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04-0316_CAPISTRANO UNIFIED SCHOOL DISTRICT_G3b_Agenda Reportr AGENDA REPORT TO: Dave Adams, City Manager FROM: Cindy Russell, Acting Assistant City Manager 3116/2004 G 3b SUBJECT: Consideration of Conceptual Amendment to the Joint Community Facilities Agreement (CFD 98-1) (Capistrano Unified School District) (SJD Partners, Ltd.) RECOMMENDATION: By Motion, approve in concept an amendment for the Joint Community Facilities Agreement (CFD 98-1) maintaining the 1.7% tax rate and providing funding as outlined in Attachment "1 ". SITUATION: Summary and Recommendation: The Pacifica San Juan Developer, SJD Partners (Developer), in conjunction with the Capistrano Unified School District (CUSD) is requesting an amendment to the Joint Community Facilities Agreement (JCFA) for Community Facilities District (CFD) 98-1 approved by the City and Water District on September 13, 1999. Now that the development is ready to move forward, the Developer is requesting an amendment to the JCFA to reflect the increased values on this project. The 1.7% tax rate originally approved is anticipated to generate $27.6 million in available funds, rather than the $11.8 million originally anticipated. This would allow the City to receive approximately $10.1 million in fees up front rather than over time as each area is built. Additionally, the City has the opportunity to generate approximately $850,000 to provide funding for facilities not required as a part of this development that provide a benefit to the community as well as the development. Staff recommends the City Council approve in concept an amendment for the Joint Community Facilities Agreement (CFD 98-1) maintaining the 1.7% tax rate and providing funding as outlined in Attachment "1". Based on the City Council's actions on this concept, staff will work with the CUSD to prepare amended JCFA document for City Council consideration in May 2004. FOR CITY COUNCILAGEND 0 Agenda Report Paqe 2 Background: March 16. 2004 The approved CFD provides for $11,765,000 in improvement dollars based on a maximum tax rate of 1.7% total for the homes in this development. Of the $11.7 million, $6.9 million was identified for CUSD improvements and the balance of $4.8 million was identified for City and Water improvements required as part of the Pacifica San Juan development. The $6.9 million for the CUSD was earmarked for the Kinoshita Elementary School and a future school site. Due to rising property values over the past five years, the Pacific San Juan development will generate significantly more improvement dollars based on the 1.7% tax rate. The CUSD financial consultants, David Taussig & Associates (Taussig), have calculated the new amount available from the CFD to be approximately $27.6 million. Taussig is currently evaluating the value of "view premiums" to determine whether or not the $27.6 million can conservatively be supported by the property values. CUSD needs approximately $13.8 million to fund the Kinoshita Elementary School site, acquire the future school site and construct some sewer & storm drain improvements. This leaves approximately $10.8 million remaining to fund City/Water improvements. Issues for Consideration: Two issues should be consider when evaluating this request: 1. Should the City amend the JCFA to provide for additional facilities within the 1.7% tax rate? 2. What other facilities could be funded by the increase outside those proposed in the original JCFA? Should the City amend the JCFA to provide for additional facilities within the 1.7% tax rate? By amending the JCFA, the Developer would be able to take an additional $9 million in development costs out of the CFD. The City would benefit by receiving all City fees, up front, rather than wait for payment upon the approval of each final map. Based on our calculations, the outstanding fees and other reimbursements total approximately $8.1 million leaving approximately $5.7 million available for Developer improvement reimbursement. The City could also choose to amend to the JCFA to limit the approved dollars for the City somewhere between the original $4.8 million and the new $13.8 million figure. CUSD has indicated that they want to amend their portion of the CFD to capture the $13.8 million as discussed above. If the improvement dollars to the City remain at $4.8 million and the CUSD dollars are increased to $13.8 million (total of $18.6 million), the Agenda Report Page 3 March 16, 2004 tax rate would be reduced to approximately 1.55% as opposed to the current 1.7%. If the total CFD proceeds remain at $11.8 million, the rate would be reduced to 1.38%. What other facilities could be financed by the amended JCFA? Since the JCFA is being amended, the City has the opportunity to add other community- wide facilities to the amended JCFA. The City Council could consider requesting that all or a portion of the additional funds be used for other improvements not conditioned as part of this development. These improvements could include access to the Northwest Open Space, unfunded traffic improvements, a new City Hall, recreational facilities, or other necessary items. In the past, the City Council has not been interested in this sort of financing, however if the Developer is proposing to leave the tax rate at 1.7%, the City Council should consider what community benefit could be gained from this CFD. The CUSD