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Home My WebLink AboutRES NO 102-06 POLICY RESOLUTION NO. iÓ2'=08 A RESOLUTION ADOPTING A REVISED LAND BASED FINANCING POLICY WHEREAS, the City Council had adopted an Assessment District Policy on March 19, 1986; and WHEREAS, the City Council amended the Assessment District Policy on June 14, 1995 (Res. 86-95) to include a 4 to 1 value to lien ratio district wide in addition to the 3 to 1 value to lien ratio per parcel; and WHEREAS, the City has entered into development agreements to provide Community Facility District financing to developers; and WHEREAS, in order for the City to provide Community Facility District financing for said developers, the City must adopt an Ordinance and a Policy regarding the formation of Community Facility Districts; and WHEREAS, the City Council adopted an Ordinance (#4314) regarding formation of Community Facility Districts at the March 8, 2006 Council meeting; and WHEREAS, Community Facility Districts and Assessment Districts are both considered Land Based Financing mechanisms and as such, the City desires to combine the existing policy guidelines for Assessment Districts into one policy document that addresses issues associated with both Community Facility Districts and Assessment Districts; and WHEREAS, the Budget and Finance Committee of the City of Bakersfield has reviewed the draft combined policy document at their March 8, 2006 committee meeting, recommending it be forwarded to the full Council for their consideration and approval. ~",MF1 <:J t!~ _ IT _ r- ) c:- ."'")Qt(',I~,1""¡ 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. 2. The City shall use the attached Land Based Financing Policy as a guideline for establishing Assessment Districts and Community Facility Districts 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 APR 5 2006 , by the following vote: .___--n--..- l/" (_~- I> L-- 1-- - ~. COUNCILMEMBER: CARSON. BENHAM. MAGGARD. COUCH HANSON, SULLIVAN, SCRIVNER COUNCILMEMBER: COUNCILMEMBER: COUNCILMEMBER: ~ «---",",-)"'0..- v,,~ -'-Æf~s) NOES: ,,-ABSTAIN: ~BSENT: PAMELA A. McCARTHY, CMC CITY CLERK and Ex Officio CI Council of the City of Bakersfield APPROVED APR 5 2006 APPROVED as to form: VIRGINIA GENNARO, CITY ATTORNEY ByAc?n-~ ROBERTSHERFY /0 <¿,i\l<,,^ <, "1 C). ú' -'" >- - ru n"" _ r <.) C: ()RIf'I~1ð' CITY OF BAKERSFIELD LAND SECURED FINANCING POLICIES Prepared by: Finance Department February 27, 2006 , 'óþ,J<,t~ ",' <.!' ~ -<1 "- - ~ m _ r-- '~"R:(mJAf' CITY OF BAKERSFIELD LAND SECURED FINANCING POLICIES TAB LEO F CON TEN TS Page Definitions ....... .......................................................................... 2 Introductory Statement ........................................................................ 3 Eligible Public Facilities ........................................................................ 4 Eligible Public Services ........................................................................ 5 Financing Priorities ...................................................................... 6 Right of Way Acquisitions ......... ............................................................. 6 Value-To-Lien ......... ............................................................. 7 Credit Enhancements ...................................................................... 7 Security ............................................................................................. 8 Special Tax Formula ........................................................................ 9 Terms and Conditions of Bonds ............................................................. 10 District Cost Deposits and Reimbursements ........................................ 11 Agreements .............................................................................................. 13 Use of Consultants ................................................................................... 13 Acquisition Provisions ................................. ...................... ................. 14 Disclosure to Purchasers ........................................................................ 14 Property Owner Support ........................................................................ 14 Land Use Approvals ........................................................................ 15 Exceptions to These Policies ............................................................. 15 Attachment: Form of Application for Land-Secured Financing - I - - +..._.....~.- .~._~_..._------_.__.,--,. ". ~.k,. "",~ .~ 'ú' ~ "" )- 'ç. J!- ù e::, nR:Gf~·ltd City of Bakersfield Land Secured Financing Policies Definitions Unless the context otherwise requires, the terms employed in the following policies shall have the meanings specified below: "Assessment Acts" means the Improvement Bond Act of 1911 and/or the Municipal Improvement Act of 1913 and/or the Improvement Bond Act of 1915; the Landscaping and Lighting Act of 1972; the Benefit Assessment Act of 1982. "Bonds" means bonds authorized and issued under the Mello-Roos Act or Improvement Bond Act of 1915. "Bulk Sale Value" means the most probable price, in a sale of all parcels within a tract or development project, to a single purchaser or purchasers, over a reasonable absorption period, discounted to a present value, as of a specified date, in cash or in terms equivalent to cash, for which the