STAFF REPORT DATE: February 17, 2015 TO: FROM: SUBJECT: City Council Mike Webb, Director of Community Development & Sustainability Cannery Request for Community Facilities District (CFD) Formation Recommendation Direct staff and the City's CFD consultant team to proceed with next steps in forming a Community Facilities District (CFD) for The Cannery Project. City Council Goals Promote Community Fund, Maintain, and Improve Infrastructure Background and Discussion Background. The Cannery is an approved mixed use project located on the site of the former Hunt Wesson tomato plant. The New Home Company is the developer. At build out, the project will comprise 547 residential units and 171,000 square feet of non-residential development. The project site is approximately 100 acres. The New Home Company has indicated that they would like to have model homes open by July of 2015. Construction on the first models began earlier this month. The developer has proposed formation of a Community Facilities District (CFD) to fund certain components of public infrastructure for the CFD. On November 5, 2014 the City Council held a workshop on the more general topic of CFD s in anticipation of the specific Cannery CFD being presented now. The November 5 th report and presentations can be found at: http://citycouncil.cityofdavis.org/council-meetings/agenda---november-5-2014---special-meeting On October 22, 2014 the New Home Company (developer of the Cannery project) submitted a request to the City to authorize the formation of a Community Facilities District (and therefore issuance of one or more series of bonds secured by the Special Taxes levied) in an amount sufficient to finance certain public improvements for the project. The amount proposed is not to exceed $17,000,000. Project infrastructure proposed for CFD financing includes backbone infrastructure the project is obligated to provide, including, but not limited to, public roadways, storm drainage, sanitary sewer, water, parks and open space, and electrical/lighting, as well as certain off-site improvements required of the project. Details of the CFD request are attached to this report. Consenting to the formation of a CFD is a discretionary action by the City. Provisions in the Cannery Development Agreement allow the developer to request consideration of the formation
of one or more CFD s for funding of infrastructure and/or services for the project. Specifically, the DA states: ARTICLE 11. Special District Formation. A. [Sec. 11001 Community Facilities District for Public Facilities and/or Services. Developers and City may form a Community Facilities District or Districts (or other public finance district under State law, as appropriate) for the purpose of financing the construction and/or acquisition of public infrastructure and facilities within the Project area or for the provision of services ("Project CFD(s)"). If requested by Developers, City may determine whether to form one or more Project CFD(s) for the purpose of providing services or financing the acquisition or construction of some or all of the improvements and facilities eligible for CFD financing within and associated with the Project, including those improvements which will mitigate impacts of the Project upon areas inside and outside of the Project with a useful life of 5 years or longer, and will be owned, operated or maintained by the City or another public agency as authorized under Government Code 53311 et seq. and City policy. CFD s are a typical means to finance public infrastructure in major projects, such as public roads and backbone utility infrastructure, parks, and greenbelts. CFD s may not be utilized for the development of private improvements, such as homes or homeowners association facilities. Total infrastructure and park development costs for the CFD are estimated by The New Home Company at $18.1 million, plus another $3.2 million for development of the Urban Farm feature, another $750,000 for an improvement of community benefit to be determined by the City, for a total of about $22 million. The total amount of potential infrastructure that could be funded via a CFD exceeds the actual amount of CFD requested. Therefore, the balance of the infrastructure financing would be borne directly by the developer. Staff and our consultants believe that this is a prudent approach as the proposal does not seek to overreach to fund 100% of the public infrastructure. If authorized by the City Council to proceed to the next steps of formation, staff and our consultants will review specifics of infrastructure proposed to be funded by the CFD to ensure the facilities qualify as public facilities eligible as CFD improvements. The proposed CFD. The developer has submitted the proposed tax structure for the CFD (called the Rate and Method of Apportionment). The CFD would be authorized to levy special taxes on taxable parcels within the CFD for a period of 40 years. The maximum tax rates on residential units would range from $904 to $3,223 per unit, per year. No special taxes would be levied on affordable housing units. The special taxes would increase at a rate of 2% per year over the full 40 year term. Parcel owners could prepay their taxes, and eliminate the lien for the CFD special taxes on their property. The developer estimates that this tax structure would allow about $12.4 million of the proposed $22 million in eligible facilities to be funded by a combination of CFD bond proceeds and direct payment by special taxes. The remaining costs would be funded directly by the developer. Overall tax burden on homeowners in The Cannery. Table 1 below shows the estimated combined ad valorem, special assessment and CFD special tax burden on an average size home in The Cannery, including all CFD special taxes for the Davis Joint Unified School District:
