TO: LINDA REICH, CITY MANAGER
FROM: KIM SAO, DIRECTOR OF FINANCE
SUBJECT
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Intention to Establish Improvement Area 12 in CFD 2003-3 and Incur Bonded Indebtedness.
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RECOMMENDATION
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1) Adopt Resolution No. 2025-022, declaring the City of Chino’s intention to establish Improvement Area No. 12 in Community Facilities District (CFD) No. 2003-3; 2) adopt Resolution No. 2025-023 declaring the City of Chino’s Intention to Incur Bonded Indebtedness for the proposed Improvement Area (IA) 12 of the CFD No. 2003-3; and 3) authorize the City Manager to execute all necessary documents on behalf of the City.
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FISCAL IMPACT
Upon full build-out of Improvement Area 12, the City will receive approximately $292,897 per year in CFD special tax revenue. These funds are designated to offset the cost of providing municipal services to homes within CFD No. 2003-03, ensuring the continued delivery of essential public services.
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
• Responsible Long-Range Planning
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BACKGROUND
Lewis Operating Corporation (Lewis) is the primary land developer in The Preserve, actively constructing residential, commercial, and community facilities. As part of this development, the City of Chino requires Lewis to build the necessary public infrastructure to support residents and businesses within the new project area. To assist in financing these required improvements, the City formed Community Facilities District (CFD) No. 2003-03.
CFD No. 2003-03 was established in 2004 with five initial Improvement Areas (IA) designated at the time of its formation. These Improvement Areas were designed to facilitate bond issuance as The Preserve developed, enabling the financing of public facilities and funding ongoing municipal services authorized by the Mello-Roos Act and the CFD’s formation documents. IA 1 and IA 2 were developed and remain active along with IA 5, which serves as the primary annexable services IA for the Preserve Development. The boundary of IA 5 includes only those properties that have formally annexed into it; however, all property covered under The Preserve Development Agreement is subject to annexation into IA 5 to ensure municipal services are funded as development progresses. IA 3 and IA 4 were dissolved due to development delays, and subsequent Improvement Areas-IA 6 through IA 12-were established as the project continued to evolve. With the formation of Improvement Area 12, there are now ten active Improvement Areas.
Public improvements undertaken as part of the Lewis project include backbone infrastructure such as sewer, water, and gas lines; storm drain connections; streets, curbs, and gutters; streetlight and traffic signal enhancements; landscaped medians; a fire station; a joint-use community center; and other essential facilities. Authorized municipal services funded through the Improvement Areas encompass park, parkway, and open space maintenance; flood and storm protection; operation of storm drainage systems; and public safety services.
Lewis has now approached the City with a request to establish Improvement Area 12 within CFD No. 2003-3, further supporting the financing of critical infrastructure and services for the continued development of The Preserve. See attached map for reference.
ISSUES/ANALYSIS
Under current Government Code provisions, the City must adopt a Resolution of Intention to establish the Improvement Area and declare its intention to incur bonded indebtedness for the proposed area. Additionally, the City is required to set a public hearing date no sooner than 30 days and no later than 60 days after approving the Resolution of Intention. Prior to the public hearing, a public notice must be published in a local newspaper.
Following the public hearing, an election will be conducted for affected property owners to cast their ballots. Once the ballots are counted and the Improvement Area is approved by the property owner(s), the City will adopt a resolution finalizing its formation.
A public hearing has been scheduled for July 15, 2025, to consider the following:
1. Establishment of Improvement Area 12 and the levy of a special tax therein
2. Approval of the proposed bonds for Improvement Area 12
The levy of the special tax is subject to approval by the qualified electors of the CFD through a special election. Voting will be conducted by mail or via hand-delivered ballots submitted by the landowners within the proposed Improvement Area 12.
Pursuant to Section 53314.9 of the Mello-Roos Community Facilities Act of 1982, the City proposes to authorize bonded indebtedness to finance the acquisition and/or construction of certain public improvements and City development impact fees, with a maximum aggregate principal amount not to exceed $40,000,000.
The CFD bonds will be secured by special taxes levied upon individual properties within Improvement Area 12, with the revenue generated from these taxes specifically designated to pay the bond debt. The City of Chino's General Fund will not be obligated to cover debt service on these bonds.
Attachments: Resolution No. 2025-022 (Exhibits A, B, C)
Resolution No. 2025-023
Improvement Area 12 Boundary Map