,280,000 $5,130,000
Percent Value Adjustment 1%3%8%-2%3%
Cap Rate Scenario 2 6.00%6.00%6.00%6.00%5.70%6.00%6.00%
Capitalized Value per SF $444 $397 $402 $407 $428 $390 $390
Estimated Building Value $185,540,000 $187,880,000 $190,210,000 $200,030,000 $182,270,000 $182,270,000
Oyster Point Investment Benefit $8,410,000
Estimated Value (With OP Investment)$190,680,000
Difference from Current Value $2,340,000 $4,670,000 $14,490,000 -$3,270,000 $5,140,000
Percent Value Adjustment 1%3%8%-2%3%
Key Pro Forma Assumptions
Average Market Rent:Based on average lease rents from Table 1.
Vacancy Rate:10%of lease revenues (and with adjustments)
Operating Expenses:30%of effective gross rent
Premium adjustments: Premium adjustments are made cumulatively across the three columns.
Oyster Point Marina Plaza 467,358 rentable square feet (for existing office buildings)
Oyster Point (OP) Investment Benefit $18 per building square feet (About $70 million/about 3.8 million square feet of new and existing buildings)
Note: Numbers may not calculate precisely due to rounding.
Source: CBRE, Cushman & Wakefield, Kidder Matthews, Seifel Consulting.
City Council Special Meeting
Public Hearing
December 4, 2017
1
Mello-Roos Community Facilities Act of 1982
◦Authorizes City to levy annual special taxes on
properties within the CFD boundary based on 2/3
property owner approval
October 11, 2017
◦City adopted the Resolution of Intention to Establish
a CFD to be known as “City of South Francisco CFD
No. 2017-01 (Public Services and Facilities)”
2
3
Special taxes collected will be used to:
1) Finance public services and public
infrastructure
2) OPD and Successor Agency are funding
approximately $70 million in infrastructure
improvements in the Oyster Point Marina area
Authorized Services
1) Maintenance of new public infrastructure
parks, parkways, streets, storm drains and
open space
2) Police services
Authorized Facilities
◦Replace and Renovate
1) Fuel Dock
2) Fueling System
4
5
CFD Report, p. 6 (Attachment 2)
Authorized Services – new services only
◦Services related to maintenance of new public
infrastructure, including parks, parkways, streets,
storm drains and open space (Approx $998,000)
Current services at Oyster Point not included
in CFD 2017-01, including:
◦Occasional park maintenance (~$5,040/yr)
◦Pump Station Maintenance (~$8,000/yr)
◦Methane monitoring (~$67,000/yr)
6
Authorized Services
◦$0.32 per square foot of developed floor area
◦Levied in perpetuity
Authorized Facilities
◦$0.07 per square foot of floor area
◦Tax collection capped at $2,750,000
◦Sunset of tax is estimated to be 6/30/31
7
8
Amended Boundary Map (Attachment 3)
Parties
OPD
(consented)
City
(consented)
Kashiwa
9
CFD Report, p. 2 (Attachment 2)
1) Conduct public hearing
Regarding proposed establishment of CFD
2) Adopt the Resolution of Formation of CFD
File No. 17-1124
3) Adopt the Resolution Calling Special
Landowner Election for CFD
File No. 17-1125
10
11
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:17-1124 Agenda Date:12/4/2017
Version:1 Item #:2a.
Resolution of formation of Community Facilities District,City of South San Francisco Community Facilities
District No. 2017-01 (Public Services and Facilities).
WHEREAS,on October 11,2017,this City Council adopted Resolution No.17-981 entitled “Resolution of
Intention to Establish a Community Facilities District”(the “Resolution of Intention”),stating its intention to
form the "City of South San Francisco Community Facilities District No.2017-01 (Public Services and
Facilities)"(the “CFD”)under the Mello-Roos Community Facilities Act of 1982,Chapter 2.5 of Part 1 of
Division 2 of Title 5, commencing at Section 53311, of the California Government Code (the “Act”); and
WHEREAS,the Resolution of Intention,incorporating a map of the proposed boundaries of the CFD,and
stating the public services and public facilities to be provided and the rate and method of apportionment of the
special tax to be levied within the CFD to pay for the public services and public facilities,is on file with the
City Clerk and the provisions thereof are incorporated herein by this reference as if fully set forth herein; and
WHEREAS,on November 20,2017 and on this date,this City Council held a noticed public hearing as
required by the Act and the Resolution of Intention relative to the proposed formation of the CFD; and
WHEREAS,at the hearing all interested persons desiring to be heard on all matters pertaining to the formation
of the CFD,the public services and public facilities to be provided in the CFD and the levy of such special tax
were heard and a full and fair hearing was held; and
WHEREAS,at the hearing evidence was presented to this City Council on such matters before it,including a
special report (the “CFD Report”)as to the public services and public facilities to be provided through the CFD
and the estimated costs thereof,a copy of which is on file with the City Clerk,and this City Council at the
conclusion of said hearing is fully advised in the premises; and
WHEREAS,written protests have not been filed with the City Clerk against the formation of the CFD,the
furnishing of specified types of public services and public facilities,or the rate and method of apportionment of
the special taxes by 50%or more of the registered voters residing within the territory of the CFD or property
owners of one-half or more of the area of land within the CFD and not exempt from the proposed special taxes;
NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of South San Francisco,as
follows:
City of South San Francisco Printed on 12/7/2017Page 1 of 3
powered by Legistar™
File #:17-1124 Agenda Date:12/4/2017
Version:1 Item #:2a.
1.Recitals. The foregoing recitals are true and correct.
2.No Majority Protest.The proposed special tax to be levied within the CFD has not been precluded by
majority protest pursuant to section 53324 of the Act.
3.Prior Proceedings Valid.All prior proceedings taken by this City Council in connection with the
establishment of the CFD and the levy of the special tax have been duly considered and are hereby found and
determined to be valid and in conformity with the Act.
4.Name of CFD.The community facilities district designated "City of South San Francisco Community
Facilities District No. 2017-01 (Public Services and Facilities)" is hereby established pursuant to the Act.
5.Boundaries of CFD.The boundaries of the CFD,as set forth in the map of the CFD heretofore
recorded in the San Mateo County Recorder’s Office on October 27,2017,at 10:51 a.m.,in Book 18 of Maps
of Assessment and Community Facilities Districts at Page 50,as amended by an amended boundary map of the
CFD heretofore recorded in the San Mateo County Recorder’s Office on November _30___,2017,at
_11:12____a.m.,in Book _18___of Maps of Assessment and Community Facilities Districts at Page _51__,
are hereby approved, are incorporated herein by reference and shall be the boundaries of the CFD.
6.Description of Services and Facilities.The type of public services (the “Services”)and public
facilities (the “Facilities”)proposed to be financed by the CFD and pursuant to the Act shall consist of those
items shown in Exhibit A hereto and by this reference incorporated herein.
7.Special Tax.
a.Except to the extent that funds are otherwise available to the CFD to pay for the Services and the
Facilities,a special tax (the “Special Tax”)sufficient to pay the costs thereof,secured by the recordation of a
continuing lien against all non-exempt real property in the CFD,is intended to be levied annually within the
CFD,and collected in the same manner as ordinary ad valorem property taxes or in such other manner as may
be prescribed by this City Council.
b.The proposed rate and method of apportionment of the Special Tax among the parcels of real property
within the CFD (reflecting clarifying additions to the version attached as Exhibit B to the Resolution of
Intention),in sufficient detail to allow each landowner within the proposed CFD to estimate the maximum
amount such owner will have to pay, are shown in Exhibit B attached hereto and hereby incorporated herein.
c.In the case of the Special Tax when it is levied on any parcel used for private residential purposes to pay
for the Facilities,the Special Tax levy shall comply with all applicable provisions of the Act,including those set
forth in Section 53321(d)of the Act.In furtherance of the foregoing,the portion of the Special Tax to be levied
for Facilities shall have a sunset based upon the 2030 tax year no later than June 30,2031.Such sunset date
shall be advanced or extended for the same period that construction of the development of property currently
owned by Oyster Point Development is advanced or delayed,so as to be coterminous with total collections of
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owned by Oyster Point Development is advanced or delayed,so as to be coterminous with total collections of
such portion of the Special Tax having produced an amount not exceeding $2,750,000,or such lesser amount as
actually is authorized by the City and expended on the Facilities.
d.Certain property within the boundaries of the CFD is currently owned by the City (the “City-Owned
Property”).Under Section 53317(f)(3)of the Act,this City Council hereby states all or a portion of the City-
Owned Property is intended to be transferred (by sale or lease)to private ownership and agrees that all or a
portion of the City-Owned Property will be subject to the Special Taxes on the same basis as private property
within the CFD,and affirmatively waives any defense based on the fact of public ownership,to any action to
foreclose on the property in the event of nonpayment of the Special Taxes.Accordingly,the City constitutes a
qualified landowner elector under the Act with respect to the City-Owned Property.
8.Responsible Official.The Finance Director,400 Grand Avenue,South San Francisco,CA 94080,
telephone number (650)877-8500,is the officer of the City who will be responsible for preparing annually a
current roll of the levy of the Special Tax obligations by assessor’s parcel number and who will be responsible
for estimating future levies of the Special Tax.
9.Tax Lien.Upon recordation of a notice of special tax lien pursuant to Section 3114.5 of the California
Streets and Highways Code,a continuing lien to secure each levy of the Special Tax shall attach to all
nonexempt real property in the CFD and this lien shall continue in force and effect until the Special Tax
obligation is prepaid and permanently satisfied and the lien canceled in accordance with law or until collection
of the Special Tax by the City ceases.
10.Appropriations Limit.In accordance with the Act,the annual appropriations limit,as defined by
subdivision (h)of Section 8 of Article XIII B of the California Constitution,of the CFD is hereby preliminarily
established at $1,500,000,and such appropriations limit shall be submitted to the voters of the CFD as hereafter
provided.The proposition establishing such annual appropriations limit shall become effective if approved by
the qualified electors voting thereon and shall be adjusted in accordance with the applicable provisions of the
Act and the Constitution.
11.Election.Pursuant to the Act,the proposition of the levy of the Special Tax and the proposition of the
establishment of the appropriations limit specified above shall be submitted to the qualified electors of the CFD
at an election the time,place and conditions of which election shall be as specified by a separate resolution of
this City Council.
12.Effective Date. This resolution shall take effect upon its adoption.
*****
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EXHIBIT A
CITY OF SOUTH SAN FRANCISCO
Community Facilities District No. 2017-01
(Public Services and Facilities)
DESCRIPTION OF AUTHORIZED SERVICES AND FACILITIES
Authorized Services
The services authorized to be funded by the CFD and paid by the Special Taxes
levied within the CFD (the "Authorized Services") are described below. For purposes of
the CFD, the Authorized Services shall incorporate and have the meaning given to the
term "services" in section 53313 of the Mello-Roos Community Facilities Act of 1982.
(a) Police protection services.
(b) Maintenance and lighting of parks, parkways, streets, roads, and open
space, including without limitation:
• roadway maintenance,
• streetlight maintenance and operations,
• traffic signal maintenance and operations,
• parks, waterfront and Bay Trail maintenance,
• landscaping, parkway, median and open space maintenance, including
erosion prevention,
• public surface parking maintenance, and
• operation and maintenance of public restroom buildings.
(c) Operation and maintenance of storm drainage systems.
The cost of the Authorized Services shall include all related administrative costs
and expenses, necessary utility (water and electricity) costs, and related reserves for
replacement of vehicles, equipment and facilities.
Authorized Facilities
The facilities shown below (the "Authorized Facilities") are proposed to be funded
i n whole or in part by the CFD. The Authorized Facilities shall be owned and operated
b y the City or by another public agency, and shall be constructed, whether or not
~~7i117[~~1
acquired in their completed states, pursuant to the plans and specifications approved by
the City and its officials.
(a) Replacement and renovation of the publicly owned fuel dock and
related appurtenances located at the Oyster Point Marina, and the related
p ublicly owned fueling system consisting of fuel lines, underground gasoline and
d iesel storage tanks currently located at the intersection of East Basin Road and
Marina Boulevard, and related appurtenances (collectively, the "Fuel System"),
and, if circumstances so warrant as determined by the City, removal and
remediation of all or a portion of the Fuel System.
The Authorized Facilities to be financed or funded shall include, without
limitation, the following costs: appurtenances to and improvements related to the
Authorized Facilities; related utility lines, pipes and conduits; acquiring rights-of-way
(including any right-of-way intended to be dedicated by the recording of a final map);
d esign, architecture, engineering and planning; any environmental review, studies,
remediation and mitigation; traffic studies, surveys, geotechnical studies, soils testing,
or other studies related to the Authorized Facilities; permits, plan check and inspection
fees; insurance, legal and related overhead costs; project management, coordination
and supervision; and any other costs or appurtenances related to any of the foregoing.
The Special Taxes may also be used to pay for the expansion, improvement or
rehabilitation of any of the Authorized Facilities, and to reimburse the City or any third
parties for advances made to purchase, construct, expand, improve or rehabilitate any
of the Authorized Facilities.
Additional Authorized Expenses
I n addition, the following costs are authorized to be funded by the Special Taxes
levied within the CFD:
(a) Administrative expenses including the costs incurred to determine, levy
and collect the Special Taxes, including compensation of City employees for
administrative work performed in relation to the CFD, the fees of consultants and legal
counsel, the charges imposed by the County for the levy and collection of the Special
Taxes on the property tax rolls, preparation of required reports, and any other costs
i ncurred in the administration of the CFD by the City.
(b) Any amounts needed for operating reserves and capital reserves.
(c) Any amounts needed to cure actual or estimated delinquencies in Special
Taxes for the current or previous fiscal years.
(d) To reimburse the City or any third parties for actual costs advanced that
are related to the formation of the CFD.
Exhibit A
RATE AND METHOD OF APPORTIONMENT FOR
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO.2017-01
(PUBLIC SERVICES AND FACILITIES)
CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATEO,
STATE OF CALIFORNIA
A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of Taxable Property
in City of South San Francisco Community Facilities District No. 2017-01 (Public Services and
Facilities), City of South San Francisco, County of San Mateo, State of California ("CFD No.
