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HomeMy WebLinkAboutResolution No. 01-P3RESOLUTION NO. 01-P '+3 • RESOLUTION OF THE BOARDMEMBERS OF THE AZUSA PUBLIC FINANCING AUTHORITY APPROVING DEBT POLICY AND PROCEDURES WHEREAS, the Boardmembers (the "Boardmembers") ofthe Azusa Public Financing Authority has considered a document entitled "CITY OF AZUSA DEBT POLICY AND PROCEDURES" which contains policies and procedures which are designed to standardize the issuance and management of debt by the Azusa Public Financing Authority, (the "Debt Policy"); and WHEREAS, the Director ofFinance has recommended to the Boardmembers that the Debt Policy be approved and established as the policies and procedures of the City, the Azusa Public Financing Authority and such other entities for the issuance and management of debt; and WHEREAS, the Boardmembers have determined that the Debt Policy should be approved and established as recommended by the Director of Finance. NOW THEREFORE, THE BOARDMEMBERS OF THE AZUSA PUBLIC FINANCING AUTHORITY DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS: Section 1. Approval of Policy. The "CITY OF AZUSA DEBT POLICY AND PROCEDURES," as presented to the Boardmembers, is hereby approved and established as the policies and procedures of the City with respect to the issuance and management of debt. Section 2. Certification. The Secretary shall certify to the passage and adoption of this Resolution. adoption. SECTION 3. Effective Date. This Resolution shall become effective upon its PASSED, APPROVED AND Cristina Cruz -Madrid Chairperson ATTEST: Vera Mendoza Secretary RVPUBWGS\622765 19, 2001. STATE OF CALIFORNIA• ) • COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I, Vera Mendoza, Secretary of the AZipIjWUBLIC FINANCING AUTHORITY, do hereby certify that the foregoing Resolution No. _ was duly introduced and adopted at a regular meeting of the Boardmembers on the 19th day of November, 2001, by the following vote, to wit: AYES:DIRECTORS: HARDISON,STANFORD, ROCHA,MADRID NOES: DIRECTORS: ABSENT DIRECTORS: CHAGNON Vera Mendoza, Secretary RVPUBWGS\622165 -2' CITY OF AZUSA DEBT POLICY LAND BASED FINANCING The City will consider developer or property owner initiated applications requesting the formation of community facilities or assessment districts and the issuance of bonds to finance eligible public facilities necessary to serve newly developing commercial, industrial and/or residential projects. Generally, only community serving public facilities such as major streets, highway improvements, freeways, flood or drainage improvements, sewers, water improvements, libraries and fire stations (including public parking facilities) may be eligible for this financing program. Facilities will be financed in accordance with the provisions of the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915, or the Mello -Roos Community Facilities Act of 1982. The City shall make the determination as to whether a proposed district will proceed under the provisions of the Assessment Acts or the Mello -Roos Community Facilities Act. The City may confer with other consultants and the applicant to learn of any unique district requirements such as regional serving facilities or long-term development phasing, prior to making any final determination. All City and City consultant costs incurred in the evaluation of new development, district applications and the establishment of districts will be paid by the applicant(s) by advance deposits in those instances where a party or parties other than the City have initiated a proposed district. Expenses not legally reimbursable by the district will be borne by the applicant. The City may incur expenses for analyzing proposed assessment or community facilities districts where the City is the principal proponent of the formation or financing of the district. APPLICATION PROCESS Early communication with the City is encouraged to assist applicants in evaluating the feasibility of available financing programs and to discuss program procedures. The following details a typical district application review and approval process: 1. Application Submission: Applicant shall submit anapplication to the City together with a non-refundable fee in the amount of $5,000. This fee is for the purpose of application processing, and other preliminary costs. The City will conduct an initial evaluation of the application to determine if it is complete and whether additional information is required. 2. Project Review: The City staff will meet to discuss the application, including any issues raised and further information that might be required. Once the district's application is accepted by City Staff, it will be reviewed by a City Assessment and Mello -Roos financing team consisting of, but not limited to, the City Manager, Director of Finance, City Treasurer and the Investment Committee, and other City staff based on the needs of the project. 0 0 3. Application Processing: Upon determination that the application package is complete, City Staff prepares a report to the City Manager or the designee, who will then forward the application for district formation and project financing, along with the recommendations of the City Assessment and Mello -Roos Financing Team to the City Council for further action. 4. City Council Consideration: The City Council grants or denies the application. If approval is granted, the City Council directs the City Manager, or the designee, to engage additional consultants, which may include, but not be limited to: an appraiser, financial advisor, underwriter, bond counsel, special tax consultant and assessment engineer. This includes negotiation of necessary contracts, and the collection of additional developer deposits, as necessary. 5. Project Initiation: City Staff submits contracts, reimbursement agreements, bond documents and other pertinent items for consideration to the City Council, as required. 