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HomeMy WebLinkAboutD-1 Staff Report - Adopt LocalGoals and Policies relating toCFDs- 5.15.17SCHEDULED ITEM D-1 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: TROY L. BUTZLAFF, ICMA-CM, CITY MANAGER FROM: TALIKA JOHNSON, DIRECTOR OF FINANCE DATE: MAY 15, 2017 SUBJECT: ADOPTION OF GOALS AND POLICIES FOR THE IMPLEMENTATION OF THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982, AS AMENDED, CALIFORNIA GOVERNMENT CODE § 53311, ET SEQ., REGARDING THE FORMATION OF COMMUNITY FACILITIES DISTRICTS SUMMARY: The Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), provides a method for local governments to fund public facilities and certain services, particularly for newly developing areas. Prior to forming a Community Facility District (CFD) as authorized under the Act, the City must first establish goals and policies. Adoption of the Goals and Policies will establish the groundwork for the financing of authorized public facilities and/or public services that benefit or serve the existing, new, or planned development for the City of Azusa. The proposed action, adopts Resolution No. 2017-C30 establishing Goals and Policies for implementation of the Mello-Roos Community Facilities Act of 1982, as amended. RECOMMENDATION: Staff recommends that the City Council take the following action: 1) Adopt Resolution No. 2017-C30 establishing Goals and Policies for implementation of the Mello-Roos Community Facilities Act of 1982, as amended. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA ADOPTING GOALS AND POLICIES FOR THE IMPLEMENTATION OF THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982, AS AMENDED, CALIFORNIA GOVERNMENT CODE § 53311, ET SEQ., REGARDING THE FORMATION OF COMMUNITY FACILITIES DISTRICTS APPROVED CITY COUNCIL 5/15/2017 Adopt Resolution of Goals and Policies for implementation of CFD’s May 15, 2017 Page 2 DISCUSSION: The initial formal step in establishing a CFD is to adopt a statement of local goals and policies that will guide CFD administration and financing for this CFD and any future CFDs the City establishes. The City's consultant, SDFA has developed the recommended goals and policies specifically to address the City's existing fiscal policies and the California laws authorizing the establishment of a CFD. These policies are general in nature and apply to all CFDs that may be formed by the City. Once adopted, these policies will govern the establishment of all future CFDs, and will not need to be re-adopted. The following is a summary of the significant features of the proposed Goals and Policies:  Defines the eligible public facilities and public services that can be financed through the CFD.  Requires an appraisal to determine property values and the City may require a market absorption study.  Requires full disclosure of CFD and special tax liens to property owners and continuing disclosure to bond holders.  Provides for Special Tax formulas and maximum limits on properties  Summarizes proceedings on establishment of a CFD according to State Law.  Sets the CFD bond financing terms established solely by the City and the security pledged shall be only from the CFD properties and the special tax lien. Attached is a draft resolution adopting goals and policies for the implementation of a CFD and the draft goals and policies. FISCAL IMPACT: There is no fiscal impact associated with the recommended action. Prepared by: Reviewed and Approved: Talika Johnson Louie F. Lacasella Director of Finance Management Analyst Reviewed and Approved: Troy L. Butzlaff, ICMA-CM City Manager Attachment: 1) Resolution No. 2017-C30 Adopting Local Goals and Policies including: a. Exhibit A – For the use of the Mello-Roos Community Facilities Act of 1982, as amended to finance Public Facilities and Public Services 45635.01433.1\29767955 RESOLUTION NO. 2017-C30 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA ADOPTING GOALS AND POLICIES FOR THE IMPLEMENTATION OF THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982, AS AMENDED, CALIFORNIA GOVERNMENT CODE § 53311, ET SEQ., REGARDING THE FORMATION OF COMMUNITY FACILITIES DISTRICTS WHEREAS, the Mello-Roos Community Facilities Act of 1982 (California Government Code 53311, et seq. (the “Act”) establishes mechanisms to finance authorized public facilities and/or public services that benefit or serve existing, new, or planned development for the City of Azusa (the “City”); and WHEREAS, California Government Code § 53312.7 provides that a local agency may initiate proceedings to establish a district pursuant to the Act only if it has first considered and adopted local goals and policies concerning the use of the Act; and WHEREAS, City staff has caused to be prepared and presented to the City Council a statement of local goals and policies relating to the formation and implementation of community facilities districts within the City of Azusa as required by the Act; and WHEREAS, the City Council desires to ensure that the provisions of the Act are implemented in a timely manner and in accordance with the requirements of the Act; and WHEREAS, all legal prerequisites to the adoption of this Resolution have occurred. