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HomeMy WebLinkAbout15 COMM FAC. LENNAR 10-17-05 AGENDA REPORT Agenda Item ~ ~;:::~~~, 1 ; MEETING DATE: OCTOBER 17,2005 TO: WilLIAM A HUSTON, CITY MANAGER FROM: RONALD A. NAULT, FINANCE DIRECTOR SUBJECT: APPROVAL OF A JOINT COMMUNITY FACILITIES AGREEMENT BETWEEN THE CITIES OF TUSTIN AND IRVINE AND lENNAR HOMES OF CALIFORNIA, INC. SUMMARY: The Mello-Roos Community Facilities Act of 1982 provides that a Community Facilities District may finance facilities to be owned and operated by an entity other than the agency that created the District pursuant to a Joint Community Facilities Agreement (JCFA). Tustin and Irvine would like to enter into the attached JCFA in order to provide financing for Tustin Legacy infrastructure costs through the issuance of bonds by the City of Irvine's Community Facilities District. RECOMMENDATION: Approve the attached Joint Community Facilities Agreement by and among the City of Tustin, the City of Irvine and Lennar Homes of California, Inc., and authorize the City Manager to sign the agreement on behalf of the City of Tustin. FISCAL IMPACT: The approval of this JCFA will allow for a portion of the necessary infrastructure improvements within the Legacy project to be paid for from bond proceeds of the City of Irvine Community Facilities District. DISCUSSION: Lennar Homes is developing a residential tract, Columbus Grove, at the eastern edge of the Tustin Legacy project within the cities of Irvine and Tustin. lennar Homes will be responsible for their pro rata share of the Tustin Legacy infrastructure costs and Staff has been working with them to determine what portion of their fair share can be supported by a Community Facilities District in Tustin. Following the Goals and Policies for Mello-Roos Community Facilities Districts adopted by the City Council last March, Staff has determined that a CFD for Lennar's Columbus Grove project will not provide adequate financial resources to cover all of the Developer's "fair share" obligation. The Mello-Roos Community Facilities Act provides that facilities within the city of Tustin can be financed by a CFD formed within the city of Irvine if both Cities adopt a Joint Community Facilities Agreement (JCFA). The JCFA will allow bond proceeds from the Irvine CFD to be used to construct Tustin Legacy infrastructure and will be credited against Lennar's "fair share" costs to the extent that there are adequate funds available to complete the projects as listed on Exhibit A of the agreement. The attached JCFA has been prepared and agreed to by the Staff of the Cities of Tustin and Irvine and the Developer, Lennar Homes of California, Inc. Staff supports the approval of the agreement by the City Council. RAN:ts Attachment U: INa u" (RAN) IApprova IOf A J oi ntComm un ityF aeilitia sO istriet 5t a ffRe pori. doc JOINT COMMUNITY FACILITIES AGREEMENT by and among CITY OF IRVINE CITY OF TUSTIN AND LENNAR HOMES OF CALIFORNIA, INC. Dated as of ,2005 Community Facilities District No. 2005-2 (Columbus Grove) of the City of Irvine DOCSLA1:502685.5 42081.8GHI JOINT COMMUNITY FACILITIES AGREEMENT THIS JOINT COMMUNITY FACILITIES AGREEMENT (this "Facilities Agreement"), dated as of 1, 2005, is by and among the CITY OF IRVINE, a charter city organized and existing under the laws of the State of California and its charter ("Irvine"), the CITY OF TUSTIN, a general law city organized and existing under the laws of the State of California ("Tustin"), and LENNAR HOMES OF CALIFORNIA, INC., a corporation organized and existing under the laws of the State of California ("Lennar"). WI TNE S SETH: WHEREAS, pursuant to the Mello-Roos Community Facilities Act of 1982 (the "Act"), the City Council of Irvine (the "Irvine City Council") has instituted proceedings to establish Community Facilities District No. 2005-2 (Columbus Grove) of the City of Irvine (the "Community Facilities District"), to authorize the levy of special taxes (the "Special Taxes") upon the land within the Community Facilities District and to issue bonds (the "Bonds") secured by the Special Taxes, the proceeds of which are to be used to finance certain public facilities; WHEREAS, MW Housing Partners III, loP., William Lyon Homes, Inc., Ora Lantana, LLC (collectively, the "Non-Signatory Property Owners") and Lennar are the owners of all of the property within the proposed boundaries of the Community Facilities District; WHEREAS, Lennar and the Non-Signatory Property Owners are collectively referred to herein as the "Property Owners;" WHEREAS, the facilities