property rights should sell after reasonable exposure, in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgably and for self-interest, and assuming that neither is under undue stress. "City" means the City of Bakersfield. "Discounted Cash Flow" means the measurement of the cash flows associated with the development and sale of real estate parcels, based on an independent judgment of the prices and times at which individual parcels or properties would be sold, after applying a discount rate to such cash flows to reflect the risk-adjusted rate of return necessary to attract the debt and equity investment necessary to undertake and complete the acquisition, entitlement, development and sale of the parcels or properties. "District" means a Community Facilities District (CFD) formed under the Mello-Roos Community Facilities Act of 1982 or an assessment District formed under the Improvement Act of 1911 or the Municipal Improvement Act of 1913. "Lien" means, in the case of public debt imposed on a parcel or parcels, the aggregate amount of debt attributable to such parcel, as measured by an assessment engineer; or, in the case of Mello-Roos Community Facilities District debt, the amount of debt attributable to a parcel or parcels, based on an apportionment of the debt to such parcel or parcels in relation to the probable debt service to be borne by such parcel or parcels. - 2- ,~¡\Kf^, ,<. .y ("' ~ ->-, rr v:. r-- / "-.. ,) ORiGlt·UÜ· "Public Facilities" means improvements authorized to be constructed or acquired under the Mello-Roos and Assessment Acts including, but not limited to, fees for capital facilities imposed by public agencies as a condition to approval of the development encompassed by the District or as a condition to service the District. "Public Services" means anyone or combination of the following: police protection services; jail, detention facility, and juvenile hall services; fire protection and suppression services; ambulance and paramedic services; maintenance of parks, parkways and open space; flood and storm protection services, including, but not limited to, the operation and maintenance of storm drainage systems, and sandstorm protection services; or environmental cleanup and remediation services. "Value" or "Fair Market Value" means the amount of cash or its equivalent which property would bring if exposed for sale in the open market under conditions in which neither buyer nor seller could take advantage of the exigencies of the other and both have knowledge of all of the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions upon uses and purposes. "Value-to-lien ratio" means 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, special taxes or other encumbrances. Introductorv Statement The City of Bakersfield (the "City") will consider developer or property owner initiated applications requesting the formation of Assessment Districts and the issuance of bonds to finance eligible public facilities necessary to serve newly developing or existing residential, commercial and/or industrial projects under the conditions set forth herein. Developers may apply for Community Facilities District (CFD) financing of eligible public facilities and/or services necessary to serve newly developing residential, commercial and/or industrial projects, but only in the following instances: 1. The tax-exempt financing of project public facilities will result in a clear public benefit, as such public benefit is determined by the City; AND 2. The City has negotiated and executed a development agreement (or similar agreement) addressing project implementation and providing for financing of all required public infrastructure and public safety services, including all facilities and services as listed in the Assessment Acts and Mello-Roos Community Facilities Act of 1982 or approved zoning or site plan approval. Project applicants without a negotiated and executed development agreement (or similar agreement) may apply for assessment District financing only. - 3 - ò.i:"""'t:·", ,~ '(~ ~ rr .- 0- J '0 ,JOR'('I_,^! . j\.j!\l:r\\.. The above criteria will be applied by the City staff with final determination and findings to be made by the City Council. Generally, facilities providing a significant public benefit, such as collector and arterial streets and highways, state highways and bridges, freeways and freeway interchanges, railroad crossings, traffic signals, parks and open space acquisitions, public works facilities (including water, wastewater, storm drainage processing and distribution systems), community facilities (including youth facilities, sports complexes, libraries, bikeways and community/youth centers), public safety facilities (including police and fire facilities), public safety services (including police and fire operating costs), library facilities and services, and other appropriate public facilities will be eligible for this program. Facilities and services will be financed in accordance with the provisions of the Assessment Acts, or the Mello-Roos Community Facilities Act of 1982. Each time a CFD or Assessment District is formed for the benefit of a development project, the City may require the creation of a maintenance district. The maintenance district may be established pursuant to the provisions of the Landscaping and Lighting Act of 1972, or such other provision of state law or appropriate local