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CONSIDERATION OF THE FORMATION AND ESTABLISHMENT OF COMMUNITY FACILITIES DISTRICT NO. 18M (OTAY RANCH VILLAGE 3) (“CFD NO. 18M”), CONDUCTING A SPECIAL ELECTION THEREIN, AUTHORIZATION TO LEVY A SPECIAL TAX THEREIN, AND CONSIDERATION OF AUTHORIZING THE ANNEXATION OF TERRITORY IN THE FUTURE TO CFD NO. 18M
A. RESOLUTION NO. 2016-225 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF CFD NO. 18M FORMING AND ESTABLISHING CFD NO. 18M, AND AUTHORIZING SUBMITTAL OF LEVY OF SPECIAL TAXES OF CFD NO. 18M TO THE QUALIFIED ELECTORS
B. RESOLUTION NO. 2016-226 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF CFD NO. 18M DECLARING THE RESULTS OF A SPECIAL ELECTION IN CFD NO. 18M
C. ORDINANCE OF THE CITY OF CHULA VISTA ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF CFD NO. 18M, AUTHORIZING THE LEVY OF A SPECIAL TAX IN CFD NO. 18M (FIRST READING)
D. RESOLUTION NO. 2016-227 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ACTING IN ITS CAPACITY AS THE LEGISLATIVE BODY OF CFD NO. 18M, AUTHORIZING THE ANNEXATION OF TERRITORY IN THE FUTURE TO CFD NO. 18M
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RECOMMENDED ACTION
Recommended Action
Council conduct the public hearing, adopt the resolutions, and place the ordinance on first reading.
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SUMMARY
On October 4, 2016, Council approved the Resolution of Intention to form Community Facilities District No. 18M (“CFD No. 18M”) (Resolution 2019-198) and the Resolution of Intention to Authorize the Annexation in the Future to Community Facilities District No. 18M (Resolution 2016-199) and set the public hearing for November 8, 2016.
Community Facilities District No. 18M (Otay Ranch Village 3) will fund the maintenance and replacement of (a) landscaping, including, but not limited to, trees, slopes, parkways and medians; (b) facilities that are directly related to storm water quality control; (c) walls and fencing; and (d) trails within the Otay Ranch Village 3 master planned community.
There are two separate actions this evening. The first public hearing and adoption of the first two resolutions and the ordinance above, will continue the formal proceedings leading to the establishment of Community Facilities District No. 18M and authorization of the levy of the special tax.
If following the first public hearing, the election authorizing the levy of the special tax is successful, the Council may proceed with the second action, which will be the public hearing and adoption of the resolution authorizing the annexing in the future of certain territory to CFD No. 18M.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
The Project was adequately covered in previously adopted/certified Final Environmental Impact Report (EIR 13-01) for the Otay Ranch University Villages Project Comprehensive Sectional Planning Area (SPA) Plan Amendment. Thus, no further environmental review or documentation will be conducted or considered in connection with this action.
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Environmental Determination
The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project was adequately covered in previously adopted/certified Final Environmental Impact Report (EIR 13-01) for the Otay Ranch University Villages Project Comprehensive Sectional Planning Area (SPA) Plan Amendment. Thus, no further environmental review or documentation is necessary.
BOARD/COMMISSION RECOMMENDATION
Not Applicable.
DISCUSSION
On January 13, 1998, Council adopted the “City of Chula Vista Statement of Goals and Policies regarding the establishment of Community Facilities Districts” (the “Goals and Policies”). The approval of this document ratified the use of CFDs as a public financing mechanism for (1) the construction and/or acquisition of public infrastructure, and (2) the financing of authorized public services. Taxes levied by maintenance districts, such as CFD No. 18M, are currently excluded from the 2% maximum tax criterion set forth in the Goals and Policies.
On April 28, 1998, Council, acting under its Charter authority, enacted the “Chula Vista Community Facilities District Ordinance” (the “Ordinance”). The Ordinance adopted the Mello-Roos Act with modifications to accomplish the following: (1) incorporate all maintenance activities authorized by the “Landscaping & Lighting Act of 1972” (the “1972 Act”); (2) include certain maintenance activities not listed in the Mello-Roos Act or the 1972 Act; and (3) establish an operating reserve fund for open space districts.
