HomeMy WebLinkAbout09.24.2020 Finance Committee agenda packet
CITY OF SARATOGA
COUNCIL FINANCE COMMITTEE
SEPTEMBER 24, 2020
Teleconference/Public Participation Information to Mitigate the Spread of COVID‐19
This meeting will be entirely by teleconference. All Council members and staff will only participate
via the Zoom platform using the process described below. The meeting is being conducted in
compliance with the Governor’s Executive Order N‐29‐20 suspending certain teleconference rules
required by the Ralph M. Brown Act. The purpose of this order was to provide the safest
environment for the public, elected officials, and staff while allowing for continued operation of
the government and public participation during the COVID‐19 pandemic.
Members of the public can view and participate in the meeting by:
Using the Zoom website https://us02web.zoom.us/j/84573371672 or App Webinar ID: 845 7337
1672 and raising their hand to speak on an agenda item when directed by the Mayor.
1. Calling 1.669.900.6833 or 1.408.638.0968 and pressing *9 to raise their hand to speak
on an agenda item when directed by the Mayor.
The public will not be able to participate in the meeting in person.
As always, members of the public can send written comments prior to the meeting by
commenting online at www.saratoga.ca.us/fc prior to the start of the meeting. These emails will
be provided to the members of the Council and will become part of the official record of the
meeting.
During the meeting the Mayor will explain the process for members of the public to be recognized
to offer public comment.
In accordance with the Americans with Disabilities Act and the Governor’s Executive Order, if
you need assistance to participate in this meeting due to a disability, please contact the City
Clerk at debbieb@saratoga.ca.us or calling 408.868.1216 as soon as possible before the
meeting. The City will use its best efforts to provide reasonable accommodations to provide as
much accessibility as possible while also maintaining public safety.
TIME 1:00 p.m.
LOCATION Virtual meeting via Zoom
1. CALL TO ORDER Mayor Miller
2. ROLL CALL Council Members: Miller. Bernald, Zhau, Kumar
3. REPORT ON POSTING OF THE AGENDA: Pursuant to Government Code Section 54954.2,
the agenda for this meeting was properly posted on: September 21, 2020.
4. ORAL & WRITTEN COMMUNICATION
Any member of the public may address the Committee about any matter not on the agenda
for this meeting for up to three minutes. Committee members may not comment on the
matter but may choose to place the topic on a future agenda.
5. APPROVAL OF FINANCE COMMITTEE MEETING MINUTES FOR August 27, 2020
6. OLD BUSINESS
A. Community Funded Improvement Project Council Policy
7. NEW BUSINESS
A. ClearGov Contract
B. Next Finance Committee meeting proposed date: October 22, Thursday, 1:00 PM
8. ADJOURNMENT
CERTIFICATE OF POSTING OF THE AGENDA, DISTRIBUTION OF THE AGENDA PACKET,
COMPLIANCE WITH AMERICANS WITH DISABILITIES ACT
I, Mary Furey, Administrative Services Director for the City of Saratoga, declare that the
foregoing agenda for the meeting of the Council Standing Finance Committee of the City of
Saratoga was posted and available for public review on September 21, 2020 at the City of
Saratoga, 13777 Fruitvale Ave., Saratoga, CA 95070, and on the City’s website at
www.saratoga.ca.us.
Signed this 21st day of September 2020 at Saratoga, California.
Mary Furey, Administrative Services Director
In compliance with the Americans with Disabilities Act, if you are a disabled person and need a
disability-related modification or accommodation to participate in this meeting, please contact
the City Clerk’s Office at (408) 868-1216 or by email at debbieb@saratoga.ca.us. Requests must
be made as early as possible and at least one full business day before the start of the meeting.
In accordance with the Ralph M. Brown Act, staff reports and other materials provided to the members
of the legislative body will be made available following removal of State and local shelter in place
orders in the office of the City Clerk at 13777 Fruitvale Avenue, Saratoga, CA 95070.
[28 CFR 35.102-35.104 ADA title II]
CITY OF SARATOGA
ACTION MINUTES
COUNCIL FINANCE COMMITTEE
AUGUST 27, 2020
TIME 1:00 p.m.
