TO: LINDA REICH, CITY MANAGER
FROM: NADYNE LOWRY, ACTING DIRECTOR OF FINANCE
SUBJECT
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Formation of Improvement Area 11 in Community Facilities District 2003-3.
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RECOMMENDATION
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1) Conduct a Public Hearing regarding the formation of Improvement Area 11 in Community Facilities District 2003-3; 2) accept tax consultant’s report; 3) adopt Resolution No. 2024-054 establishing Improvement Area 11 of CFD No. 2003-3 authorizing the levy of special taxes and calling an election; 4) adopt Resolution No. 2024-055, determining the necessity to incur bonded indebtedness; 5) conduct a special election with the property owners; 6) adopt Resolution No. 2024-056, declaring results of the special election and directing recording of the special tax lien; 7) approve the introduction of Ordinance No. 2024-012, levying a special tax, to be read by number and title and waive further reading of the ordinance; and 8) authorize the City Manager to execute all necessary documents on behalf of the City.
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FISCAL IMPACT
The City will receive City Services Tax revenue of approximately $134,800 per year upon build out of Improvement Area 11. This revenue is intended to offset the cost of providing City services to the homes within CFD 2003-3.
CITY OF CHINO MISSION / VISION / VALUES / STRATEGIC ISSUES
The recommendation detailed above further the City’s values and strategic issues that serve as key pillars on which identified priorities, goals, and action plans are built, by fostering:
• Financial Stability
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BACKGROUND
Lewis Operating Corporation (Lewis) is the primary land developer in The Preserve. Lewis is currently developing their land with residential, commercial and community facilities. As part of the development of The Preserve, the City of Chino is requiring Lewis to build the necessary public infrastructure to serve the residents and businesses of the new project area. In order to help Lewis finance the cost of the required infrastructure improvements, the City has formed Community Facilities District (CFD) No. 2003-3.
CFD No. 2003-03 was formed in 2004 and was designed to utilize Improvement Areas to issue bonds as The Preserve developed over time to finance certain public facilities, and to pay for necessary ongoing municipal services authorized by the Mello-Roos Act and the formation documents with respect to CFD No. 2003-3. To date, ten Improvement Areas have been established. The public improvements for the Lewis project have consisted of backbone infrastructure such as sewer, water and gas lines, storm drain connections, streets, curb and gutters, streetlight and traffic signal improvements, landscaped medians, fire station, joint use community center and other required facilities. Authorized municipal services payable from the improvement areas include maintenance of parks, parkways, and open space; flood and storm protection; operation of storm drainage systems; and public safety services.
Lewis is moving forward on additional housing developments in The Preserve. Lewis has approached the City and wishes to establish Improvement Area 11 in CFD No. 2003-3. Improvement Area 11 will comprise of four separate zones for taxing purposes (see attached map).
On October 1, 2024, City Council adopted Resolution No. 2024-049, declaring the City of Chino’s intention to annex property into Community Facilities District No. 2003-3, and to Establish Improvement Area No. 11 in CFD No. 2003-3, and to authorize the Levy of Special Taxes. In addition, the City Council adopted Resolution No 2024-050, declaring the City of Chino’s Intention to Incur Bonded Indebtedness for the proposed Improvement Area 11 of the Community Facilities District No. 2003-3 and established November 5, 2024, as the Public Hearing date. A Notice of Public Hearing was published in the local paper on October 19, 2024. Additionally, the full notice was mailed to all the owners of the subject property prior to the Public Hearing, November 5, 2024.
ISSUES/ANALYSIS
The Mello-Roos Community Facilities Act of 1982 (“the Act”), Section 55318 of the Government Code, establishes the specific proceedings for creating Improvement Areas in a Community Facilities District. These proceedings require the City Council to conduct a public hearing to hear testimony of all interested persons for or against the establishment of the Improvement Area, the extent of the Improvement Area, and the furnishing of specific types of public facilities or services. At the conclusion of the hearing, the legislative body may determine to proceed with establishing the Improvement Area.
By adopting Resolution No. 2024-049, pursuant to Section 53321.5 of the Act, the Council ordered the responsible officers for the proposed Improvement area to study said improvement area and prepare a report for the Council. The Special Tax Consultant, Webb Municipal Finance, has prepared and submitted this report to the City Council on behalf of the officers for City review. The report contains a brief description of the public facilities and services by type, their estimated cost, establishes the rates and methods of apportionment of the special taxes to be levied upon the parcels of taxable property required to fund the acquisition and/or construction of said public facilities and the provision of said services, as well as the amounts and costs associated with the issuance of bonds to finance acquisition and/or construction of said facilities.
After the legislative body determines to establish the Improvement Area, it shall adopt a resolution authorizing the formation of the Improvement Area and the levy of a special tax within the Improvement Area and calling for a special election within the Improvement Area, and it may immediately hold the special election. An official ballot, including a waiver of the time limit pertaining to the conduct of the election, and any requirement for notice of analysis and arguments with respect to the ballot measure, were provided to the property owner(s) prior to the November 5, 2024 City Council meeting. The City Clerk must also concur with the shortening of various time periods applicable to the said landowner election.
The City Clerk shall then canvass the returns of the election and total the number of ballots cast for and against the measure. After the canvass of returns of any election, pursuant to Section 53326, the legislative body may levy any special tax as specified in the resolution of formation in the territory of the Improvement Area, if two-thirds of the votes cast are in favor of levying that tax. The legislative body shall then approve the introduction of an ordinance levying a special tax on the Improvement Area.
At this time, it is estimated there will be approximately $20,000,000 in bonds sold. Staff is not moving forward with the remaining documents required to sell the bonds until development in the Improvement Area is sufficient to justify the bond issuance. When development is sufficient to justify the bond issuance, the City will then process the documents necessary to sell bonds. These documents will include the Resolution approving the Preliminary Official Statement, Fiscal Agent Agreement, Bond Purchase Agreement and District Continuing Disclosure Agreement. These documents will be scheduled for consideration at a future City Council meeting.
Attachments: Resolution No. 2024-054
Resolution No. 2024-055
Resolution No. 2024-056
Ordinance No. 2024-012
Improvement Area 11 Boundary Map
Tax Consultant’s Report
Rate and Method of Apportionment (RMA)
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