REPORT TO THE CITY COUNCIL
FROM: SCOTT L. MOZIER, PE, Director
Public Works Department
BY: ANDREW J. BENELLI, PE, City Engineer/Assistant Director
Public Works Department, Traffic Operations and Planning
SUBJECT
Title
RESOLUTION - (1) Authorizing the California Statewide Communities Development Authority to form a Community Facilities District within the territorial limits of the City of Fresno to finance certain public improvements and development impact fees; (2) embodying a joint community facilities agreement setting forth the terms and conditions of the community facilities district financing; and (3) authorizing staff to cooperate with the authority and its consultants in connection therewith. (Property located near the intersection of East Belmont Avenue and North Armstrong Avenue, in Council District 5)
Body
RECOMMENDATION
Staff recommends that the City Council adopt a resolution (1) authorizing the California Statewide Communities Development Authority (the “Authority” or “CSCDA”) to form a Community Facilities District within the territorial limits of the City of Fresno to finance certain public improvements, development impact fees, and refinance outstanding bonds; (2) embodying a Joint Community Facilities Agreement setting forth the terms and conditions of the Community Facilities District financing; and (3) authorizing staff to cooperate with the Authority and its consultants in connection therewith.
EXECUTIVE SUMMARY
Staff recommends the Council authorize creation of a new Community Facilities District overlaying existing Community Facilities District (CFD) No. 2012-01, by the CSCDA. This CFD was formed in 2012 to finance public infrastructure improvements in the Fancher Creek Business Park, located near the intersection of East Belmont Avenue and North Armstrong Avenue. The new CFD is being formed to facilitate the refinancing of the original CSCDA bonds at lower interest rates.
BACKGROUND
On March 25, 2010, Council adopted Resolution 2010-058 and the City gave its consent to CSCDA to act as the issuer for the bonds associated with Fancher Creek. The CFD district included three improvement areas, but bonds were only sold to finance improvements in the Fancher Creek Business Park which is located on the northwest and southwest corner of Belmont Avenue and Armstrong Avenue. The Bonds were sold by CSCDA in January 2013 and delivered on February 7, 2013 (the “CSCDA 2013 Bonds”).
Since issuing the CSCDA 2013 Bonds, development of the business park has progressed, property values have appreciated, and interest rates have contracted significantly despite recent interest rate volatility. The 2013 Bonds had a cost of capital of 6.94%. The estimated interest cost from refinancing is 3.60%. Annual debt service savings through the original term of the borrowing are estimated to be $30,000. Fully discounted net present value savings from the refinancing are estimated to be $800,000. These estimates are subject to market conditions at the time of the eventual sale.
Fancher Creek Properties LLC has requested that the City consider formation of a new community facilities district for Fancher Creek Business Park to facilitate the repayment of CSCDA 2013 Bonds and the reformulation of the special tax to align with actual development that has occurred within the area. The new CFD will cover the same geographic area as the prior CFD and will allow the for payment of the CSCDA 2013 Bonds and the financing of eligible improvements.
Fancher Creek Properties LLC is a joint venture between Lance Kashian & Company and Penstar Group. The joint venture still owns the majority of the parcels. The assessment rate for all parcels not owned by Fancher Creek Properties LLC will be decreased from the current rate.
Exhibit “B” illustrates the tax-exempt rates as reported by the Bond Buyer for its 20- Bond General Obligation Bond Index since 2013. While interest costs for a non-rated Community Facilities District should be higher than a General Obligation bond, the chart is illustrative of tax-exempt interest rate movement over the past decade. Development, rising property values, and reduced costs of borrowing provide an opportunity to achieve considerable financial savings for the Fancher Creek Business Park property owners.
ENVIRONMENTAL FINDINGS
Pursuant to the definition in California Environmental Quality Act Guidelines Section 15378, this activity is not a project.
LOCAL PREFERENCE
Local preference was not considered because this resolution does not include a bid or award of a construction or services contract.
FISCAL IMPACT
The Fancher Creek Business Park is located in Council District 5. Approval of the Community Facilities District will not have any impact on the City’s General Fund. Staff costs to bring forward the resolution for Council consideration have been funded by a deposit from the applicant.
Attachments:
Resolution
Exhibit A, Proposed Boundaries of CSCDA CFD No. 2022-XX
Exhibit B, 20-Bond Index (2013-2022)