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HomeMy WebLinkAbout12/13/1999, 1 - HOUSING AUTHORITY REQUEST FOR CONDUIT FINANCING council j agcnaa Report IrN=ba CITY OF SAN LUIS O B I S P O FROM: Bill Stader, Director of Finance SUBJECT: HOUSING AUTHORITY REQUEST FOR CONDUIT FINANCING CAO RECOMMENDATION Adopt a resolution approving the issuance of multi-family housing revenue bonds by the Housing Authority. DISCUSSION Overview As set forth in the attached memorandum (Exhibit A) from the City's bond counsel (Jones Hall), the Housing Authority is requesting that the City approve their issuance of multi-family housing revenue bonds (Exhibit B). The Housing Authority will loan the proceeds from this "conduit" issue (about $16 million) to the DeVaul Ranch Company to assist them in financing the construction of a 122-unit apartment complex. Of these units, 20% (24) would be set aside for very-low income residents for the life of the bond issue (30 years). This will not change the total number of affordable units required in the apartment complex (26) under the terms of the planned development permit (approved by the Council on November 16, 1999). However, it is likely to change the composition: instead of 13 "low" income and 13 "moderate" income units,there will probably be 24"very-low" and 2 "moderate" income units. As discussed below, neither the City nor the Housing Authority has any liability for the repayment of these bonds. The developer is solely responsible for making these payments. Benefits of the.Proposed Financing For the Developer. Since the interest income from these bonds will be exempt from state and federal income taxes, this form of financing will reduce the developer's financing costs, and thus reduce the overall cost of developing this project. For the City. This financing will assist the developer in meeting the City's inclusionary housing requirements. Additionally, this will result in the creation of 24 "very-low" income units, which is a much more difficult unmet need to fill than low or moderate-income housing. (In fact, the City's inclusionary housing regulations do not even address "very-low" income housing.) The following summarizes this project's requirements for low and moderate-income housing from all 269 housing units in the DeVaul project: 1-1 Council Agenda Report—Housing Authority Request for Conduit Financing Page 2 DeVaul Ranch Inclusio Housin R nirements:All Units Percent .- Low-Income Housing 5% 13 Moderate-Income Housing 10% 27 Market-Rate Housing 85% 229 Total 100% 269 As reflected above, 15% of the units will be "affordable," with 5% set aside for low-income households and 10% for moderate-income households. The following summarizes inclusionary requirements by housing types: DeVaul Ranch Inclusio Ho ' R ents-Affordable Units Apartments Duple Total Low Income Housing 13 0 13 Moderate Income Housing 13 14 27 Total 26 14 40 As summarized above, the 122-unit apartment development is required to include 13'units for low-income residents and 13 for moderate-income residents. The following summarizes how these project-specific requirements relate to the City's general inclusionary housing policies as well as federal tax-exempt housing bond regulations. ■ City's inclusionary housing policies. Under the City's inclusionary housing regulations, at least 5% of housing units in expansion areas must be for low-income households; and 10% for moderate-income households. There are no `very-low" income requirements. As Affordable Housing Definitions reflected above, the project meets these Very-Low Income 50%or less of requirements. Households median area income ■ Federal requirements. Under federal Low-Income Households 80%or less of median area regulations for tax-exempt housing bonds, at, income least 20% of the units must be set aside for very-low income households for as long as the Moderate-Income 120%or less Households of median bonds are outstanding. area income Under the federal regulations, the developer will be required to set aside 24 of the 122 units for very-low income housing. It is likely that the developer will want these 24 units to apply to the City's overall affordability requirement of 26 units in the apartment complex. (The moderate income housing requirements for the duplex/single family units are unaffected by the bond issuance). As set forth in Exhibit C, the City's regulations do not explicitly allow for additional `very-low and low" income units to meet the "moderate" income requirements. However, Community Development believes that it is reasonable to include very-low and low-income units in meeting the moderate-income housing requirement, since this will help us meet an even greater need for 1-2 Council Agenda Report—Housing Authority Request for Conduit Financing Page 3 very-low and low income housing. In short, this is better for us in achieving our most difficult affordable housing goals. The following summarizes the likely change in the composition of affordable apartment units if the Council approves this bond issue: DeVaul Ranch Indusiqnary Hoydng Requirements:Likely Change