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.
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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.
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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
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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
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assessments or taxes.
ia NOW THEREFORE BE IT RESOLVED by the City Council of the City of
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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
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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 -
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LOCATION MAP .
cc/ fi;;;:
LEGEND
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--- - 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.