2017-01") and collected each Fiscal Year commencing in Fiscal Year 2017-18, in an amount
determined by the City Council through the application of the appropriate Special Tax for
"Developed Property," as described below. All of the real property in CFD No. 2017-01, unless
exempted by law or by the provisions hereof, shall be taxed for these purposes, to the extent and
in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an
Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the
land area shown on the applicable final subdivision map, parcel map, condominium plan,
record of survey, or other map or plan recorded with the County. The square footage of an
Assessor's Parcel is equal to the Acreage of such parcel multiplied by 43,560.
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being
Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California.
"Administrative Expenses" means the following actual or reasonably estimated costs
directly related to the administration of CFD No. 2017-01: the costs of computing the
Special Taxes and preparing the annual Special Tax collection schedules (whether by the
City or any designee thereof or both); the costs of collecting the Special Taxes (whether by
the City or otherwise); the costs to the City, CFD No. 2017-01, or any designee thereof of
complying with CFD No. 2017-01 or obligated persons disclosure requirements associated
with the Act; the costs associated with preparing Special Tax disclosure statements and
responding to public inquiries regarding the Special Taxes; the costs to the City, CFD No.
2017-01, or any designee thereof related to an appeal of the Special Tax; and the City's
annual administration fees and third party expenses. Administrative Expenses shall also
include amounts estimated or advanced by the City or CFD No. 2017-01 for any other
administrative purposes of CFD No. 2017-01, including attorney's fees and other costs
related to commencing and pursuing to completion any foreclosure of delinquent Special
Taxes.
"Assessor's Parcel" or "Parcel" means a lot or parcel shown on an Assessor's Parcel Map
with an assigned Assessor's Parcel number.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 1
"Assessor's Parcel Map" means an official map of the Assessor of the County designating
parcels by Assessor's Parcel number.
"Authorized Facilities" means those facilities eligible to be financed by CFD No. 2017-
01, as defined in the Resolution of Formation.
"Authorized Services" means those services eligible to be funded by CFD No. 2017-01,
as defined in the Resolution of Formation and authorized to be financed by CFD No. 201 ~-
Ol pursuant to Section 53313 and Section 53313.5 of the Act. CFD No. 2017-01 shall
finance Authorized Services only to the extent that they are in addition to those provided
in the territory of CFD No. 2017-01 before CFD No. 201701 was created and such
Authorized Services may not supplant services already available within CFD No. 2017-01
w hen CFD No. 2017-01 was created.
"Building Permit" means a permit issued by the City or other governmental agency for
the construction of a residential or non-residential building on an Assessor's Parcel.
"CFD Administrator" means an official of CFD No. 2017-01, or any designee thereof,
responsible for determining the Special Tax Requirement for Municipal Services and the
Special Tax Requirement for Fuel System Replacement and Maintenance calculations and
providing for the levy and collection of the Special Taxes.
"CFD No. 2017-01" means City of South San Francisco Community Facilities District
No. 2017-01 (Public Services and Facilities), City of South San Francisco, County of San
Mateo, State of California.
"City" means the City of South San Francisco, California.
"City Council" means the City Council of the City.
"County" means the County of San Mateo.
"Component A" means the Special Tax Component to be levied in each Fiscal Year on
each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for
Municipal Services.
"Component A Maximum" means the Component A maximum, determined in
accordance with Section C below that can be levied by the City in any Fiscal Year on any
Assessor's Parcel of Taxable Property.
"Component B" means the Special Tax Component to be levied in each Fiscal Year on
each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Fuel
System Replacement and Maintenance.
"Component B Maximum" means the Component B maximum, determined in
accordance with Section C below that can be levied by the City in any Fiscal Year on any
Assessor's Parcel of Taxable Property.
City of South San Francisco December 4, 2017
CFD Nn. 2017-01 (Pufilic Services and Facilities) Page 2
"Component Maximum" means the Component A Maximum and/or Component B
Maximum, as applicable.
"Developed Property" means, for each Fiscal Year, all Assessor's Parcels for which a
Building Permit was issued on or before May 1 of the Fiscal Year preceding the Fiscal
Year for which the Special Taxes are being levied.
"Fiscal Year" means the period starting July 1 and ending on the following rune 30.
"Non-Residential Floor Area" means the total building square footage of the non-
residential buildings) or the non-residential portion of a building with both residential and
non-residential areas located on an Assessor's Parcel of Developed Property, measured
from outside wall to outside wall, not including space devoted to stairwells, public
restrooms, lighted courts, vehicle parking and areas incident thereto, and mechanical
equipment incidental to the operation of such building. The determination of Non-
Residential Floor Area shall be made by reference to the Building Permits) issued for such
Assessor's Parcel and/or to the appropriate records kept by the City's Building Division,
as reasonably determined by the CFD Administrator.
"Non-Residential Property" means any and each Assessor's Parcel of Developed
Property for which a Building Permit permitting the construction of one or more non-
residential units or facilities has been issued by the City or some other governmental
agency.
"Proportionately" means, for Component A, the ratio of Component A to Component A
Maximum is equal for all Assessor's Parcels of Developed Property and, for Component
B, the ratio of Component B to Component B Maximum is equal for all Assessor's Parcels
of Developed Property.
"Property Owner Association Property" means, for each Fiscal Year, any Assessor's
Parcel within the boundaries of CFD No. 2017-01 that is owned by or irrevocably offered
for dedication to a property owner association, including any master or sub-association,
not including any such property that is located directly under a residential ornon-residential
structure.
"Public Property" means, for each Fiscal Year, (i) any property within the boundaries of
CFD No. 2017-01 that is owned by or irrevocably offered for dedication to the Federal
government, the State, the City, or any other public agency; provided however that any
property leased by a public agency to a private entity and subject to taxation under Section
53340.1 of the Act, as such section may be amended or replaced, shall be taxed and
classified in accordance with its use; or (ii) any property within the boundaries of CFD No.
2017-01 that is encumbered by an unmanned utility easement making impractical its
utilization for other than the purpose set forth in the easement.
"Rate and Method of Apportionment" or "RMA" means this Rate and Method of
Apportionment of Special Tax.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 3
"Residential Floor Area" means all of the square footage of living area within the
perimeter of a residential structure located on Residential Property, not including any
carport, walkway, garage, overhang, patio, enclosed patio, public areas and building
administrative areas such as the lobbies, amenities for resident use only, homeowner
association and building management offices or similar area and not including any Non-
Residential Floor Area. The determination of Residential Floor Area shall be made by
reference to the Building Permits) issued for such Assessor's Parcel and/or to the
appropriate records kept by the City's Building Division, as reasonably determined by the
CFD Administrator.
"Residential Property" means all Assessor's Parcels of Developed Property for which a
~3uilding Permit permitting the construction thereon of one or more residential facilities
has been issued by the City or some other governmental agency.
"Resolution of Formation" means the resolution forming CFD No. 2017-01.
"San Francisco Urban Consumer Price Index" means, for each Fiscal Year, the
Consumer Price Index published by the U.S. Bureau of Labor Statistics for All Urban
Consumers in the San Francisco —Oakland —San Jose Area, measured as of the month of
December in the calendar year that ends in the previous Fiscal Year. In the event this index
ceases io be published, the San Francisco Urban Consumer Price Index shall be another
index as determined by the CFD Administrator that is reasonably comparable to the
Consumer Price Index for the San Francisco —Oakland — San Jose Area.
"Special Tax" or "Special Taxes" means the special tax or special taxes to be levied in
each Fiscal Year on each Assessor's Parcel of Developed Property to fund the Special Tax
Requirement for Municipal Services and/or the Special Tax Requirement for Fuel System
Replacement and Maintenance.
"Special Tax Component" means a component of the Special Tax to be levied in each
Fiscal Year on each Assessor's Parcel of Developed Property to fund the Special Tax
Requirement for Municipal Services and/or the Special Tax Requirement for Fuel System
Replacement and Maintenance.
"Special Tax Levy" means the total Special Tax to be listed on the property tax rolls and
levied for each Assessor's Parcel of Taxable Property in a given Fiscal Year to fund the
Special Tax Requirement for Municipal Services and the Special Tax Requirement for Fuel
System Replacement and Maintenance.
"Special Tax Requirement for Municipal Services" means that amount of Component
A to be collected in any Fiscal Year for CFD No. 2017-01 to pay for certain costs as
required to meet the needs of CFD No. 2017-01 in that Fiscal Year. The costs to be covered
shall be the direct costs for (i) Authorized Services, including the establishment of reserves
for future costs of Authorized Services, (ii) Administrative Expenses, (iii) an amount to
cover anticipated delinquencies for the payment of the Special Tax Levy, based on the.
delinquency rate for the preceding Fiscal Year; less (iv) a credit for funds available to
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 4
reduce the annual Special Tax Levy, if any, as determined by the CFD Administrator; and
less (v) a reduction in costs to Authorized Services, as determined by the CFD
Administrator, contingent upon the successful transfer of hotel-site maintenance
responsibilities related to hydro-seeding and erosion control, estimated to cost $131,600 in
Fiscal Year 2016-2017, to the developer of the hotel site, proposed to be on Assessor's
Parcel 015-010-600. Under no circumstances shall the Special Tax Requirement for
Municipal Services include debt service payments for debt financings by CFD No. 2017-
01.
"Special Tax Requirement for Fuel System Replacement and Maintenance" means
that amount of Component B required, if any, in any Fiscal Year for CFD No. 2017-01
to: (i) pay directly for fuel system replacement and maintenance, as well as for Authorized
Facilities and Authorized Services eligible under the Act; (ii) pay for Administrative
Expenses; (iii) an amount to cover anticipated delinquencies for the payment of the Special
Tax Levy, based on the delinquency rate for the preceding Fiscal Year; less (iv) a credit
for funds available to reduce the annual Special Tax Levy, if any, as determined by the
CFD Administrator. Under no circumstances shall the Special Tax Requirement for Fuel
System Replacement and Maintenance include debt service payments for debt financings
by CFD No. 2017-01. The cumulative amount of the Component B special tax to be
collected shall not exceed $2,750,000.
"State" means the State of California.
"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD
No. 2017-01 which are not exempt from the Special Tax pursuant to law or Section E
below.
"Undeveloped Property" means, for each Fiscal Year, all property not classified as
Developed Property, Property Owner Association Property, or Public Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessor's Parcels within CFD No. 2017-01 shall be classified by the
CFD Administrator as Developed Property, Undeveloped Property, Property Owner
Association Property, or Public Property, and shall be subject to annual Special Taxes in
accordance with this Rate and Method of Apportionment as determined by the CFD
Administrator pursuant to Sections C and D below. The CFD Administrator's allocation
of property to each type of Land Use Class shall be conclusive and binding. However,
only Developed Property shall be subject to annual Special Taxes in accordance with the
Rate and Method of Apportionment as determined pursuant to Sections C and D below.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page S
C. MAXIMUM SPECIAL TAX RATE
1. Component A of the Special Tax
a. Developed Property
(1) Component A Maximum
The Component A Maximum for Fiscal Year 2017-18 for Developed Property is
shown below in Table 1.
rr:~, ~~i
Component A Maximum for Developed Property
For Fiscal Year 2017-18
Community Facilities District No. 2017-01
Land Use
Class Land Use
j Fiscal Year 2017-2018
Component A Maximum
1 R~sic~~ntial Prop~_rty X0.32 per Square Foot of
1Zesidential r loor Area
2 Non-Residential Property X0.32 per Square Foot of
Non-Residential Floor Area
(2) Multiple Land Use Classes
In some instances, an Assessor's Parcel of Developed Property may contain more
than one Land Use Class. The Component A Maximum that can be levied on an
w e i i n i ,i r .~tissessor s rarcei snail ne ine sum or ine ~omponeni ~y iviaximum treat can ne
levied for all Land Use Classes located on that Assessor's Parcel.
(3) Increase in the Component A Maximum
On each July 1, commencing on July 1, 2018, the Component A Maximum for
Developed Property shall be increased annually by the lesser of the change in the
San Francisco Urban Consumer Price Index during the twelve (12) months prior
to December of the previous Fiscal Year, or five percent (5.00%).
City of South San Francisco December 4, 2017
CFD Nn. 2017-01 (Public Services and Facilities) Page 6
2. Component B of the Special Tax
a. Developed Property
(1) Component B Maximum
The Component B Maximum for Fiscal Year 2017-18 for Developed Property is
shown below in Table 2.
TABLE 2
Component B Maximum for Developed Property
For Fiscal Year 2017-18
Community Facilities District No. 2017-01
Land Use
Class Land Use
Fiscal Year 2017-2018
Component B Maximum
X0.07 per Square Foot of1Residential Property Residential Floor Area
$0.07 per Square Foot of2Non-Residential Property Non-Residential Floor Area
(2) Multiple Land Use Classes
In some instances, an Assessor's Parcel of Developed Property may contain more
than one Land Use Class. The Component B Maximum that can be levied on an
Assessor's Parcel shall be the sum of the Component B Maximum that can be
levied for all Land Use Classes located on that Assessor's Parcel.
(3) Increase in the Component B Maximum
On each July 1, commencing on July 1, 2018, the Component B Maximum for
Developed Property shall be increased by two percent (2.00%) for any given
Fiscal Year.
3. Undeveloped Property
No Special Taxes shall be levied on Undeveloped Property.
4. Exempt Parcels
The following Assessor's Parcels within the boundaries of CFD No. 2017-01 shall be
exempt from Component B of the Special Tax: 015-010-220 and 015-010-290.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 7
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2017-18 and for each following Fiscal Year, the City
Council shall levy the annual Special Tax Proportionately for each Assessor's Parcel of
Developed Property at up to 100% of the applicable Component Maximum, until the
amount of Special Taxes equals the summation of the Special Tax Requirement for
Municipal Services and the Special Tax Requirement for Fuel System Replacement and
Maintenance.
E. EXEMPTIONS
In addition to Undeveloped Property being exempt from annual Special Taxes, no Special
Tax shall be levied on Public Property or Property Owner Association Property. However,
should an Assessor's Parcel no longer be classified as Public Property or Property Owner
Association Property, such Assessor's Parcel shall, upon each reclassification, no longer
be exempt from Special Taxes.