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF AZUSA AS FOLLOWS: 1. The City Council finds that the foregoing recitals are true and correct. 2. Pursuant to the provisions of California Government Code § 53312.7, the City Council hereby adopts those Goals and Policies set forth in Exhibit “A,” attached hereto and by this reference included as though fully set forth herein. 3. The Goals and Policies adopted hereby supersede any prior Statement of Local Goals and Policies of the City of Azusa which have previously been adopted. 4. The City Clerk shall certify to the adoption of this Resolution. 45635.01433.1\29767955 2 PASSED AND ADOPTED by the City Council of the City of Azusa at a regular meeting held on the 15th day of May, 2017. _____________________________ Joseph Romero Rocha Mayor ATTEST: ______________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk 45635.01433.1\29767955 3 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) ss. CITY OF AZUSA ) I HEREBY CERTIFY that the foregoing Resolution No. 2017-C30 was duly adopted by the City Council of Azusa at a regular meeting thereof, held on the 15th day of May, 2017, by the following vote of Council: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ______________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk APPROVED AS TO FORM: __________________________________ Best Best & Krieger, LLP City Attorney 45635.01433.1\29767955 A-1 EXHIBIT "A" GOALS AND POLICIES City of Azusa, California Goals and Policies For the use of the Mello-Roos Community Facilities Act of 1982, as amended To finance Public Facilities and Public Services Statement of Purpose This document sets forth the goals and policies of the City Council of the City of Azusa (the “City Council”) concerning the use of the Mello-Roos Community Facilities Act of 1982 (California Government Code § 53311, et seq.) (“Act”) to finance authorized public facilities and/or public services that benefit or serve the existing, new, or planned development for the City of Azusa (“City”). These goals and policies have been prepared pursuant to the requirements of § 53312.7 of the Act and shall apply to all Community Facilities Districts (“CFD”) formed by the City Council. The City Council may, at its sole discretion, supplement or amend any goal or policy stated herein. This document supersedes any prior Statement of Local Goals and Policies of the City of Azusa which have previously been adopted. Definitions “Act” means the Mello-Roos Community Facilities Act of 1982, as amended (California Government Code § 53311, et seq.). “Bonds” means bonds authorized and issued under the Act. “Bulk Sale Value” means the most probable price, in a sale of all parcels within a tract or development project, to a single purchaser or purchasers, over a reasonable absorption period, discounted to a present value, as of a specified date, in cash or in terms equivalent to cash, for which the property rights should sell after reasonable exposure, in a compet itive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgably, and for self-interest, and assuming that neither is under undue stress. “CFD” or “District” means a community facilities district formed under the Act. “City” means the City of Azusa, California. “Discounted Cash Flow” means the measurement of the cash flows associated with the development and sale of real estate parcels, based on an independent judgment of the prices and times at which individual parcels or properties would be sold, after applying a discount rate to such cash flows to reflect the risk-adjusted rate or return necessary to attract the debt and equity investment necessary to undertake and complete the acquisition, entitlement, development and sale of the parcels or properties. 45635.01433.1\29767955 A-2 “Lien” means, in the case of public debt imposed on a parcel or parcels, the amount of debt attributable to a parcel or parcels, based on an apportionment of the debt to such parcel or parcels in relation to the probable debt service to be borne by such parcel to parcels. “Public Facilities” means improvements authorized to be constructed or acquired under the Act, including, but not limited to, fees for capital facilities. “Public Services” means any service authorized by the Act. “Value” or “Fair Market Value” means the amount of cash or its equivalent which property would bring if exposed for sale in the open market under conditions in which neither buyer or seller could take advantage of the exigencies of the other, and both have knowledge of all the uses and purposes to which the property is adapted and for which it is capable of being used, and of the enforceable restrictions upon uses and purposes. “Value-to-Lien Ratio” means a calculation to measure the number of times the value of a property exceeds the sum of the Liens, including any proposed liens. Fundamental Community Facilities District Policy Objective It is the policy of the City that the City Council may exercise all rights, powers, and authorities granted to it by the Act to finance, or