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A. RESOLUTION NO. 2017-050 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING A BOUNDARY MAP SHOWING THE BOUNDARIES OF THE TERRITORY PROPOSED FOR THE INCLUSION IN PROPOSED COMMUNITY FACILITIES DISTRICT NO.19M (FREEWAY COMMERCIAL 2)
B. RESOLUTION NO. 2017-051 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA DECLARING ITS INTENTION TO ESTABLISH COMMUNITY FACILITIES DISTRICT NO. 19M (FREEWAY COMMERCIAL 2), AUTHORIZE THE LEVY OF A SPECIAL TAX THEREIN TO FINANCE CERTAIN SERVICES, SET THE PUBLIC HEARING TO CONSIDER THE ESTABLISHMENT OF THE PROPOSED DISTRICT, AND ORDER THE PREPARATION OF A CFD REPORT
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolutions.
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SUMMARY
Village II Town Center, LLC and SunRanch Capital Partners, LLC (collectively referred to as the “Developer”) have requested that the City conduct proceedings to consider the approval of the formation of Community Facilities District No. 19M (Freeway Commercial 2) (“CFD No. 19M”), north of the Otay Ranch Town Center at the Intersection of Town Center Drive and Olympic Parkway. CFD No. 19M will fund the maintenance and replacement of (a) landscaping, including, but not limited to, trees, shrubs, grass, other ornamental vegetation located in or on slopes, parkways and medians; (b) facilities that are directly related to storm water conveyance, including, but not limited to pipes and drainage inlets, the Poggi Canyon channel and detention basin or parks; (c) walls and fencing; and (d) parks. This action initiates the formal proceedings to consider the establishment of CFD No.19M.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
The Project was adequately covered in previously adopted/certified Final Second Tier Environmental Impact Report (EIR 02-04) and Addenda to EIR 02-04 for the Otay Ranch Planning Area Twelve Freeway Commercial Sectional Planning Area (SPA) Plan.
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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 the previously adopted/certified Final Second Tier Environmental Impact Report (EIR 02-04) and Addenda to EIR 02-04 for the Otay Ranch Planning Area Twelve Freeway Commercial Sectional Planning Area (SPA) Plan. Thus, no further environmental review or documentation is necessary.
BOARD/COMMISSION RECOMMENDATION
Not Applicable
DISCUSSION
On January 13, 1998, the City 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 approved 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 CFDs, such as CFD No. 19M, 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.
The Developer has requested that the City conduct proceedings to consider the approval of the formation of CFD No. 19M. The conditions of approval of the tentative map for Freeway Commercial 2 require that said CFD be formed prior to approval of the final subdivision map. CFD No. 19M will fund the maintenance and replacement of (a) landscaping, including, but not limited to, trees, shrubs, grass, other ornamental vegetation located in or on slopes, parkways and medians; (b) facilities that are directly related to storm water conveyance, including, but not limited to pipes and drainage inlets, the Poggi Canyon channel and detention basin or parks; (c) walls and fencing; and (d) parks and trails. The City has retained the services of NBS Government Finance Group as special tax consultant and Best, Best and Krieger, LLP as legal counsel to provide assistance during the formation proceedings, including the preparation of this report and associated resolutions. Tonight’s action will initiate the formal proceedings to consider the establishment of CFD No. 19M.
CFD No. 19M will provide the necessary funding for the operation and maintenance of public landscaping areas and public park amenities. On an annual basis, the property owners within CFD No. 19M will have to pay a “special tax” that will be collected with their property taxes or via direct billing. All expenses related to the administration of CFD No. 19M, including levying and collecting the special taxes, are also funded from these special taxes.
Area of Benefit
The proposed boundaries of CFD No. 19M encompass parcels located within Otay Ranch known as Freeway Commercial 2. The area is approximately thirty-six (36) acres located just south of Olympic Parkway between SR-125 and Eastlake Parkway and north of Otay Ranch Town Center. The Developer owns 100% of the property within the proposed boundaries of CFD No. 19M. The project is proposed for approximately 600 multi-family units, 15,000 square feet of mixed-use commercial space, 300 hotel rooms in two hotels, and a two-acre highly-amenitized public park. Staff has reviewed the proposed boundary map (the “Boundary Map”) and has found it acceptable and ready for approval by Council. A reduced copy of the Boundary Map is presented in Attachment 1.
Cost Estimate
The estimated annual budget for CFD No. 19M is approximately $299,560. This budget includes $268,246 for landscape, walls and fencing, and a highly-amenitized park; and $11,314 that is set aside for the replacement of the amenities as they reach the end of their useful life. In addition, the budget includes $20,000 for CFD administration (preparing reports, levying and collecting taxes, public assistance, etc.) by the Finance Department or their designee.
