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RESOLUTION NO. 2015-282 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE ADVANCE DEPOSIT AND REIMBURSEMENT AGREEMENT FOR COMMUNITY FACILITIES DISTRICT NO. 16-I (MILLENIA) BETWEEN THE CITY AND SLF IV-MILLENIA, LLC AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE AGREEMENT ON BEHALF OF THE CITY
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
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SUMMARY
SLF IV-Millenia, LLC is the owner of the property within the Eastern Urban Core of the City commonly referred to as Millenia and assignee to McMillin Otay Ranch LLC under the Development Agreement by and between the City of Chula Vista and McMillin Otay Ranch LLC pertaining to the development of Millenia. SLF IV-Millenia, LLC intends to submit a request and application to the City that the City undertake proceedings to establish a community facilities district to finance the acquisition or construction of certain public improvements in connection with the Millenia Project.
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” in accordance with Section 15378(b)(5) of the State CEQA Guidelines because the District is a financing district that will not result in a direct or indirect physical change in the environmental; therefore, pursuant to Section 15060(c)(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
SLF IV-Millenia, LLC (“Applicant”) is the owner of that property within the Eastern Urban Core (“EUC”) of the City commonly referred to as Millenia and assignee to McMillin Otay Ranch LLC (“McMillin”) under the Development Agreement by and between the City of Chula Vista (the “City”) and McMillin (the “Development Agreement”) pertaining to the development of Millenia (defined in the Development Agreement as the “Project”). Acting pursuant to the Financing Plan contained in the Development Agreement (the “Financing Plan”), Applicant intends to submit a request and application to the City that the City undertake proceedings to establish a community facilities district (the “District”) to finance the acquisition or construction of certain public improvements (defined in the Financing Plan as “Eligible Public Facilities”) in connection with the Project. The Financing Plan provides that the obligation of the City to initiate such proceedings is conditional upon receipt by the City of an advance, subject to reimbursement, from the Applicant in an amount determined by the City to pay for the City’s estimated costs to be incurred in undertaking the proceedings to establish the District. The Financing Plan further requires that the exact terms and conditions for the advance of funds by the Applicant and the reimbursement of such advances as mutually agreed upon shall be memorialized in a separate agreement between the City and the Applicant. The Community Facilities District Advance Deposit and Reimbursement Agreement (the “Agreement”) is intended to satisfy such requirement of the Financing Plan. The approval of the Agreement will also preserve the ability to finance the acquisition of certain Eligible Public Facilities that have been constructed by the Applicant and are awaiting acceptance by the City.
The Financing Plan to the Development Agreement establishes the basic terms and conditions pursuant to which the City and the Applicant, as assignee to McMillin, will cooperate to establish the District to finance the acquisition or the construction of Eligible Public Facilities in connection with the Project. As mentioned above, the City shall initiate the proceedings to form the District only upon receipt of a request and the City’s standard application for consideration of the formation of a community facilities district and an advance from the Applicant in the amount estimated by the City. The City and the Applicant will establish the terms and conditions pursuant to which the Applicant will advance funds to the City to pay for the costs incurred by the City in undertaking the proceedings to consider the formation of the District and, if the District is formed, the estimated cost of issuing bonds by the District to finance the Eligible Public Facilities.
The Agreement provides that the Applicant shall advance funds necessary to pay all costs and expenses incurred by the City in undertaking the proceedings to consider the formation of the District and subsequently authorizing, issuing and selling bonds of the District to finance the acquisition or construction of the Eligible Public Facilities (the “Formation and Issuance Costs”) (except those costs and expenses which are contingent upon the issuance of bonds for the District and are payable solely from the proceeds of such bonds). Such Formation and Issuance Costs will include, without limitation, the following:
1. Special Tax Consultant services;
2. Bond counsel services;
3. Financial advisory services;
4. Appraisal and market absorption services;
5. Disclosure Counsel services; and
6. City staff and City Attorney time.
Prior to the execution of the Agreement, the Applicant is required to make an initial advance to the City of $79,500. If monies in addition to the initial advance are necessary to pay for the Formation and Issuance Costs, the City shall as necessary and from time to time make written demand upon Applicant and Applicant shall immediately thereafter, within five (5) working days, deposit said monies with the City to pay for the balance of the Formation and Issuance Costs. If such additional monies are not timely received, all proceedings shall, at the option of the City, be suspended until such monies are received.
If the District is formed and bonds of the District are issued, the Applicant shall be reimbursed for all expenditures funded from such advances solely from the proceeds of the special taxes levied within the District and/or the proceeds of bonds issued by the District. If the District is not formed and such proceedings are abandoned for any reason at any time prior to the successful sale of bonds or the District is unable for any reason to issue or sell the bonds, there will be no obligation on the part of the City or the District to reimburse the Applicant for any monies previously advanced pursuant to this Agreement; provided, however, the City shall return to the Applicant any monies previously advanced which remain on deposit with the City and which the City determines are in excess of the amount necessary to pay for any outstanding Formation and Issuance Costs previously incurred by the City.
The Agreement does not in any way create a contractual, legal or equitable obligation of or commitment by the City to approve the formation of the District and the City expressly reserves the right to abandon the proceedings for any reason at any time prior to the completion thereof.
The Agreement also establishes the terms and conditions pursuant to which certain Eligible Public Facilities that have been constructed (the “Initial Improvements”) or may be constructed (the “Additional Improvements”) by the Applicant subsequent to the parties entering into the Agreement and prior to the formation of the District shall be eligible to be acquired by the City if the District is formed and bonds of the District are issued for such purpose. The specific terms and conditions are set forth in Section 6 of the Agreement.
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. The approval of this agreement initiates the District formation process. Once the District is formed and bonds are sold, the proceeds will serve two City Strategic Plan major goals: Economic Vitality, via addition commercial activities, and a Connected Community by way of enhanced roadway improvements in the EUC/Millenia area of the City.
CURRENT YEAR FISCAL IMPACT
Funds to pay for all expenses incurred by the City in undertaking the proceedings to form the District will be advanced by the Applicant. There is no direct fiscal impact on the City by this action.
ONGOING FISCAL IMPACT
The costs to administer the District, if established and the issuance of bonds by the District shall be paid from the proceeds of special taxes to be levied within the District or the proceeds of the bonds issued by the District. There is, therefore, no ongoing fiscal impact on the City’s general fund by this action.
ATTACHMENTS
1. Community Facilities District Advance Deposit and Reimbursement Agreement - Community Facilities District No. 16-I
Staff Contact: David Bilby, Director of Finance/Treasurer