F. INTERPRETATION OF SPECIAL TAX FORMULA
The City reserves the right io make minor administrative and technical changes to this
document that may immaterially 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 Rate and Method of
Apportionment.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as
ordinary ad valorem property taxes; provided, however, that the City may directly bill the
Special Tax, may collect Special Taxes at a different time or in a different manner if
necessary or otherwise advisable to meet its financial obligations for CFD No. 2017-01,
and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels
as permitted by the Act.
H. TERM OF SPECIAL TAX
The Component A Special Tax shall be levied in perpetuity as necessary to meet the Special
Tax Requirement for Municipal Services, unless no longer required to pay for Authorized
Services as determined at the discretion of the City. The Component B Special Tax shall
be levied and collected until the costs of constructing or acquiring Authorized Facilities
from Component B Special Tax proceeds have been paid, and all Administrative Expenses
have been paid or reimbursed. Additionally, the Component B Special Tax shall have a ~.
City of South San Francisco December 4, 2017
CFD Nn. 2017-01 (Public Services and Facilities) Page 8
sunset based upon the 2030 tax year no later than June 30, 2031. Such sunset date shall be
advanced or extended for the same period that construction of the OPD development is
advanced or delayed, so as to be coterminous with the Component B Special Tax having
produced an amount not exceeding $2,750,000, or such lesser amount as actually is
authorized by the City and expended on the Authorized Facilities.
I. CREDIT FOR OVERPAYMENT FOR AUTHORIZED FACILITIES
If the remaining balance of the aggregate payments of Special Tax attributable to the
Authorized Facilities at the end of a fiscal year exceed by fifteen percent (15%) or more
the approved budget for such fiscal year, the funds exceeding fifteen percent (15%) of the
approved budget for such fiscal year shall be credited ratably, by the CFD Administrator,
to those who pay Special Tax attributable to the Authorized Facilities and applied to such
property owners' future Special Taxes as they become due with the funds applied first any
Special Tax due for the Authorized Facilities.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 9
COMMUNITY FACILITIES
DISTRICT REPORT
of South San Francisco
Community Facilities District
No. 2017-01
Services and Facilities)
December 4, 2017
San Fralicisco
COMMUNITY FACILITIES DISTRICT REPORT
MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO. ZO17-01
(PUBLIC SERVICES AND FACILITIES
Prepared for
CITY OF SOUTH SAN FRANCISCO
400 Grand Avenue
South San Francisco, California 94080
Prepared by
DAVID TAUSSIG Sz ASSOCIATES, INC.
1302 Lincoln Avenue, Ste 204
San Jose, California 95125
~J ~DAVID TAUSSIG
&ASSOCIATES
TABLE OF CONTENTS
Section Page
I.INTRODUCTION ..............................................................................................................1
II.PROJECT DESCRIPTION ..............................................................................................2
III.DESCRIPTION AND ESTIMATED COST OF PUBLIC FACILITIES ....................3
A. Description of Proposed Public Facilities ....................................................................3
B. Estimated Cost of Proposed Public Facilities ..............................................................3
C. Exempt Parcels .............................................................................................................4
IV.DESCRIPTION AND ESTIMATED COST OF PUBLIC SERVICES ........................5
A. Description of Proposed Public Services .....................................................................5
B. Estimated Cost of Proposed Public Services ...............................................................5
C. Estimated Cost of Administering CFD No. 2017-01 ...................................................6
D. No Exempt Parcels .......................................................................................................6
V.BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES ...................................7
A. No Bond Sales ..............................................................................................................7
B. Incidental Expenses to be Included in the Annual Levy of Special Taxes ..................7
VI.RATE AND METHOD OF APPORTIONMENT ..........................................................8
VII.BOUNDARIES OF COMMUNITY FACILITIES DISTRICT ....................................9
VIII. GENERAL TERMS AND CONDITIONS ....................................................................10
A. Substitution of Facilities ............................................................................................10
B. Substitution of Services .............................................................................................10
APPENDICES
Appendix A Rate and Method of Apportionment
Appendix B CFD No. 2017-01 Boundary Map
~~ ADAVID Tf1USSIG
&ASSOCIATES
'20DUCTIC
WHEREAS, under the Mello-Roos Community Facilities Act of 1982, Chapter 2.5 of Part 1 of
Division 2 of Title 5, commencing at Section 53311, of the California Government Code (the
"Act"), this City Council is authorized to establish a community facilities district and to act as its
legislative body; and
WHEREAS, this City Council, having previously adopted Resolution No. 17-981 expressing an
intention to form a community facilities district, now desires to proceed with the establishment
of such community facilities district to finance costs of certain public services and public
facilities required to meet the demands of development of lands in the City; and
This community facilities district being City of South San Francisco Community Facilities
District No. 2017-01 (Public Services and Facilities) shall hereinafter be referred to as:
"CFD No. 2017-0 l "; and
RESOLUTION NO. 17-981 RESOLUTION OF INTENTION TO ESTABLISH A
COMMUNITY FACILITIES DISTRICT CITY OF SOUTH SAN FRANCISCO COMMUNITY
FACILITIES DISTRICT NO. 2017-01 (PUBLIC SERVICES AND FACILITIES) (hereinafter
referred to as the "Resolution of Intention"), was adopted by the City Council on October 11,
2017.
WHEREAS, the Resolution of Intention, in its Section 8, directed:
The City Manager (or deputy or designee thereo fl is hereby directed to study the proposed
Services and Facilities and to make, or cause to be made, and file with the City Clerk, a report in
writing (the "CFD Report"), which shall be a part of the record of the public hearing hereinafter
specified and which shall present the following:
1 1 A cleccrintinn of the ~P,1'V1CP.0 anti FacilitiPc that will he YP.(1771YP.(~ t(1 a(~P(717AtP.~~7 YYIPPY
the needs of CFD No. 2017-01;
2) An estimate of the fair and reasonable cost of the Services and Facilities and
incidental expenses in connection therewith, and all other related costs;
NOW, THEREFORE, David Taussig &Associates, Inc. does hereby submit the Report.
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-Ol (Public Services and Facilities) Page 1
~J ~DAVID TEIUSSIG
&ASSOCIATES
CFD No. 2017-01 encompasses approximately 75.16 gross acres of land adjacent to the Oyster
Point Channel in the City of South San Francisco (the "City'). CFD No. 2017-01 is located
generally north of Forbes Boulevard and generally south of the Brisbane Marina, generally west
of the Oyster Point Channel Basins, and generally east of Bayshore Freeway. A map showing
this territory is provided as Appendix B of this report.
Ownership and the projected use for the parcels can be found below in Table 1.
Table 1 —Parcels and Intended Use
1 i i I ',
Owner APN/Lot No.Intended Use
Open Space/Recreation/Commercial Retail
City of South San Francisco
Parcel 5 Development
Parcel6 Hotel
LLA Parcel A
015-010-240
Oyster Point Development, LLC Parcel 1 Proposed Oyster Point Project, an integrated
office, R&D, and mixed-use development.
Parcel3
Parcel4
015-010-220 Commercial Office
Kashiwa Fudosan America Inc
015-010-290 Commercial Office
Within the CFD, a Special Tax' shall be levied only on Developed Property as set forth in the
Rate and Method of Apportionment ("RMA"), attached herewith as Appendix A.
1 Please note that all capitalized terms used herein, unless otherwise indicated, shall have the meanings defined in
the Rate and Method of Apportionment for CFD No. 2017-01.
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 2
~~ ~DAVID TAUSSIG
&ASSOCIATES
III. DESCRIPTION AND ESTIMATED COST OF FACILITIES
A. Description of Proposed Public Facilities
A community facilities district ("CFD") may provide for the purchase, construction,
expansion, or rehabilitation of any real or tangible property, including public facilities
and infrastructure improvements, with an estimated useful life of five (5) years or longer.
It is intended that CFD No. 2017-01 will be authorized to finance all or a portion of the
costs of any of the following improvements to be owned by the City, including but not
limited to, the replacement and renovation of the publicly owned fuel dock and related
appurtenances located at the Oyster Point Marina, and the related publicly owned fueling
system consisting of fuel lines, underground gasoline and diesel storage tanks currently
located at the intersection of East Basin Road and Marina Boulevard, and related
appurtenances, and, if circumstances so warrant as determined by the City, removal and
remediation of all or a portion of the fuel system.
CFD No. 2017-01 may also finance any of the following: (i) appurtenances to and
improvements related to the Authorized Facilities, (ii) related utility lines, pipes, and
conduits; acquiring rights-of-way (including any right-of-way intended to be dedicated by
the recording' of a final map), (iii) design, architecture, engineering, and planning, (iv)
any environmental review, studies, remediation, and mitigation, (v) traffic studies,
s~~_rv~ys5 g~~techni~~l stz2clies, soils testing, or other studies related t~ the Authorized
Facilities, (vi) permits, plan check, and inspection fees, (vii) insurance, legal, and related
overhead costs, (viii) project management, coordination, and supervision, and (ix) the
expansion, improvement, or rehabilitation of any of the Authorized Facilities, and to
reimburse the City or any third parties for advances made to purchase, construct, expand,
improve, or rehabilitate any of the Authorized Facilities.
CFD No. 2017-01 may also finance reimbursement of costs related to the formation of
CFD No. 2017-01 advanced by the City or anv other nartv. as well as reimbursement of
any costs advanced by the City or any other part, for facilities, capital related fees, or
other purposes of CFD No. 2017-01.
The preceding facilities are all facilities which the legislative body creating CFD No.
2017-01 or another public agency is authorized to own, construct, operate, provide, or
finance, and which are required to adequately meet the needs of development expected to
occur within CFD No. 2017-01. The Special Taxes required to pay for the construction
and acquisition of said facilities will be apportioned as described in the Rate and Method
of Apportionment for CFD No. 2017-01.
B. Estimated Costs of Proposed Public Facilities
The maximum special taxes that could be levied in CFD No. 2017-01 for Authorized
Facilities presently would be $0.07 per square foot of Residential Floor Area, and $0.07
per square foot of Non-Residential Floor Area; however, this amount is subject to annual
escalation. The actual amount to be levied will be determined by the City Council on an
annual basis. The maximum total collections of the Special Tax for Authorized Facilities
City of South San Francisco December 4, 2017
Community Facilities District Nn. 2017-01 (Public Services and Facilities) Page 3
~, ~oAv~D TAuss~c
&ASSOCIATES
(plus administrative costs) is limited to $2,750,000, and the levy of the Special Tax for
Authorized Facilities will cease once the $2,750,000 in cumulative costs have been
collected, or unless no longer required to pay for Authorized Facilities as determined at
the discretion of the City.
Itemized cost estimates for the proposed public facilities can be found below in Table 2.
C Exempt Parcels
The following parcels within the boundaries of CFD No. 2017-01 shall be exempt from
the Special Tax for Authorized Facilities: 015-010-220 and 015-010-290.
Table 2 —Projected Fuel Dock Costs
~ ~~
Floatin Dock
•,
N/A
•~ ~•~
$769 000
Pa Shack N/A N/A
Flotation N/A N/A
Piles and Pile Guides N/A $215 000
Utilities: Electrical $5 000 $82 000
Utilities: Water &Fire N/A $26 000
Utilities: Wastewater N/A $37 000
Fuel S stem N/A $780 200
A roach Structure: General N/A $185 000
A roach Shucture: Girders $20 000 N/A
Gan a :Structure N/A $85 000
Gan a : Walkin Surface $4 000 N/A
Subtotal Construction $29 000 $2 179 200
A dditional So t Costs $40,000 $281,200
A dditionalAdminEx enses N/A $289,600
Grand Total $69 000 $2 750 000
1. Cost estimates derived from Condition Assessment Summary dated May 26, 2017 . All estimated
costs are in 2017 dollars and include overhead and contingency.
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 4
~~ ~DAVID Tf1USSIG
&ASSOCIATES
A. Description of Proposed Public Services
The services authorized to be funded by the CFD and paid by the Special Taxes levied
within the CFD (the "Authorized Services") are described below. For purposes of the
CFD, the Authorized Services shall incorporate and have the meaning given to the term
"services" in section 53313 of the Mello-Roos Community Facilities Act of 1982.
(a) Police protection services.
(b) Maintenance and lighting of parks, parkways, streets, roads, and open space,
including without limitation:
• Roadway maintenance,
• Streetlight maintenance and operations,
• Traffic signal maintenance and operations,
• Parks, waterfront, and Bay Trail maintenance,
• Landscaping, parkway, median and open space maintenance, including erosion
prevention,
• Public surface parking maintenance, and
• Operation and maintenance of public restroom buildings.
(c) Operation and maintenance of storm drainage systems.
The cost of the Authorized Services shall include all related administrative costs and
expenses, necessary utility (water and electricity) costs, and related reserves for
replacement of vehicles, equipment, and facilities.
CFD No. 2017-01 shall only fund the above listed services only to the extent that they are
in addition to existing services provided within the boundaries of CFD No. 2017-01
before creation of the CFD. The Special Taxes required to fund the annual costs of those
public services will be apportioned as described in the Rate and Method of
Apportionment of the Special Tax for CFD No. 2017-01.
B. Estimated Costs of Proposed Public Services.
The intent of the CFD is to fund the anticipated revenue shortfall in providing the public
services listed above. The maximum Special Taxes that could be levied in CFD No.
2017-01 to fund Authorized Services presently would be $0.32 per square foot of
Residential Floor Area, and $0.32 per square foot of Non-Residential Floor Area;
however, this amount is subject to annual escalation. The actual amount to be levied will
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page S
~J ~DAVID TAUSSIG
&ASSOCIATES
be determined by the City Council on an annual basis. Cost estimates by enhanced
maintenance areas are detailed in Table 3 below.
C. Estimated Costs of Administering CFD No. 2017-01
While the actual costs of administering CFD No. 2017-01 may vary, it is anticipated that
the amount of Special Taxes which can be collected within CFD No. 2017-01 will be
sufficient to fund at least $25,000 in annual administrative expenses.
