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HomeMy WebLinkAboutCity Council Resolution 16-032 - Establishing Local Goals and Policies for Community Facilities DistrictsRESOLUTION NO. 16-032 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SARATOGA ESTABLISHING LOCAL GOALS AND POLICIES FOR COMMUNITY FACILITIES DISTRICTS WHEREAS, California Government Code Section 53312.7(a) requires that the City of Saratoga consider and adopt local goals and policies concerning the use of the Mello -Roos Community Facilities Act of 1982 before Initiating proceedings to establish a new community facilities district (CFD) under the Act , and WHEREAS, the Local Goals and Policies provide guidance and conditions for the conduct by the City in the proceedings for, and the issuance of bonds secured by special taxes levied in, a CFD established under the Act, and WHEREAS, the attached Local Goals and Policies are intended to provide general guidance in the formation for CFDs, including identification of improvements eligible to be financed by a CFD, cnterla for bond financing, disclosure requirements, outline of City proceedings, and other components associated with development of a CFD ; NOW, THEREFORE BE IT RESOLVED, that the City Council of the City of Saratoga hereby adopts the attached Local Goals and Policies for Community Facilities Districts. The above and foregoing resolution was passed and adopted at a regular meeting of the Saratoga City Council held on the 18th day of May 2016 by the following vote. AYES- Mayor E Manny Cappello, Vice Mayor Emily Lo, Council Member Mary -Lynne Bernald, Howard A Miller, Rishi Kumar NOES - ABSENT ABSTAIN - ATTEST ii•erIVWZAVO al Bothello, City Clerk E Manny appello, Mayor DATE r J c 1-Z--v=b1 k4C2 CITY OF SARATOGA LOCAL GOALS AND POLICIES FOR COMMUNITY FACILITIES DISTRICTS Adopted May 18, 2016 I. GENERAL Section 53312 7(a) of the California Government Code requires that the City of Saratoga (the "City") consider and adopt local goals and policies concerning the use of the Mello -Roos Community Facilities Act of 1982 (the "Act") pnor to the initiation of proceedings on or after January 1, 1994 to establish a new community facilities distnct ("CFD") under the Act. These Local Goals and Policies for Community Facilities Distracts (the "Policies") provide guidance and conditions for the conduct by 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 each particular financing The Policies are applicable to financings under the Act and are intended to comply with Section 53312.7(a) of the Government Code 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 The improvements eligible to be financed by a CFD will be owned by a public agency, public utility, pnvately-owned public utility, or shareholder -owned utility and will have a useful life of at least five years Development proposed within a CFD will be consistent with the City's general plan and will have received any required legislative approvals. A CFD will not vest any rights to future land use on any properties, including those which are responsible for paying special taxes The list of eligible public facilities include, but are not limited to, the following • Streets • Street lighting • Traffic signals and safety lighting • Landscaping on public property or in public easements • Sanitary sewer facilities • Storm dram facilities • Flood control facilities • Potable and reclaimed water facilities • Utility relocations • Elementary and secondary school sites and facilities • Libraries • Parks and recreational facilities • Public utilities • Cultural facilities • Police and fire protection facilities • Governmental facilities 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 fisted above The City will consider an application to finance fee obligations on a case-by-case basis City of Saratoga Local Goals & Policies for Community Facilities District — Adopted Via Resolution No 16-032 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 may consider entering into a funding agreement or joint powers authority in order to finance these facilities. In the event the City elects to pursue a funding agreement or joint powers authority, such a joint agreement with the public agency that will own and operate any such facility will be entered into consistent with the time specified in the Act A CFD may also be formed for the purpose of refinancing any fixed special assessment or other governmental hen on property to the extent permitted under the Act, as applicable Pnonty Facilities The City Council establishes the following pnonties for use of the Act in the order set forth. 1 The cost and expense of providing eligible services, maintaining, operating and replacing any of the eligible facilities per this policy, including establishing a reasonable reserve fund 2. Facilities needed to enable the City to extend a City service into an area irrespective of the scale of the area, consisting of property which is not presently receiving such service and the owners of which property submit a legally sufficient petition to the City requesting such service, which petition is accompanied by a deposit of funds to pay the City 's prelunmary expense as provided by subsection (d) of Section 53318 of the Act, 3 Facilities which provide a community -wide benefit for all inhabitants of the City; and, 4 Other facilities permitted by the Act 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 The City Council adopts the requirements of Section 53345 8 of the Act as sufficient minimum standards for the credit quality of any bonds issued pursuant to the Act. IV. DISCLOSURES Purchasers of Property. As a minimum, any disclosures mandated by applicable