HomeMy WebLinkAboutMINUTES - 12021986 - 2.2 TQ BOARD OF SUPERVISORS X002
FROM; Contra
Gl
Harvey E. Bragdon,
Director of Community Development Costa
DATE ' November 7, 1986 Courty
SUBJECT;
Oakley Area Infrastructure Financing Study Fina] Report
SPECIFIC REQUEST(S) OR RECOMMENDATIONS) & BACKGROUND AND JUSTIFICATION
RECOMMENDATION
Accept the Oakley Area Infrastructure Financing Plan Final Report and refer to the
Community Development Department for input into the Oakley Area General Plan as an
implementation component.
FINANCIAL IMPACT
All administrative costs of preparation of the election and Issuance of Bonds are
receivable costs within the recommended financing approach.
BACKGROUND
On October 13, 1986 the Oakley Infrastructure Finance Program Advisory Committee met and
considered, the consultant final report. The members found that the report adequately
represented the financing objectives of the committee and endorsed the report in concept.
The committee noised that the exact figures in the report may change due to changing
circumstances, and that the approach presented should be pursued by the County in
implementing the Oakley Area General Plan.
CONTINUED ON ATTACHMENT: YES SIGNATURE'
_. RECOMMENDATION OF COUNTY ADMINISTRATOR RECO M ATIO F ARD COMMITTEE
APPROVE OTHER
SIGNATURE(S1:
ACTION OF BOARD ON December 2, 1986 APPROVEDI AS RECOMMENDED OTHER X
ACKNOWLEDGED receipt of the Oakley Area Infrastructure Financing Plan Final Report; REFERRED report to the
Community Development Director for further review in context with the General Plan including consideration of
financing mechanisms pertinent to schools, fire stations and sheriff substations; and REFERRED the report to the
Oakley Muncipal Advisory Committee (GMAC) and the East County Regional Planning Commission for review.
VOTE OF SUPERVISORS
I HERBY CERTIFY THAT THIS IS A TRUE
X UNANIMOUS (ABSENT AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
cc: Community Development Director ATTESTED
GMAC, via CDD PHIL BATCHELOR, CLERK OF THE BOARD OF
ECRPC, via CDD SUPERVISORS AND COUNTY ADMINISTRATOR
County Administrator y(/
2�-
BYLZ
6 D£PUTY
M381/7-83
OAKLEY AREA
INFRASTRUCTURE FINANCING PLAN
LFINAL REPORT
CONTRA COSTA COUNTY
Prepared By:
RALPH ANDERSEN & ASSOCIATES
1446 Ethan Way.
' Suite 101
Sacramento, California 95825
(916) 929-5575
3860 West Northwest Hwy.
Suite 230
Dallas, Texas 75220
(214) 956-7097
June 9, 1986 (Revision of
the March 7, 1986
Final Report)
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TABLE OF CONTENTS
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PAGE
EXECUTIVE_ SUMMARY i
CHAPTER I--INTRODUCTION 1
Background 1
Scope and Method for Analysis 3
CHAPTER II--NATURE AND COST OF FACILITIES TO BE FINANCED 8
Timeframe for Facilities Financing 8
Nature and Cost of Facilities 9
Exhibit A--Oakley Area Financing Plan Capital Costs for
10-Year Timeframe 10
CHAPTER :III--OBJECTIVES FOR FINANCING PLAN AND OTHER
FACTORS AFFECTING.AVAILABLE ALTERNATIVES 17
Objectives for Financing Plan 17
Factors Affecting the Selection of Financing Methods 19
Projected Development In Oakley 21
Exhibit B--Oakley Area.General Plan--Option A Estimates
of Developed vs. Undeveloped Acres by Land
Use Category 22
Exhibit C--Oakley Area General Plan--Option A Projected
Residential , Commercial and Industrial Development 23
Potential Financing Methods Evaluated for the Financing Plan 24
CHAPTER :IV--RECOMMENDED FINANCING PLAN AND SELECTED
ALTERNATIVES 27
Alternative Policy Approaches for Facilities Financing 27
Recommended Oakley Infrastructure Financing Plan 32
Exhibit D--Illustrative Timeline for Mello-Roos District
Formation and Tax Election 39
Exhibit E--Oakley Area Infrastructure Financing Plan
Estimate of Bond Financing Costs 41
Exhibit F--Estimated New and Existing Land Uses for
Zones of Oakley Area General Plan, Option A 45
