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HomeMy WebLinkAbout1991-04-16; City Council; 11119; Rancho Santa Fe Road Financing ProgramCl’- OF CARLSBAD - AGEN FINANCING PROGRAM FOR RANCH0 SANTA FE AND OLIVENHAIN ROAD RECOMMENDED ACTION: Adopt Resolution No. q/-/b0 directing staff to proceed with the formation of a financing district(s) for Ranch0 Santa Fe Road and related improvements. ITEM EXPUWATION: The City of Carlsbad is faced with the need to construct a wide variety of major capital projects in the next few years. One of the most important of these is Ranch0 Santa Fe Road from the eastern city limits to the southern boundary of Carlsbad and the widening of Olivenhain Road from Ranch0 Santa Fe Road to El Camino Real. These projects are a necessary part of the City’s circulation system serving the south eastern quadrant. The construction of these roads is also a condition of development found in the Zone 11 and 12 Local Facilities Management Plans and several tentative maps in Zone 6. The City has been working with the property owners in these areas for some time to develop a financing plan for these improvements that will adequately guarantee the funding of the road segments while fairly apportioning the cost of these facilities. In addition, the Policy 33/38 Committee has met several times in the past two years to consider the viability of using public financing for these facilities. In addition to seeking funding for Ranch0 Santa Fe Road and Olivenhain Road, the property owners have proposed that the City include the financing of Calle Barcelona in any financing district. As of this date, the City has not agreed to commit public financing to this project. The cost estimate for these projects is significant, to say the least. The necessary improvements to Ranch0 Santa Fe and Olivenhain Roads alone will cost as much as $60 million. Although this should be considered a preliminary rough estimate, it does give a feel for the magnitude of the project. The combined efforts of the property owners and the City have resulted in the following: . The Policy 33/38 Committee has determined that Ranch0 Santa Fe Road and Olivenhain Road meet the City’s standards for the use of public financing such as a 1913/1915 Act Assessment District or Community Facilities District. . A preliminary assessment spread has been prepared by NBS/Lowry showing the extent of the district boundaries, the possible assessment to each parcel, and the estimated cost of each reach of the project. This preliminary assessment engineering has been funded by the property owners. This assessment spread has not been formally accepted by the property owners or the City. - Page Two of Agenda Bill No. I I : 119 . The property owners have offered to form a CFD as soon as possible to provide the City with a guarantee sufficient to meet growth management requirements for these improvements as well as other improvements required by the Zone 11 and 12 Local Facilities Management Plans. They have further asked that the City consider allowing the initial CFD to be replaced at a later time by a 1913/1915 assessment district. . The property owners have presented a Zone 11/12 financing plan and a financing agreement to the City for review that incorporates the financing of Ranch0 Santa Fe and Olivenhain Roads as a major property owner obligation. Their plan is dependant upon the use of assessment district and/or CFD financing vehicles and a financing agreement that details responsibilities of the land owners and the City. The City has not commented on the financing plan or the financing agreement. At this time, the staff is asking for Council direction before investing further time and effort in this project. The staff position is that the use of assessment district and/or CFD financing is necessary to accomplish the construction of these improvements. The total cost of the project alone is enough to make the construction of these roads almost impossible without some sort of public finance structure. In addition, the staff believes that the fair and equatable distribution of assessments must be a priority in this project. Although the property owners have done a commendable job of working together and with the City to bring the project to this point, a commitment from the City to pursue tax exempt financing of these road segments would allow further progress toward construction of the improvements. The only uncertainty at this time is whether or not Calle Barcelona meets the City’s policy for use of tax exempt debt. The staff recommendation is to continue to work with the property owners on this issue. If the Council concurs with this position, the recommended action is to adopt the attached resolution which indicates the Council’s support for the project and directs staff to pursue the creation of a financing district. Staff will then proceed with work on a district following the vote on the City-Wide Mello-Roos district and review and adoption of the Zone 11/12 financing plans. The vote on the City-Wide CFD is scheduled for May 1991 with the district being in place in June. The Zone 11/12 financing plan has been submitted to the City for review and should be ready for adoption during the summer. A financing proposal could be returned to the Council within 90 days of the formal creation of the City-Wide CFD. It should be noted that if the City-Wide CFD fails, there will be no need to push forward with the financing of Ranch0 Santa Fe Road. The property owners in this area are conditioned with a variety of public improvements such as the library and the La Costa Avenue Interchange on Interstate 5 which are to be funded through the City-Wide CFD. Without the CFD no development could occur until a satisfactory alternate financing mechanism could be found for these projects. At this time, no alternate financing is proposed for these facilities. Page Three of Agenda Bill No. J I,, 112 If the Council would rather have the staff delay any action on the financing of Ranch0 Santa Fe Road, staff may be directed to hold further action until a later date. FISCALIMPACX The funding of these road segments will have a major fiscal impact on the property owners in Zones 11, 12 and a portion of 6. These land owners will be asked to accept assessments which will support the issue of as much as $60 million in bonds. In today’s economic climate, this is no small commitment by the property owner and their lenders. Banks and lenders, in general, are hesitant to advance funds unless there is a reasonable expectation that the property will be able to support the debt service costs. The City’s commitment to