Table 1 - Hypothetical Property Tax Bill for a 2,130 sf home in the Cannery Scenario 1 - With Cannery CFD Taxes and Assessments Per cent of total taxes and assessments Scenario 2 - Without Cannery CFD Taxes and Assessments Per cent of total taxes and assessments Ad Valorem Taxes Sales Price 637,000 637,000 Homeowner's exemption (7,000) (7,000) Adjusted Assessed Value 630,000 630,000 Combined Ad Valorem Tax Rate 0.0107 0.0107 Total Ad Valorem Taxes 6,750 60.5% 6,750 75.5% Special assessments and CFD taxes DUSD Measure C 327 2.9% 327 3.7% DUSD Measure E 204 1.8% 204 2.3% DJUSD CFD #1 199 1.8% 199 2.2% DJUSD CFD #2 1,287 11.5% 1,287 14.4% County Library CFD 99 0.9% 99 1.1% Proposed Cannery CFD 2,224 19.9% - 0.0% City of Davis Landscaping and Lighting Assessment 49 0.4% 49 0.5% City of Davis Open Space Assessment 24 0.2% 24 0.3% Total Special Assessments and CFD Taxes 4,413 39.5% 2,189 24.5% Combined Ad Valorem, CFD special taxes and assessments 11,163 100.0% 8,939 100.0% Total taxes and assessments as a per cent of assessed value 1.75% 1.40% Without the CFD, the combined ad valorem, assessment and CFD special tax burden on an average home in The Cannery would be $8,939 per year, or the equivalent of a combined ad valorem levy equal to 1.4% of assessed value. With the proposed CFD, the combined annual ad valorem, assessment and special tax burden would be $11,163 per year, or the equivalent of a combined ad valorem tax levy equal to 1.75% of assessed value. The actual special tax for The Cannery CFD would be $2,224 per year, compared with $2,017 for all Davis Joint Unified School District CFD's combined.
Table 2 below shows the total assessments on a $637,000 home in the Cannery with and without a CFD compared to the same price home in Mace Ranch, South Davis, as well as areas of the City not within CFD s Existing City Policy on CFD s The City has adopted goals and policies for CFD's formed by the City. These goals and policies cover issues regarding the tax structure of a CFD, the facilities to be funded, and many structural and credit issues regarding the issuance of bonds. The CFD proposed by The New Home Company for The Cannery is consistent with these policies. However, actual City practice with respect to its current CFD's has varied in two key areas: 1) The 2% Escalator. The escalators on the City sponsored CFD's for community improvements were terminated because the City either deferred or found other funding sources for the projects intended to be funded over time by the escalating special taxes. With respect to the Mace Ranch developer CFD, the escalator was eliminated as part of an overall negotiated restructuring of the CFD to accommodate the needs of both the homeowners and the developer. The School District CFD s do include such an escalator. The overall funding power of the CFD is significantly greater with the 2% escalator than without. A 2% escalator is not uncommon in other CFD s and the exclusion of it would impair the viability and purchasing power of the CFD. 2) Comparative Tax Rates. The actual special taxes levied currently on taxable homes in Davis is lower than what is proposed for The Cannery. The highest combined special
tax levy currently for City sponsored CFD's is in the Mace Ranch area, and is about $780 per home per year, almost 1/3 less than what is proposed for an average home in The Cannery. At the time of formation for the Mace Ranch developer CFD, the combined ad valorem tax rates, assessments and CFD tax rates, measured as a hypothetical ad valorem levy, were nearly 2%. Consequently, on that basis, the proposed tax rates for The Cannery CFD are actually lower. Since home values have increased significantly since the early 1990's in Davis, while the proposed tax rates in absolute dollars are significantly higher, as a percent of assessed value, they are slightly lower. Comparative Issues with the Mace Ranch CFD. The Mace Ranch project was a major extension of City services and school facilities outside the then existing urban area of Davis. The CFD was intended to provide funding for these needed services on a timely basis. However, while basic infrastructure was funded on a timely basis, some of the other amenities, particularly in the view of Mace Ranch residents, were not funded on a timely basis. Consequently, many residents felt they were paying taxes for facilities that were not in place.
