REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Oliver Chi, City Manager
PREPARED BY: Ursula Luna-Reynosa, Director of Community Development
Subject:
title
Adopt Resolution No. 2021-24 authorizing the City of Huntington Beach to join the Statewide Community Infrastructure Program (SCIP); Authorizing the California Statewide Communities Development Authority (CSCDA) to Accept Applications from Property Owners, Conduct Special Assessment Proceedings and Levy Assessments and Special Taxes and to Form Assessment Districts and Community Facilities Districts Within the Territory of the City of Huntington Beach; Embodying a Joint Community Facilities Agreement Setting Forth the Terms and Conditions of Community Facilities Districts Financings; Approving Form of Acquisition Agreement for Use when Applicable; and Authorizing Related Actions
body
Statement of Issue:
The City Council is requested to consider the adoption of Resolution No. 2021-24 authorizing the City to join the Statewide Community Infrastructure Program (SCIP) sponsored by the California Statewide Communities Development Authority (CSCDA).
Financial Impact:
All bond obligations are the responsibility of CSCDA and not the City. The City is not taking any financial obligation. Minimal staff time may be incurred by the initial formation and related functions of the programs.
Recommended Action:
recommendation
A) Conduct a public hearing to invite any interested members of the public to provide testimony regarding the SCIP and proposed action; and,
B) Adopt Resolution No. 2021-24, “Resolution of the City Council of the City of Huntington Beach Authorizing the City to Join the Statewide Community Infrastructure Program; Authorizing the California Statewide Communities Development Authority to Accept Applications From Property Owners, Conduct Special Assessment Proceedings and Levy Assessments and Special Taxes and to Form Assessment Districts and Community Facilities Districts Within the Territory of the City of Huntington Beach; Embodying a Joint Community Facilities Agreement Setting Forth the Terms and Conditions of Community Facilities District Financings; Approving Form of Acquisition Agreement for Use When Applicable; and Authorizing Related Actions.”
end
Alternative Action(s):
Do not approve the proposed Resolution, and direct staff accordingly.
Analysis:
CSCDA is a joint powers authority sponsored by the League of California Cities and the California State Association of Counties. The member agencies of CSCDA include approximately 391 cities and 56 counties throughout California, including the City of Huntington Beach (the “City”).
The SCIP was instituted by the CSCDA in 2002 to allow owners of property in participating cities and counties to finance development impact fees that would be payable by property owners upon receiving development entitlements or building permits. The program has since been expanded to include financing of public capital improvements directly and has further expanded to include community facilities districts within the pooled financing structure. If a property owner chooses to participate, the selected public capital improvements and the development impact fees owed to the City will be financed by the issuance of tax-exempt bonds by CSCDA.
CSCDA will impose an assessment or special tax, as applicable on the owner’s property to repay the portion of the bonds issued to finance any public improvements or development impact fees paid associated with development of the property. With respect to impact fees, the property owner will either pay the impact fees at the time of the permit issuance, and will be reimbursed from the SCIP bond proceeds when the SCIP bonds are issued; or the fees will be funded directly from the proceeds of the SCIP bonds. In the former case, the City will transfer the fees to SCIP, and in the latter case, SCIP will hold the bond proceeds representing the fees. In both cases, the fees are subject to requisition by the City at any time to make authorized expenditures. By holding and investing the funds until they are spent, SCIP is able to monitor the investment earnings (which come to the City) for federal tax law arbitrage purposes. In the event fees are paid by the property owner and bonds are never issued, the fees are returned to the City by SCIP. In this way, the City is never at risk for the receipt of the impact fees.
The benefits to the property owner include:
• Only property owners who choose to participate in the program will have assessments or special taxes imposed on their property.
• Instead of paying cash for public capital improvements and/or development impact fees, the property owners receive low-cost, long-term, tax exempt financing of those improvements and/or fees, freeing up capital for other purposes.
• The property owner can choose to pay off the assessments or special taxes at any time.
• For homebuyers, paying for the costs of public infrastructure through an assessment or special tax is superior to having those costs “rolled” into the cost of the home. Although the tax bill is higher, the amount of the mortgage is smaller, making it easier to qualify. Moreover, because the assessment/special tax financing is at tax-exempt rates, it typically comes at lower cost than mortgage rates.
• Owners of smaller projects, both residential and commercial, can have access to tax-exempt financing of infrastructure. Before the inception of SCIP, only projects large enough to justify the formation of an assessment or community facilities district had access to tax-exempt financing.
The benefits to the City include:
• As in conventional assessment district and community facilities district financing, the City is not liable to repay the bonds issued by CSCDA or the assessments or special taxes, as applicable, imposed on the participating properties.
• CSCDA handles all district formation, district administration, bond issuance, and bond administration functions. A participating city or county can provide tax-exempt financing to property owners through SCIP while committing minimal staff time to administer the program.
• Providing tax-exempt financing helps participating cities and counties cushion the impact of rising public capital improvements costs and development impact fees on property owners.
• The availability of financing will encourage developers to pull permits and pay fees in larger blocks, giving participating jurisdictions immediate access to revenues for public infrastructure, rather than receiving revenues over time. As part of the entitlement negotiation process, the possibility of tax-exempt financing of fees can be used to encourage a developer to pay fees up front.
• In some cases, the assessments or special taxes on successful projects can be refinanced through refunding bonds. Savings achieved through refinancing may be directed back to the participating jurisdiction for use on public infrastructure, subject to applicable federal tax limitations.
The proposed resolution authorizes CSCDA to accept applications from owners of property within the City’s jurisdiction to apply for tax-exempt financing of public capital improvements and development impact fees through SCIP. It also authorizes CSCDA to form assessment districts and community facilities districts within the City’s boundaries, conduct assessment and special tax proceedings and levy assessments and special taxes against the property of participating owners. It approves the form of an Acquisition Agreement, attached to the resolution as Exhibit B, to be entered into between the City and the participating property owner/developer, if applicable, to provide the terms and conditions under which financing for public capital improvements will be provided and to establish the procedure for disbursement of bond proceeds to pay for completed facilities. It also authorizes necessary related actions and makes certain findings and determinations required by law.
Environmental Status:
Pursuant to CEQA Guidelines Section 15378(b)(4), government fiscal activities that do not result in a physical change in the environment and do not commit the lead agency to any specific project, do not constitute a project. Therefore, these activities are exempt in accordance with CEQA Guidelines Section 15060(c)(3).
Strategic Plan Goal:
Economic Development & Housing
Attachment(s):
1. Resolution No. 2021-24 authorizing the City of Huntington Beach to join the Statewide Community Infrastructure Program; Authorizing the California Statewide Communities Development Authority to Accept Applications from Property Owners, Conduct Special Assessment Proceedings and Levy Assessments and Special Taxes and to Form Assessments Districts and Community Facilities Districts Within the Territory of the City of Huntington Beach; Embodying a Joint Community Facilities Agreement Setting Forth the Terms and Conditions of Community Facilities Districts Financings; Approving Form of Acquisition Agreement for Use when Applicable; and Authorizing Related Actions