For City Council Meeting [August 10, 2021]
TO: Honorable Mayor and City Council
APPROVAL Marcus Fuller, City Manager
FROM: Bob Chandler, Interim Finance Director
title
Request City Council to Adopt Resolution No.7764 Setting the Fiscal Year 2021-2022 Special Tax Levy for Community Facilities District 2019-02 (Foothill/Spruce).
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BACKGROUND
The Mello-Roos Community Facilities Act of 1982 permits cities to establish a Community Facilities District (CFD) that allows for financing the construction of various public improvements and the provision of additional public safety and other City services. On an annual basis, the special tax levy is calculated according to the applicable Rate and Method of Apportionment adopted at the formation of the Community Facilities District. Typically, these special taxes are billed through the County of jurisdiction and appear as separate line-item charges on the property tax billing. This financing mechanism allows new development to pay for significant public infrastructure and augmented public service needs over time.
On December 10, 2019 the City Council conducted a Public Hearing and election on the formation of Community Facilities District No. 2019-02 (CFD 2019-02) to finance the construction of certain public improvements and to pay certain public fees related to a 16-acre residential neighborhood consisting of 66 detached single-family dwelling units and 118 attached townhome dwelling units located on Foothill Boulevard at Spruce Avenue. At that time, the City Council adopted a Resolution of Formation, Resolution No. 7584, and took all other necessary to form CFD 2019-02 (Foothill/Spruce) to finance a portion of the costs to complete the various public improvements and to provide additional public safety and other City services in the new residential development.
The City of Rialto will annually set the special tax rates to be levied within CFD 2019-02, with Fiscal Year 2021-2022 being the first year of the City’s levying the special taxes.
ANALYSIS/DISCUSSION
The levy for CFD 2019-02 Special Tax A is required to pay annual principal and interest on the Mello-Roos bonds now estimated to be issued in 2022, plus administrative costs associated with CFD 2019-02. The levy for CFD 2019-02 Special Tax B is assessed to pay for the increased costs of public safety and other City services related to the new residential development. The proceeds of the bonds to be issued for CFD 2019-02 will pay for public facilities (via payment of development impact fees) in connection with the planned 184-unit residential development project within the Foothill Boulevard Specific Plan.
For Special Tax A, the City levies annual special tax rates per dwelling unit for developed parcels, and per gross acre for undeveloped land. The proposed special tax rates for FY 2021-2022 range from $1,299.48 to $1,742.16 per dwelling unit for Special Tax Rate A. The Proposed Special Tax Rate B for FY 2021-2022 is $305.61 for all developed residential dwelling units. In total (including both Special Tax A and Special Tax B) the Proposed Special Tax Rates for Fiscal Year 2021-2022 range from $1,605.09 to $2,047.77 per dwelling unit.
For Special Tax A, the City bases its calculations on the costs involved with administering the District, including: i) debt service payments, ii) debt service fees, iii) collection of assessments, iv) delinquency management, and v) reserve requirements. For Special Tax B, the rate proposed is pursuant to the formula included in the Rate and Method of Apportionment adopted by the City Council and approved by the landowner vote when the district was formed. CFD 2019-02 has 164 levied parcels for Fiscal Year 2021-2022, with no active delinquent properties. The estimated levy for Fiscal Year 2021-2022 is $275,002.38 for the total Proposed Special Tax, with $230,383.32 assessed for Special Tax A, and $44,619.06 assessed for Special Tax B. All of the Special Tax Rates proposed for FY 2021-2022 for CFD 2019-02 are consistent with the Rate and Method of Apportionment originally approved by the property owners through the ballot procedures performed when CFD 2019-02 was formed.
ENVIRONMENTAL IMPACT
As proposed, the request is not a Project as defined by Section 15378 of the California Environmental Quality Act (CEQA), wherein a “Project” means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. By definition, pursuant to Section 15378 (b) (4) of CEQA, a Project does not include: the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
GENERAL PLAN CONSISTENCY
Adopting the proposed Resolution complies with the following Rialto General Plan Guiding Principle:
Our Government will lead by example, and will operate in an open, transparent, and responsive manner that meets the needs of the citizens and is a good place to do business.
Goal 3-6: Require that all developed areas within Rialto are adequately served with essential PUBLIC SERVICES and infrastructure.
Policy 3-6.1: Coordinate all development proposals with other affected public entities to ensure the provision of adequate public facilities and infrastructure services.
Policy 3-6.3: Require an increasing level of public safety infrastructure and service capability tied to population increase and increasing service demand.
Policy 5-3.7: Add service level capability and infrastructure to meet increasing demand of new development.
LEGAL REVIEW
The City Attorney has reviewed and supports this staff report.
FINANCIAL IMPACT
Operating Budget Impact
As proposed, the total levy for CFD 2019-02 is $275,002.38. Revenues received will be recorded in Agency Fund Account No. 873-400-2141-7104.
Capital Improvement Budget Impact
This item, as proposed, will have no impact on the capital improvement budget.
Licensing
A Business License is not required as part of this action.
RECOMMENDATION
Staff recommends that the City Council adopt a Resolution Establishing the Annual Special Tax Rates for Fiscal Year 2021-2022 for CFD 2019-02 (Foothill/Spruce).