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HomeMy WebLinkAboutReso 129-2017 (17-890)City of South San Francisco P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, CA • City Council ' Resolution: RES 129 -2017 File Number: 17 -890 Enactment Number: RES 129 -2017 RESOLUTION APPROVING LOCAL GOALS AND POLICIES FOR COMMUNITY FACILITY DISTRICTS. WHEREAS, this Council is intending to consider the conduct of proceedings under the Mello -Roos Community Facilities Act of 1982 (Chapter 2.5, commencing with Section 53311 of Part 1, Division 2, Title 5 of the California Government Code) (the "Act "). WHEREAS, under the Act, a local agency may initiate proceedings to establish a community facilities district under the Act only if it has first considered and adopted local goals and policies. WHEREAS, a form of Local Goals and Policies for Community Facilities Districts (the "Goals and Policies ") is on file with the City Clerk. NOW THEREFORE BE IT RESOLVED, that in accordance with the requirements of Section 53312.7 of the Act, this Council hereby adopts the "Local Goals and Policies for Community Facilities Districts" as set forth in Exhibit A attached hereto and incorporated herein by reference. BE IT FURTHER RESOLVED, that this Resolution shall take effect from and after the date of its passage and adoption and shall apply to public financings under the Act that are approved by this Council hereafter. At a meeting of the City Council on 10/11/2017, a motion was made by Richard Garbarino, seconded by Mark Addiego, that this Resolution be adopted. The motion passed. Yes: 5 Vice Mayor Normandy, Councilmember Garbarino, Councilmember Matsumoto, Mayor Gupta, and CouncilmemberAddiego Attest City of South San Francisco Page 1 CITY OF SOUTH SAN FRANCISCO LOCAL GOALS AND POLICIES FOR COMMUNITY FACILITIES DISTRICTS Adopted J 2017 I. GENERAL. EXHIBIT A Section 53312.7(a) of the California Government Code requires that local agencies consider and adopt local goals and policies concerning the use of the Mello -Roos Community Facilities Act of 1982 (the "Act ") prior to the initiation of proceedings on or after January 1, 1994 to establish a new community facilities district ( "CFD ") under the Act. These Local Goals and Policies for Community Facilities Districts (the "Policies') provide guidance and conditions for the conduct by the City of South San Francisco (the "City") of proceedings for, and the issuance of bonds secured by special taxes levied in, a CFD established under the Act. The Policies are intended to be general in nature; specific details will depend on the nature of each particular financing. The Policies are applicable to financings under the Act and are intended to comply with Section 53312.7 (a) of the Act. These policies supersede and replace any local goals and policies previously adopted by the City under the Act. These Policies shall not apply to any assessment financing or any certificate of participation or similar financings involving leases of or security in public property. The Policies are subject to amendment by the City Council at any time. II. FINANCING PRIORITIES. Eligible Facilities. Except as otherwise permitted by the Act, the improvements eligible to be financed by a CFD must be owned by a public agency or public utility and must have a useful life of at least five years, except that up to 10% of the proceeds of an issue may be used for facilities owned and operated by a privately -owned public utility. The development proposed within a CFD must be consistent with the City's general plan and any required legislative approvals and entitlements, such as zoning or specific plan approvals, must be in place or in process at the time the CFD is formed. A CFD shall not vest any rights to future land use on any properties, including those that are responsible for paying special taxes. The eligible public facilities include, but are not limited to, those listed in the Act. It is acknowledged that the Act permits the financing of fee obligations imposed by governmental agencies the proceeds of which fees are to be used to fund public capital improvements of the nature listed above. The City will consider an application to finance fee obligations on a case -by -case basis. The City will prioritize financing fees to be paid to the City because of the administrative burden associated with financing fees payable to other local agencies. The funding of public facilities to be owned and operated by public agencies other than the City shall be considered on a case -by -case basis. If the proposed financing is consistent with a public facilities financing plan approved by the City, or the proposed facilities are otherwise consistent with approved land use plans for the property, the City shall consider entering into a joint financing agreement or joint powers authority in order to finance these facilities. A joint agreement with the public agency that will own and operate any such facility must be entered into at the time specified in the Act. A CFD may also be formed for the purpose of refinancing any fixed special assessment or other governmental lien on property, to the extent permitted under the Act, as applicable. Priority Facilities. Priority for CFD financing of public facilities