HomeMy WebLinkAbout1984-05-29; City Council; 7706-1; 1915 Act: Assessment District FinancingCir OF CARLSBAD — AGEND BILL
AR* 7706-1
MTfl. 5/29/84
OPPT CA
TITLE: IQI s ACT • A^F^MFNT DT^TPTPT
FINANCING
DEPT. HD.
CITY ATTvV/53
CITY MGR.<^_
RECOMMENDED ACTION:
That the City Council adopt Council Policy Statement
establishing procedures for assessment district financing of
public improvements.
ITEM EXPLANATION
The City Council,.at your, meeting of April 10, 1984, considered
the use of 1915 Act assessment district bond financing for the
City of Carlsbad. After hearing from staff and a number of
interested developers, the City Council made a series of basic
policy judgments to establish guidelines under which the Council
would consider approving such financings. The City Council then
directed the City Attorney's office to prepare a council policy
statement incorporating those guidelines.
On April 12, 1984 we completed a draft policy. In doing that we
drew on policies already adopted by other public agencies in
California and the recommendations of the staff as modified by
the City Council. The draft was reviewed by the City Engineer,
Land Use Planning Manager, and F. MacKenzie Brown, the City's bond
counsel. The draft was also circulated by the City Manager to a
number of interested developers who also offered comments. All of
the modifications suggested by staff and bond counsel have been
made as well as a number of changes in response to developer
comments. As might be expected the developer comments fell along
a spectrum ranging from "a good job please adopt as soon as
possible" from Mr. Barnes to a "we will be unable to use
assessment district financing in Calavera Hills" from Cedric
Sanders. Some detailed and well thought out specific
recommendations for changes were received from Mr. Easterling, a
financial consultant, and Don Woodward. On the whole we were able
to either make changes in the policy or otherwise satisfy their
concerns. In a couple of instances, particularly in the case
of Calavera Hills, we were not able to accommodate their concerns
because they were directly contrary to matters already resolved
by the City Council at your meeting of April 10, 1984.
A draft policy is attached for your consideration. In our opinion
it is consistent with the Council's previous action and the City
Engineer recommends its adoption. It should be kept in mind that
as a city gains experience with this type of assessment district
the City Council may determine that changes are necessary in the
policy. In light of our experience we didn't think it was
Agenda Bill #7706-1
5/29/84
page 2
helpful at this early stage in the development of the program to
attempt to be overly specific or cover all possible
eventualities.
FISCAL IMPACT
None. Staff costs will be covered by developer deposits or
recovered from the district.
EXHIBITS
Council Policy Statement No.
J
CITY OF CARLSBAD Policy No. 33
COUNCIL POLICY STATEMENT
General Subiect- ASSESSMENT DISTRICT FINANCINGJ ' OF PUBLIC IMPROVEMENTS
Specific Subject: Policy for Use of
1915 Act Bonds
Date Issued
Effective Date
Cancellation Date
Supersedes No.
Copies to: City Council, City Manager, City Attorney, Department and
Division Heads, Employee Bulletin Boards, Press, File
BACKGROUND;
The City Council has received several requests from property owners of
major planned developments to use 1915 Act assessment district bond
financing for public improvements to be constructed as a condition of
such developments. The City Council has determined that tax exempt
financing and 1915 Act bonds should only be used if a substantial
public benefit to the City can be found. Council has determined
further that such a benefit can be found in the construction of
arterial streets that are necessary, not only to serve an individual
development, but also to link communities within the City. The use of
assessment district financing for arterial streets may include sewer
and water lines when the City Engineer determines it is necessary that
they be located within the street right of way. Projects may also
include other incidental construction such as drainage facilities
located within an eligible arterial highway.
Council has also determined that it is necessary to establish
circumstances under which the City Council will approve assessment
district financing as a guide to those who would seek to request it.
PURPOSE;
To establish a policy regarding the requirements which must be met
before the City Council will approve the financing of public
improvements using 1915 Act assessment district bonds.
To establish a procedure for processing applications for assessment
district financing and a staff review committee to apply the
requirements of this policy to such applications. The committee may
also consider recommending that the City initiate a district.
This policy is primarily intended to apply to assessment districts
proposed for property which is predominantly undeveloped where the
developers in the area propose to use public financing in lieu of
private financing for appropriate public improvements.
POLICY;
1. The City may allow the financing of public improvements under the
provisions of this policy where the public facilities represents, in
the City's opinion, a significant public benefit not only to the
prospective residents of the development but to the entire
community.
CITY OF CARLSBAD Policy No.
COUNCIL POLICY STATEMENT Date Issued
General Subject: ASSESSMENT DISTRICT FINANCING
OF PUBLIC IMPROVEMENTS
Specific Subject: Policy for Use of
1915 Act Bonds
Effective Date
Cancellation Date
Supersedes No.
