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. CC'ITY eF SAN BE~ARDINO CL MEMORANDUQ
To THE HONORABLE MAYOR AND COMMON COUNCIL
Subject Conmunity Facil i ti es Di stri ct Proposal
From JOHN MATZER, JR.
City Administrator
Date
January 18, 1985
Approvsd
Date
It is recommended that any Council action relating to the proposed Cable
Lake Conmunity Facilities District be postponed until the first or second
meeting in February in order 'to provide you sufficient time to review
the information in this report as well as additional information which will
be provided within the next week. At our request, Mr. Tim Sabots staff
is preparing an analysis of the Mello-Roos approach as compared to the
special assessment approach to financing developer improvements. In
addition, Mr. Sabo's staff and Mr. Allen Briggs are reviewing questions
which we have proposed relating to the Communities Facilities concept as
well as the specific Cable Lake proposal. Their questions along with ours
will be forwarded to the developer for a response.
The following information is presented to assist you in your review of the
proposed Cable Lake Community Facilities District:
1. A chronology of actions taken to-date. (EXHIBIT A)
2. Potential policy issues involved in the adoption of a Community
Facilities District,
3. Questions relating to the Mello-Roos Conmunity Facilities Act of
1982 and the Cable Lake Project. (EXHIBIT B)
4. Departmental evaluations of the estimated impact of the proposed
Conmunity Facilities District upon their operations.
CHRONOLOGY
Exhibit "A" provides a chronology of events that have occurred in connection
with the proposed Cable Lake Community Facilities District. In summary,
on November 5, 1984, Council adopted resolutions of intention to establish
a Community Facilities District, to incur bonded indebtedness of $3,500,000
within the proposed Communities Facilities District and setting a public
hearing on the proposed district for December 17, 1984. On December 17,
1984, the publ ic hearing was continued until January 21,1985. It is requested
that this public hearing be postponed until either February 4 or February 18
in order to provide you adequate time to review the staff information.
Mr. Briggs has advised that the public hearing may be continued.
POll CY ISSUES
A review of the Mello-Roos Community Facilities Act of 1982 and numerous
discussions with individuals familiar with the Act and the establishment
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THE HONORABLE MAYOR AND COMMON COUNCIL
January 18, 1985
Page 2
of community facilities districts have helped to identify a number of basic
issues which should be considered in making a decision relative to the
establishment of a community facilities district. Some of these issues
include:
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A determination of the advantages to the City of utilizing the Community
Facilities District approach as compared to the special assessment
approach. The Community Facilities District approach provides a
means for spreading the cost of improvements over larger property'
holdings capable of absorbing the cost more readily than one developer.
The district approach offers a further advantage of providing one funding
vehicle for all types of public facilities and for ongoing operation
and maintenance of police. fire and recreation services. The special
tax provided under the Act offers a means of charging the residents
in the district for the increased services which they require. The
third advantage is the potential of lower and competitive housing cost
as compared to areas where capital improvements and police, fire and
recreation services are not funded through the District method.
There appears to be a greater advantage to the developer in the use of
a Community Facilities District. This is primarily because the District
approach does not involve the placement of a lien on the property as
does the special assessment approach, and therefore, enables the dev-
eloper to obtain more flexible financing. It has also been alleged
that lower interest rates can be obtained through the district approach
than the special assessment approach. This, however, depends greatly
upon the market's assessment of the viability of the project. Under-
writers indicated that there is no guarantee that a lower interest
rate would be associated with Community Facility District bonds.
The Act provides that impact fees or exactions may not be required
for facilities provided under the Act.
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A basic policy issue is the extent to which the use of a Community
Facilities District results in a significant public benefit. One
such benefit might be reduced initial housing cost. There is, however,
no assurance that the reduction will be passed to the buyer in the form
of a lower sales price. Another example of a broad public benefit
would involve the construction of public facilities which would serve
a wider population such as the bridge. A potential criticism of the
use of the Community Facilities District is that it gives a potential
competitive advantage to a developer involved in the District which
may not have been offered to other developers. Moreover, the estab-
lishment of the District could establish a precedent whereby numerous
requests might be made to use this technique in other developments.
