CITY COUNCIL AGENDA
ITEM NO. 12
Meeting Date: March 12, 2002
Subject/Title: Approving a Resolution adopting the Local Goals & Policies and Appraisal Standards Concerning the Use of the Community Facilities Act of 1982
Submitted by: J. Stevenson/P. Ehler
Approved by: John Stevenson, City Manager
Approve a resolution implementing local goals and policies and appraisal standards concerning use of the Community Facilities Act of 1982 (the “Act”).
Pursuant to Section 53312.7 of the Government Code, a City may initiate proceedings to establish a Community Facilities District (CFD) if it has first considered and adopted local goals, policies and appraisal standards concerning the use of CFDs. These goals, policies and appraisal standards must include the following:
· Statement of priorities for use of the Act.
· Statement concerning the credit quality of any bonds issued pursuant to the Act.
· Statement concerning the steps to be taken so that future property purchasers are fully informed about their taxpaying obligations imposed under the
· Statement concerning the criteria for evaluating equity of tax allocation formulas and methodologies.
· Statement of the definitions, standards and assumptions to be used in appraisals.
In order for the City to initiate the proceedings to form Community Facilities District No. 1 and Community Facilities District No. 2 it must first adopt these local goals, policies and appraisal standards. These goals and policies and appraisal standards are standard in the industry and may be modified in the future by City Council action.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING LOCAL GOALS AND POLICIES AND APPRAISAL STANDARDS
WHEREAS, the City Council of the City of Brentwood (the “City”) wishes to give consideration to form a community facilities district pursuant to Sections 53311 and following of the California Government Code (the “Act”); and
WHEREAS, Section 53312.7 of the Act provides that proceedings to establish a community facilities district pursuant to the Act may be initiated only after the local agency in question (in this case, the City of Brentwood) has first considered and adopted local goals and policies and appraisal standards concerning use of the Act; and
WHEREAS, a proposed set of Local Goals and Policies and Appraisal Standards (the “Local Goals and Policies”) has been prepared and submitted to the City Clerk for consideration by this City Council in order to comply with Section 53312.7 of the Act; and
WHEREAS, this City Council wishes to approve the Local Goals and Policies, a copy of which is attached to this resolution as Exhibit A;
NOW, THEREFORE, THE CITY COUNCIL HEREBY FINDS, DETERMINES AND RESOLVES as follows:
Section 1. The foregoing recital is true and correct, and this City Council so finds and determines.
Section 2. This City Council hereby approves the Local Goals and Policies in the form attached hereto as Exhibit A.
Section 3. This City Council finds that the Local Goals and Policies approved by this resolution contain the matters prescribed by Section 53312.7 of the Act and that adoption of the Local Goals and Policies enables this City Council to initiate proceedings to establish a community facilities district pursuant to the Act.
Section 4. This resolution shall take effect immediately upon its passage.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 12th day of March, 2002, by the following vote:
Michael A. McPoland, Sr.
Karen Diaz, CMC
CITY OF BRENTWOOD
LOCAL GOALS AND POLICIES AND APPRAISAL STANDARDS
CONCERNING USE OF COMMUNITY FACILITIES ACT OF 1982
The City Council (the “Council”) of the City of Brentwood, California (the “City”) hereby adopts the following in compliance with Section 53312.7 and 53345.8 of the Community Facilities Act of 1982 (the "Act").
General Policy Respecting Use of the Act.
As a matter of general policy, the City will utilize the Act for purposes of (1) acquiring and constructing and providing financing for all or a prescribed portion of the cost and expense of public capital improvements (“facilities”) to be owned by the City or other public agencies or regulated public utility companies and which serve a public purpose for the City and its inhabitants and (2) financing all or a prescribed portion of the estimated cost and expense of maintaining and operating such facilities and/or providing services as permitted by the Act.
Priorities for Use of Act.
Reserving the right to make exceptions when circumstances warrant, the City establishes the following priority for use of the Act:
1. Facilities which provide a community-wide benefit to all inhabitants of the City;
2. Facilities needed to serve a community plan or specific plan area that is currently deficient in off-site infrastructure needed to develop the area as planned, i.e. "backbone" infrastructure to support already approved community plan or specific plan areas;
3. Other facilities for which there is a clearly demonstrated public benefit but which benefit is likely to be greater to specific sub-areas of the City rather than community-wide;
4. Other facilities permitted by the Act;
5. The cost and expense of maintaining and operating any of the foregoing facilities; and
6. The cost of services (including environmental mitigation monitoring programs) permitted to be paid for from special taxes under the Act.
Required Credit Quality.
The Council adopts the requirements of Section 53345.8 of the Act (a copy of which is set forth in Exhibit 1, attached hereto) as sufficient minimum standards for the credit quality of any bonds issued pursuant to the Act.
Disclosure to Property Purchasers.
The Council finds that the statutory requirements of disclosure to property purchasers contained in the Act, most notably, but not limited to, Sections 53328.3, 53328.5 (including the referenced sections of the California Streets and Highways Code), 53340.2 and 53341.5 adequately address this need, and no additional procedures need be imposed by the City. The Council reserves the right to require additional disclosure procedures in any particular case.
Requirements for Special Tax Formulas.
