HomeMy WebLinkAboutE-16 Staff Report - Third Amendment Funding Agreement CFD 2005-1 CONSENT ITEM
E-16
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: JUNE 19, 2023
SUBJECT: CONSIDERATION OF ADOPTION OF A RESOLUTION APPROVING THE
THIRD AMENDMENT TO FUNDING AND ACQUISITION AGREEMENT
RELATING TO COMMUNITY FACILITIES DISTRICT NO. 2005-1
(ROSEDALE) OF THE CITY OF AZUSA
BACKGROUND:
The City Council (the “City Council”) of the City of Azusa (the “City”) established the
Community Facilities District No. 2005-1 (Rosedale) of the City (the “District”) and designated
improvement areas pursuant to the provisions of Chapter 2.5 (commencing with Section 53311)
of Part 1 of Division 2 of Title 5 of the California Government Code, commonly known as the
“Mello-Roos Community Facilities Act of 1982.” The District is authorized to finance certain
public facilities and improvements, including utilities, to be owned and maintained by the City,
Azusa Unified School District, the Metropolitan Transit Authority, the Los Angeles County
Sanitation District No. 22, and the City of Glendora (collectively, the “Public Facilities”).
The City previously entered into a Funding and Acquisition Agreement (the “Original
Agreement”) dated as of August 1, 2005 with Azusa Land Partners, LLC (“ALP”), for the
purpose of including the property in the District and establishing a plan for the financing of the
acquisition, design, and construction of the Public Facilities. On July 18, 2011, ALP, the City,
and the Rosedale Land Partners II, LLC (the “Developer”) entered into the Assignment and
Assumption Agreement of Funding and Acquisition Agreement, whereby ALP assigned to, and
the Developer assumed, all of ALP’s rights and obligations under the Original Agreement.
The City, on behalf of itself and the District, and Developer, entered into a First Amendment to
Funding and Acquisition Agreement, dated June 1, 2019, and a Second Amendment to Funding
and Acquisition Agreement, dated December 1, 2019 (together referred to as the “Funding
Agreement”). These amendments addressed the additional funding of public improvements and
revised the amount of the funding of Azusa Unified School District facilities.
Approved
City Council
June 19, 2023
3rd Amendment Funding & Acquisition Agreement CFD NO. 2005-1
June 19, 2023
Page 2
RECOMMENDATION:
Staff recommends the City Council take the following action:
1) Adopt Resolution No. 2023-C33 of the City Council of the City of Azusa Approving
the Third Amendment to Funding and Acquisition Agreement Relating to Community
Facilities District No. 2005-1 (Rosedale) of the City of Azusa.
ANALYSIS:
As part of the development of the property, a 6-acre site was previously planned for a joint use
park to be developed as part of a K-8 school that was to be constructed in the project (the
"Proposed School"). Two acres of the site were to be dedicated to the City and the balance of the
site to be dedicated to the Azusa Unified School District ("AUSD") as part of a Proposed School.
However, due to a lack of students generated from new housing within the Rosedale community,
AUSD abandoned plans for the Proposed School at this location, and in accordance with a
November 18, 2019 Settlement Agreement and Mutual General Release (the "Settlement
Agreement"), AUSD has relinquished all rights to the school site and the joint use park site. As
the site is no longer needed for school purposes, the Developer proposed, and the City agreed, to
relocate and expand the community park to a larger 9-acre site (the "Rosedale Great Park").
On August 12, 2020, the Developer submitted Preliminary Plan Review applications for the
development of the Rosedale Great Park and a 23-lot subdivision (PPR-2020-05) on the former
Proposed School site (the "23-Unit Project"). The Developer also proposed a Minor Modification
to the Monrovia Specific Plan. On March 23, 2022, the Planning Commission approved some
land use entitlements and conditions of approval that required that the Developer execute a Park
Dedication and Construction Agreement. The City and Developer have agreed that in lieu of
executing a Park Dedication and Construction Agreement, a Third Amendment to the Funding
Agreement will be executed which will serve the same purpose. Upon execution of the Third
Amendment, the conditions of approval will be considered satisfied and the Developer will be
entitled to receive Certificates of Occupancy for the 23-Unit Project upon request and payment
of any legally applicable fees.
On December 18, 2019, the City, on behalf of the District, issued the $20,525,000 City of Azusa
Community Facilities District No. 2005-1 (Rosedale), 2019 Special Tax Bonds (Improvement
Area No. 2) (the "IA No. 2 Bonds"). Out of the proceeds of the IA No. 2 Bonds, the amount of
$16,004,832.02 was deposited in the City Facilities Account of the Improvement Fund. As part
of the Settlement Agreement, the City agreed to set aside $7 million of the amounts in the City
Facilities Account for the construction of the Rosedale Great Park. As of April 30, 2023,
including accumulated interest the City Facilities Account had a balance of $7,152,398.
The current estimate for constructing the Rosedale Great Park is approximately $9,703,000,
resulting in a funding gap of approximately $2,600,000 ("Funding Gap"). City and Developer
have agreed to fund the Funding Gap as set forth in the Funding Agreement (as amended by the
Third Amendment). The purpose of the Third Amendment is to (i) satisfy the conditions of
approval, (ii) memorialize the City's and Developer’s agreement to fund the Funding Gap, (iii)
set forth the conditions for the Developer to construct the Rosedale Great Park, (iv) establish the
discrete components of the Rosedale Great Park, and (v) make other changes to the Funding
3rd Amendment Funding & Acquisition Agreement CFD NO. 2005-1
June 19, 2023
Page 3
Agreement, such as extending the date of expiration to assist the financing of the construction of
the park improvements.