dedicate staff time and effort to the creation of a financing district will go a long way toward bringing the project to completion and thereby providing the property owners and lenders with some confidence that the growth management conditions in this region can be met. Also, because of this economic climate, the property owners, in an attempt to demonstrate some level of assurance for lenders, have proposed the use of an “Infrastructure Finance Agreement”. The City has never used such an instrument before in conjunction with publicly financed improvements. The property owners have indicated they need this instrument because it would “set the ground rules” for the placement of this significant debt on their land. While such an agreement may be possible, a considerable amount of work remains to be done in this area. The proposed assessment district and/or CFD financing program will also require the dedication of significant staff time from the Engineering and Finance Departments, with the support of the City Attorney’s office, the Community Development Director and the Growth Management Division. Much of the early cost related to the creation of the district will not be recovered. All direct costs related to the creation of the district will be born by the land owners. The City will be compensated through the district for any ongoing administration costs as well as reimbursement for some indirect costs. EXHIBITS: 1. Resolution No. 9/-1&U) directing staff to proceed with the formation of a financing district(s) for Ranch0 Santa Fe Road and related improvements. J. 2 3 4 5 6 RESOLUTION NO. 91-120 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, DIRECTING STAFF TO PROCEED WITH THE FORMATION OF A FINANCING DISTRICT FOR THE CONSTRUCTION OF RANCH0 SANTA FE ROAD AND OLIVENHAIN ROAD WHEREAS, the City of Carlsbad has demonstrated the need to improve 7 certain portions of Ranch0 Santa Fe Road and Oliver-main Road as shown in a Exhibit A attached hereto; and 9 10 WHEREAS, the cost and extent of this project make it necessary to pursue a variety of financing alternatives including the formation of a 1913/1915 Act 11 12 II Assessment District or a Mello-Roos Community Facilities District; and 13 WHEREAS, the City is particularly interested in ensuring that the property 14 owners included within any financing district are treated fairly and equitably with 15 respect to the cost of the improvements they are asked to fund through 16 17 assessments or taxes. ia NOW THEREFORE BE IT RESOLVED by the City Council of the City of 19 20 21 22 23 24 Carlsbad, California, as follows: 1. That all above recitations are true and correct. 2. The City Council finds that the construction of improvements to Ranch0 Santa Fe Road and Oliver&tin Road as generally described in exhibit A attached hereto meet the City’s conditions for the use of tax exempt debt under the City Council policy No 33 and/or 38. 25 3. 26 The City Council finds that it is in the best interest of the City of 27 Carlsbad to proceed with the construction of said improvements in a timely 28 manner consistent with prudent fiscal management practices, and 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 ia 19 20 21 22 23 24 25 26 27 28 4. The City Council directs the City Manager to work with the property owners affected by the proposed project to develop an acceptable financing program. This program or a progress report shall be presented to the Council by July 31, 1991. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California on the 16th day of April , 1991, by the following vote, to wit: AYES: Council Members Lewis, Kulchin, Larson, Nygaard and Stant NOES: None ABSENT: None ATTEST: ALETHA L. RA;TENKRANZ (SEAL) . . A_ 2s - EXHIBIT A - 1 LOCATION MAP . cc/ fi;;;: LEGEND ,1v /I//////> --- - DISTRICT BOUNDARY r~ ROAD CONSTRUCTION PROJECT NAME PROJECT # EXHIBIT RANCH0 SANTA FE ASSESSMENT DISTRICT 3190 1 April 16, 1991 TO: MAYOR LEWIS, COUNCILMEMBERS KULCHIN, LARSON, STANTON, & NYGAARD FROM: PROJECT FUTURE RE: AGENDA ITEM I/ 11 (Agenda Bill 11,119) "FINANCING PROGRAM FOR RANCH0 SANTA FE & OLIVENHAIN ROAD'! FUTURE respectfully requests that the comments and concerns we and our representatives have previously expressed to the council in oral and written testimony regarding the formation of a citywide Mello-Roos Community Facilities District(CFD) be incorporated by reference into the record of these proceedings, inasmuch as they apply also to the subject of the proposed resolution on the abovecaptioned. Moreover, we ask the council to require the affected landowners/developers in the proposed Ranch0 Santa Fe/Olivenhain Rd'CFD to contractually guarantee reimbursement of any and all city funds expended--directly or indirectly-- on activities related to the formation of the subject special district. The staff report states: "Much of the early cost related to the creation of the District will not be recovered." We urge the council to reconsider that assumption and, in fact, to make such recovery a condition of council'.: approval should Council decide to direct staff to proceed with the proposed RSF/Olivenhain CPD and/or 1913/15 assessment district. According to Growth Management Department staff, these roads presently meet city standards. Their improvement is therefore a condition of future development under the Growth Management Ordinance and, thus, the financial responsibility of developers in the zones. No city funds should be spent subsidizing landholders'/developers' efforts to meet their growth management obligations, The resolution rationalises such subsidies by adducing "the best interest of the City of Carlsbad" and the city's "demonstrated need." Yet according to growth management staff, it is not the city's "best interest" and "need" that will be served by the proposed financing district, but those of the affected landholders/developers in the district. Furthermore, FUTURE asks the council to squelch at the onset the property owners' desire for an "Infrastructure Financing Agreement," as contrary to the intent and purpose of the Growth Management Ordinance and other city policy. . Finally, should the council decide to direct staff to proceed with the district, we ask that the council oppose the use of a Mello-Roos CFD as an expedient, interim vehicle for expediting development in the affected zones. FUTURE believes such a use is very bad public policy if for no other reason-- and there are many-- than that it willfully adds an unnec- essary. and avoidable layer of costs to all public agencies(including the state) involved in the conversion and, ultimately, to future1 homebuyers in the district.