shall be given to public facilities that: (a) are necessary for development to proceed in an orderly fashion, or (b) are otherwise coordinated to correspond to the phasing of the related private development project. If appropriate, the City may prepare a public facilities financing plan as a part of the specific plan or other land use document that identifies the public facilities required to serve a project, and the type of financing anticipated to be used for each facility. Eligible Services; Priority Services. The services eligible to be financed by a CFD (the "Services") are those identified in the Act. Subject to the conditions set forth in the Act, priority for public services to be financed by a CFD shall be given to services that (a) are necessary for the public health, safety and welfare and (b) would otherwise be paid from the City's general fund. The City may finance services to be provided by another local agency if it determines the public convenience and necessity require it to do so, although the City prioritizes financing services to be provided by the City. If appropriate, the City shall prepare a public services financing plan as a part of the specific plan or other land use document that identifies the public services required to serve a project, the source of funding for each such service and the incremental services to be financed by property owners. Eligible Private Facilities. Financed improvements may be privately owned in the specific circumstances, and subject to the conditions, set forth in the Act. III. BOND FINANCINGS, CREDIT QUALITY. Value -to- Public Lien Ratio. All CFD bond issues should have a value -to -lien ratio of at least 3:1, based on the value of the property in the CFD and the principal amount of the CFD bonds and other public debt with a foreclosable lien on the property in the CFD, taking into account the value of the financed public improvements to be installed, unless otherwise specifically approved by the City Council as provided in Section 53345.8(b) or (c) of the Act. Property value may be based on either an appraisal (as described in VI below) or on assessed values as indicated on the county assessor's tax roll. 2 Entitlement Status. Except as otherwise approved by the City Council, the City will require all major land use approvals and governmental permits necessary for development of land in the CFD to be substantially in place before bonds may be issued. Reserve Fund. Where appropriate, the City will require a reasonable debt service reserve fund, which will typically be funded with proceeds of bonds issued for the CFD. Failure to Meet Credit Criteria. A property value to public lien ratio of less than 3:1, excessive tax delinquencies, or projects of uncertain economic viability may cause the City to disallow the sale of bonds or require credit enhancement prior to bond sale. The City may consider exceptions to the above policies for bond issues that do not represent an unusual credit risk, either due to credit enhancement or other reasons specified by the City, or which otherwise provide extraordinary public benefits, to the extent permitted by and subject to any applicable requirements of the Act. If the City requires letters of credit or other security for the payment of special taxes within a CFD, the credit enhancement shall be issued by an institution, in a form and upon terms and conditions satisfactory to the City. Any security required to be provided by the applicant may be discharged by the City upon satisfaction of the applicable credit criteria specified by the City. As an alternative to providing other security, and subject to federal tax law, the applicant may request that a portion of the bond proceeds be placed in escrow with a trustee or fiscal agent in an amount sufficient to assure the financing will meet the applicable credit criteria, including, but not limited to, meeting a value -to -lien ratio of at least three to one on the non - escrowed bond proceeds. The escrowed bond proceeds shall be released at such times and in such amounts as may be necessary to assure the applicable credit criteria have been met. The City will work with its legal counsel, financial advisors and bond underwriters to ensure that bond financings are structured so that bonds are purchased and owned by suitable investors. IV. DISCLOSURES Purchasers of Property. As a minimum, any disclosures mandated by applicable state law to inform prospective purchasers of their obligations under the CFD shall apply to each CFD. In addition, there may be additional requirements mandated by the City for particular kinds of financings on a case -by -case basis. The City may prescribe specific forms to be used to disclose the existence and extent of obligations imposed by CFD. Disclosure Requirements for the Resale of Lots. The City shall, upon request, provide a notice of special taxes to sellers of property (other than developers) to enable them to comply with their notice requirements under Section 1102.6 of the Civil Act. This notice shall be provided by the City within a reasonable time after receiving a written request for the notice. A reasonable fee may be charged for providing the notice, not to exceed any maximum fee specified in the Act. K Continuing Bond