Closely related to the preceding point is the need to determine the
viability of the proposed development and its unique characteristics
which might set it apart from other developments, and, therefore,
warrant the use of a Community Facilities District. Such a determination
requires extensive information on the specific type of development
proposed, the estimated cost of the units and the extent to which the
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THE HONORABLE MAVOR AND COMMON COUNCIL
January 18, 1985
page 3
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marketing plan is realistic.
Consideration must be given to the feasibility of including in the special
tax the cost of police, fire and recreation services and the cost of
maintaining the new capital facilities. The proposed Cable Lake
District will only provide a special tax to cover the cost of the pUblic
improvements. No tax for services is being proposed. The Act states
that services provided the District may not supplant existing services
but must be in addition to such services. The, City Council could
after the District is established initiate proceedings to provide
additional authorized facilities or services, change the rate or method
of apportionment or propose a new tax and submit the question to the
voters.
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If a special tax is established to cover the cost of services, the
City each year would have to review the special tax needed to be
established to support the cost of services for the following year.
This would result in considerable uncertainty on the part of the
taxpayers in planning for the amount of tax that they would have to
pay. It is conceivable that the tax would vary from year to year, and,
in some cases, might not even be levied. The taxpayers are further
burdened by the fact that the special tax is not integrated into their
mortgage payments and, therefore, would be paid over and above such
payments. The special tax rate could also change because of a change
in development plans.
Consideration must be given to the fact that future residents of the
District may object to the special tax they have inherited and demand
to vote on its continued existence. The Act indicates that a petition
signed by 25% or more of registered voters in the District or owners
of 25% or more of the territory within the District can be submitted
to the legislative body requesting that the specified public service be
reduced or terminated or that any existing special tax be reduced or
terminated. Although the legislative body has the discretion not to
act on the petition, it must, nevertheless, hold a public hearing on
the matter. This would mean that on an annual basis, the City Council
could be confronted with citizen requests to reduce or terminate a
particular service. The Act does not allow reduction or termination of
the tax if it will interfere with the retirement of debt.
A decision has to be made as to the rate and method of the tax appor-
tionment. Considerable flexibility is available. The tax may be X
number of dollars per acre for land in large parcels changing to V
dollars per lot when it is subdivided into building lots and changing
to Z dollars per dwelling unit, bedroom or square foot of residential
dwellings, This approach recognizes the various stages of the develop-
ment. The Cable Lake project establishes the tax based on unit size.
However, since the developer is a land developer and contemplates
selling the developed land to builders, considerable time could elapse
before units are actually constructed. Therefore. it might be advisable
to base the initial tax rate on the number of dollars per acre for
land.
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THE HONORABLE MAYOR AND COMMON COUNCIL
January 18, 1985 '
Page 4
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It is proposed that the tax for commercial property shall be at the
maximum annual rate of $1,000 per acre per $1,000,000 of annual
indebtedness.
Consideration should be given to requiring the Community Facilities
District property value to bond ratio to be not less than 3 or 4
to 1 after installation of the facilities to be financed. The
values could be determined based on an MAl appraisal before and after
the installation of the facilities. ,This requirement would provide
a security against possible failure of the project in that the land could
be sold to meet the debt service requirements. Riverside County
requires that District property value to bond ratio be not less than
four to one after the installation of the facilities and services to
be financed.
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A major policy issue relates to the steps that would be taken to provide
assurances that all prospective buyers of property within the District
receive full disclosure regarding the District's special tax. One
approach is to have the initial developer and sUccessor~ to the extent
possible, distribute to each potential buyer a separate disclosure
report identifying the existence and details of the special tax and
foreclosure procedures. In addition, the contractual commitment could
be recorded as a lien agreement and, therefore, would appear in any
title report on property within the Community Facilities District.
The mechanics of such a recording still needs to be verified. 'Although,
full disclosure laws require that a buyer be informed of taxes and
assessments, experience has shown that buyers often lack knowledge
and/or understanding of taxes and assessments. Buyers may be extremely
unhappy about the discovery of a special tax and the purpose for which
it is being levied. In other cases, a buyer who is financially
surprised may be unable to pay the tax. This would place the City in
a position of having to foreclose on the property.