LOCATION Virtual meeting via Zoom
PRESENT Council Members: Miller, Bernald
ALSO PRESENT Staff Members: Lindsay, Furey, Jaw, Bothelio, G. Scott, T. Scott, Salindong,
Alvarez
1.APPROVAL OF PRIOR FINANCE COMMITTEE MEETING MINUTES
A.July 23, 2020 Meeting Minutes – approved
2.ORAL & WRITTEN COMMUNICATIONS
A.None
3.OLD BUSINESS
A.None
4.NEW BUSINESS
A.Electric Vehicle Charging Station Review
Action Item – Finance Committee recommends staff prepare an Electric Vehicle
Charging Station policy consistent with the actions recommended in the draft
Climate Action Plan and bring to Council with Climate Action Plan report in November
2020.
B.CARES Act Funding
Action Item – Staff to submit the first CARES Act report to the State with approved
Financial Assistance amounts, and the remainder assigned to City costs for now
pending future direction from Council.
Action Item - Staff to bring Business License six month extension program plan to
City Council for consideration.
C.CalPERS Assessed Valuation Reports
Action Item – none. Finance Committee recommends City stays the course with the
$1 million per year payment.
D.Next Finance Committee meeting date
Scheduled for September 24, 2020 at 1:00 pm
5.ADJOURNMENT
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Memorandum
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DATE: September 24, 2020
TO: Finance Committee
FROM: Mary Furey, Finance & Administrative Services Director
SUBJECT: Item 6A -Community Funded Improvement Project Process Policy
Per Finance Committee request, staff has prepared a Community Funded
Improvement Project Council Policy to provide guidance to Saratoga residents
seeking infrastructure improvements in their neighborhood community. The process
policy is attached for the Committee’s review and recommendations.
Once finalized, the process policy will be brought to City Council for review and
approval.
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POLICY TITLE:District Formation and Bond Issuance Policy for
Community-Funded Infrastructure Projects
REGULATORY COMPLIANCE:Applicable statutes under California Government Code,
Title 5, Division 2, Part 1, Chapters 2.5-2.9 [53311-
53398.8]
POLICY EFFECTIVE DATE: September 16, 2020
AMENDMENTS:N/A
POLICY CONTENT:
I.POLICY SCOPE & OBJECTIVE
A. Scope
B. Objective
II.BACKGROUND
A. Project Initiation
B. Project Cost
C. Timeline
D. Definition
III.COMMUNITY COORDINATION
A. Initiation
B. Project Parameters
C. Communication
D. Community Vote
IV.COMMUNITY APPLICATION
A. Formal Request
B. District Formation Application
V.DISTRICT FORMATION PROCESS
A.Initial Meeting
B. Process Begins
C. Structural Decisions
D. Obtain Consultants
E. Engineering
F. City Council Authorization
G. Election
H. City Council Approval
VI.BOND ISSUANCE
A. Bond Issuance Options
B. Cash Payment Option
C. Ongoing Bond Issuance Costs
D. Indenture Considerations
E. Bond Funds
F. Improvement Project
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I.POLICY SCOPE AND OBJECTIVES
A. Scope –This policy outlines the process to establish a legal community-based entity
for the purpose of financing the construction or acquisition of infrastructure
improvements. This policy identifies both the Community’s and the City’s roles and
responsibilities, and the process to create an established special tax district. Districts
are commonly formed as Community Facilities Districts (CFD) for the purpose of
issuing a bond to provide the funding needed for the infrastructure improvement.
B. Objective -This policy process is generic in nature in order to provide informational
guidance to staff, and for community members interested in pulling a community
together to form an agreement, under various special tax district formations. City Staff
will meet with community members interested in facilitating a community
improvement project to provide guidance on the process as provided in this policy.
II.BACKGROUND
A. Project Initiation – Community-funded improvement projects are initiated by a
neighborhood that sees a need for a community-wide improvement, such as upgrading
a private roadway, undergrounding line-based infrastructure, or replacing a small
private water system for acceptance into the local water system utility.
B. Project Cost –While neighborhood improvements can be undertaken as private
projects without the City’s involvement, large-scale infrastructure improvements are
often cost-prohibitive or may require ongoing maintenance. In these situations,
neighborhoods look to the City for assistance to manage the improvement process.