assist in financing, authorized Public Facilities and/or Public Services. The silence of these goals and policies with respect to any matter shall not be interpreted as creating any policy with regard to that matter. Any inconsistency between these goals and policies and the Act, as amended, shall be resolved in favor of the Act. Initiation of CFDs The City will consider applications requesting the formation of CFDs to finance authorized Public Facilities and/or authorized Public Services. The City reserves the right to request additional information, reports, or studies reasonably necessary to evaluate these applications. Applications may be initiated by owners or developers of vacant property proposed to be developed, owners of property within existing developed areas, registered voters residing in existing developed areas, or the City itself. The City shall not incur any non-reimbursable expense for processing applications and/or petitions for CFDs except for those where the City is the applicant. City and consultant costs incurred in the establishment of a CFD may be recovered by the City through the levy of the Special Tax. The applicant, if not the City, will pay for the costs associated with the applic ation review as well as any non-reimbursable expenses related to the formation for the CFD via advanced deposit. Each application for formation of a District shall be accompanied by an initial deposit in an amount determined by the City as necessary to fund initial staff time and consultant costs associated with District review and formation. Deposit terms and conditions will be defined by a deposit and reimbursement agreement to be executed by the applicant and the City, as soon as 45635.01433.1\29767955 A-3 practical after receipt of an application. If additional funds are needed to off-set costs and expenses incurred by the City during the review, evaluation and/or formation of the District, the City shall submit a written request to the applicant for such funds, and the applicant shall comply with each demand within ten (10) business days of receipt of such notice. If the applicant fails to make deposit of additional funds for the proceedings, the City may suspend all proceedings until receipt of such additional deposit. The deposits shall be used by the City to pay for actual costs and expenses incurred by the City relative to the proceedings, including but not limited to the following: legal, engineering, appraisal, market absorption and/or pricing, special tax consulting and financial advisory; documented City staff time, administrative costs and expenses; required notifications; and printing and publication of legal matters. The City shall refund any unexpended portion of the deposits upon the following conditions: A. The District is not formed; B. Bonds are not issued and sold by the District; C. The proceedings for formation of the District or issuance of bonds is disapproved by the City; or D. The proceedings for formation of the District or issuance of bonds are abandoned in writing by the applicant; E. Except as otherwise provided herein, the applicant shall be entitled to reimbursement for all reasonable costs and expenses incident to the proceedings and construction of the Public Facilities as provided under the Act, provide d that all such costs and expenses shall be verified by the City as a condition of reimbursement. The applicant or property owner shall not be entitled to reimbursement from bond proceeds for any of the following: A. In-house administrative and overhead expenses incurred by the applicant, or expenses of applicant’s counsel or consultants; and B. Interest expense incurred by the applicant on moneys advanced or expended during the proceedings and construction of Public Facilities. The City shall not accrue or pay any interest on any portion of the deposit refunded to the applicant or the costs and expenses reimbursed to the applicant. Neither the City nor the District shall be required to reimburse the applicant or property owner from any funds other than the proceeds of bonds issued by the District and moneys remaining in the deposit account as provided above. Excess funds on deposit after the formation of the proposed District will be refunded to the depositor. 45635.01433.1\29767955 A-4 Eligible Facilities In accordance with the Act, facilities must be owned by a public agency or utility and must have a useful life of at least five (5) years in order to be eligible to be financed through a CFD. In selecting facilities to be financed, the City may finance any Public Facility authorized to be financed under the Act as it now exists or as it may be amended in the future. These authorized Public Facilities may include, but are not limited to, the purchase, construction, expansion, improvement, or rehabilitation of:  Fire stations;  Flood control facilities;  Governmental facilities;  Libraries;  Local park, recreation, parkway, and open-space facilities;  Police stations;  Public utilities;  Sanitary sewer facilities;  Storm drain facilities;  Water transmission and distribution facilities. Eligible Services In