code or charter provisions, and will serve for the purpose of paying for any unfunded on-going City maintenance costs associated with the development project. All City and consultant costs incurred in the evaluation of new development, District applications and the establishment of Districts must be paid by the applicant(s) by advance deposit increments. The City will not incur any non-reimbursable expense for processing assessment District or a CFD. Expenses not prepaid and chargeable to the District shall be solely for the account of the applicant. Eliaible Public Facilities Facilities to be financed must be public facilities for which the City, or a public agency as determined appropriate by the City, will be the owner or will have normal operating and maintenance responsibility. The types of facilities eligible to be financed include, but are not limited to: A. Streets, roads and highways 1. Arterial roads and state highways 2. Collector streets, as determined by the City 3. Bridges and freeway interchanges 4. Traffic signals and railroad crossings, including grade separations 5. Canal and river crossings B. Parks, open space and community facilities 1. Youth facilities, youth centers, community facilities, child care facilities 2. Sports facilities and complexes 3. Bikeways -4 - è ,??þ.,,\,~:/.,; ';Ii .,-, en r" ) ,." ,CJ ."ìq/"~·I.\! 4. Parks and recreational facilities 5. Multi use trails C. Public safety facilities 1. Police stations, sub-stations, and other facilities 2. Fire stations and facilities. D. Public works facilities 1. City owned and operated Water and wastewater treatment, storage and conveyance facilities 2. Storm drainage facilities 3. Natural gas pipelines, telephone lines, facilities for transmission and distribution of water or electrical energy, and cable television lines (includes public, PUC-regulated and municipal facilities). The aforementioned list may not be exhaustive. For a complete list of eligible facilities, please refer to the current version of the Municipal Improvement Act of 1913, Improvement Bond Act of 1915, and the Mello-Roos Community Facilities Act of 1982. In the case where any public or private utility facilities are funded with District proceeds, any future reimbursements related to said facilities shall be credited to the District and to the benefit of the property owners at the time said funds are received by the City. These funds will generally be used to reduce District debt in the form of bond calls. Should said reimbursements continue beyond the life of the District, said funds will become property of the City and used for ongoing maintenance of other public facilities funded by District proceeds. The City will retain final determination as to any facility's eligibility for financing, as well as the prioritization of facilities to be included within a District financing. Use of bond proceeds for grading and right-of-way acquisition will be reviewed by the City and bond counsel on a case-by-case basis. Generally, "in-tract" improvements will not be considered eligible, unless specific circumstances and credit conditions warrant such inclusion. Applicant will be eligible for reimbursement for all soft costs relative to construction of eligible facilities, including but not limited to design and engineering costs, as to be defined in the deposit and reimbursement agreement. Eliaible Public Services Services to be financed through a CFD must be public services for which the City provides, and would include both staffing costs (salary and benefits) and normal operating costs of providing such services. The types of services eligible to be financed are: A. Police protection services B. Fire protection and suppression services C. Jail, detention facility, and juvenile hall services - 5 - V,AKf.',. i~Jì ~, 0-' r ~ c' nn!('I'U· D. Ambulance and paramedic services E. Services and maintenance of parks, parkways and open space F. Flood and storm protection services, including, but not limited to, the operation and maintenance of storm drainage systems, and sandstorm protection services G. Environmental cleanup and remediation services (including hazardous substances) . H. Library services. Financina Priorities It is the City's view that a comprehensive policy toward mitigating the service impacts of growth is the best way to foster cooperation in allocating available debt capacity. Therefore, it is the City's intent to work closely with local school districts (and any other public agencies with District creating authority) to ensure that the maximum tax rate is not exceeded and homeowners are not overburdened. In order to ensure that public financing is used in a comprehensive, organized way consistent with the City's General Plan and these Policies, the aforementioned eligible public facilities are prioritized below: 1· Priority 2" Priori 3' Priori City Facilities and services needed to serve a community plan area that is currently deficient in off-site infrastructure needed to develop the area as planned; that is "backbone" public infrastructure to support already approved communi Ian areas. Other public facilities and services for which there is a clearly demonstrated ublic benefit. Other public facilities and services permitted by the Acts. Generally speaking, the City would give higher priority to any City owned public facilities and any financial terms or conditions specifically outlined in a Development Agreement. Non-City-Owned public facilities and related costs would generally be of secondary priority. The City reserves the right to make exceptions to these priorities when circumstances warrant (the City is consciously establishing no priority for the use of the Acts in the case of populated areas and registered-voter elections). Riaht-of-Wav Acauisitions 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 (for Assessment Districts) -6- c ý-,kf\f',:..' \,\ '/c0 --0 .