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HomeMy WebLinkAbout2023-04-11 - AGENDA REPORTS - AMEND TRANSIT FUNDING AGMT VISTA CYNO Agenda Item: 2 1. CITY OF SANTA CLARITA AGENDA REPORT NEW BUSINESS 14) CITY MANAGER APPROVAL: ' DATE: April 11, 2023 SUBJECT: AMENDMENTS TO THE TRANSIT FUNDING AGREEMENT AND WAIVERS TO CERTAIN PENALTIES AND INTEREST FOR THE COMMUNITY FACILITIES DISTRICTS AND WATER FACTORY FOR THE VISTA CANYON DEVELOPMENT DEPARTMENT: City Manager's Office PRESENTER: Michael Villegas RECOMMENDED ACTION City Council: Authorize an amendment to the Transit Funding Agreement included in the Vista Canyon Conditions of Approval to reduce the required Vista Canyon Transit Center surface parking lot from 500 to 400 spaces, allow it to be constructed in phases, and grant the City an easement at no cost. 2. Authorize the waiver of certain penalties and interest relating to the City of Santa Clarita Community Facilities District No. 2016-1 and the Vista Canyon Wastewater Standby Assessment District. 3. Amend the budgets for the Cooper Street Communities Facilities District and Vista Canyon Water Factory Assessment District as shown in Exhibit A. 4. Authorize the City Manager to execute all documents, amendments, and or waivers needed to facilitate the recommended actions, subject to City Attorney approval. BACKGROUND On April 16, 2011, the City Council approved Resolution No. 11-23, which formally approved the Vista Canyon project, including the final Conditions of Approval (COA) and the Transit Funding Agreement (TFA). The approved project includes up to 1,100 dwelling units (apartments, townhomes, and detached single-family), 950,00 square feet of commercial space, 10-arce park, and up to four parking structures, among other amenities. In addition, the approval Page 1 Packet Pg. 28 O of the project contemplated the creation of a Community Facilities District (CFD) over commercial properties, inclusive of apartments, within the Vista Canyon project area and required Vista Canyon's commitment to allocate 15 percent of the net construction proceeds of any bonds to the construction of the Vista Canyon Multi -Modal Transit Center (Transit Center). Over recent months, City of Santa Clarita (City) staff and Vista Canyon Ranch, LLC (Developer) have been in active discussions regarding various aspects of the project, which are outlined in this report. Transit Center Parking The TFA included in the COA for Vista Canyon requires the Developer to construct a 500-space surface parking lot prior to the commissioning of the Transit Center. However, as a result of the COVID-19 pandemic, the Vista Canyon project has slowed significantly and transit ridership has decreased. While ridership is gradually increasing, it has not hit pre -pandemic levels, and at this time in order to meet current economic conditions with ridership, fewer parking spaces are needed. As a result, the Developer has requested that the required Transit Center parking be developed in three phases. Phase 1 would consist of 160 surface spaces located adjacent to the Metrolink Station and 240 spaces in the Cooper Street Parking Structure located just south of the Transit Center. Both the surface spaces and those within the existing parking structure would be assigned as dedicated parking for Transit use only, including the appropriate signage and striping, as determined by the City. Phase 2 would require the Developer to expand the 160- space surface lot to 400 spaces (at the Developer's expense). Phase 2 would be triggered by one of the two following conditions: 1. The Transit dedicated parking in the structure and/or surface lot reaches 80 percent capacity, as determined by the City; OR 2. Prior to Certificates of Occupancy being issued for the second of either building 4 (three- story, 52,830 square -foot office/retail) or building 8 (three-story, 60,309 square -foot office/retail). Phase 3 would consist of a 750-space parking structure to be located on the site of the adjacent surface lot. A portion of these spaces may be shared -use spaces between Transit and the Vista Canyon project, pending the results of a parking study to be completed by the Developer. As currently conditioned in the TFA, the Developer will provide the City with a permanent easement for the parking at no cost to the City. The timing for the construction of the parking structure would be based on parking demand and available funding. Vista Canyon CFD On April 12, 2016, the City formed a CFD designated for the approved Vista Canyon development located at the end of Lost Canyon Road near Sand Canyon Road. The Vista Canyon CFD covers the apartment and commercial use parcels within the development. In February 2020, the Vista Canyon CFD issued its first series of bonds secured by special taxes within the Vista Canyon CFD to fund the 613-space Cooper Street Parking Structure, a City - owned public parking garage, with 84 dedicated spaces for the adjacent apartment complex, and Page 2 Packet Pg. 29 O a portion of the Transit Center. Once completed, and following a final review by the City's Public Works department, the City purchased the Cooper Street Parking Structure from the Developer for $15 million using the proceeds of the bonds. Commencing in 2021, property within the Vista Canyon CFD began paying special taxes to fund debt service on the bonds. In Fiscal Year (FY) 2022-23, the first installment, due December 10, 2022, to the County, had 16 parcels delinquent; however, as of January 27, 2023, these delinquencies were paid, in full, directly to the City in two installments, excluding estimated penalties and interest in the amount of $22,905.31. For better accounting, the City has commenced removing the second installment ($229,053.12) for such parcels, due April 10, 2023, from the property tax roll and has sent a bill to the Developer