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HomeMy WebLinkAboutResolution 2017-009 N.C.S. 01/09/2017Resolution No. 2017 -009 N.C.S. of the City of Petaluma, California RESOLUTION ADOPTING AMENDED LOCAL GOALS AND POLICIES FOR SPECIAL TAXING DISTRICTS ESTABLISHED UNDER THE CITY OF PETALUMA SPECIAL TAX PROCEDURE CODE, CHAPTER 4.40 OF THE PETALUMA MUNICIPAL CODE AND THE MELLO -ROOS COMMUNITY FACILITIES ACT OF 1982, GOVERNMENT CODE SECTION 53311 AND FOLLOWING WHEREAS, under the Mello -Roos Community Facilities Act of 1982, as amended, codified in Sections 53311 and following of the California Government Code ( "Act "), and prior to the initiation of any proceedings thereunder, the City Council ( "Council ") of the City of Petaluma ( "City ") must adopt local goals and policies as provided in Section 53312.7 of the Act ( "Goals and Policies "); and WHEREAS, the Goals and Policies are intended to provide general guidance in the formation for Community Facilities Districts ( "CFDs ") established pursuant to the Act, including identification of services and improvements eligible to be financed by a CFD, criteria for bond financing, disclosure requirements, outline of City proceedings, and other components associated with development of a CFD; and WHEREAS, by adoption of Ordinance No. 2119 N.C.S. on August 20, 2001, the City enacted Chapter 4.40 of the Petaluma Municipal Code entitled "The City of Petaluma Special Tax Procedure Code" ( "Special Tax Code "); and WHEREAS, section 4.40.020 of the Special Tax Code provides that the Special Tax Code is an alternative method of financing public and private facilities and municipal services, and that the provisions of the Special Tax Code do not affect or limit any other provisions of law authorizing or providing for the famishing of facilities or services, or the raising of revenue for such purposes; and WHEREAS, by adoption of Resolution No. 2006 -075 N.C.S. on May 1, 2006, in anticipation of formation of a special tax district for the Theater District Area in the City, the City Council adopted Local Goals and Policies for Special Tax Districts ( "Local Goals ") in accordance with the requirements of Section 53312.7(a) of the Act; and Resolution No. 2017 -009 N.C.S. Page 1 WHEREAS, the Local Goals, as adopted, expressly provide that they are intended to provide guidance and conditions for conducting proceedings for special tax districts established under the Special Tax Code, as well as for CFDs established under the Act; and WHEREAS, the City Council wishes to amend the City's existing Goals and Policies, most notably for the purpose of including the identification of services eligible to be financed by a CFD under the Act, in anticipation of formation of a CFD for the Riverfront Mixed Use Project, and for subsequent proceedings under the Special Tax Code or the Act as the City may in the future pursue. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma, as follows: Section 1. Adoption. The "Amended Local Goals and Policies for Special Taxing Districts ( "Amended Goals and Policies ") attached hereto and made a part hereof as Exhibit A are hereby found to meet the requirements of the Mello -Roos Community Facilities Act of 1982 and are hereby adopted for purposes of compliance with that Act, as well as, when convenient therefore, for purposes of assisting with formation of Special Tax Districts pursuant to the City of Petaluma Special Tax Procedure Code, Chapter 4.40 of the Petaluma Municipal Code, subject to further amendment of such Amended Goals and Policies by the City Council as may be desirable or required from time to time. Section 2. Repeal. The Local Goals and Policies for Special Tax Districts adopted on May 1, 2006 pursuant to Resolution No. 2006 -075 N.C.S. are hereby repealed and replaced in their entirety, as of the effective date of this resolution. Section 3. Constitutionality, Severability. If any section, subsection, sentence, clause, phrase, or word of this resolution is for any reason held by a court of competent jurisdiction to be unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining portions of the resolution. The Council, hereby declares that it would have passed this resolution and each section, subsection, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more section(s), subsection(s), sentence(s), clause(s), phrase(s), or word(s) be declared invalid. Resolution No. 2017 -009 N.C.S. Page 2 Section 4. Effective Date. This resolution and the Amended Policies shall become effective from and after the date of the adoption of this resolution by the City Council. Under the power and authority conferred upon this Council by the Charter of said City. REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the A, roved a o. Council of the City of Petaluma at a Regular meeting on the 91h day of January, form: 2017, by the following vote: City Alto rn y AYES: Albertson, Vice Mayor Barrett, Mayor Glass, Healy, Kearney, King, Miller NOES: None ABSENT: None ABSTAIN: None ATTEST: City Clerk Mayor Resolution No. 2017 -009 N.C.S. Page 3 CITY OF PETALUMA AMENDED LOCAL GOALS