D No Exempt Parcels
No parcels within the boundaries of CFD No. 2017-01 shall be exempt from the Special
Tax for Authorized Services.
Table 3 —Projected Public Services Costs
t'1 i ~
TOTAL AREAS
Phase I $947,293
Phase IIC $50, 907
SUBTOTALI $998 200
Administrative Fees 5% ofsubtotal $49 910
Le 1 5% of subtotal $49 910
O eratin Reserves Fund 10% of subtotal $99 820
TOTAL $1 197 840
1. Cost estimates for enhanced maintenance areas provided by City staff:
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 6
i~ ~DAVID TAUSSIG
&ASSOCIATES
V. INCIDENTAL EXPENSES
A. No Bond Sales
CFD No. 2017-01 is not authorized to sell bonds.
B. Incidental Expenses to be Included in the Annual Lew of Special Taxes
Pursuant to Section 53340 of the Act, the proceeds of any Special Tax may only be used
to pay, in whole or part, the cost of providing public facilities, services, and incidental
expenses. As defined by the Act, incidental expenses include, but are not limited to, the
cost of planning and designing public facilities to be financed, including the cost of
environmental evaluations of those facilities. As there is no intention or authorization for
CFD No. 2017-01 to sell bonds, the incidental expenses to be funded through Special
Taxes shall be limited to the costs associated with the creation of the CFD, determination
of the amount of Special Taxes, collection of Special Taxes, payment of Special Taxes,
or costs otherwise incurred in order to carry out the authorized purposes of the CFD.
While the actual cost of administering CFD No. 2017-01 may vary, it is anticipated that
the amount of Special Taxes that can be collected will be sufficient to fund the CFD's
annual administrative expenses.
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 7
~J ~DAVID TAUSSIG
&ASSOCIATES
Pursuant to Section 53325.3 of the Act, the tax imposed in a CFD "is a special tax and not a
special assessment, and there is no requirement that the tax be apportioned on the basis of benefit
to any property." The Special Tax "may be based on benefit received by parcels of real property,
the cost of making facilities or authorized services available to each parcel, or other reasonable
basis as determined by the legislative body," although the Special Tax may not be apportioned
on an ad valorem basis pursuant to Article XIIIA of the California Constitution. The adopted
Rate and Method of Apportionment ("RMA"), attached herewith as Appendix A, provides
information sufficient to allow each property owner within CFD No. 2017-01 to estimate the
maximum annual Special Tax he or she will be required to pay.
The RMA requires that all Assessor's Parcels within CFD No. 2017-01 be categorized as
Developed Property, Undeveloped Property, Property Owner Association Property, or Public
Property. The principal assumption inherent in the calculation of Special Taxes as defined in the
RMA is that the level of budgetary shortfall impacting the City is the primary result of
development within the City. These determinations are based on an evaluation of the City's
recurring costs and revenues. No Special Taxes will be levied on Undeveloped Property,
Property Owner Association Property, or Public Property.
Each Fiscal Year, the Special Tax levy shall be calculated in an amount sufficient to cover the
costs required to meet the financial needs for the proposed Authorized Services and Authorized
Facilities, but not to exceed the maximum Special Tax for Developed Property. The maximum
annual Special Tax for Authorized Services (designated as Component A within the RMA) that
can be levied within the CFD on Developed Property shall increase annually by the lesser of the
change in the San Francisco Urban Consumer Price Index during the twelve (12) months ending
in December of the Fiscal Year prior to the Fiscal Year in which the Special Tax is being levied,
or five percent (5.00%).
The maximum annual Special Tax for Authorized Facilities (designated as Component B within
the RMA) that can be levied within the CPD on Developed Property shall increase annually by
two percent (2.00%). The RMA specifies that the maximum total collections of the Special Tax
for Authorized Facilities (plus administrative costs) is limited to $2,750,000, and the levy of the
Special Tax for Authorized Facilities will cease once the $2,750,000 in cumulative costs has
been collected, or unless no longer required to pay for Authorized Facilities as determined at the
discretion of the City. Commencing with Fiscal Year 2017-18 and for each following fiscal
year, the City Council shall levy the annual special tax proportionately for each Assessor's
Parcel of Developed Property at up to 100% of the applicable maximum Special Tax, until the
amount of special taxes equals the special tax requirement.
In order to establish the Maximum Special Tax rates for CFD No. 2017-01 as set forth in the
Rate and Method of Apportionment, David Taussig &Associates, Inc. has relied on information
regarding land-use types, geographic location, and Taxable Property provided to it by others.
David Taussig &Associates, Inc. has not independently verified such data and disclaims
responsibility for the impact of inaccurate data, if any, on the Rate and Method of
Apportionment for CFD No. 2017-01, including the inability to meet the financial obligations
within CFD No. 2017-01.
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 8
~~ ~DAVID TAUSSIG
&ASSOCIATES
The amended boundaries of CFD No. 2017-01 include all land on which the Special Taxes may
be levied. A reduced scale amended map showing the boundaries of CFD No. 2017-01 is
provided as Appendix B. The amended full-scale map is on file with the San Mateo Recorder's
Office and was recorded on the 30`" day of November 2017 in the San Mateo Recorder's Office
at Book 18 of Maps of Assessment and Community Facilities Districts at Page 51 (Instrument
No. 2017-0900132). Furthermore, the original boundary map that will be superseded by the
amended boundary map in Appendix B is on file with the San Mateo Recorder's Office and was
accepted on October 24, 2017 and recorded at 10:51AM on October 27, 2017 in the San Mateo
Recorder's Office at Book 18 of Maps of Assessment and Community Facilities Districts at Page
50 (Instrument No. 2017-9001321.
The boundaries of CFD No. 2017-01 were modified to exclude Parcel 2 as noted on Parcel Map
No. 17-0002 (Oyster Point) recorded on September 25, 2017 in Book 83 of Parcel Maps at Page
50 through 54 as File No. 2017-900124 in the official records of the County of San Mateo.
Parcel 2 is public right-of-way.
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 9
~J ~DAVID Tf1US5IG
&ASSOCIATES
A. Substitution of Facilities
The descriptions of the Authorized Facilities, as set forth herein, are general in their
nature. The City will determine the final nature, location, and costs of improvements and
facilities upon the preparation of final plans and specifications. The final plans may
show substitutes, in lieu of modifications to the proposed work in order to accomplish the
work of improvement, and any such substitution shall not be a change or modification in
the proceedings as long as the public facilities provide a service substantially similar to
that as set forth in this Report.
B. Substitution of Services
The description of the Authorized Services, as set forth herein, is general in their nature.
The final nature and location of the specific services to be funded by the CFD will be
determined by the City Council. The actual services funded may show substitutes, in lieu
or modifications to the proposed services that benefit the CFD, and any such substitution
shall not be a change or modification in the proceedings as long as the services provided
are of a type substantially similar to that as set forth in this Report.
City of South San Francisco December 4, 2017
Community Facilities District No. 2017-01 (Public Services and Facilities) Page 10
APPENDIX A
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO.2017-01
(PUBLIC SERVICES AND FACILITIES)
l 7r 1~~/:]►117u 1_~1[I!. [t] 1Z~] al:~~ Z~7.71 Y [~7►1uiD1►Y~1
RATE AND METHOD OF APPORTIONMENT FOR
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO.2017-01
(PUBLIC SERVICES AND FACILITIES)
CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATED,
STATE OF CALIFORNIA
A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of Taxable Property
in City of South San Francisco Community Facilities District No. 2017-01 (Public Services and
Facilities), City of South San Francisco, County of San Mateo, State of California ("CFD No.
2017-01") and collected each Fiscal Year commencing in Fiscal Year 2017-18, in an amount
determined by the City Council through the application of the appropriate Special Tax for
"Developed Property," as described below. All of the real property in CFD No. 2017-01, unless
exempted by law or by the provisions hereof, shall be taxed for these purposes, to the extent and
in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
"Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an
Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the
land area shown on the applicable final subdivision map, parcel map, condominium plan,
record of survey, or other map or plan recorded with the County. The square footage of an
Assessor's Parcel is equal to the Acreage of such parcel multiplied by 43,560.
"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being
Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California.
"Administrative Expenses" means the following actual or reasonably estimated costs
directly related to the administration of CFD No. 2017-01: the costs of computing the
Special Taxes and preparing the annual Special Tax collection schedules (whether by the
City or any designee thereof or both); the costs of collecting the Special Taxes (whether by
the City or otherwise); the costs to the City, CFD No. 2017-01, or any designee thereof of
complying with CFD No. 2017-01 or obligated persons disclosure requirements associated
with the Act; the costs associated with preparing Special Tax disclosure statements and
responding to public inquiries regarding the Special Taxes; the costs to the City, CFD No.
2017-01, or any designee thereof related to an appeal of the Special Tax; and the City's
annual administration fees and third party expenses. Administrative Expenses shall also
include amounts estimated or advanced by the City or CFD No. 2017-01 for any other
administrative purposes of CFD No. 2017-01, including attorney's fees and other costs
related to commencing and pursuing to completion any foreclosure of delinquent Special
Taxes.
"Assessor's Parcel" or "Parcel" means a lot or parcel shown on an Assessor's Parcel Map
with an assigned Assessor's Parcel number.
Ciry of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 1
"Assessor's Parcel Map" means an official map of the Assessor of the County designating
parcels by Assessor's Parcel number.
"Authorized Facilities" means those facilities eligible to be financed by CFD No. 2017-
01, as defined in the Resolution of Formation.
"Authorized Services" means those services eligible to be funded by CFD No. 2017-01,
as defined in the Resolution of Formation and authorized to be financed by CFD No. 2017-
01 pursuant to Section 53313 and Section 53313.5 of the Act. CFD No. 2017-01 shall
finance Authorized Services only to the extent that they are in addition to those provided
in the territory of CFD No. 2017-01 before CFD No. 2017-01 was created and such
Authorized Services may not supplant services already available within CFD No. 2017-01
when CFD No. 2017-01 was created.
"Building Permit" means a permit issued by the City or other governmental agency for
the construction of a residential or non-residential building on an Assessor's Parcel.
"CFD Administrator" means an official of CFD No. 2017-01, or any designee thereof,
responsible for determining the Special Tax Requirement for Municipal Services and the
Special Tax Requirement for Fuel System Replacement and Maintenance calculations and
providing for the levy and collection of the Special Taxes.
"CFD No. 2017-01" means City of South San Francisco Community Facilities Dis~ri~t
No. 2017-01 (Public Services and Facilities), City of South San Francisco, County of San
Mateo, State of California.
"City" means the City of South San Francisco, California.
"City Council" means the City Council of the City.
"County" means the County of San Mateo.
"Component A" means the Special Tax Component to be levied in each Fiscal Year on
each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for
Municipal Services.
"Component A Maximum" means the Component A maximum, determined in
accordance with Section C below that can be levied by the City in any Fiscal Year on any
Assessor's Parcel of Taxable Property.
"Component B" means the Special Tax Component to be levied in each Fiscal Year on
each Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Fuel
System Replacement and Maintenance.
"Component B Maximum" means the Component B maximum, determined in
accordance with Section C below that can be levied by the City in any Fiscal Year on any
Assessor's Parcel of Taxable Property.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 2
"Component Maximum" means the Component A Maximum and/or Component B
Maximum, as applicable.
"Developed Property" means, for each Fiscal Year, all Assessor's Parcels for which a
Building Permit was issued on or before May 1 of the Fiscal Year preceding the Fiscal
Year for which the Special Taxes are being levied.
"Fiscal Year" means the period starting July 1 and ending on the following June 30.
"Non-Residential Floor Area" means the total building square footage of the non-
residential buildings) or the non-residential portion of a building with both residential and
non-residential areas located on an Assessor's Parcel of Developed Property, measured
from outside wall to outside wall, not including space devoted to stairwells, public
restrooms, lighted courts, vehicle parking and areas incident thereto, and mechanical
equipment incidental to the operation of such building. The determination of Non-
ResidentialFloor Area shall be made by reference to the Building Permits) issued for such
Assessor's Parcel and/or to the appropriate records kept by the City's Building Division,
as reasonably determined by the CFD Administrator.
"Non-Residential Property" means any and each Assessor's Parcel of Developed
Property for which a Building Permit permitting the construction of one or more non-
residential units or facilities has been issued by the City or some other governmental
agency.
"Proportionately" means, for Component A, the ratio of Component A to Component A
Maximum is equal for all Assessor's Parcels of Developed Property and, for Component
B, the ratio of Component B to Component B Maximum is equal for all Assessor's Parcels
of Developed Property.
"Property Owner Association Property" means, for each Fiscal Year, any Assessor's
Parcel within the boundaries of CFD No. 2017-01 that is owned by or irrevocably offered
for dedication to a property owner association, including any master or sub-association,
not including any such property that is located directly under a residential ornon-residential
structure.
"Public Property" means, for each Fiscal Year, (i) any property within the boundaries of
CFD No. 2017-01 that is owned by or irrevocably offered for dedication to the Federal
government, the State, the City, or any other public agency; provided however that any
property leased by a public agency to a private entity and subject to taxation under Section
53340.1 of the Act, as such section may be amended or replaced, shall be taxed and
classified in accordance with its use; or (ii) any property within the boundaries of CFD No.
2017-01 that is encumbered by an unmanned utility easement making impractical its
utilization for other than the purpose set forth in the easement.
"Rate and Method of Apportionment" or "RMA" means this Rate and Method of
Apportionment of Special Tax.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 3
"Residential Floor Area" means all of the square footage of living area within the
perimeter of a residential structure located on Residential Property, not including any
carport, walkway, garage, overhang, patio, enclosed patio, public areas and building
administrative areas such as the lobbies, amenities for resident use only, homeowner
association and building management offices or similar area and not including any Non-
Residential Floor Area. The determination of Residential Floor Area shall be made by
reference to the Building Permits) issued for such Assessor's Parcel and/or to the
appropriate records kept by the City's Building Division, as reasonably determined by the
CFD Administrator.
"Residential Property" means all Assessor's Parcels of Developed Property for which a
Building Permit permitting the construction thereon of one or more residential facilities
has been issued by the City or some other governmental agency.
"Resolution of Formation" means the resolution forming CFD No. 2017-01.
