Loading...
HomeMy WebLinkAbout03/08/2006 B A K E R S F I E L D Mike Maggard, Chair Alan Christens~n, A-~sistant City Manager Irma Carson For: Alan Tandy, City Manager Harold Hanson AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Wednesday, March 8, 2006 - 10:00 a.m. City Manager's Conference Room - Suite 201 City Hall, 1501 Truxtun Avenue, Bakersfield, CA 1. ROLL CALL' Councilmember Harold Hanson Called the Meeting to Order at 10:10 a.m. Present: Councilmembers Irma Carson; and Harold Hanson Councilmember Mike. Maggard, Chair, seated at 10:17 a.m. 2. ADOPT FEBRUARY 8, 2006 AGENDA SUMMARY REPORT Adopted as submitted. (Committee Chair Mike Maggard absent) 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Report and Committee recommendation on Policy regarding Land Based Financing / Community Facility Districts (CFD's and Assessment Districts) Finance Director Nelson Smith gave a brief history. Recently the City has entered into development agreements with local landowners associated with the Old River Ranch, Rosedale Ranch and a pre-annexation agreement regarding the McAIlister Ranch project. Each of these agreements includes a commitment by the City to provide a.mechanism for financing public facilities and/or services commonly known as Community Facilities Districts (CFD); also known as Mello-Roos financing. An ordinance regarding these special tax districts was reviewed by this Committee and forwarded to the Council for first reading on February 22nd. In AGENDA SUMMARY REPORT Page 2 BUDGET AND FINANCE COMMITTEE MEETING Wednesday, March 8, 2006 addition to the ordinance, the City needs to adopt a policy document to provide guidelines regarding the formation of CFD's. CFD's provide large subdivision developments with a financing mechanism to finance public facilities and services, such as fire and police. Homebuyers in these' developments wili be paying, for these improvements on their property taxes. Finance Director Nelson Smith provided an overview of the draft policy. The proposed draft policy was prepared by the Finance Department after requesting input from a variety of sources including, developers, Bond Underwriters, Special Bond Counsel, the BIA (who did not respond), and City staff. The City has had a policy in place for several years for Assessment Districts. Highlights of changes being proposed by staff to the current Assessment District financing (Policy Resolution 86-95) were: Maximum Term of Bonds - The current maximum on district bond issues is 20 years. The proposed draft policy allows for bond issues to generally range from 20 to 30 years, with the maximum term not to exceed 35 years. Minimum Bond Amounts - Staff is proposing the minimum bond issuance requirement be raised from $1 million (current district policy) to a minimum of $2 million. There are some definite economies of scale in processing larger bond projects, and because the majority of these costs get passed on to homebuyers, it is prudent to raise this minimum threshold. Value to Lien Ratio - The current policy states: "The value to lien 'ration for each individual property within a district shall be at lease 3:1. The City Council is also desirous of a value tolien ratio of at least 4:1 district-wide." In order'to stay on the conservative side, staff is recommending strengthening the language to make the 4:1 ratio "required" rather than "desirous." Developer input on this issue indicated a desire to reduce the ratio to a 3:1 ratio district- wide.. Level Debt Service vs. Tax Escalation Clause - Staff is recommending the City not allow the special tax to escalate, thus maintaining a level debt service on any bonds issues for two reasons: 1) If property values drop, taxes can be reduce, while the special taxes would continue to escalate; and 2) It does not seem appropriate to tax property owners at an escalating rate for public assets that depreciate over time. The development groups would have preferred to allow for a 2% annual escalation of the special tax within the CFD's. Committee Member Irma Carson made a motion that the Committee approve the Community Facilities District Policy and recommend forwarding the Policy to the Council. The Committee unanimously approved the motion. AGENDA SUMMARY REPORT Page 3 BUDGET AND FINANCE COMMITTEE MEETING Wednesday, March 8, 2006 5. NEW BUSINESS A. Report and Committee recommendation on Fiscal Year 2006-07 Community DeveloPment Block Grant (CDBG), Home Investment Partnerships (HOME), and Emergency Shelter Grant (ESG) Annual Spending Plan Economic Development Director DOnna Kunz gave a report on the U.S. Department of Housing and Urban Development (HUD) annual entitlements the City receives to improve Iow-income neighborhoods. The Federal Government has reduced HUD funding again this year. The City's entitlements for Fiscal Year 2006-07 have an overall reduction of 9.2% from $5,620,980 in 2005-06 to $5,144,124 for 2006-07. The Fiscal Year 2006-07 HUD entitlements are: $3,391,309 for CDBG funding; $1,608,770 for HOME Investment Partnership Program (included is this amount is $22,537 allocated to the American Dream Downpayment Initiative); and $144,045 for Emergency Shelter Grant funding. Community Development Coordinator George Gonzales gave an overview of the applications that were received from nonprofit organizations and public entities and the proposed allocations, which were included in the packet. Marque R. Stansberry, Ebony Counseling Center, spoke regarding their application, which was not included in the proposed allocations for funding. Their request was for replacement of 7,000 