TABLE OF' CONTENTS (Continued)
PAGE
CHAPTER IV--RECOMMENDED FINANCING PLAN AND SELECTED
ALTERNATIVES (Continued)
Exhibit G--Oakley Infrastructure Financing Plan Estimated
Cost Allocations to New and Existing Develop-
ment in Each Zone of District 46
Exhibit H--Estimated Zone 1 Tax, Recommended Oakley
Community Facilities District 47
Exhibit I--Estimated Zone 2 Tax, Recommended Oakley
Community Facilities District 49
Alternative 1 : Development Fees 56
Exhibit J--Projected Funds Available from Current
Development Fees 58
Exhibit K--Estimated Fees to Finance 10-Year Needs for
Parks, Fire Protection, Schools and Roads 60
Alternative 2: A Combination Financing Approach 61
Exhibit L--Estimated Zone 1 Tax, Alternative 2, Mello-Roos
Financing of School & Fire Fac. 63
Exhibit M--Estimated Zone 2 Tax, Alternative 2, Mello-Roos
Financing of School & Fire Fac. 65
Financing Operations and Maintenance Costs 68
CHAPTER V--IMPLEMENTATION OF RECOMMENDED FINANCING PLAN 70
How the Recommended Financing Plan Should be Implemented 70
Responsibilities and Costs for Implementation 74
Timing for Implementation 75
' APPENDIX--SUMMARY OF THE MELLO-ROOS COMMUNITY
FACILITIES ACT OF 1982 76
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Ralph Andersen 1446 Ethan Way 3860 West Northwest Highway
'
8t ASS0CIi3teS Suite 101 Suite 230 Sacramento, CA 95825 Dallas,TX 75220
(916)929-5575 (214)956-7097
EXECUTIVE SUMMARY
This report provides a review and analysis of the alternatives for
financing certain public facilities in the Oakley Area, and speci-
fically -develops a recommended Oakley Infrastructure Financing Plan.
The facilities to be financed include park, fire protection, school
and roadway facilities which will be required to serve the Oakley
area over the next 10 years. The nature and cost of these facili-
ties were identified based upon input provided by the staff and
other representatives of Contra Costa County, Oakley Fire Protection
District:, Oakley Union School District, and Liberty Union High
School District. The cost of these facilities are summarized as
follows:
OAKLEY INFRASTRUCTURE FINANCING PLAN
COST OF FACILITIES FOR 10-YEAR TIMEFRAME
(IN 1985-86 DOLLARS)
TYPE OF FACILITY TOTAL COST
Parks $ 2,522,500
Fire Protection 764,500
Schools 139600,000
Roads 8,902,000
TOTAL $25,789,000
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The type of facilities to be financed represent a diverse combina-
tion which are difficult to bring together under any one financing
method. For some types of facilities (roads and parks) , there is
statutory authority for several alternative financing methods. How-
ever, there is very little financing available for schools, and
financing for fire protection facilities is also somewhat limited.
Available alternatives were evaluated relative to the objectives for
the study and relative to practical factors that must be taken into
consideration which are summarized as follows:
. Objectives for the Financing Plan:
- To the extent possible, the financing method should be
equitable
- The impact on the cost of housing should be minimized
' - The financing method should be practical and capable of
being implemented.
Practical Factors Affecting the Selection of Financing Methods:
- The type of facilities to be financed
' - The mix of developed and undeveloped land in the Oakley
Area
' - Relative costs of alternative financing methods
- Ease of implementation and administration
- Ability of the financing method to provide for the types
of facilities, and provide the funding when needed
' - Capability of the financing method to provide for infla-
tion
I - Consistency of the financing method with County policies
and objectives
- Compatability with other alternatives, or existing
' financing methods which could be effectively utilized
- Ability to provide for all costs.