Copies to: City Council, City Manager, City Attorney, Department and
Division Heads, Employee Bulletin Boards, Press, File
2. Facilities which may be considered shall be public facilities in
dedicated rights-of-way or easements, and for which a public agency
has on-going responsibility to maintain and operate. The types of
facilities to be financed are limited to:
(a) Arterial streets identified on the circulation element of
the Carlsbad General Plan.
(b) Sewer and water lines to be located within the right-of-way
of arterial streets when the City Engineer determines it is
necessary that they be so located.
(c) Drainage facilities and public utilities may be included
which are appurtenant and incidental to such streets.
3. Project property value to lien ratio should be 4:1 after the
installation of the improvements to be financed. A project may be
approved with a ratio between 4:1 and a minimum of 3:1 if the ratio is
recommended by both bond counsel and the underwriter and if the City
Council finds the reduced ratio will not materially affect the City's
obligations to the district. The value of the property proposed to be
assessed shall be determined by an M.A.I, appraisal, performed by an
appraiser selected by the City.
4. Projects shall be at the stage where all criteria of this policy
can be adequately assessed. Developments proposed for inclusion in a
district shall have already received environmental review and shall
have already received all legislative approvals such as zoning,
master plans or specific plans. The City Council may approve a
district that includes some lands without legislative approvals if
the improvement to be constructed is consistent with the general plan
and if the City Council finds the improvement is required in the
public interest.
5. Assessment districts shall have the concurrence of the effected
area's property owners representing not less than 60 percent, by area, -
of the land proposed to be assessed. The petition shall include an
acceptance of this policy and a waiver of the property owners' rights
under the Majority Protest Act.
6. The City shall select the assessment engineer, bond counsel, and,
if required, the financial consultant. In making such selections the
CITY OF CARLSBAD Policy No.
COUNCIL POLICY STATEMENT _ . -. , ,Date Issued
General Subject: ASSESSMENT DISTRICT FINANCING
OF PUBLIC IMPROVEMENTS
Specific Subject: Poiicy for Use of
1915 Act Bonds
Effective Date
Cancellation Date
Supersedes No.
Copies to: City Council, City Manager, City Attorney, Department and
Division Heads, Employee Bulletin Boards, Press, File
City will take any suggestions from the project proponents into
account. The design engineer and underwriter may be selected by the
proponent of the district in consultation with and subject to approval
of the City.
7. A sum sufficient to pay all fees and costs for the proposed
assessment district prior to award of contract shall be deposited with
the City by the proponents of the district. The proponents shall also
be required to deposit with City a sum sufficient to cover all City
costs incurred in connection with review of a proposed district
including staff review, legal review, administration, plan checking,
investigation, City Council review and inspection. These sums will be
retained by City to the degree used if the district is not success-
fully completed or if such costs are not recovered by City from the
district. If the district is confirmed any sum not retained by City
shall be refunded in cash or applied as a credit against the
assessments at the option of the proponents.
8. Improvements shall be constructed in accordance with the Municipal
Improvement Act of 1913, and the assessment district bonds shall be
issued in accordance with the Improvement Bond Act of 1915 unless the
City Council determines otherwise.
9. Generally, there shall be no overlapping bond assessments or tax
liens on the proposed special assessment district at the time
assessments are to be affirmed by the City. The City Council upon
advice of bond counsel may approve an overlap provided the combined
assessments are within the property value ratios of paragraph 3 of
this policy.
10. The proponents of the district must demonstrate to the
satisfaction of the City Council that interim financing or other means
is available for the developments to be included within the district
adequate to meet all assessment obligations between the time the
district is formed and the pay off of the bonds or their assumption by
the purchasers of the individual homes within the proposed develop-
ment. As part of this review the City Council may also consider any
indebtedness presently existing against the properties to be
assessed. The district proponents must bring all property tax bills
current and agree to keep them current prior to confirmation of the
district.
CITY OF CARLSBAD Policy No
COUNCIL POLICY STATEMENT Date Issued
DISTRICT FINANCINGGeneral Sub"iect•AJ3S£'aBn£llN1 LU.STKJ.UT riGeneral Subject.op PUBLIC IMPROVEMENTS
Specific Subject: Policy for Use of
1915 Act Bonds
Effective Date
Cancellation Date
Supersedes No.
Copies to: City Council, City Manager, City Attorney, Department and
Division Heads, Employee Bulletin Boards, Press, File
11. If the City Council determines it is necessary a financial
feasibility study may be required by a consultant selected by the City
to be accomplished at the expense of the proponents of the district to
ascertain whether or not the proposed development will find market
acceptance. The City Council may accept a private sale bond purchase
agreement from a qualified underwriting firm on terms and conditions
satisfactory to the City in lieu of such a study.
12. As a part of the structuring of the financing for the district
the City Council shall require that an adequate reserve fund be
established to cover City's obligations for any potential defaults.
