Loading...
HomeMy WebLinkAboutRES NO 86-95POLIC RESOLUTION NO.8 6 ' 9 5 A RESOLUTION ADOPTING A REVISED ASSESSMENT DISTRICT POLICY WHEREAS, the Council of the City of Bakersfield had adopted an Assessment District Policy on March 19, 1986. WHEREAS, the Budget and Finance Committee met on December 5, 1994 and recommended that the existing Policy be changed to include a 4 to 1 value-to-lien ratio district wide in addition to the current policy of a 3 to 1 value-to-lien ratio per parcel. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Bakersfield as follows: 1. The above recitals are found to be true and correct. The City shall use the attached Assessment District Policy as a guideline for establishing assessment districts. .......... o0o .......... I HEREBY CERTIFY that the foregoing Resolution was passed and adopted by the Council of the City of Bakersfield at a regular meeting thereof held on JUN [4 ~ , by the following vote: AYES; COUNCILMEMBER DeMOND, CARSON, SMITH, McDERMOTT, F~ES, CHOW, SALVAGGIO NOES: COUNCiLMEMBER ABSTAIN: COUNCILMEMBER ABSENT: COUNCILMEMBER /~ ~--~ITY CLERK and Ex Offi Clerk of the SS~[~H~ounci1 of the City of Bakersfield APPROVED JUN I 4 ~ MAYOR of the City of Bakersfield APPROVED as to form: JUDY SKOUSEN CITY ATTORNEY of f Ba ield GR/krc POLICY.AD 06/06/95 CITY OF BAKERSFIELD ASSESSMENT DISTRICT POLICY I. PURPOSE The City of Bakersfield has established this policy to establish certain standards and to provide information on the formation process for assessment districts. Assessment districts are formed to finance public improvements, usually through the use of assessment bonds. The City has established the minimum amount of public improvements to be financed under assessment district proceedings to be not less than one million dollars. Through an assessment district, the cost of acquiring or constructing public improvements is generally assessed to property within the assessment district boundaries that would receive special benefit from the improvements. This policy establishes uniform criteria and rules for the use of assessment districts within the City of Bakersfield. This policy describes the assessment district process as provided by law and additional legal and administrative requirements of the City. Applications for assessment districts must comply with this policy. II. SCOPE This policy shall govern the application for and formation of an assessment district within the City when requested by an Applicant. This policy also provides guidance to City staff in connection with the formation of an assessment district initiated by the City. However, nothing in this policy binds the Council to approve any assessment district or authorize the issuance of assessment bonds in connection therewith; the Council retains its discretion with respect to any assessment district, assessment bonds and public improvements and all related matters. III. DEFINITIONS The terms used in this policy shall have the following meanings: "1913 Act" shall mean the Municipal Improvement Act of 1913 (Streets and Highways Code Sections 10000 et seq.), which specifies a procedure for forming assessment districts. "1915 Act" shall mean the Improvement Bond Act of 1915 (Streets and Highways Code Section 8500 et seq.), which authorizes the issuance of assessment bonds. "Acquisition District" shall mean an assessment district in which the City acquires public improvements constructed by one or more private developers in accordance with an acquisition agreement with the City. "Applicant" shall mean any person, firm or corporation who submits an application for the formation of an assessment district. "Bond or Bonds" shall mean assessment bonds authorized and issued in accordance with the Improvement Bond Act of 1915 and Chapter 13.08 of the City's Municipal Code. "City" shall mean the City of Bakersfield. "Construction District" shall mean an assessment district in which the City enters into a contract for the construction of public improvements. "Council" shall mean the Council of the City. "District" shall mean a special assessment district formed in accordance with the Municipal Improvement Act of 1913, Chapter 13.08 of the City's Municipal Code and this policy. As a general rule "Public Improvements" shall mean the work and improvements to be either acquired or constructed in accordance with the 1913 Act, Chapter 13.08 of the City's Municipal Code and this policy. "Value" or "Fair Market Value" shall mean the amount of cash or a cash equivalent that a property would bring between a willing buyer and a willing seller on the open market as established by an MAI appraiser approved by the City. IV. ELIGIBLE PUBLIC IMPROVEMENTS As a general rule, Public Improvements to be financed with Bonds must provide a benefit to the public at large and a special benefit to property in the District and serve a public purpose. The types of Public Improvements eligible to be financed include, but are not limited to the following: A. Streets and Roads Arterial highways, commuter or collector streets, as determined by the Public Works Director. (Minor streets within subdivisions or industrial parks/complexes are not eligible.) B. Utilities and Drainage Facilities Storm drain collection systems, water mains and sewer trunk lines located within or adjacent to an eligible road, public right-of-way or easement, or such other utility-type improvements found by the City to provide special benefit to property in the District. 