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2020-08-05 City Council Item No. 11.2 Consideration of Formation: TR 36852, Strata Homes to Community Facilities District No. 2020-2 (Del Oro) Regular MEETING - Additional Meeting MaterialsCONSENT ITEM 11.2 : CONSIDERATION OF FORMATION: TR 36852, STRATA HOMES TO COMMUNITY FACILITIES DISTRICT NO. 2020-2 (DEL ORO) ROCHELLE CLAYTON DEPUTY CITY MANAGER AUGUST 5, 2020 Discussion •THIS ITEM WAS PRESENTED TO THE FINANCE COMMITTEE ON MARCH 19, 2020. •ON MAY 20,2020,THE CITY COUNCIL APPROVED RESOLUTION NO.20- 889,DECLARING ITS INTENT TO FORM COMMUNITY FACILITIES DISTRICT NO. 2020-2 (CFD NO.2020-2). •THE DEVELOPER,STRATA HOMES,HAS REQUESTED THE CITY ASSIST THEM IN FORMING A FACILITIES COMMUNITY FACILITIES DISTRICT (CFD)TO FINANCE CERTAIN DEVELOPMENT COSTS OF THE PROJECT RELATED TO THE CITY AND EASTERN MUNICIPAL WATER DISTRICT (EMWD).THE CREATION OF CFD 2020-2 WOULD LEVY A SPECIAL TAX WITHIN THE BOUNDARIES OF THE CFD AND ISSUE BONDS IN AN AMOUNT NOT TO EXCEED $4,000,000. Discussion •THE AREA PROPOSED WITHIN CFD NO.2020-2 IS INCLUDED IN ATTACHMENT A OF THE RESOLUTION OF INTENTION (ROI).THE PROPOSED DEVELOPMENT TO BE INCLUDED INTO THE CFD NO.2020-2 INCLUDES THE 68 DETACHED SINGLE FAMILY RESIDENTIAL PROPERTIES KNOWN AS DEL ORO ON 17 GROSS ACRES WITHIN TRACT MAP NO.36852. •AS REQUIRED BY THE RESOLUTION OF INTENTION THE PROPOSED BOUNDARY MAP FOR CFD 2020-2 WAS RECORDED MAY 28,2020 IN BOOK 85,PAGE 29 DOCUMENT NO.2020-0226591. Location Map Bradley RoadHolland Road Discussion (Cont.) A PUBLIC HEARING REPORT WAS PREPARED BY SPICER CONSULTING GROUP WHICH DESCRIBES AND ANALYZES THE FACILITIES TO BE FINANCED BY THE CFD AND THE ESTIMATED COSTS OF SUCH FACILITIES. •THE ANTICIPATED ISSUANCE AMOUNT BASED ON CURRENT RATES WOULD BE APPROXIMATELY $2,555,000 WHICH WOULD COVER A RESERVE FUND, FINANCING COSTS, AND GENERATE APPROXIMATELY $2,037,469 IN NET BOND PROCEEDS FOR FACILITIES. •THE PROPOSED FACILITIES, WHICH MAY BE FUNDED WITH PROCEEDS OF THE BONDS INCLUDE: •$116,000 –CITY PRIORITY FACILITIES (20%PREMIUM TO PROJECT SPECIFIC PRIORITIES,PER CITY’S CFD GOALS &POLICIES) •$582,000 –CITY DEVELOPMENT IMPACT FEES (NOTE THAT PARKS QUIMBY FEES WERE ADDED AFTER THE PRESENTATION TO THE FINANCE COMMITTEE) •$1,426,000 –EMWD FACILITIES IN ADDITION TO THE COSTS OF THE FORGOING FACILITIES,PROCEEDS OF THE SPECIAL TAX MAY BE EXPENDED TO PAY ADMINISTRATIVE. Discussion (Cont.) •THE PROPOSED DEVELOPMENT IS PROPOSING TO BUILD 68 DETACHED RESIDENTIAL UNITS WITH HOME SIZES RANGING FROM 2,250 TO 2,850 SQUARE FEET. •THE PROJECT IS CURRENTLY ANNEXING INTO CFD 2017-1 (MAINTENANCE SERVICES) TO COVER LANDSCAPING,LIGHTING,STREET