The situation with The Cannery is different. This is an infill project. The facilities required for The Cannery, in general, must be constructed before the first units are occupied. In addition, the City and the developer can negotiate a prioritization of funding with CFD bond proceeds for all facilities that will help insure the timely development of all amenities for The Cannery. The Development Agreement and project conditions do not mandate, for example, that all the backbone greenbelts, parks, and Cannery farm be completed within the first project phase. In fact, it is more typical for a project to develop such amenities in a more piecemeal manner concurrent with home construction phasing. Furthermore, there are certain amenities, such as the Farm House building, that are not mandated project elements, but that the Cannery is pursuing nonetheless. The extent of amenities and timing thereof, will result in a project site where the parks, greenbelts, farm, and other public amenities, are largely completed when the first residents move in. To do this requires substantial up-front investment in infrastructure. Staff and our consultants believe that the CFD proposal, in the context of a high amenity infill project like Cannery, is a reasonable means of financing such infrastructure and can be readily distinguished from the circumstances found in the Mace CFD. The CFD also provides an opportunity to provide greater assurances of early infrastructure timing. Fiscal Impact The obligation to pay special taxes for both CFD's is solely an obligation of the parcels within each CFD. Neither the parcel owner nor the City is directly obligated to pay the taxes. The taxes are secured solely by a lien on the taxable parcels. When bonds are issued, debt service will be secured solely by a pledge of the special taxes on parcels within the CFD. There is no obligation from the City to pay debt service on the bonds. The City is responsible for administering the levy of the special taxes for both CFD's. The tax structure for The Cannery CFD would provide for an allocation of special taxes for this purpose, with an escalator to provide for inflation in administration costs as well. The City is also obligated to pursue legal foreclosure remedies against parcels that are delinquent in the payment of their special taxes. These costs can be paid from the special taxes. However, as the City experienced with its prior CFD, if all parcels in a CFD are delinquent, there will not be sufficient special tax revenue to pay for the City's foreclosure costs. In this case, the City's General Fund must pay these costs until such time as foreclosure is successful. At that time, the first use of foreclosure sale proceeds is to reimburse the City for its foreclosure costs. The proposed CFD includes funds of $750,000 that the City may utilize for a public improvement anywhere in the City. The public improvement may be located anywhere in the City, and is not limited to the geographic area of the Cannery. The $750,000 in CFD funds would need to be utilized for a public capital improvement that is to be owned by a public agency. For tax-exempt bond purposes, the facility should have a useful life of at least 20 years and be operated by the public agency. Furthermore, the funds would need to be spent within 3 years from the date of issue of the bonds. Ideally, the City would identify the improvement to be funded as we move toward issuance of the bonds. In the proceedings to form the CFD the City can describe, in general terms, the types of facilities that the City may want to fund, such as recreational facilities or transportation facilities. If directed to proceed to CFD formation, utilization of the $750,000 will be identified as part of the Budget and Capital Improvement
Program. Per the proposal from The New Home Company, the full $750,000 would be realized as long as the CFD net proceeds are at least $11.8 million. The New Home Company proposal includes a provision that would adjust this downward by $150,000 for every $1.0 million reduction in net proceeds. For example, a $450,000 pledge will follow from $9.8 million in net proceeds. Furthermore, the pledge is reduced only with a reduction in bond proceeds by a FULL $1 million (e.g. bond proceeds of $10.9 million would still result in a pledge of $750,000). In the event TNHC receives less than $9.0 million in total net proceeds from the CFD the pledge would be reduced to zero. Our consultant team believes that, given the current and foreseeable CFD bond market, there is minimal risk to the CFD proceeds being less than $11.8 million. The Process of CFD Formation The formation of a CFD requires the following steps be undertaken by the City Council: 1) Direction from Council to proceed with the next steps of CFD formation. 2) Accept the petition of the landowner and adopt a resolution of intention (the ROI ) approving the Rate and Method of Apportionment (special tax structure) for the CFD, establishing the boundaries of the proposed CFD, listing the authorized facilities to be financed by the CFD, and establishing the maximum amount of bonds that can be issued by the CFD 3) Within 30 to 60 days from the date of adoption of the ROI conduct a hearing regarding the formation of the proposed CFD, the boundaries thereof, the facilities to be financed, the rate and method of apportionment of the special tax and the bonded indebtedness 4) At the close of the hearing the City Council will adopt the resolution of formation and call a special election of the landowners within the CFD to vote on the authorization of the special tax levy and the bonded indebtedness. 5) If the landowner election is successful, ie. 2/3 s majority vote in favor of the CFD, then the City may proceed with the issuance of bonds at such time as the credit criteria of the City with respect to the issuance of bonds is met. Prior to adoption of the resolution of intent, City staff and its consultant team would negotiate the sequencing and funding plan for all improvements to be funded through the CFD. Possible Schedule Staff and the City's consultant team believe it is possible to form the CFD for The Cannery before The New Home Company intends to open its first model homes (models anticipated to open in July, 2015). This is important because it is in the City's best long term interest to have the disclosure to potential homebuyers regarding the special tax burden for the CFD be as accurate as possible. Accordingly, staff and our consultant team believe that the negotiation of sequencing and funding for all public improvements for the CFD can be accomplished within the next six weeks, as well as review of the proposed Rate and Method of Apportionment. On this basis, the Resolution of Intent could be scheduled for the Council meeting of April 7 th, with the landowner election and adoption of the Resolution of Formation at the Council meeting of June 2 nd.