proposed to be financed by the Community Facilities District include (a) the facilities described on Exhibit A hereto (the "Priority Facilities"), which are to be owned and operated by Irvine, (b) the portion of the facilities described on Exhibit B hereto under the caption "Tustin/Irvine Facilities" that are within the territorial jurisdiction of Irvine (the "Irvine Jurisdictional Facilities"), which are to be owned and operated by Irvine, (c) the facilities described on Exhibit B hereto under the caption "Irvine Additional Facilities" (the "Irvine Additional Facilities"), which are to be owned and operated by Irvine, and (d) the portion of the facilities described on Exhibit B hereto under the caption "Tustin/Irvine Facilities" that are within the territorial jurisdiction of Tustin (the "Tustin Facilities"), which are to be owned and operated by Tustin; WHEREAS, the Priority Facilities, the Irvine Jurisdictional Facilities and the Irvine Additional Facilities are collectively referred to herein as the "Irvine Facilities;" WHEREAS, the Irvine Jurisdictional Facilities, the Irvine Additional Facilities and the Tustin Facilities are collectively referred to herein as the "Additional Facilities;" WHEREAS, Section 53316.2 of the Act provides that a community facilities district may finance facilities to be owned or operated by an entity other than the agency that created the community facilities district only pursuant to a joint community facilities agreement or a joint exercise of powers agreement adopted pursuant to said Section; DOCSLAI :502685.5 42081-8GHI WHEREAS, Section 53316.2 of the Act further provides that at any time prior to the adoption of the resolution of formation creating a community facilities district, the legislative bodies of two or more local agencies may enter into a joint community facilities agreement pursuant to said Section and Sections 53316.4 and 53316.6 of the Act to exercise any power authorized by the Act with respect to the community facilities district being created if the legislative body of each entity adopts a resolution declaring that such a joint agreement would be beneficial to the residents of that entity, and by its authorization hereof, the legislative body of each of Irvine and Tustin has so declared; WHEREAS, Irvine and Tustin desire to enter into this Facilities Agreement in accordance with Sections 53316.2, 53316.4 and 53316.6 of the Act in order to provide for the financing of the Tustin Facilities through the issuance of Bonds by the Community Facilities District; WHEREAS, each Property Owner is a successor in interest to Marble Mountain Partners, LLC ("Marble Mountain"), which is obligated by Irvine conditions of approval for development of the land within the Community Facilities District to pay its fair share (the "Fair Share Obligation") of the design and construction costs of the Tustin Legacy Backbone Infrastructure Program (the "Backbone Infrastructure Program"), and the Priority Facilities and the Additional Facilities constitute components of the Backbone Infrastructure Program; WHEREAS, the Property Owners desire to satisfy all or a portion of their Fair Share Fee obligations through the levy of the Special Taxes on their property within the boundaries of the Community Facilities District and the issuance of the Bonds to finance the Priority Facilities and a portion of the Additional Facilities, and Irvine and Tustin are willing to accommodate such desire, subject to the terms and conditions set forth herein; NOW, THEREFORE, for and in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows: Section 1. The Communitv Facilities District: Issuance of Bonds. The Irvine City Council shall, in its sole discretion, determine whether and when it may be appropriate to establish the Community Facilities District. In no event shall Tustin or the Property Owners have any right to compel the Irvine City Council to establish the Community Facilities District. Irvine shall engage such consultants as it may deem necessary or appropriate to facilitate the establishment of the Community Facilities District. Tustin shall have no responsibility for any costs incurred by Irvine in connection with the establishment of the Community Facilities District. It is anticipated that the Community Facilities District will issue Bonds to finance the acquisition, construction and installation of the Priority Facilities and a portion of the Additional Facilities. If the Community Facilities District is established, the Irvine City Council, acting as the legislative body of the Community