square-feet of roof surface. He expressed he did not understand the requirement for paying prevailing wage. Committee Chair Mike Maggard requested staff to meet with Mr. Stansberry to explain how prevailing wage becomes a requirement for a contract when the funding is coming from government dollars and also requested staff to look for another funding source to fund Ebony Counseling Center's request. Jeff Green spoke on behalf of the request for $25,000 from Bethany Services Inc. for repairs to the heating and cooling units at the Homeless Center. Louis Gill, Director, Bakersfield Homeless Center, spoke about their request and the application process for CDBG funding. Community Development Coordinator George Gonzales explained Bethany Homeless Shelter applied and is on the list to be funded from the Emergency Shelter Grant (ESG) for $60,880 for' Fiscal Year 2006-07 for operational purposes. The request for facility repairs was not considered as they did not apply by the deadline of October 31st. AGENDA SUMMARY REPORT Page 4 BUDGET AND FINANCE COMMITTEE MEETING Wednesday, March 8, 2006 Committee Member Irma Carson expressed as their request comes under the Public Services category, she would vote to approve one-time funding for the Homeless Center's facility repairs by transferring funding from another source. Committee Member Harold Hanson expressed he was sympathetic with the needs of the poor and homeless. However, as there are so many deserving nonprofits with no possible way to fund all the requests, he suggested fund-raising within the community for facility improvements. Committee Chair Mike Maggard expressed since the City has a long-term history with the Homeless Center, he would like to be able to provide one-time funding so the repairs to the heaters and coolers could be made to get them through the rest of the year. Economic Development Director Donna Kunz indicated if the Committee's desire is to provide funds for facility repairs, the money could be transferred from CDBG Capital Improvement Projects for the Central Park Improvements. Committee Member Irma Carson made a motion to approve one-time funding of $25,000 for facility repairs for the Bakersfield Homeless Center by reducing CDBG funding from the Central Park Restrooms Project. Committee Chair Maggard and Committee Member Carson voted: Aye. Committee Member Hanson voted: Nay. Committee Member Irma Carson made a motion that the Committee approve proceeding with the public notice and forwarding the Fiscal Year 2006-07 Community Development Block Grant (CDBG), Home Investment Partnerships (HOME), and Emergency Shelter Grant (ESG) Annual Spending Plan to the City Council. The Committee unanimously approved the motion. B. Discussion and Committee recommendation regarding Southeast Redevelopment Project Area request for additional property acquisition funds City Attorney Ginny Gennaro recommended this item be discussed in Closed Session by the full City Council. The Committee unanimously approved the recommendation. C. Wastewater Treatment Plant Expansion Overview City Manager Alan Tandy provided an update. He explained as the Committee is aware, prior to the Thomas Road Improvement Project, the largest capital improvement need the City had was an approximate $115 million project for the expansion of Wastewater Treatment Plant-No. 3. Obviously, this involves AGENDA SUMMARy REPORT Page 5 BUDGET AND FINANCE COMMITTEE MEETING Wednesday, March 8, 2006 dealing with the-,,tremendous growth rates of the City and the fact that the previous plant expansion has been consumed by that growth rate. The City currently has the $115 million expansion project under design and the financing documents and the mechanism to retire the debt on 'the financing need to be prepared. Doug Houston, George K. Baum & Company, the City's bond underwriter, presented a slideshow presentation on the rate survey and proposed financing information, which was included in the Committee packet, The rate survey was completed in 2005, and the financing plan is in progress. At the end of 2006 there will be a series of meetings to finalize the financing plan with a presentation to Council, a review meeting with the Council and a Council workshop on the financing plan. In early 2007 there should be formal approval of the documents and then with Council approval the proposed plan is to issue the bonds. D. Discussion and Committee recommendation on request from Bakersfield Homeless Center for $25,000 The Committee took action on this item under New Business, 5.A. 6. COMMITTEE COMMENTS Committee Member Irma Carson expressed she would like to review the City's policy on one-time funding for nonprofits. 7. ADJOURNMENT The meeting adjourned at 12:30 p.m. Attendance: Staff: City Manager Alan Tandy; City Attorney'Ginny Gennaro; Assistant City Manager Alan Christensen; Finance Director Nelson Smith; Public Works Director Raul Rojas; Economic Development Director Donna Kunz; Public Works Civil Engineer Marian Shaw; Assistant Finance Director Sandra Jimenez; Deputy Fire Chief Gary Hutton; Police Sergeant Scott Faulkenberry; Community Development Coordinator George Gonzales; Economic Community Development Business Manager Rhonda Barnhard; and Wastewater Engineer Art Chianello Others: Jeff Green; Marque R. Stansberry, Ebony Counseling Center; Essie Blue, Bakersfield Senior Center; Ken Miller, Police Activities League; Doug Houston, George K Baum & Company; Louis Gill, Bethany Homeless Shelter; and Michelle Durgy cc: Honorable Mayor and City Council S:UOHN~Council Committees\06Budget&Finance\bf06 mar 08summary.doc