AND POLICIES FOR SPECIAL TAX DISTRICTS I. GENERAL. Exhibit A Section 53312.7(a) of the California Government Code requires that the City of Petaluma (the "City ") consider and adopt local goals and policies concerning the use of the Mello -Roos Community Facilities Act of 1982 (the "Act ") prior to the initiation of proceedings on or after January 1, 1994 to establish a new community facilities district ( "CFD ") under the Act. The City of Petaluma (the "City ") has adopted its "City of Petaluma Special Tax Procedure Code" (the "Special Tax Code "), codified as Chapter 4.40 of the Petaluma Municipal Code, under the Petaluma City Charter (the "Charter ") and Sections 3, 5 and 7 of Article XI of the Constitution of the State of California. Section 4.40.020 of the Special Tax Code provides that the Special Tax Code is an alternative method of financing public and private facilities and municipal services, and that the provisions of the Special Tax Code do not affect or limit any other provisions of law authorizing or providing for the furnishing of facilities or services, or the raising of revenue for such purposes. Section 4.40.130 of the Special Tax Code incorporates the Act, but provides that in proceedings under the Special Tax Code exclusively for maintenance and /or services, the provisions of Section 53312.7 of the Act relating to goals and policies shall not apply. These Local Goals and Policies for Special Tax Districts or Community Facilities District (the "Local Goals ") provide guidance and conditions for City proceedings for, and the issuance of bonds secured by special taxes levied in CFDs established under the Act, and when convenient therefore, for purposes of assisting with the formation of special tax districts ( "TDs ") under the Special Tax Code for the purpose of financing public facilities. The Local Goals are intended to be general in nature; specific details will depend on the nature of each particular financing. The Local Goals are applicable to special tax financings and are intended in particular to comply with the requirements of the Act contained in Section 53312.7 (a) of the Government Code. These Local Goals shall not apply to any assessment financing or any certificate of participation or similar financings involving leases of or security in public property. The Local Goals are subject to amendment by the City at any time. II. FINANCING PRIORITIES. Eligible Facilities. The real or tangible property eligible to be financed by a TD or a CFD must be owned by a public agency or public utility and must have a useful life of at least five (5) years, except that up to five percent of the proceeds of an issue may be used for facilities owned and operated by a privately -owned public utility. Any new development proposed within a TD or a CFD must be consistent with the City's general plan and must have received any required legislative approvals such as zoning or specific plan approvals. A TD or a CFD shall not vest any rights to future land use on any properties, including those which are responsible for paying special taxes. Resolution No. 2017 -009 N.C.S. Page 4 The list of eligible public facilities includes, but is not limited to, the following: • Streets • Street lighting • Traffic signals and safety lighting • Landscaping on public property or in public easements • Sanitary sewer facilities • Storm drain facilities • Flood control facilities • Potable and reclaimed water facilities • Utility relocations • Elementary and secondary school sites and facilities • Libraries • Parks and recreational facilities • Public utilities • Cultural facilities • Police and fire protection facilities • Governmental facilities It is acknowledged that the Special Tax Code permits the financing of fee obligations imposed by governmental agencies, the proceeds of which fees are to be used to fund public capital improvements of the nature listed above and permitted by the Act. The funding of public facilities to be owned and operated by public agencies other than the City shall be considered on a case -by -case basis. If the proposed financing is consistent with a public facilities financing plan approved by the City, or the proposed facilities are otherwise consistent with approved land use plans for the property, the City shall consider entering into a joint financing agreement or joint powers authority in order to finance these facilities. In general, a joint agreement with the public agency that will own and operate any such facility must be entered into prior to the resolution of formation of any TD or CFD as required by the Special Tax Code or the Act. TDs or CFDs may also be formed for the purpose of refinancing any fixed special assessment or other governmental lien on property, to the extent permitted under the Special Tax Code or the Act, as applicable. Eligible Services. The services eligible to be financed by a CFD (the "CFD Services ") are those identified in the Act, including without limitation Section 53313 of the Act. To the extent required by the Act, the CFD may only finance the CFD Services to the extent they are in