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Home My WebLink AboutItem 5e. Annual Monitoring Report of the Avila Ranch Development Agreement and Community Facilities District Item 5e Department: Community Development Cost Center: 4003 For Agenda of: 3/1/2022 Placement: Consent Estimated Time: N/A FROM: Michael Codron, Community Development Director Prepared By: Esteban Cano-Gutierrez, Financial Analyst & John Rickenbach, Contract Planner SUBJECT: ANNUAL MONITORING OF THE AVILA RANCH DEVELOPMENT AGREEMENT AND COMMUNITY FACILITIES DISTRICT RECOMMENDATION Receive and file the annual monitoring report for the Avila Ranch Development Agreement and Community Facilities District. DISCUSSION Background On September 19, 2017, the City Council approved the Development Agreement (DA) between the City and Avila Ranch, LLC. On October 24, 2017, the City Council approved the Avila Ranch Community Facilities District (CFD) Resolution of Formation. Both the DA and CFD require annual monitoring and reporting of activities. Some activity on the project, including public improvements, began in 2021, which is described below. This report provides an update on how this activity has affected revenues and expenditures related to the DA and CFD. Development Agreement Implementation of the Avila Ranch project requires substantial new infrastructure to support the development, most of which is the responsibility of the developer. The approved DA for the project describes the developer's responsibilities in that regard. Section 5.05.4 of the DA also requires that a financing mechanism be established to ensure that there is no shortfall to the City's General Fund as public improvements are made and need to be maintained by the City in the future. Section 5.05.4(c) of the DA establishes that the effect on the City's General Fund be monitored annually relative to possible City expenditures needed to make up any shortfalls in the construction of various public improvements that are the responsibility of the developer. Section 5.04.2(i) of the DA establishes that Avila Ranch will pay the City reasonable staff and consultant time associated with monitoring and compliance of the Mitigation Monitoring and Reporting Program, the DA, the financing mechanism (i.e., the CFD) and all other administrative tasks associated with the adoption and implementation of the DA and the project. This provision provides the City with an ongoing funding source that will be used to ensure the project is developed, operated, and maintained consistent with all applicable requirements. Attachment A summarizes the project’s compliance with the Development Agreement. Page 85 of 381 Item 5e Community Facilities District A Mello-Roos CFD was established and approved on October 24, 2017 (“Avila Ranch Community Facilities District No. 2017-1”). The CFD is the mechanism that facilitates the collection of revenue as development occurs, and that revenue is used to maintain the various public improvements once signed over to the City. Section 10(ii) of the CFD resolution also has an annual reporting requirement, similar to the one included in the DA. The City anticipates that the first levy on the property tax roll will be made in fiscal year 2022-23 based on building permit issuance. Attachment B shows the project phasing and portion of the project covered by the CFD. Annual Revenues and Expenditures For the period October 24, 2020, through October 23, 2021, no revenue was collected through the CFD although development of public infrastructure has begun. However, no infrastructure has been taken over by the City and no maintenance has occurred. In the initial phases of the development, the tax levy will be based on building permits issued by mid-June to allow for the remittance to the County Tax Assessor in time for the following year’s property tax roll. It is anticipated that the CFD will begin the levy with fiscal year Project Development and Public Improvements Some building permit applications have come forward since the approval of the documentation described above. The following summarizes the status of these, as well as related public improvements: A. Phase 1 Public Improvements. The public improvement plans for Phase 1 and several off -site improvement plans have been approved in accordance with the tentative map, conditions of approval, and mitigation measures. These improvements also included the extension of Buckley Road from the Vachell Lane intersection to South Higuera. The Buckley extension occurs within the County of San Luis Obispo and was approved and permitted by the County with review and input from the City of San Luis