Facilities District, shall, in its sole discretion, determine whether, when, under what conditions and to what extent Bonds shall be issued to finance the acquisition, construction and installation of the Priority Facilities and a portion of the Additional Facilities, or any combination thereof. In no event shall Tustin or the Property Owners have any DOCSLAI :502685.5 42081-8GHI 2 right to compel the Community Facilities District to issue Bonds to finance the acquisition, construction and installation ofthe Priority Facilities and a portion ofthe Additional Facilities. If the Bonds are not issued to finance the acquisition, construction, and installation of the Priority Facilities and a portion of the Additional Facilities, or any combination thereof, the Property Owners will remain obligated to satisfy the Fair Share Obligation. The Property Owners will remain obligated to satisfy the amount of the Fair Share Obligation, if any, in excess of the amount of the costs of the acquisition, construction, and installation of the Priority Facilities and a portion of the Additional Facilities financed by the Bonds. Section 2. Fundinl! for Additional Facilities. It is anticipated that the Community Facilities District will provide $2,701,133 in Bond proceeds to finance the acquisition, construction and installation of a portion of the Additional Facilities. If the Community Facilities District issues Bonds, a portion of the proceeds of which are to be available to finance the acquisition, construction and installation of a portion of the Additional Facilities, Irvine shall, or shall cause the Community Facilities District to, notify Tustin of the amount of such proceeds available for such purpose within 15 days of the Community Facilities District's determining, in its discretion, that such proceeds will so become available. Irvine makes no representation that, if proceeds of Bonds are made available to finance the acquisition, construction and installation of a portion of the Additional Facilities, that such proceeds will be sufficient to finance the acquisition, construction and installation of all of such portion of the Additional Facilities, and neither Irvine nor the Community Facilities District shall have any liability to Tustin if such proceeds are insufficient for such purpose. If the Community Facilities District does not issue Bonds to finance the acquisition, construction and installation of a portion of the Additional Facilities, neither Irvine nor the Community Facilities District shall have any obligation to provide any amounts to finance or pay the costs of the acquisition, construction and installation of a portion of the Additional Facilities. Tustin shall not apply any of the proceeds of the Bonds to the purchase of any Tustin Facilities unless such Tustin Facilities were constructed as if they had been constructed under the direction and supervision, or under the authority of, Tustin. The Tustin Facilities, including any real or tangible property which is to be purchased, constructed, expanded or rehabilitated, are described on Exhibit B hereto under the caption "Tustin/Irvine Facilities," and consist of the portion of such facilities that are within the territorial jurisdiction of Tustin. Section 3. Disbursements for Additional Facilities. Bond proceeds available for the acquisition, construction and installation of a portion of the Additional Facilities shall be deposited in an account or subaccount (the "Tustin Account") to be established under the Indenture pursuant to which the Bonds are issued. Moneys on deposit in the Tustin Account shall be invested and disbursed at the direction of the Community Facilities District. To the extent that Bond proceeds are available therefor, the Community Facilities District shall cause disbursements to be made from the Tustin Account from time to time to pay the costs of the acquisition, construction and installation of the Additional Facilities upon submission of a written request of Tustin stating (a) the name and address of the person to whom payment is to OOCSLAI :502685.5 42081-8 GHI 3 be made, (b) the amount to be paid, (c) that an obligation in such amount has been incurred, (d) the purpose for which the obligation to be paid was incurred, (e) that each item of the obligation to be paid constitutes a cost of the Additional Facilities, (f) that the obligation to be paid has not been the subject of a prior Tustin request for disbursement from the Tustin Account, and (g) if the amount requested to be disbursed is to be applied to the purchase of any Tustin