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HomeMy WebLinkAbout1995-04-18; City Council; 13119; REQUEST BY PROPERTY OWNER FOR DISMISSAL OF COMMUNITY FACILITIES DISTRICT NO. 1 SPECIAL TAXESREQUEST BY PROPERTY OWNER FOR DISMISSAL OF COMMUNITY FACILITIES Adopt Resolution No. 75- /Q 5 to ratify and approve the action of the Apy Board and to deny the request for dismissal of Community Facilities District No. 1 sp ITEM EXPLANATION: II J- -Y 2: 4: y 19 a\ Go v;l a cn 3$ 4 3\= N" 0 h bY 2 YI- 4-1 $5 -d C ! < ,g FJ Q; Q) z* z <o ot? development to proceed. 4J. $4k s s $7- !=i !z b3 .rl .d 4 2? gg 9Y u 0 77 ma mm L4* 3 3 clw development proceed. '* 1- $E g* Only property with a developable land use are taxed. The CFD places annual ti U4J 2Q -4 ad Q Q)a, Ez on property with commercial, industrial, or residential zoning. Property owners completed zone plans were given the opportunity to have no CFD taxes assessel rezoning their undeveloped property to non-development land use category. No 3-; kul mm 0- \\ am taxes are placed on agricultural, open space, or limited control (VC) property incli within the CFD. Only capital projects with citywide benefit are funded. Council Policy 38 control: City's use of Mello-Roos Community Facility Districts. To meet Policy 38 condition utilizing CFD financing, only projects currently funded by existing development progn projects too large for a single developer to fund, and projects required by more than local facilities management (zone) plan were to be funded by the CFD. CFD fur projects include major road segments, civic facilities, and freeway interchanges. In 1986, the Citizens of Carlsbad voted to establish the Growth Management Pro! which linked residential, commercial and industrial development directly to the availa of public services and facilities. The Growth Management Program requires appropriate public facilities must be available when new development occurs in an i New development cannot occur until each of the eleven public facitity standards I 3 h dQ Qa=k Existing development fee programs collected revenue at building permit issuance to the required public facilities. This pay-as-you-go program, although financially so creates a lag period between the time the fees are collected and the constructic facilities. Under the Growth Management program, new development could not c during the lag period, because the performance standards were not met. Property owners of undeveloped, vacant land in Carlsbad and the City worked togc to solve the problem. The City of Carlsbad Community Facilities District (CFD) No. 1 established to alleviate the lag period, fund required public facilities, and i 0 bD 4J a s 4J am Prior to formation of the CFD, many issues were discussed with the affected pro1 owners. Zones not scheduled for development were excluded from the CFD. Tv zones were included in the original CFD boundaries as the zones were considered 1 scheduled for development since they had completed (or were soon to be comr local facilities management plans. Remaining vacant property will annex as plan: 4J4J d.c HH cord A\ U 09 - zo U lm "ie d z 3 0 0 0 0 PAGE TWO OF AGENDA BILL NO. 1.7 //9 Upon resolution of these and many other issues, and using procedures established by N Roos State law, the City of Carlsbad by action of the City Council and the affected voters, a public hearing, called for an election, and counted the ballots, In May 1991, Council cer the results of the election. Out of 8,197 votes cast, 7,760 (94.7%) voted to approve a spr tax levy upon their property to fund the construction or acquisition of facilities. Thus the of Carlsbad Community Facilities District No. 1 was established. In June 1991, Council adopted an ordinance putting in place the tax formula for establishin1 maximum tax rates that may be levied on CFD No. 1. Although the ordinance establish ceiling for future tax rates, it did not create the individual tax levy placed on each parcel. year Council establishes the levy as the funding needs for the next fiscal year are known. Appeals Process Any landowner who feels that the amount or formula of the special tax is in error may file a n appealing the special tax levy. The essence of an appeal is whether or not there is ambiguity in the tax formula and whether the tax was properly levied on the property at that. An appeals and interpretation procedure was established in the CFD formation documents. Community Development Director, Financial Management Director, and Finance Director appointed to the Appeals Board. The purpose of Appeals Board is to