Obispo. Although not required as a condition of Phase 1, the developer has commenced with and has made significant progress on this scope of work. The several off-site improvements have either been completed, substantially completed, or are under construction. The on -site Phase 1 improvements including grading, street construction, utilities, drainage and water quality treatment areas, bikeways, and a drainage basin have been substantially completed or are nearing completion. The improvements have advanced to a point to allow for the issuance of model home permits. B. Phase 1 Building Permits. Several building permit applications have been received for model homes and production units are under review or permits are pending. The first release of building permits for model home construction should be permitted by the second week of February 2022. Page 86 of 381 Item 5e C. Phase 2 Public Improvements. The developer has chosen to submit improvement plans for the remaining phases 2 – 6. The early/rough grading submittal was received at the end of 2021 and the first review has been completed and comments were recently returned to the applicant. The engineer of record has completed their technical work for the required Conditional Letter of Map Revision (CLOMR) to revise the existing flood zone mapping. They have scheduled an appointment with City staff to review the submittal documents before the official submi ttal to FEMA. The application materials require acknowledgement from the City of San Luis Obispo. Policy Context The Avila Ranch property was originally annexed as vacant commercial land. Therefore, the City's tax sharing agreement with the County does not provide for property tax increment to be collected on behalf of the City. As a result of this circumstance, the CFD was established to provide the City with sufficient revenues to maintain public facilities within the development area. As a housing project, the past approvals have been previously determined to be consistent with Major City Goals and General Plan policies that call for the City to produce more housing. Public Engagement The annual monitoring of the Avila Ranch Development Agreement and C FD have a “notify” level of public engagement, which has been accomplished through the agenda and associated staff report. CONCURRENCE The Finance Department concurs with Avila Ranch Development Agreement and CFD report. ENVIRONMENTAL REVIEW Annual monitoring of the Avila Ranch DA and CFD are categorically exempt from California Environmental Quality Act (CEQA) according to CEQA Guidelines Section 15306 (Information Collection) and that the action otherwise qualifies for a “common sense” exemption according to Section 15061(b)(3), which covers activities "where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment." Annual monitoring does not change any aspect o f the approved Avila Ranch project, nor does it introduce the potential for any new environmental impacts. Under Section 15306, the Secretary for the California Natural Resources Agency has concluded that “basic data collection, research, and resource evaluation activities which do not result in a serious or major disturbance to an environmental resource” are exempt from CEQA. Therefore, the proposed action is categorically exempt from further analysis under CEQA. Page 87 of 381 Item 5e FISCAL IMPACT Budgeted: No Budget Year: 2021-22 Funding Identified: N/A Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund $ $ $ $ State Federal Fees Other: Total $0 $0 $0 $0 No property tax levy was assessed for the 2021-22 property tax year and no CFD revenue was collected. It is anticipated that the first levy will occur with the 2022 -23 property tax roll to begin building the funds necessary to maintain the public infrastru cture once the City has assumed responsibility from the developer. ALTERNATIVES 1. Council could decide to provide direction to staff regarding the annual monitoring report for the Avila Ranch DA and CFD and continue the item to a future meeting. 