Improvement-project requestors should be aware that the entire cost of the project
will be funded by the community, inclusive of City staff time and legal fees.
Due to the cost involved with a district formation and bond issuance, City policy hereby
establishes a minimum project improvement cost of $1 million. Participants are
required to pay formation costs and pre-bond issuance costs before the City will begin
the process.
City staff will provide estimated cost information for official requests; participants
should expect this will require a minimum of $50,000 for district formation costs,
additional funding for engineer work if needed, and any pre-bond issuance costs that
are not paid for as part of the bond issuance. Altogether, these costs could total
$150,000 prior to the bond issuance and its associated costs.
C. Timeline –Community-funded improvement projects incorporate many steps with
some statutorily required notification and/or waiting periods. The speed of the
community’s cohesive decision-making and community leadership is the first variable
in the timeline that determines the speed of the process. Once the Community has
agreement on project and funding choices, they can move forward with a request to
the City. The City Council’s CFD formation and bond authorization process will typically
take between four and six months. During this time, the community should ensure
that they have finalized engineering or construction plans and determined project costs
through professional estimates. Following City Council approval, the project’s funding
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timeline is determined by the community’s funding choices and actions. The project
construction timeline begins after the funding is in place.
D. Definition –A Community Facilities District (CFD) is a special tax district based on
State law first adopted in 1911 to establish assessment districts, and the subsequent
updates and new statues that have modified the technical and legal procedures for this
process. A CFD is a legal entity that can issue debt for the planning, design,
acquisition, construction, and/or operations of facilities, within an identified area.
Property owners within the district boundaries vote to both establish the District itself,
and to authorize a maximum special tax to be levied on taxable property within the
district boundaries. Revenues received from the special tax can only be used for the
purposes defined at the time of CFD formation or approval, inclusive of debt service
payments and associated bond expenses.
Special Tax liens are recorded against the title of properties within the district.
California Civil Code Section 1102.6 requires that the Special Tax lien be disclosed to
a buyer when the property is subsequently sold. Any outstanding Special Tax lien is
assumed with the purchase for the life of the CFD.
III.COMMUNITY COORDINATION
A. Initiation –A district formation is initiated by interested residents in a community,
through meeting with their neighbors to:
1. Discuss the need for an infrastructure improvement
2. Determine the improvement project scope and the proposed district’s boundaries
3. Hold community-wide meetings to choose leaders willing to guide the improvement
project on the community’s behalf, act as the main contacts for the project, and
communicate with the entire community group during the process
B. Project Parameters – Community leaders discuss and refine improvement project
parameters to:
1. Articulate a clearly defined improvement project in writing
2. Identify community boundaries and property ownership information
3. Determine implementation and improvement project funding methodology
4. Obtain expert advice on desired infrastructure project and/or engineering plans
5. Identify project urgency, project contingencies, and a realistic timeline
6. Determine anticipated project costs
C. Communication - Community Leaders:
1. Ensure project information and feedback is disseminated back to entire community,
including total funding requirements, per member cost, possible funding options,
and community concerns and responses.
a. Project funding option discussions to include:
Community association to self-fund project
City-established district with annual assessments (funded over time)
City-established district with bond issuance (immediate funds)
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2. Discuss and inform community of District formation and bond issuance process,
and pre-funding requirements to move forward:
District formation costs of approximately $50,000
Pre-bond issuance costs of approximately $50,000
Engineering Plans (this cost varies and can be conducted after bond issuance,
but if done after, the bond sizing would be less certain, require a larger
contingency, and the project timeline extended prior to beginning construction)
Potential for added legal fee costs if community members do not move forward
as a united group
3. Discuss bond issuance costs – both initial and ongoing costs.
4. Discuss improvement project costs, contingencies, alternatives, etc.
5. Discuss the method and allocation of tax assessments to property owners.
6. Discuss option to allow property owners to pay their share in cash prior to bond
issuance to eliminate participation in bond issuance.
D. Community Vote - A preliminary vote of all community members should be taken to
gauge majority opinion on moving forward with district formation and bond issuance.
While the City highly recommends 100% approval of district formation and bond
issuance, if the community is at least 2/3 in favor of establishing a district and funding
City involvement, the community leadership may then contact the City’s Public Works
Director to begin the process.
