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DECLARATION OF ELECTION RESULTS REGARDING LEVY OF SPECIAL TAXES WITHIN THE IMPROVEMENT AREAS OF COMMUNITY FACILITIES DISTRICT NO. 14M (EASTERN URBAN CENTER/MILLENIA) AND THE ESTABLISHMENT OF AN APPROPRIATIONS LIMIT THEREIN AND AUTHORIZE THE LEVY OF SPECIAL TAXES
A. RESOLUTION NO. 2014-023 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA DECLARING THE RESULTS OF A SPECIAL ELECTION IN COMMUNITY FACILITIES DISTRICT NO. 14M (EASTERN URBAN CENTER/MILLENIA)
B. ORDINANCE OF THE CITY OF CHULA VISTA AUTHORIZING THE LEVY OF SPECIAL TAXES WITHIN THE IMPROVEMENT AREAS OF COMMUNITY FACILITIES DISTRICT NO. 14M (EASTERN URBAN CENTER/MILLENIA) (FIRST READING)
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution and place the ordinance on first reading.
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SUMMARY
On January 7, 2014, Council initiated proceedings for the formation of CFD No. 14M by adoption of Resolutions 2014-003 through 2014-005. On February 11, 2014, Council held a public hearing and approved the formation and establishment of CFD No. 14M and called for and ordered to be held an election to submit to the qualified electors of each Improvement Area of CFD No. 14M propositions relating to the levy of special taxes within the Improvement Areas and separate propositions relating to the establishment of an appropriations limit for the district. This action will be the next step in the proceedings to establish CFD No. 14M. This district will fund the perpetual operation and maintenance of (a) landscaping, including, but not limited to, parkways and medians; (b) facilities that are directly related to storm water quality control; (c) walls and fencing; (d) trails; (e) pedestrian bridges, including, but not limited to, graffiti removal; (f) public lighting facilities; and (g) public parks. The City has retained the services of NBS as special tax consultant and Best, Best and Krieger, LLP as legal counsel to provide assistance during the proceedings.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because the creation of government funding mechanism is not considered a project; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review 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. 14M, 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.
CFD 14M will provide the necessary funding for the operation and maintenance of public landscaping, storm water quality, walls, fencing, trails, pedestrian bridges, lighting, and park improvements by levying an annual "special tax" which is collected from the property owners within CFD 14M 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.
On September 15, 2009, Council approved an Agreement Regarding Construction of Parks in a Portion of Otay Ranch Eastern Urban Center (the "Parks Agreement"). The Parks Agreement states that the City and McMillin Otay Ranch LLC ("McMillin") shall split equally (50-50) the costs of maintaining the Public Parks in the Eastern Urban Center based on preliminary cost estimates provided by both the City and McMillin. The City's share (and thus McMillin's basic share) shall be based on the average annual cost for 21.51 acres each fiscal year as calculated for the City's budget for public parks.
To ensure collection of the City's portion of the cost of the park maintenance, CFD 14M has been structured with two improvement areas with the City parks placed into the second improvement area. On December 17, 2013, Council, acting under its Charter authority, amended the Chula Vista Community Facilities District Ordinance to allow for the City park property to be placed into the improvement area. Each year, the City will be assessed for its portion of the costs to maintain the parks based on the average annual citywide maintenance cost for 21.51 acres budgeted for that fiscal year multiplied by a ratio of the public park acres in the Eastern Urban Center that have been turned over to the City for maintenance. The ordinance was also amended to allow the CFD Administrator to directly bill the City each year for the assessment so the public parks remain off the County property tax rolls.
The proposed CFD 14M is consistent with the above-mentioned Ordinance as amended and the Goals and Policies. In addition, the staff and McMillin have met to discuss, review and clarify the intent of the Goals and Policies and Ordinance, the proposed special tax rates, and the methodology for the apportionment of the special taxes. Any matters raised by McMillin have been discussed and solutions, satisfactory to all parties, have been incorporated into the "Rate and Method of Apportionment" (the "RMA") presented at the January 7, 2014 Council meeting.
During its January 7, 2014 meeting, the City Council approved Resolution No. 2014-005, which ordered the preparation of a Community Facilities District Report ("Report"). Earlier in this meeting of February 11, 2014, the City Council approved the formation and establishment of Community Facilities District No. 14M (Eastern Urban Center/Millenia), authorized the electors to vote on the special taxes and the establishment of an appropriations limit for the district, and authorized the City Clerk to conduct the special election.
Resolution/Ordinance
The City Clerk, acting as the designated election official, has held the special election within each Improvement Area of Community Facilities District No. 14M (Eastern Urban Center/Millenia) and each such measure did receive the favorable votes of at least 2/3's of the qualified electors of each Improvement Area within the district.
There is one resolution and one ordinance with this agenda item, which, if adopted, will accomplish the following:
1. Declare the results of the special election for Community Facilities District No. 14M (Eastern Urban Center/Millenia).
2. Introduce an ordinance of the City Council authorizing the levy of a special tax within Community Facilities District No. 14M (Eastern Urban Center/Millenia) (First reading).
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not 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. This action supports the goal of Economic Vitality, which includes promoting and supporting the development of quality master-planned communities.
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.
ONGOING FISCAL IMPACT
McMillin will be building the six public parks on behalf of the City to meet their park obligations, so there will be no capital costs related to the construction of the parks. One of the parks will be privately maintained, but open to the public. The cost for the maintenance for the five remaining parks shall be shared between the property owners and the City as described in the discussion section of this report. The total annual cost for all the parks is estimated to be $319,859 to the property owners and $319,859 to the General Fund. This includes both maintenance of the parks and periodic replacement of amenities as needed. The development of Millenia will generate additional property tax and sales tax that will help offset the annual General Fund expenditure.
Construction for the first public park is anticipated to be complete by the end of 2015 with the park opening in early 2016. The fiscal year 2015/16 impact for this 1.97 acre park is estimated to be $59,445 to the General Fund, along with $59,445 to be incurred by the property owners.
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