For City Council Meeting July 23, 2024
TO: Honorable Mayor and City Council
APPROVAL: Michael Milhiser, Interim City Manager
FROM: Mark Alvarado, Interim Finance Director
Title
Request City Council to Adopt the Following Resolutions Setting the Fiscal Year 2024-25 Special Tax Levies for Community Facilities Districts 2006-1, 2016-1, 87-1, 87-2, 2019-2, and 2020-1:
1) Resolution No. 8260 of The City Council of the City of Rialto, State of California, Community Facilities District 2006-1 (ELM PARK) Establishing Annual Special Tax for Fiscal Year 2024-25.
2) Resolution No. 8261 of The City Council of the City of Rialto, State of California, Community Facilities District 2016-1 (PUBLIC SERVICES) Establishing Annual Special Tax for Fiscal Year 2024-25.
3) Resolution No. 8262 of The City Council of the City of Rialto, State of California, Community Facilities District 87-1 (LAS COLINAS) Establishing Annual Special Tax for Fiscal Year 2024-25.
4) Resolution No. 8263 of The City Council of the City of Rialto, State of California, Community Facilities District 87-2 (LAS COLINAS) Establishing Annual Special Tax for Fiscal Year 2024-25.
5) Resolution No. 8264 of The City Council of the City of Rialto, State of California, Community Facilities District 2019-2 (FOOTHILL/SPRUCE) Establishing Annual Special Tax for Fiscal Year 2024-25.
6) Resolution No. 8265 of The City Council of the City of Rialto, State of California, Community Facilities District 2020-1 (EL RANCHO VERDE) Establishing Annual Special Tax for Fiscal Year 2024-25.
Body
RECOMMENDATION
Staff recommends that the City Council adopt the following resolutions setting the Fiscal Year 2024-25 special tax levies for Community Facilities Districts 2006-1, 2016-1, 2019-2, 2020-1, 87-1 and 87-2:
1) Resolution No. 8260 of The City Council of the City of Rialto, State of California, Community Facilities District 2006-1 (ELM PARK) Establishing Annual Special Tax for Fiscal Year 2024-25.
2) Resolution No. 8261 of The City Council of the City of Rialto, State of California, Community Facilities District 2016-1 (PUBLIC SERVICES) Establishing Annual Special Tax for Fiscal Year 2024-25.
3) Resolution No. 8262 of The City Council of the City of Rialto, State of California, Community Facilities District 87-1 (LAS COLINAS) Establishing Annual Special Tax for Fiscal Year 2024-25.
4) Resolution No. 8263 of The City Council of the City of Rialto, State of California, Community Facilities District 87-2 (LAS COLINAS) Establishing Annual Special Tax for Fiscal Year 2024-25.
5) Resolution No. 8264 of The City Council of the City of Rialto, State of California, Community Facilities District 2019-2 (FOOTHILL/SPRUCE) Establishing Annual Special Tax for Fiscal Year 2024-25.
6) Resolution No. 8265 of The City Council of the City of Rialto, State of California, Community Facilities District 2020-1 (EL RANCHO VERDE) Establishing Annual Special Tax for Fiscal Year 2024-25.
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.
The City of Rialto annually sets the special tax rates levied within Community Facilities Districts (CFDs) 2006-1 (ELM PARK), 2016-1 (PUBLIC SERVICES), 87-1 and 87-2 (LAS COLINAS), 2019-2 (FOOTHILL/SPRUCE), and 2020-1 (EL RANCHO VERDE). Property owners established these districts through ballot procedures when the districts were formed to complete various public improvements and provide additional public safety and other City services in the subject areas.
ANALYSIS/DISCUSSION
The levy for CFD 2006-1 for Special Tax A is required to pay annual principal and interest on the Mello-Roos bonds issued in 2006 and refinanced in 2016, plus administrative costs associated with the district. The levy for 2006-1 Special Tax B is assessed to pay for the increased costs of public safety and other City services related to new development within the district. The proceeds of the bonds issued for the district paid for development impact fees, the acquisition and construction of necessary street improvements, water facilities, sanitary sewer and storm drain improvements, and landscaping.
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 2024-25 range from $2,801.23 to $3,312.85 per dwelling unit for Special Tax Rate A. The Proposed Special Tax Rate B for FY 2024-25 is $1,068.98 for all developed residential dwelling units. In total, the Proposed Special Tax Rates for FY 2024-25 range from $3,870.21 to $4,381.83 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 2006-1 has 130 parcels. The estimated levy for Fiscal Year 2024-25 is $524,158.26 for the Proposed Special Tax, and all of the Special Tax Rates proposed for FY 2024-25 for CFD 2006-1 are consistent with the Rate and Method of Apportionment originally approved by the property owners through the ballot procedures performed when the district was formed.
The levy for CFD 2016-1 was established by the City and property owners to help reimburse the City for increased costs of public safety and other City services related to new developments and as determined necessary by the City’s General Plan to maintain the district. The City levies annual special tax rates per dwelling unit for developed parcels. The proposed special tax rate for Fiscal Year 2024-25 is $347.07 per single family residential dwelling unit. The City determines rate calculations on the costs involved with administering the district, including collection of assessments, delinquency management, and reimbursement of Police, Fire, and other services for the district. CFD 2016-1 has 209 parcels. The estimated levy for Fiscal Year 2024-25 is $107,937.53. As proposed, the special tax rate for CFD 2016-1 is consistent with the rate and method of apportionment originally approved by the property owners through the ballot procedures performed when the district was formed.