2 C. Streetlights and Traffic Signals Streetlights and traffic signals for arterial highways, commuter or collector streets. Developer may combine more than one subdivision into one district or developers may agree to combine their projects in order to meet the minimum financing amount. The Council has final approval in determining if a proposed project or improvement meets the eligibility requirement of special benefit. V. RIGHT-OF-WAY ACQUISITIONS Right-of-way needed for streets purposes will be acquired through the District or dedicated as a street easement by the property owner. If the right-of-way is acquired, the total cost of the acquisition shall be based upon an amount no greater than the Value of the property acquired, including any severance damages. The cost of a right-of-way acquisition for a specific property will be assessed back to such property in accordance with the assessment spread methodology described in the engineer's report prepared for the District. If a property owner dedicates in lieu of monetary payment, a property owner can do so only prior to the end of the cash collection period. This section will not apply to any property owner within the District required to dedicate street right-of-way as a condition of an approved development entitlement, since the property owner does not receive monetary payment for the dedication, unless the acquisition of right-of-way provides funding for a public purpose as approved by the Finance Director. VI. VALUE-TO-LIEN AND APPRAISAL STANDARDS The value-to-lien ratio for each individual property within a District shall be at least 3:1. The City Council is also desirous of a value-to-lien ratio of at least 4:1 district wide. The value- to-lien ratio is a calculation to measure the number of times the value of a property (gross retail value after improvements funded by the District) exceeds the sum of its assessment liens, including the proposed assessment and any existing assessments or other encumbrances. In order to establish a value-to-lien ratio, the property must be appraised by an MAI appraiser selected by the Finance Department of the City. In most cases, the appraisal is based on comparable sales data for similar property in the area. The appraisal will also usually consider the status of the land, including the zoning, tentative or final map approvals, development agreements and other matters pertinent to valuation of the land, including the value of the property with the proposed public improvements installed. All costs associated with the preparation of the appraisal report shall be paid by the City from advanced deposits made by the Applicant. The City selects MAI appraisers based upon a criteria of qualifications, applicable experience, and competitiveness of compensation. In lieu of requiring an appraisal report, the City may accept, in its discretion, current assessed valuation of the County of Kern if such valuation either meets or exceeds the value- to-lien ratio standards of this policy. VII. CREDIT ENHANCEMENT During the application review process, an Applicant or property owner may be required to either prepare a financial plan to demonstrate an ability to pay the estimated assessments or provide credit enhancement. Upon review of all information available to the City, including a financial plan (if required), the appraisal report, the diversification of land ownership, and recommendations from the City's financial advisor, legal counsel or investment banker, the City shall determine whether credit enhancement will be required by considering the following criteria: A. Value-to-Lien Ratio of a Parcel The value-to-lien ratio of any parcel within the District does not meet the 3:1 value-to-lien ratio standard as determined by this policy. B. Concentration of Property Ownership The assessment lien(s) of a property owner within a District exceeds 25% of the assessment liens for the entire District. C. Historical Assessment Installment Delinquencies A property owner with a history of assessment installment delinquencies may be viewed by the City as an unreasonable risk. D. Other Financing The property owner fails to demonstrate the ability to secure conventional financing. Credit enhancement refers to either letters of credit, surety bonds, or cash deposits in a form and upon terms and conditions satisfactory to the Finance Director. The requirement for credit enhancement shall remain in place until the Finance Director has determined that the Applicant or property owner, as applicable, has satisfied the credit enhancement criteria of this policy. All fees payable to obtain or maintain the credit enhancement shall be the responsibility of the Applicant or property owner, as applicable, and shall not be reimbursable by the City. TERNS AND CONDITIONS OF BONDS All terms and conditions of the Bonds shall be established by the Finance Director, subject to Council approval. The Finance Director will control, manage and direct investment of all Bond proceeds. Each Bond transaction shall be structured to protect bond owners, and in a manner to not negatively impact the bonding capacity or credit rating of the City, through some combination of credit enhancement, foreclosure covenant, special reserve fund or deposits. While the Bond terms and conditions will be based on the needs of each particular Bond transaction as determined by the Finance Director and/or the Council, such terms and conditions will normally include the following: A debt service reserve fund in an amount equivalent to 10% of the total amount of assessments to be levied or some lesser amount provided that such amount is the maximum allowable for federal income tax purposes. The assessments shall be levied for the first fiscal year following sale of the Bonds for which they may be levied. Interest shall not be funded (capitalized) beyond the earliest interest payment date of the Bonds, unless recommended by the Financial Advisor or Underwriter and approved by the Finance Director. The repayment of principal shall begin on the earliest principal payment date permitted by law and for which sufficient assessment revenues can be made available. o The term of the Bonds issued will be no more than 20 years (principal maturities). Beginning with the commencement of the repayment of principal, the annual debt service payments shall be structured on a level basis. Bonds shall be callable on any interest payment date at par plus a premium not exceeding three percent (3%). All statements and documents related to the sale of Bonds shall emphasize and state that (i) the Bonds are limited obligations of the City and neither the faith, credit nor the taxing