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The above objectives and factors were taken into consideration in
evaluating potential financing methods for inclusion in the recom-
mended Oakley Area Infrastructure Financing Plan. These objectives
' and factors were evaluated relative to the particular characteris-
tics of current and planned development in the Oakley Area, and the
nature and cost of the facilities to be financed. As a result of
this analysis, three alternatives were selected as being feasible,
and were presented in a draft report which was reviewed by County
staff and the Oakley Infrastructure Finance Program Advisory Commit-
tee. The Committee evaluated the available alternatives relative to
the three basic financing policy approaches of (1 ) "pay-as-you-use"
debt financing , (2 ) "pay-as-you-go" financing (accumulating fees,
charges, etc. ) , and (3) a combination of the two preceding
approaches. The Committee determined that "pay-as-you-use" debt
financing offered the greatest potential for minimizing the impact
on the cost of housing because facilities could be financed at rela-
tively low tax-exempt interest rates of public bonds. "Pay-as-you-
go" financing with development fees could become a cost of property
' and be financed at higher mortgage interest rates, thereby repre-
senting a potentially higher cost to the ultimate consumer. Consid-
eration of these and other important advantages and disadvantages of
' each alternative (described in Chapter IV of this report) resulted
in the Committee's recommendation that a debt financing approach be
used for all facilities of the Oakley Infrastructure Financing Plan.
' RECOMMENDED MELLO-ROOS DEBT FINANCING
' The Mello-Roos Community Facilities Act of 1982 is the only method
available for utilizing debt-financing (bonds) for all of the facili-
ties, particularly schools. Under this financing method all facility
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costs could be financed through the issuance of tax-exempt public
bonds. These bonds could be repaid over a relatively long period of
time (20-25 years) by an annual tax on residential dwelling units
' and commercial/industrial parcels. This bonded debt would amortize
the public facility costs over a long period of time at a relatively
low interest cost, and thereby minimize the impact on the cost of
housing. Also, since the cost would be repaid as a tax, the property
owner could potentially deduct this expense for purposes of personal
income tax (under current tax laws) .
The Mello-Roos Act provides a great deal of flexibility as to how
the annual tax can be structured and levied. For purposes of esti-
mating the annual tax, this study utilized assumptions on allocation
of facility costs requested by the Oakley Infrastructure Finance
' Program Advisory Committee, which are summarized as follows:
' . Community Park Costs should be attributed to both existing and
new development throughout the Oakley Area. In this way,
existing deficiencies in parks can be financed as a first pri-
ority by existing development as well as new development that
would also benefit from the Community Park.
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. Middle School Costs should be attributed to new and existing
' Oakley Area development that is within the Oakley Union School
District boundaries (referred to as Zone 1 of the Community
Facilities District). In this way, the existing deficiency in
school facilities can also be financed as a first priority by
existing development as well as new development that would
also benefit from the school facilities.
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. Other School Construction Costs of the Oakley Union School
District would serve development over the next 10 years, and
should be financed only by new development occurring within
' that school district's. boundaries (zone 1 of the Community
Facilities District) .
. All Other Facility Costs include fire protection, high school
' site, local parks, and roadway costs to serve new development
over the next 10 years, and should be financed only by new
development throughout the entire Community Facilities Dis-
trict.
' As a result of the above assumptions, two tax zones would be estab-
lished within the recommended Oakley Community Facilities District.
Zone 1 would include all Oakley areas within the Oakley Union School
District's boundaries. Zone 2 would include all areas outside that
school district's boundaries. Within each zone, separate tax rates
for new and existing development would be established based on the
preceding assumptions of the Committee. Chapter IV (see Exhibits E,
' F, G, H, and I ) provides a detailed explanation of how estimated
Mello-Roos taxes were developed using these assumptions. The esti-
mated Mello-Roos taxes for the recommended Mello-Roos debt financing
are summarized here as follows:
Estimated Tax at Full Development:
' Zone 1 Estimated Annual Tax Zone 2 Estimated Annual Tax
Existing New Existing New
' Land Use Development Development Development Development
Residential $ 60/unit $ 195/unit $31/unit $165/unit
Commercial 306/acre 1 ,055/acre 52/acre 417/acre
Industrial 306/acre 1 ,055/acre 52/acre 417/acre
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Estimated Tax in 10 Years:
Zone 1 Estimated Annual Tax Zone 2 Estimated Annual Tax
Existing New Existing New
Land Use Development Development Development Development
Residential $ 60/unit $ 395/unit $31/unit $ 286/unit
Commercial 306/acre 1 ,705/acre 52/acre 694/acre
Industrial 306/acre 3,330/acre 52/acre 1 ,380/acre
In addition to the Committee's recommended Mello-Roos debt financing
methods for the Oakley Infrastructure Financing Plan, this study
' identified other debt financing alternatives (see Chapter IV discus-
sion of Community Facilities Districts and assessment districts), as
' well as the following two alternatives to the recommended approach.