Proposed Special Tax
CFD No. 19M has six proposed categories of taxable property, as follows:
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Single Family Attached Property with Density ≤19 DU/acre |
Residential property consisting of one or more Dwelling Unit(s) that may or may not share common walls with one or more other Dwelling Unit(s), including, but not limited to, duplexes, triplexes, townhomes, and condominiums with a density of 19 or fewer Dwelling Units per acre. |
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Single Family Attached Property with Density >19 DU/acre |
Residential property consisting of one or more Dwelling Unit(s) that may or may not share common walls with one or more other Dwelling Unit(s), including, but not limited to, duplexes, triplexes, townhomes, and condominiums with a density of greater than 19 Dwelling Units per acre. |
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Multi-Family Property |
Residential Property consisting of two or more for-rent Dwelling Units that share common walls, including, but not limited to, apartments and Residential Property that are not for sale to an end user and are under common management. |
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Non-Residential Property |
Developed property for which a building permit(s) has been issued for a structure or structures for non-residential use, excluding Hotel Property. |
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Hotel Property |
Developed property for which a building permit(s) has been issued for purposes of constructing one or more structures comprising of individual sleeping or living units for the accommodation of transient guests. |
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Undeveloped Property |
Parcels not classified as Developed Property. |
There are properties which will not be taxed and are included in an “Exempt Category”. These properties include:
(i) Public Property,
(ii) Property Owner Association Property,
(iii) Community Purpose Facility (CPF) Property,
(iv) Assessor’s Parcels with public or utility easements making impractical their utilization for other than the purposes set forth in the easement, including but not limited to property designated for open space, trails, pathways, parks or park and recreation related facilities, and
(v) Property reasonably designated by the City or CFD Administrator as Exempt Property due to deed restrictions, conservation easement, or similar factors.
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 Rate and Method of Apportionment (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 the CFD. Then, the special taxes will be levied on all taxable Property of the CFD 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 the CFD, up to 100% of the Maximum Special Tax.
The Maximum Special Tax shall be subject to an annual escalation as follows. The escalation shall be equal to the sum of the Maximum Special Tax Component for Labor, Maximum Special Tax Component for Water and Maximum Special Tax Component for Asset Replacement. For a full description of the RMA of the Special Tax, see Attachment 2.
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Labor Annual Percentage Change |
This component shall be equal to the annual percentage change for the July immediately preceding the current Fiscal Year and compared to the previous year’s Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). |
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Water Annual Percentage Change |
This component shall be equal to the annual percentage change for the July immediately preceding the current Fiscal Year and compared to the previous year’s Otay Water District Commodity Rate. |
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Asset Replacement Annual Percentage Change |
This component shall be equal to the annual percentage change for the July immediately preceding the current Fiscal Year and compared to the prior year’s Engineering News Record Construction Cost Index for the Los Angeles Area. |
The Fiscal Year 2017-2018 Maximum Special Tax shall be equal to the Fiscal Year 2017-2018 Maximum Special Tax rates listed in the Table below. In each subsequent Fiscal Year, the Maximum Special Tax Components shall be increased by the escalation factor outlined above in Section C (1, 2, and 3) of the RMA, provided the Maximum Special Tax Component for Labor, the Maximum Special Tax Component for Water and the Maximum Special Tax Component for Asset Replacement shall never be less than two percent (2%) and not greater than six percent (6%) than the maximum amounts in the preceding Fiscal Year, respectively.
Proposed Maximum Special Taxes
The proposed maximum special tax rates for fiscal year 2017-18 for a typical dwelling unit within CFD No. 19M are as follows:
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Land Use Class |
Maximum Special Tax Component |
Fiscal Year 2017-2018 Maximum Special Tax |
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Labor |
Water |
Asset Replacement |
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Single Family Attached Property with Density of ≤19 DU/acre |
$803.23 per DU |
$223.47 per DU |
$43.30 per DU |
$1,070.00 per DU |
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Single Family Attached Property with Density of >19 DU/acre |
$481.94 per DU |
$134.08 per DU |
$25.98 per DU |
$642.00 per DU |
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Multi-Family Property |
$2,614.63 per acre |
$727.41 per acre |
$140.96 per acre |
$3,483.00 per acre |
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Non-Residential Property |
$0.32 per building square foot |
$0.09 per building square foot |
$0.02 per building square foot |
$0.43 per building square foot |
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Hotel Property |
$4,329.94 per acre |
$1,204.62 per acre |
$233.44 per acre |
$5,768.00 per acre |
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Undeveloped Property |
$7,314.65 per acre |
$2,034.99 per acre |
$394.36 per acre |
$9,744.00 per acre |
With the adoption of the resolutions presented tonight, Council will adopt the map setting forth the boundaries of the proposed CFD No. 19M and declare its intent to establish the proposed CFD No. 19M, authorize the levy of a Special Tax, set the time and place for the public hearing, and order the preparation of a CFD Report. The public hearing and consideration of the adoption of a resolution forming and establishing CFD No. 19M, and submitting the authorization for the levy of special taxes to the qualified electors are scheduled for the City Council meeting on May 16, 2017, at 5:00 P.M.
DECISION-MAKER CONFLICT
Staff had reviewed the property holdings of the City Council and has found no property holding within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, nor has staff been informed by any City Councilmember, 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 CFD No. 19M 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, park, and facilities being constructed in association with the development of Freeway Commercial 2, and Connected Community by way of maintaining the pedestrian facilities associated with the development.
CURRENT YEAR FISCAL IMPACT
All costs of formation of the CFD No. 19M are borne by the Developer and the on-going administration will be funded entirely by CFD 19M. The City will recover the full cost of staff time expended in formation of CFD 19M and administration activities in perpetuity.
Staff anticipates that the majority of the CFD No. 19M administration will be contracted out. The CFD No. 19M administration cost is estimated not to exceed $20,000 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. CFD No. 19M Boundary Diagram
2. CFD No. 19M Rate and Method of Apportionment
3. Resolution “A”
4. Resolution “B”
5. CFD No. 19M Maintenance Responsibility Exhibit
Staff Contact: Paul Oberbauer, Senior Civil Engineer, Development Services Department