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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.