Since the financial reputation of the City goes along with the name of
the City on the bonds sold to finance the Community Facilities District
it is important that bond issuance be structured to adequately protect
the bondholders and the credit capabilities and credit rating of the City
through some combinations of credit enhancement such as bond insurance,
foreclosure covenants, special reserve funds or deposits and/or a
contractual commitment by the developer and successor to pay the taxes
as necessary during at least the fi.rst five years of the bond life.
In the Cable Lake case, such enhancements are particularly important
since there may be a lag between the time that the initial developer
sells the land and development eventually occurs.
Many uncertainties associated with the Community Facilities District
as a financing plan create a need for a detailed fiscal review. Such
a review should evaluate the fiscal risk and impact on City borrowing,
economic feasibility, City's obligation on a default and related issues.
Proponents of a Community Facilities District should be required to
provide a current audited financial statement and other necessary materials
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THE HONORABLE MAYOR AND COMMON COUNCIL
January 18, 1985
Page 5
to assist in the fiscal review which preferably should be performed
by a financial consultant experienced in such projects. The cost of
such a consultant should be paid by the proponent.
A decision must be made as to who selects the bond counsel, underwriter,
financial consultant, appraiser and other experts required to implement
the District. A strong case can be made for selection by the City.
Consideration should also be given to requiring the petitioner to pay
a fee to compensate the City for all costs incurred in conducting
the proceedings. The fee should be paid prior to initiation of the
proceedings.
The above are some of the important policy issues identified at this point.
Responses to the questions in Exhibit "B" will undoubtedly raise other
critical policy issues.
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DEPARTMENTAL EVALUATION OF ESTIMATED IMPACT OF PROPOSED COMMUNITY FACILITIES DISTRICT
FIRE DEPARTMENT: The department has indicated that the Cable Lakes Project
will not have a major impact on the Fire Department. Fire Station #5 at
1640 Kendall Drive will provide initial fire and medical aid response
within the prescribed response time. The Chief indicated that any increase
of 560 dwelling units and 1,500 population will affect the overall response
of the Fire Department but will not require additional fire stations, equip-
ment or personnel.
PUBLIC SERVICES DEPARTMENT: The department was unable to estimate the
maintenance cost until information is obtained on the miles of street
proposed in the development as well as other improvements such as street
trees, sewer, etc. The Director estimated the service cost per mile for
street sweeping to be $13.00.
PUBLIC WORKS DEPARTMENT: The department raised questions on the length,
height and type of the proposed storm drain improvement. The cost is '
based on standards set forth by the County Flood Control District. There
was concern that costs may have been underestimated as the flooding potential
is extensive in the area, and inadequate drainage will cause future
maintenance problems.
An additional improvement identified by the Director is a bridge that
crosses over Cable Creek, replacing the present 2-lane wooden bridge with
a 4-lane reinforced concrete box. Based on the estimated travel trips
generated by the proposed residential and commercial development, the
cost is $85,000 (26% of the total estimated cost of $327,000).
No plan for street lights is proposed.
PARKSh RECREATION & COMMUNITY SERVICES DEPARTMENT: The department pointed
out t at park services are now being designed for the Al Guhin Park which
is approximately 1/4 to 1/2 mile away from the Cable Lakes Development
project. It was suggested that any reference to park services within the
development should not deter from the ongoing development of the Al Guhin
Park. The Director recommended that park construction fees should still
apply to the Cable Lakes Development Project as their proposal does not
address the various park and recreation services which their residents will
eventually demand. A clarification of the term "Park Landscape" was
requested. It was not clear to whether the terms refer to parkways or a
full service park. Questions were also raised as to the number of 'tennis
courts and whether or not they were lighted. Information on the kinds of
recreation buildings being proposed was requested. The department was
unable to determine the maintenance and operation cost because the type
of park and recreation services were not clearly defined.
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POLICE DEPARTMENT: The department recommended three additional sworn officers
and one marked police unit in order to effectively address the increased
population density proposed in the plan.