provide a mechanis hear appeals in cases of uncertainties or ambiguity in any special tax levy. For example board may clarify a definition of acreage to determine if the property was incorrectly asse and to allow correction of vague and/or uncertain language in the formula. The board hc authority to change or modify the previously authorized special tax formula. LUCIA SIPPLE APPEAL Appeals Board - In February 1994, Mrs. Sipple requested a hearing with the Mello-Roos Api board (Exhibit 2). Upon Council approval to rezone the Kelly Del Cerro property to L/C lanc category, Mrs. Sipple appealed CFD taxes previously placed on the 246 undeveloped acres. felt that the vacant land use tax was not appropriate and that taxes should be rem retroactively. Mrs. Sipple based her appeal on the fact that the Kelly Del Cerro land was part of the prop core area in the draft Habitat Management Plan (HMP). Future use of the property withi HMP would preclude a subdivision with its attendant need for infrastructure. As the land v remain as habitat/open space, there would be no increased demand for public facilities. Hc no CFD taxes should be owed. In July, the Appeals Board considered Mrs. Sipple’s request. Mrs. Sipple did not appeal the tax on the basis of an ambiguity in the tax formula or error in the CFD tax on her pro1 Because of changed circumstances to her property, she is requesting forgiveness of CFD which were levied in prior years. After discussions with legal counsel, the board limit( determination to whether the special tax was levied in error. In August, the special tax consL NBS Lowry, reviewed the propriety of the taxes levied on Mrs. Sipple’s property sinc inception of the CFD. NBS Lowry reported that the property was properly included as ta property and Mrs. Sipple was informed that her appeal was denied (Exhibit 3). 0 0 PAGE THREE OF AGENDA BILL NO. / 3 / / 9 Council Request for Hearing - Mrs. Sipple has now requested a hearing before Council. reviewed Council options with Mac Brown of Brown, Diven & Hentschke, the City's attorn€ assessment and community facilities districts (Exhibit 4). Based on our discussions wit1 Brown, during a CFD appeal procedure Council may only address questions regarding ambi in the language, interpretation of the tax formula, or proper imposition of the tax. Council may not grant the request as stated. The Mello-Roos State law must be followed in ( to make changes and/or modifications in previously approved CFD taxes. Any change tl current taxing formula for the CFD would require a public hearing and an election wheri qualified electors would vote on the changes and/or modifications. Staff does not recommend that Council consider modifying the CFD. Changes or modifica to the CFD have not been proposed by the affected property owners. Actions to modify the would bring the entire taxing formula back for a vote of the landowners and could res substantial changes to the current district. Putting a modified tax formula back to a vote c the Growth Management program. Therefore, if Council finds no ambiguity in the CFD language, interpretation of the tax forr or proper imposition of the tax, there are two ways in which the Council could handle request. 1. property owners could jeopardize the "guarantee" of funding of public facilities required u Deny the Request - If Council concurs with the Appeals Board decision, Council may and approve the CFD Appeals Board action and deny the request. The specia consultant and staff have determined that the taxes were properly calculated and If upon the property. The special tax formula was adopted by a large majority of the pro^ owners and any discussion of changes to it should be supported by an equally si majority. No such appeal has been presented to the City. Deny the Request but Establish Hardship Program - Council may direct stz investigate a hardship program for property owners who apply for relief or deferral of In most cases, it would require a loan of City funds to pay CFD taxes for any eli property owner. The loan would be repaid upon a subsequent event, usually the tra. of land, thus guaranteeing that the tax would be paid if the property were sold or develo A hardship program would need to be extended on an equal basis to any quali property owner, thus the cost of such a program is unknown. It would also tie up p funds for an indeterminate period of time. 2. taxes, A hardship program would establish rules, conditions and eligibility requirem After considering the options and the fiscal impacts of those options as described below, s