IV.COMMUNITY APPLICATION
A. Formal Request – A community group’s formal request to the City to form a
Community Facility District (CFD) or similar assessment district for the purpose of
financing community infrastructure through the issuance of special tax bonds requires
a packet of information be submitted to City. The City will then consider such requests
in the context of State law and City Policy. Information to be provided includes:
B. District Formation Application –To request the City begin the district formation
process, the community must provide:
1. A petition signed by at least 2/3 of homeowners (1 vote per property) requesting
the City to proceed with the district formation process.
2. Documentation authorizing who they have elected as Community leaders to act on
the community’s behalf to proceed with the request.
3. A clearly defined scope of work describing the improvement project.
4. Project cost estimates at a minimum, or preferably more refined estimates from a
draft engineering plan.
5. Information to explain the need and/or urgency of the project, project funding
maximum authorization, options, and the proposed method of cost allocation.
6. Defined district boundaries (must be entirely within city limits) for the proposed
Special Tax District, with addresses and property owner contact information.
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7. A signed acknowledgement that the community is aware a $50,000 deposit is
required to begin the district formation process, and that the use of the deposit
funds shall in no way be construed as requiring the City to issue bonds or to provide
reimbursement of the proceeds expended if the district formation and/or bond
issuance process is not successful.
8. A signed Funding and Indemnification agreement (provided by the City)
acknowledging the community group understands they are liable to protect the
City against lawsuits associated with district formation and project funding, and
will be required to provide commercial general liability insurance for this purpose.
The agreement also requires the community group to submit additional funding if
needed to complete the district formation process. (Deposit to be provided at initial
City Meeting, prior to the start of the district formation work. The City’s Risk
Manager will provide project specific insurance requirements.)
V.DISTRICT FORMATION PROCESS
A. Initial Meeting -City staff to meet with community leaders to review:
1. Completeness of their Request for District Formation application.
2. District formation options and community preferences.
3. District formation costs for attorneys, staff time, consultants, election costs, etc.
4. Engineering design/plan preparation options.
The Community may retain an engineer to design/prepare cost estimate for
improvement, or ask the City to do so on their behalf. Engineering plans are
recommended to ensure proper financing/bond-sizing.
5. City’s funding and indemnification requirements. The City requires the community
to submit payment from a community group account. Individual payments will not
be accepted.
6. Steps and timeline in the district formation and bond issuance process.
B. Process Begins –Once the agreement is signed, funded, and proof of insurance is
received, the City will assemble a team of district formation consultants.
C. Structural Decisions – To bring the district formation and bond issuance requests to
the City Council, the community leaders and the City must finalize and clearly define
a number of decision points:
District formation boundaries.
Limited purpose of the CFD (clearly defined project).
The rate and method of the special tax assessments.
This information will also be used for the ballot measure that goes to the electorate to
authorize the district formation and bond issuance election.
D. Obtain Consultants –For critical guidance in how bond issues and assessments are
structured and ultimately the success in the approval and issuance of a bond measure,
the City will contract with consultants to assist with preparing the documents for
Council approval. Financial Advisors and/or Underwriters provide expertise in the bond
market and bond issuance requirements, and Special Tax Consultants provide
expertise in the structure of bond assessment and special tax allocation calculations.
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E. Engineering –At this point, the community will have decided whether to fund the
engineering design and cost estimate work themselves, or to wait until the bond is
issued so that the expense can be paid from bond funds. If the community wants the
City to hire an engineering firm to complete the design process and cost estimate work
prior to bond issuance, an additional funding deposit is required.
F. City Council Authorization –Once the district formation, project details, tax
assessments, and bond issuance particulars are finalized, staff will bring two
resolutions and a petition to the City Council meeting for approval:
1. Resolution of intent to establish a Community Facilities District and to authorize
the levy of Special Taxes
2. Resolution to incur bonded indebtedness of the proposed Community Facilities
District
3. Petition to create a Community Facilities District (hold an election)
G. Election – If Council approves the district and bond issuance resolutions, a special
election will be held for the community. If the community votes to approve the district
formation and bond issuance by at least 2/3 of the voters, the process will continue.
If not, staff will refund any remaining deposit back to the community group.
