REPORT TO THE CITY COUNCIL
FROM: MICHAEL A. LIMA, Finance Director/Controller
Finance Department
SUBJECT
Title
Memorandum of Understanding for Administrative Support between the City of Fresno and the Fresno Enhanced Infrastructure Financing District
Body
RECOMMENDATION
Staff recommends the Council of the City of Fresno (Council) approve the Memorandum of Understanding (MOU) for administrative support between the City of Fresno (City) and the Fresno Enhanced Infrastructure Financing District (FEIFD)
EXECUTIVE SUMMARY
Council established the FEIFD in April 2020 to finance certain public facilities allowed pursuant to the State of California’s (State) Enhanced Infrastructure Financing District law. This action was followed by a subsequent Council action in May 2020, which established the Public Finance Authority of the FEIFD (PFA) to act as the FEIFD’s governing board.
While the FEIFD has a governing board, it does not have staff to carry out the FEIFD’s administrative functions, such as financial and legal services. Thus, the FEIFD is dependent on City staff to carry out these administrative functions. As State law specifies that the FEIFD is a separate legal entity from the City, an MOU detailing between the City and the FEIFD is needed to define the roles and responsibilities that each entity will provide to the other. The attached MOU, which has been reviewed and edited by both parties, will provide that clarity of responsibilities. Staff recommends that Council approve the proposed MOU between the City and the FEIFD.
BACKGROUND
On April 23, 2020, Council adopted Resolution 2020-084 which established the FEIFD. This action was followed by the adoption of Resolution 2020-099 on May 14, 2020 which defined the PFA as the FEIFD’s governing board. The FEIFD was created to oversee infrastructure development in an area generally defined as downtown Fresno and the Blackstone Avenue corridor to Gettysburg Avenue. The FEIFD will use property tax increment generated in the FEIFD’s geographic area to fund this infrastructure development. As the property tax increment is anticipated to initially be well below what is needed to fund these infrastructure improvements, an Infrastructure Financing Plan for the FEIFD was prepared which called for the issuance of a bond by the FEIFD to fund these infrastructure projects, with future property tax increment being used as the revenue stream to meet the annual debt service on this bond. Council approved this Infrastructure Financing Plan on September 25, 2020, while the PFA approved it on November 30, 2020.
While the FEIFD has a governing board and a financing plan, it does not have a staff to carry out the FEIFD’s administrative functions. Given the relatively limited administrative functions that are anticipated, it has been contemplated that City staff would perform those duties. However, State enhanced infrastructure financing district law expressly states that the FEIFD (and all enhanced infrastructure financing districts in California) are separate legal entities from the cities and counties that would otherwise receive the property tax increment that the enhanced infrastructure financing district receives. In light of this language, an MOU between the City and the FEIFD is needed to define the working arrangement between the two agencies.
To address this need, the City Attorney’s Office drafted an MOU with input from the Administration. Under the terms of the proposed MOU, the City shall provide all administrative support necessary for the District and the PFA to conduct business and perform their respective tasks. City staff will have the right to hire financial advisors and other specialists to assist with carrying out specialized transactions (such as the sale of bonds) that arise as part of the FEIFD’s business. The City will bill monthly actual costs incurred in performing the FEIFD’s administrative duties. There is a $100,000/year annual cap on expense reimbursement to the City. The proposed MOU shall be effective from July 1, 2021 and shall continue indefinitely, subject to any earlier termination at any time by mutual agreement of the parties.
The agreement has been reviewed and approved by representatives from Kosmont Companies (the consultant who assisted in creating the FEIFD). The agreement will also need to be approved by the PFA before it becomes effective.
ENVIRONMENTAL FINDINGS
This is not a project pursuant to CEQA guidelines Section 15378.
LOCAL PREFERENCE
Local preference does not apply.
FISCAL IMPACT
The City will receive compensation for satisfactory performance of all services required or rendered pursuant to this MOU. The total compensation for services will not exceed $100,000 annually, unless otherwise agreed to in writing by the Parties. This compensation will be a General Fund revenue in future fiscal year budgets.
Attachment: Memorandum of Understanding FEIFD