The Chief recommended the manpower distribution to be two (2) uniformed
officers to Field Operations and one (1) investigator to Investigations
to provide support services.
The cost breakdown is as follows:
A. Patrolman $24,024 + $9,609 (bene's) x 2 = $
B. Investigator, $32,388 + $12,955 (bene's) x 1=
C. Ancillary Equipment, $773 x 3 officers =
D. Fully equipped marked police unit =
TOTAL
JM/md
67,266
45,343
2,319
13,500
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$ 128,428
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EXHIBIT "A"
CHRONOLOGY OF PROPOSED COMMUNITY FACILITIES DISTRICT
July, 1984
7-13-84
9- 13-84
10-2-84
11-5-84
11-8-84
Cable Lake Associates submitted to the Planning Department
the proposal to change the zoning classification from MHP
Mobile Home Park to PRD-7U Planned Residential Development
(Change of Zone No. 84-14), subdivide approximately 20 acres
of land into 120 residential lots (Tentative Tract No. 12756),
and develop 120 single family units ranging from 800-1,200
square feet in size on substandard lots of approximately
4,000 square feet (Conditional Use Permit No. 84-37).
The Environmental Review Committee, during their preliminary
review, directed the developer to explore the possibility
of providing a second dedicated means of access, as required
under SBMC Chapter 18.40.160. This requirement cannot be
waived by the Commission or the Mayor and Common Council
since the property is located inside the high fire hazard
area. By memo dated January 4, 1985, Fire Chief Newcombe
reaffirmed the necessity of the designation as experience has
shown that wildland fires are a threat to this area.
The Environmental Review Committee determined that a focused
EIR is required, because the developer's proposed second means
of access did not meet the intent of the ordinance, whereas
the applicant was proposing one dedicated and one undedicated
means of access, essentially meeting at the same point for in-
gress and egress.
The Developer's engineer, J. E. Bonadiman, appealed the deter-
mination of the Environmental Review Committee to the Planning
Commission.
The Planning Commission upheld the determination of the Environ-
mental Review Committee.
J. E. Bonadiman appealed the determination of the Planning
Commission to the Mayor and Council.
Adopted Resolution of Intention (84-463) to establish a
Community Facilities District (CFD).
Adopted Resolution of Intention (84-464) to incur bonded in-
debtedness of $3,500,000 within the proposed Community Facil-
ities District (CDF).
Established public hearing on the proposed CFD on December
17, 1984.
The Mayor and Council reversed the decision of the Planning
Commission and the Environmental Review Committee, and in-
1. Minimum square footage is 1,000
2. Minimum single-family residential lot is 7200 square feet.
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CHRONOLOGY OF PROPOSED COMMUNITY FACILITIES DISTRICT
Page 2
12-17-84
12-18-84
1-21-85
1-22-85
NOTE:
structed staff to prepare statements of overridfng effect.
(To be scheduled for February 4, 1985 Councfl Agenda for
approval).
Council continued Public Hearing to January 21, 1985.
Change of Zone 84-14 was scheduled before the Planning Com-
mission, but was continued to January 22, 1985 in order to
receive an opinion from the City Attorney's office relative
to the issue of density bonuses.
The Commission felt that the zone change to 7 units per acre
is already dense enough for the area, and want to preclude
density bonuses (State requfres automatic approval) be granted
to future home builders if providing affordable housing by
meeting certain criterfa.
Request to continue Publfc Hearing by Cfty Administrator to
February 18, 1985 (or earl fer).
Change of Zone No. 84-14 fs scheduled on the Planning Commission's
agenda. Planning staff has recommended approval, because it is
fn conformity to the General Plan.
Tentative Tract No. 12756 and C.U.P. No. 84-37 will not be considered
at the Plannfng Commission's January 22, 1985 meeting. It will be
scheduled on February 5, 1985 at the next regular meeting.
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EXHIBIT "B"
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MELLO-ROOS GENERAL QUESTIONS
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What are the specific advantages and disadvantages to the City of
utilizing the Mello-Roos Conmunity Facilities Act of 1982 vs. the
special assessement and/or other approaches to developer financing
of public improvements.