Facilities, that such Tustin Facilities were constructed as if they had been constructed under the direction and supervision, or under the authority of, Tustin. The Community Facilities District shall process in a timely manner written requests for disbursements received from Tustin that conform to the requirements hereof. Section 4. Prioritv Facilities. It is anticipated that the Community Facilities District will provide approximately $15,591,804 in Bond proceeds to finance the acquisition, construction and installation of Priority Facilities. Net proceeds of the Bonds, other than those deposited to pay costs of issuance, to fund a reserve fund, to pay capitalized interest and those deposited in the Tustin Account, shall be deposited in a special account (the "Irvine Account") to be established under the Indenture pursuant to which the Bonds are issued. Moneys on deposit in the Irvine Account shall be invested at the direction of the Community Facilities District and shall be withdrawn and disbursed at the direction of Irvine or the Community Facilities District to pay the costs of the acquisition, construction and installation of Priority Facilities and, if sufficient therefor, a portion of the Additional Facilities. Irvine agrees with Tustin that if Irvine determines, from time to time in its discretion, that such Bond proceeds are to be so provided, Irvine will cause to be made available for the acquisition, construction and installation of each Priority Facility described on Exhibit A an amount not less than the amount specified on Exhibit A as the Costs Funded by CFD for such Priority Facility (the "Funded Amount"). If the Community Facilities District issues Bonds, Irvine shall, or shall cause the Community Facilities District to, notify Tustin of the amount of such proceeds deposited in the Irvine Account within 15 days of such proceeds being so deposited. Section 5. Fair Share Oblil!ation Credits. Upon the deposit of proceeds of the Bonds in the Tustin Account, the Property Owners, collectively, as successors in interest to Marble Mountain, shall receive from Tustin a credit against the Fair Share Obligation imposed as a condition of approval for development of their land within the Community Facilities District in an amount equal to the amount so deposited. Upon the deposit of proceeds of the Bonds in the Irvine Account in an amount at least equal to the aggregate Funded Amount for all Priority Facilities, the Property Owners, collectively, as successors in interest to Marble Mountain, shall receive from Tustin a credit against the Fair Share Obligation imposed as a condition of approval for development of their land within the Community Facilities District in an amount equal to $12,841,507. Section 6. Construction, Ownership and Maintenance of Irvine Facilities and Tustin Facilities. Irvine shall be solely responsible for the acquisition, construction and installation of the Irvine Facilities, and Tustin shall have no responsibility therefor or liability with respect thereto, except to the extent that Tustin acquires, constructs and installs for Irvine, under Irvine supervision, such Irvine Facilities. The Irvine Facilities shall be and remain the sole and separate property of Irvine and shall be operated, maintained and utilized by Irvine. Tustin shall not have DOCSLAl.502685.5 42081-8GHI 4 any ownership interest in the Irvine Facilities, and Tustin shall have no responsibility for the operation, maintenance or utilization of the Irvine Facilities or any liability with respect thereto, except for Irvine Facilities that involve traffic signals in which operation and maintenance responsibilities are subject to shared responsibility under the Agreement, dated November 25, 1998, by and between Tustin and Irvine, relating to traffic signal maintenance. Tustin shall be solely responsible for the acquisition, construction and installation of the Tustin Facilities, and Irvine shall have no responsibility therefor or liability with respect thereto. The Tustin Facilities shall be and remain the sole and separate property of Tustin and shall be operated, maintained and utilized by Tustin. Irvine shall not have any ownership interest in the Tustin Facilities, and Irvine shall have no responsibility for the operation, maintenance or utilization of the Tustin Facilities or any liability with respect thereto, except for Tustin Facilities that involve traffic signals in which operation and maintenance responsibilities are subject to shared responsibility under the Agreement, dated November 25, 1998, by and between