Cannery Development Agreement The entitlements for the Cannery project include a Development Agreement (DA), which was approved by the City Council via ordinance concurrently with the project entitlements on November 19, 2013. A Development Agreement is a contract between a developing property owner and the regulating jurisdiction. The DA requires agreement by both parties and provides a vested right that allows the development to proceed despite future changes in land use regulation or other local requirement. Development Agreements often include obligations of developers to provide contributions or other community benefits. Because a Development Agreement is a voluntary contract, contributions are not limited to those with a direct nexus to the project (as is required for conditions of approval and mitigation measures). The developer obligations in the DA cover a range of topics, including infrastructure (parks, greenbelts, drainage, roads, bicycle/pedestrian paths, farm, etc ), affordable housing, sustainability/energy efficiency features, accessibility features, and project fees and monetary obligations. Once adopted, the DA is binding on both the developer and City. Any amendment to the DA must be by mutual agreement. Since approval of the Cannery project at the end of 2013, the developer has been working diligently to perform the various obligations of the DA, as well as those requirements set forth in the project conditions of approval, and has been developing site infrastructure in preparation for installation of parks, greenbelts, utilities, urban farm infrastructure, bicycle paths and roads. On February 6 th building permits were issued for the construction of the first model homes in the development. The developer has been executing the project development in full conformance with the project conditions and Development Agreement. Two key provisions of the DA remain in need of final resolution: 1) the CFD request discussed in this report and 2) finalizing a preferred alignment of a southwest (SW) bicycle/pedestrian grade separated connection. The requested CFD is discussed in both this report and the overview report presented to the City Council in November of 2014. The status of the SW bicycle/pedestrian grade separated connection is discussed below. SW Grade Separated Bicycle/Pedestrian Connection Southwest Connections The Draft Environmental Impact Report (EIR) for the Cannery analyzed three off-site pedestrian and bicycle path connections, as follows: 1. the proposed alignment under the East Covell Boulevard bridge and east of the UPRR tracks to connect with the H Street bicycle tunnel; 2. the Option 1 alignment under the East Covell Boulevard bridge and east of the UPRR tracks turning easterly and continuing along the southern face of the Covell overcrossing to tie into the existing bike trail on the south side of East Covell Boulevard; and 3. the Option 2 alignment over the UPRR tracks to connect to the existing bike trail parallel to F Street.
Images of the three options are below.
While these three options for SW connection were analyzed in the EIR, the Development Agreement focused on the two connection options on the south side of Covell Boulevard, in lieu of the option 2 connection north of Covell. Specifically, the DA states: Article 2.B [Sec. 201]8 Bicycle Connection BIKE CONNECTION. A grade-separated bike path connection from the southwest portion of the project site across Covell Boulevard shall be constructed by Subdivider. The alignment and the design and construction shall be reviewed and approved by the Director of the Public Works and the Director of Community Development and Sustainability (the Directors ). Subdivider shall construct a ten-foot wide bicycle connection path from the project site which shall meet all ADA requirements including currently proposed requirements for multi-use paths. The path shall also meet City requirements to provide two feet of clearance on each side of the bike path, unless the Directors approve adjustments to dimensions based on physical constraints. Lighting shall be provided along the path and shall also be kept two feet clear from the path, unless otherwise approved by the Directors. The preferred route is to connect to the H Street Tunnel as studied in the project Environmental Impact Report (EIR). The H Street Tunnel route requires offsite easements and/or right-of-way acquisition. Subdivider shall
diligently pursue acquisition of the necessary easements and/or right-of-way, consistent with parameters established in Section 204 of the Development Agreement. If the Subdivider has not secured the easements and/or right-of-way acquisition by April 30, 2014, the Subdivider shall so inform the City and provide detailed documentation of the efforts taken to acquire and the City Council shall determine whether to obtain the easements and/or right-of-way through condemnation or otherwise. Should the City Council determine not to proceed with acquisition of the easements and/or right-of-way, the Subdivider shall be required to construct the Southwest Connection to the Covell Boulevard Multi-Use Path as studied in the EIR (Bike Path Option 1). All acquisition expenses and construction costs for completion of the connection shall be borne by the applicant. Associated improvements shall include, but are not necessarily limited to: street, sidewalk, bike path, lighting, landscaping, irrigation, and drainage improvements. Should the right-of-way and/or easements for the preferred H Street Tunnel connection be secured by April 30, 2014 or the City Council chooses not to pursue condemnation, the improvements to make the applicable bike connection shall be completed prior to issuance of a building permit for the 100th market rate unit proposed for development in this subdivision (model homes excluded). Should the City Council choose to pursue condemnation, the improvements shall be completed the later of one year after such right-of-way and/or easements are obtained or proceedings abandoned, or prior to issuance of a building permit for the 100 th market rate unit proposed for development in this subdivision (model homes