in Aparonent Affordable Units Current Likely Change Very-Low Income Housing — 24 Low-Income Housing 13 — Moderate-Income Housing 13 2 Total 26 26 City's Conduit Financing Policy Under the City's debt financing and management policies (Exhibit D), consideration of a request for conduit financing is generally a two-step process: ■ First asking the Council if they are interested in considering the request, and establishing the ground rules for evaluating it. ■ And then returning with the results of this evaluation, and recommending approval of appropriate financing documents if warranted. This two-step approach ensures that the issues are clear for both the City and applicant, and that key policy questions are answered. However, due to timing constraints, the Housing Authority has requested that these issues be addressed in one meeting on December 13, 1999. Given the close and ongoing working relationship that the City has with the Housing Authority, and the clear relationship of this project in meeting the City's adopted housing affordability goals, we believe a "one-step" process will be adequate in addressing the City's criteria (see sidebar) for assisting with conduit financings. • The City s bond counsel will review the terms of the financing,and Compliance with the City's Policy. The City's bond render an opinion that there will be counsel (Jones Hall) is also the bond counsel for this no liability to the City in issuing the issue. Their assurance that there will be no liability to bonds on behalf of the applicant the City in issuing these bonds is provided in Exhibit A. • There is a clearly articulated public This finding is also stated in the attached resolution. purpose in providing the conduit financing. As discussed above, we believe there is a clearly • The applicant is capable of articulated public purpose in approving the Housing achieving this public purpose. Authority's conduit financing request, and that they are capable of achieving this public purpose. Accordingly, since there is no City liability for these bonds, we believe that the proposed bond issue complies with the City's conduit financing policy. 1-3 Council Agenda Report—Housing Authority Request for Conduit Financing Page 4 Developer's Role in the Financing. It should be noted the developer is responsible for actual construction of the units, and repayment of the bonds; While we have not performed any "due diligence" on their financial ability to do this, we believe it is likely that they will successfully develop and.operate these units. In terms of financial capacity to repay these bonds, this is an issue that will be closely scrutinized by the.underwriter and bondholders. However, as noted in Jones Hall's memorandum, under the proposed .bond terms, the Federal National Mortgage Corporation (an agency of the federal government) will guarantee payment of the bonds; and during construction, repayment will be guaranteed through a.letter of credit issued by Bank of America. This should result in an"AAA" credit rating (the highest possible). In summary,while there is always some possibility of default in any conduit bond issue,there are a number of safeguards planned for this issue. Ultimately, however, the bondholders are assuming all risks that the bonds will be repaid; and neither the City nor the Housing Authority is assuming any responsibility for their repayment. City's Past Experience with Conduit Housing Bonds The City has approved two"conduit" housing bond issues in the past: ■ 1985. 168-unit development on Southwood Drive (refinanced in 1993). ® 1998. 30-unit development (all "affordable"-for seniors and persons with disabilities) on Bri'zzolara Street. The Housing Authority is the developer of this project. There have been no financial difficulties with the 1985 issue. The Brizzolara Street development is still under construction. City's Role in this Process Why are we involved? Under federal laws allowing for the issuance of tax-exempt housing bonds, the legislative body of a general-purpose government must approve these types of bonds. This means approval by cities (or counties in the case of unincorporated areas). The City's approval.of the attached resolution does not.immediately result in the issuance of bonds. Although the Housing Authority has adopted a "Resolution of Intent" to issue these bonds, this will be subject to subsequent approval of formal bond documents by the Housing Authority. However,the City's approval is required before this next step can take-place. CONCURRENCES The Department of Community Development concurs with this-recommendation. FISCAL HVIPACT The City will not incur any costs—directly or indirectly:.in approving this bond issue. 