HomeMy WebLinkAbout2015-05-26 - AGENDA REPORTS - CFD 2015-1 VISTA CYN RANCH (2)0
Agenda Item: 7
CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR
CITY MANAGER APPROVAL:
DATE:
May 26, 2015
SUBJECT:
COMMUNITY FACILITIES DISTRICT - VISTA CANYON RANCH
LLC
DEPARTMENT:
Administrative Services
PRESENTER:
Elena Galvez
RECOMMENDED ACTION
City Council:_
L Adopt a resolution approving a Deposit and Reimbursement Agreement relating to the
proposed City of Santa Clarita Community Facilities District No. 2015-1 (Vista Canyon) and
the retention of certain professional firms in connection therewith.
2. Adopt a reimbursement resolution to allow for the reimbursement of expenditures made
prior to the issuance of obligations issued for certain public facilities within a proposed
City -formed community facilities district.
BACKGROUND
The Vista Canyon project was approved by City Council on April 26, 2011. It is a 185 -acre
multi -use project which consists of up to 1,100 residential units, approximately 950,000 square
feet of commercial floor area, a new Metrolink station and bus transfer station, water reclamation
plant, and over 21 acres of recreational amenities, including a 10 -acre neighborhood park.
Resolution No. 11-23 was also approved by City Council on April 26, 2011, which included the
Final Conditions of Approval and the Transit Funding Agreement. Final Condition of Approval
No. TS8 required the applicant to comply with the requirements of the Transit Funding
Agreement, and Transit Funding Agreement Section 4.0 states the following:
"Vista will create a Community Facilities District ("CFD') over the commercial
properties within the Vista Canyon project. The City agrees to work with and
facilitate the formation of this CFD, and Vista commits to allocate 15% of the
proceeds of this CFD to construction of the Transit Station. Total proceeds from
the CFD are estimated to be between $10 million and 515 million. "
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APPROWED
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City staff has received an application by Vista Canyon Ranch LLC (Developer) for the formation
of a community facilities district (District) in connection with the Vista Canyon project for the
purpose of financing of a public parking structure and a portion of the transit station (Project).
Community Facilities Districts (CFDs) can be formed by cities, school districts, counties, and
special districts to finance public improvements. A CFD has the authority to levy a special tax
on property (which is in addition to general property taxes), to finance a variety of public
improvements or services. If there are more than 12 eligible voters, the special tax must be
approved by a two-thirds vote of the registered voters within the CFD; otherwise, the property
owners can vote to approve the special tax. A CFD can be formed to finance a wide list of
improvements, including roads, sewers, drainage, and parking facilities. The CFD special taxes
are secured by a continuing lien and are levied annually against property within the CFD. The
annual tax levy is used to pay debt service on bonds or for facilities on a pay-as-you-go basis, or
a combination thereof. In the proposed Vista Canyon CFD there is a single property owner so
that owner can approve the formation of the CFD.
The formation of community facilities district will require a number of City Council actions.
The first action includes the approval of a reimbursement resolution for reimbursement of
expenditures made prior to the issuance of the obligations, approval of the Deposit and
Reimbursement Agreement relating to the proposed District, and the retention of certain
professional firms in connection with the formation of the community facilities district.
This preliminary action allows staff and the professional fines to proceed with
discussions with the Developer on the proposed CPD.
The subsequent actions, which will follow in several months, include the formal City
Council approval to form the new CFD, which includes the CFD formation, public
hearing, and election process followed some months later by approval of the bond
financing documents.
The subsequent Council actions will commence after all parties agree to the parameters of the
special tax formula and the funding and acquisition agreement are finalized. The formal City
Council approval process to create a new CFD takes approximately ninety (90) days. This
process includes adopting resolutions of intention (ROI), holding a public hearing (at least 30
days after ROI), conducting an election, and adopting an ordinance levying the special tax. The
action to approve the issuance of bonds is not expected until next year.
Upon completion of the formation and election process for the District, the City anticipates that
the District will issue CFD Special Tax Bonds (Bonds) to finance the reimbursement of costs
associated with the parking structure and a portion of the transit station. Certain expenditures
with respect to the Project may be paid by the City, the District, or other persons prior to the date
of issuance of the Bonds. Approval of the attached reimbursement resolution will provide for
such expenditures to be reimbursed from proceeds of the Bonds, if any are issued.
The proposed deposit and reimbursement resolution approves the form of a deposit and
reimbursement agreement with the Developer. Along with the application the Developer has
filed with the City, the Developer will make a deposit of $75,000 to the City toward the costs of
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forming the CFD, including the costs of staff and consultant time. The costs of forming the CFD
are the responsibility of the Developer. if bonds are issued, the Developer will be reimbursed
from the proceeds of the Bonds.
The proposed deposit and reimbursement resolution also approves the hiring or appointment of
certain consultants to the City in connection with the formation of the CFD and the issuance of
the special tax bonds for the CFD: (i) C.M. de Crinis & Co., Inc., Glendale, California, as
financial advisor to the City; (ii) the law firm of Norton Rose Fulbright U.S., LLP, Los Angeles,
California, as bond and disclosure counsel; and (iii) Harris & Associates, Irvine, California, as
special tax consultant. All fees are expected to be paid from the deposit of the Developer or as
part of the costs of issuance of the Bonds.
The proposed formation of the CFD is consistent with the City's Policy Guidelines Regulating
the Use of Public Financing Mechanism to Finance Public Improvements, adopted on
October 11, 2005. Per the City's policy guidelines, the request for the CFD is solely for the
financing of the public parking structure and a portion of the transit station. Additionally, only
the commercial property of this project will be assessed and not the owner -occupied residential
units.
ALTERNATIVE ACTION
Other action as determined by the City Council.
FISCAL IMPACT
No fiscal impact to the City with this action. The costs of forming the CFD are to be borne by
the Developer.
ATTACHMENTS
Resolution - Reimbursement
Resolution - Deposit and Reimbursement Agreement
Deposit and Reimbursement Agreement
Policy Guidelines Regulating the Use of Public Financing Mechanism to Finance Public
Improvements
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RESOLUTION NO. 15-
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SANTA CLARITA, CALIFORNIA,
DECLARING ITS INTENT THAT A CITY -FORMED
COMMUNITY FACILITIES DISTRICT ISSUE OBLIGATIONS
FOR CERTAIN PUBLIC FACILITIES AND TO ALLOW FOR THE
REIMBURSEMENT OF EXPENDITURES MADE PRIOR TO THE
ISSUANCE OF SUCH OBLIGATIONS.
