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APPROVE TWO RESOLUTIONS RELATED TO PROPOSED FORMATION OF COMMUNITY FACILITIES DISTRICT NO. 2025-1 (CANNERY PARK EAST):
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RECOMMENDATION
It is recommended that the City Council approve the following resolutions:
1. A Resolution of Intention to form a Community Facilities District (“CFD”) to levy a special tax in such district to finance the acquisition and construction of certain public facilities in and for such district; and
2. A Resolution of Intention to incur bonded indebtedness to finance the acquisition and construction of certain public facilities in and for proposed Community Facilities District No. 2025-1 (Cannery Park East) (the “District”).
The resolutions authorize the City Manager to take appropriate and necessary actions to carry out the purpose and intent of the motion.
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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 District. CFD bonds will be issued to provide the primary funding for the authorized facilities and fees. The District comprises 311 single-family residential units.
The resolutions necessary to begin the process of forming the CFD are attached to this staff report. The resolutions have been approved as to form by the City Attorney.
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, in addition to levying and collecting a component of the tax to pay for public services.
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). 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 within CFD No. 2019-1. The District will consist of 311 single-family residential homes. The Developer sold 64 lots to Richmond American on October 25, 2024, and sold 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 formation of a CFD is subjected to a formal public process beginning with the adoption of several Resolutions by the City Council that establish the parameters of the CFD.
The first resolution before the City Council for consideration is the Resolution of Intention (the “ROI”) to Form a CFD and Levy a Special Tax within the territory of the proposed District. The resolution includes:
• The Rate and Method of Apportionment (the “RMA”) defines the maximum amount of special taxes applied to each parcel of land within the boundaries of the District and the escalation factor to be applied to each year.
• A list of the types of public facilities and fees proposed to be funded by special taxes.
• Reference to a boundary map showing the territory that is proposed to be included in the District, including the boundary subject to the special tax levy.
In addition to the items mentioned above, adoption of the ROI sets the date, time and place for a public hearing on the establishment of the District and future issuance of bonds. At the hearing, testimony concerning the District, and the furnishing of the types of public facilities and fees will be heard. Protests by landowners or registered voters residing within the District boundaries and persons owning real property within the CFD will be considered. The date of the public hearing for the proposed District is September 23, 2025, at 5:30 p.m. in the Council Chambers.
The second resolution before the City Council for consideration is the Resolution of Intention to Incur Bonded Indebtedness. The resolution sets forth an intention to set the maximum proposed amount of bonded indebtedness for the District. The District may issue one or more series of bonds totaling no more than $15.0 million to fund facilities and fees within the District. Actual approval of each series of bonds will require future Council consideration and action.
These resolutions are simply an expression of intent, the Council is not bound to form the CFD, which will be decided on September 23rd.
Rate and Method of Apportionment of the Special Tax
Parcels within the proposed District 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 the District, already pay a services tax that will continue to be collected on the parcels.
FINANCIAL SUMMARY
There is no financial impact to the City for the formation of the proposed CFD. The Developer provided funding for the legal and administrative costs, including internal staff time, for the formation of the proposed CFD. When the City issues bonds, the City will receive an administrative fee based on a sliding scale and the size of the issuance:
• 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.