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PUBLIC HEARING: APPROVE FOUR RESOLUTIONS AND ADOPT AN ORDINANCE IN CONNECTION WITH PROPOSED FORMATION OF COMMUNITY FACILITIES DISTRICT NO. 2025-1 (CANNERY PARK EAST)
recommended action
RECOMMENDATION
It is recommended that City Council:
1. Approve the following four resolutions:
a) A resolution of formation establishing Community Facilities District No. 2025-1 (Cannery Park East) (the “CFD”) authorizing the levy of a special tax within the CFD and establishing an appropriations limit for the CFD.
b) A resolution determining the necessity to incur bonded indebtedness in an amount not to exceed $15,000,000.
c) A resolution calling for an election for the purpose of submitting the levy of the special tax and the establishment of the appropriations limit to the qualified electors of the CFD.
d) A resolution declaring the results of the election and directing the recording of a notice of special tax lien.
2. Adopt an ordinance authorizing the levy of a special tax within the CFD.
The resolutions authorize the City Manager or designee to take appropriate and necessary actions to carry out the purpose and intent of the resolutions, including entering into an acquisition agreement for the distribution of bond proceeds to pay for authorized facilities and fees for the CFD.
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Summary
The City was approached by the landowner Jen California 31, LLC who acquired a portion of the property from Arnaiz Homes within the existing boundary of CFD 2019-1 (Cannery Park II). The current special taxes within CFD 2019-1 are fixed at an annual amount of $1,600 per year and are collected for the repayment of bonds already issued for that CFD. This new overlapping CFD will provide additional funding necessary to complete improvements related to the CFD. Future bonds will be issued to provide the primary funding for the authorized facilities and fees. The District comprises 311 single-family residential lots which have been sold to two merchant builders.
The Council approved the resolutions necessary to begin the process of forming the CFD on August 12, 2025, and set a public hearing date of September 23, 2025. The recommended resolutions, attached to this agenda item, finalize formation by calling for the landowner election (which can be held immediately because the City has procured waivers of the time otherwise required), certify the election results, and authorize the placement of special taxes on the tax roll.
DISCUSSION
Background
The Mello-Roos Community Facilities Act of 1982, as amended (Government Code Sections 53311 et seq.), was enacted by the California Legislature to provide an alternate method of financing certain essential public capital facilities and services, especially in the developing areas of the State of California. Once duly established by a city, county, or other local agency, a CFD is a legally formed governmental entity with defined boundaries, with the governing board or legislative body of the local agency acting on its behalf. Subject to approval by a two-thirds vote of qualified electors within the boundaries in compliance with the provisions of the Act, a legislative body of a local agency may issue bonds for a CFD to finance public facilities and may levy and collect a special tax within a CFD to repay such indebtedness.
Present Situation
The initial boundary of the District will include just the portion of property originally acquired by Jen California 31, LLC (the “Developer”). The portion acquired is already in CFD No. 2019-1 (Cannery Park II) but remains undeveloped. The special taxes payable by the property owners will be in addition to the already fixed $1,600 per year of facilities special tax and the services special tax already collected from the properties within CFD No. 2019-1. The District will consist of 311 single-family residential homes. The Developer sold 64 lots to Richmond American Homes on October 25, 2024, and 267 lots to Century Communities on May 19, 2025. If formed, the District will help fund the acquisition of authorized facilities and the payment of fees.
Steps in Initiating the Formation of a Community Facilities District
The Council approved the resolutions necessary to begin the process of forming the CFD on August 12, 2025, and set a public hearing date of September 23, 2025.
The law requires that a CFD can only be formed, and the tax approved, by a 2/3rds vote of the qualified electors within the CFD, which can be registered voters or landowners. If there are fewer than 12 registered voters residing within the boundaries of the CFD (as is the case here), then the qualified electors are the landowners with one vote for each acre of land owned. The landowners in the proposed CFD have filed the necessary waiver and consent documents with the City Clerk shortening the time periods and waiving various requirements for conducting a mailed ballot election.
Steps in Completing the Formation of a Community Facilities District
1. Adoption of the following resolutions will take the next steps necessary to complete the formation after the conclusion of the public hearing:
a) A resolution of formation establishing Community Facilities District No. 2025-1 (Cannery Park East) authorizing the levy of a special tax within the CFD and establishing an appropriations limit for the CFD.
b) A resolution determining the necessity to incur bonded indebtedness in an amount not to exceed $15,000,000.
c) A resolution calling for an election for the purpose of submitting the levy of the special tax and the establishment of the appropriations limit to the qualified electors of the CFD.
d) A resolution declaring the results of the election and directing the recording of a notice of special tax lien.
2. Adoption of the ordinance authorizes the levy of a special tax within the CFD and will complete the formation process.
Rate and Method of Apportionment of the Special Tax
Parcels within the proposed CFD will pay a maximum annual special tax based on the RMA, commonly referred to as the Special Tax Formula. The annual costs will include:
• Administrative Expenses
• Debt Service (i.e., principal and interest on bonds)
• Replenishment of the reserve fund (when necessary)
• An amount equal to estimated special tax delinquencies
The annual costs funded by the levy of the special tax will be determined by subtracting other available revenues, such as reimbursement payments, fees, funds available from prepaid special taxes, interest earnings on the bond reserve fund, or receipts of delinquent special taxes from previous fiscal years, from the annual costs. The City will then apply the Special Tax Formula to determine the special tax levy for each parcel.
In addition, all parcels within CFD 2019-1 (Cannery Park II), including those within the CFD, already pay a services tax that will continue to be collected.
The City has completed all legal matters needing to take place before the public hearing concerning the formation of the proposed CFD, including recording a Boundary Map showing the CFD boundaries with the San Joaquin County Recorder, and published in the Stockton Record a Notice of the Public Hearing to be conducted this evening. Certificates certifying both actions regarding notification are on file with the City Clerk.
Incurrence of bonded indebtedness:
During the formation process of the CFD, the not to exceed bonded indebtedness is established at $15 million. None of the actions taken this evening approve the issuance of bonds. It is anticipated, as development occurs within the CFD by the two merchant builders owning the lots, staff will bring forward later for City Council consideration the issuance of bonds to finance the authorized facilities and fees.
FINANCIAL SUMMARY
The cost to the City to form the CFD is estimated at $39,500 and includes the fees and expenses of the Special Tax Consultant (Willdan Financial Services), Bond Counsel (Jones Hall) and the City’s Municipal Advisor (Del Rio Advisors, LLC). The Developer has deposited $39,500 with the City to cover the estimated costs of formation.
Ultimately, when bonds are issued, the City will receive an administrative fee based on a sliding scale of the issuance based on three-quarters of one-percent (.75%) up to the first $5 million of the par amount of the bond issue; one-half of one-percent (.50%) of the par amount of the bond issue over $5 million up to $10 million; one-quarter of one-percent (.25%) of the par amount of the bond issue over $10 million. The City’s Administration Fee is a component of the cost of issuance and is paid from bond proceeds.
These bonds are not an obligation of the City and are payable solely from the collection of special taxes and any funds and accounts established under the documents of any future bonds. There is no adverse impact on the General Fund nor any other funds or accounts of the City.