WHEREAS, the City Council of City of Santa Clarita, California (City) intends to form a
community facilities district (District) pursuant to the Mello -Roos Community Facilities Act of
1982, as amended (Act), and further desires and intends that the District finance the acquisition
and construction of certain public facilities and related costs (Public Facilities), including, but
not limited to, public parking facilities and a portion of the transit station, in connection with the
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development of mixed-use project within the District commonly known as "Vista Canyon;"
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WHEREAS, the City expects the District to cause the issuance and sale of bonds, notes,
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or other obligations, in one or more series, for the purpose of providing financing for the Public
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Facilities in a principal amount of not to exceed $20,000,000 (Obligations); and
WHEREAS, the City expects that certain expenditures relating to the Public Facilities
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will be incurred and paid from other sources of money made available to the District, the City,
the developer, or other persons prior to the issuance of the Obligations (Reimbursable
Expenditures); and
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WHEREAS, the City reasonably expects that a portion of the proceeds of the Obligations
will be used to reimburse all or a portion of the Reimbursable Expenditures;
NOW, THEREFORE, the City Council of the City of Santa Clarita does hereby resolve
as follows:
SECTION 1. The City hereby declares its official intent, subject to further approval of
the legislative body of the District, to use the proceeds of the Obligations to reimburse
Reimbursable Expenditures. It is intended that this Resolution shall constitute a declaration of
`official intent' within the meaning of section 1.150-2 of the Treasury Regulations promulgated
under Section 150 of the Internal Revenue Code of 1986. All of the Reimbursable Expenditures
covered by this Resolution were or are to be made not earlier than sixty (60) days prior to the
adoption hereof, other than certain do minin is amounts and preliminary expenditures as
described in Treas. Reg. Section 1.150-2(0(2) that are exempt from the 60 -day requirement
pursuant to Section 1.150-2 of the Treasury Regulations. The non-exempt Reimbursable
Expenditures covered by this Resolution are eligible for reimbursement, provided the
reimbursement occurs not later than eighteen (18) months after the later of the date the original
expenditure is made or the date the property is placed in service; but in no event more than three
(3) years after the original expenditure is made.
SECTION 2. The adoption of this Resolution shall not bind the District to proceed with
the issuance and sale of the Obligations until and unless all other necessary actions and approvals
are taken or received in accordance with all applicable laws.
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SECTION 3. All actions heretofore taken by the officers, or their respective designees,
and the employees and agents of the City, on behalf of the District, in connection with the
financing of the Public Facilities are hereby ratified and confirmed. The officers and their
designees, the employees and agents of the City, acting on behalf of the District, are hereby
authorized to take any and all actions in connection with the financing of the Public Facilities
and as may be necessary and consistent with the purposes of this resolution.
SECTION 4. This resolution shall take effect immediately upon its adoption.
SECTION 5. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED this 26'h day of May 2015
MAYOR
ATTEST:
CITY CLERK
DATE:
STATE OF CALIFORNIA
)
COUNTY OF LOS ANGELES
) ss.
CITY OF SANTA CL,ARITA
)
1, Kevin Tonoian, City Clerk of the City of Santa Clarita, do hereby certify that the
foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a
regular meeting thereof, held on the 26'h day of May 2015, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
CITY CLERK
41660939.1
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RESOLUTION NO. 15 -
RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SANTA CLARITA, CALIFORNIA,
APPROVING A DEPOSIT AND REIMBURSEMENT AGREEMENT
RELATING TO THE PROPOSED CITY OF SANTA CLARITA
COMMUNITY FACILITIES DISTRICT NO. 2015-1 (VISTA CANYON)
AND THE RETENTION OF CERTAIN PROFESSIONAL FIRMS IN
CONNECTION THEREWITH
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WHEREAS, the City Council of the City of Santa Clarita, California (City) intends to
form a community facilities district pursuant to the Mello -Roos Community Facilities Act of
1982, as amended (Act), to be known as the City of Santa Clarita Community Facilities District
No. 2015-1 (Vista Canyon) (District); and
WHEREAS, Section 53314.9 of the Act provides that, at any time either before or after
the formation of a community facilities district, the legislative body may accept advances of
funds from any source, including, but not limited to, private persons or private entities and may
provide, by resolution, for the use of those funds for any authorized purpose, including, but not
limited to, paying any cost incurred by the local agency in creating a community facilities district
(including the issuance of bonds thereby); and
WHEREAS, the developer with respect to the District intends to make a security deposit
with the City to cover certain costs of formation which are eligible for reimbursement upon the
sale of bonds by the District from the proceeds of such bonds.
NOW, THEREFORE, the City Council of the City of Santa Clarita does hereby resolve
as follows:
SECTION 1. The City Council hereby approves the Deposit and Reimbursement
Agreement by and between the City and Vista Canyon Ranch, LLC, in substantially the form
presented to the City Council at this meeting. The City Manager or designee are hereby
authorized to execute the Deposit and Reimbursement Agreement with such revisions,
amendments, and completions as shall be approved by the officer executing the same, such
approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 2. The firm of C.M. de Crinis & Co., Inc., Glendale, California, is hereby
retained as financial advisor in connection with the proposed District and the issuance of bonds,
upon such terms and conditions as shall be approved by the City Manager or designee. The law
firm of Norton Rose Fulbright U.S., LLP, Los Angeles, California, is hereby retained as bond
counsel and disclosure counsel in connection with the proposed District and the issuance of
bonds, upon such terms and conditions as shall be approved by the City Manager or designee.
The firm of Harris & Associates; Irvine, California, is hereby retained as special tax consultant in
connection with the proposed District and the issuance of bonds, upon such terms and conditions
as shall be approved by the City Manager or designee.
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SECTION 3. This Resolution shall take effect immediately upon adoption.
SECTION 4. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED, AND ADOPTED this 26`h day of May 2015
MAYOR
ATTEST:
CITY CLERK
DATE:
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF SANTA CLARITA )
1, Kevin Tonoian, City Clerk of the City of Santa Clarita, do hereby certify that the
foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a
regular meeting thereof, held on the 26`h day of May 2015, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
2
CITY CLERK
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DEPOSIT AND REIMBURSEMENT AGREEMENT
THIS DEPOSIT AND REIMBURSEMENT AGREEMENT (Deposit Agreement),
dated as of , 2015, is by and between the City of Santa Clarita. California
(City) and Vista Canyon Ranch LLC, a California limited liability company, (Owner).
RECITALS
WHEREAS, the City has determined to initiate proceedings to create a
community facilities district designated City of Santa Clarita Community Facilities District No. a
2015-1 (Community Facilities District) under the Mello -Roos Community Facilities Act of 1982,
as amended (Act); and 0
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WHEREAS, Owner is the owner of the real property within the proposed m
Community Facilities District; and u
WHEREAS, in accordance with City's policy regarding use of the Act, the
Owner is required to compensate the City for all costs reasonably incurred in the formation of the
Community Facilities District and issuance of bonds for the Community Facilities District; and
WHEREAS, Section 53314.9 of the Act provides that, at any time either before
or after the formation of a community facilities district, the legislative body may accept advances
of funds from any source, including, but not limited to, private persons or private entities and
may provide, by resolution, for the use of those funds for any authorized purpose, including, but
not limited to, paying any cost incurred by the local agency in creating a community facilities
district (including the issuance of bonds thereby); and
WHEREAS, Section 53314.9 of the Act further provides that the legislative body
may enter into an agreement, by resolution, with the person or entity advancing the funds, to
repay all or a portion of the funds advanced, as determined by the legislative body, with or
without interest under all of the following conditions: (a) the proposal to repay the funds is
included in both the resolution of intention to establish a community facilities district adopted
pursuant to Section 53521 of the Act and in the resolution of formation to establish the
community facilities district pursuant to Section 53325.1 of the Act (including the issuance of
bonds thereby), (b) any proposed special tax is approved by the qualified electors of the
community facilities district pursuant to the Act, and (c) any agreement shall specify that if the
qualified electors of the community facilities district do not approve the proposed special tax, the
local agency shall return any funds which have not been committed for any authorized purpose
by the time of the election to the person or entity advancing the funds, without interest; and
WHEREAS, the City and the Owner desire to enter into this Deposit Agreement
in accordance with Section 53314.9 of the Act in order to provide for the advancement of funds
by the Owner to be used to pay costs incurred in connection with the formation of the
Community Facilities District and issuance of special tax bonds for the Community Facilities
District (Bonds), and to provide for the reimbursement to the Owner of such funds advanced,
without interest, from the proceeds of the Bonds.