1-4 Council Agenda Report–Housing Authority Request for Conduit Financing Page 5 ALTERNATIVES ■ Do not approve the requested financing. Given the clear relationship between the purpose of this financing and the City's adopted housing goals, this option is not recommended. ■ Defer consideration of the request. Due to the time requirements for this financing,this option is not recommended. SUMMARY As the Council is aware, there are very few "arrows" in the City's quiver in targeting the production of affordable housing (let alone housing for very-low and low-income households). Tax-exempt housing revenue bonds are one of the few "arrows" available to us since they help make it economically feasible for new developments to meet our inclusionary housing requirements. While we have limited experience with them in San Luis Obispo, they are widely used throughout the state and nation in helping to produce affordable housing. Accordingly, given our inclusionary housing requirements, we can expect to receive additional developer requests for the use of housing revenue bonds in the future as housing development in expansion areas goes forward. This does not mean we should "blanketly" approve these requests—we should continue to consider the merits of each one on a case-by-case basis in accordance with the criteria set forth in our conduit financing policy. However, it does mean we should be receptive to these requests. This will not only help in funding more affordable housing in San Luis Obispo, but it will also signal to the development community our willingness to take reasonable, commonly-accepted steps in helping them meet our affordable housing goals. ATTACENMNT Resolution approving the issuance of multi-family housing revenue bonds by the Housing Authority. EDITS A. Memorandum from the City's bond counsel on our liability for this project and other related issues B. Request from the Housing Authority for the City to approve issuance of these bonds C. Excerpt from the City's inclusionary housing regulations D. City's conduit financing policy _ ... . .., H:Housing Authority conduit Financing RequesuDeVaul Ranch/Council Agenda Report 1-5 RESOLUTION NO. (1999 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING THE ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS BY THE HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO WHEREAS, the Housing Authority of the City of San Luis Obispo (the "Housing Authority') has been asked to issue tax-exempt obligations in a principal amount not to exceed $13,000,000 (the "Obligations") for the purpose, among other things, of making a loan to DeVaul Ranch, LLC, a California limited liability company ("Developer"), the proceeds of which will be used by the Developer to finance (1) the acquisition, construction, rehabilitation and development of a 122-unit multifamily housing facility located at the Southwest comer of Los Osos Valley Road and Madonna Road in the City of San Luis Obispo (the "City'), and (2) the acquisition of vacant real property adjacent thereto(the "Project"); and WHEREAS, the Housing Authority is authorized by the Health and Safety Code of the State of California (the "Law") to issue and sell revenue bonds for the purpose of financing the acquisition, construction, rehabilitation and development of multifamily rental housing facilities to be occupied in part by low and very low income tenants; and WHEREAS, neither the Housing Authority nor the City will have any obligation to pay debt service on the Obligations except from loan repayments made by the Developer; and WHEREAS, the Obligations will be considered to be "qualified exempt facility bonds" under Section 142(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and Section 147(f) of the Code requires that the "applicable elected representative" with respect to the geographical area in which the Project is to be located hold a public hearing relating to and approve the issuance of the Obligations; and WHEREAS, the Council of the City of San Luis Obispo is the applicable elected representative of the City; and WHEREAS, a notice of public hearing in a newspaper of general circulation in the City has been published, to the effect that a public hearing would be held by this City Council regarding the issuance of the Obligations by the Housing Authority and the nature and location of the Project; and WHEREAS, the Council held said public hearing on such date, at which time an opportunity.was provided to present arguments both for and against the issuance of such Obligations and the nature and location of the Project. NOW, THEREFORE,BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. The above recitals are true and correct. SECTION 2. The Council hereby approves the issuance of the Obligations by the Housing Authority. It is the purpose and intent of the Council that this resolution constitutes 1-6 Resolution No. — (1999 Series) Page 2 _ approval of the Obligations for the puiposes of Section 147(f) of the. Code by the applicable elected representative of the governmental unit having.jurisdiction over the area in which the Project is located, in accordance with said Section 147(f). SECTION 3. Issuance of the Obligations shall be subject to further approval by the Housing Authority of the documents relating to the.Obligations. SECTION 4. This Resolutionshall take effect immediately upon.its passage Upon motion of. -- , seconded by --- - - and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this._._ __ .day of 