accordance with the Act, CFDs may only finance services that are determined to be in addition to those provided within the territory prior to the formation of the CFD. Additional services may not supplant services already available within that territory when the CFD was created. In selecting services to be financed, the City may finance any Public Service authorized to be financed under the Act as it now exists or as it may be amended in the future. These public services may include, but are not limited to, the following types of services within the area:  Fire protection and suppression services, and ambulance and paramedic services;  Flood and storm protection services, including but not limited to, the operation and maintenance of storm drainage systems, and sandstorm protection systems;  Maintenance and lighting of parks, pathways, streets, roads, and open-space;  Police protection services;  Services with respect to removal or remedial action for the cleanup of any hazardous substance released or threatened to be released into the environment. Financing Priorities Ultimately, the eligibility of any proposed Public Facility and/or Public Service will be determined by the City. In general, none of these uses of the Act will have priority over the others; however, the City reserves the right to make exceptions when circumstances warrant. All applications and their proposed facilities and services will be considered on a case-by-case basis and prioritized at the discretion of the City. 45635.01433.1\29767955 A-5 Credit Quality Requirements It is the policy of the City to comply with all provisions of the Act including, but not limited to, § 53345.8, as the same may be amended from time to time. It is the goal of the City to conform, as nearly as practicable, to the California Debt and Investment Advisory Commission’s Appraisal Standards for Land-Secured Financings, as such standards may be amended from time to time, provided, however, that this City Council may additionally amend such standards as it deems necessary and reasonable, in its own discretion, to provide needed public improvements within the City, while still accomplishing the goals set forth herein. Unless otherwise specifically approved by the City Council as provided in § 53345.8(b) or (c) of the Act, the District property Value-to-Lien Ratio shall be at least 3:1 after calculating the value of the Public Facilities to be financed, and considering any prior or pending special taxes or assessment liens. The City may require a higher District property Value-to-Lien Ratio in its discretion, in consideration of current market and related conditions. In addition, the City, at its discretion, may require a higher Value-to-Lien Ratio for individual parcels or properties with concentrated ownership within the District, if considered necessary to enhance the overall credit- worthiness of the district. Property value may be based on either an appraisal or on assessed values as indicated on the county assessors tax roll. The City shall select the appraiser, and the appraisal shall be based on standards promulgated by the State of California and otherwise determined applicable by the city staff and consultants. The appraisal must be dated within three (3) months of the date that the bonds are issued. The public lien amount shall include the bond issue currently being sold plus any public indebtedness secured by a lien on real property currently existing against the properties to be taxed. Less than a three to one property value to public lien ratio, excessive tax delinquencies, or projects of poor economic viability may cause the City to disallow the sale of bonds or require credit enhancement prior to bond sale. The City may consider exceptions to the above policies for bond issues that do not represent an unusual credit risk, either due to credit enhancement or other reasons specified by the City, and which otherwise provide extraordinary public benefits. The City shall have discretion to retain a consultant to prepare a report to verify market absorption assumptions and projected sales prices of the properties which may be subject to the maximum special tax in the District. Such a report may be used by appraisers in determining the value to property to be assessed or taxed. Credit Enhancement If the City requires letters of credit or other security, the credit enhancement shall 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 shall be the sole responsibility of the applicant or developer, not the City or District. Any security required to be provided by the applicant may be discharged by the City upon the opinion of a qualified appraiser, retained by the City, that a Value-to-Lien Ratio of at least three to one has been attained per land use category, including any overlapping special assessments or special tax liens. The City shall impose specific requirements (including but not limited to an absorption study) with respect to such credit enhancements on a case-by-case basis. 