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NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein contained, the parties hereto agree as follows:
Section 1. The Deposits and Application Thereof.
(a) The Owner has previously deposited with the City the amount of $75,000
(Initial Deposit). The City, by its execution hereof, acknowledges receipt of, and accepts, the
Initial Deposit.
(b) The Initial Deposit, together with any subsequent deposit required to be
made by the Owner pursuant to the terms hereof (collectively, Deposits), are to be used to pay
for any costs incurred for any authorized purpose in connection with the formation of the
Community Facilities District and the issuance of the Bonds (other than costs, fees and expenses
to be paid directly out of the proceeds of the Bonds), including, without limitation, (i) the fees
and expenses of any consultants to the City employed in connection with the formation of the
Community Facilities District and the issuance of the Bonds, including an engineer, special tax
consultant, financial advisor, bond counsel, disclosure counsel and any other consultant
reasonably deemed necessary or advisable by the City. (ii) the costs of City appointed appraisals,
market absorption and/or feasibility studies and other reports reasonably deemed necessary or
advisable by the City in connection with the formation of the Community Facilities District and
issuance of the Bonds, (iii) the costs of publication of notices, preparation and mailing of ballots
and other costs related to.any hearing, election or other action or proceeding undertaken in
connection with the formation of the Community Facilities District and issuance of the Bonds,
(iv) reasonable charges for City staff time incurred in connection with the formation of the
Community Facilities District and the issuance of the Bonds by the Community Facilities
District, including a reasonable allocation of City overhead expense related thereto, and (v) any
and all other actual costs and expenses incurred by the City in connection with the formation of
the Community Facilities District and the issuance of the Bonds (collectively, Initial Costs). The
City may draw upon the Deposits from time to time to pay the Initial Costs.
(c) If, at any time, the unexpended and unencumbered balance of the Deposits
is less than $10,000, the City may request, in writing, that the Owner make an additional deposit
in an amount estimated to be sufficient, together with any such unexpended and unencumbered
balance, to pay for all Initial Costs. The Owner shall make such additional deposit with the City
within two weeks ofthe receipt by the Owner of the City's written request therefor. If the Owner
fails to make any such additional deposit within such two week period, the City may cease all
work related to the issuance of the Bonds. Upon payment of the additional deposit, the City shall
resume all work related to the issuance of bonds.
(d) The Deposits may be. commingled with other funds of the City for
purposes of investment and safekeeping, but the City shall at all times maintain accurate and
detailed records as to the expenditure of the Deposits.
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(e) The City shall provide the Owner with a written monthly summary of
expenditures made from the Deposits, and the unexpended balance thereof, within ten business
days of receipt of the City of a written request therefor submitted by the Owner. The cost of
providing any such summary shall be charged to the Deposits.
Section 2. Return of Deposits; Reimbursement.
(a) As provided in Section 53314.9 of the Act, the approval by the qualified
electors of the Community Facilities District of the proposed special tax to be levied therein is a
condition to the repayment to the Owner of the funds advanced by the Owner pursuant hereto. In
accordance with Section 53314.9 of the Act, if the qualified electors of the Community Facilities
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District do not approve the proposed special tax to be levied therein, the City shall return to the
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Owner any portion of the Deposits which has not been expended or encumbered to pay Initial
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Costs by the time of the election on said proposed special tax, without interest.
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(b) If proceedings for the issuance of the Bonds are terminated, the City shall,
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within ten business days after official action by the City or the Community Facilities District to
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terminate said proceedings, return the then unexpended and unencumbered portion of the
Deposits to the Owner, without interest.
(c) If the Bonds are issued by the Community Facilities District, the City shall
reimburse the Owner, without interest, for the portion of the Deposits that has been expended or
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encumbered, said reimbursement to be made within ten business days after the issuance of such
Bonds, solely from the proceeds of such Bonds and only to the extent otherwise permitted under
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the Act. In addition, the City shall, within ten business days after the issuance of such Bonds,
return the then unexpended and unencumbered portion of the Deposits to the Owner, without
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interest.
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Section 3. Abandonment of Proceedings. The Owner acknowledges and agrees
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that the issuance of the Bonds shall be in the sole discretion of the City. No provision of this
Deposit Agreement shall be construed as an agreement, promise or warranty of the City to issue
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the Bonds.
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Section 4. Deposit Aereement Not Debt or Liability of City. As provided in
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Section 53314.9(b) of the Act, this Deposit Agreement does not constitute a debt or liability of
the City, but shall constitute a debt and liability of the Community Facilities District upon its
formation. The City shall not be obligated to advance any of its own fiords to pay Initial Costs or
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any other costs incurred in connection with the issuance of the Bonds. No member of the City
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Council of the City and no officer, employee or agent of the City shall to any extent be
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personally liable hereunder
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Section 5. Notices. Any notices, requests, demands, documents, approvals or
disapprovals given or sent under this Deposit Agreement from one party to another (collectively,
"Notices") may be personally delivered, or deposit with the United States Postal Service or other
Postal Service for mailing, postage prepaid, to the address of the other party as stated in this
Section, and shall be deemed to have been given or sent at the time of personal delivery or
electronic transmission or, if mailed, seventy-two hours following the date of deposit in the
course of transmission with the United States Postal Service. Notices shall be sent as follows:
If to City:
City of Santa Clarita
Attn: Director of Administrative Services
23920 Valencia Boulevard
Santa Clarita. California 91355
email address: dhernandeza Santa-clarita.com
If to Owner:
Vista Canyon Ranch LLC
Attn: Jim Backer
27451 Tourney Road, Suite 250
Santa Clarita, California 91355
email address: JBacker@isbdev.com
Vista Canyon Ranch LLC
Attn: Glenn Adamick
27451 Tourney Road, Suite 250
Santa Clarita, California 91355
email address: GAdanlick c 'sbdev.com
With Copy to:
Goodwin Procter LLP
Attn: Robert M. Haight Jr.
601 South Figueroa Street, Suite 4100
Los Angeles, California 90017
email address: rhaii!ht@goodwinProcter.com
Each such notice, statement, demand, consent, approval, authorization, offer, designation,
request or other communication hereunder shall be deemed delivered to the party to whom it is
addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic
communication, upon the sender's receipt of an appropriate answerback or other written
acknowledgement, (c) if given by registered or certified mail, return receipt requested, deposited .
with the United States mail postage prepaid, 72 homy after such notice is deposited with the
United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after
delivery to said overnight courier, or (e) if given by any other means, upon delivery at the
address specified in this Section.
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Section 6. California Law. This Deposit Agreement shall be governed and
construed in accordance with the laws of the State of California. The Parties shall be entitled to
seek any remedy available at law and in equity. All legal actions must be instituted in the
Superior Court of the County of Los Angeles, State of California, in an appropriate municipal
court in Los Angeles County, or in the United States District Court for the District of California
in which Los Angeles County is located.