Tustin and Irvine, relating to traffic signal maintenance. Section 7. Tax Matters. In connection with the issuance of any Bonds, a portion of the proceeds of which are to be made available to finance the acquisition, construction and installation of Tustin Facilities, Tustin agrees to execute and deliver such certifications and agreements as may be reasonably required in order for bond counsel to conclude that interest on such Bonds will be excluded from gross income under Section 103 of the Internal Revenue Code of1986. Section 8. Indemnification. Irvine agrees to protect, indemnify, defend and hold Tustin, and its officers, employees and agents, and each of them, harmless from and against any and all claims, losses, expenses, suits actions, decrees, judgments, awards, attorneys' fees and court costs which Tustin, or its officers, employees and agents, or any combination thereof, may suffer or which may be sought against or recovered or obtained from Tustin, or its officers, employees or agents, or any combination thereof, as a result of or by reason of or arising out of or in consequence of the acquisition, construction, installation, operation, maintenance or utilization of the Irvine Facilities. If Irvine fails to do so, Tustin shall have the right, but not the obligation, to defend the same and charge all of the direct and incidental costs of such defense, including any attorneys' fees or court costs, to and recover the same from Irvine. No indemnification is required to be paid by Irvine for any claim, loss or expense arising from the willful misconduct or negligence of Tustin, or its officers, employees or agents. Tustin agrees to protect, indemnify, defend and hold Irvine and the Community Facilities District, and their respective officers, employees and agents, and each of them, harmless from and against any and all claims, losses, expenses, suits actions, decrees, judgments, awards, attorneys' fees and court costs which Irvine or the Community Facilities District, or their respective officers, employees and agents, or any combination thereof, may suffer or which may be sought against or recovered or obtained from Irvine or the Community Facilities District, or their respective officers, employees or agents, or any combination thereof, as a result of or by reason of or arising out of or in consequence of the acquisition, construction, installation, operation, maintenance or utilization of the Tustin Facilities. If Tustin fails to do so, Irvine and the Community Facilities District shall have the right, but not the obligation, to defend the same DOCSLAI :502685.5 42081-8GHI 5 and charge all of the direct and incidental costs of such defense, including any attorneys' fees or court costs, to and recover the same from Tustin. No indemnification is required to be paid by Tustin for any claim, loss or expense arising from the willful misconduct or negligence of Irvine or the Community Facilities District, or their respective officers, employees or agents. Lennar agrees to protect, indemnify, defend and hold Irvine, the Community Facilities District and Tustin, and their respective officers, employees and agents, and each of them, harmless from and against any and all claims, losses, expenses, suits actions, decrees, judgments, awards, attorneys' fees and court costs which Irvine, the Community Facilities District or Tustin, or their respective officers, employees and agents, or any combination thereof, may suffer or which may be sought against or recovered or obtained from Irvine, the Community Facilities District or Tustin, or their respective officers, employees or agents, or any combination thereof, as a result of or by reason of or arising out of or in consequence of (a) the acquisition, construction or installation of the Priority Facilities or the Additional Facilities by or on behalf of any Property Owner, (b) the financing of the Priority Facilities or the Additional Facilities by or through the Community Facilities District, and (c) any act or omission of a Property Owner, or their respective officers, employees, agents or subcontractors, in connection with the Priority Facilities or the Additional Facilities. If Lennar fails to do so, Irvine, the Community Facilities District and Tustin shall have the right, but not the obligation, to defend the same and charge all of the direct and incidental costs of such defense, including any attorneys' fees or court costs, to and recover the same from Lennar. No indemnification is required to be paid by Lennar to, for or in respect of Irvine or the Community