Are the special assessment proceedings more time-consuming and cumbersome
than those for community facilities districts.
What specific benefits should the City require, such as substantial
reduced housing cost, prior to agreeing to the use of a Community
Facilities District to assist a private developer to enhance the
value of vacant land? How can the specific benefits be quantified
and guaranteed?
Is there double taxation if City services such as Police, Fire
and Recreation are included in the special tax levy?
What criteria should be used in determining whether services should
be included along with capital improvements in a Community Facilities
District?
Is there evidence that the interest rate on Community Facilities District
bonds is lower than that of special assessment bonds?
What credit enhancements should the City use to minimize exposure
to liability in case of default of the Community Facilities bonds?
Will bond insurance be provided?
Doesn't the special provision in the Act providing for early foreclosure
put the City in the unenviable position of foreclosing on homeowners
in the District much earlier than normally would be the case?
Approximately 7 years are now required to collect delinquencies
under the normal procedures for the collection of delinquent property
taxes. Early foreclosures in the District could be considered as
unequal treatment for homeowners. The Mountain View School District
has a provision to initiate foreclosure proceedings within 90 days.
Will the City want to initiate special foreclosure procedures for the
protection of bond holders?
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What kinds of disclosure guarantees will the City obtain to be sure that
every current and future homeowner 'would be fully apprised of the
current potential assessments,and any special foreclosure proceedings
in effect? What guarantee is there that future homeowners will read
the various recording notices that might be employed?
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What has been the experience in recording notice of this special tax
on each parcel of property on which such tax is levied?' Will it
appear on a title search?
Should a bond reserve be established and how large should it be?
Must the legislative body adopt a resolution of intention to establish
the District within 40 days after receipt of a petition or can it
reject it until further study is done?
Why shouldn't the initial tax be based on the number of dollars per
acre for land in large parcels or the number of dollars per lot when
sub-divided rather than the number of dollars per dwelling unit,
bedroom or square foot of residential dwelling being proposed. Doesn't
a tax on the land assure payment of the special tax during the period
while the land is being developed?
How long will the validation proceedings in Superior Court take?
Who bears the cost? Will it and should it be reimbursed through
the bond sale?
Are not unpopulated areas given a competitive edge for development
under the Mello-Roos Community Facilities District concept.
What assurance is there that the savings initiated by the use of the
Act would be passed on to the eventual purchaser of the developed
property within the City?
Shouldn't the developer be required to identify when construction
of the units will begin to coincide with the bond sale?
What criteria should be used to determine the extent to which a proposed
development represents a significant public benefit to the community
at large?
What is the extent of the fiscal risk to the City in terms of impact
on City borrowing, economic feasibility, City obligations on a default
and the City's ability to sell issues in the competing bond market?
Will the developer pay a fee to the City for all costs incurred in
conducting the proceedings relating to the establishment of the
Communities Facilities District? When should the fee be paid?
What is the estimated cost of conducting the proceedings?
What is involved in the foreclosure proceedings if a special tax is
not paid? Who handles the proceedings? How soon are they initiated
and how long do they take to complete?
As the developer or successors begin to market units, will comparable
sales data showing prices of homes within the 'District and similar
homes in the area served by facilities financed through conventional
means be provided to the City along with an estimate of what sales
prices would have been if conventional financing was used?
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When should an authorized agency seriously consider the use of Mello
Roos? When the plans for the development are in an advanced stage or
when it is still a speculative package?
Who will administer the special tax? How much staff time will be required?
What are the estimated administrative costs?
What is the potential marketability of the bonds? What interest rates
can be anticipated? What do the rating houses and underwriters look
for in evaluating such bonds? Will the issuance of such bonds have
a significant impact on the area's overlapping debt?
If a tax for services is not implemented at the time of the formation
of the District, can it be added later? Is a 2/3 vote required to
implement the tax?
Should permit, appraisal, engineering, attorney, financial consultant
fees, etc. be financed under the bond issue and special tax?