Section 7. Successors and Assigns. This Deposit Agreement may be assigned, in
whole or in part, by the Owner to the purchaser of any parcel of land within the proposed
Community Facilities District provided, however, such assignment shall not be effective unless
and until the City has been notified, in writing, of such assignment. This Deposit Agreement
shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto.
Section 8. Counterparts. This Deposit Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which shall constitute but one and the same
instrument.
Section 9. Other Agreements. The obligations of the Owner hereunder shall be that
of a party hereto. Nothing herein shall be construed as affecting the City's or Owner's rights, or
duties to perform their respective obligations, under other agreements, use regulations or
subdivision requirements relating to the development. This Deposit Agreement shall not confer
any additional rights, or waive any rights given, by either party hereto under any development or
other agreement to which they are a party.
Section 10. Indemnification. Owner shall assume the defense of, indemnify and save
harmless, City and the Community Facilities District, their respective officers and employees,
and each and every one of them, from and against all actions, damages, claims. losses or
expenses of every type and description to which they may be subjected or put, by reason of', or
resulting fi-om, any act or omission of Owner with respect to this Deposit Agreement; provided,
however, that Owner shall not be required to indemnify any person or entity as to damages
resulting from negligence or willful misconduct of such person or entity or their officers, agents
or employees.
Section 11. Entire Agreement. This Deposit Agreement contains the entire
agreement between the parties with respect to the matters provided for herein and supersedes all
prior agreements and negotiations between the parties with respect to the subject matter of this
Deposit Agreement.
Section 12. No Third Party Beneficiaries. No person or entity other than the
Community Facilities District shall be deemed to be a third party beneficiary hereof; and nothing
in this Deposit Agreement (either express or implied) is intended to confer upon any person or
entity, other than the City, the Community Facilities District, and Owner (and their respective
successors and assigns, exclusive of individual homebuyers), any rights, remedies, obligations or
liabilities under or by reason of this Deposit Agreement.
Section 13. Titles and Captions. Titles and captions are for convenience of reference
only and do not define, describe or limit the scope or the intent of this Deposit Agreement or of
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any of its terms. Reference to section numbers are to sections in this Deposit Agreement, unless
expressly stated otherwise.
Section 14. Interpretation. As used in this Deposit Agreement, masculine, feminine
or neuter gender and the singular or plural number shall each be deemed to include the others
where and when the context so dictates. The word "including" shall be construed as if followed
by the words "without limitation." This Deposit Agreement shall be interpreted as though
prepared jointly by both Parties.
Section 15. No Waiver. A waiver by either party of a breach of any of the covenants,
conditions or agreements under this Deposit Agreement to be performed by the other party shall o
not be construed as a waiver of any succeeding breach of the same or other covenants, LL
agreements, restrictions or conditions of this Deposit Agreement. o
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Section 16. Modifications. Any alteration, change or modification of or to this
Deposit Agreement, in order to become effective, shall be made in writing and in each instance 2
signed on behalf of each Party. j
Section 17. Severability. If any term, provision, condition or covenant of this Deposit
Agreement or its application to any party or circumstances shall be held, to any extent, invalid or
unenforceable, the remainder of this Deposit Agreement, or the application of the term,
provision, condition or covenant to persons or circumstances other than those as to whom or
which it is held invalid or unenforceable, shall not be affected, and shall be valid and enforceable
to the fullest extent permitted by law.
Section 18. Legal Advice. Each party represents and warrants to the other the
following: they have carefully read this Deposit Agreement, and in signing this Deposit
Agreement, they do so with full knowledge of any right which they may have; they have
received independent legal advice from their respective legal counsel as to the matters set forth
in this Deposit Agreement, or have knowingly chosen not to consult legal counsel as to the
matters set forth in this Deposit Agreement; and, they have freely signed this Deposit Agreement
without any reliance upon any agreement, promise, statement or representation by or on behalf of
the other party, or their respective agents, employees, or attorneys, except as specifically set forth
in this Deposit Agreement, and without duress or coercion, whether economic or otherwise.
Section 19. Cooperation. Each party agrees to cooperate with the other in this
transaction and, in that regard, to sign any and all documents which may be reasonably
necessary, helpful, or appropriate to carry out the purposes and intent of this Deposit Agreement
including, but not limited to, releases or additional agreements.
Section 20. Conflicts of Interest. No member, official or employee of City shall have
any personal interest, direct or indirect, in this Deposit Agreement, nor shall any such member,
official or employee participate in any decision relating to the Deposit Agreement which affects
his personal interests or the interests of any corporation, partnership or association in which he is
directly or indirectly interested.
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IN WITNESS WHEREOF, the parties hereto have executed this Deposit. Agreement as
of the date set forth on the first page hereof.
FOR OWNER:
VISTA CANYON RANCH LLC, a California Limited Liability Company
By: JSJ PARTNERS, LLC, a California Limited Liability Company,
its Manager
By: JSB Development, Inc., a California Corporation, Member
James S. Backer, President
Date
By: Valencia Realty Partners, LLC, a California
limited liability Company, Member
Stephen F. Valenziano, Member
Date
FOR CITY OF SANTA CLARITA:
KENNETH W. STRIPLIN, CITY MANAGER
By:
City, Manager
Date
ATTEST:
By:
City Clerk
Date
APPROVED AS TO FORM:
JOSEPH M. MONTES, CITY ATTORNEY
By:
City Attorney
Date
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THE CITY OF SANTA CLARITA
POLICY GUIDELINES REGULATING THE USE OF PUBLIC FINANCING
MECHANISMS TO FINANCE PUBLIC FACILITIES
PURPOSE
This policy provides the City guidelines for evaluating the merits of assisting in financing
project -related public facilities in which a significant public benefit has been established. The
City of Santa Clarita has adopted the following Policy Guidelines to address the City's use of
Community Facilities Districts established pursuant to the Mello Roos Community Facilities
Act of 1982, and special assessment districts established pursuant to the Improvement Act of
1911, the Municipal Improvement Act of 1913, and the Improvement Bond Act of 1915.
It is the City's desire to make this Policy available so that: 1) the City's policies are clearly
communicated, 2) the developer/proponent can make reasonable and realistic business
decisions based upon an understanding of the City's willingness to assist in a public financing
program, and 3) the significant public benefit requirement for eligibility of public financing is
clearly identified. The City emphasizes that the public financing through CFDs and/or
Assessment Districts is not a right but a privilege for a developer. The City shall make the
determination as to which public financingmechanism, if any, shall be used to assist in the
construction of a public facility or funding of a service.
PUBLIC FINANCING MECHANISMS AND ELIGIBLE PUBLIC FACILITIES,
INELIGIBLE COSTS, AND PRIORITIES
The public financing mechanisms subject to these policies include the Improvement Act of
1911, Municipal Improvement Act of 1913, and the Improvement Bond Act of 1915, and the
Mello Roos Community Facilities Act of 1982.
The general types of facilities and/or services currently eligible to be financed are listed as
follows for each public financing mechanism: .