Disclosure. Major landowners in a CFD must agree to provide: (i) initial disclosure at the time of issuance of any bonds; and (ii) continuing disclosure as required by the City and the bond underwriter to ensure compliance with Rule 15c2 -12 of the Securities Exchange Commission. V. EQUITY OF SPECIAL TAX FORMULAS AND MAXIMUM SPECIAL TAXES Minimum Special Tax Levels. Special tax formulas shall provide for minimum special tax levels which satisfy the following payment obligations of a CFD: (a) 110% gross debt service coverage for all CFD bonded indebtedness, (b) the administrative expenses of the CFD (which may be covered in the 10% debt service coverage described in clause (a)), and (c) amounts equal to the differences between expected earnings on any escrow fund and the interest payments due on related bonds of the CFD. In addition, the special tax formula may provide for the following to be included in the special tax levels: (a) any amounts required to establish or replenish any reserve fund established in association with the indebtedness of the CFD, (b) the accumulation of funds reasonably required for future debt service, (c) amounts equal to projected delinquencies of special tax payments, (d) the costs of remarketing, credit enhancement and liquidity facility fees, (e) the cost of acquisition, construction, furnishing or equipping of authorized Facilities, (f) lease payments for existing or future facilities, (g) costs associated with the release of funds from an escrow account, (h) the costs of Services, and (i) any other costs or payments permitted by law. Equity of Special Tax Allocation Formula. The special tax formula shall be reasonable in allocating the CFD's payment obligations to parcels within the CFD. Exemptions from the special tax may be given to parcels which are publicly owned, are held by a property owners' association, are used for a public purpose such as open space or wetlands, are affected by public utility easements making impractical their utilization for other than the purposes set forth in the easements, or have insufficient value to support bonded indebtedness. 4 Aggregate Tax Burden. The total projected non - residential property tax levels for any CFD (including ad valorem taxes, any maintenance, landscaping or other impositions on the land in the CFD and other similar annual government charges levied on parcels in the CFD, but excluding property owners' association annual levies and as to any special tax levies, based' on the expected special tax rates and not any "back -up" special taxes) must be reasonable. The annual increase, if any, in the maximum special tax for any non - residential parcel shall not exceed any maximum specified in the Act. At the time a CFD is formed, except as otherwise approved by the City Council, the City shall determine that the total projected residential property tax levels (including ad valorem taxes, any maintenance, landscaping or other impositions on the land in the CFD and other similar annual government charges levied on parcels in the CFD, but excluding homeowners' association annual levies and as to any special tax levies, based on the expected special tax rates and not any "back -up" special taxes) within the CFD (or, if a CFD has multiple improvement areas, for each improvement area and not the entire CFD) does not exceed the lesser of (i) 2.0% of the estimated sales prices of the respective homes to be constructed in the CFD (with such prices to be determined by reference to an absorption study or appraisal prepared for the CFD or such other information as the City may use), or (ii) any maximum specified in the Act. The annual increase, if any, in the maximum special tax for any parcel shall not exceed any maximum specified in the Act. The increase in the special tax levied on any residential parcel as a consequence of delinquency or default by the owner of any other parcel shall not exceed any maximum specified in the Act. Levy on Entire Parcels. Special taxes will only be levied on an entire county assessor's parcel, and any allocation of special tax liability of a county assessor's parcel to leasehold or possessory interest in the fee ownership of such county assessor's parcel shall be the responsibility of the fee owner of such parcel and the City shall have no responsibility therefor and has no interest therein. Failure of the owner of any county assessor's parcel to pay or cause to be paid any special taxes in full when due, shall subject the entire parcel to foreclosure in accordance with the Act. Feasibility Analysis. The City may retain a special tax consultant to prepare a report which: (a) recommends a special tax for the proposed CFD, and (b) evaluates the special tax proposed to determine its ability to adequately fund identified public facilities, City administrative costs, services (if applicable) and other related expenditures. Such analysis shall also address the resulting aggregate tax burden of all proposed special taxes plus existing special taxes, ad valorem taxes and assessments on the properties within the CFD. VI. APPRAISALS The definitions, standards and assumptions to be used for appraisals shall be determined by City staff on a case -by -case basis, with input from City consultants and CFD