1999. Mayor Allen Settle ATTEST: Lee Price,City Clerk APPROVED AS TO FORK J .J- gense City ttomey 1=7 Exhibit A . JONEs Hmj-. A PROFESSIONAL LAW CORPORATION ATTORNEYS AT LAW CHARLES F.ADAMS 650 CALIFORNIA STREET STEPHEN R.f ASAI cGGIO EIGHTEENTH FLOOR THOMAS A.DOWNEY SAN FRANCISCO,CA 941as SCOTT R. FERGUSON ANDREW G HALL,JR TELEPHONE COURTNEY L JONES (415)391-5780 WuuAM J.ICADI CHRISTOPHER K LYNCH FACSIMILE WILLIAM H.MADISON (415)391-5784 STEPHEN G.MFT TITIAN DAVID J.OSTER DAVID A.WALTON KENNETH L JONES,OF COUNSII. HOMEPAGE hap://m .jhhw.mm dynch 17Thm.c MEMORANDUM To: Bill Stader Director of Finance City of San Luis Obispo 909 Palm Street San Luis Obispo,CA 93401 From: Chris Lynch Date: November 17, 1999 Re: Housing Authority of the City of San Luis Obispo,Multifamily Housing Revenue Bonds,De Vaul Ranch Apartments In connection With the proposed issuance of the above-referenced bonds and the public hearing to be held by the City Council on December 13, 1999,you have asked Jones Hall, as bond counsel to the City, to address the following issues: 1. The nature of the multifamily housing development to be financed with the proposed bonds. 2. The benefits to the City of the proposed bond financing. 3. The st acture of the proposed bond financing. 4. The liability of the City and the Housing Authority arising out of their participation in the proposed financing. 1. The Project The Housing Authority has been asked to issue tax-exempt bonds for the purpose of making a loan to DeVaul Ranch,LLC,a California limited liability company. De Vaul Ranch,LLC will use the proceeds of the loan to finance (1) development of a 122-unit multifamily housing facility located at the Southwest comer of Los Osos Valley Road and Madonna Road in the City,and (2) acquisition of vacant real property adjacent to the proposed development(the"Project D. The Projectwill include 16 efficiency units,56 one-bedroom units and 50 two-bedroom units. 1-8 2. Benefits to the City. The Housing Authority has agreed to consider issuing bonds to finance the Project in order to promote low and moderate income occupancy in the City. In connection with issuance of the bonds, De Vaul Ranch, LLC will agree to set aside 20 percent of the units in the Project for occupancy by `very low income residents,"ie.,residents with an income equal to or less than 50 percent of area median income.Half of the units set aside for occupancy by very low income tenants must be rented at an annual rental equal to or less than 30 percent of 50 percent of area median income. Both of these requirements will last for as long as the bonds are outstanding. The occupancy restrictions described above exceed the restrictions imposed by the City under its zoning regulations. 3. Description of the Proposed Bond Financing. The bonds will be 30-year, fixed-rate conduit revenue bonds payable solely from loan payments made by De Vaul Ranch,LLC to the Housing Authority. De Vaul Ranch,LLC and the underwriter,Banc of America Securities LLC, have proposed that the Federal National Mortgage Association ("Fannie Mae') guarantee payment of debt service on the bonds. As a result of the Fannie Mae guarantee, the bonds will be rated"AAA",which is the highest possible rating. In addition, during the period after issuance of the bonds while the Project is being constructed, De Vaul Ranch, LLC will provide Fannie Mae with a letter of credit from Bank of America. This letter of credit will eliminate the risk to Fannie Mae,as guarantor of the bonds,that the Project is not built 4. Liability of the City and Housing Authority. The City. The City's only involvement in the financing will be to hold a public hearing and, following the public hearing, approve issuance of the bonds. The City's participation is necessary because federal tax law, as a condition to tax-exemption,requires the City Council (the elected legislative body in the Housing Authority's jurisdiction) to approve issuance of the bonds. Issuance of the bonds will be subject to the Housing Authority's subsequent approval of the legal documentation. The Hounng Authority. Without the Housing Authority's participation as issuer of the bonds, the bonds could not be tax-exempt However, the Housing Authority will have no moral or legal obligation to repay the bonds from any source other than (1) loan payments made by De Vaul Ranch, LLC and (2) payments by Fannie Mae under its guarantee. As part of the bond documentation,De Vaul Ranch,LLC will agree to indemnify the Housing Authority for all legal expenses and liability arising from the Housing Authority's participation in the financing. I hope this letter is responsive to your request Please call me with any comments or questions at your convenience. 