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HomeMy WebLinkAbout27-Mayor's Office CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION , From: Tom Minor, Mayor r Q"'I""'" 1 H1UII.r,J. Subject: Community Facilities District - AD 995 Dept: Mayor's Office Date: August 14, 1997 Synopsis of Previous Council Action: Rew..........ded Motion: That Staff be instructed to develop an amended Settlement Agreement with Irving Feldkamp and Ruth Newbury for Mello-Roos Community Facilities District (AD 995) which incorporates the deal points outlined in the attached staff report. ~ture~ Contact person: Lorraine Velarde, Executive Assistant to the Mayor Phone Supporting data attached: Yes Ward: FUNDING REQUIREMENTS: Amount: None Source:(Acct. No.) (Acct. Description) Finance: Council Notes: a/It/en Agenda Item No.~ 7 . City of San Bernardino INTEROFFICE MEMORANDUM OFFICE OF THE MAYOR TO: Mayor Tom Minor Council Members Jim Penman, City Attorney Fred Wilson, City Administrator Rachel Clark, City Clerk Barbara Pachon, Director, Finance Department FROM: J. Lorraine Velarde, Mayor's Executive Assistant SUBJECT: COUNCIL AGENDA ITEM #27 - BACKUP DATE: August 14, 1997 COPIES: File Attached herewith is the backup information for Council Agenda Item #27 scheduled for the Council Meeting Monday, August 18, 1997. . /~ J. Lorraine Velarde Mayor's Executive Assistant JLV: sc Attachment . #~1 Flif/41 . . . FROM SABO & GREEN CALABASAS (iHUJ e. t 4' 97 14: 01/ST. 14: oOINe. 4260609190 P 2 MEM01\ANI)UM TO: Kayor and Common Council FRC>>l : Fred Wilson DATE: AUqust 14, 1997 RE: AD 995 Fel~kamp Parcels & City awned Parcel~ BACKGROUNP On June 18, 1990, the City created Community Facilities District No. 995 ('~O'istrict") pursuant to the Kello-Roos community Faci1itie5 Act. In December, 1990, the City issued the $7,325,000 Special Tax Limited Obliqation Bonds ("Bonds"). Due to the change in the real estate market and other factors, some of the owners within the District were unable to develop their land as planned. The City was required to refund the Bonds in 1994, and issued the $3,315,000 Community Facilities District No. 995 of the City (Verdemont Area) special Tax Refun~nq Bon~s (the "Refunding Bon~s") . In connection with the issuance of the Re!undinq Bonds, the City entere~ into Mutual Releases and Settlement Aqreements (the "Oriqinal Settlement Agreements") with the various developers, and foreclosed on 42 lots owned by SB Five (the "55 Five Lots"). The Original Settlement Agreements provided a payment plan allowing the City to be paid the past due amounts over a period of years. Approximately 163 homes had been constructed and occupied prior to the refinancing. Since mos~ of the District still remains vacant, the city has been required to tap into the Debt Service Reserve Fund for the Refunding Bonds in order to meet debt service payments. If subsequent payments under the Original settlement Agreement are not made, the city will deplete the reserve fund and in 1999-2000 the city will be required to raise the special tax on the 163 homes in order to continue to meet debt service. Dr. Irving Feldkamp and Ru~h Newbury (the "owners") are the owners of 34 lots within the Dis~rict (the "Feldkamp Lots"). Like the City, they al.o acquired their parcels by foreclosure. Said owners have, to date, paid a portion of the payments due under the oriqinal Settlement Agreement in the amount of $40,098.79. 1 ~1 . . . rKOM ~AtiU ~ GKttN ~ALAtiA~A~ (THU) 8.14 9'/ 14:UII~I. 14:UU/NU. 4ibUbiJ919U ~ 3 City Statt and representatives of the Owners have neqotiated a solution that will allow the Owners to develop the 76 Lots. The most teaaible alternative is that the Owners purchase the SB Five Lots and construct homes on all 76 Lots to create a subdivision. This alternative frees the City ot the S8 Five Lots and at the same time would provide development in order to spread the Mello-Roos payments over a number ot homeowners. The owners believe that the proportional price of a sinqle tamily home in the District would be prohibitive because of the Mello-Roos fees and Verdemont Infrastructure Fees. the price ot a similar home outside ot the District is substantially less. PROPOSED REVISIONS TO SETtLEMENT In order to determine the development costs associated with the construction of the 76 Lots and a reasonable purchase price, City Staff proposes