recommendation would be to adopt Resolution No. 93-- / 0.5& to ratify and approvc Appeals Board action and to deny the request for dismissal of the CFD No. 1 special tax€ FISCAL IMPACT: Each year the City places CFD taxes on County property tax bills. These taxes, plus CFD i paid at building permit issuance, are currently funding design and construction of the Palc 0 e PAGE FOUR OF AGENDA BILL NO. / 3, j J 9 Poinsettia, and La Costa Interstate 5 interchanges. In 1996-97, CIP plans show CFD fundin the south Carlsbad library and Cannon Road, with an $1 1.2 million bond issue for constru of the library. A total of $85 million in future projects are scheduled for CFD funding. The 1 impact of the two options for processing the request is as follows: Option 1. Deny the Request - The unpaid CFD taxes on the Kelly Del Cerro pror including penalties and interest, total $418,000 and represent 20% of all CFD delinquen Property and special taxes have been delinquent from the second payment of fiscal year 199 the first year of CFD taxes. Beginning in fiscal year 1994-95, no CFD taxes will be levied a property has been rezoned to limited control, Penalties and interest on the CFD taxes, plus t property taxes bring the tax bill on the property to approximately $520,000 (Exhibit 5). Recovery of CFD tax delinquencies is calculated into current and projected CFD tax rates. five years, the County will move to collect delinquent property taxes through tax sale. If solc City would recover its proportionate share from the proceeds. If payment of the Kelly Del C taxes were delayed beyond the five years allowed by the County, the resulting impact to the may be a slight increase in all other property owners’ CFD rates, postponing future ci projects, or increased borrowing of funds. Option 2. Deny the Request but Establish Hardship Program -The fiscal impact of a harc program is not known at this time. No criteria has been established for eligibility into a harc program, thus it is impossible to estimate how many property owners would be eligible. hardship program would need to be offered on an equal basis to any qualifying property ov Also, the program would most likely involve loans from the City which would restrict the UI public funds for an undetermined period of time. EXHIBITS: 1. Resolution No. 9&7- IO 5 ratifying and approving the Appeals Board action denying request for dismissal of CFD No. 1 special taxes. 2. Appeal of CFD taxes from Lucia Sipple. 3. Finance Director denial of appeal and NBS Lowry report. 4. Community Facilities District No. 1 Appeals Procedure from Mac Brown. 5. Alan 0. Kelly Trust delinquent taxes, penalties, and interest. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 11 18 19 20 21 22 23 25 24 26 27 28 0 e RESOLUTION NO. 95-105 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD TO RATIFY AND APPROVE THE ACTION OF THE APPEALS BOARD AND TO DENY THE REQUEST FOR DISMISSAL OF CITY / I/' NITY FACILITIES DlSTRlC Parcel Numbers 16 -050-03, -06, -07, -25, and -26 are within the boundaries Community Faci ' ies District No. 1, were taxable property for fiscal years 1991 -9 1992-93, an493-94; and f P WHEREAS, the Community Facilities District No. 1 Appeals Boa deter ined that in accordance with the Community Facilities District No. 1 tc for uta, the Alan 0. Kelly Trust property was properly assessed. {' / JJI iii IJI / 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 0 e of Carlsbad, California as follows: 1. That the above recitations are true and correct. 2. That the acti Board is ratified and approved. 3. That the Luc District No. 1 special taxes -25, and -26 is denied. PASSED: APPRO'd at a regular meeting of the C Council on the 995, by the following vote, to wit: CIAUDEA. LEWIS, Mayor , 0 0 EKATBIT 2 Lucia Sippel 1287 Vera Cruz Oceanside, CA 92056 February 25, 1994 Mr. Jim Elliott Financial Management Director City of Carlsbad Dear Mr. Elliott, On February 16, the Planning Commission approved a req for rezoning our property (ZC93-06). I believe it now proc to the city council for approval. You are aware that our concern has been the vacant land We have discussed the issue with you during previous meeti Since those discussions toak place, the City HHP has progressing, and is now approaching the draft stage. Our acres known as Kelly Del Cerro is part of the core area Preliminary Planning Area II. There are gnat catchers as we1 other species of plants and birds which are environment( sensitive, It appears that our property is quite desirable part of the citywide effort to connect Calavera with a netwar: large areas south and east to San Pasqual. We have agreed this proposal in theory. However, it means that Kelly Del Cerro vi11 not becomi subdivision with its attendant needs for infrastructure. Ti will not be large housing tracts increasing strains on trafl libraries, parks, schools etc.. These acres will remain habitatlopen space. For that reason, the owners feel the vat land tax is not appropriate, and that taxes should be rem4 retroactively, Therefare we would like to request a hearing with the Ne. Roo5 District appeals board. I hope that you will further ad7 us of the correct procedures to follow in our appeal. It 8( logical that a first step would be to get on the board calendi Thank you far your attention. Sincerely, X&& Lucia Sippel EXHIBIT3 ( August 8,1994 Mrs. Lucia Sippel 1287 Vera Cruz Oceanside CA 92056 COMMUNITY FACILITIES DISTRICT NO. 1 Dear Mrs. Sippel: As you requested, I have submitted your appeal of the Community Facilities Distr 1 special taxes to the appeals board for consideration. The appeals boar( established in the formation documents of the CFD to allow any landowner or rG who feels that the amount or formula of the special tax was in error to appeal thc Upon receiving your appeal and at the advice of legal counsel, the City requestec Lowry, the special tax consultant who was used when the district was formed, to I the formula of the special tax as it pertains to your specific parcels. Their respo attached. As stated by NBS Lowry, your property was correctly included as G property within the CFD. As such, the appeals board will not be able to gran request to retroactively remove the special taxes from the property, As I stated earlier, the appeals board was only given specific authority to detc whether the amount or formula of the special tax was correctly applied. They do no the ability to change the method of taxation nor were they granted any other authc the matter of the tax levy. I am sony that we were not able to grant your request. If I can be of any assistance, please let me know. &L b;/ * \ LISA HILDABRAND Finance Director Uf:ernr F\USERS\EROP~WPDATAVETTERS\SIPLMLLTR p-..i-L-~ -A nclT\n- am-- ,---, *-x ---- - 9 3nn rqrirh-r( !IOI~--- n NBp\ ENGINEERS g PLAl 10920 Via Frontera PO. Box LZOWRY e ExBl LAW OFFICES BROWN, DIVEN &L HENTSCHKE e __ F. MACKENZIE BROW* 12770 HIGH BLUFF DRIVE, Sum 240 "VFQRT BE ' WARRENB.DIVEN SAN DIEGO, CALIFORNIA 92130 US ANG DANIEL s. HENTXHKE (619) 456-1915 ROBERT E. HESSEL FAX 259-0292 mA A. BRNVER 'A MLOFESSIONAL CORNRATION - .. AUCJUt 26j 1994 .... . . - " Lisa Hildabrand, Finance Director City of Carlsbad 1200 Carlsbad Village Dr. Carlsbad, CA 92008 RE: COXNUXITY FACILITIES DISTRICT NO. 1 --_ . APPEALS PROCEDURE Dear Lisa: At this time it is my understanding that an appeal is being filed with Council as it relates to previously authoized and approved special taxe referenced Community Facilities District. -- - The following is set forth the rules and procedures a8 it relates to any a - possible modification to any special tax; -. A. The special taxes for Community Facilities District No. 1 were approvc City Council upon the establishment of the District and the approva special tax formula, and subsequently ratified and approved by the electors of the Community Facilities District, -- B. The Code specifically sets forth a procedure for changing and .- previously authorized special taxes, ... . ..-- __. . C. That procedure Contemplates a Resolution of Considertion to Modify, hearing and a subsequent election where the qualified electors again w on any change and modification. D. Our program did establish an appeals procedure in an attempt to he1 uncertainties or ambiguities in any special tax levy. E. The purpose for that was to provide a mechanism to hear appeals in ambiguity, i.e., definition of acreage to determine if the pro] incorrectly assessed and to allow correction of vague and/or uncertain in the formula. Based upon the above, please note the following: 1. The City and/or City Council has no authority to make changes and/or tions in the previously approved tax unless a subsequent public he; election is desired. -C..-- -._ 0 e <- , -- Lisa Hildabrand, Finance Director - City of Carlsbad August 26, 1994 Page Two c-- L- -I r .**" - I.,---..^ .- _-. __ 2. __-. 1 -. 3. The appeals procedure is limited to allow clarification of ambiguities. In cases of an appeal, the questions to be determined are as follows: (a) Is there an ambiguity in the language or interpretation of the not, has the tax been properly imposed? If there is no uncertain1 .. . - .