The levy for CFD 2019-2 for Special Tax A is required to pay annual principal and interest on the Mello-Roos bonds issued in 2022, plus administrative costs associated with the district. The levy for 2019-2 Special Tax B is assessed to pay for the increased costs of public safety and other City services related to new development within the district. The proceeds of the bonds issued for the district paid for development impact fees, the acquisition and construction of necessary street improvements, water facilities, sanitary sewer and storm drain improvements, and landscaping.
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 2024-25 range from $1,331.77 to $1,607.10 per dwelling unit for Special Tax Rate A. The Proposed Special Tax Rate B for FY 2024-25 is $333.95 for all developed residential dwelling units. In total, the Proposed Special Tax Rates for FY 2024-25 range from $1,665.72 to $1,941.05 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 2019-2 has 184 parcels. The estimated levy for Fiscal Year 2024-25 is $337,127.75 for the Proposed Special Tax, and all the Special Tax Rates proposed for FY 2024-25 for CFD 2019-2 are consistent with the Rate and Method of Apportionment originally approved by the property owners through the ballot procedures performed when the district was formed.
The levy for CFD 2020-1 for Special Tax A will be required to pay annual principal and interest on anticipated Mello-Roos bond issuance, plus administrative costs associated with the district. The levy for 2020-1 Special Tax B will be assessed to pay for the increased costs of public safety and other City services related to new development within the district. The proceeds of the bonds issued for the district paid for development impact fees, the acquisition and construction of necessary street improvements, water facilities, sanitary sewer and storm drain improvements, and landscaping.
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 2024-25 range from $2,437.80 to $3,600.60 per dwelling unit for Special Tax Rate A. The Proposed Special Tax Rate B for FY 2024-25 is $351.23 for all developed residential dwelling units. In total, the Proposed Special Tax Rates for FY 2024-25 range from $2,789.03 to $3,951.83 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 2020-1 has 314 parcels. The estimated levy for Fiscal Year 2024-25 is $1,967,080.47 for the Proposed Special Tax, and all the Special Tax Rates proposed for FY 2024-25 for CFD 2020-1 are consistent with the Rate and Method of Apportionment originally approved by the property owners through the ballot procedures performed when the district was formed.
The levy for CFD 87-1 was required to pay annual principal and interest on Mello-Roos bonds issued in 1988 and for administrative costs associated with the district. The proceeds of the bonds issued for the district paid for the acquisition and construction of necessary street improvements, water facilities, sanitary sewer and storm drain improvements, and police and fire protection facilities. However, the CFD 87-1 debt service was defeased during Fiscal Year 2018-19, and as such, no levy is being proposed for Fiscal Year 2024-25.
The City and the property owners established the levy for CFD 87-2 to help reimburse the City for Police and Fire protection services determined as necessary by the City’s General Plan and the location of the district. Subsequent to the approval of the Utility Users Tax in 2003, the CFD 87-2 annual tax rate has been set at zero ($0) for all parcels within the district.
The Resolutions with Exhibits indicating the special tax rates (required by the County Tax Collector each year) are attached to the staff report. Staff recommends approval by the City Council to ensure the City can continue to levy and collect the special taxes that pay for the continued debt service in CFD 2006-1, the additional public services pursuant to CFD 2016-1, the additional debt service in CFD 2019-2 and CFD 2020-1. The City will provide this information to the County Tax Collector, and the authorized assessments will be included on the 2024-25 property tax roll.
ENVIRONMENTAL IMPACT
The request is not a Project as defined by Section 15378 of the California Environmental Quality Act (CEQA)
GENERAL PLAN CONSISTENCY
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 approved the resolutions as to form.
FINANCIAL IMPACT
Operating Budget Impact
As proposed, the total levy for CFD 2006-1 is $524,158.26, $107,937.53 for CFD 2016-1, $337,127.75 for CFD 2019-2, and $1,967,080.47 for CFD 2020-1. The estimated revenues will be included in the Fiscal Year 2024-25 annual budget in the following Custodial Funds:
§ CFD 2006-1 Account No. 78712141-47104, CFD 2016-1 Account No. 78722141-47104, CFD 2019-2 Account No. 78732141-47104, and CFD 2020-1 Account No. 78742141-47104.
§ Related expenditures for the districts will be included in the Fiscal Year 2024-25 annual budget in Fund 7871, CFD 2006-1 ELM PARK Custodial Fund, Fund 7872, CFD 2016-1 Custodial Fund, Fund 7873, CFD 2019-2 Custodial Fund, and Fund 7874, CFD 2020-1 Custodial Fund.
§ CFDs 87-1 and CFD 87-2 special tax assessments have been set to zero ($0) for Fiscal Year 2024-25.
Capital Improvement Budget Impact
There is no impact to the CIP budget with this action.
Licensing
A Business License is not required as part of this action.