- .) rr ,- c-- nQ""'~·I·,' 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 City. Value-To-Lien The City requires a District-wide value-to-lien ratio of at least 4:1 for the District. The District (or improvement area) property value-to-lien ratio for each individual parcel within the District shall be at least 3: 1. Therefore, the value-to-lien ratio for any particular individual parcel within a District can be less than 4:1 (but must be at least 3:1 ) as long as the overall valuation of the District is at least 4:1. Valuations shall be determined based upon an appraisal of the proposed District properties. Assessed valuation data from the County of Kern may be used for valuation purposes in lieu of an appraisal report, at the discretion of the City. The appraisal shall be coordinated by and under the direction of the City. All costs associated with the preparation of the appraisal report shall be paid by the applicant through the advance deposit mechanism. The appraisal shall be conducted by an MAl appraiser in accordance with criteria established by the City, based upon the recommendations received by the City from its bond counsel and/or financial advisor. In every case, the appraisal shall employ either a discounted cash flow or utilize bulk sale com parables and shall fully conform to published guidelines set forth in the Appraisal Standards for Land Secured Financings published by the California Debt and Investment Advisory Commission ("CDIAC Guidelines"), originally dated May 1994 and modified July 2004. However, notwithstanding the foregoing sentence, if a conflict exists between the CDIAC Guidelines and the corresponding definitions, standards, or assumptions in the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation (USPAP"), USPAP shall govern. The City shall have discretion to retain a consultant to prepare a report to verify market absorption assumptions and projected sales prices of the properties which may be subject to the maximum special tax or assessments in the District. Such a report may be used by appraisers in determining the value of property to be assessed or taxed. Credit Enhancement Owners of the property who are deemed responsible for 33% or more of the debt service obligation of the bond issue may be required to provide a letter of credit or cash deposit equal to two years' special taxes or assessments on their property. The letter of credit may be drawn on if and to the extent that the landowner is delinquent in paying its special taxes or assessments. Upon receipt of a request of a property owner who has provided a letter of credit or cash deposit pursuant to the first sentence of this - 7 - \~h~,F^~ <.. '-" .' ,~;;.... , .' ".r'.,...··I.:",· r ; c- -----,.__._"-~~,., -------.--.-----,. ~ paragraph, which request shall be accompanied by documentation in support of such request, the City will review such request to determine (a) the percentage of annual special tax or assessment payment obligation applicable to property owned by the property owner submitting the request and (b) the annual amount of special taxes or assessments applicable to such property; provided that such requests shall not be submitted more frequently than such property owner is providing reports pursuant to a continuing disclosure undertaking under SEC Rule 15c2-12. If the City determines, based on its review of the information submitted, that the percentage has fallen below 33%, the City shall notify the property owner and release the letter of credit or return the cash deposit, as the case may be. If the City determines that such percentage remains at 33% or above but that the amount of two years' special tax or assessment payment obligation has decreased, the City shall either notify the property owner and cooperate with the property owner in obtaining a reduction of the amount of the letter of credit or reducing the amount of the cash deposit, as the case may be. The City may, at its discretion, require additional credit enhancement to increase the credit quality of any CFD / Assessment bond issue. Credit enhancements may be required in additional situations where there is an insufficient value to lien ratio, a substantial amount of property in the district is undeveloped, tax delinquencies are present on parcels within the District, and in any other situation as required by the City. As a practical matter, such additional requirements will generally be the result of recommendations made by the City's bond counsel, financial advisor, bond underwriter, or other members of the City's financing team. The form of credit enhancement is subject to the approval of the City and the City shall impose specific requirements (including but not limited to an absorption study) with respect to such credit enhancement on a case-by-case basis. The City retains the right to withhold public financing if it determines