1-9 - Exhibit 6 November 11, 1999 Bill: I have been told that you indicated you were not aware of the TEFRA hearing needed for the building of the 122 unit apartment complex that is to be part of the DeVaul Ranch annexation at 11855 Los Osos Valley Road. I'll take at least partial responsibility for that oversight. At their August 19a'meeting the Commissioners of the Housing Authority adopted the attached resolution No. 757 (1999 Series). My assumption was that the developer's financing team led by bond counsel would schedule the necessary TEFRA hearing with you. That obviously didn't happen until very recently. I understand that you and Lee Price now have a copy of the resolution, which the City is being asked to consider. I also understand that Jones Hall,the city's bond counsel,has prepared the resolution. I also have been told you are looking for some details as to the proposal itself as well as some background information on the development team, etc. So let me make an attempt at that The process and development team are very similar to something the City approved back in 1985,before we were here, and which led to the 168 unit development on Southwood Drive which we refer to as either Parkwood or Southwood Apartments. Those were built with the Housing Authority issuing the bonds and the developer in return setting side 20%of the units for use by low income individuals and families using the Housing Authority's Section 8 Housing Assistance Program. Those units came into management in late 1986 early 1987 and we have had a successful relationship since that date. The original commitment to the Housing Authority was for 10 years.However,when interest rates dropped the developer asked that the city and we assist in the refinancing of the development. In return the Section 8 commitment would be extended for 25 years to the year 2018. A TEFRA hearing for that re-financing was held by the City Council on July 20, 1993 and the City Council adopted Resolution No. 8192 (1993 Series) at that time and the refinancing was put in place. The Section 8 commitment on this new development will be for a minimum of 30 years. My understanding is that the market range of rents on the new units will be from approximately$675 to$1,150 with bedroom breakdown as follows: 16—Efficiency or 0-bedroom units 56—One bedroom units 50—Two bedroom units 1-10 The developer hopes to begin construction in April or May of next year and the complex will be managed by Avila Beach Realty Inc. the same people who manage the Parkwood/Southwood development. They really need the TEFRA hearing out of the way by January 1 because of the State's bond cycle schedule so anything you can do to assist in the scheduling would be appreciated. You may recall that just two years ago we did a similar TEFRA hearing for our Brizzolara Street development. These are usually very short, not well attended hearings. They are held simply to put the needed financing vehicle in place, with all the hostilities behind us. Indeed in this instance the second reading of the ordinance amending the zoning for this development is scheduled for next Tuesday, November 16. Item C-4 on the council's agenda. I do have one comment on bond counsels Notice of Public Hearing and that is written comments are being directed to the Housing Authority. That's fine with us but I don't think that's what the City wanted in the past. If you need any additional information give me a call at 597-5302. George Moylan CG SEE P,gr�� 141 RESOLUTION NO.757(1999 SERIES) RESOLUTION OF INTENTION TO REIMBURSE EXPENDITURES FROM THE PROCEEDS OF TAX-EXAMPT OBLIGATIONS AND DIRECTING CERTAIN ACTIONS WHEREAS,the Housing Authoring of the City of San Luis Obispo(the"Authority') intends to issue tax-exempt obligations(the"Obligations")for the purpose,among other things, of malting a loan to DeVaul Ranch,LLC,a California limited liability company("DeVauP),or such limited partnership or limited liability company in which DeVaul acts as general partner or managing member,respectively,or has an ownership interest,or such other legal entity estab- lished by DeVaul(the"Developer"),the proceeds of which shall be used by the Developer to finance the acquisition,construction and development of an 122-unit multifamily housing facility located at the Southwest comer of Los Osos Valley Road and Madonna Road,San Luis Obispo, California and the acquisition of vacant real property adjacent thereto(the"Project');and WHEREAS,the United States Income Tax Regulations section 1.103-18 provides generally that proceeds of tax-exempt debt are not deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such debt unless certain procedures are followed,among which is a requirement that(with certain exceptions),prior to the payment of any such expenditure,the issuer must declare an intention to reimburse such expenditure;and WHEREAS,it is in the public interest and for the pubic benefit that the Authority declare its official intent to reimburse the expenditures referenced herein; NOW,THEREFORE,BE IT RESOLVED that the Housing Authority of the City of San Luis Obispo DECLARES and ORDERS as follows: 1. The Authority intends to issue the Obligations for the purpose of paying the costs of financing the acquisition,construction and development of the Project 2. The Authority hereby declares that it reasonably expects that a portion of the proceeds of the Obligations will be used for reimbursement of expenditures for the acquisition,construction and development of the Project that are paid before the date of initial execution and delivery of the Obligations. 