. ALTERNATIVE 1 : DEVELOPMENT FEES--Under this alternative, the
identified public facility costs could be recovered through
one-time fees and/or assessments on property at the time of
development. As a one-time fee, it must be assumed that this
cost could be passed on to the buyer of developed property/
' homes in the purchase cost. The effect would be to increase
the cost of housing. To the extent that this cost would
increase purchase costs and become amortized through the mort-
gage, it would result in higher monthly payments, and would
' not provide the same potential for personal income tax deduc-
tions possible under. the recommended Mello-Roos tax (although
interest on the higher cost could be deducted). Development
fees (in 1985-86 dollars) that would be necessary to finance
' all of the facilities are estimated to be as follows:
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Residential Commercial Industrial
Type of Facility Fees Fees Fees
Parks $400/unit -- --
' Fire Protection $77/unit $313/acre $313/acre
Schools $1 ,696/unit
Roads $1 ,315/unit $1 .55/sq.ft. $4,535/acre
ALTERNATIVE 2: A COMBINATION FINANCING APPROACH--A combina-
tion of Mello-Roos debt financing and development fees could
be used as a composite approach. Under this alternative, the
' advantages and disadvantages of each would be realized. With
this alternative, some facilities might appropriately be
financed on a pay-as-you-go basis and constructed apace with
development (e.g. , parks) , while other facilities might be
needed early as development begins to occur (e.g. , fire pro-
tection) and thereby be funded by debt financing. A combina-
tion approach would consist of two components; (1 ) a Develop-
ment Fees Component to finance parks and roads, and (2) a
Mello-Roos Bond Component to finance schools and fire protec-
tion facilities. A detailed explanation of this alternative
financing method and how it would be implemented is provided
in Chapter IV of this report. Based upon projected develop-
ment of Oakley Area General Plan Option A, the costs of this
1 alternative approach are estimated as follows:
DEVELOPMENT FEES COMPONENT FOR PARKS AND ROADS
Residential Commercial Industrial
' Type of Facility Fees Fees Fees
Parks $400/unit -- --
IRoads $1 ,315/unit $1 .55/sq.ft. $4,535/acre
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MELLO-ROOS BOND COMPONENT FOR SCHOOL AND FIRE PROTECTION
Estimated Tax at Full Development (School and Fire Facilities Only):
Zone 1 Estimated Annual Tax Zone 2 Estimated Annual Tax
Existing New xis ing ew
Land Use Development Development Development Development
' Residential $ 50/unit $132/unit -- $ 12/unit
' Commercial 255/acre 712/acre -- 67/acre
Industrial 312/acre 712 acre -- 67/acre
Estimated Maximum Tax in 10 Years (School and Fire Facilities Only):
' Zone 1 Estimated Annual Tax Zone 2 Estimated Annual Tax
Existing New Existing New
Land Use Development Development Development Development
' Residential $ 50/unit $ 267/unit -- $ 25/unit
' Commercial 255/acre 1 ,148/acre -- 107/acre
Industrial 312/acre 2,247/acre -- 210/acre
' Implementation of the Oakley Infrastructure Financing Plan 's recom-
mended Mello-Roos Tax and bonds will involve a number of legally
required procedures including the preparation and adoption of cer-
tain resolutions and reports at public hearings and an election which
' requires a two-thirds approval from qualified voters within the pro-
posed Mello-Roos Community Facilities District (see descriptions in
Chapter VI and the Appendix of this report). This Mello-Roos process
will likely take approximately seven months, although under the most
favorable circumstances (where all involved are in favor) the pro-
cess could be done in as little as three and one-half months.
The following chapters of this report provide a detailed analysis
and discussion of the findings and recommendations outlined in the
preceding Executive Summary.