that such financing is detrimental to its credit rating or to the issuance of other City-planned, land-secured debt. Security For new development, the applicant or property owner must demonstrate its financial plan for the property within the District and ability to pay all assessments and/or special taxes during the build-out period. Additional security such as credit enhancement may be required by the City in certain instances. If the City requires letters of credit or other security, the credit enhancement shall be issued by an institution in a form and upon terms and conditions satisfactory to the City. All fees payable on the letter of credit or other security shall be the sole responsibility of the applicant or developer, not the City or District. Any security required to be provided by the applicant shall be discharged by the City upon the opinion of a qualified appraiser retained by the City, that specific release thresholds have been reached. - 8- ,.)¡"k¿ ,', .,1,.-' "<",r· ..... '-"c' ) ",:"':" '," n r r- _._,._.'--_._,-"...._.._._-------~._-_._-~,.._-,--,._.- Special Tax Formula For Mello-Roos Community Facilities Districts ("CFDs"), the assigned special tax submitted to the qualified electors of the CFD shall not exceed nine-tenths of one percent (0.9%) of the estimated base sales price of the subject properties at the time of CFD formation. Furthermore, the total of the following burdens, when taken in the aggregate, may not exceed two percent (2%) of the estimated base sales price of the subject properties: A. Ad valorem property taxes levied by the County. B. Voter approved ad valorem taxes levied by the County in excess of one percent (1 %) of the estimated base sales price for each unit. C. Special taxes levied by any existing CFD for the payment of bonded indebtedness or on-going services. D. Assessments levied by the City for residential garbage service, residential sewer service, median landscape districts and parks maintenance districts. E. Assessments levied for any assessment district or maintenance district for the payment of bonded indebtedness or services and, F. The assigned special tax for the proposed CFD. The special tax formula shall adhere to the following requirements: A. The maximum special tax shall include customary and reasonable annual administrative costs of the City to administer the District (A portion of these costs may be established as superior in lien position to the debt service). B. The special tax formula shall not include escalator rates allowing annual tax increases above the maximum special tax established upon District formation. C. The maximum special tax shall establish for undeveloped land, tax rates corresponding to the adopted land use designations on each parcel. Undeveloped land shall be taxed at rates equal to developed properties of the same land use designation. D. The City shall have discretion to allow a special tax in excess of the established limits for any lands within the CFD which are designated as commercial or industrial. -9- ~),)1: k ¡:, ..' . '1. C)/, f: r ) r ,¡r>"""'"" E. For residential districts, once property sales to homeowners actively commences, the City will not take any actions to modify the established special tax formula that would cause an increase of the special tax on residential properties. Proposed actions that would reduce the special tax on residential properties will be considered on a case-by-case basis. The City shall retain a special tax consultant to prepare a report which: A. Recommends a special tax method for the proposed CFD, and B. Evaluates the special tax proposed to determine its ability to adequately fund identified public facilities, City administrative costs, services (if applicable) and other related expenditures. Such analysis shall also address the resulting aggregate tax burden of all proposed special taxes plus existing special taxes, ad valorem taxes and assessments on the properties within the CFD. Terms and Conditions of Bonds All terms and conditions of the bonds shall be established by the City. The City will control, manage and invest all District issued bond proceeds. Unless otherwise authorized by the City, the following shall serve as bond requirements: A. A reserve fund shall be set at the lesser of the three tests: i. 10% of par amount, ii. maximum annual debt service, or iii. 125% of average annual debt service. B. The special taxes or assessment liens shall be levied for the first fiscal year fOllowing sale of the bonds for which they may be levied. Interest may be capitalized for up to 24 months. C. The repayment of principal shall begin on the earliest principal payment date for which sufficient special tax or assessment revenues can be made available. The term of any given bond issue will be set by the Finance Director, in consultation with the applicant(s) and the bond underwriter, and will be in relation to the relative size of the particular bond issue. The City prefers most District bond issues to be in the 20 year to 30 year range. In any case, the maximum term of bond issue shall not exceed 35 years. D. The City has established the minimum amount of public improvement bonds financed to be not less than two (2) million dollars construction cost (, .~: - 10- r; '\,:,'rd~' ' ____·__~._.·m'_._.__··_.__. ._~ _..._.._.__...._._~.._____.