3. The maximum amount of proceeds of the Obligations to be used for reimbursement of expenditures for the acquisition,construction and development of the Project that are paid before the date of initial execution and delivery of the Obligations is not to exceed$16,000,000. 4. The foregoing declaration is consistent with the budgetary and financial circumstances of the Authority in that there are no fbn&(other than proceeds of the Obligations)that are reason- ably expected to be(i)reserved,(ii)allocated or(iii)otherwise set aside,on a long-tom basis,by or on behalf of the Authority,or any public entity controlled by the Authority,for the cgmndi- tures for the acquisition and construction of the Project that are expected to be reimbursed from the proceeds of the Obligations. 5. The Developer sball be responsible for the payment of all present and future costs in connection with the issuance of the Obligations,including,but not limited to,any fees and expenses incurred by the Authority in anticipation of the;ro,anM of the Obligations,the cost of printing,any official statement,rating agency coats,bond counsel fees and expenses,under- writing discount and costs,trustee fees and expense,and the costs of printing the Obligations. The payment of the principal,redemption premium,if any,and purcbase price of and interest on the Obligations shall be solely the responsibility of the Developer. The Obligations shall not constitute a debt or obligation of the Authority. 6. The appropriate officers or staff of the Authority are hereby authorized,for and in the name of and on behalf of the Authority,to make an application to the California Debt Limit Allocation Committee for an allocation of private activity bonds for the financing of the Project 1=12 Resolution No.757 Page 2 7. The adoption of this Resolution shall not obligate(i)the Authority to provide financing to the Developer for the acquisition,construction and development of the project or to issue the Obligations for purposes of such financing;or(ii)the Authority,of or any department of the Authority or the City of San Luis Obispo to approve any application or request for,or take any other action in connection with,any environmental,General Plan,zoning or any other permit or other action necessary for the acquisition,construction,development or operation of the Project. 8. This resolution shall take effect immediately upon its adoption. On motion of Commissioner lemuS seconded by Commissioner Koss and on the following roll call votes: AYES: NOTES; ABSENT: the following Resolution was duly adopted and passed this 19th Day of August, 1999. D�,VID R BOOKER, TAN SEAL: ATTENTS: UPIUMUE I MOYLAX,SECRETARY Resolution#757 1-13 Exhlbit C Housing Element H 2.3.1: New Development •ecr j �1 Requirements The City shall require require that new development projects include affordable housing units, dedicate land for affordable housing, or pay an in-lieu fee to assist in the development of affordable housing Citywide. (p 14,1.22.10) Table 1 Affordable Housing Requirements' cs " Tp hof DCQOp1]1C°II � Ot � : x `s. to Build 3% low or 5% moderate cost Affordable Build 1 ADU.per acre, but Dwelling Units (ADUs�, not less than 1 ADU per In City but not less than 1 ADU project; or pay in-lieu fee per project; or pay in-lieu equal to 2% of building fee equal to 5% of building valuation. valuation.' a ,d:: n w, 3S31 �e a "w°• .�8. Yyy '.x �ysy`gv5 ,�; a Y°" ..._ I iK r ..� x ?fir?. x�tt_. � _. �L'� ....-•.4:"'.. Build 5% low - and 10% uild 1 ADU per acre, but In moderate - cost ADUs, but t less than 1 ADU per not less than 1 ADU per Fapansion project; or pay in-lieu fee roject; or pay in-lieu fee Area uilding qual to 2% of building equal to 10% of b valuation. valuation. 1 Developer may build affordable housing in the required amounts,pay an in-lieu fee or dedicate land based on the above formula. 2 Affordable Dwelling Units must meet City affordability criteria listed in Goal 2.1.1. 3 "Building Value" shall mean the total value of all construction work for which a permit would be issued, as determined by the Chief Building Official using the Uniform Building Code. H-6 peneual plan alcest-clty of sal is Blspo POUCIES AND OBJECTIVES Rybibi,t D BUDGET AND FISCAL.POLICIES I annual average debt service; or 10% of the service. The rate and method of bond proceeds. apportionment should include a back-up tax in the event of significant changes from the 5. Value-to-debt ratios. The minimum value- initial development plan,and should include to-date ratio should generally be 4:1. This procedures for prepayments. means the value of the property in the district, with the public improvements, 10. Foreclosure covenants. In managing should be at least four times the amount of administrative costs, the City will establish the assessment or special tax debt In mininnumz delinquency amounts per owner, special circumstances, after conferring and and for the district as a whole,on a case-by- receiving the concurrence of the City's