excluded). The City agrees to diligently process and approve improvements plans associated with the applicable bike connection in a period less than 60 days. The one year construction requirement associated with right-of-way acquisition and/or easements being obtained through condemnation shall be extended for each day that the 60-day processing and approval requirement is not met. The City initiated preliminary discussions with the owner (North Davis Land Company) of the Cranbrook Apartments, one of two apartment complexes through which the preferred pathway would need to be routed. An MOU was adopted by the City and Cranbrook owners outlining the circumstances under which they would agree to provide an easement for such a pathway through their property. A key element to their willingness to provide such an easement hinged on the City pursuing another bike/ped grade separated crossing of Covell Boulevard in the vicinity of L Street. The determination of whether to pursue such a crossing was to be made as part of the East Covell Corridor Plan process. On October 7, 2014 the City Council provided direction on the implementation of the East Covell Corridor Plan. Two of the specific directions were to 1) pursue a Dutch Junction intersection design at the Covell/J and the Covell/L intersections, and 2) NOT to pursue a second grade separated crossing of Covell in the vicinity of L Street, citing concerns over high cost. On the heels of this discussion, the City Council appointed a subcommittee of Council Members Davis and Frerichs to work with staff to further the conversations with the Cranbrook property
owner to determine if pursuing a pathway through the Cranbrook property was still a viable option in light of the Council direction to not purse another grade separated crossing near L Street. The subcommittee, staff, and Cranbrook owners have met several times to further discuss providing such an easement. To date, no definitive resolution has been reached and conversations are ongoing. After further review and discussion of the SW connection options by staff and the City Council subcommittee in the last few months, staff believes it is prudent to re-assess the viability of a grade separated bike/ped crossing north of Covell under or over the railroad tracks (option 2 described above). However further exploration of such an option is not currently accounted for in the Development Agreement, unless both the City and developer mutually agree to amend the DA to allow for exploration and possible implementation of such an option, if found to be viable. As part of the City s consideration of the CFD formation request, the Cannery has proposed negotiating an amendment to the DA specifically for the purpose of exploring additional alternatives to the SW connection as enumerated in the DA. The proposal from the Cannery is attached to this report. Key elements of what may be included in such a proposal are outlined below: The DA amendment would be drafted after City approval of the Resolution of Intent for The Cannery CFD and would be agreed to prior to or concurrent with the Resolution of Formation (e.g. prior to June 2 nd ). The goal of the DA amendment would be to afford the City and Developer the opportunity to explore whether there is a viable connection option(s) not currently contemplated in the DA to the west or southwest of Cannery. The DA amendment would set forth timelines for performance of the viability study, the ultimate decision on which alternative to pursue, and the construction of the final SW connection. The DA amendment would set forth how the viability study would be funded, who is responsible for performing the study, and who would be responsible for the construction of a SW connection. The City would engage a third-party consultant to study grade-separated bike path connection alternatives at the western or southwestern property boundaries of The Cannery. A period of up to six months to study alternatives to determine viability of various alternatives is contemplated. The ultimate grade-separated crossing would be constructed by the City and not the developer (utilizing fees/funds from the development). The City shall commence construction of the grade-separated crossing within a period of three years from the time in which the ultimate path is determined to be viable by the City Council. TNHC and the City would mutually agree on reasonable estimates to construct either the H Street Tunnel Connection or the Southwest Connection to the Covell Blvd Multi-Use Path. The estimated construction funds for the higher estimate of the two alternatives would be provided to the City for City construction of a grade-separated crossing at the west or southwest of the property. TNHC would further provide a reasonable, mutually-agreeable dollar amount to the City as recognition of potential easement/right-of-way land acquisition costs that were contemplated for the potential H Street Tunnel grade-separated connection alternative
(Cranbrook pathway). The additional funds could be used for the construction of bicycle improvements associated with the ultimate grade-separated crossing to the west or southwest, easement acquisition funds (if required), used for other City infrastructure bicycle infrastructure improvements, or other community enhancements. If the City determines that grade-separated alternatives studied are not feasible or an agreement on access to the H Street Tunnel is not reached, the City would construct the Southwest Connection to the Covell Boulevard Multi-Use Path to ensure a gradeseparated crossing is provided for access to and from the project. As presented, the concept would provide for the exploration of a wider range of SW connection options while still retaining the two connection options that are currently enumerated in the DA. Given the general concepts set forth by The New Home Company, staff believes that an agreement can be achieved, subject to development of more detailed DA amendment language and reaching a mutually agreeable consensus on key deal points. The City Council would be presented with a proposed DA amendment once a draft agreement has