"San Francisco Urban Consumer Price Index" means, for each Fiscal Year, the
Consumer Price Index published by the U.S. Bureau of Labor Statistics for All Urban
Consumers in the San Francisco —Oakland —San Jose Area, measured as of the month of
December in the calendar year that ends in the previous Fiscal Year. In the event this index
ceases to be published, the San rrancisco Urban consumer Yrice Index shall be another
index as determined by the CFD Administrator that is reasonably comparable to the
Consumer Price Index for the San Francisco —Oakland — San Jose Area.
"Special Tax" or "Special Taxes" means the special tax or special taxes to be levied in
each Fiscal Year on each Assessor's Parcel of Developed Property to fund the Special Tax
Requirement for Municipal Services and/or the Special Tax Requirement for Fuel System
Replacement and Maintenance.
"Special Tax Component" means a component of the Special Tax to be levied in each
Fiscal Year on each Assessor's Parcel of Developed Property to fund the Special Tax
Requirement for Municipal Services and/or the Special Tax Requirement for Fuel System
Replacement and Maintenance.
"Special Tax Levy" means the total Special Tax to be listed on the property tax rolls and
levied for each Assessor's Parcel of Taxable Property in a given Fiscal Year to fund the
Special Tax Requirement for Municipal Services and the Special Tax Requirement for Fuel
System Replacement and Maintenance.
"Special Tax Requirement for Municipal Services" means that amount of Component
A to be collected in any Fiscal Year for CFD No. 2017-01 to pay for certain costs as
required to meet the needs of CFD No. 2017-01 in that Fiscal Year. The costs to be covered
shall be the direct costs for (i) Authorized Services, including the establishment of reserves
for future costs of Authorized Services, (ii) Administrative Expenses, (iii) an amount to
cover anticipated delinquencies for the payment of the Special Tax Levy, based on the
delinquency rate for the preceding Fiscal Year; less (iv) a credit for funds available to
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 4
reduce the annual Special Tax Levy, if any, as determined by the CFD Administrator; and
less (v) a reduction in costs to Authorized Services, as determined by the CFD
Administrator, contingent upon the successful transfer of hotel-site maintenance
responsibilities related to hydro-seeding and erosion control, estimated to cost $131,600 in
Fiscal Year 2016-2017, to the developer of the hotel site, proposed to be on Assessor's
Parcel 015-010-600. Under no circumstances shall the Special Tax Requirement for
Municipal Services include debt service payments for debt financings by CFD No. 2017-
01.
"Special Tax Requirement for Fuel System Replacement and Maintenance" means
that amount of Component B required, if any, in any Fiscal Year for CFD No. 2017-01
to: (i) pay directly for fuel system replacement and maintenance, as well as for Authorized
Facilities and Authorized Services eligible under the Act; (ii) pay for Administrative
Expenses; (iii) an amount to cover anticipated delinquencies for the payment of the Special
Tax Levy, based on the delinquency rate for the preceding Fiscal Year; less (iv) a credit
for funds available to reduce the annual Special Tax Levy, if any, as determined by the
CFD Administrator. Under no circumstances shall the Special Tax Requirement for Fuel
System Replacement and Maintenance include debt service payments for debt financings
by CFD No. 2017-01. The cumulative amount of the Component B special tax to be
collected shall not exceed $2,750,000.
"State" means the State of California.
"Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD
No. 2017-01 which are not exempt from the Special Tax pursuant to law or Section E
below.
"Undeveloped Property" means, for each Fiscal Year, all property not classified as
Developed Property, Property Owner Association Property, or Public Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessor's Parcels within CFD No. 2017-01 shall be classified by the
CFD Administrator as Developed Property, Undeveloped Property, Property Owner
Association Property, or Public Property, and shall be subject to annual Special Taxes in
accordance with this Rate and Method of Apportionment as determined by the CFD
Administrator pursuant to Sections C and D below. The CFD Administrator's allocation
of property to each type of Land Use Class shall be conclusive and binding. However,
only Developed Property shall be subject to annual Special Taxes in accordance with the
Rate and Method of Apportionment as determined pursuant to Sections C and D below.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 5
C. MAXIMUM SPECIAL TAX RATE
1. Component A of the Special Tax
a. Developed Property
(1) Component A Maximum
The Component A Maximum for Fiscal Year 2017-18 for Developed Property is
shown below in Table 1.
TABLE 1
Component A Maximum for Developed Property
For Fiscal Year 2017-18
Community Facilities District No. 2017-01
Land Use i Land UseClass
Fiscal Year 2017-2018
Component A Maximum
1 Residential Propert~$0.32 per Square Foot of
Residential Floor Area
$0.32 per Square Foot of2Non-Residential Property Non-Residential Floor Area
(2) Multiple Land Use Classes
In some instances, an Assessor's Parcel of Developed Property may contain more
than one Land Use Class. The Component A Maximum that can be levied on an
tissessor's rarcei shall be the sum of the Component A Maximum that can be
levied for all Land Use Classes located on that Assessor's Parcel.
(3) Increase in the Component A Maximum
On each July 1, commencing on July 1, 2018, the Component A Maximum for
Developed Property shall be increased annually by the lesser of the change in the
San Francisco Urban Consumer Price Index during the twelve (12) months prior
to December of the previous Fiscal Year, or five percent (5.00%).
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Pzrblic Services and Facilities) Page 6
2. Component B of the Special Tax
a. Developed Property
(1) Component B Maximum
The Component B Maximum for Fiscal Year 2017-18 for Developed Property is
shown below in Table 2.
TABLE 2
Component B Maximum for Developed Property
For Fiscal Year 2017-18
Community Facilities District No. 2017-01
Land Use
Class Land Use
Fiscal Year 2017-2018
Component B Maximum
X0.07 per Square Foot of1Residential Property Residential Floor Area
$0.07 per Square Foot of2Non-Residential Property Non-Residential Floor Area
(2) Multiple Land Use Classes
In some instances, an Assessor's Parcel of Developed Property may contain more
than one Land Use Class. The Component B Maximum that can be levied on an
Assessor's Parcel shall be the sum of the Component B Maximum that can be
levied for all Land Use Classes located on that Assessor's Parcel.
(3) Increase in the Component B Maximum
On each July 1, commencing on July 1, 2018, the Component B Maximum for
Developed Property shall be increased by two percent (2.00%) for any given
Fiscal Year.
3. Undeveloped Property
No Special Taxes shall be levied on Undeveloped Property.
4. Exempt Parcels
The following Assessor's Parcels within the boundaries of CFD No. 2017-01 shall be
exempt from Component B of the Special Tax: 015-010-220 and 015-010-290.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 7
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2017-18 and for each following Fiscal Year, the City
Council shall levy the annual Special Tax Proportionately for each Assessor's Parcel of
Developed Property at up to 100% of the applicable Component Maximum, until the
amount of Special Taxes equals the summation of the Special Tax Requirement for
Municipal Services and the Special Tax Requirement for Fuel System Replacement and
Maintenance.
E. EXEMPTIONS
In addition to Undeveloped Property being exempt from annual Special Taxes, no Special
Tax shall be levied on Public Property or Property Owner Association Property. However,
should an Assessor's Parcel no longer be classified as Public Property or Property Owner
Association Property, such Assessor's Parcel shall, upon each reclassification, no longer
be exempt from Special Taxes.
F. INTERPRETATION OF SPECIAL TAX FORMULA
1 he City reserves the right to make minor administrative and technical changes to this
document that may immaterially affect the rate ~nc~ m~thc~d of ~pportionin~ Sp~Ei~1 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 ar ambiguity in this Rate and Method of
Apportionment.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as
ordinary ad valorem property taxes; provided, however, that the City may directly bill the
Special Tax, may collect Special Taxes at a different time or in a different manner if
necessary or otherwise advisable to meet its financial obligations for CFD No. 2017-01,
and may covenant to foreclose and may actually foreclose on delinquent Assessor's Parcels
as permitted by the Act.
H. TERM OF SPECIAL TAX
The Component A Special Tax shall be levied in perpetuity as necessary to meet the Special
Tax Requirement for Municipal Services, unless no longer required to pay for Authorized
Services as determined at the discretion of the City. The Component B Special Tax shall
be levied and collected until the costs of constructing or acquiring Authorized Facilities
from Component B Special Tax proceeds have been paid, and all Administrative Expenses
have been paid or reimbursed. Additionally, the Component B Special Tax shall have a
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 8
sunset based upon the 2030 tax year no later than June 30, 2031. Such sunset date shall be
advanced or extended for the same period that construction of the OPD development is
advanced or delayed, so as to be coterminous with the Component B Special Tax having
produced an amount not exceeding $2,750,000, or such lesser amount as actually is
authorized by the City and expended on the Authorized Facilities.
I. CREDIT FOR OVERPAYMENT FOR AUTHORIZED FACILITIES
If the remaining balance of the aggregate payments of Special Tax attributable to the
Authorized Facilities at the end of a fiscal year exceed by fifteen percent (15%) or more
the approved budget for such fiscal year, the funds exceeding fifteen percent (15%) of the
approved budget for such fiscal year shall be credited ratably, by the CFD Administrator,
to those who pay Special Tax attributable to the Authorized Facilities and applied to such
property owners' future Special Taxes as they become due with the funds applied first any
Special Tax due for the Authorized Facilities.
City of South San Francisco December 4, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 9
APPENDIX B
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO.2017-01
(PUBLIC SERVICES AND FACILITIES)
BOUNDARY MAP
Government Code Section 54957.5
SB 343
Agenda - 1L~4~~~
ItemN Z —at~,<tin~ ~3
SHEET 1 OF 1 AMENDED BOUNDARIES OF
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO.2017-01~,P (PUBLIC SERVICES AND FACILITIES)Thle map emends the Proposed Boundaries o1ew ca~,asam,se~F c~,~~ COUNTY OF SAN MATEO~ F°~`"°'°'.m``"°.zo„-0,~P""``S°'""~.
STATE OP CALIFORNIAentl Feti1W). Counh of San M~Yo. Sfete of~,
(1) Flied In the oftice of the City Clerk of the Clly of South
? GAfotnl~, pIM retdded In Book 18 of Maps do Arrwr P«a1. rA~n tl~e Amandsd BauW.rMe San Frendsco Mib,~ day of , 2017.
d` As~wment aM CamMxYry Fedltlw Dbtrkb~y at Pg~ 50~ at lin6ipne~t No. 2017900732. ai W N FOedltle~a~ No. P017-0t:0P Ocbber 27.2017 6 the 011ke of the Courtly
076010.2/0 ~ -
ftxwdx of tlro County of San Meted, Stata of 015-010.260 K~i&Ie MCeYbmle. •.t 075-070-270 City Of SOutl18811 F1HIId~WReference N mods to the Asseaeor Maps __ _ / 016-010.290~ n~ c~H a s.~ ~, ro n,e ~~ ~ ois•o~o-eoo tvo~noro (2~ I hereby certiy that the witliln map showing the~,~ ~ ~~ o~so~ano ors-ofd-63o (porooN amended boundaries of City of South San Frandxo2e, 20n a oownsnt No. mt7~ae~3ea ~ ot5-o10-eto (poroail Community Fadiities DiaMd Na. 2017-01 (Publ~In the rsmrda d aw San taateo Coumy ~ a~s'~~'»~ (P°'~^1 o~.e. Services and Fadlitles), County of San Mateo, State of
rteoaa.r,.na m ~ n~a~, No. n-0002 . — o~~-~~-~~ ~^) ~ California, was approved by the city Cound~ of the City
(Oysbr PoM) rocoMW rn Sapbmber 25, g
o} South San Frendsco eta meeting thereof,
20171n Book 83 of Peml Ml~ps et Peps Aw ~n~ a. p ~. r,~. zo,~.eoo,z. ~ p d mao,o~ao nea «~ me aay a ~ , zo». ny n~ais olfda~~ecaW ache coutra3en ~ _ ~( Resolutlon No.._ _ ~-a~7Alabo for a daalptlan W the labs and ~ ~ Lot Lk~edhretrlons of sadi bt eM parcel. Ad1wNw~i ~•i ~~PwN A ~ ~
Kfi9te Meftine I. 1 <I2Ik,
~ ~wr rr~;~y r ; °1~ °'~' City of SaAh San Frandaco'.I ~
LEOENDI€ -oYe76t PONr YVD: ~ ~ ~ ~ ~ i ~~ I ~ ~ ~ ~ ~ • Nignd~d Bonld~rW o! CMY of SouMl Sin Fmtl~m
_.—. 1 , — - — ~.\ ~~►~ ~ ~, ~ I Conmrdlp Fati~ DMYkt No. 2017-01 (PuEYc ServbesYY~~ .~a F.crr.) aompr m s.n ~aew, smr. a c.am,m~ 4i~., p~ ~ / ~~ PrnM 8 ~ PnoN ~ PaaM MmhKm Pe~oN Map No. 17-0002st =~--
~ /,,~~,
;~ —
---- - -. Fre~r~A ~e D~rYl Twmy~AMwe~W,uic _.)~
(3) Fibd this ` >Y day of ___ _ , 2017, at the hour of _o'dock, _m. in Book of Maps of Assessment andCommunity FadNUes DfsMds at Page in the ofAce ofthe county recorder in the County of San Mateo, State of Cali(amla.
Merk~ ~CountyGlerk-RecorderCq~pr of
L ~ L - rder~~y'
exempt recording requited, par CA Government Code §6103
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 1
RATE AND METHOD OF APPORTIONMENT FOR
CITY OF SOUTH SAN FRANCISCO
COMMUNITY FACILITIES DISTRICT NO. 2017-01
(PUBLIC SERVICES AND FACILITIES)
CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATEO,
STATE OF CALIFORNIA
A Special Tax as hereinafter defined shall be levied on all Assessor’s Parcels of Taxable Property
in City of South San Francisco Community Facilities District No. 2017-01 (Public Services and
Facilities), City of South San Francisco, County of San Mateo, State of California (“CFD No.