~-. tax has been properly imposed, there is no procedure or authoriz the City Council to grant or provide relief through any moc process. -. *.-_.- _-- -_ ". *. -. -- . - _- -I----.-I--- _- (b) .The only alternate for consideration would be for the City 'to c hardship program. Under a hardship program, based upon applicati --. and conditions, the City could consider loans to certain hardsh Le,, thus guaranteeing the tax would be paid. The City would then have the loan repaid upon a subsequent event the transfer of land, m...,.-... .,... - (c) .- - .. If there any questions regarding the above, I would be ready to attend a n . discuss the ramifications in further detail, -Xe?x. truly". Yours f nb -. _. -.. - - -.. ~ - - F, MACKENZIE BROWN -__II ". -m:bd. ., -UI--,. - . - - - ^I -_-.-... . . .. . I ,. u 0 0 EXHIBIT 5 ALAN 0. KELLY TRUST * DELINQUENT TAXES, PENALTIES & INTEREST DESCRIPTION AMOUNT CFD #1 SPECIAL TAXES FY 1991 -92 75,300 PI 1993-94 1 12,900 TOTAL CFD #1 SPEC TAXES 300,300 CFD #l PENALTIES 30,000 CFD #1 INTEREST 87,700 FY 1992-93 112,100 TOTAL CFD #1 TAXES EST OTHER PROPERTY TAXES, PENALTIES 41 8,000 & INTEREST 102,000 TOTAL DELINQUENT TAXES FY 1991 -92 TO 1993-94 520,000 * ALAN 0. KELLY TRUST APN’S: 168-50-03 168 -50-06 1 68 - 50 -07 168-50-25 168-50-26 CFD\KELLYSUM 7 May 14, 1993 Lucia Kelly Sipple 1287 Vera Cruz Oceanside, CA 92056 Z+.d Crry OF CARLSBAD COMMUNlIY FA(IILITIES DISTRICI' NO. 1 Thank you for your recent letter remdlng the issues surrounding the gnatcatcher listing problems this poses for property owners in San Diego County. Although the listing does c change the status of the bird, the City of Carlsbad has been working with property owners fc months in an effort to find a solution that will recognize ow responsibility to rnaintak habitat without eliminating property owners rights to economic use of their property. When City's Community Facilides District No. 1 (CFD) was established in 1991 the tax. called for a vacant land tax to be placed on all developable property as a mechanism tc funds to build needed infiastrucme. The CFD taxing formula anticipated that there wl undevelopable land and open space which would provide no economic benefit to the F owner. In addition, the formula recognized the need to preserve agricultural lands. The: were excluded from taxation as long as the Open Space, Limited Control (WC) or Agricuitu use designation remained on the property. Those lands having zoning allowing developme taxed as developable property. The question of taxation of the two Kelly family parcels has been discussed several he: past, and this may be a good time to revisit this issue. In previous discussions staff has ofi propose zoning or land use designation changes to the City Council that would place d. parcels into a tax exempt starus. By laying an WC or agricultural designation on the prop1 annual tax would cease, the family could proceed with the sale of the property without bein! to hurry due to economic pressures, and the question of gnatcatcher habitat could be dealt whatever pace the family determines is appropriate. In the past, the family representativ been opposed to such a land use change. However, perhaps this position should be reexa I would be happy to meet with you on this issue. I will contact you to arrange a rneering b your family representatives and the City staff. I will also ask Don Rideout, the Cijs habitat and Cheryl Men, the Acting Finance Director to attend this meering. I look fonyard to seeing you again. if I may be of assistance, please feel free to call. r f #$' ,.: ,I / / , ': 4 vj, 7 .! ;c&,@,; --' 1. -_ JAMES k. EfLIG, Fhanci$ Management Director C: Acring Finance Eirecror 7 Senior Managemenr: Ansiyst, Comuniry Deveicpmenr ~. . - -,-,. ,(, - >..:,. . I.-.~.- .,ucc /ij;,i,-.c? ;:,\/e - ,.3,ir!ccac, :~,<i~fqrv~~ '>zcC;<-: ;;+(> - .<:':-I :.:2-2 0 0 .. ,. . .-. . .. < >...,. ... ? .. , __.__ ,-. -. i " - 2.. . - .. .. . -.- .--.. I - -, -. -. . . - - _. _. . -.-. .- .- ._ - ..% .- * :- ._ _i D~sTRIB~T~~ m cQurJc'L 8': edLGLL;' Dqt?l&q 4- lees< M EET"6 t e m May 1, 1995 TO: COUNCIL MEMBERS FROM: Mayor Bud Lewis This is to inform the City Council that Bob Ladwig, representing Lucia Sipple, has requested that the agenda item concerning their appeal be pulled from the Caunc agenda at this time. Mr. Ladwig has recently been retained by the Sipples to assist them in reviewing matter, and he will advise us when the Sipples would like to have this considered / 4J&z-& 7 /J d L/d.YS CLAUDE A. "BUD" LEWIS Mayor cc; City Manager City Attorney City Clerk