been developed. As presented by The New Home Company, the responsibility of the construction of a SW connection is proposed to shift from the developer to the City. Such a shift will require thorough vetting by staff to assure that appropriate funding and contingency measures are in place so as not to place the City at undue risk. Ultimately, any amendment to the Development Agreement must be reviewed by the City Council and cannot otherwise be enacted unilaterally by either party. Conclusion Staff believes that the requested CFD is a reasonable request and provides an appropriate mechanism to help finance the highly amenitized and desirable Cannery project. The provision of $750,000 of funds that can be utilized by the City to help fund local infrastructure, combined with the proposal seeking a focused amendment to the Development Agreement to afford further exploration of connection options, make a compelling case to support the CFD proposal. Attachments 1. CFD Petition and Supporting Documents submitted by the New Home Company
PETITION TO CREATE COMMUNITY FACILITIES DISTRICT AND WITH RESPECT TO RELATED MATTERS (INCLUDING WAIVERS) Honorable Council Members City of Davis 23 Russell Boulevard Davis, CA 95616 Members of the City Council: This is a Petition to create a Community Facilities District ( CFD ), and a waiver with respect to certain procedural matters, under the Mello-Roos Community Facilities Act of 1982, constituting Section 53311 et seq. of the California Government Code (the Act ). The undersigned hereby states as follows: 1. Landowner. This Petition is submitted by TNHC-HW Cannery, LLC, a Delaware limited liability company (the Landowner ), as the owner of all of the parcels of land identified by the assessor s parcel numbers set forth in Exhibit A attached hereto and made a part hereof (the Land ). By submitting this Petition, the Landowner warrants to the City Council (the Council ) of the City of Davis (the City ) that the Landowner is the owner of the fee interest in the Land, that no other person or entity is the legal owner of any portion of the fee interest in any of such property, and that the Landowner has the power and authority to execute and deliver this Petition. 2. Proceedings Requested. The Landowner hereby requests that the Council institute proceedings pursuant to the Act to establish a CFD over the Land to be designated as City of Davis Community Facilities District No. 2014-01 (Cannery) (the Community Facilities District ) as shown on the proposed Boundary Map (the Boundary Map ) attached as Exhibit A hereto, to authorize the levy of special taxes on the property within the Community Facilities District (the Special Taxes ), and to authorize the issuance by or on behalf of the Community Facilities District of one or more series of bonds secured by the Special Taxes levied in an amount sufficient to finance the public improvements described in Exhibit B hereto (the Bonds ). Generally, project infrastructure proposed for CFD financing includes backbone infrastructure in compliance with City Goals and Policies, including, but not limited to, public roadways, storm drainage, sanitary sewer, water, parks and open space, and electrical/lighting. The bond authorization for the Community Facilities District should be established in the amount of $17,000,000, however, this figure is a not-to-exceed maximum developed for legal purposes. It is expected that the CFD, via one (1), or perhaps two (2) bond issuances in 2015 and beyond, will likely not generate more than $15,000,000 in gross proceeds. 3. Boundaries of Community Facilities District. The Landowner hereby requests that the territory within the boundaries of the Community Facilities District include all of the Land as shown on the Boundary Map for the Community Facilities District attached as Exhibit A hereto. 4. Purpose of Community Facilities District. The Landowner hereby requests that the Community Facilities District be created, the Special Taxes authorized to be levied, and the Bonds authorized to be issued to finance the costs of the public improvements as generally described in Exhibit B attached hereto and made a part hereof, which public improvements will be owned and operated by the City, or other public agencies, as applicable, and to finance the costs of issuing the Bonds and to pay the costs of administering the Community Facilities District.
Exhibit A Proposed Boundaries of City of Davis Community Facilities District No. 2014-1 (Cannery)
Assessor Parcels within C.F.D. 2014-1: 035-970-034 035-970-035 035-970-037 035-970-051 PROPOSED BOUNDARIES OF CITY OF DAVIS COMMUNITY FACILITIES DISTRICT NO. 2014-1 (Cannery) COUNTY OF YOLO STATE OF CALIFORNIA Proposed Boundaries of City of Davis Community Facilities District No. 2014-1 (Cannery) (1) Filed in the office of the City Clerk of the City of Davis this day of, 2014. City Clerk of the City of Davis Assessor Parcel Line Reference is hereby made to the Assessor maps of the County of Yolo for a description of the lines and dimensions of each lot and parcel. (2) I hereby certify that the within map showing the proposed boundaries of City of Davis Community Facilities District No. 2014-1 (Cannery), County of Yolo, State of California, was approved by the City Council at a regular meeting thereof, held on this day of, 2014, by its Resolution No.. City Clerk of the City of Davis (3) Filed this day of, 2014, at the hour of o'clock m, in Book of Maps of Assessment and Community Facilities Districts at page and as Instrument No. in the office of the County Recorder of Yolo County, State of California. Freddie Oakley County Clerk Recorder of Yolo County By Deputy Fee
