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HomeMy WebLinkAbout18 AUTHORIZATION TO PARTICIPATE IN THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY’S BOND OPPORTUNITIES FDocusign Envelope ID: BAD3C41B-AA32-41EC-9COD-3637AD501 FCC AGENDA REPORT MEETINGDATE: JUNE17,2025 TO FROM SUBJECT: SUMMARY: ALDO E. SCHINDLER, CITY MANAGER Agenda Item Reviewed: City Manager Finance Director JUSTINA L. WILLIKOM, COMMUNITY DEVELOPMENT DIRECTOR AUTHORIZATION TO PARTICIPATE IN THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY'S BOND OPPORTUNITIES FOR LAND DEVELOPMENT PROGRAM FOR COMMUNITY FACILITIES DISTRICT FORMATION A request that the City Council authorize participation in the California Municipal Finance Authority's Community Facility District Bond Opportunities for Land Development program, which enables land developers to finance public improvements and/or pay development impact fees from the issuance of tax-exempt bonds. RECOMMENDATION: Staff recommends that the City Council: Adopt Resolution 25-44, authorizing participation in the California Municipal Finance Authority's (CMFA) Bond Opportunities for Land Development (BOLD) program, which allows the California Municipal Finance Authority to accept applications, conduct proceedings, and levy special taxes within the City of Tustin, pursuant to the Mello -Roos Community Facilities Act of 1982. 2. Authorize the City Manager and/or Finance Director, or their designee(s), to negotiate, execute, and deliver acquisition, reimbursement, or joint community facilities agreements required in connection with any BOLD Community Facilities District formed pursuant to Resolution 25-44. FISCAL IMPACT: There is no cost to the City to participate in the BOLD program. Projects financed through the BOLD program will facilitate future development of public infrastructure within Tustin. CORRELATION TO THE STRATEGIC PLAN: This action supports Strategic Plan Goal A: Economic and Neighborhood Development, because it is an additional funding source developers can use to provide necessary public infrastructure as part of their development projects; and Goal C: Financial Strength, because it can provide lower -cost public infrastructure financing for land developers, thereby conserving City resources, which enhances fiscal stability. Docusign Envelope ID: BAD3C41B-AA32-41EC-9COD-3637AD501 FCC City Council Agenda Report California Municipal Finance Authority's BOLD Program June 17, 2025 Page 2 BACKGROUND AND DISCUSSION: Under California Government Code Section 53311 et seq. (the Mello -Roos Community Facilities Act of 1982), public agencies may form Community Facilities Districts (CFDs) to finance public facilities, or to reimburse developers after they construct public facilities. A CFD generates funds by selling bonds, and the bonds are repaid with special taxes collected from the end users of the development. The California Municipal Finance Authority (CMFA) is a joint powers authority composed of numerous California local agencies, including the City of Tustin. The CMFA's Bond Opportunities for Land Development (BOLD) program is intended to allow member agencies to work collaboratively with land developers who want to use CFDs to cost- effectively finance public infrastructure projects. The BOLD program is specifically designed to simplify the CFD process for cities and developers, by ensuring all steps of the bond issuance, CFD formation, and collection of the special tax are done by the CMFA. The City's participation in the BOLD program can be as little as authorizing the CFD formation and verifying the completion of the public infrastructure; or the City can choose to be engaged with CMFA throughout the entire process. Additionally, all costs related to bond issuance, including underwriter fees, trustee fees, and CMFA administrative fees, are borne by the CFD and, thereafter, by the property owners within the CFD. The City is pursuing participation in the BOLD Program in accordance with Development Agreement (DA) 2024-0004, which is associated with the Meritage Homes' Compass at Red Hill project, which the City Council approved on June 3, 2025. Ordinance 1566, which approved DA 2024-004, will have its second reading on June 17, 2025, concurrent with this request. Authorizing participation in the BOLD Program will allow Meritage Homes to pursue a CFD through CMFA, which will fund public improvements associated with their project, including the payment of development impact fees. The CFD is an attractive tool for Meritage Homes because it is a low-cost funding source, in part because it utilizes tax-exempt bonds. Although the request to participate in the BOLD Program has been initiated as part of the Compass at Red Hill project, the participation in the BOLD Program does not limit the City to only partnering with Meritage Homes Inc. The City Council's authorization to participate in the Program will allow other developers in the City to pursue a CFD through CMFA in the future. This has value for the city because the cost effectiveness of the BOLD program has the potential of transitioning economically marginal projects into