A. IMPROVEMENT ACT OF 1911, MUNICIPAL IMPROVEMENT ACT OF 1913,
AND IMPROVEMENT BOND ACT OF 1915
1. Arterial Streets
2. Trunk Sewer Mains
3. Master Area Storm Drains
4. Water Transmission Mains
5. Water, Sewer or Drainage Pumping Plants
6. Non -Tract related Street lighting
7. Traffic Signals and Safety Lighting
8. Grading necessary to accommodate "Backbone" Infrastructure; including
Retaining Walls, Drainage Facilities, and Stabilization of Land
9. Government Facilities of specific benefit to the district
10. Parks
11. Ornamental Vegetation Installation
12. Other Facilities andlor services as provided by law and permitted by the
City.
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B. MELLO ROOS COMMUNITY FACILITIES ACT OF 1982
1. Local park, recreation, parkway open -space facilities
2. Child Care Facilities — publicly owned and operated
3. Utilities (Public Utilities, including electric, gas, flood and storm drainage)
— not to exceed 5% of the net value of the Improvement Fund proceeds
4. Cultural Facilities
5. Police and Fire Protection Services (Services CFD)
6. Services with respect to removal or remedial action of hazardous
substances
7. Development Impact Fees
8. District costs associated with acquisition of facilities and processing
payment requests
9. In combination with one or more of the foregoing, any of the facilities
listed under A above
10. Other facilities and/or services as provided by law and permitted by the
City.
C. INELIGIBLE COSTS
Costs considered ineligible to be financed from the proceeds of Special District bonds or
the assessments, special taxes, or taxes levied within a Special District include, but are
not limited to, the following:
a) Statutory development and building fees.
b) Financial consultant or legal fees incurred by an applicant for the formation
of a District. This limitation does not apply to amounts advanced by the
applicant to the City pursuant to the provisions of this policy to pay for
formation costs incurred by the City.
C) Fees collected by the City on behalf of other public entities.
d) Land -use planning and subdivision costs and environmental review costs
related to such land use planning and subdivision
e) Environmental impact studies, unless directly related to the project and
done separately for the project
f) Endowments for mitigation land
g) Cost incurred prior to the City Council's acceptance of a request to begin
work on the formation of a District, a reimbursement, or acquisition
agreement, or the adoption of a resolution of intention to form the District,
whichever comes first
h) Subdivision financial analysis
i) Attorney's fees incurred by the property owners or their agents, except as
recommended by the City Attorney related to condemnation proceedings
j) On-site right-of-way and casements
k) Other overhead expenses incurred by the applicant
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PRIORITIES
The City reserves the right to make exceptions to these priorities when circumstances warrant
(the City is establishing no priority for the use of the Acts in the case of populated areas and
registered -voter elections).
1. The public infrastructure and public facilities proposed to be financed must, in the
opinion of the City, provide a significant public benefit.
2. The public infrastructure and public facilities proposed must be owned and maintained
by the City. Public facilities and infrastructure owned and maintained by other public
agencies, such as water districts and school districts will have a lower priority.
3. In tract improvements such as public streets, sidewalks, and other infrastructure may
not be considered unless a significant public benefit finding can be made.
4. Development impact fees used for public facilities may be considered on a case-by-
case basis.
5. As a condition of development, the City may require a developer to form a "Services
District' or "Maintenance District' for the project area to pay for eligible services,
including but not limited to public safety, park and/or street maintenance, flood
control maintenance, and any other services authorized by CFDs, Assessment
Districts, or other benefit assessment districts.
6. Private improvements cannot be financed.
SIGNIFICANT PUBLIC BENEFIT
An example of significant public benefit is a public facility having regional impact such as the
construction of master -planned facilities for streets, storm drain, sewer, water and regional
facilities for water treatment, wastewater treatment, flood control, freeway overpasses,
bridges, schools, fire stations, and parks. Other projects which may be of significant public
benefit are those which would increase net revenues to the City, provide for adequate
residential housing, integrate with existing capital projects, coordinate infrastructure
construction, renovate or complete existing infrastructure, and increase employment that
provides for a net increase in jobs for City residents. Regional improvement or facilities of
benefit to the surrounding community will be considered to be of significant public benefit.
Rights-of-way or lands which are usually dedicated by a developer and facilities regulated by
a public utility will usually not be eligible for financing. Limited exceptions may be made for
certain facilities to be owned, operated, or maintained by private utilities and, to the extent
permitted by law, for the payment of fees normally incurred by the developer, such as
building fees, water fees, traffic impact fees, park fees, and school fees, but will be at the sole
discretion of the City.
APPLICATION & DEPOSIT PROCESS
The application form for a proposed CFD or Assessment District can be obtained from the
Department of Administrative Services of the City. All completed documents must be
forwarded to the City Manager, or his designee, the Mello Roos and Assessment District Task
Force (the "task Force") for review.
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"Task Force" means the Mello Roos and Assessment District Task Force which includes
members of the City's Department of Administrative Services, Department of Community
Development, Department of Public Works, and the City's bond counsel and financial
advisor. The Task Force reviews the application for conformance with City policy and is
responsible for making a recommendation through the City Manager to the City Council
regarding the proposed facilities and proposed financing.
Early communication with the City is encouraged to assist applicants in reviewing these City
Policy Guidelines, allowing the City to evaluate the feasibility of available financing
programs and to discuss program procedures.
PRELIMINARY CONFERENCE: Applicant meets with the Task Force to discuss the
proposed project, review City's policies regarding public financing mechanisms, and
provide an overview of the formation process.
FORMAL REQUEST TO CITY: Applicant submits a completed Application for
Participation in City Assessment District Finance Program with a written letter requesting
that the City formally consider the formation of a district. Prior to any formation actions,
an Applicant is required to pay a non-refundable District Application Fee, subject to the
terms of the executed Deposit and Reimbursement Agreement. The Application Fee and
any payments required under the Deposit and Reimbursement Agreement will pay for all
costs incurred by the City, its legal and financial advisors, appraisers, and other
consultants (e.g., engineer firms, special tax consultants) prior to formation of a CFD or
Assessment District including City staff and administrative costs and related expenses,
costs of printing notices, printing and publication costs, and all expenses directly or
indirectly relating to these items. Reimbursement shall be facilitated by advance deposit
increments in accordance with the agreements required by this policy document. All City
administrative and consultant costs related to administration of the district and incurred
after the later formation and bond issuance shall be included within the assessment or
special tax formula in accordance with applicable provisions of law.
PROJECT REVIEW: Applicant and the Task Force meet to discuss the preliminary
project schedule and determine what further information is required to move forward with
the formation of a new district. If necessary, applicant submits additional information
required by the City.
APPLICATION PROCESSING: Upon the Task Force's determination that the
application package is complete, the application and project financing will be forwarded
to the City Council for further action. At this time, the City Manager will request the City
Council approve a preliminary feasibility study on the project. This study may be done
internally or externally, as the circumstances of the project dictate.
CITY COUNCIL CONSIDERATION: City staff submits consultant contracts,
reimbursement agreements, Resolution of Intention, and other similar items for City
Council consideration. The City Council makes any necessary finding and grants or
denies the request to proceed with formation. If approval is granted, the Council directs
the City Manager to engage additional consultants, negotiate necessary contracts, and
collect additional developer deposits, as necessary.
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PROJECT INITIATION: Applicant and Task Force meet to determine district formation
schedule and begin work necessary to initiate District formation and financing.
