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CONSIDERATION OF APPROVING THE AMENDED AND RESTATED CHULA VISTA BAYFRONT MASTER PLAN FINANCING AGREEMENT BETWEEN THE CITY AND THE SAN DIEGO UNIFIED PORT DISTRICT
RESOLUTION NO. 2016-241 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE AMENDED AND RESTATED CHULA VISTA BAYFRONT MASTER PLAN FINANCING AGREEMENT BETWEEN THE CITY AND THE SAN DIEGO UNIFIED PORT DISTRICT
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
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SUMMARY
On May 8, 2012, the City Council approved the Chula Vista Bayfront Master Plan Financing Agreement with the San Diego Unified Port District, addressing the financing, development, and construction of public improvements, infrastructure, and a conference center pursuant to the Chula Vista Bayfront Master Plan (CVBMP). An amendment to the Financing Agreement is recommended in order to reflect updated commitments from both agencies.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
The Project was adequately covered in previously adopted Environmental Impact Report UPD#83356-EIR-65B/
SCH#20005081077.
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Environmental Determination
The Development Services Director has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity was covered in previously adopted Environmental Impact Report UPD#83356-EIR-65B/SCH#2005081077. The Development Services Director has also reviewed the proposed activity for additional compliance with CEQA and has determined that there is no possibility that the activity may have a significant effect on the environment; therefore, pursuant to Section 15061(b)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is required.
BOARD/COMMISSION RECOMMENDATION
Not Applicable.
DISCUSSION
In 2002, the City of Chula Vista and the Unified Port District of San Diego (the “Port”) began a collaborative planning process to create a master plan for the approximately 535-acre Chula Vista Bayfront area. The Chula Vista Bayfront Master Plan (CVBMP) was designed to transform Chula Vista’s underutilized industrial Bayfront landscape into a thriving residential and world-class waterfront resort destination. The CVBMP represents the last significant waterfront development opportunity in Southern California and is the result of a decade-long joint planning effort by a broad coalition of stakeholders, the Port, the City, and Pacifica Companies.
The CVBMP will create thousands of new jobs, create new public parks, protect natural coastal resources, provide conference and visitor-serving amenities and build an important asset for the San Diego region, the South Bay, Chula Vista residents, and coastal visitors. At buildout, more than 40% of the CVBMP project area will be dedicated to parks, open space, and habitat restoration/preservation. Anticipated economic benefits include the creation of more than 2,200 permanent jobs, nearly 7,000 temporary construction jobs, and numerous indirect jobs in the regional economy.
The master plan will be implemented jointly by the City and the Port in four major phases over a 24-year period. Phase one of implementation includes the development of a resort conference center, the creation of public parks and open space, the restoration of habitat areas, and the construction of a new fire station and mixed-use residential development.
CVBMP Financing Agreement, Approved
Approved by City Council in May of 2012 via Resolution 2012-078, the CVBMP Financing Agreement establishes a fiscal foundation for creating a world-class Bayfront that reflects strong planning and design principles, environmental protection, economic feasibility, and community benefits. The capital projects and activities to be funded per the Financing Agreement will promote public access to and engagement with the waterfront, while enhancing the quality and protection of key habitat areas.
The adopted Financing Agreement identifies the revenue sources necessary to construct and maintain public improvements, infrastructure, and other facilities necessary to implement the CVBMP in accordance with the Final Environmental Impact Report (FEIR) approved by the City and the Port on May 16, 2010.
Anticipated sources of funds per the Financing Agreement include the following:
1. Ground lease revenues generated by the Resort Hotel and Conference Center project (RHCC). (Port)
2. Other new, long-term ground leases in the CVBMP project area. (Port)
3. Transient Occupancy Taxes (TOT) generated within the CVBMP project area. (City)
4. Tourism Marketing District Assessments. (City)
5. Park Fees. (City/Developer)
6. Pacifica Unit Contribution per the Chula Vista Bayfront Master Plan Settlement Agreement. (Developer)
7. Development Impact Fees. (City/Developer)
The adopted Financing Agreement contemplates that revenue sources #1 through #4 above would be contributed to the project on a net basis, following the repayment of operation & maintenance (O&M) costs incurred by each agency.