2. Council could decide to reject the annual monitoring report for the Avila Ranch DA and CFD. This is not recommended since annual monitoring is a requirement of the DA and CFD. ATTACHMENTS A - Avila Ranch Development Agreement Compliance B - CFD Summary Map Page 88 of 381 Avila Ranch Compliance with Development Agreement February 2022 Development Agreement Item DA ID Summary Description Responsibility Timing and Compliance Status 1 1.03.a.1 Agreement terminates on 20th anniversary of effective date (9-19-37)All Parties ongoing 2 1.03.a.2 Agreement terminates on 7th anniv of effective date if Ph 1-2 backbone infrastructure not in place All Parties ongoing 3 1.03.a.3 Agreement terminates once development and conditions are satisfied All Parties ongoing 4 1.04 Agreement must be executed 5 days after Ordinance adoption; to County Recorder within 10 days All Parties ongoing 5 5.03 Form Community Facilities District (CFD) or other financing mechanisms City ongoing; done 6 5.04.2.f Payment of fees: processing of subsequent permits and planning applications Developer as applications are made 7 5.04.2.g Reimbursement for developer improvements beyond fair share cost City according to law 8 5.04.2.i Payment of fees: staff and consulting time to process permit applications and MMRP Developer as applications are made 9 5.04.2.j Payment of fees: CDFW fees Developer before finaling NOD on any CEQA document 10 5.05.4.c City to annually monitor whether there is a General Fund shortfall from fees collected City annually 11 6.02.2 City may require oversizing of backbone infrastucture, under certain conditions City as needed 12 6.04.1 Applicant to make all reasonable efforts to purchase off-site improvement properties Developer as needed 13 7.02.1.b Developer to complete first two phases and infrastructure within 7 years of effective date Developer ongoing 14 7.02.1.c Developer to conform with phasing shown in Table Developer ongoing 15 7.03 Developer to dedicate 18.25 acres of parkland to satisfaction of PRC Developer coordinate with PRC 16 7.04 Developer to dedicate at least 50 acres of ag/open space onsite and preserve 50 acres offsite Developer applicant coordinating with City staff 17 7.05 Provide affordable and workforce housing per Exhibit G Developer applicant coordinating with City staff 18 7.07 Developer to provide accelerated compliance with energy standards Developer applicant coordinating with City staff 19 7.08.a Developer to provide accelerated compliance with Climate Action Plan Developer applicant coordinating with City staff 20 7.08.c Install water infrastructure for offsite annexations near Broad and Buckley per Exhibit H Developer applicant coordinating with City staff 21 7.08.d Developer to dedicate 20x40 land for future water well site to City on Lots 594, 406, or 398 Developer applicant coordinating with City staff 22 7.11 Construct all needed traffic improvements shown on Exhibit C; plus fair share portions of others Developer applicant coordinating with City staff 23 7.12 construct and/or fund bike improvements per Exhibit J Developer applicant coordinating with City staff 24 7.13.6 Developer to provide all cable for internet connections Developer as utilities are constructed 25 10.01 Annual evaluation of the MMRP and DA to ensure compliance City ongoing; annually 26 11.01 Annual evaluation of the MMRP to ensure compliance City ongoing; annually 27 11.02 Annual evaluation of the DA to ensure compliance City ongoing; annually 28 11.02.02 CDD to issue "Finding of Development Agreement Compliance" based on review City ongoing; annually 29 12.01 Any DA provision out of compliance must be cured within 60 days both parties ongoing 30 7.09 Build all necessary storm drain facilities Developer prior to subdivision map approval* 31 5.04.2.b Payment of fees: Citywide, AASP, LOVR Interchange, development fees (except sewer/water)Developer prior to each Final Map recordation 32 5.04.2.c Payment of fees: Sewer and Water; plus adjustment for CPI until issuance of building permits Developer prior to each Final Map recordation 33 7.13.1 Include airport hazard related language in CC&Rs Developer with CC&Rs for each subdivision 34 7.10 Build interim fire station on Lot 302 at buildout of 361st unit Develoepr prior to construction of 361st unit Page 89 of 381 Page 90 of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age 91 of 381 Page 92 of 381 City of San Luis Obispo, Council Memorandum City of San Luis Obispo Council Agenda Correspondence DATE: March 1, 2022 TO: Mayor and Council FROM: Michael Codron, Community Development Director VIA: Derek Johnson, City Manager DJ SUBJECT: Item 5e - ANNUAL MONITORING OF THE AVILA RANCH DEVELOPMENT AGREEMENT AND COMMUNITY FACILITIES DISTRICT Subsequent to the release of the packet it was noticed that there was an omission in the Council Agenda Report. On page 86 of the agenda packet, the second paragraph of “Annual Revenues and Expenditures” should read: In the initial phases of the development, the tax levy will be based on building permits issued by mid-June to allow for the remittance to the County Tax Assessor in time for the following year’s property tax roll. It is anticipated that the CFD will begin the levy with fiscal year 2022-23. Page 93 of 381 Page 94 of 381