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.
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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.
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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.
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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
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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
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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
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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
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