In addition to identifying specific revenue streams, the Financing Agreement also provides that the City and the Port will:
1. Establish a Joint Powers Authority (JPA) to facilitate the financing of public improvements and the conference center;
2. Work cooperatively to develop a more definitive Plan of Finance, with the assistance of Bond Counsel and the Investment Banking Community;
3. Cooperate in good faith and use their respective best efforts to negotiate an agreement relating to the provision of a Fire Station serving the CVBMP project area (“Bayfront Fire Station”); and
4. Cooperate to develop a transit plan consistent with the shuttle service identified in the FEIR (the “Transit Plan”), including identification of funding sources for associated capital costs and operation costs.
CVBMP Financing Agreement, Implementation to Date
Since the 2012 adoption of the Financing Agreement, the City and the Port have taken a number of implementing actions, including formation of the required JPA (#1 above)1. In addition, the City and Port worked collaboratively to develop the Chula Vista Bayfront Master Plan Public Access Program (PAP). Adopted by the Port and certified by the California Coastal Commission in late 2012, the PAP defines and implements an extensive multi-modal pedestrian, bicyclist, mass-transit and automobile based system, in order to provide a variety of free and low-cost waterfront public recreational opportunities for residents and visitors. The PAP establishes a Public Transit plan for the CVBMP, including the required shuttle service (#4 above).
The proposed Amendment to the Financing Agreement before the Council tonight addresses several of the remaining outstanding implementation items.
CVBMP Financing Agreement, Recommended Amendment
While the City and Port have worked to implement the provisions of the adopted Financing Agreement, the vision for the RHCC project and the necessary public investment has continued to evolve. As such, a number of modifications to the adopted CVMBP Financing Agreement are recommended to better reflect the anticipated contribution from each agency. The proposed Amended and Restated Agreement is included as Attachment 1.
Significant changes proposed are as follows:
1. Assumed payment of O&M costs prior to application of net revenues streams to project has been removed. All revenue streams are now considered on a gross basis. (City/Port)
2. Addition of ground lease revenues generated by existing uses in the CVBMP project area. (Port)
3. Acknowledgement of previously committed Port Land Exchange Payment, to be applied to CVBMP public improvements. (Port/Developer)
4. Acknowledgement of previously committed SDG&E Relocation Fees, to be applied to CVBMP public improvements. (Port/SDG&E)
5. Addition of sales tax revenues generated by the RHCC project. (City)
6. New agreement to pursue formation of an Enhanced Infrastructure Financing District (EIFD) with the County of San Diego. If formed, the incremental Property Tax and Property Tax In-Lieu of Motor Vehicle License Fee revenues generated by the project would be dedicated to project infrastructure. The EIFD funds replace tax increment that would have been generated under the City’s now defunct Redevelopment Agency, as anticipated in the original agreement. Should the County not approve formation of the EIFD, the City will contribute an amount equal to the City’s share of project generated incremental Property Tax and Property Tax In-Lieu revenues. (City)
7. Addition of City General Fund discretionary revenues, in an amount equal to the annual funds currently received from the Port, reimbursing the City for the cost of providing public safety services within the Chula Vista tidelands area (“MSA Funds”). (City)
8. New agreement to pursue creation of a mechanism to generate additional occupancy-based revenues, replacing previous Tourism Marketing District Assessments (Chula Vista Tourism Marketing District was disestablished in 2012). (City)
9. Addition of Sewer Facility funds to finance specific sewer improvements in the CVBMP project area. (City)
10. City acceptance of sole responsibility for provision of the planned Bayfront Fire Station. (City)
11. City acceptance of sole responsibility for operation, including funding, of shuttle service per the CVBMP Transit Plan (as described in the CVBMP PAP). (City)
Joint Powers Authority (JPA)
Through the Financing Agreement, the City and the District agreed to establish a JPA to provide for or facilitate the financing of CVBMP public improvements and the planned conference center.
In May of 2014, the City Council adopted Resolution 2014-070 approving a Joint Exercise of Powers Agreement (JEPA) with the Port and creating the “Chula Vista Bayfront Facilities Financing Authority” (the “Authority”). The Authority, as formed, is a separate public entity from the City and the District, with the sole purpose of assisting in the financing and refinancing of the capital improvement projects of the CVBMP, as contemplated in the Financing Agreement. Under California law and the JEPA, the liabilities or obligations of the Authority will not be the debts, liabilities or obligations of the City, the District, or any representative of the City or District serving on the governing body of the Authority.