economically viable ones, thereby increasing capital investments in the City. Additionally, authorizing this program sends a message to developers that the City is willing to be a partner and find productive development solutions. Docusign Envelope ID: BAD3C41B-AA32-41EC-9COD-3637AD501 FCC City Council Agenda Report California Municipal Finance Authority's BOLD Program June 17, 2025 Page 3 Adoption of Resolution 25-44 will authorize the CMFA to accept applications to form a CFD under the BOLD program, conduct the required public hearings and landowner ballot proceedings under the Mello -Roos Community Facilities Act, levy special taxes in accordance with the adopted rate and method of apportionment, and issue tax-exempt bonds. The City Manager or Finance Director, or their designee, will be authorized to execute acquisitions, reimbursements, or joint CFD agreements to ensure that bond proceeds are applied exclusively to authorized public improvements, or payment of development impact fees related to public infrastructure. All bond issuance activities, including pricing, underwriting, and trustee services, will be managed by the Authority, with City responsibilities limited to those specified in the authorization. Prepared by: E Signed by: 7BBC64A9.. Jorge Maldonado, Senior Planner Approved by: ESigned by: r;-'ba baw, Raymond Barragan, Principal Planner ES'igned by: 7- ___aaF.Q7C77A3RP:Ai n Jay Eastman, AICP, Assistant Director E Signed by- 14A5 Justina L. Willkom, Community Development Director Attachments: 1. City Council Resolution No. 25-44 Docusign Envelope ID: BAD3C41B-AA32-41EC-9COD-3637AD501 FCC RESOLUTION NO. 25-44 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA, AUTHORIZING USE OF THE BOND OPPORTUNITIES FOR LAND DEVELOPMENT PROGRAM AND AUTHORIZING THE CALIFORNIA MUNICIPAL FINANCE AUTHORITY TO ACCEPT APPLICATIONS FROM PROPERTY OWNERS, CONDUCT PROCEEDINGS AND LEVY SPECIAL TAXES WITHIN THE CITY OF TUSTIN PURSUANT TO THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982, AS AMENDED; AND AUTHORIZING RELATED ACTIONS The Tustin City Council finds and determines as follows: A. That the California Municipal Finance Authority (the "CMFA") is a joint exercise of powers authority, the members of which include numerous cities, counties and other local agencies in the State of California (the "State"); and B. That the CMFA has established the Bond Opportunities for Land Development Program (the "BOLD Program") to allow the financing of certain public facilities and/or certain Development Impact Fees (DIF) that finance public facilities (together, the "Improvements") levied by local agencies in the State through the levy of special taxes under the Mello -Roos Community Facilities Act of 1982, as amended (the "Act"); and C. That the City of Tustin (the "City") is currently a member of CMFA in good standing, such that only a new City Council Resolution is necessary to authorize participation in the BOLD program; and D. That the CMFA from time to time may be requested by owners of land within the City to utilize the BOLD Program for the financing of Improvements related to new development within the City, which improvements will be financed for acquisition by the City or to finance impact fees payable to the City in connection with new development; and E. That the City desires to allow the owners of property within the City to participate in the BOLD Program ("Participating Developers") and to allow the CMFA to conduct proceedings under the Act to form Community Facilities Districts ("CFDs") from time to time under the Act, to levy special taxes within such CFDs, and to issue bonds secured by such special taxes under the Act to finance the Improvements, provided that such participating developers vote in favor of the levy of such special taxes and bonded indebtedness; and F. That property owners within the jurisdiction of the City may, in the future, elect to be participating developers upon obtaining approval of the CMFA, and the Resolution 25-44 Page 1 of 5 Docusign Envelope ID: BAD3C41B-AA32-41EC-9COD-3637AD501 FCC CMFA may conduct proceedings under the Act to form CFDs, levy special taxes within such CFDs and issue bonds secured by such special taxes to finance Improvements; and G. That the City will not be responsible for the conduct of any proceedings under the Act for the formation of any CFD, the levy or collection of special taxes for any CIFID or any required remedial action in the case of delinquencies in any special tax payments, or the issuance, sale or administration of any bonds issued in connection with the BOLD Program; and H. That the City finds that the BOLD program offered by the CMFA can provide significant public benefits, and in conformance with Government Code Section 6586.5 relating to the issuance of bonds by a joint powers authority of which the City is a member, notice was published at least five days prior to the adoption of this resolution at a public hearing, which was duly conducted by this City Council concerning the significant public benefits of the BOLD Program and the bond financing of the improvements from time to time; and That