addition to those provided in the territory of the CFD before the CFD was created, and the additional CFD Services may not supplant services already available within the territory of the CFD when the CFD was created. The services eligible to be financed by a TD ( "TD Services ") include, but are not limited to, those identified in Section 53313 of the Act, as well as those identified in Section 4.40.170(C) of the Special Tax Code. Priorities. Priority for TD or CFD financing shall be given to public facilities which: (a) are necessary for development to proceed in an orderly fashion, or (b) are otherwise coordinated to correspond to the phasing of the related private development project, if any. If appropriate, the City shall prepare a public facilities financing plan as a part of the specific plan or other land use document that identifies the public facilities required to serve a project, and the type of financing to be utilized for each facility. The City will attempt to schedule construction of TD- or CFD- Resolution No. 2017 -009 N.C.S. Page 5 financed facilities in a manner such that private development will not occur ahead of the installation of public infrastructure necessary to support that development. M. CREDIT QUALITY OF BOND ISSUES. For all TD or CFD bond issues, the value of the taxable property included in the CFD (taking into account the value of the public improvements to be financed by the CFD) should be at least 3 times the principal amount of the bonds to be issued plus the outstanding principal amount of any outstanding bonds secured by a special tax or assessment lien on the property in the CFD„ unless otherwise specifically approved by the City Council as provided in Section 53345.8(b) or (c) of the Act. Property value may be based on either an appraisal or on assessed values as indicated on the county assessor's tax roll. The public lien amount shall include the bond issue currently being sold plus any public indebtedness secured by a lien on the properties to be taxed. The City will require that all major land use approvals and governmental permits necessary for development of land in the TD or CFD be substantially in place before bonds may be issued. In most cases, a reserve fund equal to the lesser of (i) 10% of the original proceeds of the bond issue, (ii) the maximum annual debt service on the bonds, or (iii) 125% of the average annual debt service on the bonds will be required for all bond issues for TDs or CFDs where less than fifty percent of the buildable acreage has been developed. A smaller reserve fund may be required by the City for bond issues in TDs or CFDs where over fifty percent of the buildable acreage has been developed. The City may disallow the sale of bonds or require additional credit enhancement for the bonds under certain circumstances, such as cases where the property value to public lien ratio is less than 3 to 1, excessive tax delinquencies exist with respect to the property in the CFD, or the project proposed to be constructed within the CFD is deemed to have poor economic viability. The City may consider exceptions to the these Local Goals for bond issues that do not represent an unusual credit risk, either due to credit enhancement or other reasons specified by the City, and /or which otherwise provide extraordinary public benefits, to the extent permitted by and subject to any applicable requirements of the Act. If the City requires letters of credit or other security, the credit enhancement shall be issued by a financial institution, in a form and upon terms and conditions satisfactory to the City. Any security required to be provided by the applicant may be discharged by the City upon the opinion of a qualified appraiser, retained by the City, that a value -to -lien ratio of three to one has been attained or based upon other criteria (such as diversity in ownership) specified by the City. As an alterative to providing other security, the applicant may request that a portion of the bond proceeds be placed in escrow with a trustee or fiscal agent in an amount sufficient to assure a value -to -lien ratio of at least three to one on the outstanding proceeds. The escrowed proceeds shall be released at such times and in such amounts as may be necessary to assure a value -to -lien ratio of at least three to one on the aggregate outstanding bond proceeds and other indebtedness secured by real property liens as required. Resolution No. 2017 -009 N.C.S. Page 6 IV. DISCLOSURES. A. Purchasers of Propert y. As a minimum, any disclosures mandated by applicable state law shall apply to each TD or CFD to inform prospective purchasers of their obligations under the TD or CFD. In addition, there may be -additional requirements mandated by the City for particular kinds of financings on a case -by -case basis. The City may prescribe specific forms to be used to disclose the existence and extent of obligations imposed by TD or CFD. B. Disclosure Requirements for the Resale of Lots. The City Finance Department shall provide a notice of special taxes to sellers of property (other than developers) which will