2017-01”) and collected each Fiscal Year commencing in Fiscal Year 2017-18, in an amount
determined by the City Council through the application of the appropriate Special Tax for
“Developed Property,” as described below. All of the real property in CFD No. 2017-01, unless
exempted by law or by the provisions hereof, shall be taxed for these purposes, to the extent and
in the manner herein provided.
A. DEFINITIONS
The terms hereinafter set forth have the following meanings:
“Acre” or “Acreage” means the land area of an Assessor’s Parcel as shown on an
Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the
land area shown on the applicable final subdivision map, parcel map, condominium plan,
record of survey, or other map or plan recorded with the County. The square footage of an
Assessor’s Parcel is equal to the Acreage of such parcel multiplied by 43,560.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being
Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California.
“Administrative Expenses” means the following actual or reasonably estimated costs
directly related to the administration of CFD No. 2017-01: the costs of computing the
Special Taxes and preparing the annual Special Tax collection schedules (whether by the
City or any designee thereof or both); the costs of collecting the Special Taxes (whether by
the City or otherwise); the costs to the City, CFD No. 2017-01, or any designee thereof of
complying with CFD No. 2017-01 or obligated persons disclosure requirements associated
with the Act; the costs associated with preparing Special Tax disclosure statements and
responding to public inquiries regarding the Special Taxes; the costs to the City, CFD No.
2017-01, or any designee thereof related to an appeal of the Special Tax; and the City’s
annual administration fees and third party expenses. Administrative Expenses shall also
include amounts estimated or advanced by the City or CFD No. 2017-01 for any other
administrative purposes of CFD No. 2017-01, including attorney’s fees and other costs
related to commencing and pursuing to completion any foreclosure of delinquent Special
Taxes.
“Assessor’s Parcel” or “Parcel” means a lot or parcel shown on an Assessor’s Parcel Map
with an assigned Assessor’s Parcel number.
EXHIBIT B
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 2
“Assessor’s Parcel Map” means an official map of the Assessor of the County designating
parcels by Assessor’s Parcel number.
“Authorized Facilities” means those facilities eligible to be financed by CFD No. 2017-
01, as defined in the Resolution of Formation.
“Authorized Services” means those services eligible to be funded by CFD No. 2017-01,
as defined in the Resolution of Formation and authorized to be financed by CFD No. 2017-
01 pursuant to Section 53313 and Section 53313.5 of the Act. CFD No. 2017-01 shall
finance Authorized Services only to the extent that they are in addition to those provided
in the territory of CFD No. 2017-01 before CFD No. 2017-01 was created and such
Authorized Services may not supplant services already available within CFD No. 2017-01
when CFD No. 2017-01 was created.
“Building Permit” means a permit issued by the City or other governmental agency for
the construction of a residential or non-residential building on an Assessor’s Parcel.
“CFD Administrator” means an official of CFD No. 2017-01, or any designee thereof,
responsible for determining the Special Tax Requirement for Municipal Services and the
Special Tax Requirement for Fuel System Replacement and Maintenance calculations and
providing for the levy and collection of the Special Taxes.
“CFD No. 2017-01” means City of South San Francisco Community Facilities District
No. 2017-01 (Public Services and Facilities), City of South San Francisco, County of San
Mateo, State of California.
“City” means the City of South San Francisco, California.
“City Council” means the City Council of the City.
“County” means the County of San Mateo.
“Component A” means the Special Tax Component to be levied in each Fiscal Year on
each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement for
Municipal Services.
“Component A Maximum” means the Component A maximum, determined in
accordance with Section C below that can be levied by the City in any Fiscal Year on any
Assessor’s Parcel of Taxable Property.
“Component B” means the Special Tax Component to be levied in each Fiscal Year on
each Assessor’s Parcel of Taxable Property to fund the Special Tax Requirement for Fuel
System Replacement and Maintenance.
“Component B Maximum” means the Component B maximum, determined in
accordance with Section C below that can be levied by the City in any Fiscal Year on any
Assessor’s Parcel of Taxable Property.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 3
“Component Maximum” means the Component A Maximum and/or Component B
Maximum, as applicable.
“Developed Property” means, for each Fiscal Year, all Assessor’s Parcels for which a
Building Permit was issued on or before May 1 of the Fiscal Year preceding the Fiscal
Year for which the Special Taxes are being levied.
“Fiscal Year” means the period starting July 1 and ending on the following June 30.
“Non-Residential Floor Area” means the total building square footage of the non-
residential building(s) or the non-residential portion of a building with both residential and
non-residential areas located on an Assessor’s Parcel of Developed Property, measured
from outside wall to outside wall, not including space devoted to stairwells, public
restrooms, lighted courts, vehicle parking and areas incident thereto, and mechanical
equipment incidental to the operation of such building. The determination of Non-
Residential Floor Area shall be made by reference to the Building Permit(s) issued for such
Assessor’s Parcel and/or to the appropriate records kept by the City’s Building Division,
as reasonably determined by the CFD Administrator.
“Non-Residential Property” means any and each Assessor’s Parcel of Developed
Property for which a Building Permit permitting the construction of one or more non-
residential units or facilities has been issued by the City or some other governmental
agency.
“Proportionately” means, for Component A, the ratio of Component A to Component A
Maximum is equal for all Assessor’s Parcels of Developed Property and, for Component
B, the ratio of Component B to Component B Maximum is equal for all Assessor’s Parcels
of Developed Property.
“Property Owner Association Property” means, for each Fiscal Year, any Assessor’s
Parcel within the boundaries of CFD No. 2017-01 that is owned by or irrevocably offered
for dedication to a property owner association, including any master or sub-association,
not including any such property that is located directly under a residential or non-residential
structure.
“Public Property” means, for each Fiscal Year, (i) any property within the boundaries of
CFD No. 2017-01 that is owned by or irrevocably offered for dedication to the Federal
government, the State, the City, or any other public agency; provided however that any
property leased by a public agency to a private entity and subject to taxation under Section
53340.1 of the Act, as such section may be amended or replaced, shall be taxed and
classified in accordance with its use; or (ii) any property within the boundaries of CFD No.
2017-01 that is encumbered by an unmanned utility easement making impractical its
utilization for other than the purpose set forth in the easement.
“Rate and Method of Apportionment” or “RMA” means this Rate and Method of
Apportionment of Special Tax.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 4
“Residential Floor Area” means all of the square footage of living area within the
perimeter of a residential structure located on Residential Property, not including any
carport, walkway, garage, overhang, patio, enclosed patio, public areas and building
administrative areas such as the lobbies, amenities for resident use only, homeowner
association and building management offices or similar area and not including any Non-
Residential Floor Area. The determination of Residential Floor Area shall be made by
reference to the Building Permit(s) issued for such Assessor’s Parcel and/or to the
appropriate records kept by the City’s Building Division, as reasonably determined by the
CFD Administrator.
“Residential Property” means all Assessor’s Parcels of Developed Property for which a
Building Permit permitting the construction thereon of one or more residential facilities
has been issued by the City or some other governmental agency.
“Resolution of Formation” means the resolution forming CFD No. 2017-01.
“San Francisco Urban Consumer Price Index” means, for each Fiscal Year, the
Consumer Price Index published by the U.S. Bureau of Labor Statistics for All Urban
Consumers in the San Francisco – Oakland – San Jose Area, measured as of the month of
December in the calendar year that ends in the previous Fiscal Year. In the event this index
ceases to be published, the San Francisco Urban Consumer Price Index shall be another
index as determined by the CFD Administrator that is reasonably comparable to the
Consumer Price Index for the San Francisco – Oakland – San Jose Area.
“Special Tax” or “Special Taxes” means the special tax or special taxes to be levied in
each Fiscal Year on each Assessor’s Parcel of Developed Property to fund the Special Tax
Requirement for Municipal Services and/or the Special Tax Requirement for Fuel System
Replacement and Maintenance.
“Special Tax Component” means a component of the Special Tax to be levied in each
Fiscal Year on each Assessor’s Parcel of Developed Property to fund the Special Tax
Requirement for Municipal Services and/or the Special Tax Requirement for Fuel System
Replacement and Maintenance.
“Special Tax Levy” means the total Special Tax to be listed on the property tax rolls and
levied for each Assessor’s Parcel of Taxable Property in a given Fiscal Year to fund the
Special Tax Requirement for Municipal Services and the Special Tax Requirement for Fuel
System Replacement and Maintenance.
“Special Tax Requirement for Municipal Services” means that amount of Component
A to be collected in any Fiscal Year for CFD No. 2017-01 to pay for certain costs as
required to meet the needs of CFD No. 2017-01 in that Fiscal Year. The costs to be covered
shall be the direct costs for (i) Authorized Services, including the establishment of reserves
for future costs of Authorized Services, (ii) Administrative Expenses, (iii) an amount to
cover anticipated delinquencies for the payment of the Special Tax Levy, based on the
delinquency rate for the preceding Fiscal Year; less (iv) a credit for funds available to
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 5
reduce the annual Special Tax Levy, if any, as determined by the CFD Administrator; and
less (v) a reduction in costs to Authorized Services, as determined by the CFD
Administrator, contingent upon the successful transfer of hotel-site maintenance
responsibilities related to hydro-seeding and erosion control, estimated to cost $131,600 in
Fiscal Year 2016-2017, to the developer of the hotel site, on Parcel 6 of Parcel Map No.
17-0002 (Oyster Point) recorded on September 25, 2017 in Book 83 of Parcel Maps at Page
50 through 54 as File No. 2017-900124 in the official records of the County of San Mateo.
Under no circumstances shall the Special Tax Requirement for Municipal Services include
debt service payments for debt financings by CFD No. 2017-01.
“Special Tax Requirement for Fuel System Replacement and Maintenance” means
that amount of Component B required, if any, in any Fiscal Year for CFD No. 2017-01
to: (i) pay directly for fuel system replacement and maintenance, as well as for Authorized
Facilities and Authorized Services eligible under the Act; (ii) pay for Administrative
Expenses; (iii) an amount to cover anticipated delinquencies for the payment of the Special
Tax Levy, based on the delinquency rate for the preceding Fiscal Year; less (iv) a credit
for funds available to reduce the annual Special Tax Levy, if any, as determined by the
CFD Administrator. Under no circumstances shall the Special Tax Requirement for Fuel
System Replacement and Maintenance include debt service payments for debt financings
by CFD No. 2017-01. The cumulative amount of the Component B special tax to be
collected shall not exceed $2,750,000.
“State” means the State of California.
“Taxable Property” means all of the Assessor’s Parcels within the boundaries of CFD
No. 2017-01 which are not exempt from the Special Tax pursuant to law or Section E
below.
“Undeveloped Property” means, for each Fiscal Year, all property not classified as
Developed Property, Property Owner Association Property, or Public Property.
B. ASSIGNMENT TO LAND USE CATEGORIES
Each Fiscal Year, all Assessor’s Parcels within CFD No. 2017-01 shall be classified by the
CFD Administrator as Developed Property, Undeveloped Property, Property Owner
Association Property, or Public Property, and shall be subject to annual Special Taxes in
accordance with this Rate and Method of Apportionment as determined by the CFD
Administrator pursuant to Sections C and D below. The CFD Administrator’s allocation
of property to each type of Land Use Class shall be conclusive and binding. However,
only Developed Property shall be subject to annual Special Taxes in accordance with the
Rate and Method of Apportionment as determined pursuant to Sections C and D below.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 6
C. MAXIMUM SPECIAL TAX RATE
1. Component A of the Special Tax
a. Developed Property
(1) Component A Maximum
The Component A Maximum for Fiscal Year 2017-18 for Developed Property is
shown below in Table 1.
TABLE 1
Component A Maximum for Developed Property
For Fiscal Year 2017-18
Community Facilities District No. 2017-01
Land Use
Class Land Use Fiscal Year 2017-2018
Component A Maximum
1 Residential Property $0.32 per Square Foot of
Residential Floor Area
2 Non-Residential Property $0.32 per Square Foot of
Non-Residential Floor Area
(2) Multiple Land Use Classes
In some instances, an Assessor’s Parcel of Developed Property may contain more
than one Land Use Class. The Component A Maximum that can be levied on an
Assessor’s Parcel shall be the sum of the Component A Maximum that can be
levied for all Land Use Classes located on that Assessor’s Parcel.
(3) Increase in the Component A Maximum
On each July 1, commencing on July 1, 2018, the Component A Maximum for
Developed Property shall be increased annually by the lesser of the change in the
San Francisco Urban Consumer Price Index during the twelve (12) months prior
to December of the previous Fiscal Year, or five percent (5.00%).
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 7
2. Component B of the Special Tax
a. Developed Property
(1) Component B Maximum
The Component B Maximum for Fiscal Year 2017-18 for Developed Property is
shown below in Table 2.
TABLE 2
Component B Maximum for Developed Property
For Fiscal Year 2017-18
Community Facilities District No. 2017-01
Land Use
Class Land Use Fiscal Year 2017-2018
Component B Maximum
1 Residential Property $0.07 per Square Foot of
Residential Floor Area
2 Non-Residential Property $0.07 per Square Foot of
Non-Residential Floor Area
(2) Multiple Land Use Classes
In some instances, an Assessor’s Parcel of Developed Property may contain more
than one Land Use Class. The Component B Maximum that can be levied on an
Assessor’s Parcel shall be the sum of the Component B Maximum that can be
levied for all Land Use Classes located on that Assessor’s Parcel.
(3) Increase in the Component B Maximum
On each July 1, commencing on July 1, 2018, the Component B Maximum for
Developed Property shall be increased by two percent (2.00%) for any given
Fiscal Year.
3. Undeveloped Property
No Special Taxes shall be levied on Undeveloped Property.
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 8
D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX
Commencing with Fiscal Year 2017-18 and for each following Fiscal Year, the City
Council shall levy the annual Special Tax Proportionately for each Assessor’s Parcel of
Developed Property at up to 100% of the applicable Component Maximum, until the
amount of Special Taxes equals the summation of the Special Tax Requirement for
Municipal Services and the Special Tax Requirement for Fuel System Replacement and
Maintenance.
E. EXEMPTIONS
In addition to Undeveloped Property being exempt from annual Special Taxes, no Special
Tax shall be levied on Public Property or Property Owner Association Property. However,
should an Assessor’s Parcel no longer be classified as Public Property or Property Owner
Association Property, such Assessor’s Parcel shall, upon each reclassification, no longer
be exempt from Special Taxes.