power of the City is pledged to security or repayment of the Bonds, (ii) the sole source of revenues are assessments, the debt service reserve fund or proceeds raised by foreclosure proceedings, and (iii) the City shall not be obligated to make payments of principal, interest or redemption premiums (if any) from any other source of funds. IX. DEPOSITS AND REIMBURSEMENTS Each application for formation of a District shall be accompanied by a duly executed petition waiving the provisions of the Special Assessment Investigation Limitation and Majority Protest Act of 1931 of the California Streets and Highways Code and an initial deposit as determined by the City's Public Works Department. All City and consultant costs incurred in the evaluation of District applications and the establishment of Districts will be paid by the Applicant from advance deposit(s). At the City's discretion, deposits may be required in increments as such costs are incurred. In any event, the Applicant shall reimburse the City for all expenses incurred in processing the formation of a District. The purpose of the deposit is to fund all incidental expenses and other District evaluation and formation expenses incurred by the City prior to the issuance of Bonds. If funds in addition to the initial deposit are needed to offset expenses of District evaluation and formation, the Public Works Director may make a written demand upon the Applicant for such funds, and the Applicant shall comply with each demand within seven calendar days after receipt of such notice. If the Applicant fails to make any initial or additional deposit of funds for the proceedings, the Public Works Director may suspend all proceedings until receipt of such deposit(s). The deposits shall be used by the City to pay for costs and expenses incurred by the City incident to the District evaluation and formation proceedings, including, but not limited to the following: Consultant services, including but not limited to legal counsel (including disclosure counsel), assessment engineering, appraisal, special tax consultant, financial advisory, and miscellaneous tests and studies; Administrative costs and expenses incurred by City staff; and 3. Preparation, printing and publication of notices and various legal documents. The City shall refund any unexpended and uncommitted portion of the deposits only upon one of the conditions following: The proceedings for formation of the District or issuance of Bonds are not approved by the City; or The proceedings for formation of the District are abandoned in writing by the Applicant. The Applicant or property owners shall not be reimbursed by the City or out of funds available in the District for any of the expenses following: Administrative, overhead, legal, accounting, consulting expenses or similar expenses incurred by the Applicant or any property owner; Interest on funds advanced by the Applicant or any property owner during the proceedings and construction of the Public Improvements; and Any other costs and expenses incurred by the Applicant which are not otherwise expressly authorized by the City for reimbursement. Amounts advanced by the applicant are subject to reimbursement by the City from the proceeds of the sale of bonds, but without interest on amounts to be reimbursed. The City shall not be required to reimburse the Applicant or any property owner from any funds other than the proceeds of Bonds. X. USE OF CONSULTANTS Selection of consultants needed for the formation of a District and the issuance of Bonds, including but not limited to the investment bankers, bond counsel, disclosure counsel, financial advisor, design engineer, assessment engineer, appraiser, and the special tax consultant, shall be by the City. XI. ACQUISITION PROVISIONS The City shall have final determination as to whether it will allow the financing of Public Improvements through an Acquisition District. In the event the acquisition provisions of the 1913 Act and Chapter 13.08 of the City's Municipal Code are utilized, an acquisition agreement in a form acceptable to the City Attorney must be executed by the City and the Applicant or all property owner(s) having responsibility for constructing improvements prior to the construction of any Public Improvement to be acquired. The acquisition agreement must specify the Public Improvements to be acquired, the method of determining reasonable acquisition costs, and such other terms and conditions as the City Attorney or the Public Works Director may require. The City may require an Applicant or all property owner(s) having responsibility for constructing improvements, as applicable, in connection with an Acquisition District to submit reports on a periodic basis detailing the status of the project. XII. DISCLOSURE TO PURCHASERS The Applicant or property owner(s) will be required to demonstrate to the satisfaction of the City that there will be full disclosure of any assessments established in accordance with this policy. Such disclosure must be made to the existing and future property owners, including interim purchasers and sales to merchant builders. In addition to all r~quirements of law, the Applicant shall provide disclosure of such information as the City deems appropriate to the purchasers of property within the District with respect to the existence of the District, Public Improvements to be constructed, the amount of the assessments, the foreclosure process and the terms and conditions of Bonds issued on behalf of the District. For residential property, such disclosure will include home buyer notification requiring signature prior to a home purchase, as well as methods to notify subsequent home buyers. PROPERTY OWNER SUPPORT If there are multiple property owners, the Applicant shall submit, as attachments to the Application, letters evidencing other property owners' support for the scope and establishment of the District. The City will not proceed with the District unless the Applicant has the written concurrence of at least one-half of the other property owners to be included in the proposed District. XIV. EXCEPTIONS TO THESE POLICIES The City may find, in its discretion, that a waiver to any of the above policies should be granted in exceptional instances, provided there are given special public benefits to be derived from such waiver. XV. APPLICATION PROCESS The application process is as follows: PREAPPLICATION MEETING: Applicant meets with City staff to discuss the application procedures and the conceptual plan of the District. o APPLICATION SUBMISSION: Applicant submits the application to the City's Public Works Department with a deposit as determined by that same department. 