applicants, and by reference to relevant materials and information promulgated by the State of California (including, but not limited to, the California Debt Investment and Advisory Commission). The appraiser shall be selected by or otherwise acceptable to the City, and the appraisal shall be coordinated by and under the direction of, or otherwise as acceptable to, the City. The date of value set forth in the appraisal must be no earlier than three months of the date the bonds are priced, unless the City Council determines a longer time is appropriate. All costs associated with the preparation of the appraisal report shall be paid by the entity requesting the establishment of the CFD, if applicable, through the advance deposit mechanism described below. VII. CITY PROCEEDINGS. Petition. For new development projects, a petition meeting the requirements of the applicable authorizing law will be required. The applicant is urged to obtain unanimous waivers of the election waiting period. In applying to the City for formation of a CFD, the applicant must specify any reasonably expected impediments to obtaining petitions, including from co- owners and /or lenders of record (where required). Waiver of the petition shall be made only upon showing of extraordinary hardship. For existing development, petitions are preferred, but may be waived, depending on the nature of the project and degree of public importance. Deposits and Reimbursements. All City staff and consultant costs incurred in the evaluation of CFD applications and the establishment of the CFD will be paid by the entity, if any, requesting the establishment of the CFD, and the City may require such entity to make an advance deposit in order to cover such costs as further described below. The City shall not incur any expenses for processing and administering a CFD that are not paid by the applicant or from CFD bond proceeds. In general, expenses not chargeable to the CFD shall be directly borne by the proponents of the CFD. The City may require that any petition for formation of a CFD be accompanied by an initial deposit in the amount determined by the City to fund initial staff and consultant costs associated with CFD review and implementation. If additional funds are needed to off -set costs and expenses incurred by the City, the City may make written demand upon the applicant for such funds. If the applicant fails to make any deposit of additional funds for the proceedings, the City may suspend all proceedings until receipt of such additional deposit. The City shall not accrue or pay any interest on any portion of the deposit refunded to any applicant or the costs and expenses reimbursed to an applicant. Neither the City nor the CFD shall be required to reimburse any applicant or property owner from any funds other than the proceeds of bonds issued by the CFD or special taxes levied in the CFD. Representatives. The applicant shall designate a representative for each financing district proceeding who shall be responsible for coordinating the activities of the applicant and shall be the spokesperson for the applicant. The purpose of this requirement is to avoid duplication of effort and misunderstandings from failure to communicate effectively. M Time Schedule. The final schedule of events for any proceeding shall be determined by the City, in consultation with its financing team and the applicant. Any changes will require approval by the appropriate City official. Time schedules will (unless specific exceptions are allowed) observe established City Council meeting schedules and agenda deadlines. To the extent possible, financings will be scheduled to allow debt service to be placed on the tax rolls with a minimum of capitalized interest. VIII. FINANCING TERMS All terms and conditions of any CFD bonds shall be established by the City. The City will control, manage and invest all CFD issued bond proceeds. Each bond issue shall be structured to adequately protect bond owners and to not negatively impact the bonding capacity or credit rating of the City through the special taxes, credit enhancements, foreclosure covenant, and reserve funds. All statements and material related to the sale of bonds shall emphasize and state that neither the faith, credit nor the taxing power of the City is pledged to security or repayment of the Bonds. The sole source of pledged revenues to repay CFD bonds are special taxes, bond proceeds and reserve funds held under the bond document, and the proceeds of foreclosure proceedings and additional security instruments provided at the time of bond issuance. The City shall select all consultants necessary for the formation of the CFD and the issuance of bonds, including the underwriter(s), bond counsel, disclosure counsel, municipal advisors, appraiser, market absorption/ pricing consultant and the special tax consultant. Prior consent of the applicant shall not be required in the determination by the City of the consulting and financing team. IX. EXCEPTIONS TO THESE POLICIES The City may find in limited and exceptional instances that a waiver to any of the above stated policies is reasonable given identified special benefits to be derived from such waiver. Such waivers only will be granted by action of the City Council. 7