and Developer are supportive of a portion of the new funds to be allocated to other community -wide facilities. In discussions with the CUSD, their portion of the CFD will be providing approximately $1 million toward District -wide facilities. Through negotiations with the Developer, City staff has arrived at a figure of $850,000 for the City to be allocated toward community -wide facilities. Proposed Options: Staff has developed a number of scenarios for the City Council to consider. Alternative #1 (Tax Rate 1.7%) - Leave the tax rate at 1.7% and finance additional CityMater fees and improvements from the CFD. Share the proceeds between the Developer and the City. Developer gets a portion of the $13.8 million to pay their fees and reimbursements ($12.95 million); therefore City gets fees sooner than later. CUSD gets $13.8 million. City gets $850,000 million toward community wide facilities. Alternative #2 (Tax Rate 1.55%) - Reduce the tax rate to 1.55% to assure that the CUSD gets the necessary funds ($13.8 million) and our funds remain the same at $4.8 million. Developer would get the $4.8 million from CFD; therefore the City gets a portion of the fees paid sooner. No funds would be available for community -wide facilities. Alternative #3 (Tax Rate 1.38%) - Leave the CFD proceeds at $11.8 million and reduce the tax rate to 1.38%. This would leave the CUSD short of their $13.8 million by $6.9 million. The Developer would get the $4.8 million from the CFD; therefore the City gets a portion of the fees paid sooner. No funds would be available for community -wide facilities. Alternative #4 — (Tax Rate between 1.38% and 1.7%). CUSD gets $13.8 million. Staff could generate additional information based on City Council direction for another funding level different from those listed above. 0 L Agenda Report Page 4 March 16, 2004 On the average, the CUSD CFDs formed in the last five years have an effective tax rate of 1.86% Recommendation: Based on all the information, staff is recommending Alternative #1. This would leave the tax rate at the originally anticipated 1.7%, however provide additional funding for the CUSD, Developer and now the City. In addition to negotiating an amount of funding to be allocated to community -wide facilities, staff has discussed with the Developer the priority order of items to be funded. The Developer has proposed that CFD funds be made available in the following order: • All City Fees to be funded first. ($10,181,192) • Transportation Corridor Agency (TCA) fees. ($1,372,020) • Fair Share Reimbursement for 1-5 Northbound On-ramp and Southbound Off -ramp at Ortega Highway ($79,583) • Allocation to City -Wide Community Facilities ($850,000) • "A" Street Grading. (In -Tract improvement) ($1,317,205) Staff had requested that TCA fees be eliminated in favor of a larger amount of funds for shared facilities and also recommended that the cost associated with shared facilities, whether constructed or a fair share reimbursement, take precedent over in -tract facilities. Attachment 1" reflects the Developer's response, which is also summarized above. The City Council could choose to eliminate the TCA fees and "A" street grading in favor of shared improvements. Whether or not the CFD funds the TCA fees, shared facilities or in -tract improvements, all of these items will ultimately be paid and/or built based on the conditions of this development Although staff expects the valuations to generate the funds projected, should the CFD generate fewer funds than the $27.6 million, staff recommends that the amounts provided for TCA fees or "A" street grading be reduced. The $850,000 for community- wide facilities should be maintained. COMMISSION/BOARD REVIEW AND RECOMMENDATIONS: Not Applicable FINANCIAL CONSIDERATIONS: The amendment to the JCFA provides an opportunity for the City to generate a new funding source for community -wide facilities. If this funding is not approved, the City will lose any existing funds. E 0 Agenda Report Page 5 March 16, 2004 NOTIFICATION: Mr. Ron Freeman, SJD Partners, Ltd.* Mr. Brad Gates, DTS LLC* * Agenda Report included ALTERNATE ACTIONS: 1. By Motion, approve in concept an amendment for the Joint Community Facilities Agreement (CFD 98-1) maintaining the 1.7% tax rate and providing funding as outlined in Attachment "1" 2. By Motion, approved another alternative 3. Request additional information from staff. By Motion, approve in concept an amendment for the Joint Community Facilities Agreement (CFD 98-1) maintaining the 1.7% tax rate and providing funding as outlined in Attachment "1". Respectfully submitted, Cindy Acting Assistant City Manager Attachment: 1. Pacifica San Juan CFD Facilities Request Summary Pacifica San Juan CFD Facilities Summary 3-10-04 Potential CFD Funds Available 13,800,000 Park Fees 2,661,384 TTM approval 9-03 P1 Affordable Housing Fees 1,800,000 Systems Development Fees (211 and 364) 1,182,668 Agricultural Preservation Fees 242,700 Soils Subsidence Remediation Fees 500,000 Catchment Area Fees 150,000 San Joaquin Hills Corridor Fees 1,372,020 Water Capacity Fees 1,000,000 Non -Domestic Water Fees 700,000 La Novia Reimbursement 364,050 Sewer Connection Fees 1,580,390 Fair Share of Southbound Ortega Hwy. Offramp 76,979 Fair Share of Northbound Ortega Hwy. Onramp 2,604 City Wide Development Fee 850,000 Balance 1,317,205 "A" Street Grading (4,716,648) 1,317,205 Balance -0- ATTACHMENTI