PROJECT IMPLEMENTATION: Applicant and Task Force negotiate a Funding and
Acquisition Agreement. Such an Agreement will require that the City acquire only
facilities that are complete. The City shall not purchase completed facilities unless the
City Council has declared its intention to purchase prior to the commencement of
construction. An approved Funding and Acquisition Agreement must be in place prior to
any purchase for improvements. Under limited circumstances, the City may agree to
construct the improvements and such, as Agreement may not be required.
For facilities under the purview of the Department of Public Works, this determination is
evidenced by a "Notice of Completion" or other documentation and/or certification
acceptable to the Director of Public Works. An appraisal of the completed improvements
will also be undertaken by the Department of Public Works or otherwise qualified
engineer or consultant to assure that any acquired improvements are acquired at a
reasonable price and that all such improvements are up to City Standards.
APPLICANT REIMBURSEMENT FROM BOND PROCEEDS
After formation of a CFD or Assessment District and sale of bonds, an applicant can be
reimbursed from bond proceeds for paid City consultant costs and other expenses which
would otherwise be normally incurred in the formation of the District and sale of
municipal bond, but reimbursement shall be limited to those district -related costs and
consultant costs approved by the City. Such reimbursement does not include costs of the
developer's counsel and other consultants or other costs of the developer. Reimbursement
shall be facilitated by advance deposit increments in accordance with the agreements
required by this policy document.
As required by State Law, a Joint Financing Agreement shall be entered into in a timely
manner for any facility which will be owned and operated by any entity other that the
City, such as water, flood control, or school improvements.
Where District is Formed and Bonds are Issued:
The applicant shall not be entitled to reimbursement from bond proceeds for any of the
following:
1. Administrative or overhead expenses, financial consultant or legal fees incurred by
an applicant for the formation of a Special District. (This limitation does not apply
to amounts advanced by the applicant to the City.)
2. Land -use planning and subdivision costs and environmental review costs related to
such land use planning and subdivision.
3. Construction loan interest.
4. Costs, including but not limited to, land acquisition costs incurred prior to entering
into a reimbursement or acquisition agreement or the adoption of a resolution of
intention to form the special district.
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5. Attorney's fees related to the land use entitlement or subdivision process unless
off-site and directly related to the project.
6. Other overhead expenses incurred by the applicant.
Where District is Not Formed, or Where District is Formed and Bonds are Not Issued:
In the event that the district is not formed due to City disapproval or abandonment, or due
to applicant abandonment, or the district is formed and bonds are not issued for any
reason, the City will refund to applicant/developer any remaining unexpended and
unobligated portion of advance deposits posted with the City, subject to the City's prior
and full reimbursement of all its direct and indirect costs associated with the special
district in accordance with policies herein. If the applicant's advance deposit to the City is
not sufficient to reimburse the City for all of its direct and indirect costs, the City will
require an additional deposit by the applicant for the difference. The City shall be entitled
to pay any refund to the applicant listed on the application form without interest,
irrespective of any changes in the ownership or composition of the applicant/developer.
Surplus Funds
In the event that there are surplus funds generated through the creation of the Special
District and the sale of bonds, these surplus funds shall be used as follows:
1. The Council may direct staff to use a portion of this surplus to offset the annual
levy of assessments or special taxes to property owners in following years in a
manner consistent with the statutes. Under this policy, an amount of up to 5% of
the total bond issue size not to exceed $1 million may be used to offset the annual
levy without further Council action.
2. Any amount in excess of that used to offset the annual levy described above will
be used to call bonds at an appropriate bond call date, as determined by staff and
the City's financial advisor.
GENERAL POLICIES
ELIGIBLE SUBDIVISION PROJECTS AND LAND USE ENTITLEMENTS.
It is the strong preference of the City that subdivision and other development projects have
progressed to the approved tentative map stage. In extraordinary circumstances, formation of
a.CFD or Assessment District can be considered prior to this. In no event will bonds be
issued prior to approved tentative maps being obtained for the entire project providing
security for the CFD or Assessment District.
LAND USE APPROVALS
All proposed projects within the proposed district, together with the infrastructure and public
facilities, must be consistent with the City's adopted General Plan and zoning classifications.
All property within the proposed district must possess land use determinations or zoning
classifications of sufficient certainty and facility requirements of sufficient specialty that each
parcel can be adequately assessed
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AGREEMENTS REQUIRED
The applicant will be required to enter into all necessary agreements incident to district
proceedings in a form provided by the City and consistent with these policies. These
agreements may include, but not be limited to:
• Deposit and Reimbursement Agreement
• Funding and Acquisition Agreement
• Development and Disposition Agreement
• Land Dedication Agreement (where required)
• Agreement to use the City as sole issuer of bonds in the District. No other
governmental entity may be used to issue any additional bonds in the future.
• Other Agreements (as required).
As a condition to the issuance and sale of the bonds, all of the agreements required by the City
shall be duly approved and executed by applicant/developer. Prior to execution of any
agreements, documents will be reviewed by bond counsel, City Attorney, and other
consultants as needed.
USE OF CONSULTANTS AND BOND UNDERWRITERS
The City shall select and employ consultants and attorneys necessary for the review,
formation, and sale of bonds for a proposed CFD or Assessment District. Such consultants
can include underwriters, financial advisors, bond counsel, market absorption analysis, special
tax advisors, appraisers and engineering firms, which consultants shall be solely managed,
coordinated and directed by the City.
An applicant may retain its own consultants for its own benefit and at its own expense, but
such consultants will work through the City and the consultants hired by the City.
CREDIT EVALUATIONS
The applicant must demonstrate, to the satisfaction of the City, the financial ability and
existing resources of the applicant to complete the proposed development project and to make
all the special tax or assessment payments during the time the facilities and improvements are
being constructed and so long as the applicant is responsible for the payment of such special
taxes and assessments. The applicant must make available all necessary audited and
unaudited financial statements, bank and business references and documents, and other
financial information as requested in order for a determination to be made regarding financial
risk to bondholders and the City. As part of this review, the City may consider interim
financing, third -party credit enhancements, capitalized interest and/or other means available
for the development project to meet its financial obligations. The applicant must bring all
project -related property tax bills current.
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LAND APPRAISAL REQUIREMENT
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The Appraiser shall be selected and approved by the City. The appraisal shall be reviewed by U.
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the City and shall be prepared as set forth in Criteria for Appraisals A minimum residential c
property value to lien/debt ratio of 4:1 and a minimum commercial/industrial property value c
to lien/debt ratio of 3.5:1 (all ratios to be calculated on a fee simple basis but including the 0
proposed special tax and assessments and any overlapping direct public debt) as set forth in =°
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the Criteria for Appraisals section as determined by an MAI Appraisal. In those instances >
where the residential ratio is less than 4:1 and where the commercial/industrial ratio is less
than 3.5:1, credit enhancements must be provided to the satisfaction of the City. These r
enhancements may include, but are not limited to, letters of credit and/or appropriate y
guarantees or deposits. Value to lien/debt ratio shall not be less than 3 to 1 on any individual
parcels representing more than 10% of the project value, and in the aggregate all parcels with d
value to lien ratios of less the 2.5 to 1 cannot represent more than 25% of the Project Value. o
FISCAL FEASIBILITY REPORT
Prior to the formation of a financing district, a fiscal feasibility report may be required if fifty
percent (50%) or more of the land within a district is substantially undeveloped. The report
shall be prepared by or at the direction of the City. All costs for preparing this report shall be
borne by the applicant/developer. An estimate of the report cost will be made prior to
initiating the study and the applicant/developer shall deposit one hundred percent (100%) of
the cost prior to starting the report.