Exhibit B Description of Eligible Public Facilities City of Davis Community Facilities District No. 2014-1 (Cannery) It is intended that CFD No. 2014-1 (Cannery) will be authorized to finance all or a portion of the costs of any of items listed and described herein. 1. Public Improvements 2. Other a. The types of facilities proposed to be financed by CFD No. 2014-1 are street improvements, including grading, paving, curbs and gutters, sidewalks, street signalization and signage, street lights and parkway and landscaping related thereto, sewers, storm drains, monuments, utilities, public parks, greenbelts and recreation facilities, detention pond, soft costs, rights-of-way and easements necessary for any of such facilities. Offsite Infrastructure J Street Intersection Improvements L Street Traffic Signal Covell Boulevard Frontage Improvements Offsite Bike Trail Oak Tree Plaza Improvements Infrastructure Phase 1 EVA Road Detention Basin Storm Drain Pump Station Agricultural Well Market Avenue Cannery Avenue Cannery Loop Roundabout Infrastructure Phase 2 Cannery Loop Landscaping Parks Greenbelts Urban Farm Barn Farmhouse Landscaping CFD No. 2014-1 (Cannery) may also finance any of the following: a. Special Tax Consultant services b. Authority, City staff review, oversight, and administrative services c. Bond Counsel and Disclosure Counsel services d. Financial Advisor services 1
e. Special Tax administrator services f. Appraiser/Market absorption consultant services g. Initial bond transfer agent, fiscal agent, registrar and paying agent services, and rebate calculation service set up charge h. Bond printing and Preliminary Official Statement and Official Statement printing and mailing i. Publishing, mailing, and posting of notices j. Recording fees k. Underwriter s discount l. Bond reserve fund m. Capitalized interest n. Governmental notification and filing fees o. Credit enhancement costs p. Rating agency fees q. Continuing disclosure services r. Arbitrage rebate services s. Other post-issuance tax compliance services 2
RATE AND METHOD OF APPORTIONMENT FOR CITY OF DAVIS COMMUNITY FACILITIES DISTRICT NO. 2014-1 (CANNERY) A Special Tax as hereinafter defined shall be levied on all Assessor s Parcels in City of Davis Community Facilities District No. 2014-1 ( CFD No. 2014-1 ) and collected each Fiscal Year commencing in Fiscal Year 2015-16, in an amount determined by the City Council of the City of Davis through the application of the Rate and Method of Apportionment as described below. All of the real property in CFD No. 2014-1, unless exempted by law or by the provisions hereof, shall be taxed for the purposes, to the extent and in the manner herein provided. A. DEFINITIONS The terms hereinafter set forth have the following meanings: Acre or Acreage means the land area of an Assessor s Parcel as shown on an Assessor s Parcel Map, or if the land area is not shown on an Assessor s Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. An Acre equals 43,560 square feet of land area. Act means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California. Administrative Expenses means the following actual or reasonably estimated costs directly related to the administration of CFD No. 2014-1: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the City or designee thereof or both); the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the City, CFD No. 2014-1, or any designee thereof of complying with arbitrage rebate requirements; the costs to the City, CFD No. 2014-1, or any designee thereof of complying with City, CFD No. 2014-1, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the City, CFD No. 2014-1 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from any escrow account; and the City s annual administration fees, and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the City or CFD No. 2014-1 for any other administrative purposes of CFD No. 2014-1, including attorney s fees and other costs related to commencing and pursuing any foreclosure, or other resolution of delinquent Special Taxes. Affordable Housing means residential Dwelling Units, located on one or more Assessor s Parcels of Residential Property, that are subject to deed restrictions, resale City of Davis October 21, 2014 CFD No. 2014-1 (Cannery) Page 1
restrictions, and/or regulatory agreements recorded in favor of the City that restrict rents or prices chargeable to lower income households (as defined in California Health and Safety Code Section 50079.5 or any successor code section). Assessor s Parcel means a lot or parcel shown in an Assessor s Parcel Map with an assigned Assessor s parcel number. Assessor s Parcel Map means an official map of the Assessor of the County designating parcels by Assessor s parcel number. Assigned Special Tax means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C below. Backup Special Tax means the Special Tax applicable to each Assessor s Parcel of Developed Property, as determined in accordance with Section C below. Bonds means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by CFD No. 2014-1 under the Act. CFD Administrator means an official of the City, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes. CFD No. 2014-1 means City of Davis Community Facilities District No. 2014-1 (Cannery). City means the City of Davis Council means the City Council of the City. County means the County of Yolo. Developed Property means, for each Fiscal Year, all Taxable Property, exclusive of Taxable Property Owner Association Property and Taxable Public Property, for which a building permit for new construction was issued prior to May 1 of the previous Fiscal Year. Dwelling Unit means one residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, apartment, mobile home, or otherwise. Final Map means (i) a final map, or portion thereof, approved by the County pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots or parcels for which building permits may be issued, or (ii) for condominiums, a final map approved by the County and a condominium plan recorded pursuant to California Civil Code Section 1352 creating such individual lots or parcels. The term Final Map shall not include any Assessor s Parcel Map or subdivision map or portion thereof, which does not create individual lots for which a building permit may be issued, including Assessor s Parcels that are designated as remainder parcels. City of Davis October 21, 2014 CFD No. 2014-1 (Cannery) Page 2