The proposed amount and apportionment of the special tax for each community facilities district ("CFD") shall comply with the following criteria:
1. The special tax formula shall be structured to produce sufficient annual special tax revenue to pay:
(a) annual debt service on special tax bonds which have been issued, if any;
(b) amounts needed to replenish any reserve funds for such bonds;
(c) reasonable annual administrative expenses of the City in the administration of the special taxes and the bonds, if any, of the CFD, including without limitation fees and expenses of trustees, fiscal agents, special tax consultants, arbitrage rebate compliance consultants, arbitrage rebate payments, and any incidental expenses related thereto; and
(d) the cost of any maintenance, services and "pay as you go" programs funded by the CFD special tax.
2. A backup special tax to protect against unforeseen contingencies, including but not limited to unusual levels of delinquency in the payment of the special tax.
3. The rate and method of apportionment may provide for an annual increase in the maximum special tax for residential properties not to exceed two percent (2%) annually and shall provide for prepayment and discharge of that portion of the special tax obligation on any residential properties pertaining to debt service on special tax bonds, if any, as distinguished from that portion of the special tax obligation on such residential properties pertaining to maintenance, services or other pay-as-you-go programs.
4. The total projected annual special tax revenues, less estimated annual administrative expenses, maintenance, services and pay-as-you-go program costs, shall be at least equal to the projected annual gross debt service on outstanding special tax bonds, if any.
5. All property within the CFD not otherwise statutorily exempted or owned (or to be owned) by a public entity and to be benefited shall bear its appropriate share of the special tax liability, as determined in the rate and method of apportionment of special taxes for the CFD.
6. The special tax shall be allocated and apportioned on the basis of reasonableness to all categories and classes of property within the CFD, as determined by the Council.
7. The total amount of projected ad valorem property tax and other direct and overlapping debt for the proposed CFD (including estimated CFD charges, projected benefit assessments, levies for authorized but unissued debt and any other anticipated municipal charges which may be included on a property owner's annual property tax bill), including the proposed maximum special tax, shall not exceed two and one-half percent (2˝ %) of the estimated market value for any single family home, condominium or town home. Any deviations from the foregoing must be specifically approved by the Council.
The Appraisal Standards for Land Secured Financings (the "Standards") published by the California Debt and Investment Advisory Commission and dated May 1994 are adopted as the appraisal standards for the City with the following modifications:
1. The independent review appraiser is an option, and not a requirement.
2. The comparable sales method may be used whenever there is sufficient data available in the opinion of the appraiser.
3. The appraiser should assume the presence of the facilities to be financed with the proposed special tax bonds.
4. The special tax lien need not be computed as the present value of the future tax payments if there is a pre-payment mechanism or other more appropriate measure.
5. Except where necessary to make a meaningful comparable sale comparison, the appraiser is not to discount the value of property for the amount of the special tax or assessment liens. This also means that the special tax should be ignored in any discounted cash flow analysis.
6. Page 29 of the Standards, in the definition of "Bulk Sale Value," states the requirement that all parcels within a tract or development be included. Instead, it may be any defined portion of the property.
TEXT OF SECTION 53345.8 OF THE ACT
Government Code §53345.8. (a) The legislative body may sell bonds pursuant to this chapter only if it determines prior to the award of sale of bonds that the value of the real property that would be subject to the special tax to pay debt service on the bonds will be at least three times the principal amount of the bonds to be sold and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to this chapter on property within the community facilities district or a special assessment levied on property within the community facilities district. Any determination made pursuant to this subdivision shall be based upon the full cash value as shown on the ad valorem assessment roll or upon an appraisal of the subject property made in a manner consistent with the policies adopted pursuant to paragraph (5) of subdivision (a) of Section 53312.7 by a state certified real estate appraiser, as defined in subdivision (c) of Section 11340 of the Business and Professions Code. The Treasurer may recommend definitions, standards, and assumptions to be used for these appraisals. These definitions, standards, and assumptions are advisory only, and the definitions, standards, and assumptions to be applied to appraisals will be those adopted by the local agency pursuant to paragraph (5) of subdivision (a) of Section 53312.7.
(b) Notwithstanding the provisions of subdivision (a), if the legislative body selling the bonds finds and determines that the proposed bonds do not present any unusual credit risk due to the availability of credit enhancements or for other reasons specified by the legislative body, the provisions of subdivision (a) may be disregarded.
(c) Notwithstanding the provisions of subdivision (a), if the legislative body selling the bonds finds and determines by a vote of not less than four-fifths of all of its members that the proposed bond issue should proceed for specified public policy reasons, the provisions of subdivision (a) may be disregarded.
A finding and determination by the legislative body pursuant to this subdivision shall be final and conclusive upon all persons in the absence of actual fraud, and neither the legislative body nor the district shall have any liability of any kind whatsoever out of, or in connection with, any finding and determination.
I, Karen Diaz, City Clerk of the City of Brentwood, do hereby certify as follows:
The foregoing resolution is a full, true and correct copy of a resolution duly adopted at a regular meeting of the City Council of said City duly and regularly held at the regular meeting place thereof on the 12th day of March, 2002, of which meeting all of the members of said City Council had due notice and at which a majority thereof were present; and that at said meeting said resolution was adopted by the following vote:
An agenda of said meeting was posted at least 72 hours before said meeting at City Hall, 150 City Park Way, Brentwood, California 94513, a location freely accessible to members of the public, and a brief description of said resolution appeared on said agenda.
I have carefully compared the foregoing with the original minutes of said meeting on file and of record in my office, and the foregoing is a full, true and correct copy of the original resolution adopted at said meeting and entered in said minutes.
Said resolution has not been amended, modified or rescinded since the date of its adoption and the same is now in full force and effect.
Dated: _____________, 2002.
Karen Diaz, CMC
City Clerk, City of Brentwood