While this type of financing is legal, it is not encouraged by some
jurisdictions such as Oceanside which requires that the fee be paid
by the developer. Doesn't the financing of sUch fees and charges
in a Communities Facilities District present an unfair competitive
advantage over other developers whose property is not suited to a
Community Facilities District approach?
Can the City Council after a public hearing terminate or reduce
the special tax for services without a popular vote?
What administrative service charge will the County Tax Collector charge
and will it be computed into the special tax? Can annual City
administrative costs associated with the special tax be included in the
tax?
What mechanisms can be used to prevent the final cost of constructing
facilities from exceeding its estimates?
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CABLE LAKE
SPECIFIC QUESTIONS
1. What is the marketability of the homes in the proposed area? Has
a copy of the market survey been submitted? What is the economic
feasibility of the project?
2. How would the effects of environmental factors such as fire, wind
and flood affect the cost of developing homes in the area?
3. Why shouldn't the cost of expenses incurred in the fonmation of a,
District such as attorney, engineer, appraisal, financial consultant
and other fees be reimbursed by the developer rather than financed
over the life of the bonds? Is it good management to finance these
costs over such a long period?
4. In view of the fact that the City's Housing Element indicates that
it has more than its share of affordable housing, is the current plan
for 120 affordable homes the appropriate kind of development for the
City which should be assisted by a Community Facilities District?
5. How many miles of streets, sewers, curbs, gutter, etc. will be inclu-
ded in the project and will they be dedicated in phases? Who will
assume the maintenance cost prior to dedication? What will be the
impact of a requirement to provide a secondary access to the project
if it involves other property owners currently outside of the proposed
Community Facilities District?
6. What is the appraised value of the land before and after the public
facilities are installed? Will the developer be willing to incur
the costs of such appraisals?
7. Is the levy based upon the square footage of homes the best approach?
Should consideration be given to establishing an initial rate based
upon the number of acres or the number of lots when subdivided?
8. Has the developer supplied a current audited financial statement?
9. What guarantee can the developer provide that the homes in the de-
velopment would be priced lower than comparable homes in other areas
of the City?
10. What is meant by "park landscape" to be provided as part of the im-
provement plan? Does this mean parkways or full service parks? How
many tennis courts are being provided and are they lighted? What
kinds of recreation buildings are proposed?
11. What are the specific proposed Cable Creek Channel improvements and
their estimated cost?
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CABLE LAKE
SPECIFIC QUESTIONS - Continued
Page 2
12. How final are the development plans? Is the proposed development
realistic and what are the possibilities of it being changed? How
many of each type of unit are being proposed? Are full development
plans available?
13. Have proposed financing agreements been submitted and reviewed?
14. What potential litigation could be initiated before, during and
after the formation of the District and what would be its potential
effect on the City?
15. How firm are the estimated improvement costs? Is the estimate of
$2,642,000 still valid?
16. When will construction of the improvements commence? What is the
estimated build out schedule?
17. When will construction of the residential and commercial units
conmence?
18. Has a fee been paid to cover the cost of conducting the proceedings?
19. Are the developers and builders willing to make a contractual commit-
ment to pay taxes during the first four or five years of the bond
1 i fe?
20. Will the costs of the sewer capacity rights be included in the bond
issue? Have the costs been incurred? Is it a good practice to in-
clude costs already incurred in a bond issue?
21. What equity are the developers putting into the project?
22. Has any property been sold?
23. What is the likelihood of a change in the proposed development or
in the allocation of unit types from those currently being proposed?
If changes occur, how would the bond payoff be affected?
24. How was the special tax for commercial properties of $1.000 per acre
per $1,000,000 of annual indebtedness determined?
25. What is the estimated term of the bonds?
26. What is the estimated ultimate market value of the project?
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CABLE LAKE
SPECIFIC QUESTIONS - Continued
Page 3
27. How will the bond proceeds be distributed (developer, bond fund,
bond reserve fund, etc.)?
28. Why was the special tax formula for the residential units related
to the total debt rather than a maximum annual rate per "x" dollars
of annual debt service?