bonds of BOLD Program CFDs are issued through CIVIFA, with no involvement of the City needed other than approving the use of the program and, prior to actual issuance of bonds, entering into an agreement to acquire the public facilities or fees to be paid for with the bond proceeds, and CMFA authorizes and issues the bonds in their name and awards their sale to the bond underwriter per the underwriter's credit requirements; and That CMFA's financing team provides the bond documentation and the official statement for the bonds through its bond counsel; and K. That by authorizing use of the BOLD Program in the City, the City will not be liable to repay the bonds issued by CIVIFA or the special taxes imposed on the participating properties and would have no contractual relationship with bond owners or the bond trustee; and L. That upon issuance of the bonds, proceeds are a funding source for direct payment of impact fees or to otherwise reimburse developer costs for public facilities associated with new development; once the bond issuance occurs, bond proceeds are available to be disbursed pursuant to a joint community facilities agreement and/or acquisition agreement between CMFA and the City for each project, the form of which is subject to approval by City staff, and the bond proceeds are held by a bond trustee or fiscal agent and become available to a participating developer as directed by the City for use on public capital improvements benefitting the City. Resolution 25-44 Page 2 of 5 Docusign Envelope ID: BAD3C41B-AA32-41EC-9COD-3637AD501 FCC NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF TUSTIN, AS FOLLOWS: 11. The use of the BOLD Program, in connection with the financing of improvements, is hereby authorized and approved. The appropriate officials and staff are hereby authorized and directed to allow BOLD Program participation to be available to property owners who are subject to the payment of fees for new development and/or who are conditioned to install public improvements in connection with new development. 111. The City hereby finds and declares that the issuance of bonds by the CMFA, in connection with the BOLD Program, will provide significant public benefits, including without limitation, savings in effective interest rate, bond preparation, bond underwriting and bond issuance costs and the more efficient delivery of local agency services to residential and commercial development within the City. IV. In connection with the issuance of bonds from time to time by the CMFA for the BOLD Program, a form of acquisition agreement, joint community facilities agreement or similar agreement will be required to be entered into, and the form of such agreement will be subject to approval by the City Manager, the Director of Finance or their respective designees. The City Council finds and declares that entrance into each such agreement will constitute a "joint community facilities agreement" for purposes of the Act and shall be beneficial to residents of the City. Any such agreement may include, directly or by reference, City standards, policies and procedures applicable to the financing of public facilities constructed by developers for acquisition by the City. V. The appropriate officials and staff of the City are hereby authorized and directed to allow and approve BOLD Program participation by requesting property owners that are required to install public improvements and/or the payment of fees in connection with new development in the City, including signing developer applications or other documents evidencing the official intent of the City to reimburse itself in connection with each project from the proceeds of tax-exempt obligations issued by CMFA as part of the BOLD Program, and to advise such owners requesting participation in the BOLD Program that the City has approved the BOLD Program; provided, that the CMFA shall be responsible for providing applications and processing of documentation and related materials at its own expense. VI. This Resolution shall take effect immediately upon its adoption. The Clerk of the City Council is hereby authorized and directed to transmit a certified copy of this resolution to the Secretary of CMFA. Resolution 25-44 Page 3 of 5 Docusign Envelope ID: BAD3C41B-AA32-41EC-9COD-3637AD501 FCC PASSED AND ADOPTED by the City Council of the City of Tustin, at a regular meeting on the 17 th day of June 2025. AUSTIN LUMBARD, Mayor ATTEST: ERICA N. YASUDA, City Clerk APPROVED AS TO FORM: FDocuSigned by: -:7z" DANA IG, City Attorney /msd/ Resolution 25-44 Page 4 of 5 Docusign Envelope ID: BAD3C41B-AA32-41EC-9COD-3637AD501 FCC STATE OF CALIFORNIA ) COUNTY OF ORANGE SS CITY OF TUSTIN 1, Erica N. Yasuda, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council is five; that the above and foregoing Resolution No. 25-44 was duly and regularly passed and adopted at a regular meeting of the City Council held on the 17th day of June, 2025 by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOES: COUNCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: COUNCILMEMBER RECUSED: ERICA N. YASUDA, City Clerk Resolution 25-44 Page 5 of 5