for payment to be made directly to the City. Cooper Street CFD Pursuant to the conditions for development, the original intent was for the property owner association (POA) of the development to pay the cost of operating and maintaining the Cooper Street Parking Structure. The City previously entered into a Parking Management Services Agreement (Management Agreement) with the POA. In order to maintain the tax-exempt nature of the bonds and have the Management Agreement be considered a qualified management contract under IRS rules, tax counsel required the formation of the Cooper Street CFD in 2021 to pay the POA for costs associated with the operation and maintenance of the Cooper Street Parking Structure. The POA initially pays the costs of operation and maintenance and also pays the special taxes. The POA then submits invoices for reimbursement payable by the Cooper Street CFD using the special taxes paid by the POA. Water Factory In November 2017, a standby assessment district and a sewer rate district were established to support operations and capital replacements costs associated with the future Vista Canyon Water Factory (Water Factory). The Developer was required and was financially responsible for the construction of the Water Factory as a condition of approval. Properties subject to the standby assessment and subsequent sewer rate are limited only to parcels within and directly adjacent to the development area that directly benefit from the Water Factory. Levying of the standby assessment upon vacant parcels commenced in FY 2018-19 and will remain in effect until individual parcels within the District are developed and serviced by the Water Factory. In addition to funding all construction costs of the Water Factory, the Developer is financially responsible for operating the Water Factory until the City assumes ownership and operation. Despite an original expectation of operating the Water Factory for one year, the Developer has been operating the facility since mid-2020. As a result, the City owes the Developer $1,975,994.22 through December 2022 for operations and maintenance of the Water Factory. However, the Developer presently owes $559,938.42 in unpaid assessments for FY 2018-19 and the second installment of FY 2019-20, and has accumulated $390,855.29 in estimated penalties and interest. The assessments were not paid by the Developer as the focus was to construct the Water Factory, a significant financial investment, and make it operational as soon as feasible. Page 3 Packet Pg. 30 O Penalties and Interest In accordance with the CFD agreements, the City has the authority to charge penalties (10%) and interest (1.5% per month) on special taxes and assessments which are delinquent. The City may also waive any or all such penalties and interest at its discretion. After a thorough review and discussions with the Developer, it is recommended that the City waive current outstanding penalties and interest owed by the Developer relating to Vista Canyon CFD and Water Factory totaling an estimated $22,905.31 and $390,855.29, respectively. For the Vista Canyon CFD, the Developer made direct payments to the City in December and January resulting in the City receiving these payments earlier than it would have from the County tax roll. For the Water Factory, the Developer has been operating the Water Factory for a period longer than anticipated and has been current in payment of assessments since the Water Factory became operational. It is also recommended to accept the Developer's request and apply the $1,975,994.22 owed by the City for the operations and maintenance of the Water Factory as follows: $249,563.44 to the FY 2022-23 second installment of the Vista Canyon CFD and associated costs for special taxes and $559,938.42 to the Water Factory for assessments owed. In addition, $590,000 of the amount owed to the Developer will be held until the Developer provides adequate and necessary plans, approvals, and timeline for the temporary parking lot, as outlined in the Transit Center Parking section of this report. Once provided, the remaining funds will be disbursed to the Developer. ALTERNATIVE ACTION Other action as determined by the City Council. FISCAL IMPACT Upon approval of the recommended action, Vista Canyon CFD estimated unpaid special tax penalties and interest in the amount of $22,905.31 and Vista Canyon Water Factory estimated unpaid assessment penalties and interest in the amount of $390,855.29 will be waived. The Developer's Water Factory reimbursement of $1,975,994.22 will be applied to outstanding balances owed for the: (a) Vista Canyon CFD - $249,563.44 and (b) Vista Canyon Water Factory - $559,938.42. In addition, $590,000 will be retained by the City until the Developer provides adequate plans, approvals, and timeline for the surface parking lot. Once provided, the remaining funds will be disbursed to the Developer. ATTACHMENTS Exhibit A Page 4 Packet Pg. 31 2.a Exhibit A Budget Adjustments Cooper Street CFD Account Number Fund Account Name Amount Expenditures 3697409-516101 Cooper Street Contractual Services 128,001 3697409-516114 Cooper Street Parking Structure Inspections 2,521 Revenues 100-462118 General Fund Inspections Revenue 2,521 369-402411 Cooper Street Special Taxes 562,460 369-462105 Cooper Street Prior Year Revenue 122,342 Transfers 3699500-710100 Cooper Street Transfer out to General Fund 1,553 100-600369 General Fund Transfer in from Cooper Street 1,553 3699500-710721 Cooper Street Transfer out to Self Insurance 29,099 721-600369 Self Insurance Transfer in from Cooper Street 29,099 Water Factory Assessment District Account Number Fund Account Name Amount Expenditures 3687413-516101 Water Factory Contractual Services 1,975,994.22 Revenues 368-402405 Water Factory Assessment Revenue 559,938.42 ON t x w r c m E c� r r Q Packet Pg. 32