___ per bond issue. Multiple applicants may be merged together into one District, at the City's discretion, to meet this minimum requirement. E. Beginning with the co'mmencement of the repayment of principal, annual debt service shall be level. F. For assessment Districts, the bonds shall be callable on any interest payment date. For CFD's, the bonds shall be callable on interest payment dates as structured at the time of sale. Any call premium structure shall be established based on market conditions at the time bonds are sold. G. The maximum special tax shall be established to assure that the annual revenue produced by levy of the maximum special tax shall be equal to at least 110% of the average annual debt service. H. 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 and/or special taxes, 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. In general, advance refundings of outstanding bonds for economic savings will be considered on a case-by-case basis, but only when net present value savings of at least five percent (5%) of the refunded debt can be achieved. Refundings with savings of less than five percent (5%), or with negative savings, will not be considered unless there is a compelling public policy objective, as determined by the City. The measurement of the 5% savings may, but is not required to, consider other benefits to the City, other than the proposed bond transaction, if deemed appropriate by the City. District Cost DeDosits and Reimbursements All City and consultant costs incurred in the evaluation of District applications and the establishment of Districts will be paid by the applicant by advance deposit increments. Except for those applications for assessment Districts or CFD's where the City is the applicant, the City shall not incur any non-reimbursable expenses for processing and administering applicant initiated assessment Districts or CFD's. Expenses not chargeable to the District shall be directly borne by the applicant. Each application for formation of an assessment District or CFD shall be accompanied by an initial deposit in the amount determined by the City's Public Works Department to fund initial staff time and consultant costs associated with District review and implementation. No work will be initiated by City staff until the initial deposit is received by the City. If additional funds are needed to off-set costs and expenses incurred by the c - 11 - c' " . "",:". r- I~.l' District, the City shall make written demand upon the applicant for such funds and the applicant shall comply with each demand within ten (10) business days of receipt of such notice. If the applicant fails to make any deposit of additional funds for the proceedings the City may suspend all proceedings until receipt of such additional deposit. The deposits shall be used by the City to pay for actual costs and expenses incurred by the City relative to the proceedings, including but not limited to, legal, engineering, appraisal, special tax consultant and financial advisory expenses; documented City staff time, administrative costs and expenses; required notifications; and printing and publication of legal matters. The applicant may request deposit terms and conditions to be defined by a deposit and reimbursement agreement to be executed by the applicant and the City. Upon such request, the City will place this agreement on the City Council agenda, as soon as practical after receipt of application. The district shall refund any unexpended portion of the deposits upon the following conditions: A. The District is not formed; B. Bonds are not issued and sold by the District; C. The proceedings for formation of the District or issuance of bonds is disapproved by the City; or D. The proceedings for formation of the District or issuance of bonds is abandoned in writing by the applicant. E. The formation of the District and the issuance of bonds as set forth below a. Except as otherwise provided herein, the applicant shall be entitled to reimbursement for all reasonable costs and expenses incident to the proceedings and construction of the public facilities as provided under the Mello-Roos Community Facilities Act of 1982 or the Municipal Improvement Act of 1911 or 1913 and the Improvement Bond Act of 1915, provided that all such costs and expenses shall be verified by the City as a condition of reimbursement. The applicant or property owner shall not be entitled to reimbursement from bond proceeds for any of the following: A. In-house administrative and overhead expenses incurred by the applicant, or expenses of applicant's counselor consultants; and ÓÞ'I't, , > - 12- "1 --.-.,--.,--...---..---.-----, -_._._--_.