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Title:
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JOINT CITY COUNCIL/REDEVELOPMENT AGENCY BOARD AGENDA ITEM: Discussion Regarding Potential Formation of Special Tax District for the Transit Oriented District at Washington/National and Authorization to Release a Request for Proposals for Professional Special Tax District Formation Services Related Thereto.
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City of Culver City, California
Agenda Item Report
Meeting Date: 11/01/10 Item Number: J-4
JOINT CITY COUNCIL/REDEVELOPMENT AGENCY BOARD AGENDA ITEM:
Discussion Regarding Potential Formation of Special Tax District for the Transit
Oriented District at Washington/National and Authorization to Release a Request
for Proposals for Professional Special Tax District Formation Services Related
Thereto.
Contact Person/Dept.: Glenn Heald
Todd Tipton/Community Development
Nick Kimball/Finance
Phone Number: (310) 253-5752, (310) 253-
5783 and (310) 253-6013
Fiscal Impact: Yes [] No [X] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [X] Attachments: []
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: (E-Mail) Meetings and Agendas – City Council (10/27/10); Meetings
and Agendas – Redevelopment Agency (10/27/10).
Department Approval:
Sol Blumenfeld/CDD (10/26/10)
Jeff Muir/Finance (10/27/10)
City Attorney Approval:
Carol Schwab (by H. Baker) (10/27/10)
Agency General Counsel Approval:
Murray Kane (10/21/10)
Chief Financial Officer Approval:
Jeff Muir (by N. Kimball) (10/27/10)
City Manager/Executive Director Approval:
John M. Nachbar (10/27/10)
RECOMMENDATION:
Staff recommends the City Council and Redevelopment Agency Board (Agency
Board) discuss the potential formation of a special tax district for the Transit Oriented
District involving commercially zoned properties surrounding the Exposition Light
Rail (LRT) station in the Washington/National area and authorize the issuance of a
Request for Proposals (RFP) for professional special tax district formation services
related thereto.
BACKGROUND:
The Mello-Roos Community Facilities Act of 1982 allows the funding of the
construction or acquisition of real or tangible property with a useful life of five years
or more (such as streets, sewer, and other infrastructure improvements) through the
establishment of a Community Facilities District (CFD). A CFD is a special tax
district with an amount levied annually on each parcel within the CFD. Voting for a
CFD is done by mail-in ballot and requires approval by a supermajority (67%) of
returned ballots. All registered voters within the boundaries of the CFD are eligible
to vote. If there are fewer than 8 registered voters in the proposed CFD, then it is a
vote of the property owners (a likely scenario for the proposed Washington/National City of Culver City, California
Agenda Item Report
CFD). Similar to a Benefit Assessment District, the typical time to implement a CFD
is nine to twelve months.
DISCUSSION:
A CFD is a method of financing required infrastructure and other public
improvements through a bond issuance, which is subsequently repaid by a tax
imposed on the property within the CFD. In general, any major commercial or mixed
use development in the TOD District in the Washington/National area will require
new or additional infrastructure improvements, which can be funded through the
CFD.
Benefits to the City/Agency from the formation of a CFD include:
• The assessment to pay the debt service is applied to the property owners’ tax
bill, so efforts to collect the annual assessment are minimal, and may be
contracted out to a management firm funded through the assessment’s
administrative fee.
• The bond is issued using the property in the CFD as security. Issuing a CFD
bond does not impact the debt capacity or become an obligation of the City or
Agency (the bond is the obligation of the underlying CFD).
• The City or Agency will be responsible for paying only that portion of the levy
against any property that the City or Agency may own that lies within the CFD.
Benefits to the Developer from formation of a CFD include:
• The developer(s) amortizes the cost of the infrastructure improvement over the
life of the debt (e.g. 20 years) rather than having to pay a large cost up front.
Financing the infrastructure improvements through a tax-exempt CFD bond issue
is cheaper than requiring the developer to finance the improvements at the
developer’s market finance rate.
• The cost is equitably distributed to all subject properties in the CFD, so no single
developer or property owner is burdened with the entire expense of the
infrastructure improvement.
• As the property is subdivided and sold off by developer(s), assessments remain
with each property, so over time the developer(s) will likely pass off some or all of
the expense to subsequent property owners.
Consultants who specialize in the formation of CFDs are readily available for hire. In
order to explore all potential benefits and consequences of forming a CFD, staff
requests authorization to issue an RFP for consultant services from firms
specializing in CFD formation.
Steps to the formation of a CFD include:
City of Culver City, California
Agenda Item Report
1. City/Agency authorization to issue RFP for consultant
2. Issue RFP for consultant
3. Select consultant
4. Award contract
5. Consultant prepares required Engineering Report and other documents required
to form a CFD
6. City conducts election to approve proposed CFD
7. City Council adopts CFD (if approved by voters)
8. CFD Bond issuance
9. Bond proceeds received
10. Improvements designed and constructed
If the Agency Board authorizes issuance of an RFP, staff will return to the Agency
Board with a proposed implementation schedule and a request further direction upon
completion of the RFP process.
FISCAL ANALYSIS:
There is no fiscal impact in issuing an RFP. If the Agency Board ultimately decides
to hire a consultant and form a CFD, staff estimates the cost for the consultant’s
services will be between $27,000 and $35,000.
ATTACHMENTS:
None.
MOTION:
That both the City Council and Agency Board:
1. Discuss the potential formation of a special tax district for the Transient
Oriented District at Washington/National; and
2. Authorize release of a Request for Proposals to provide special tax district
formation services related thereto.