45635.01433.1\29767955 A-6 The City retains the right to withhold public financing at its sole discretion. Appraisals The definitions, standards and assumptions to be used for appraisals shall be determined by the City on a case-by-case basis, with input from City consultants and CFD applicants, and by reference to relevant materials and information promulgated by the State of California, including the Appraisal Standards for Land-Secured Financings prepared by the California Debt and Investment Advisory Commission. In any event, the Value-to-Lien Ratio shall be determined based upon an appraisal of the proposed CFD by an independent Member Appraisal Institute appraiser of the proposed CFD. The appraisal shall be coordinated by and under the direction of the City. All costs associated with the preparation of the appraisal report shall be paid by the entity requesting the establishment of the CFD through the advance deposit mechanism. Market Absorption and/or Pricing Study A market absorption study and/or a market pricing study for any proposed development project may be required for land secured financing. These studies shall be based on the specified economic and demographic data, projected sales prices, projected rates at which the finished products will be sold, and, generally, shall include an analysis of competitive prices for the product types proposed to be developed within the CFD. These studies will be used as a basis for verification that timely sufficient revenues can be produced, and to determine if the public 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 required in the above “Appraisal” section. The City may at its discretion require either of these studies to be updated after the formation of the District but prior to the issuance of bonds. In the event of significant market changes and if it is determined that the original special tax rates do not support the current pricing or property values, the City retains the right to administratively reduce the special tax rates as appropriate. Terms and Conditions of Bonds The City shall establish all terms and conditions of the bonds. The City will control, manage and invest all CFD issued bond proceeds. Each bond issue shall be structured to adequately protect bond owners and to not negatively impact the bonding capacity or rating of the City. These security measures could include a combination of credit enhancement, foreclosure covenant, special reserve fund or deposits, and/or a contractual commitment by the proponents and successors to pay the special taxes during the initial stages of the development project. The City has the sole discretion to determine the types of credit enhancement, foreclosure covenant, and reserve fund that may be required. Unless otherwise authorized by the City, the following shall serve as bond requirements: A. A reserve fund shall be set at the lesser of the three tests: a. 10% of par amount, 45635.01433.1\29767955 A-7 b. Maximum annual debt service, or c. 125% of average annual debt service. B. Interest may be capitalized for up to 24 months. C. The maximum term of the bonds issued shall not exceed 35 years. D. The assigned special tax for any parcel within a District may escalate annually, but not by more than five (5) percent per year for services. Debt Service on the bonds may also escalate by not more than two (2) percent per year. E. The maximum special tax shall be established to assure that the annual revenue produced by the levy of the maximum special tax shall be equal to at least 110% of the average annual debt service. F. All statements and documents related to the sale of bonds shall emphasize and state that (i) the Bonds are limited obligations of the City and neither the faith, credit, nor the taxing power of the City is pledged to security or repayment of the bonds, (ii) the sole source of revenues are special taxes, the debt service reserve fund, or proceeds raised by foreclosure proceedings, and (iii) the City shall not be obligated to make payments of principal, interest, or redemption premiums (if any) from any other source of funds. G. Bond indentures may include provisions allowing for immediate collection of delinquent taxes, including provisions for the subject District to cause judicial foreclosure proceedings to be filed in the Superior Court, within 90 days of determination of delinquency, against any such property for which special taxes remain delinquent. Equity of Special Tax Special tax formulas for CFDs shall provide for minimum special tax levels which satisfy the following: (a) 110 percent debt service coverage for all CFD bonded indebtedness, (b) the reasonable and necessary annual administrative expenses of the CFD, and (c) amounts equal to the differences between expected earnings on any escrow fund and the interest payments due on bonds of the CFD. Additionally, the special tax formula may provide for the following: (a) any amounts required to establish or replenish any reserve fund established in association with the indebtedness of the CFD, (b) the accumulation of funds reasonably required for future debt service, (c) amounts equal to projected delinquencies of special tax payments, (d) the furnishing or equipping of facilities, (f) lease