The Governing Board of the Authority, when seated, will consist of five (5) members, as follows:
Two (2) members appointed by the City Council;
Two (2) members appointed by the Port District; and
One (1) member will be the Chula Vista appointed Port Commissioner.
To date, no members have been appointed to the Governing Board. Board Members must be members of the governing body or employees of the Port District or the City, as applicable. All administrative functions (Secretary, Treasurer, and Executive Director) will be fulfilled by existing Port District staff. Seating of the board is anticipated to follow adoption of the Plan of Finance.
Plan of Finance
The future Plan of Finance will utilize all sources of funds identified in the Financing Agreement to support the construction of public improvements and amenities, attached as Exhibits C-1, C-2, E-1, and E-2 to the Finance Agreement, as well as development of the RHCC.
Following approval of the Amended and Restated CVBMP Financing Agreement, City and Port staff will begin drafting the Plan of Finance.
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. Adopting the Amended and Restated CVBMP Financing Agreement supports the Economic Vitality Goal by continuing implementation of the Chula Vista Bayfront Master Plan, Initiative 2.1.1 of the City’s Strategic Plan.
CURRENT YEAR FISCAL IMPACT
The Amended and Restated Financing Agreement sets forth the anticipated funding sources and methodology for the preparation of a future Plan of Finance for the CVBMP project. Approval of the Amended and Restated Financing Agreement results in no current year fiscal impact.
ONGOING FISCAL IMPACT
Specific commitments of revenues and other forms of financial support for the CVBMP will be determined in a future Plan of Finance, yet to be negotiated. The Amended and Restated Financing Agreement reflects the expected forms of support from each public agency (City and Port), but is non-binding without further action of the respective legislative bodies.
Anticipated City Contribution
Project support is expected to include a combination of one-time and ongoing contributions from the City, the Port, and the County (EIFD only). One-time contributions are generally tied to the construction of specific public infrastructure (roadways, parks, etc.). Per conditions of the FEIR, much of the planned CVBMP infrastructure must be constructed prior to, or concurrent with, initial private development. Development impact and in-lieu fee revenues will be generated over the entirety of the project’s buildout, creating an initial cash flow gap and necessitating the issuance of bonded debt for public improvements. Issuance of additional debt to finance the RHCC conference facilities is also anticipated. The ongoing contributions of each agency will be used to repay any bonded debt that may be issued, and to offset the cost of operating and maintaining public infrastructure and facilities.
One-time contributions by the City reflect the purchase of a potential fire station site on the Bayfront and development impact and in-lieu fees applicable to CVBMP public infrastructure, including:
• Bayfront Development Impact Fees;
• Public Facilities Development Impact Fees;
• Parkland Acquisition & Development Fees;
• Traffic Signal Fees; and
• Sewer Facility funding.
Anticipated ongoing contributions by the City include the following:
• The City’s portion of Property Tax and associated Property Tax In-Lieu of Motor Vehicle License Fees generated by the project (EIFD);
• Project generated TOT (existing RV park and proposed RHCC);
• Sales tax generated by the proposed RHCC;
• Project generated additional occupancy-based revenues (replaces repealed CVTMD);
• General Fund support in an amount equal to the funds currently received from the Port, reimbursing the City for the cost of providing municipal public services in the tidelands (MSA Funds).
If implemented per the Amended and Restated Agreement, impacts to the City’s existing General Fund would be limited to the TOT generated by the existing RV Park and the MSA Funds. City staff will continue to work with the Port to reduce General Fund impacts to both agencies. This may be accomplished through either (1) the identification of alternative funds or (2) the use of project generated revenues to repay any discretionary funds that have been expended.
Approval of the proposed Amended and Restated CVBMP Financing Agreement provides a framework for the City and the Port to move forward with a Plan of Finance. Approval of a Plan of Finance, which will provide additional detail and specificity, will be brought back to Council for future consideration and approval.
ATTACHMENTS
1. Proposed Amended and Restated Chula Vista Bayfront Master Plan Financing Agreement
Staff Contact: Tiffany Allen, Development Services Department
1. Additional discussion of the JPA is provided in the “Joint Powers Authority (JPA)” section of this report.