3. STAFF REVIEW: City staff reviews the application for completeness and prepares an estimate of the initial deposit to be made by the Applicant. PROJECT REVIEW: Applicant and City staff meet to discuss the application, including any issues raised during staff review and any further information that might be 8 required. If necessary, Applicant submits revised application and preliminary project schedule. APPLICATION PROCESSING: Once City staff has determined that the application has been fully completed and the initial deposit has been received, staff will proceed with the preparation of the necessary documents to submit for Council approval. DISTRICT INITIATION: Staff submits to the Council resolutions, consultant contracts, acquisition agreements and other items necessary to commence District proceedings. COUNCIL CONSIDERATION: Upon recommendation by the Public Works Department, the Council decides whether to initiate the formation, approve consultants, approve or authorize staff to negotiate contracts, and approve various resolutions necessary to form a District. PROJECT IMPLEMENTATION: Applicant, staff and consultants meet to determine project schedule. XVI. FORMATION PROCEEDINGS District proceedings under the 1913 Act and Chapter 13.08 of the Municipal Code normally provide for the construction of Public Improvements by the City and the financing of such Public Improvements with Bonds which are secured by a fixed lien on the benefitted properties. In certain instances, if authorized by the Council, a developer may construct the Public Improvements (or portion thereof) which would be acquired by the City. This procedure requires the developer to enter into an acquisition agreement with the City and to pay all administrative and consultant costs which may be incurred. The formation proceedings are subject to, and contingent upon, satisfaction of all environmental laws and regulations. The proceedings for a District in accordance with 1913 Act and Chapter 13.08 of the Municipal Code will be substantially as follows: INITIATION OF PROCEEDINGS. The initial request to form a District can be made by an individual Applicant or landowner petition. Upon initiation, the design engineer prepares plans, specifications and cost estimates of the proposed Public Improvements and related work and facilities. The assessment engineer begins preparing the engineer's report, including the assessment diagram, assessment roll, description of the Public Improvements and preliminary cost spread. City staff and the environmental consultant (if any) begins processing the 9 appropriate environmental documentation. The Council conducts proceedings under the 1913 Act, the 1915 Act and Chapter 13.08 of the City's Municipal Code. PRESENTATION OF REPORT. Upon completion of the preliminary engineering work, the Council conducts proceedings to consider adopting a resolution of intention to form the District, preliminarily approving the engineer's report, calling for construction bids, setting the date, time and place for the public meeting and the public hearings and directing notices to be given as required by law, advising property owners of the time and place of the public meeting and the protest hearing, the estimated cost of the Public Improvements, the preliminary assessment on each parcel, and other required information. BID PROCESS. The City Purchasing Officer calls for and receives construction bids. The assessment engineer modifies the assessment roll and engineer's report based on the preliminary bid(s). PUBLIC HEARINGS. The Council holds the information hearing and public protest hearing at which time written protests are presented and public testimony is taken. If no written protests have been received, or if the Council determines to overrule such protest, the Council approves District formation, confirms the assessments, and directs the Finance Director to coordinate the issuance of Bonds. CASH COLLECTION PERIOD. The City notifies property owners of the confirmed assessment amounts. Bonds will not be issued until 30 days after the confirmed assessments are recorded. During this 30-day period, property owners may pay their assessments in cash without incurring penalties or Bond interest cost and they will be given credit for capitalized interest and reserve fund, if any. All property owners may petition the City to waive the thirty (30) day cash collection period. AUTHORIZED ISSUANCE OF BONDS. After the 30-day cash payment period has expired, the Council determines the balance of unpaid assessments and provides for the issuance of Bonds to be secured by the assessments. SALE OF BONDS. Bonds are issued and the cash proceeds from the sale, are held by the City or its fiscal agent and utilized for the purposes described in the engineer's report and the Bond issuance documents. ACCEPTANCE OF BID. After Bonds are sold, staff recommendation for award of construction contract is 10 presented to City Council for approval or rejection. If approved then Contract is executed. DISTRICT CLOSE-OUT. After the Public Improvements have been completed and all claims in connection therewith have been paid from the District improvement fund, the District improvement fund will be closed-out and any surplus in the fund will be distributed as determined by the Council in accordance with the 1913 Act and the resolution of intention. The Public Works Department will notify the Finance Department of the close out date. GR.14 06/02/95 11