enable them to comply with their notice requirements under Section 1102.6 of the Civil Code. This notice shall be provided by the City within five working days of receiving a written request for the notice. A reasonable fee may be charged for providing the notice, not to exceed any maximum fee specified in the Act. C. Continuing Bond Disclosure. Landowners in a TD or CFD that are responsible for ten percent (10 %) or more of the annual special taxes must agree to provide: (i) initial disclosure at the time of issuance of any bonds; and (ii) annual disclosure as required under Rule 15c2 -12 of the Securities Exchange Commission until the special tax obligation of the property owned by such owner drops below 10 %. V. EQUITY OF SPECIAL TAX FORMULAS AND MAXIMUM SPECIAL TAXES. Special tax formulas for TDs or CFDs shall provide for minimum special tax levels, which satisfy the following payment obligations of a TD or a CFD: (a) a minimuml 10% gross debt service coverage for all CFD bonded indebtedness, (b) the administrative expenses of the TD or CFD, and (c) amounts equal to the differences between expected earnings on any escrow fund and the interest payments due on related bonds of the TD or CFD. In addition, the special tax formula may provide for the following to be included in the Special Tax levels: (a) any amounts required to establish or replenish any reserve fund established in association with the indebtedness of the TD or CFD, (b) the accumulation of funds reasonably required for future debt service, (c) amounts equal to projected delinquencies of special tax payments, (d) the costs of remarketing, credit enhancement and liquidity facility fees, (e) the cost of acquisition, construction, furnishing or equipping of authorized Facilities, (f) lease payments for existing or future facilities, (g) costs associated with the release of funds from an escrow account, and (h) the costs of CFD or TD Services, as applicable, and (i) any other costs or payments permitted by law. In addition, the City may, in its discretion, provide for a special tax to pay for TD or CFD services authorized under the Special Tax Code or the Act, as applicable. The special tax formula shall be reasonable in allocating public facilities' costs to parcels within the TD or CFD. Exemptions from the special tax may be given to parcels which are publicly owned, are held by a property owners' association, are used for a public purpose such as open Resolution No. 2017 -009 N.C.S. Page 7 space or wetlands, are affected by public utility easements making impractical their utilization for other than the purposes set forth in the easements, or have insufficient value to support bonded indebtedness. The total projected property tax levels (including ad valorem taxes, any maintenance, landscaping or other impositions on the land in the TD or CFD and other similar annual government charges levied on parcels in the TD or CFD, but excluding homeowners' association annual levies and as to any special tax levies, based on the expected special tax rates and not any "back -up" special taxes) for any TD or CFD (or, if a TD or CFD has multiple improvement areas, for each improvement area and not the entire TD or CFD) shall not exceed the lesser of (i) 2.0% of the estimated sales prices of the respective homes to be constructed in the TD or CFD (with such prices to be determined by reference to an absorption study or appraisal prepared for the TD or CFD or such other information as the City shall determine), or (ii) any maximum specified in the Special Tax Code or the Act. The annual increase, if any, in the maximum special tax for any parcel shall not exceed any maximum specified in the Special Tax Code or the Act. The increase in the special tax levied on any parcel as a consequence of delinquency or default by the owner of any other parcel shall not exceed any maximum specified in the Special Tax Code or the Act. Special taxes will only be levied on an entire county assessor's parcel, and any allocation of special tax liability of a county assessor's parcel to leasehold or possessory interest in the fee ownership of such county assessor's parcel shall be the responsibility of the fee owner of such parcel and the City shall have no responsibility therefore and has no interest therein. Failure of the owner of any county assessor's parcel to pay or cause to be paid any special taxes in full when due, shall subject the entire parcel to foreclosure in accordance with the Special Tax Code and the Act. The City may retain a special tax consultant to prepare a report which: (a) recommends a special tax for the proposed TD or CFD, and (b) evaluates the special tax proposed to determine its ability to adequately fund identified public facilities, administrative costs, services (if applicable) and other related expenditures. Such analysis may 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 TD or CFD. VI. APPRAISALS. The definitions, standards and assumptions to be used for appraisals shall be determined by City staff on a case -by -case basis, with input from City consultants and TD or CFD