~._._~ B. Interest expense incurred by the applicant on moneys advanced or expended during the proceedings and construction of public facilities; The City shall not accrue or pay any interest on any portion of the deposit refunded to the applicant or the costs and expenses reimbursed to the applicant. Neither the City nor the District shall be required to reimburse the applicant or property owner from any funds other than the proceeds of bonds issued by the District. Excess funds on deposit after the formation of the proposed District will be refunded to the depositor. Aareements The applicant shall provide drafts of all necessary agreements incident to District proceedings in a form satisfactory to the City and consistent with these policies. City bond counsel will determine and approve the final form of all District agreements. These agreements shall include, but are not limited to: A. Development Agreement B. Reimbursement Agreement C. Agreements with any other public agency entitled to receive any portion of the bond proceeds or entitled to own and/or operate any of the public facilities financed by the bond proceeds. As a condition to the issuance and sale of the bonds, all of the agreements specified shall be duly approved and executed by the parties thereto. Prior to execution of any agreements, such agreements shall be reviewed by bond counsel and the City Attorney and approved by the City Council. Use of Consultants The City shall select all consultants necessary for the formation of the district and the issuance of bonds, including the underwriter(s), bond counsel, disclosure counsel, financial advisor, assessment engineer, appraiser, market study consultant, and the special tax consultant. Prior consent of the applicant shall not be required in the determination by the City of the consulting and financing team. However, the applicant may make recommendations to the City on an advisory basis in their application. No firm may serve as both design engineer and engineer of work and assessment engineer or special tax consultant on the same District. Y:¡\ "", " - 13 - " -.,n'r".i_O' _'_' .__.__.__.,__.____..~.~ _··__·_._____···_··w.___,····· No law firm may serve as bond counsel if any project proponent has engaged such firm at any time during the three-year period immediately preceding the formation of the proposed District. No law firm may serve as both bond counsel and disclosure counsel. ACQuisition Provisions The City is generally opposed to developer initiated construction Districts. The City shall have final determination as to whether it will allow the financing of public facilities through construction as opposed to acquisition, and will grant rare exceptions where an overriding justification exists concerning public benefit, safety or health. Such waiver shall be subject to City council approval. The City and the applicant or property owner shall mutually agree upon facilities to be acquired and the method of determining reasonable acquisition costs. A funding and acquisition agreement shall be required and approved by the City Council on or prior to the adoption of the Resolution of Intention to form the District. The applicant will be expected to have all improvements completed within three years from the date bonds are sold. Reimbursement requests should be filed with the City prior to the expiration of this three year period. Disclosure to Purchasers The applicant or property owner will be required to demonstrate to the satisfaction of the City that there will be full disclosure of this and any other special tax, assessment or other liens on individual parcels of which the seller or lessor has knowledge to existing and future property owners. In addition to all requirements of law, the City shall require the applicant to 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, amounts of special taxes to be levied within the District and the terms and conditions of bonds issued on behalf of the District. Such disclosure shall take place prior to sale, and may include homebuyer notifications requiring signature prior to home sales, as well as methods to notify subsequent home purchasers. Property Owner Support In the instance of multiple property owners, the District applicant shall be required to produce letters evidencing other property owner support for the scope and establishment of the District as an attachment to the District application. The City will require that developer initiated Districts have concurrence of not less than two-thirds of the property owners to be included in the proposed District, unless there is an overriding need for the public facilities, or the applicant is willing to separately fund the facilities on the non-participating property(s). The City reserves the right to require demonstration of a greater or lesser degree of public support for the formation of proposed multiple property owner Districts.òi-Krc ~ - 14 - ----_._._....__.._-_._-~- -. .._..- ._,-~ _......_--..- Land Use Approvals Proposed District properties must possess a land use determination such that proposed development land uses and specific facility requirements can be adequately assessed. The City will accept applications for assessment and/or Mello-Roos financing only when properties to be included within a proposed District have City approved zoning or site plan approval. The City will also accept applications for District financing from applicants whose properties are included in an approved Development Agreement. Exceptions to These Policies The City reserves the right to amend or modify these policies at any time as well as to make exceptions or changes for specific financing projects, as facts or circumstances so warrant. The City may find in limited and exceptional instances that a waiver to any of the above stated policies is reasonable given identified special City benefits to be derived from such waiver. Such waivers are granted only by action of the City Council and based upon specific public purpose and/or health and safety findings. p:nks/cfd/land based policy as revised teb 27 2006.doc - 15 - ,~~þ..Kt n ·'i ( (~. >- rr' 'r r" ~~) C) - '.lR:r',!~I,'\~