13. The City Council may require the district proponents enter into
an agreement with the City to be individually and jointly responsible
for the cost of any foreclosures which the City determines are
necessary in regard to the assessment district bonds. The City shall
be responsible for retaining an attorney to prosecute the foreclosures
in a timely manner in the name of the City and the proponents shall
agree to be responsible for all costs of such foreclosures. If the
City Council approves a pass through of a bond to the purchaser of an
individual lot the proponents shall be relieved of their obligations
under the agreement for such lot.
14. It is the policy of the City Council in approving basic
legislative authorization for developments such as master plans for
planned communities, to give such approvals as a part of the City's
ongoing planning processes. That is, the City reserves the right to
modify the approvals in the future as they determine the public
interest may require. Such approvals when given are subject to a
condition that the construction of any part of a development does not
vest any rights to complete other portions of the development.
Construction of public improvements pursuant to an assessment district
in undeveloped land shall not vest any rights to the existing
legislative approvals for the property to be assessed or to any
particular level, type or intensity of use. Proponents of a district
shall include an acknowledgement of this policy as a part of their
petition and shall expressly waive on their behalf and on behalf of
their successors and assigns any cause of action based on the case of
Fury v. County of Sacramento which might be applicable to the
properties to be assessed.
15. Proponents of the district may elect at their discretion to
discharge the assessment district bonds applicable to their property
CITY OF CARLSBAD Policy No.
COUNCIL POLICY STATEMENT Date Issued
General Subiect- ASSESSMENT DISTRICT FINANCINGGeneral Subject. nv T5ntJT Tn IMPROVEMENTS Effective Date
Specific Subject: Policy for Use of /-=,^«Ti=4-.;™ r> <-1915 Act Bonds Cancellation Date
Supersedes No.
Copies to: City Council, City Manager, City Attorney, Department and
Division Heads, Employee Bulletin Boards, Press, File
at any time prior to the sale of individual lots. The City Council
may approve a pass through of the bond obligation to a prospective
purchaser. A developer wishing to secure approval of a pass through
is required to provide for full disclosure of this and any other
assessment financing applicable to the property to prospective
purchasers. In advertising the price of the housing the advertised
amount shall include the amount of assessment district bonds on the
property. The prospective purchaser shall be given an option to have
the assessment lien discharged prior to close of escrow or to assume
the assessment lien by a pass through as a part of the sales price of
the house.
16. The principal purpose for the City Council's approval of
assessment district financing is to complete the links in the City's
circulation system. The City Council in that regard will not favor a
proposed district which contemplates the construction of a portion of
an arterial street without extending it in a logical way to connect to
the City's existing circulation system. The City may require that
proponents of a district presenting a petition to expand the area to
be included within a proposed district as may be necessary to complete
such circulation links.
PROCEDURE;
1. It is the intention of the City Council that proponents of a
district have an early opportunity to have the proposal reviewed by
City staff for compliance with this policy. In that regard, the City
Council hereby directs the creation of the Project Review Committee.
The Committee shall consist of the City Manager, Land Use Planning
Manager, City Engineer, Director of Utilities and Maintenance and City
Attorney. The Committee shall meet on request with proponents of a
district to review a project to determine whether or not the
requirements of this policy have been satisfied. Committee review
shall take place prior to the presentation of an assessment district
project to the City Council. Whenever any such project is presented
to the Council it shall be accompanied by a report containing the
findings and recommendations of the Committee made in regard to such
project. The Committee may require the proponents to furnish any
information necessary to the evaluation of the proposed district. The
Committee may require all or any part of the deposits provided for in
this policy to be made prior to commencing their review of the
project.
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
General Subject: ASSESSMENT DISTRICT FINANCING
OF PUBLIC IMPROVEMENTS
Specific Subject: Policy for Use Qf
1915 Act Bonds
Policy No.
Date Issued
Effective Date
Cancellation Date
Supersedes No.
Copies to:City Council, City Manager, City Attorney, Department and
Division Heads, Employee Bulletin Boards, Press, File
2. Upon review of the proposed assessment district and after
considering the report of the Committee the City Council shall
determine whether or not to approve proceeding with the formation of
the district. It is the policy of the City Council of the City of
Carlsbad to limit projects to the criteria set forth in this policy
The City Council reserves to itself the authority to approve or
disapprove any proposed improvement district based upon the evidence
received at the hearings held by the City Council. Any exceptions to
the criteria of this policy will be approved only upon an express
finding by the City Council that the project is so effected with a
public interest that the City should assist in providing tax free
financing for the improvement in order to satisfy a public need. If
the City Council approves proceeding with the formation of the
district City staff and the proponents shall proceed to do that in
accordance with state law and the requirements of this policy.
3. Where there are multiple proponents of a proposed district they
shall designate a spokesman authorized to act for the proponents in
their dealings with the City. The spokesman shall be responsible for
collecting any fees for deposit with the City, providing any
necessary information to the City, and for communicating as necessary
back to the proponents.