case basis before initiating foreclosure financial advisor and bond counsel that a proceedings. lower value-to-debt ratio is financially prudent under the circumstances, the City 11. Disclosure to bondholders. In general,each may consider allowing a value-to-debt ratio property owner who accounts for more than j of 3:1. Special findings should be made by 10% of the annual debt service or bonded the Council in this case. indebtedness must provide ongoing disclosure information annually as 6. Capfralized interest during construdion. described under SEC Rule 15(c}12. f Decisions to capitalize interest will be made on case-by-case basis, with the intent that if 12. Disclosure to prospective purchasers. Full allowed,it should improve the credit quality. disclosure about outstanding balances and annualpayments should be made by the of the bonds and reduce borrowing costs, benefiting both current and future property seller to prospective buyers at the time that owners the buyer bids on the property. It should not be deferred to after the buyer has made the 7. Maximum burdmL Annual assessments(or decision to purchase. When appropriate, special taxes in the case of Mello-Roos or applicants or Property owner may be similar districts) should generally not required to provide the City with a exceed 1%of the sales price of the property; disclo and total property taxes, special assessments and special taxes payments collected ori the F. Conduit F iandngs tax roll should generally not exceed 20/a. 1. The City will consider requests for conduit 8. Benefit apportionment Assessments and financing on a case-by-case basis using the special taxes will be apportioned according following criteria: to a formula that is clear, understandable, equitable and reasonably related to the a The City's bond counsel will review the benefit received by--or burden attributed terms of the financing, and render an to.--each parcel with respect to its financed opinion that there will be no liability to improvement Any annual escalation factor the City in issuing the bonds on behalf should generally not exceed 2%. of the applicant 9. Special tax district adminfstrati L In the b. There is a clearly articulated public case of Mello-Roos or similar special tax purpose in Providing the conduit districts, the total maximum annual tax financing• should not exceed 110% of annual debt J 1-15 B-19 POLICIES AND OBJECTIVES BUDGET AND FISCAL POLICIES c. The applicant is capable of achieving a. Fill an authorized regular position- this public purpose. b. Be assigned to an appropriate bargaining unit. 2 This means that the review of requests for c. Receive salary and benefits consistent conduit financing will generally be a two- step process: first asking the Council if they with labor agreements or other compensation plans. are interested in considering the request,and establishing the groundrules for evaluating 3. To manage the growth of the regular work it; and then returning with the results of this force and overall staffing costs,the City will evaluation, and recommending approval of follow these procedures: appropriate king documents if warranted. This two-step approach ensures a. The Council will authorize all regular that the issues are clear for both the City and positions. applicant, and that key policy questions are answered. b. The Human Resources Department will to address these coordinate and approve the hiring of 211 3. The workscope necessary regular and temporary employees. issues will vary from request to request,and will have to be determined on a case-by- c. All requests for additional regular case basis. Additionally, the City should positions will include evaluations of: generally be fully reimbursed for our costs in evaluating the request; however, this • The necessity, term, and expected should also be determined on a case by-case results of the proposed activity. i basis- • Staffing and materials costs HUMAN RESOURCE MANAGEMENT including salary, benefits, !I equipment, uniforms, clerical support,and facilities. A Regular Sta,frIng The ability of private industry to w� fully appropriate the provide the proposed service. 1. The budget o Additional revenues or cost savings resources needed for authorized regular . staffing and will limit programs to the which may be realized. . regular staffing au&orized 4. Periodically, and prior to any request for 2. Regular employees will be the core work additional regular positions, programs will force and the preferred means of staffing be evaluated to-determine if they can be mgoin& year6 round program acdvrtres that accomplished with fewer regular should be performed by full-time City employees. (See Productivity Review employees rather than independent Policy) contractors. The City will strive to provide competitive compensation . and benefit 5. Staffing and contract service cost ceilmgs schedules for its authorized regular work win limit total expeaditraes for regular fame. Each regular employee will: employees, temporary employees, and mdepandent contractors hired to provide operating and maintenance services. 1-16 R90