Homefed Village III Master, LLC has requested that the City conduct proceedings to consider the approval of the establishment of CFD No. 18M. Otay Ranch Village 3, consists of approximately four-hundred and twenty-three (423) acres located just south and east of the Otay Landfill and Village Two, west of the existing light industrial uses in the City of Chula Vista and north of the Otay River Valley. Otay Ranch Village 3 is proposed to contain approximately 702 single-family units and 563 multi-family units, 7.9 acres of office use, and 16.8 acres of industrial use. This district will fund the maintenance and replacement of (a) landscaping, including, but not limited to, trees, slopes, parkways and medians; (b) facilities that are directly related to storm water quality control; (c) walls and fencing; and (d) trails.
The required resolutions were adopted at the meeting of the City Council on October 4, 2106 to initiate the proceedings to establish CFD No. 18M and to authorize future annexations to CFD No. 18M to certain territory designated as the Future Annexation Area, and Boundary Maps of the proposed Community Facilities District and Future Annexation Area were recorded with the San Diego County Recorder’s office within the required 10-day period.
There are two separate actions related to CFD No. 18M tonight. The first action will continue the formal proceedings leading to the establishment of CFD No. 18M. If there is no protest at the public hearing on this first matter, and if the special election authorizing the levy of the special tax is successful, the Council may proceed with the second action.
The second action will include a public hearing on the matter of authorizing the annexing territory in the future to CFD No. 18M, and assuming no protest, adoption of the resolution authorizing annexing territory in the future to CFD No. 18M.
CFD No. 18M will provide the necessary funding for the operation and maintenance of public landscaping, storm water quality, walls, fencing, and trails, by levying an annual “special tax” which is collected from the property owners within CFD No. 18M in conjunction with property taxes or via direct billing. All expenses related to the district administration, including levying and collecting the special taxes, are also funded from such special taxes.
Area of Benefit
The District boundary map was approved by Council on October 4, 2016 via Resolution 2016-197 and filed with the San Diego County Recorder’s Office on October 11, 2016. A recorded copy of the map is presented in Attachment 1.
The boundaries of CFD No.18M encompass parcels located within Village 3 of the Otay Ranch. Village 3 is approximately four hundred and twenty-three (423) acres located just south and east of the Otay Landfill and Village Two, west of the existing light industrial uses in the City of Chula Vista and north of the Otay River Valley. Homefed Village III Master, LLC owns 100% of the property within the proposed district. The project is proposed for approximately 702 single-family units and 563 multi-family units, 7.9 acres of office use, and 16.8 acres of industrial use.
Future Excluded Area
The Boundary Map also depicts an area designated as the Future Excluded Area which is intended to be excluded from CFD No. 18M. This area is currently included within the boundaries of CFD No. 18M because the Future Excluded Area does not currently exist as a separate legal parcel, but is a part of the legal parcel identified on the Boundary Map as Assessor’s Parcel No. 644-060-27-00.
The Mello-Roos Act provides that the boundary of a community facilities district may not bisect an existing legal parcel. In order to include that portion of Assessor’s Parcel No. 644-060-27-00 that is intended to be included in CFD No. 18M it is necessary to include the whole of such parcel in the Boundary Map until a legal parcel is created for the Future Excluded Area. Following recordation of a Final Subdivision Map creating a parcel for the Future Excluded Area, the Boundary Map may be amended by resolution of the City Council to reflect the exclusion of the new parcel.
Future Annexation Area
The boundaries of the Future Annexation Area were approved by Council on October 4, 2016 via Resolution 2016-199 and filed with the San Diego County Recorder’s Office on October 11, 2016. A recorded copy of the map is presented in Attachment 2.
The territory within the boundaries of the future annexation area encompass approximately fifty-four (54) acres located southwest of Village 3. Flat Rock Land Company LLC owns 100% of the property within the future annexation area.
Cost Estimate
The estimated annual budget for CFD No. 18M shown in the CFD Report (Attachment 3) is approximately $1,591,750. This budget includes $1,284,555 for landscape, storm water quality, walls and fencing, and trails; and $269,675 that is set aside for the replacement of the amenities as they reach the end of their useful life. In addition, the budget includes $37,520 for administration of CFD No. 18M (preparing reports, levying and collecting taxes, public assistance, etc.) by City staff.