payments for existing or future facilities, (g) costs associated with the release of funds from an escrow account, and (h) any other costs or payments permitted by law. In structuring the special tax, projected annual interest earnings on bond reserve funds may not be included as revenue for purposes of the calculation. The special tax formula shall be reasonable and equitable in allocating Public Facilities’ and Public Services’ costs to parcels within the CFD. Exemptions from the special tax may be given to parcels which are publicly owned, are held by a property owners ’ association, are used for a public purpose such as open space or wetlands, are affected by public utility easements making impractical their utilization for other than the purpose set forth in the easements, or have 45635.01433.1\29767955 A-8 insufficient value to support bonded indebtedness. The City will engage a qualified special tax consultant to assist in the development of the rate and method of apportionment for any special tax proposed in connection with a proposed CFD. Special taxes may, but are not legally required to, be allocated in proportion to the estimated benefits that each parcel will derive from the facilities and services to be financed through a CFD. Parcels should, at a minimum, be classified according to whether they are undeveloped, developed for residential uses, or developed for non- residential uses. The City recognizes that the determination of estimated benefit will rely, to a large extent, on assumptions based on average characteristics of parcels, and that the exact benefit to be derived by any parcel or class of parcel cannot be perfectly estimated. The City may, at its sole discretion, permit the allocation of special taxes on any reasonable basis. The special tax shall be allocated equitably and shall not be discriminatory or arbitrary and shall permit a purchaser of property subject to the special tax a fair means of determining his or her obligation. Maximum Special Taxes The maximum annual special tax, together with ad valorem property taxes, special assessments or special taxes for an overlapping financing district, including such potential taxes and assessments relating to authorized but unissued debt of public entities other than the City (collectively, the “Overlapping Debt Burden”), in relation to the expected assessed value of each parcel upon completion of the private improvements to the parcel is of great importance to the City in evaluating any proposed financing. For residential parcels, the Overlapping Debt Burden, or overall Effective Tax Rate, shall not exceed two percent (2.0%) of the projected assessed value of each improved parcel within the District. As it pertains to commercial, industrial, or other parcels within the District, the City reserves the right to exceed the two percent (2.0%) limit if, in the City’s sole discretion, it is fiscally prudent. The City, in its discretion, may allow an annual escalation factor on parcels within a District. Special taxes will only be levied on an entire County Assessor’s parcel, and any allocation of special tax liability of a County Assessor’s parcel to leasehold or possessory interest in the fee ownership of such County Assessor’s parcel shall be the responsibility of the fee owner of such parcel (except where the City is the fee owner of the parcel and has leased the parcel pursuant to a lease with a term of at least 5 years, in which case the lessee shall have the responsibility for the special tax liability) and the City shall have no responsibility therefore and has no interest therein. Failure to pay, or cause to be paid, any special tax in f ull when due shall subject the entire parcel to foreclosure in accordance with the Act. The City shall retain a special tax consultant to prepare a report which: (a) recommends a special tax for the proposed CFD, and (b) evaluates the special tax proposed to determine its ability to adequately fund identified Public Facilities, City Administrative costs, Public 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. 45635.01433.1\29767955 A-9 Transparency and Notification The City will take the following steps to ensure that prospective property purchasers are fully informed about their taxpaying obligations imposed under the Act: A. It will conduct all proceedings required by the Act in the manner required by the Ralph M. Brown Act (California Government Code § 54950, et seq.); B. It will cause a map of the boundaries of any proposed CFD to be recorded, pursuant to § 3111 of the California Streets and Highways Code, in the Office of the Recorder of Orange County within 15 days following the adoption of a resolution of intention to form such CFD, pursuant to § 53321 of the Act; C. It will give notice, as required pursuant to the Act, prior to holding any public hearing on the establishment of a CFD, modification of an existing CFD or annexation to an existing CFD; D. It will record a notice of special tax lien, in the form specified by § 3114.5 of the California Streets and Highways Code, within 15 days of the City Council’s determination