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CHAPTER I--INTRODUCTION
This chapter provides a discussion of the purpose and related back-
ground for preparation of an Oakley Area Financing Plan. This chap-
ter also describes the scope and methodology for preparing the
recommended Oakley Area Infrastructure Financing Plan.
iBACKGROUND
The Oakley area is an unincorporated area located generally east of
the City of Antioch, and is one of the fastest growing areas in
' Contra Costa County. There are approximately 3,500 dwelling units
presently in the area and near-term development (10 years) is pro-
jected to bring the total to approximately 8,850 dwelling units.
Major increases in related commercial and light industrial develop-
ment are also projected to occur, adding approximately 445,000 square
feet of light manufacturing, warehouse, commercial , and retail build-
ings.
In the era of significant fiscal limitations since the passage of
Propositions 13 and 4 , public agencies throughout the State of
California have become acutely aware of the importance of assuring
that adequate funding is available to provide the needed services
and facilities to serve development. Contra Costa County has recog-
nized the importance of assessing the need for key facilities and
identifying appropriate methods for financing the required infra-
structure to serve development.
Accordingly, the County has identified that important key facilities
will need to be financed and constructed to serve near-term develop-
ment in the Oakley area, including in particular schools, fire sta-
tions, parks, and thoroughfares. The County, school districts, and
fire protection district have developed descriptions of these needed
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facilities and their costs, so that the needs for schools, roads,
' parks and fire protection have been relatively well defined. Needs
for flood control and drainage improvements are in the process of
' being further defined.
With these things in mind, Contra Costa County retained Ralph Ander-
sen & Associates together with the bond counsel law firm of Jones
' Hall Hill & White as financial management consultants to provide
assistance in developing a comprehensive plan for financing these
' facilities needed to serve the Oakley area. As a first phase, the
financing plan was to provide for school , road, park and fire pro-
tection needs. A second phase of the study would provide a recom-
mended financing plan for flood control and drainage improvements,
as the needs for these facilities become better defined.
' The recommended financing plan is intended to be comprehensive, and
' take into consideration the specific types of improvements needed
and their cost. The financing plan should also take into considera-
tion, among other things:
. An equitable method for allocating costs among developers,
' landowners, and others based upon their requirements for, and
benefit derived from, such improvements
. The timing of development relative to when the improvements
are needed and when costs would be incurred
' . The effects of inflation over the time that improvements would
be constructed
' . The availability, adequacy and appropriateness of existing
' fees, charges, and other financing methods presently used to
finance such improvements
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. Administrative, design, engineering, debt service, and other
' related costs for improvements
' . Improvements that may be constructed directly by developers or
landowners.
With these things in mind, the recommended financing plan has
' developed appropriate financing methods to provide for school , road-
way, park and fire protection facilities in the Oakley Area.
SCOPE AND METHOD FOR ANALYSIS
In order to accomplish the objectives for the financing plan as sum-
marized in the preceding, a work plan was specifically designed for
this project. The work plan utilized the experience and capabili-
ties of the consultant team to thoroughly analyze the financing
' needs and identify appropriate financing methods that meet those
needs in a way that is practical and capable of being implemented.
' The work plan involved completion of a series of tasks which are
summarized as follows:
' TASK 1--MEETINGS WERE HELD WITH PLANNING STAFF AND THE STEERING
' COMMITTEE TO REVIEW AND CONFIRM PROJECT OBJECTIVES, APPROACH ,
TIMING AND END-PRODUCTS
The assignment began with developing a mutual understanding of
project objectives, approach, timing, and end-products. This
was accomplished at the beginning of the project through meet-
ings with Planning Department staff, and the Oakley Area Steer-
ing Committee.
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TASK 2--MEETINGS WERE HELD WITH APPROPRIATE STAFF OF THE COUNTY,
SCHOOL DISTRICTS, FIRE DISTRICT, AND DEVELOPERS TO SPECIFICALLY
DETERMINE NEEDED IMPROVEMENTS AND THEIR COSTS
' Project consultants initially reviewed all available reports and
studies which identifed the Phase I improvements (schools,
' roads, parks, and fire protection) needed to provide for devel-
opment in the Oakley area. Project consultants then worked
' closely with the staff of the County, school districts and fire
district to identify the cost of needed improvements.