state law to mform 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 prescnbe 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 provide a notice of special taxes to sellers of property (other than developers) which will 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 five working days of receiving a wntten request for the notice A reasonable fee may be charged for providing the notice, not to exceed any maximum fee specified in the Act. City of Saratoga Local Goals & Policies for Community Facilities District — Adopted Via Resolution No 16-032 Contmuing Bond Disclosure. Landowners in a CFD that are responsible for ten percent (10%) or more of the annual special taxes must agree to provide (i) initial disclosure at the time of issuance of any bonds, and (ii) annual disclosure as required under Rule 15c2-12 of the Securities Exchange Commission until the special tax obligation of the property owned by such owner drops below 10%. V. REQUIREMENT FOR SPECIAL TAX FORMULAS. The special tax formula shall be structured to produce sufficient annual special tax revenue to pay (a) operating, maintenance and replacement costs, including establishment of a reasonable reserve for the eligible facilities (b) annual debt service on special tax bonds, if any have been issued, (c) reasonable annual administrative expenses of the City in the administration of the special taxes and the bonds, if any, of the CFD, and (d), in the event that any services or other "pay as you go" programs have been authorized to be funded by the CFD special tax, the estimated cost of such services or other "pay as you go" programs for the commg year. The special tax formula may provide for a backup special tax to protect against unforeseen contingencies, including but not limited to unusual levels of delinquency in the payment of the special tax, but subject to the limitations of subsection (d) of Section 53321 of the Act pertaining to the 10 percent limitation on such backup special taxes on parcels used for private residential purposes The special tax formula may provide for an annual increase in the maximum special tax for facilities, subject to the 2 percent limitation on such annual increases specified by subsection (d) of Section 53321 of the Act pertaining to parcels used for private residential properties, and may provide for prepayment and discharge of that portion of the special tax obligation on any residential properties pertaimng to debt service on special tax bonds, if any, as distinguished from that portion of the special tax obligation on such residential properties pertaining to services. The special tax formula may be structured to provide for total estimated annual special tax revenues, less estimated annual administrative expenses, which shall exceed the projected annual gross debt service on outstanding special tax bonds, if any, by ten percent (10%). The special tax formula shall allocate the annual special tax obligation to all categories and classes of taxable property within the CFD on the basis of reasonableness The special tax formula shall generally be structured to honor the limitation that, subject to the limitations on the ability of the City Council to anticipate future actions of other local agencies having jurisdiction to impose exactions on property within a CFD of the City , the total amount of the annual "tax burden" for residential property within the proposed CFD, mcludmg (a) the estimated general annual ad valorem property tax levied by the County of Santa Clara, (2) other direct and overlappmg debt, if any, for taxable property within the proposed CFD (including anticipated benefit assessments, levies for authorized but unissued debt and any other anticipated municipal charges, if any, which in the normal course would be included on a property owner's City of Saratoga Local Goals & Policies for Community Facilities District — Adopted Via Resolution No. 16-032 annual property tax bill), and (3) the proposed maximum annual special tax of the CFD, shall not exceed two percent (2%) of the estimated market value for any single family home, condominium or town home within the proposed CFD VI. APPRAISALS The defmrtions, 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 matenals and information promulgated by the State of California (including, but not lumted 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 appraisal must be dated within 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 authonzmg law will be required The applicant is urged to obtain unammous 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 obtaimng an affirmative vote on the district, 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 existmg 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 m 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 by advance deposit increments 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 Any petition for formation of a CFD shall be accompanied by an initial deposit in the amount determined by the City to fund uutial 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 shall make wntten 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 City of Saratoga Local Goals & Policies for Community Facilities Distnct — Adopted Via Resolution No 16-032 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. 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 underwnter(s), bond counsel, disclosure counsel, financial advisors, appraiser, market absorption/pncing consultant and the special tax consultant Pnor 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 City of Saratoga Local Goals & Policies for Community Facilities District — Adopted Via Resolution No 16-032