CRITERIA FOR APPRAISALS
(A) Definition of Appraisal. An appraisal is a written statement independently and
impartially prepared by a qualified appraiser setting forth an opinion of defined value
of an adequately described property as of a specific date, supported by the presentation
and analysis of relevant market information.
(B) Standards of Appraisal. The format and level of documentation for an appraisal
depends on the complexity of the appraisal problem. A detailed appraisal shall be
prepared for complex appraisal problems. A detailed appraisal shall reflect nationally
recognized appraisal standards, including, to the extent appropriate, the Uniform
Appraisal Standards for Federal Land Acquisition. An appraisal must contain
sufficient documentation, including valuation data and the appraiser's analysis of the
data, to support his or her opinion of value. At a minimum, the appraisal shall contain
the following items:
(1) The purpose and/or the functions of the appraisal, a definition of the estate being
appraised, and a statement of the assumptions and limiting conditions affecting the
appraisal.
(2) An adequate description of the physical characteristics of the property being
appraised, location, zoning, present use, and an analysis of highest and best use.
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(3) All relevant and reliable approaches to value consistent with commonly accepted
professional appraisal practices. If a discounted cash flow analysis is used, it o
should be supported with at least one other valuation method such as a market L)
approach using sales that are at the same stage of land development. If more than c
one approach is utilized, there shall be an analysis and reconciliation of approaches
to value that are sufficient to support the appraiser's opinion of value. 0
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(4) A description of comparable sales, including a description of all relevant physical, >
legal and economic factors, such as parties to the transaction, source and method n
of financing, and verification by a party involved in the transaction. N
(5) A statement of the value of the real property. Nc
(6) The effective date of valuation, date of appraisal, signature and certification of the
appraiser.
(C) Conflict of Interest. No appraiser or review appraiser shall have any interest direct
or indirect in the real property being appraised for the City that would in any way
conflict with the preparation or review of the appraisal. Compensation for making an
appraisal shall not be based on the amount of the valuation and not be contingent upon
the sale of bonds.
(D) Community Facilities and District Assessment District Appraisal Premises. The
valuation of proposed CFDs or ADs should be based on three premises:
(1) Land Value. (Premise #1). The total land within the project is valued "as is."
(a) With any existing infrastructure.
(b) Without proposed infrastructure being financed.
(c) With existing parcel configuration.
(d) Considering planned densities allowed by the specific plan of
the project.
(2) Project Build Out Value (Premise #2). The total land within the project is valued
under projected conditions.
(a) With proposed infrastructure being financed completely.
(b) At the planned densities allowed by the specific plan.
(c) Land development at date of appraisal is at the stage of being
marketed to merchant builders or tentative tract maps ready to
be filed.
(d) Land is valued on a fee simple basis, assuming debt is treated as
tax lien.
This is a projected value based on project plans predicated on market conditions
continuing as projected.
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(3) Bulk Land Value. (Premise #3). The total land within the project is valued
under projected conditions: o
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(a) With proposed infrastructure being financed completely. `o
(b) With existing parcel configuration.
(c) Considering planned densities allowed by the specific plan of t)
the project. N
This premise should consider a discounted or "quick sale" valuation considering time,
costs, and the possibility of a per-unit value based on the total size of the project.
ABSORPTION STUDY REQUIREMENTS
Unless waived by the City, a separate absorption study of the proposed development project
shall be required for land secured financings. Among other things, the absorption study
should include an estimate of total number of units (EDUs), land use(s), and rate of
absorption. The absorption study shall be used as a basis for verification that sufficient
revenues can be produced and to determine if the financing of the public facilities is
appropriate given the timing of development. Additionally, the projected absorption rates will
be provided to the appraiser for use in the required land appraisal. The absorption consultant
shall be selected and approved by the City.
CFD RATE AND METHOD OF TAX APPORTIONMENT
With regard to CFDs, the proposed rate and method of apportionment of the special tax shall
be established by the City and will comply with the following criteria:
a. The rate and method of apportionment of special taxes will be structured in
such a manner as to result in a fair and reasonable taxing structure. The City
and its special tax consultant will consider input from the developer, but the
City will make the final determination.
b. The rate and method of apportionment shall not provide for an annually
increasing maximum special tax for any classification used to levy the tax.
However, under limited circumstances (such as low-income housing and
"enhanced services") an increase in the maximum special tax will be
permitted.
c. The total projected annual special tax revenues, less. estimated annual
administrative expenses, must exceed the projected annual gross debt service
on the bonds by at least ten percent (10%).
d. The projected annual special tax revenues shall include reasonable annual
administrative expenses and other direct costs to the CFD.
e. The special tax shall be equitably apportioned to all categories and classes of
property within the CFD including undeveloped land.
f. A backup special tax will be required, unless the tax formula is structured in
such a manner to avoid special tax revenue loss from changes in densities or
product type.
g. Prepayment of the special tax may be permitted according to a formula to be
set by the City.
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h. When available, interest earnings will benefit all tax payers proportionally.
i. The projected ad valorem property tax, special taxes, and other direct and o
overlapping debt for the proposed development project (including projected U
benefit assessments, levies for authorized but unissued debt, and any other c
anticipated municipal charges which may be included on a property owner's
annual tax bill), including the proposed maximum special tax, may not exceed ci
two percent (2%) of the anticipated assessed value of each improved parcel y
("final use") upon completion of the private and public improvements. >
Property will be considered in its final use when a final map for single-family
residential use has been (approved/recorded) or a final map or a parcel map for
commercial, industrial, or multi -family use has been (approved/recorded),
The City retains the right to withhold public financing if it determines that such
financing is detrimental to its credit rating or to the issuance of other City -
planned, land -secured debt. Exceptions may be granted for commercial,
industrial, and mixed-use development projects.
DEBT STRUCTURE GUIDELINES
Bond issues shall be structured to adequately protect bond owners and the bonding capacity,
reputation, and if applicable, the credit rating of the City. The approved bond structure may
require credit enhancement, foreclosure covenants, special reserve funds or deposits, and/or a
contractual commitment by the proponents of the district and their successors to pay the
special taxes or assessments during term of the bonds. Required credit enhancement may take
the form of a letter of credit, bond insurance, deposits, reimbursement agreement, or other
contractual assurances. Appropriate foreclosure covenants will also be required.
The City, in conjunction with its financial advisor, shall determine whether the aggregate cost
of public improvements and permitted indirect costs allowable under statute, shall equal an
amount that renders formation of a district economically both cost-effective and efficient.
The size of the bond issue, as determined by the City and its consultants, shall meet industry
standards with respect to marketability.
The term of the bonds will not exceed the useful life of the improvements being financed and
otherwise not exceed 30 years. The bonds will be subject to optional redemption prior to
maturity, and call protection will not exceed ten years unless specifically approved by the City
Council.
The City will select and retain National Recognized Bond Counsel Firms active in
Assessment and CFD financing to provide all necessary documentation and legal opinions.
Escrow structures will only be considered under special circumstances and only where a clear
benefit to the City is determined
Capitalized interest will be limited to no more than 24 months and be the lesser of the time it
takes to construct the financed facilities or the time it takes to levy and collect the Special
Taxes or Assessments.