the followinq modifications to the settlement aqreement which would also allow tor the sale of the SB Five Lots to the Owners. (The Feldkamp Lots and SB n ve Lots shall be collectively referred to a~ the ~76 Lots".) (a) Maximum Amount: of $p.ci"l Tax 'nr thA 76 LntA thrnllCTh llnly 1997.. The Ownen would pay a total of $903,992.22. This aJll.ount represents the followinq for the years 1991-92, 1992-93 and 1993-94 throuqh June 1997: Feldkatr.p Lots S8 Five Lots 76 LotR Delinquent s pee i a 1 Taxes $182,672.17 $182,913.18 $365,585.35 Interest to September 1, 1997 48,938.65 54,873.95 103,802.60 Costs 37,955.90 28,161.16 66,117.06 School Fees $182,784.00 $225,792.00 $408,576.00 L . s s Payments Received Sl40.0Q9.'9) 190.00\ ~J/40.098.791 TOTAL $412,251.93 $491,740.29 $903,992.22 2 FROM SABO & GREEN CAlABASAS (frilll 8.14' 97 14:02/ST.14:00/NO. 4260609190 P 4 . (No penalties have been aclclecl to the above). This total figure (herein the ~Debt.) represents $11,894.63 per lot for the 76 Lots. The Debt would be paid by the owners from two (2) sources: (1) owners would make semi-annual installments of $32,300. The tirst payment would commence on the date or execution or the revised 'settlement agreement, ancl thereafter payments would bl due on each June 1 and December 1 of each year until the full amount of the Debt is paid. (2) Developers would be required to pay a fee equal to $11,894.63 plr home payable upon tinal inspection and clearance of utilities for each lot. Amounts due under Items (1) and (2) would be paid until the full $903,992.22 i~paid in full. The amount of debt to be paid by the Owners represents the full amount of the special tax, interest and penalties and legal costs throuqh June 1, 1997. The modification to the Original Settlement Agreement would merely provide a longer period to pay the amounts due, by allowing the Owners to make a portion ot the payments at or prior to the sale or i.ndividual homes. All other special taxes due for years after 1993-94 shall be paid and maintained current as assessed. . (bl DefAult and !l.p.ml!dv The Owners would be in default under the revised settlement agreement if they (i) fail to remit any payment to the City, (ii) fail to record the final map for Tract No. 14193 on or before the expiration date of said map (currently October 9, 1997) I or (iii) fail to commence construction of the number of homes funded for Phase I by the construction lender within ten (10) months of execution of the revised settlement agreement or recordation of the final Tract Map, whichever is later. Upon default, the Owners would be required to deed all 76 Lots to the City. (c) yerrllltmnnt Infrastr\1~t\lre lZ'A@S The Verdemont Infrastructure Fees ("VI Fees") are to be charged to property ownen wi thin certain boundaries to provide certain infralltructure improvements and are payable upon c1eveloplIlent. However, there have been no improvements to date. In the Original Settlement Agreement the City acknowledged that the VI Fees (which are not charged to like parcels within the City) create a competitive disadvantage to the parcels within the District. The City represented in the original Settlement Agreement that it would . 3 . . . FROM SABO l GREEN CALA3ASAS ltf~l 8. 14' 97 14: 04/ST. 14: OOINO. 4260609190 P 5 use its bellt efforts to mitigate or restructure the VI l"ees. Under the terms of the revised settlement agreement, the Owners would not be required to pay any VI Fees. (d) Storm Drain ~nnstruct1nn. S.w.r Fee~ And Oth@r V~~~ The Developers would not be required to pay any storm drain construction.f..s or sewer plant capacity tees in conneotion with development of the 76 Lots. The state of California Department of Resources opened bids for the construction of the Bailey Creek Debris Basin, box culvert at Ohio Avenue and the improvement of Bailey Creek between Ohio Avenue and the debris basin. It is estimated that the fees to construct the above will be approximately $400,000. On behalf of the Owners, the City would pay the state $300,000 of said costs, and the Owners would pay $75,000. The City Staff will negotiate with the State to cap the amount due at "$375,000. The Owners would also be responsible for City Water Department fees and all other street improvements. (e) waD ~~~;~tan~~ The Developers have requested mortgage assistance to their buyers from the Aqency's