H. City Council Approval–If the community voted in favor of becoming a CFD and the
issuance of a bond to fund the improvement project, staff will bring a resolution back
to the City Council to: approve the formation of the CFD; levy a special tax, and;
establish an appropriation limit for the district. The City Council will hold a public
hearing for this purpose and consider community input. If City Council approves the
resolution, the bond issuance process begins.
VI.BOND ISSUANCE
A. Bond Issuance Options –Community leaders will have become acquainted with the
bond issuance process in the initial meetings with the Financial Advisor and/or
Underwriters. The bond consultants will update the CFD leaders with current market
information, trends, and any other pertinent information, such as the difference in a
private sale vs public sale. The CFD leaders will provide the City and consultants with
their decision(s).
1. Publicly offered bonds are rated in conjunction with the City’s high investment
grade rating, thereby lowering the risk for bond issuers and attracting more buyers.
Generally, the competitive process will take longer to complete due to additional
steps to prepare the bond for market, the time on the marketplace to gather
interest and to set a purchase date. This results in higher bond issuance expenses,
but lower interest costs as the buyers compete against each other.
2. Private bonds can be issued by qualified buyers who agree to hold the bonds to
maturity, or sell to another qualified buyer under those same terms. Underwriters
generally have relationships with qualified buyers and find those interested parties,
negotiate the deal, and wrap up the details in a matter of days. This eliminates
both time and bond issuance costs. Typically, interest rates are higher in private
sales, so CFD participants would have to decide on this option.
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B. Cash Payment Option –Property owners will have the opportunity to forgo
participating in the bond issuance if they choose to contribute their share of the
improvement project costs prior to the bond issuance. The Special Tax consultant will
work out the contribution amounts and payment due date.
C. Ongoing Bond Issuance Costs – Bondholders will be responsible for the bond
issuance and annual costs associated with administering tax collection, debt service
payments, and regulatory reporting. As these fees are borne only by those members
who remain bondholders, the smaller the group becomes, the fewer property owners
to share the cost burden.
D. Indenture considerations –The bond indenture basically acts as the official rules in
a bond issuance. The bond bank must follow whatever is set out in the indenture, so
it is essential that funding distribution of excess funds, and the process for how
subsequent bond payoffs are handled are all spelled out in precise detail.
E. Bond Funds -When a bond is issued, the proceeds will go into separate accounts to
represent funding allowed for uses such as:
1. Cost of Issuance –this account holds the funds due to pay off bond issuance
consultants, such as bond attorneys, underwriters, debt issuance fees, etc.
2. Project Improvement Funds –this account holds the funds issued for the project
improvement costs. The City will submit requests for payment to the contractors
and other related improvement costs. The bond bank will pay the vendors directly.
Once the project is completed, the bond indenture will call out how remaining funds
are treated, either to be applied to pay down principal at the next bond call, or to
use to reduce debt service for the bond holders.
3. Reserve –this account holds a set percentage of funds for security as required by
the issuer to ensure the debt service is paid if a borrower does not fulfill their
obligation. A participant’s share is utilized in the buyout of their debt service if the
debt is paid off after issuance. Any remaining reserve funds are used for the final
debt service payment(s).
F. Improvement Project –Once the improvement project is complete, a notice of
completion shall be sent to the bond bank. This will allow for the final steps to proceed
as described in the indenture.
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Memorandum
DATE:September 24, 2020
TO:Finance Committee
FROM:Mary Furey, Administrative Services Director
SUBJECT:7A -Clear Gov Contract
Per direction from the Finance Committee, staff has moved forward with
implementation of the ClearGov software for graph-based demographic and financial
information on the City’s website.
To expedite the implementation of this software, staff entered into a one-year
contract for an amount of $24,850 with ClearGov to try the product out under a
minimal cost impact. ClearGov is offering a three-year contract for the full suite for
a subscription price of $19,450 per year over the contract term.
The full suite includes the:
Insights Suite –for the graph-based demographic/financial website software
Budgeting, Forecasting, Benchmarking Modules -for online budgeting process
Digital Budget Book –for transitioning to an online budget book
Given this project was originated by the Finance Committee, staff is bringing back
the three year contract option for the Committee’s recommendation to the City
Council.
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