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Variable interest rate structures will only be considered if the principal and interest is backed
by Bank Letters of Credit or Bond Insurance and the transaction is rate A2/A+ or better by
Moody's Investor Service and Standard and Poors Corporation.
The City shall require bond issues to be structured with approximately level debt service. To
the extent that bonds are issued in series, individual series of bonds may have uneven debt
service if the intent is to create level debt service at such time as all series of bonds are issued
and to minimize the potential of a fluctuating annual special tax or assessment. Deviations
from the foregoing policy will only be permitted under limited circumstances.
TERMS AND CONDITIONS OF THE BONDS
All terms and conditions of the bonds shall be established by the City. The City will control,
manage and invest all district issued bond proceeds. Bonds issued under this policy may be
sold through competitive or negotiated.
DISCLOSURE TO PROPERTY OWNERS AND BONDHOLDERS
With respect to the CFDs and other land -secured financing districts, the special tax or
assessment lien shall be fully disclosed in compliance with applicable statutory requirements.
For development projects, the developer will prepare and obtain approval from the City of a
statement and report notifying any prospective property owners of existing or proposed
special taxes and/or assessments on the property. This disclosure statement shall be issued to
and signed by the prospective buyer prior to any commitment by the buyer to purchase the
property. The City, in its sole judgment, may require additional property owner notification if
the City deems that such notification will help make subsequent property owners aware of
liens or future tax obligations.
The City will require that property owners agree to cooperate and provide, as needed,
whatever information is annually required under any required Continuing Disclosure
Agreements. When a property owner represents more than 15% of the CFD taxes or
Assessment levies, the City may require that the property owner be responsible for
Continuing Disclosure. The City will also be named and obtain a 10(b)(5) Opinion regarding
the adequacy of bond disclosure on all bond issues by a Bond Counsel firm with a National
Reputation as a Bond Disclosure Counsel. All property owners who provide information to
the City for use in a Bond Official Statement will be required to certify as the accuracy of the
information provided.
MISCELLANEOUS PROVISIONS
All statements and materials related to the sale of special tax bonds (CFDs) and improvement
bonds (ADs) shall emphasize and state that neither the faith, credit, nor the taxing power of
the City is pledged to the repayment of the bonds, nor is the City obligated to replenish the
reserve fund from revenue sources other than special taxes, annual assessments, or proceeds
from foreclosure proceedings.
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The City's Administrative Services Department has the responsibility for administering all
bond issues, including authorizing and controlling all disbursements of bond proceeds. A o
preliminary and final official statement and complete transcript for all CFD and AD LLi
financings shall be filed with the City Clerk. `o
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All proposed refunding or refinancing issues will be submitted to the City for review and 0
complete disclosure of the benefits and costs of the proposed financing. After review, the N
proposed refunding with a written staff recommendation will be presented to City Council for >
its consideration. Refunding and refinancing must meet minimum savings thresholds as
determined from time to time by the City. N
The City Council has the right to waive or modify any of the policies included herein if, in its
judgment, the ultimate property owners, the CFD, the AD, or the City would benefit from
such repeal, waiver, or modification. When there is a City or homeowner initiated project, the
Task Force will determine which guidelines apply.
CITY LIABILITY
All statements and material related to the sale of special tax bonds (Community Facilities
Districts) and improvement bonds (Assessment Districts) shall emphasize and state that
neither the faith, credit, nor the taxing power of the City of Santa Clarita is pledged to the
repayment of the bonds, nor that there is an obligation of the City to replenish the reserve
fund from revenue sources other than special taxes, annual assessments, or proceeds from
foreclosure proceedings. The City has no contingent liability for the debt service.
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GLOSSARY
"Act" - The Mello -Roos Community Facilities Act of 1982, the Improvement Act of 1911,
the Municipal Improvement Act of 1913, the Improvement Bond Act of 1915, the
Landscaping and Lighting Act of 1972, or the Benefit Assessment Act of 1982.
"Assessment" - Any levy or charge by the City upon real property that is based upon the
special benefit conferred upon the real property.
"Assessment District" or "ADs"- A special district formed by the City that includes property
that will receive direct benefit from the construction of new public improvements or the
provision of services. The most common type of public improvements financed include
roads, sidewalks, and drainage. "Assessment Districts" or "ADs" also means an assessment
district formed under the Improvement Act of 1911, the Municipal Improvement Act of 1913,
the Improvement Bond Act of 1915, the Landscaping and Lighting Act of 1972, and/or the
Benefit Assessment Act of 1982.
"Bonds" - The bonds authorized and issued under any of the public financing mechanisms
described herein.
"Bond Counsel" - Special counsel retained by the City to assure compliance with applicable
federal and state tax and other laws and regulations relating to public financing.
"City" - The City of Santa Clarity
"Community Facilities Districts" or "CFD's" - A special district formed under the Mello
Roos Community Facilities Act of 1982
"Improvement Act of 1911"- California Streets and Highways Code 8500 et. seq. lets cities,
counties, and special districts levy benefit assessments for the construction and maintenance
of public facilities including streets, sidewalks, sewer systems, drains, lighting, etc.
Authorizes cities, counties, and public districts which use other assessment acts to issue
bonds.
"Improvement Bond Act of 1915" - California Streets and Hghways Code 8500 et. seq.
authorizes cities, counties, and public districts which use other assessment acts to issue bonds.
"Mello -Roos - Community Facilitdes Act of 1982" - California Government Code 53311 et.
seq. authorizes local governments to create CFDs for the purpose of financing facilities and
certain services and issuing bonds to fund public improvements. Property owners within a
CFD pay a "special tax" to repay the bonds. In 1982, Senator Henry Mello and Assemblyman
Mike Roos affected the passage of the Community Facilities District Act of 1982.
"Municipal Improvement Act of 1913" - California Streets and Highways Code 10000 et.
seq. lets cities, counties, and special districts levy benefit assessments for the construction and
maintenance of public facilities including streets, sidewalks, sewer systems, drains, lighting,
etc. .
"Policy" or "Policy Guidelines" - The Policy Guidelines of the City of Santa Clarita.
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"Public Facilities"- The improvements authorized to be constructed or acquired under any of
the public financing mechanisms described herein.
"Special District" — Within this policy, the term Special District refers to Assessment
Districts and Community Facilities Districts together.
"Special Tax" — Requires approval by two-thirds of the qualified voters in the district and
provides for a landowner election if less than 12 registered voters in the district.
"Task Force" - The Mello Roos and Assessment District Task Force which includes
members of the City's Department of Administrative Services, Department of Community
Development, Department of Public Works, the City's bond counsel and financial advisor.
The Task Force reviews the, application for conformance with City policy and isresponsible
for making a recommendation through the City Manager to the City Council regarding the
proposed facilities and proposed financing.
"Value to Lien Ratio" — The value of the taxable or assessed property, including the public
improvements proposed to be financed, relative to the amount of the assessment or special tax
debt.
"Value" or "Fair Market Value" - The amount of cash or its equivalent which property
would bring if exposed for sale in the open market under conditions in which neither buyer
nor seller could take advantage of a difficulty or the other and both have knowledge of all of
the uses and purposes to which the property is adapted and for which it is capable of being
used and of the enforceable restrictions upon uses and purposes.
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