Fiscal Year means the period starting July 1 and ending on the following June 30. Indenture means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which Bonds are issued, as modified, amended, and/or supplemented from time to time. Land Use Class means any of the classes listed in Table 1 below. Maximum Special Tax means, for each Assessor s Parcel, the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any given Fiscal Year on such Assessor s Parcel. Non-Residential Floor Area means the total building square footage of the nonresidential building(s) or the non-residential portion of a building with both residential and non-residential areas located on an Assessor s Parcel of Developed Property, measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two sides. The determination of Non-Residential Floor Area shall be made by reference to the building permit(s) issued for such Assessor s Parcel and/or to the appropriate records kept by the City s Building Division, as reasonably determined by the City. Non-Residential Property means all Developed Property for which a building permit(s) was issued for a non-residential use. Outstanding Bonds means all Bonds which are deemed to be outstanding under the Indenture. Property Owner Association Property means, for each Fiscal Year, any Assessor s Parcel within the boundaries of CFD No. 2014-1 that was owned by a property owner association, including any master or sub-association, as of January 1 of the prior Fiscal Year. Proportionately means, for Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Developed Property. For Undeveloped Property, Proportionately means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Undeveloped Property. For Taxable Public Property and Taxable Property Owner Association Property, Proportionately means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor s Parcels of Taxable Public Property or Taxable Property Owner Association Property, as applicable. Public Property means, for each Fiscal Year, any Assessor s Parcel within CFD No. 2014-1 that is owned by, irrevocably offered for dedication to, or dedicated to the federal government, the State, the County, the City, or any other public agency as of June 30 of the prior Fiscal Year; provided however that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified in accordance with its use. To ensure that property is classified as Public Property in the first Fiscal Year after it is acquired by, irrevocably offered for dedication City of Davis October 21, 2014 CFD No. 2014-1 (Cannery) Page 3
to, or dedicated to a public agency, the property owner shall notify the CFD Administrator in writing of such acquisition, offer, or dedication not later than June 30 of the Fiscal Year in which the acquisition, offer, or dedication occurred. Residential Floor Area means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area shall be made by reference to the building permit(s) issued for such residential dwelling unit. Residential Lot means an Assessor s Parcel for which a building permit has been, or under law and City planning decisions, could be issued for a residential structure. Residential Property means all Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. Special Tax means the special tax to be levied in each Fiscal Year on each Assessor s Parcel of Taxable Property to fund the Special Tax Requirement. Special Tax Requirement means that amount required in any Fiscal Year for CFD No. 2014-1 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of facilities eligible to be financed by CFD No. 2014-1, to the extent that the inclusion of such amount does not increase the Special Tax levy beyond the first step in Section D; (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax levy, as determined by the CFD Administrator pursuant to the Indenture. State means the State of California. Taxable Property means all of the Assessor s Parcels within the boundaries of CFD No. 2014-1 which are not exempt from the Special Tax pursuant to law or Section E below. Taxable Property Owner Association Property means all Assessor s Parcels of Property Owner Association Property that are not exempt pursuant to Section E below. Taxable Public Property means all Assessor s Parcels of Public Property that are not exempt pursuant to Section E below. Trustee means the trustee or fiscal agent under the Indenture. Undeveloped Property means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Property Owner Association Property or Taxable Public Property. City of Davis October 21, 2014 CFD No. 2014-1 (Cannery) Page 4
B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, commencing Fiscal Year 2015-16, all Taxable Property within CFD No. 2014-1 shall be classified as Developed Property, Taxable Property Owner Association Property, Taxable Public Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with this rate and method of apportionment determined pursuant to Sections C and D below. Residential Property shall be assigned to Land Use Classes 1 through 6, and Non-Residential Property shall be assigned to Land Use Class 7. The Assigned Special Tax for Residential Property shall be based on the Residential Floor Area of the dwelling units located on the Assessor s Parcel. The Assigned Special Tax for Non-Residential Property shall be based on the Non- Residential Floor Area located on the Assessor s Parcel. C. MAXIMUM SPECIAL TAX Land Use Class 1. Developed Property a. Maximum Special Tax The Maximum Special Tax for each Assessor s Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax. b. Assigned Special Tax The Fiscal Year 2015-16 Assigned Special Tax for each Land Use Class is shown below in Table 1. TABLE 1 Fiscal Year 2015-16 Assigned Special Taxes for Developed Property Fiscal Year 2015-16 Description Residential Floor Area Assigned Special Tax 1 Residential Property > 3,025 sq. ft. $3,223 per Dwelling Unit 2 Residential Property 2,575 to 3,024 sq. ft. $2,725 per Dwelling Unit 3 Residential Property 2,125 to 2,574 sq. ft. $2,268 per Dwelling Unit 4 Residential Property 1,675 to 2,124 sq. ft. $1,434 per Dwelling Unit 5 Residential Property 1,674 sq. ft. $904 per Dwelling Unit 6 Affordable Housing NA $0 per Dwelling Unit 7 Non-Residential Property NA $0.26 per Sq. Ft. of Non-Residential Floor Area City of Davis October 21, 2014 CFD No. 2014-1 (Cannery) Page 5