Mortgage Assistance Program ("MAP"). The Agency cannot guarantee that the people purchasing the 76 Lots will qualify to receive MAP funds. The MAP funds available at this time are solely for very low income, and thus the people who would qualify for mortgage loans probably will not qualify for the MAP funds. The Agency would agree to use its best efforts to provide MAP assistance to all buyers who qualify, however, MAP funds would be available on a first come first' serve basis. Under the MAP, the buyers would receive no more than the follOWing amounts in the following years: 1998/99 - $50,000; 1999/2000 - $100,000; 2000/01 - 50,000. These amounts would not be carried over to subsequent years. (f) Purchase of SB Five Lnt~ The 5B Five Lots were appraised for $430,000. The Owners would purchase the SB Five Lots for a total consideration of $430,000 as follows: $197,427.15 of the purchase price would be paid upon the sale of each lot to an individual purchaser. The amount due per lot equals $4,700.65 ($197,427.15/42 lots). The rema1ncler ot: $232,572.85 would be deemed to be paid by the Owners upon development of street improvements by the owners. 4 . . . FROM 2A30 & GREEN CALABA8A8 (1'1lU) 8. 14' 97 14: 05/8T. 14: oom. 426lJ61r9T90P 6 (g) S~.~~ Pronertv T.XR~ OWed nn ~M Fiv~ Lots There are approximately $35,000 in outetanding back taxes owed on the sa rive Lots through July 1997. Normally, the seller brinqs all back taxes current prior to s.le. Since the City is not receivinq any cash at closing, in order to pay said property taxes, Staft proposes that the Owners bring the property taxes current and the City would then provide a credit of one-half of said taxes ($17,500) towards the purchase price of the SB Five Lots described in item (f) above. There are also delinquent AD987 assessments due on the 76 Lots in the amounts of $4,323.58 (Feldkamp Lots) and $4,662.64 (SB Five Lotsl. These amounts would be brouqht current and maintained current by the owners. (h) Revi~i()n to Tract MAt) The 76 Lots are collectively a part of Tentative Tract Map No. 14193. The Owners have informed Staff that there are certain discrepancies in the Tract Map requirements and the requirements under the Original Settlement Agreement. Staff is awaiting further information in this regard. The final tract map must be approved or extended if possible 'by septemJ:)er 30/ 1997, or the project cannot be developed. PROPOSED ACTION Staff plans to have agreements for Council review and approval at the Council meeting of September 15, 1997. Final approval must occur prior to the September expiration date for the tentative Tract Map unl.ss an extension is available. SaEO\0121\DOC\260-1 8\14\97\ 1030 cg 5 ~nOM SA~O & GnttN~ASAS (T:>illJ 8.14' 97 14:05/ST.14:00/NO. 4260609190 P 7 " . FROM: Fred W11son, city A4a1nilltrator ci~y ot San Bernardino I.K. Feldkamp, 111, D.D.S. CFt)995 Feldkamp parcel and city OWnecl Parcel '1'0 : u: nATE: August 14, 1997 . We have reviewed YO\lr 11I8110 to the Mayor .1\4 Co_on Council. Although r am committed ~O the City of San Bernardino, it i. not realistic for me to develop the parcels unless I can realize.. marketable finishecl lot. In that respect., tor the pa.t eighteen months we bave been discussing in gOQQ faith with city s~atf alternativu available for developing the lot.. It was iJDparative thatw. cap the special taxe., and we propose" a lot cap of $10,,465.88. This figul'e wu accepUd by the city (s.. attached letter of November 27, 1996). Tht. aaount ~ lot already include. significant interest. penalties and coats which have acc:rued subsequent to entering into the original settlement agreement. A secon4 <lisagre..ent remairul the City's request that we pay the delinquent County property tax on the city owned parcel which accrued prior to city foreclosure of the property. We are already saddled with County property tax which accruecl prior to our foreclosure of the Fell5ltalllp own..:! ten acres. The . city has indicated that ita cash deficienci.s do not allow it to payoff these accrue4 taxes al is usual and customary. We have agreed that to ease the City cash crunch we will pay those taxes provided the City cre4its us with the full sum towards the purchase price of the City owned lot. If the city ac;rre.. to that propo..