F. INTERPRETATION OF SPECIAL TAX FORMULA
The City reserves the right to make minor administrative and technical changes to this
document that may immaterially 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 Rate and Method of
Apportionment.
G. MANNER OF COLLECTION
The annual Special Tax shall be collected in the same manner and at the same time as
ordinary ad valorem property taxes; provided, however, that the City may directly bill the
Special Tax, may collect Special Taxes at a different time or in a different manner if
necessary or otherwise advisable to meet its financial obligations for CFD No. 2017-01,
and may covenant to foreclose and may actually foreclose on delinquent Assessor’s Parcels
as permitted by the Act.
H. TERM OF SPECIAL TAX
The Component A Special Tax shall be levied in perpetuity as necessary to meet the Special
Tax Requirement for Municipal Services, unless no longer required to pay for Authorized
Services as determined at the discretion of the City. The Component B Special Tax shall
be levied and collected until the costs of constructing or acquiring Authorized Facilities
from Component B Special Tax proceeds have been paid, and all Administrative Expenses
have been paid or reimbursed. Additionally, the Component B Special Tax shall have a
City of South San Francisco November 9, 2017
CFD No. 2017-01 (Public Services and Facilities) Page 9
sunset based upon the 2030 tax year no later than June 30, 2031. Such sunset date shall be
advanced or extended for the same period that construction of the OPD development is
advanced or delayed, so as to be coterminous with the Component B Special Tax having
produced an amount not exceeding $2,750,000, or such lesser amount as actually is
authorized by the City and expended on the Authorized Facilities.
I. CREDIT FOR OVERPAYMENT FOR AUTHORIZED FACILITIES
If the remaining balance of the aggregate payments of Special Tax attributable to the
Authorized Facilities at the end of a fiscal year exceed by fifteen percent (15%) or more
the approved budget for such fiscal year, the funds exceeding fifteen percent (15%) of the
approved budget for such fiscal year shall be credited ratably, by the CFD Administrator,
to those who pay Special Tax attributable to the Authorized Facilities and applied to such
property owners’ future Special Taxes as they become due with the funds applied first any
Special Tax due for the Authorized Facilities.
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:17-1125 Agenda Date:12/4/2017
Version:1 Item #:2b.
Resolution calling special landowner election for Community Facilities District,City of South San Francisco
Community Facilities District No. 2017-01 (Public Services and Facilities).
WHEREAS,on this date,this City Council adopted a resolution entitled “Resolution of Formation of
Community Facilities District”(the “Resolution of Formation”),ordering the formation of the "City of South
San Francisco Community Facilities District No.2017-01 (Public Services and Facilities)"(the “CFD”),
defining the public services (the “Services”)and public facilities (the “Facilities”)to be provided by the CFD,
authorizing the levy of a special tax on property within the CFD and preliminarily establishing an
appropriations limit for the CFD,all under the Mello-Roos Community Facilities Act of 1982,Chapter 2.5 of
Part 1 of Division 2 of Title 5,commencing at Section 53311,of the California Government Code (the “Act”);
and
WHEREAS,under the Resolution of Formation,the propositions of the levy of the special tax and the
establishment of the appropriations limit shall be submitted to the qualified electors of the CFD as required by
the provisions of the Act; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of South San Francisco,as follows:
1.Issues Submitted.Pursuant to the Act,the issues of (i)the levy of the special tax in the CFD and (ii)
the establishment of the appropriations limit for the CFD shall be submitted to the qualified electors (as defined
below) of the CFD at an election called therefor as provided below.
2.Qualified Electors.This City Council hereby finds that fewer than 12 persons have been registered to
vote within the territory of the CFD for each of the 90 days preceding the close of the public hearings
heretofore conducted and concluded by this City Council for the purposes of these proceedings.Accordingly,
and pursuant to Section 53326 of the Act,this City Council finds that,for these proceedings,the qualified
electors are the landowners within the CFD and that the vote shall be by such landowners or their authorized
representatives,each having one vote for each acre or portion thereof such landowner owns in the CFD as of
the close of the public hearing.
Certain property within the boundaries of the CFD is currently owned by the City (the “City-Owned Property”).
Under Section 53317(f)(3)of the Act,this City Council hereby states all or a portion of the City-Owned
Property is intended to be transferred (by sale or lease)to private ownership and agrees that all or a portion of
the City-Owned Property will be subject to the Special Taxes on the same basis as private property within the
CFD,and affirmatively waives any defense based on the fact of public ownership,to any action to foreclose on
the property in the event of nonpayment of the Special Taxes.Accordingly,the City constitutes a qualified
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Version:1 Item #:2b.
the property in the event of nonpayment of the Special Taxes.Accordingly,the City constitutes a qualified
landowner elector under the Act with respect to the City-Owned Property.
3.Conduct of Election.This City Council hereby calls a special election to consider the issues described
in section 2,above,which shall be held on March 14,2018,and the results thereof canvassed at the meeting of
this City Council on March 14,2018.The City Clerk is hereby designated as the official to conduct the
election and to receive all ballots until the close of business on the election date.It is hereby acknowledged
that the City Clerk has on file the Resolution of Formation,a map of the boundaries of the CFD,and a
sufficient description to allow the City Clerk to determine the electors of the CFD.Pursuant to Section 53327
of the Act,the election shall be conducted by messenger or mail-delivered ballot pursuant to Section 4000 of
the California Elections Code.This City Council hereby finds that paragraphs (a),(b),and (c)(1)of Section
4000 and Section 4108 are applicable to this special election,except that Sections 53326 and 53327 of the Act
shall govern for purposes of determining the date of the election.
4.Ballot.As authorized by Section 53353.5 of the Act,the issues described in section 1 above shall be
combined into a single ballot measure,the form of which as attached hereto as Exhibit “A”is hereby approved.
The City Clerk is hereby authorized and directed to cause a ballot,in substantially the form of Exhibit “A,”to
be delivered to each of the qualified electors of the CFD.Each ballot shall indicate the number of votes to be
voted by the respective landowner to which the ballot pertains.Each ballot shall be accompanied by all supplies
and written instructions necessary for the use and return of the ballot.The envelope to be used to return the
ballot shall be enclosed with the ballot,have the return postage prepaid,and contain the following:(a)the name
and address of the landowner,(b)a declaration,under penalty of perjury,stating that the voter is the owner of
record or authorized representative of the landowner entitled to vote and is the person whose name appears on
the envelope,(c)the printed name,signature and address of the voter,(d)the date of signing and place of
execution of the declaration pursuant to clause (b)above,and (e)a notice that the envelope contains an official
ballot.
5.Accountability.Under Section 50075.1 of the Government Code,the following accountability
provisions shall apply to the special taxes:(a)the Services and the Facilities and the incidental costs thereof,all
as defined in the Resolution of Formation,shall constitute the specific single purpose;(b)the proceeds shall be
applied only to the specific purposes identified in (a)above;(c)there shall be created special account(s)or
funds(s)into which the proceeds shall be deposited;and (d)there shall be caused to be prepared an annual
report if required by Section 50075.3 of the Government Code.
6.Effective Date. This resolution shall take effect upon its adoption.
*****
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Exhibit A
EXHIBIT A
CITY OF SOUTH SAN FRANCISCO
Community Facilities District No. 2017-01
(Public Services and Facilities)
DESCRIPTION OF AUTHORIZED SERVICES AND FACILITIES
OFFICIAL BALLOT
SPECIAL TAX ELECTION
This ballot is for a special, landowner election. You must return this ballot in the
enclosed postage paid envelope to the office of the City Clerk of the City of South San
Francisco no later than the hour of 5:00 p.m. on Wednesday, March 7, 2018, either by
mail or in person. The City Clerk’s office is located at 400 Grand Avenue, South San
Francisco, CA 94080.
To vote, mark a cross (X) on the voting line after the word “YES” or after the word
“NO”. All marks otherwise made are forbidden. All distinguishing marks are forbidden
and make the ballot void.
If you wrongly mark, tear, or deface this ballot, return it to the City Clerk of the
City of South San Francisco and obtain another.
BALLOT MEASURE: Shall the City of South San Francisco (the
“City”) be authorized to annually levy a special tax solely on lands
within the City of South San Francisco Community Facilities District
No. 2017-01 (Public Services and Facilities) (the “CFD”) in
accordance with the rate and method contained in the Resolution of
Formation of the CFD adopted by the City Council of the City on
December 4, 2017, commencing in the City’s fiscal year 2018-19, to
pay for the public services and the public facilities for the CFD
described in said Resolution of Formation including to pay the costs
of the City in administering the CFD, and shall the annual
appropriations limit of the CFD be established in the amount of
$1,500,000?
YES: __________
NO: __________
Number of Votes: ___
Property Owner:
[property owner name]
[signature block]
JONES HALL
MEMORANDUM TO: Member of the City Council
FROM: Scott R. Ferguson
DATED: November 28, 2017
RE: Community Facilities District No. 2017-01
475 Sansome Street
Suite 1700
San Francisco, CA 94111
t. 415.391.5780
f. 415.276.2088
This memorandum responds to various legal issues raised by Kashiwa Fudosan America
("Kashiwa") in the letters submitted by its counsel, Jeffer Mangels Butler &Mitchell LLP, dated
November 17, 2017, and November 27, 2017, and testimony made at the public hearing held on
November 20, 2017, regarding the formation proceedings for the community facilities district
captioned above (the "CFD").
(a) The CFD Will Provide Additional Services as Required by the Mello-Roos Act.
Issue: Kashiwa has alleged that the CFD would be deficient because it will not provide
additional services within the proposed CFD.
Legal Standard: The Mello-Roos Act requires that in order for a community facilities
district to levy special taxes for public services, those services must be additional to those
provided before the district was formed.
. "A community facilities district tax approved by vote of the landowners of the
district may only finance the services authorized in this section to the extent that they are
in addition to those provided in the territory of the district before the district was created.
The additional services shall not supplant services already available within that territory
when the district was created." (Govt. Code 53313.)
A recent California Court of Appeals case, Building Industry Assn. of Bay Area v. City of
San Ramon (2016) 4 Cal. App. 5th 62, found in part that the services need not be completely new
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City Council
City of South San Francisco
Page 2
to the territory of the district, but rather, the provision of services at increased levels satisfies the
Mello-Roos Act.
While the Building Industry Assn. case found that services and facilities are "additional"
if they meet increased demand in the district where the tax is imposed, that was not a
requirement for all such services, just evidence that the services provided in that case met the
requirements of the statute.
The Building Industry Assn. case also observed that the legislative history of the Mello-
Roos Act supports the conclusion that if the level of services financed by a district are in addition
to those already provided, then the requirements of the Act are met: the new services supplement
the existing services, rather than supplanting them.
A nalysis: The CFD will be authorized to fund the following public services: police
protection services; maintenance and lighting of parks, parkways, streets, roads, and open space;
and operation and maintenance of storm drainage systems.
The Council has received ample evidence that these public services will be additional to,
and at higher levels than, those existing services at Oyster Point. The City's existing annual
budget for roadway, sewer pump station and open space/landscape maintenance in the area is
approximately $13,040, while the proposed annual budget for the services to be provided by the
CFD is approximately $1,000,000 with an additional approximately in $200,000 administrative
costs and reserves. This increased level of services will be required to maintain the substantial
roadway, landscaping and open space improvements that will be made within the area of the
CFD. The Council has sufficient evidence that the level of public services to be provided in the
CFD will be greater than those services currently supplied by the City in the territory of the CFD.
(b) The Proposed Special Taxes are Reasonable.
Issue: Kashiwa has argued that no reasonable basis for the special taxes exists because
the Kashiwa property will not receive any benefit from the services and facilities to be funded by
the CFD.
Legal Standard: The Mello-Roos Act does not require any type of benefit analysis to
support a special tax formula; rather, the only requirement is that the apportionment of taxes in a
CFD have "reasonable basis."
"A tax imposed pursuant to this chapter is a special tax and not a special
assessment, and there is no requirement that the tax be apportioned on the basis of benefit
to any property. However, a special tax levied pursuant to this chapter may be on or
based on a benefit received by parcels of real property, the cost of making facilities or
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City Council
City of South San Francisco
Page 3
authorized services available to each parcel, or some other reasonable basis as
determined by the legislative body." (Govt. Code 53325.3.)
A nalysis: Although not required by the Mello-Roos Act, the City engaged Seifel
Consulting ~ Inc., an independent economic consultant, to prepare an economic analysis to
evaluate the potential economic benefits and value enhancement to existing properties from the
development proposed for Oyster Point, including the public streets, landscaping, open space and
park improvements. The Seifel report found in part that the planned improvements to the Oyster
Point area "will increase the economic competitiveness of Oyster Point and also generate
economic benefits to surrounding properties, enhance property values and increase rents
according to numerous publications and academic research," and that "the potential value
premiums from about $70 million in capital investment in these new amenities and smart growth
design features of the proposed new development will likely offset the additional annual burden
from the maximum CFD special tax of $0.39 per building square foot, and could provide
additional value enhancement to existing properties."
The Seifel report, therefore, provides ample support for the City's position that the
property to be taxed within the CFD, including the Kashiwa property, will receive benefits from
the additional services and facilities the CFD will provide, and as such, provides sufficient
support for the conclusion that the special tax formula (Rate and Method) and the proposed levy
of the special taxes within the CFD has a "reasonable basis" as required by Govt. Code 53325.3.
The reasonable basis standard is met so long as there is evidence in the record to support
the Council's finding that the special taxes are reasonable; the existence of countervailing
evidence does not mean that the reasonableness standard has not been met. Under the Mello-
Roos Act, it is within the City Council's authority to weigh competing evidence and conclude
that a reasonable basis exists for the levy of the special taxes under the Rate and Method.
(c) The Formation of the CFD is not a "Project" for purposes of CEQA.
Issue: Kashiwa contends that the CFD qualifies as a project that requires CEQA review.
Legal Standard.• The CEQA law has been interpreted by the courts in Kaufman &
Broad-South Bay, Inc. v. Morgan Hill Unified Sch. Dist. (1992) 9 Cal. App. 4th 464, to generally
exclude community facilities district formation.