applicants, and by reference to relevant materials and information promulgated by the State of California. In any event, the value -to -lien ratio shall be determined based upon an appraisal by an independent MA or ASA appraiser of the taxable property in the proposed TD or CFD. The appraisal shall be coordinated by and under the direction of, or otherwise as acceptable to, the City. All costs associated with the preparation of the appraisal report shall be paid by the entity requesting the establishment of the TD or CFD, if applicable, through the advance deposit mechanism. Resolution No. 2017 -009 N.C.S. Page 8 VII. CITY PROCEEDINGS. A. Petition. For new development projects, a petition meeting the requirements of the applicable authorizing law will be required. The applicant is urged to obtain unanimous waivers of the election waiting period. The applicant must specify in the application any reasonably expected impediments to obtaining petitions, including from co- owners and /or lenders of record (where required). Waiver of the petition shall be made only upon showing of extraordinary hardship. For existing development, petitions are preferred, but may be waived, depending on the nature of the project and degree of public importance. B. Deposits and Reimbursements. All City and consultant costs incurred in the evaluation of TD or CFD applications and the establishment of TDs or CFDs will be paid by the entity, if any, requesting the establishment of the TD or CFD by advance deposit increments. The City shall not incur any expenses for processing and administering TDs or CFDs that are not paid by the applicant or from TD or CFD bond proceeds. In general, expenses not chargeable to the TD or CFD shall be directly borne by the proponents of the TD or CFD. Any petition for formation of a TD or CFD shall be accompanied by an initial deposit in the amount determined by the City to fund initial staff and consultant costs associated with TD or CFD review and implementation. If additional funds are needed to offset costs and expenses incurred by the City, the City shall make written demand upon the applicant for such funds. 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 City shall not accrue or pay any interest on any portion of the deposit refunded to any applicant or the costs and expenses reimbursed to an applicant. Neither the City nor the TD or CFD shall be required to reimburse any applicant or property owner from any funds other than the proceeds of bonds issued by the TD or CFD or special taxes levied in the TD or CFD. C. Representatives. The City and the applicant shall each designate a representative for each financing district proceeding. The representatives shall be responsible for coordinating the activities of their respective interests and shall be the spokespersons for each such interest. The purpose of this requirement is to avoid duplication of effort and misunderstandings from failure to communicate effectively. In the case of the City, it allows the City's consultants to report to a single official who will, in turn, communicate with other staff members. D. Time Schedule. The final schedule of events for any proceeding shall be determined by the City, in consultation with its financing team and the applicant. Any changes will require approval by the appropriate City official. Time schedules will (unless specific exceptions are allowed) observe established Council meeting schedules and agenda deadlines. To the extent possible, financings will be scheduled to allow debt service to be placed on the tax rolls with a minimum of capitalized interest. VIII. FINANCING TERMS. All terms and conditions of any TD or CFD bonds shall be established by the City. The City will control, manage and invest all TD or CFD issued bond proceeds. Each bond issue shall be structured to adequately protect bond owners and to not negatively impact the bonding capacity or credit rating of the City through the special taxes, credit enhancements, foreclosure covenant, and reserve funds. Resolution No. 2017 -009 N.C.S. Page 9 All statements and material related to the sale of bonds shall emphasize and state that neither the faith, credit nor the taxing power of the City is pledged to security or repayment of the Bonds. The sole source of pledged revenues to repay TD or CFD bonds are special taxes, bond proceeds and reserve funds held under the bond document, and the proceeds of foreclosure proceedings and additional security instruments provided at the time of bond issuance. The City shall select all consultants necessary for the formation of the TD or CFD and the issuance of bonds, including the underwriter(s), bond counsel, disclosure counsel, financial advisors, appraiser 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. IX. EXCEPTIONS TO THESE LOCAL GOALS. The City may find in limited and exceptional instances that a waiver of any of the above stated Local Goals is reasonable given identified special City benefits to be derived from such waiver. Such waivers will be granted by action of the City Council. Resolution No. 2017 -009 N.C.S. Page 10