6. Project Implementation: Applicant, City Staff and consultants meet to determine preliminary project schedule and begin work necessary to complete district formation and financing. GENERAL REQUIREMENTS District Cost Deposits and Reimbursements All City and consultant costs incurred in the evaluation of district applications and the establishment of districts will be paid by the applicant through advance deposits. Expenses not chargeable to the district shall be directly borne by the applicant. Each application for the formation of an AD or CFD shall be accompanied by an initial deposit of $25,000 or such higher amount as determined by the City to fund initial consultant and staff costs associated with district review and implementation. If additional funds are needed to offset costs and expenses incurred by the City, the City will make a written demand upon the applicant for such funds and the applicant will comply with the demand within fourteen (14) calendar days of receipt of such notice. If the applicant fails to make any deposit of additional funds for the proceedings, the City may, as its sole option, suspend all proceedings until receipt of such additional deposit. The deposits will be used by the City to pay costs and expenses incurred by the City incident to the proceedings, including, but not limited to, legal, engineering, appraisal, special tax consultant and financial advisory expenses, administrative costs and expenses, required notifications, printing and publication of legal matters. The City may refund any unexpended portion of the deposits upon the following conditions: V r 1. The district is not formed; P 2. The proceedings for formation of the district or issuance of Bonds is disapproved by the City; or 3. The proceedings for formation of the district or issuance of Bonds are abandoned in writing by the applicant. Pursuant to the adoption of a reimbursement resolution, the applicant may be entitled to reimbursement from Bond proceeds for all reasonable costs and expenses incident to the proceedings and construction of the public facilities as provided under the Mello -Roos Act, the 1911 Act, or the 1913 Act. All such costs and expenses will be limited to those district -related consultants hired by the City and invoices will be verified by the City as a condition of reimbursement. The applicant or property owner will not be entitled to reimbursement from Bond proceeds for any of the expenses specified as follows: 1. In-house administrative, legal and overhead expenses incurred by the applicant; 2. Interest expense incurred by the applicant on moneys advanced or expended during the proceedings and construction of public facilities; and 3. Any other costs and expenses incurred by the applicant, which are not, otherwise authorized for reimbursement under the Mello -Roos Act, the 1911 Act or the 1913 Act. Neither the City nor the district will be required to reimburse the applicant or property owner from any funds other than the proceeds of Bonds issued by the district. Use of Consultants The City Assessment and Mello -Roos Financing Team will either select or have the right of refusal over all consultants necessary for the formation of the district and the issuance of bonds, including the underwriter(s), bond counsel, financial advisor, assessment engineer, appraiser, market absorption study consultant, and the special tax consultant. City Staff may confer with the applicant, but consent of the applicant is not required in the determination by the City of the consulting and financing team. The need for district consultants and the scope of their services will be determined by the City Assessment and Mello -Roos Financing Team on a case-by-case basis with consideration given to market conditions and the nature of the district and financing(s). Eligible Public Facilities Facilities to be financed must be public facilities for which the City, or a public agency as determined appropriate by the City, will be the owner or will have normal operating and maintenance responsibility. The City has final determination as to any facility's M r • eligibility for financing, as well as the prioritization of public facilities to be included within a district financing. Land Use Approvals The City will accept applications for the formation of ADs and/or CFDs only when properties to be included within a proposed district have City site plan and other applicable zoning approval. Value -To -Lien Ratio Upon receiving an appraisal and determining the value -to -lien ratio, the City will apply the following criteria: If the value -to -lien ratio of particular property within the CFD is 4.0 to 1 or greater, the City will not require a letter of credit or other security enhancements to secure payment of the special taxes or assessments to be levied annually on such properties within the CFD. However, letters of credit or other security may be required for individual parcels within the district that have a value -to -lien ratio of less than 4.0 to 1. Security For new development, the applicant or property owner must demonstrate its financial plan and ability to pay all assessments and/or special taxes before full build -out has taken place. The City, in certain instances, may require additional security such as credit enhancement. If the City requires letters of credit or other security, the credit enhancement will be issued by an institution in a form and upon terms and conditions satisfactory to the City. All fees payable on the letter of credit or other security will be the sole responsibility of the applicant or developer, not the City or the district. Any security required to be provided by the applicant will be discharged by the City upon the opinion of a state certified appraiser retained by the City, that a value -to -lien ratio of 4.0 to 1 has been attained. Continuing Disclosure The applicant/developer will comply with the federal requirements concerning secondary market disclosure as those requirements are interpreted by the City and its counsel. Terms and Conditions of Bonds The City will establish all terms and conditions of the bonds. The City Treasurer will control, manage and invest all district bond proceeds. Unless otherwise authorized by the City, the following shall generally serve as bond requirements: 1. A reserve fund equal to the lesser of (i) ten percent (10%) of the proceeds of the sale of the Bonds, (ii) maximum annual debt service on the bonds, or (iii) 125 percent (125%) of average annual debt service will be established. 4 A Surety Bond will be considered in lieu of a cash funded reserve fund based on the following criteria: a. Cost of Surety versus Interest Rates on a cash funded reserve fund. b. Arbitrage considerations c. Financing requirements of the project. Selection of a surety provider will be dictated by the requirements of the bond insurer. In the absence of a bond insurer, the surety provider must posses a minimum long-term debt rating (or claims paying ability) of double A by both Moody's and Standard and Poor's. 2. The special taxes or annual assessments shall be levied for the first fiscal year following the sale of the Bonds for which they may be levied unless interest has been capitalized to provide appropriate security for the Bonds. Interest shall not be funded (capitalized) beyond the earliest interest payment date for which sufficient special tax revenues or annual assessment installments will be available for payment of interest. 