"[The community facilities district] does not commit the [school district] to any
definite course of action. It does not dictate how funds will be spent, or in any way
narrow the field of options and alternatives available to the [school district]. In cases
such as this where funding issues alone are involved, courts should look for a binding
commitment to spend in a particular manner before requiring environmental
review." (Kaufman &Broad-South Bay, Inc., 475.)
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City Council
City of South San Francisco
Page 4
As Kashiwa points out, the Kaufman &Broad-South Bay, Inc. case leaves open the
possibility that "a community facilities district might be formed to fund a sp~ci~'ic project and
therefore trigger the need for CEQA review."
A nalysis: This CFD is exempt from CEQA because the CFD i~ not the critical
requirement for the Oyster Point development plan to move forward. The CFD does not commit
the City to construct any of the planned improvements; rather, the CFD is only a financing
mechanism to finance services for those public improvements, if and when constructed, as well
as the replacement and renovation of the publicly owned fuel dock and related appurtenances, if
and when that project is carried out.
Moreover, CEQA review has already taken place for the development plan for the larger
Oyster Point development. Separate CEQA review of this CFD is therefore not required.
(d) The Establishment of a Community Facilities District is not a Regulatory Taking
Issue: Kashiwa has alleged that the CFD, as applied to Kashiwa, is a regulatory taking.
Legal Standard: The U.S. Supreme Court has established that a regulatory taking (the
"taking" of property requiring just compensation under the U.S. Constitution) can occur when a
regulation of property "denies all economically beneficial or productive use of land," or when a
regulation impedes the use of property without depriving the owner of all economically
beneficial use if the regulation is deemed to be a taking based on multiple factors, such as the
economic impact of the regulation, the extent to which the regulation has interfered with distinct
investment-backed expectations, and the character of the governmental action.
Analysis: As Kashiwa admits, the regulatory taking argument has traditionally been
applied to land use and zoning regulations limiting the use or development of the claimant's
property. The formation of the CFD is not a regulation limiting any use of the property in the
CFD, but rather a financing district being created through a statutory process providing for input
from and the vote of the affected landowners. Accordingly, the regulatory takings argument is
not applicable to the CFD.
(e) Kashiwa Has Not Been Denied Equal Protection by the Formation of the CFD.
Issue: Kashiwa contends that including Kashiwa within the boundaries of the CFD
would violate the equal protection clauses of the U.S. and California constitutions.
Legal Standard: The equal protection clause of the U.S. Constitution generally provides
that state may not deny to any person within its jurisdiction the equal protection of the laws.
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City Council
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Page 5
Analysis: The formation of the CFD is being carried out through a statutory process
providing for input from and the vote of the affected landowners. All taxable property within the
CFD will be subject to the special taxes on the basis of the special tax formula contained in the
Rate and Method. Therefore the equal protection argument is not applicable to the CFD.
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City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:17-982 Agenda Date:12/4/2017
Version:1 Item #:3.
Report regarding a City Council study session on the proposed Oyster Point mixed-use residential development.(Sailesh
Mehra, Chief Planner and Marian Lee, Assistant City Manager)
RECOMMENDATION
Staff recommends that the City Council receive this staff report and provide input regarding the proposed Oyster
Point mixed-use residential development.
BACKGROUND/DISCUSSION
In March 2011,the City and former Redevelopment Agency approved the Oyster Point Development Project -a
major public/private venture that envisioned office/R&D,hotel,open space,retail/commercial,and other
improvements to an 80+acre area located along South San Francisco’s waterfront,at the terminus of Oyster
Point Blvd (Project).
In May 2016,a new team -led by Greenland USA and operating under the name Oyster Point Development,
LLC (“OPD”)-took over as developer of the Project.OPD has worked diligently on every aspect of the
planning,design,and implementation of the Project.In November 2017,OPD formally commenced
construction on the Phase 1 infrastructure improvements.In addition,OPD is on schedule for their development
partner (Kilroy Realty) to begin building the first biotechnology R&D building in late 2018.
Meanwhile,in March 2017,OPD submitted an application to revise the Project’s development program to
include residential uses. The proposed changes to the development program are as follows:
2011 Approved Project:
Phase I-II: ~1,150,000 sq. ft. R&D
Phase III-IV: ~1,100,000 sq. ft. R&D
No requirement for Retail/Commercial
6.1 acres open space
2017 Application/Revision:
Phase I-II: ~1,500,000 sq. ft. R&D
Phase III-IV: 1,191 units residential
50,000 sq. ft. retail/commercial
10.3 acres open space
The proposed changes to the development program would introduce housing into the East of 101 Area for the
first time.To fully understand the potential impacts and benefits of this proposal,the City has conducting
feasibility analyses and is pursuing an in-depth public process.Since March 2017,several public meetings have
been held (e.g.Housing Subcommittee,Bicycle &Pedestrian Advisory Committee,Parks &Recreation
Advisory Committee).
This month,the City will publish the Draft Subsequent Environmental Impact Report (DSEIR)for the proposed
residential project and additional analysis commissioned by the City to examine the potential municipal impacts
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File #:17-982 Agenda Date:12/4/2017
Version:1 Item #:3.
residential project and additional analysis commissioned by the City to examine the potential municipal impacts
of OPD’s proposed residential uses.
The purpose of this study session is to provide the City Council with the latest information regarding the OPD
proposal,the City’s analysis of the proposal,and an opportunity for City Council members to offer input on the
proposal. Attachment 1 will be presented at the City Council meeting. It includes the following information:
·Review of the current Oyster Point proposal compared to the original (approved) development;
·Technical assessment of the issues and impacts associated with OPD’s residential proposal;
·Initial summary of impact fees, developer obligations and community benefits; and
·Next steps in the public process.
Attachment 2 provides detailed information about the estimated impact fees,developer obligations and community
benefits. This information was provided to the Housing Subcommittee in August 2017.
FISCAL IMPACT
This study session is not an action item. There is no impact to the City budget.
CONCLUSION
Staff requests that the City Council receive information and provide input regarding the proposed Oyster Point mixed-use
residential project.
Attachments:
1.Powerpoint presentation
2.Estimated impact fees, developer obligations and community benefits
City of South San Francisco Printed on 11/29/2017Page 2 of 2
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OPD DRAFT IMPACT FEES AND COMMUNITY BENEFITS
Phase I - II assumption: 1,578,000 sq. ft. R&D
Phase III - IV assumptions: 695 rental units, 495 for sale units
IMPACT FEES (BY ORDINANCE)Phase I - II R&D Phase III - IV Residential TOTAL Notes
East of 101 Traffic Impact Fee 8,397,860 1,428,976 9,826,836
Oyster Point Grade Separation Fee 2,146,236 1,178,523 3,324,759
East of 101 Sewer Impact Fee 2,571,891 704,014 3,275,905 $1,152,000 sewer pump credit
Sewer Capacity Fee 2,488,564 3,763,099 6,251,663
Child Care Fee 1,342,323 2,085,009 3,427,332
General Plan Maintenance Fee 710,550 625,722 1,336,272
Public Safety Impact Fee 622,824 614,006 1,236,830
Bicycle/Ped Capacity Fee n/a 202,470 202,470
Mass Decontamination Fee 134,232 n/a 134,232
Parkland Acquisition (Rental)n/a 5,566,950 5,566,950
Parkland Construction (Rental)n/a 1,820,857 1,820,857
Park Fee (For Sale)n/a land dedication land dedication
IMPACT FEE TOTAL 18,414,480 17,989,626 36,404,106
Existing DA/DDA Phase I - II OBLIGATIONS
Public Art/Transit Enhancement 1,342,323 n/a 1,342,323
Payment before 1st building 1,100,000 n/a 1,100,000
Land Purchase 4,500,000 n/a 4,500,000 Phased payment: $2,250,000 close of escrow; $2,250,000 first building permit for
Phase III
New DA TBD Phase II - IV (COMMUNITY BENEFITS)
Fire Station / Public Infrastructure n/a 5,000,000 5,000,000
Public Art / Civic Improvement n/a 100,000 100,000
Community Facilities District (CFD)n/a 27,965,843 Net present value - Estimated annual income of $1,000,000
GRAND TOTAL 25,356,803 51,055,469 76,412,272
OPD Residential Affordable Housing Requirement
- Provide 30 rental affordable units on site
- Provide 69 affordable units off site (city help with land; open to extra credit for 3 bedroom units; trigger linked to "oyster point north"; deferral request (value TBD); in lieu if things don't work out
(amount TBD)
Oyster Point Marina CFD Agreement
- 32 cents for O&M (annual); lesser of 5% CPI or actual
- 7 cents for fuel system (through 2030); 2% CPI
OPD Residential CEQA MMRP
- OPD commits to meeting all CEQA requirements and 100% funding
City Council Special Meeting
December 4, 2017
1
Background
OPD Residential Application
Application Evaluation
Impact Fees, DA/DDA Obligations, Community
Benefits
Next Steps
2
3
Cambridge, MA
Mtn View – N Bayshore
Emeryville
SF – Mission Bay
2011 March: OPV project DA & DDA approved by
City & Agency
2016 May: OPD takes over as developer
2017 March: OPD submits application to revise
development program to include residential
2017 Nov: OPD commences construction on
Phase I infrastructure
4
5
March 2017 Residential application submitted
April 2017 DRB Meeting #1
July 2017 DRB Meeting #2
Aug 2017 Housing Committee Meeting
Oct 2017 BPAC Meeting
Oct 2017 Park & Rec Commission Meeting
Dec 4, 2017 City Council Study Session
Dec 5-9, 2017 Draft SEIR published
Dec 2017 PC SEIR Public Hearing
Mid Jan 2018 45 day SEIR review period ends
Feb/Mar 2018 Planning Commission
Mar/Apr 2018 City Council
6
7
8
2011 Approved: 2.25M sq. ft. of R&D
◦Phase I-II ~ 1,150,000 sq. ft.
◦Phase III-IV ~1,100,000 sq. ft.
◦No Requirement for Retail/Commercial
◦6.1 acres Open Space
2017 Application: 3M sq. ft. of Mixed-Use
◦Phase I-II ~1,500,000 sq. ft. R&D
◦Phase III-IV 1,191 Residential Units
◦50,000 sq. ft. Retail/Commercial
◦10.3 acres Open Space
9
10
11
Insert retail picture
12
13
14
Aesthetics
Agricultural Resources
Air Quality
Biological Resources
Cultural Resources
Geology & Soils
Greenhouse Gases
Hazards
Hydrology & Water
Quality
Mineral Resources
Population, Public
Services & Recreation
Utilities
15
Construction Noise
Transportation
16
Mitigation Measures to reduce noise levels
generated by construction
Residents and employees exposed to construction
noise
Phased construction extends impact
17
Current traffic conditions are poor
Future traffic will increase due to developments
City efforts to improve transportation conditions
◦East of 101 CIP Update
◦Smart traffic pilot project
◦East of 101 Transportation Study
◦Alternative Mode Improvements
-Caltrain
-Ferry
-Scoop
-Shuttles
-TDM
18
2017 project traffic flow better than 2011 project during peak hours
2011 project
o All trips generated from Office/R&D
o All trips enter East of 101 in morning, exit in evening
2017 project
o Residential with Office trips balance traffic flow
o Office/R&D enter East of 101 in AM and exit in PM
o Residential exits East of 101 in the PM and enter in the AM
o Some trips will stay within SSF
OPD estimated transportation Impact Fees $13.1M
19
40% Alternative Mode Split (Office/R&D / Residential)
Examples of Proposed Measures
◦Bicycle and Pedestrian Resources & Amenities
◦Last Mile Shuttle Resources
◦Ride Matching Resources
◦Supporting On-Site Amenities
◦Live Work SSF Preference
◦Parking Management
20
21
2017 Application
Mitigation
Fire
No New Personnel for
2017 OPSP
Relocate Fire Station
No. 62
Fire/Police Public Safety
Impact Fee ($1.2M)*
$5M to Relocate Fire Station
No. 62
Police No New Personnel for
2017 OPSP
Fire/Police Public Safety
Impact Fee ($1.2M)*
Note: *$1.2M for both Fire and Police
22
Potential Impact
Mitigation
School Est. 435 school-age
children
$5.9M School
Impact Fee
Childcare Estimated 143 childcare
spaces
$3.4M Childcare
Impact Fee
Library Need additional space Demand met by
planned Library plus
Donation ($50K)
Compliance with City’s Inclusionary Housing
Ordinance
20% of rental units would be affordable:
◦30 units provided on-site w/ first housing units
◦69 units provided on/off-site in later phases
70%-110% AMI
23
24
25
Category 2011 Project 2017 Project
Impact Fees $24.9M $41.9M
DA/DDA Obligations &
Community Benefits
$7.4M $40.0M
Property Taxes
(City/SSFUSD)
$8.8M
$10.1M
Total $41.1M $92.0M
26
Agency Pre-2016 Current 2011 Project 2017 Project
City $18,800 $251,300 $2.4M $2.8M
SSFUSD $49,500 $659,800 $6.4M $7.3M
Other
Taxing
Agencies
$44,300 $590,800 $5.8M $6.6M
Subtotal $112,600 $1.5M $14.6M $16.7M
27
Category Estimated Fee
Transportation $13.1M
Sewer $ 9.5M
Childcare $ 3.4M
Park & Rec $ 7.4M + Land Dedication
Public Safety $ 1.2M
General Plan $ 1.3M
Mass Decontamination $ 0.1M
Schools (SSFUSD) $ 5.9M
Total Impact Fees $41.9M
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Category Estimated Fee
DA/DDA Obligation $6.9M
Fire Station/Public Infrastructure $5.0M
Public Art $0.1M
CFD (being formed) $28.0M*
Subtotal $40.0M
*NPV over 30 years
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•Subsequent EIR
-Dec 5-9: Draft SEIR published
-Dec 2:1 PC public hearing
-Mid Jan 2018: 45 day review period ends
•Public Hearings for Entitlement
-Feb/Mar 2018: Planning Commission
-Mar/Apr 2018: City Council
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