&l, we vill then agree to PllY the delinquent assessments due under Assessment District 987 for both the City owned llnd Fel4kup owned lots. We bave already a~eed to contribut. $75,000.00 towards the Bailey storm Drain. Thi8 contribUtion was not included in O\lr oriqinal financial analysis and will mllke it even more difficult to achieve an acceptable finished lot cost. It i. U'uly in the best intere.t. of the city of San Bernardino to enable the development of Tract 14193. I am sure it is both our goalS to develop this project in a manner so that the finished lot cosu and marketing package are cOJlPetitive with existing and future houeing eto<:k in the area. The development of Tract 14193 is an extremely important factor in achiovlng financial health for ero 995. . .c . . ."', --. FROll-rABO!~REEN-nWASAS (THU) 8. 14' 97 14: 06/ST. 14: OOINO. 4260609190 p a .\....'..f.,. t, .' - . ",;~..~j,~~,:" "..-0- '.' -- .. . _ ~ . 4 ~- '. r,J';. I'-.}," i., " :~~ ."~f '~~~>;"~ ~~! 6 .~,;.~~ '! JJI\',"''''' ,\;r ~ ~~~'I;- &'.\ J ~I"\". v ...,..; RNARDINO IOONOA1lf'VSTR!!T. SAN8eRNAROlNO. CAUFOfll'llA 92A'1 November 27, 1996 Ms. Naomi giIver~leid La.w Offices of .SJ.nger and Silvergleid 3750 ODivera1tf Avenue. Suit. 550 Riverside, Cal1tornia 92501 Re: City of S~n Bernardino va. San Bernardino S.B Pive at al. l~~lnka~) case Nn SCV09593 Dear MS. silvergleid: This lettu is in response to your most recent letter dated NOVQmher 8, 1996, and is intended to clarify the pooition ot the City of San Bernardino as to those issues whi~h you have raised. The City of San Bernardino is aware that you and yom; consultants have addressed the negotiations from the per5peotive of Dr. Feldkamp an~ a home builder, but the City or San Be~rdino cannot guarantee a finished lot cost to Dr. Feldkamp in any dollar amount due to the variables in the final cost analysi~ which are not within the control of the City of San Sernardino, The City of San Bernardino is willing to address those items which are within the purview or the City to control. The items .. whiclLe._v.ill. ague to recommend to the Mayor and COlI'!IIon Council are as tollow.: 1. The City will forgo the payllleIlt of the verc1emont Infrastructure Fee. the Storm Drain Construction Fee ~d the Sewer Plant Capacity Fee. 2. The special tax debt las you have described on your Bxhibit Cl will be capped at the $10,465.88 per lot tigure; provided, however, that: the full amount for each lot lllUst be - paid in cash to the City prior to the close of escrow to a home buyer and the occupancy pennits being issued by the City. R~CEIVr:D - DEe 2 ~ 1996 3. The Bconomic: Development Agency of the FROM SABO & GREEN CALABASAS V (Tlrol g. 14' 97 14:a67ST.l4:crlf/NO, 426060919U I' 9 ....,; . in each of the fiscal years 1997-98 and ~99B- 89 excluli vely tor t:hA!I p~j act of D%. :r. Feldkamp for the purcba.. by qualified home buyers uncler the MAP progzoa1l\ of the BOA. Funds not used in the Uscal y.ar when allocated would :be forfeited to the BOA. In the event funds were nquixecl by the Feldkamp development in CXCCD~ of the .llocate~ amounts, the home ~yers may nevartheless qualify and obtain such MlP funds on an "as a~ilable" basis frOlll the TIDA's City-wide program. 4. The City would bear the entire oo*t of the Bailey Stom prain Channel. However I such . i:lllR*ove~ptfi._ W01.l.1d not include any other street: improvements, ))ox culverts, storm dra:l:ns or other simil~ improvements that will be imposed as eO!ld1tion8 of approval to the parcel map number 14193. 5. The purcnase of Asses.or's Parcel No. 0261- 082-01 would be completed for the purchase price as outlined in your AUgust 12. 1996 letterj provided hoWever, that the net purchase pricQ payable to the City must be paid incrementally .. cOllIPleted homes ar4t sold to homebuyerll so that all amounts are paid to thQ City by the time that the last hQU88 has trancferred title. . If the conditions as set forth herein are acceptable to you, we will then be able to commence the drafting and negotiations of . tbe :l:1nal agreement between Dr. . P'eldJcamp and the City of San Bernardino which of course, will be subject to approval by the Mayor and council. Please contact either the undersigned or Timothy J. Sabo, special counsel to the City, if you should have any further questions with regard to the issues addressed herein. ... --. . -_.--- ...~ . .-... ,,-".. ..~ ~ flAW Imd ec: Hayo!:" Minor Lorra1ne Velarde Roger Hard~ave Tim Saba .