3. The repayment of principal shall begin on the earliest date for which sufficient special tax revenues or annual assessment will be made available. 4. The maximum special tax will be established to assure that the annual revenue produced by levy of the maximum special tax shall be equal to at least 110% of average annual debt service on the bonds. 5. In instances where multiple series of bonds are to be issued, the City will make a final determination as to which public facilities are of the highest priority and those public facilities will be financed first and will be subject to the earliest or most senior lien. 6. The City may require that each new district bond financing refund any prior liens, if they exist, on properties included in the district in order to avoid subordinated liens. Instances where prior liens may not require refunding are: (1) where refunding prior liens will result in higher interest cost, (2) where there can be assurance that prior liens may pose no marketing problems for the new district bonds, or (3) where refunding prior liens may present future administrative difficulties to the City or other affected public entities. Limitation on Special Taxes and Overlapping Debt It is the City's intent that the special tax resulting from the CFD, when added to the ad valorem property tax and other direct and overlapping debt for the proposed district (including other benefit assessments, special taxes levied for authorized but unissued debt, and any other anticipated special assessments, taxes or charges which may be included on a property owner's annual property tax bill), shall not exceed two percent (2%) of the projected assessed value of each improved parcel within the district. The City shall retain a special tax consultant to prepare a report which: 5 1. Recommends a special tax for proposed CFD. 2. Evaluates the proposed special tax to determine its ability to adequately fund identified public facilities, City administrative costs, services (if applicable) and other related expenditures. Such analysis shall also address the resulting aggregate tax burden of all proposed special taxes plus existing special taxes, ad valorem taxes and assessments on the properties within the CFD. Disclosure to Purchasers The applicant/developer shall be responsible for compliance with all applicable federal and state statutory disclosure requirements, as well as any additional City requirements, in transactions with purchasers of properties within the district. Acquisition Provisions The City generally will provide for acquisition districts. The City will have final determination as to whether and to what extent it will allow the financing of public facilities through acquisition. In the event the acquisition provisions of the 1913 Act or the Mello -Roos Act are used, the City and the applicant or property owner will mutually agree upon public facilities to be acquired and the method of determining reasonable acquisition cost. A funding and acquisition agreement will be required and approved by the City Council on or prior to the adoption of the resolution of formation to form the district. Market Absorption Study (Mello Roos only) An absorption study of the proposed development project will be required for land secured financing on undeveloped property. The absorption study will be used as a basis for verification that sufficient revenues can be produced and to determine if the financing of the public facilities is appropriate given the timing of the development. Additionally, the projected absorption rates will be provided to the appraiser for use in the appraisal and to verify special tax projections. CRITERIA FOR APPRAISALS Definition of Appraisal An appraisal is a written statement independently and impartially prepared by a qualified appraiser setting forth an opinion of fair market value of an adequately described property as of a specific date, supported by the presentation and analysis of relevant market information. Standards of Appraisal The format and level of documentation for an appraisal depend on the complexity of the appraisal problem. A detailed appraisal will be prepared for complex appraisal problems. 0 9 0 A detailed appraisal will reflect nationally recognized appraisal standards, including, to the extent appropriate, the Uniform Appraisal Standards for Land Acquisition and the CDIAC Appraisal Guidelines (published in 1994). An appraisal must contain sufficient documentation, including valuation data and the appraiser's analysis of the data, to support his or her opinion of value. At a minimum, the appraisal shall contain the following: The purpose and/or function of the appraisal, a description of the property being appraised, and a statement of the assumptions and limiting conditions affecting the appraisal. 2. An adequate description of the physical characteristics of the property being appraised, location, zoning, present use, and an analysis of the highest and best use. 3. All relevant and reliable approaches to arrive at the value consistent with commonly accepted professional appraisal practices. If a discounted cash flow analysis is used, it should be supported with at least one other valuation method such as a market approach using sales that are at the same stage of land development. If more than one approach is utilized, there must be an analysis and reconciliation of approaches to value that are sufficient to support the appraiser's opinion of value. 4. A description of comparable sales, including a description of all relevant physical, legal and economic factors such as parties to the transaction, source and method of financing, and verification by a party involved in the transaction. 5. A statement of the value of the real property. 6. The date of appraisal, signature and certification of the appraiser. Conflict of Interest No appraiser or review appraiser will have any interest, direct or indirect, in the real property being appraised for the City that would in any way conflict with the preparation or review of the appraisal. Compensation for making an appraisal will not be based on the amount of the valuation. EXISTING RESOLUTIONS AND/OR ORDINANCES Any existing City resolutions and/or ordinances, which may be in conflict with procedures or policies contained in this document, will be given higher priority until such time that either the ordinance or this document can be amended to provide greater consistency. 7