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HomeMy WebLinkAboutMinutes - December 12, 2006 SSCITY OF LODI INFORMAL INFORMATIONAL MEETING "SHIRTSLEEVE" SESSION CARNEGIE FORUM, 305 WEST PINE STREET TUESDAY, DECEMBER 12, 2006 An Informal Informational Meeting ("Shirtsleeve" Session) of the Lodi City Council was held Tuesday, December 12, 2006, commencing at 7:00 a.m. A. ROLL CALL Present: Council Members — Katzakian, Mounce, and Mayor Johnson Absent: Council Members — Hansen and Hitchcock Also Present: City Manager King, City Attorney Schwabauer, and City Clerk Johl B. TOPIC(S) B-1 "Discussion of the Goals and Policies Relative to the Formation of a Community Facilities District for the Financing of City Services" City Manager King briefly introduced the subject matter related to utilizing a community facilities district (CFD) for the funding of public services. Mr. King reviewed the matter as it relates to various developments in the City and introduced bond counsel, Constantine Baranoff with Kronick Moskovitz Tiedemann & Girard. Mr. King provided an overview of the current CFDs in place for surrounding cities. City Manager King provided a presentation regarding the goals and policies relative to the formation of a CFD for the financing of City services. Topics of discussion included, but were not limited to, services to be funded, boundaries, an annual special tax, increases in the maximum CFD tax, triggers for a tax, local goals and policies, and the steps associated with utilizing a Mello -Roos CFD to fund public services. Mr. Baranoff stated the resolution of intention would involve adopting the local goals and policies, rate, and boundaries at the same time. Mayor Johnson asked where the difficulties would lie if the developers have agreed. Mr. King stated the issues, if any, would lie with the paperwork not being complete, which would prevent the property owners from finishing their contractual obligations. City Manager King asked the Council to consider affordable housing options as they relate to a CFD. Mayor Pro Tempore Mounce inquired about deed restrictions on affordable housing. Mr. King stated mostly they require that housing remain affordable for a specific period of time, which may be set by the nature of the funding. He also stated the City does not have inclusionary housing. Mayor Johnson stated the sensitivity may come with trigger implementation and he is leaning toward the final certificate of occupancy. Mr. Johnson inquired about timing with current projects. Mr. King stated the current development agreements include t/Vo-year maintenance obligations and many communities implement the CFD when building permits are issued for the ease of administration. Mr. Baranoff stated typically the tax becomes effective when building permits are issued. He stated the formula requires a specific date to prepare the tax roll for the current and following years. Continued December 12, 2006 Mayor Johnson inquired about all inclusive funding versus specific funding. Mr. King stated the first threshold is that new development requires new services and a CFD provides more flexibility for new residents to pay for their new services. Mayor Johnson asked if the funding is over and above impact fees, and Mr. King replied in the affirmative. Mr. King stated the CFD is intended to be an annual tax to pay for annual expenses; although, some cities have done it as a one-time mechanism. Mayor Johnson inquired about the timing for bringing the matter back to Council. Mr. King stated it would likely be in January or February. C. COMMENTS BY THE PUBLIC ON NON -AGENDA ITEMS None. D. ADJOURNMENT No action was taken by the City Council. The meeting was adjourned at 7:34 a.m. ATTEST: Randi Johl City Clerk W AGENDA ITEM 3 — L CITY OF LODI IV COUNCIL COMMUNICATION TM AGENDA TITLE: Discussion cfthe Goals and Policies relative to the Formation of a Community Facilities Districtfor the Financing cf City Services MEETING DATE: December 12, 2006 (Shirtsleeve Session) PREPARED B Y Public Works Director RECOMMENDED ACTION: Discuss goals and policies relative to the formation of a Community Facilities Districtfor the funding of City services. BACKGROUND INFORMATION: The City Council has recently approved new development projects and DevelopmentAgreements that requirethe formation of Community Facilities Districts (CFD) for the funding of public services. The approved projects are Reynolds Ranch and Southwest Gateway. The agreement set a funding level of $600 per residential unit. On May 16, 2006 the Council received a presentation on the gap that exists between revenue and expenses relative to new development. It was noted that for several decades, cities have been examining the fiscal effect of new development. Academic studies have been done to document that new residential developmentdoes not fully pay for required city services and that the existing city businesses and residents are supporting, or subsidizing, new residential growth. Generally, retail development provides net revenue over costs, industrial and office uses tend to be in fiscal balance with city revenue matching cost of city services provided, while residential development is in a deficit position with the costs of services provided exceeding the revenue generated. There is some variation in the size of the residential "gap" with high value housing creating a smaller gap than more moderately valued housing given an equal level of services. A root cause of this fiscal gap is the State's property tax system as impacted by the limitation of Proposition 13 and the EPAF shift. This situation has been made worse for Gltiu Dy the more recent establishmentbY counties of mandatory tax sharing agreements required of cities to annex property. While these tax sharing agreements help counties address their fiscal gap by allocating more of the local property tax portion of the total property tax bill to counties, this comes directlyfrom city revenuesfrom new development. The purpose of this discussion is to continue the dialog with Council regarding the size of the "gap", the range of services that qualify for CFD funding, who would be subject to the future Special Tax, what other agencies in the region are doing, and the steps to formation of the CFD. As further background information, newspaper articles describing CFD's in Galt and Modesto are provided as Attachment A. A fiscal study prepared by Economic and Planning Systems quantified the size of the gap as being around $600 per residential unit. This analysis presented a detailed evaluation of the revenues from new development the costs to provided city services to those residents. This fiscal analysis formed the basis for setting the the funding level of $600 per residential unit for the newly approved development projects. APPROVED: Blair King, Ci ager C:IDOCUME-11WSANDE-71LOCALS-1VTemp\CDiscussFormabon.doc 1218/2006 Discussion of Goals and Policies Relative to the Formation of Community Facilities Districtfor the Financing of Capital Facilities and to Provide On -Going Funding of City Services on an Annual Basis December 12,2006 Page 2 The CFD boundary would initially comprise the two approved development projects, Reynolds Ranch and Southwest Gateway. All future residential development would be required to annex to the CFD once it has been established. This would apply to all development requiring a subdivision map. Commercial and industrial development and minor parcel splits would not be required to annex to the CFD. The range of public services that qualify for funding through a CFD is broad and flexible. The eligible services include storm drainage, landscape, parks, open space, police, fire, and library. A summary of the services and the special tax rate for other regional agencies that are funding public services is provided as Attachment B. The steps leading to formation of a CFD for Public Services are presented in Attachment C. This procedure is similar to that followed by the Council in establishing the Lighting and Landscape Maintenance Assessment District in 2003. Once the CFD for Public Services is established, it is expected that new developments would no longer be required to annex to the Lighting and Landscape Maintenance Assessment District. FISCAL IMPACT: Not applicable. FUNDING AVAILABLE: Not applicable. �o- Richard Prima, Jr. Public Works Director Prepared by F. Wally Sandelin. City Engineer/Deputy Publicworks Director RCP/FWS/pmf Attachments cc: City Engineer ConstantineBaranof Susan Goodwin C:IDOCUME--11W SANDE-110CALS-11TemplCDlscussFwmaton.doc 121812008