Proposed Special Tax and CFD Report
A copy of the CFD Report - Community Facilities District No. 18M (Otay Ranch Village 3) (the “CFD Report”) prepared by the Special Tax Consultant, Willdan Financial Services, is included as Attachment 3, and is on file, and available for public review in the City Clerk's Office. Said report incorporates the "Rate and Method of Apportionment" (RMA) (previously approved by Council on October 4, 2016) that establishes the procedures for levying the special taxes in CFD No. 18M. The special tax rates and methodology for levying the annual special tax are described in the CFD Report and enumerated in the RMA.
CFD No. 18M has four proposed categories of taxable property, as follows:
1. Single Family Detached Property, which include all parcels of residential property consisting of a single dwelling unit;
2. Single Family Attached Property, which includes all parcels of for-sale residential property consisting of one or more dwelling unit(s) that share common walls with one or more other dwelling unit(s), including, but not limited to, duplexes, triplexes, townhomes, and condominiums;
3. Multi-Family Property, which includes all parcels of residential property consisting of two or more for-rent dwelling units that share common walls, including, but not limited to, apartments and townhomes that are not for sale to an end user and are under common management; and
4. Non-Residential Property, which includes all parcels of developed property for which a building permit(s) has been issued for a structure or structures for non-residential use.
The Exempt Category that is not taxed includes all publicly owned parcels excluding City parks, Community Purpose Facility (CPF) property owned by non-profit organizations, and parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement.
Developed Property are those parcels for which a building permit has been issued prior to March 1st preceding the Fiscal Year in which the Special Tax is being levied. The proposed maximum special tax rate in the RMA on all Developed Parcels was determined by dividing the estimated annual budget at build out (plus a capital replacement allocation, initially equal to 20.9% of the annual budget) by the total estimated development (EDUs) at build out.
Collection of Taxes
At the beginning of each fiscal year the City shall determine the amount of the Special Tax Requirement for CFD No. 18M. Then, the special taxes will be levied on all taxable Property of CFD No. 18M until the total amount of Special Tax levied equals the Special Tax Requirement. The Special Tax shall be levied proportionately on each Assessor’s Parcel of Developed Property within CFD No. 18M, up to 100% of the Maximum Special Tax.
The Maximum Special Tax Basis and the Maximum Special Tax shall be subject to annual escalation as follows, and as fully described in the Rate and Method Apportionment (RMA) of Special Tax: (See Attachment 3 for full description of RMA):
- The Maximum Special Tax Basis shall be equal to the sum of Maximum Special Tax Basis for Labor, Maximum Special Tax Basis for Water and Maximum Special Tax Basis for Asset Replacement;
- The annual percentage change of the Maximum Special Tax Basis for Labor shall be equal to the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W);
- The annual percentage change of the Maximum Special Tax Basis for Water shall be equal to the annual percentage change in the Otay Water District Commodity Rate; and
- The annual percentage change of the Maximum Special Tax Basis for Asset Replacement shall be equal to the annual percentage change in the Engineering News Record Construction Cost Index for the Los Angeles Area.
The Maximum Special Tax will initially be equal to the Maximum Special Tax Basis. The Maximum Special Tax Basis will be increased each year as described above. The Maximum Special Tax will be increased by an amount not less than 2% and not more than 6% each year, that results in a minimal absolute difference from the Maximum Special Tax Basis for that Fiscal Year.
Proposed Maximum Special Taxes
The proposed maximum special tax rates for fiscal year 2016/17 for a typical dwelling unit within CFD No. 18M are as follows:
|
Land Use Class |
Maximum Special Tax Basis for Labor |
Maximum Special Tax Basis for Water |
Maximum Special Tax Basis for Asset Replacement |
Maximum Special Tax Basis |
|
Single Family Detached Property |
$912.16 |
$341.42 |
$255.70 |
$1,509.28 |
|
Single Family Attached Property |
$729.73 |
$273.14 |
$204.56 |
$1,207.43 |
|
Multi-Family Property |
$72.97 |
$27.31 |
$20.46 |
$120.74 |
|
Non-Residential Property |
$3,648.64 |
$1,365.68 |
$1,022.82 |
$6,037.13 |
Public Hearing and Election Procedure
Tonight there will be an election following the public hearing for the landowners to vote on the authorization to levy special taxes for CFD No. 18M. Once the votes are cast, Council will be requested to certify the results of the election and, if the ballot measure is approved by at least 2/3 of the qualified electors (i.e., the landowners) voting on the measure, CFD No. 18M will be authorized to levy such special taxes. Council will then be requested to introduce the Ordinance authorizing the levy of special taxes of CFD No. 18M.