FISCAL IMPACT:
The estimated construction cost for the Great Park is $9,703,000. Proposed funding sources for
the Park are as follows:
Park Construction Cost 9,703,000$
Less: Funds Bond Proceeds Available as of 4/30/23 (7,152,398)
Estimated Construction Funding Gap 2,550,602
Less: Developer's Commitment (800,000)
Less: City's Commitment (1,750,602)
Remaining Funds Needed -$
City's Outlay for Park Construction:
City's Upfront Contribution 1,750,602
Less: Est. Pay-go accumulation over 10 years (1,300,000)
City's Total Construction Contribution 450,602$
The City’s upfront contribution is estimated at $1.8 million. Once the final project budget is
established, Staff will return to Council for authority to add the budget (which will likely have to
be done in a Public Hearing process for appropriations exceeding $1M) with the understanding
that approval of the attached amended Funding and Acquisition Agreement obligates the City to
the terms of the Agreement. Additionally, adoption of the amended Funding and Acquisition
Agreement approves pay-go collections through property tax bills over a 10-year period which is
estimated to generate approximately $1.3 million; the additional pay-go will be used to
reimburse the City.
Should the initial award amount of construction of the Park exceed the estimated $9.7 million,
the City and the Developer will split the overage at 50%/50%. Once under construction, cost-
overruns would be split at 85% for the Developer and 15% for the City. All fund requests and
distributions will be brought before the City Council for approval.
Prepared By: Reviewed and Approved:
Talika M. Johnson Sergio Gonzalez
Director of Administrative Services City Manager
Attachment:
1. Resolution No. 2023-C33.
1
RESOLUTION NO. 2023-C33
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA
APPROVING THE THIRD AMENDMENT TO FUNDING AND
ACQUISITION AGREEMENT RELATING TO COMMUNITY
FACILITIES DISTRICT NO. 2005-1 (ROSEDALE) OF THE CITY OF
AZUSA
WHEREAS, the City Council (the “City Council”) of the City of Azusa (the “City”)
established the Community Facilities District No. 2005-1 (Rosedale) of the City (the “District”)
and designated improvement areas pursuant to the provisions of Chapter 2.5 (commencing with
Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code, commonly
known as the “Mello-Roos Community Facilities Act of 1982”; and
WHEREAS, Azusa Land Partners, LLC (“ALP”) and the City previously entered into a
Funding and Acquisition Agreement (the “Original Agreement”) dated as of August 1, 2005, for
the purpose of including the property in the District and establishing a plan for the financing of the
acquisition, design, and construction of public facilities; and
WHEREAS, on July 18, 2011, ALP, the City, and Rosedale Land Partners II, LLC (the
“Developer”) entered into the Assignment and Assumption Agreement of Funding and Acquisition
Agreement, whereby ALP assigned to, and the Developer assumed, all of ALP’s rights and
obligations under the Original Agreement; and
WHEREAS, The City, on behalf of itself and the District, and Developer, entered into a
First Amendment to Funding and Acquisition Agreement, dated June 1, 2019, for the purpose of
amending Section 9 of the Original Agreement with respect to Improvement Area No. 1; and
WHEREAS, the City, on behalf of itself and the District, and Developer, entered into a
Second Amendment to Funding and Acquisition Agreement, dated December 1, 2019, for the
purpose of amending Section 9 of the Original Agreement with respect to Improvement Area No.
2; and
WHEREAS, the City, on behalf of itself and the District, and the Developer desire to enter
into a “Third Amendment to Funding and Acquisition Agreement” (the “Third Amendment”), the
form of which is attached hereto as Exhibit “A”, for the purpose of (i) satisfying conditions of
approval required for the project, (ii) memorializing the City's and Developer’s agreement to fund
a funding gap, (iii) setting forth the conditions for the Developer to construct the Rosedale Great
Park, (iv) establishing components of the Rosedale Great Park, and (v) making other minor and
technical changes to the Funding Agreement.
NOW, THEREFORE, THE CITY OF AZUSA DOES HEREBY RESOLVE AS
FOLLOWS:
SECTION 1. That the above recitals are true and correct.
Attachment 1
2
SECTION 2. The Third Amendment is approved and the Mayor or the City Manager are
each authorized to execute and deliver the Third Amendment on behalf of the City in the
form presented to the City Council at the meeting at which this resolution is adopted, with
such changes therein as the officer executing the same may approve, such approval to be
conclusively evidenced by the execution and delivery thereof.
SECTION 3. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED and ADOPTED this 19th day of June, 2023.
Robert Gonzales
Mayor
ATTEST:
Jeffrey Lawrence Cornejo, Jr.
City Clerk
3
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2023-C33 was duly adopted
by the City Council of the City of Azusa, at a meeting thereof held on the 19th day of June
2023, by the following vote of the Council:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
Marco A. Martinez
City Attorney
Best Best & Krieger LLP
4
EXHIBIT “A”
THIRD AMENDMENT TO
FUNDING AND ACQUISITION AGREEMENT