SWEEPING AND PAVEMENT MANAGEMENT, DRAINAGE,PARKS AND TRAILS,AND GRAFFITI ABATEMENT SERVICE COSTS. •THE TOTAL TAX EFFECTIVE TAX RATE IS ESTIMATED AT 1.99%OF PROJECTED HOME PRICES.THIS IS WITHIN THE 2%ALLOWABLE TAX RATE LIMIT IN THE CITY’S FINANCING GOALS AND POLICIES. •THE ESTIMATED ASSIGNED ANNUAL TAX RATES RANGE FROM $2,447 FOR HOME SIZES LESS THAN 2,400 SQUARE FEET TO $2,647 FOR HOME SIZES GREATER THAN 2,850 SQUARE FEET,WHICH RATES WILL ESCALATE AT 2%PER YEAR. Discussion (Cont.) •PROPOSED TIMELINE FOR FACILITIES CFD FORMATION : •CITY COUNCIL MEETING –ADOPT RESOLUTION OF INTENTION (ROI) –5/20/2020 •PUBLIC HEARING –HOLD PUBLIC HEARING AND RESOLUTIONS, CONDUCT ELECTION, AND INTRODUCE 1ST READING OF ORDINANCE –7/15/2020 •2ND READING OF ORDINANCE –8/5/2020 •BOND ISSUANCE WOULD BE REQUESTED BY DEVELOPER AFTER CERTAIN CRITERIA HAS BEEN MET: •DEVELOPMENT THRESHOLD –BUILDING PERMITS ISSUED •INDIVIDUALLY OWNED THRESHOLD –DIVERSIFICATION OF OWNERSHIP •VALUE-TO-LIEN THRESHOLD –EXCEEDS 4:1 •LETTER OF CREDIT SECURED –IF NECESSARY •AN OFFERING DOCUMENT WOULD BE PREPARED AND PRESENTED TO CITY COUNCIL PRIOR TO BOND ISSUANCE Fiscal Impact •THE SPECIAL TAX WILL BE LEVIED ANNUALLY ON TAXABLE PROPERTIES IN CFD NO.2020-2 IN ACCORDANCE WITH THE RATE AND METHOD OF APPORTIONMENT (RMA)TO PAY FOR THE COST OF FACILITIES,DEBT SERVICE ON BONDS,AND ADMINISTRATION OF THE CFD.ANY BONDS ISSUED BY CFD NO.2020-2 ARE NOT OBLIGATIONS OF THE CITY AND WILL BE SECURED SOLELY BY THE SPECIAL TAXES LEVIED IN CFD NO. 2020-2. •ALL COSTS ASSOCIATED WITH THE FORMATION IS BORNE BY THE DEVELOPER.THE ROI INCLUDED SECTION 13 APPROVED A FORM OF A REIMBURSEMENT AGREEMENT TO REIMBURSE THE DEVELOPER FOR THESE COSTS IF AND WHEN BONDS ARE ISSUED FOR THE CFD. •THERE IS NO FISCAL IMPACT TO THE CITY’S GENERAL FUND Recommended Action 1.CITY COUNCIL INITIATE FORMATION OF COMMUNITY FACILITIES DISTRICT NO.2020-2 (DEL ORO) BY TAKING THE FOLLOWING ACTIONS: A.HOLD PUBLIC HEARING, B.ADOPT A RESOLUTION DETERMINING NECESSITY TO INCUR BONDED INDEBTEDNESS C.ADOPT A RESOLUTION CALLING THE ELECTION, D.HOLD A SPECIAL LANDOWNER ELECTION AND CANVASS THE ELECTION, E.ADOPT A RESOLUTION DECLARING RESULTS OF SPECIAL LANDOWNER ELECTION; AND 2.UPON APPROVAL OF THE PRECEDING RESOLUTIONS,INTRODUCE AN ORDINANCE AUTHORIZING THE LEVY OF SPECIAL TAXES WITHIN CFD NO.2020-2;AND 3.APPROVE JOINT COMMUNITY FACILITIES AGREEMENT WITH EASTERN MUNICIPAL WATER DISTRICT NOTE –IN CONNECTION WITH FACILITY CFD NO.2020-2 IS A PROPOSED ANNEXATION INTO CFD 2017-1 (MAINTENANCE SERVICES)FOR THE SAME PROJECT,WHICH WILL BE INTRODUCED NEXT,AS PUBLIC HEARING ITEM 11.3. 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