If CFD No. 18M is established and the qualified electors authorize the levy of special taxes of CFD No. 18M, the City Council will conduct the public hearing on the matter of the Future Annexation Area, and if there is no protest, adopt the resolution to authorize the annexation in the future of territory within the Future Annexation Area. The benefit of authorizing future annexations is that property may, with the express consent of the owners of property within the future annexation area, be annexed to CFD No. 18M without the necessity of conducting a further public hearing.
Resolutions and Ordinance
There are three resolutions, that if adopted, and one ordinance, that if adopted following introduction and waiver of the first reading thereof today, will accomplish the following pertaining to the establishment of CFD No. 18M:
Resolution (A), RESOLUTION FORMING AND ESTABLISHING COMMUNITY FACILITIES DISTRICT NO. 18M is the formal action forming and establishing Community Facilities District No. 18M and authorizing submittal of levy of a Special Tax to the qualified electors, and performs the following:
• Sets the name of the District;
• Identifies the CFD Report prepared by Willdan Financial Services as the report to be used for all future proceedings;
• Establishes a Special Tax to be levied within CFD No. 18M.The Special Tax is set forth in the Rate and Method of Apportionment, which will be approved by the adoption of this Resolution and the approval of the qualified electors of CFD No. 18M;
• Implements the provisions of the Local Agency Special Tax and Bond Accountability Act which became effective on January 1, 2001 by specifying that:
o Each special tax shall be levied for the specific purposes set forth in the Resolution;
o The proceeds of the levy of each such special tax shall be applied only to the specific applicable purposes set forth in the Resolution;
o CFD No. 18M shall establish a separate account into which the proceeds of each such special tax shall be deposited; and
o The City Manager or his or her designee, acting for and on behalf of CFD No. 18M, shall annually file a report with the City Council as required pursuant to Government Code Section 50075.3.
• Submits two (2) ballot propositions to the property owners to (A) levy a special tax and (B) establish an appropriations limit for the district; and
• Describes the type of services to be financed by CFD No. 18M.
Resolution (B), RESOLUTION DECLARING THE RESULTS OF A SPECIAL ELECTION IN NO. 18M makes official the results of the canvass of the ballots submitted by the qualified electors for CFD No. 18M; and
Ordinance (C), ORDINANCE AUTHORIZING THE LEVY OF A SPECIAL TAX authorizes the levy of the special tax, sets forth procedures for levying and collecting the special taxes, and authorizes the special taxes to be secured by the lien imposed pursuant to Sections 3114.5 and 3115.5 of the Streets and Highways Code of the State of California, which lien shall be a continuing lien and shall secure each levy of the special taxes. The City Council will be asked to introduce this ordinance and waiver the first reading today.
Resolution (D), RESOLUTION AUTHORIZING ANNEXATION OF TERRITORY IN THE FUTURE TO COMMUNITY FACILITIES DISTRICT NO. 18M allows for annexation of property in the future to CFD No. 18M with one required Council Action;
Future Actions
Future actions include enacting the Ordinance (second reading), and the levy of special taxes.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council members and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Consequently, this item does not present a disqualifying real property-related financial conflict of interest under California Code of Regulations Title 2, section 18702.2(a)(11), for purposes of the Political Reform Act (Cal. Gov’t Code §87100,et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. Once the District is formed, the proceeds will serve three City Strategic Plan majors goals: Operational Excellence and Healthy Community by ensuring a new and dedicated revenue stream to provide for the ongoing maintenance the public improvements and facilities being constructed in association with the development of Village 3, and Connected Community by way of maintaining the trails and pedestrian oriented facilities associated with the development.
CURRENT YEAR FISCAL IMPACT
All costs of formation of the District are being borne by the developers and the on-going administration will be funded entirely by the district. The City will recover the full cost of staff time expended in district formation and administration activities in perpetuity.
Staff anticipates that the majority of the CFD No. 18M administration will be contracted out. The CFD administration cost is estimated not to exceed $37,520 annually.
ONGOING FISCAL IMPACT
The costs to administer the District, if established, shall be paid from the proceeds of special taxes to be levied within the District. There is, therefore, no ongoing fiscal impact on the City’s General Fund or Development Services Fund by this action.
ATTACHMENTS
1. Recorded Boundary Map
2. Recorded Future Annexation Area Boundary Map
3. CFD Report
Staff Contact: Dave Kaplan, Development Services Department