By: Libi Uremovic | Original Article at patch.com
Agreement to Use Mello Roos Bond Funds to Pay Mitigation Fees is Illegal.
There is no provision in the Mello Roos Laws to use the Funds for Mitigation Fees, which is why this is written to side-step the fact that the City is trading Bond Debt for Mitigation Fees to Developers. The “$10,000 loan” to City should be Mitigation Fees paid to ‘mitigate’ the expenses to the City incurred by the Development.
And Council should also remember that this is the Development Area that has no Fire or Medical Services at all.
EXCERPTS FROM AGENDA ITEM 4.B CFD 2016-1
STAFF REPORT:
“The[n] Argent plans to sell its remaining property in the proposed District to one or more merchant builders, who along with Woodside, expect to develop the property within the District into residential neighborhoods.”
“…an election would be held on the levy of the special taxes for the facilities and services and on the issuance of bonds to finance facilities in the maximum principal amount not to exceed $16,000,000.”
“Staff recommends that the City Council approve two resolutions: (i) a resolution declaring the intention of the District and levy a special tax therein; and (ii) a resolution to incur bonded indebtedness within the District.”
“Staff also recommends that the City Council approve the Reimbursement Agreement (the “Reimbursement Agreement”) with SDC Fairway Canyon LLC, for the purpose of reimbursing Argent for the costs of forming the District.
“There is no impact on the general fund to pay any costs associated with the proposed formation of the District.”
“$10,000 has been advanced to the City by Argent to finance initial costs of the formation of the District. It is anticipated that Argent will be required to deposit additional amount pursuant to the Reimbursement Agreement. In the event that any bonds are issued by the District, Argent would be entitled to reimbursement of costs advanced pursuant to the Reimbursement Agreement.”
REIMBURSEMENT AGREEMENT Page 33/61
Page 34/61
2(b) “In addition to the costs incurred by the City (including City staff time) in resolving issues relating to the formation of the District, this Agreement shall cover the costs of retaining the necessary consultants to assist in the formation of the District, including an engineer, special tax consultants, financial advisor, special counsel, and other consultants deemed necessary by the City.”
2(c) “In addition to the initial advance of $10,000, from time to tie the Owner shall make additional advances to the City within 15 days following receipt from the City of a request for an additional advance to cover such costs.”
2.(d) ..“The amounts advanced by the Owner will be reimbursable to the Owner, without interest, from the proceeds of the bods issued by the District and/or from special tax revenues collected from the District.”
EXHIBIT B Page 9/61
TYPES OF PUBLIC FACILITIES
“The types of Facilities that are proposed consist of the backbone infrastructure needed for the new development, such as roadway, bridge, sewer, water, reclaimed water, dry utilities, storm drain, street and parkway landscaping, curb and gutter, medians, median landscaping, traffic signals, entry signage, parks, trails, police facilities, fire facilities, library facilities, and public community facilities, and appurtenances and appurtenant work, AND DEVELOPMENT IMPACT FEES THAT ARE USED BY THE CITY TO CONSTRUCT INFRASTRUCTURE.”
TYPES OF SERVICES
“The types of Services that are proposed to the provided including without limitation, police and fire protection, ambulance and paramedic services, street sweeping, traffic signal maintenance, and maintenance of City-owned parks, parkways, and open spaces, lighting, flood and storm protection services and the operation of storm drainage systems.”
The City is listing basic services for which the property owners’ basic sales and property taxes should be used. Mello Roos are for services additional to basic services.
TYPES OF INCIDENTAL EXPENSES
“All costs associated with the creation of CFD No 2016-1, the issuance of the Obligations, the determination of the amount of special taxes to be levied, costs incurred in order to carry out the authorized purposes including legal fees, fees of consultants, engineering, planning designing, and the annual costs to administer..”