that the requisite number of voters are in favor of the levy of a special tax in connection with a CFD. Such notice will include, among other information: 1) A description of the rate, method of apportionment, and manner of collection of the authorized special tax; 2) The name(s) of the owner(s) and the assessor’s tax parcel number(s) of the real property included within the CFD and not exempt from the special tax; and 3) The name, address, and telephone number of the Finance Department, so that a property owner may contact the Finance Department to obtain further information concerning the current and estimated future special tax liability of owners or purchasers of real property subject to the special tax lien. E. It will, through the Finance Department, furnish a notice of special tax, in the form set forth in § 53340.2(c) of the Act to any individual requesting the notice or any owner of property subject to a special tax levied by a CFD formed by the City within five (5) working days of a request for such notice. The City Council may establish a reasonable fee for this service. F. In addition, the City will take the following steps in order to comply with various requirements relative to CFDs, per the California Government Code and SEC regulations, and to further demonstrate and provide for full transparency to bond holders, financial markets, and the public: A. It will ensure the annual reporting requirements relative to special taxes as detailed in §§ 53410 through 53412 and 50075 through 50077.5 of the 45635.01433.1\29767955 A-10 California Government Code are met and will comply with the requirements detailed within Senate Bill 165, “Local Agency Special Tax and Bond Accountability Act”. B. It will ensure compliance with the annual reporting requirements of the Securities and Exchange Commission’s Rule 15c2-12(b)(5) to provide certain annual financial information, operating data, and notices of material events, and, generally, to require the due diligence of underwriters. C. It will ensure compliance with § 53359.5 of the California Government Code which requires all agencies issuing Mello-Roos Community Facilities District bonds, including refunding bonds, after January 1, 1993, to report specific information to the Commission by October 30th of each year. Compliance with § 53359.5 shall be achieved by completion of the “Yearly Fiscal Status Report” and the “Draw on Reserve of Default Report” as detailed by the California Debt and Investment Advisory Commission. Disclosure Requirements to Prospective Property Purchasers A. Disclosure Requirements for Developers - Developers who are selling lots or parcels that are within a CFD shall provide disclosure notice to prospective p urchasers that comply with all of the requirements set forth in § 53341.5 of the California Government Code. The disclosure notice must be provided to prospective purchasers of property at or prior to the time the contract or deposit receipt for the purchase of the property is executed. Developers shall keep an executed copy of each disclosure document as evidence that disclosure has been provided to all purchasers of property within a CFD. The City may at its discretion institute a requirement for developers of property within the CFD to provide the City with an acknowledgement from purchasers of property, indicating that the purchaser has received notification that their property lies within the boundaries of the CFD. B. Disclosure Requirements for the Resale of Lots - Pursuant to § 53340.2 of the Act, the City Finance Department shall provide a notice of special taxes to sellers of property (other than developers), which will enable them to comply with their notice requirements under § 1102.6 of the California Civil Code. The City shall provide this notice within five (5) working days of receiving a written request for the notice. A reasonable fee may be charged for providing the notice, not to exceed any maximum fee specified in the Act. The City may at it s discretion institute a requirement for sellers of property within the CFD to provide the City with an acknowledgement from purchasers, indicating that the purchaser has received the required notice of special tax. If such requirement is instituted, the signed acknowledgement shall be kept on file at the City. Use of Consultants The City shall select all consultants necessary for the formation of the CFD and the issuance of bonds, including the underwriter(s), bond counsel, financial advisor, appraiser, absorption consultant, and the special tax consultant. Prior consent of the applicant shall not be required in the determination by the City of the consulting and financing team. 45635.01433.1\29767955 A-11 Exceptions and Interpretation The City is empowered to interpret these Goals and Policies. A finding by the City Council that a CFD conforms to the provisions of these Goals and Policies shall be conclusive evidence of such conformity. The City reserves the right to modify or amend these policies at any time as well as to make exceptions or changes for specific financing project by resolution of the City Council.