Facilities District for any claim, loss or expense arising from the willful misconduct or negligence of Irvine or the Community Facilities District, or their respective officers, employees or agents. No indemnification is required to be paid by Lennar to, for or in respect of Tustin for any claim, loss or expense arising from the willful misconduct or negligence of Tustin, or its officers, employees or agents. Section 9. Natnre of Al!reement: Allocation of Special Taxes. This Facilities Agreement shall constitute a joint community facilities agreement entered into pursuant to Sections 53316.2, 53316.4 and 53316.6 of the Act. The entire amount of the proceeds of the Special Taxes shall be allocated and distributed to Irvine. Section 10. Third-Partv Beneficiaries. The Non-Signatory Property Owners shall be third party beneficiaries of this Facilities Agreement. If and when established, the Community Facilities District shall be a third-party beneficiary of this Facilities Agreement. Section 11. Limitation of Ril!hts to Parties. Nothing in this Facilities Agreement expressed or implied is intended or shall be construed to give to any person other than the parties hereto, the Non-Signatory Property Owners and the Community Facilities District any legal or equitable right, remedy or claim under or in respect of this Facilities Agreement or any covenant, condition or provision herein contained; and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the parties hereto, the Non-Signatory Property Owners and the Community Facilities District. OOCSLA1:502685.5 42081-8 GHI 6 Section 12. Notices. All written notices to be given hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to Irvine: City of Irvine One Civic Center Plaza Irvine, California 92606 Attention: Manager of Fiscal Services If to Tustin: City of Tustin 300 Centennial Way Tustin, California 92680 Attention: Finance Director If to Lennar: Lennar Homes of California, LLC 25 Enterprise Aliso Viejo, California 92656 Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if personally served or delivered, upon delivery, (b) if given by electronic communication, whether by telex, telegram or telecopier, upon the sender's receipt of an appropriate answerback or other written acknowledgment, (c) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (d) if given by overnight courier, with courier charges prepaid, 24 hours after delivery to said overnight courier, or (e) if given by any other means, upon delivery at the address specified in this Section. Section 13. California Law. This Facilities Agreement shall be governed and construed in accordance with the laws of the State of California. Section 14. Severabilitv. If any part of this Facilities Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Facilities Agreement shall be given effect to the fullest extent reasonably possible. Section 15. Successors. This Facilities Agreement shall be binding upon and inure to the benefit ofthe successors of the parties hereto. Section 16. Counterparts. This Facilities Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. DOCSLAI:502685.5 42081-8GHI 7 IN WITNESS WHEREOF, the parties hereto have executed this Facilities Agreement as of the date first written above. CITY OF IRVINE By: CITY OF TUSTIN By: ~,/~ LENNAR HOMES OF CALIFORNIA, INC. By: OOCSLAl:502685.5 42081-8GHI 8 EXHIBIT A DESCRIPTION OF PRIORITY FACILITIES Cost Funded bv CFD Amount Creditable Against Tustin Fair Share Oblil!ation Neighborhood Park Improvements Wamer Avenue Bike and Hiking Trail $ 3,276,894 620,278 $ 2,600,000 0 Sweet Shade (Marble Mountain Road) 874,956 704,663 341,688 704,663 Warner Avenue Harvard Avenue 1,168,257 8,700,900 245,400 8,700,900 Peters Canyon Channel Peters Canyon Channel Bike And Hiking Trail 245.856 $15,591,804 248.856 $12,841,507 DOCSLAI:502685.5 42081-8GHI A-I EXHIBIT B DESCRIPTION OF ADDITIONAL FACILITIES TustinlIrvine Facilities Tustin Legacy Master Infrastructure Item # JamboreelWamer Ramp Improvements $ 176,930 331,200 30 40 Barranca/Milliken Traffic Signal Jamboree/Barranca Traffic Signal Barranca/V on Karman Supplemental Improvements 270,000 39 139,505 74 BarrancalJ amboree Intersection Improvements 4,000,000 $ 4,917,635 75 Irvine Additional Facilities Sound Mitigation - Warner From Harvard to Culver CulverlWamer $ 1,380,000 35c 1,595,590 69 1,442,769 70 2,477,154 71 530,165 72 530,165 73 3,965,982 92 $11,921,825 Red HilllMain MichelsonIV on Karman J amboreel Alton Harvard! Alton Mitigation Improvements for Peters Canyon Channel (Irvine portion) OOCSLAI :502685.5 42081-8GHI B-1