29. The proposed residential homes are aimed at first-time or low-income
home buyers who have limited income. Since the special levy will not
be considered as part of the total financing, it would require suffi-
cient prior notice and foreknowledge of the additional tax so as to
minimize future foreclosure and complaints from citizens. Again,
procedures for disclosure have to be discussed and assured by the
owner?
30. A secondary access is required for the proposed development since it
is located within a "High Fire Hazard Zone". The proposed road requires
a right-of-way through the County Flood Control District. There is no
indication that such an easement has been obtained. There is no indi-
cation that an alternate route for the secondary access can be provided.
31. If the change of zone is not successful, will the development of mobile
home lots be able to generate sufficient tax to payoff the bond? The
City wants to have a reasonable assu.rance that the proposed development
is realistic. Otherwise, the next owner (home builder) will be stuck
with a piece of land with a heavy debt.
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QITY OF SAN BERQARDINO a.. MEMORANDUrO
To
Mayor and Conmon Council
Supplemental Information Regarding Community
Facilities District Proposal
From
John Matzer, Jr.
City Administrator
February 7, 1985
Subject
Date
Approvsd M~
,
Date
The following supplemental information is presented to assist you in your
review of the proposed Cable Lake Community Facilities District. This
information supplements the information provided in the January 18, 1985
memorandum to you and completes the 'staff analysis.
The following information is included:
1. A copy of general questions and answers relating to the Mello-Roos
Community Facilities Act prepared by Mr. Timothy Sabo's Office
(Exhibit A). This information provides considerable insight into
the implications of establishing a District.
2. A,list of suggested sample pOlicies relatin~ to the formation of
Community Facilities Districts. (Exhibit B).
3. A copy of specific questions presented to the Cable Lake developer
and information prepared by the developer in response to the ques-
tions. (Exhibit C).
4. A copy of a Community Facilities District proposal memorandum, dated
January 18, 1985. (Exhibit D).
RECOr+1ENDATION
Before you elect to proceed with the formation of a 'Community Facilities Dis-
trict, it is recommended that you consider the adoption of general policy
guidelines to be followed by proponents requesting the formation of a Commu-
nity Facilities District. The guidelines would indicate the City's position
regarding crucial ,aspects of the Community Facilities District process. Con-
sideration should be given to adopting such guidelines prior to the hOlding
of the public hearing for the Cable Lakes project that has been postponed to
February 18, 1985.
Exhibit B provides some examples of sample policies which could be adopted.
These policies are by no means meant to be all encompassing or complete.
They were prepared on the basis of the policy issues raised in the December
18, 1984, memorandum (Exhibit D) and as a result of the responses to questions
relating to the Mello-Roos Facility Act and the specific Cable Lakes Project
(Exhibit A & C). A review of the attached information will no doubt generate
a need for other policies.
CITY Oil TH.:M~
11.11_; d I
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Mayor and Common Council
February 7. 1985
Page 2
The Cable Lakes developer has indicated that although they have not responded
to all of the questions related to the project. they will provide all infor-
mation required by the City after the formation of the Community Facilities
District and prior to the actual sale of the bonds.
They are encouraging the City to create the District and then proceed to work
out the necessary details. Caution is recommended in adopting this approach
since it is felt that once the City has established the District. it will
be very difficult to abort the effort. Basic policy issues should be resolved
prior to any agreement to establish the District.
The analysis of the Mello-Roos Community Facilities Act indicates that it is
only advantageous to the City to employ the Act when there appears to be no
other viable alternative for financing the construction and installation of
public improvements and/or providing a source for funding various services
within a newly developed area. In Exhibit A, Mr. Sabo states lilt would be
advantageous to the City to work with a developer in the early stages of pro-
ject implementation and formulation so that alternative financing devices can
be arranged and adequately explored so that neither the City nor a developer
confront a situation where the development and planning 'goals of the City are
compromised merely for the sake of expediency and the accommodation of a par-
ticular developer. II Mr. Alex Bowie. the attorney representing Cable Lake,
has indicated the developer's willingness to use other financing devices such
as an assessment district.
The staff and Mr. Sabo are available to meet with you to discuss the attached
information and to provide any additional information you may require.
JM/djn