2021-11-03 City Council Item No. 11.2 Consideration of Formation Meritage Homes of California, Inc. Presentation Regular MEETING - Additional Meeting MaterialsPUBLIC HEARING ITEM 11.2 :
CONSIDERATION OF FORMATION:
TTM 37668, MERITAGE HOMES OF CALIFORNIA, INC.
TO COMMUNITY FACILITIES DISTRICT NO. 2021-2
(SUMAC RIDGE)
ROCHELLE CLAYTON
ASSISTANT CITY MANAGER
NOVEMBER 3, 2021
Discussion
•THIS ITEM WAS PRESENTED TO THE FINANCE COMMITTEE ON MARCH 19,
2020 AND OCTOBER 15,2020.
•ON SEPTEMBER 15,2021,THE CITY COUNCIL APPROVED RESOLUTION NO.
21-1066,DECLARING ITS INTENT TO FORM COMMUNITY FACILITIES DISTRICT
NO.2021-2 (CFD NO.2021-2).
•THE DEVELOPER,MERITAGE HOMES OF CALIFORNIA,INC.,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,EASTERN MUNICIPAL WATER DISTRICT (EMWD),AND
MENIFEE UNION SCHOOL DISTRICT (MUSD).THE CREATION OF CFD 2021-
2 WOULD LEVY A SPECIAL TAX WITHIN THE BOUNDARIES OF THE CFD AND
ISSUE BONDS IN AN AMOUNT NOT TO EXCEED $15,000,000.
Discussion (Cont.)
•THE AREA PROPOSED WITHIN CFD NO.2021-2 IS INCLUDED IN ATTACHMENT
A OF THE RESOLUTION OF INTENTION (ROI).THE PROPOSED DEVELOPMENT
TO BE INCLUDED INTO THE CFD NO.2021-2 INCLUDES THE 175 DETACHED
SINGLE FAMILY RESIDENTIAL PROPERTIES KNOWN AS SUMAC RIDGE ON 56.35
GROSS ACRES WITHIN TENTATIVE TRACT MAP NO.37668.
•AS REQUIRED BY THE RESOLUTION OF INTENTION THE PROPOSED BOUNDARY
MAP FOR CFD 2021-2 WAS RECORDED SEPTEMBER 22,2021 IN BOOK 87,
PAGE 66 DOCUMENT NO.2021-0565134.
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 $10,825,000 WHICH WOULD COVER A RESERVE FUND, FINANCING
COSTS, AND GENERATE APPROXIMATELY $9,302,057 IN NET BOND PROCEEDS FOR
FACILITIES.
•THE PROPOSED FACILITIES, WHICH MAY BE FUNDED WITH PROCEEDS OF THE BONDS
INCLUDE:
•$337,295 –CITY PRIORITY FACILITIES (20%PREMIUM TO PROJECT SPECIFIC
PRIORITIES,PER CITY’S CFD GOALS &POLICIES)
•$2,091,425 –CITY DEVELOPMENT IMPACT FEES &QUIMBY FEES
•$2,602,449 –CITY FACILITIES
•$2,744,421 –EMWD FACILITIES
•$1,632,723 –MUSD 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 175 DETACHED RESIDENTIAL
UNITS WITH HOME SIZES RANGING FROM 1,910 TO 3,247 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 2.00%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 $2,981 FOR HOME
SIZES LESS THAN 1,910 SQUARE FEET TO $3,734 FOR HOME SIZES GREATER
THAN 3,247 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) –9/15/2021
•PUBLIC HEARING –HOLD PUBLIC HEARING AND RESOLUTIONS, CONDUCT
ELECTION, AND INTRODUCE 1ST READING OF ORDINANCE –11/3/2021
•2ND READING OF ORDINANCE –12/1/2021
•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.2021-2 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.2021-2 ARE NOT OBLIGATIONS OF THE CITY AND
WILL BE SECURED SOLELY BY THE SPECIAL TAXES LEVIED IN CFD NO.
2021-2.
•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.2021-2
(SUMAC RIDGE)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.2021-2;AND
3.APPROVE JOINT COMMUNITY FACILITIES AGREEMENTS WITH EASTERN MUNICIPAL WATER
DISTRICT AND MENIFEE UNION SCHOOL DISTRICT
Questions?Thank You.