TASK 3--CURRENT FINANCING METHODS AND REVENUE SOURCES WERE
IDENTIFIED AND EVALUATED RELATIVE TO IMPROVEMENTS NEEDED FOR. THE
OAKLEY AREA
First, as background for subsequent tasks which developed recom-
mended financing methods, project consultants identified current
and previous financing methods used by the County, school dis-
tricts, and fire district, and the basis for their use. These
financing methods were reviewed and assessed for their potential
' relative to the Phase I improvements needed in the Oakley area.
This task also identified the extent, if any, that other poten-
tial financing methods may be limited or affected by current
County policies and existing financing applications.
' Secondly, the project consultants identified current revenue
sources (such as fees, charges, assessments, etc. ) which would
' be derived from the Oakley Area' s development, and be applicable
to the identified costs of needed improvements. The amount of
these revenue sources that has been derived from development was
compared to projected costs in order to determine the net amount
' of funding need for identified improvements.
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TASK 4--A COMPREHENSIVE INVENTORY OF AVAILABLE FINANCING ALTER-
NATIVES FOR THE IDENTIFIED IMPROVEMENT FUNDING NEEDS WAS REVIEWED
The preceding tasks identified the types of improvements needed,
' their cost, and the net funding needed after taking into consid-
eration currently available revenue sources. With the preceding
' tasks as background, project consultants then developed a com-
prehensive listing or inventory of potential financing methods
' which could be applicable to the identified funding needs. The
listing was developed through research, and the project team' s
' extensive experience with and knowledge of public financing
methods. This inventory of applicable financing alternatives
served as the basis for the following tasks which developed
' specifically recommended alternative financing methods considered
most appropriate for inclusion in the financing plan.
' TASK 5--AVAILABLE FINANCING METHODS WERE EVALUATED AND RECOM-
MENDED ALTERNATIVES WERE DEVELOPED FOR THE OAKLEY AREA FINANCING
PLAN
' The preceding tasks resulted in an inventory of available
financing methods that could potentially be utilized for the
Phase I improvements of the Oakley Area Financing Plan. In this
' task , project consultants evaluated the various alternatives
relative to the specific needs and constraints for financing the
' particular improvements, and the objectives of the County,
school districts, fire district, and landowners/developers.
' This evaluation took into consideration the following principal
factors:
. Costs of alternative financing methods relative to other
' alternatives
. Ease of implementation and administration of alternative
' financing methods
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• The relative equity of alternative financing methods for
allocating costs among developers, landowners and others
based upon their requirements for, or benefit derived
1 from, improvements
1 . Ability of alternative financing methods to provide suf-
ficient funding for needed improvements so that they may
1 be available relative to the timing of development
1 . Capabilities of alternative financing methods to provide
for inflation over the time that improvements will be
constructed
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. Consistency of alternative financing methods with County
1 policies and objectives
1 . Ability of financing alternatives to provide for adminis-
trative, design, engineering and other related costs in
addition to construction costs
1 . Impact of financing alternatives on the cost of housing.
The above evaluation of potential financing alternatives
1 resulted in the submission of a Preliminary Draft Financial Plan
that provided a selection of feasible financing methods most
1 appropriate for the needs and objectives of Oakley Area facili-
ties. The Preliminary Draft Report was reviewed by County staff
' prior to preparing the more comprehensive Draft Final Report.
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TASK 6--A DRAFT FINAL REPORT ON THE OAKLEY AREA FINANCING PLAN
WAS PREPARED AND REVIEWED BY COUNTY STAFF AND THE OAKLEY INFRA-
STRUCTURE PROGRAM ADVISORY COMMITTEE
All of the preceding tasks resulted in the preparation of a
Draft Final Report on the Oakley Area Infrastructure Financing
' Plan. The report identified all needed improvements and their
costs; forecasted revenues from existing sources (fees, charges,
' etc. ); identified available alternatives; and a recommended
financing method. The draft report was reviewed by County staff
' and the Oakley Infrastructure Program Advisory Committee. Proj-
ect consultants met with County staff and the Advisory Committee
to receive their comments and changes to the Draft Final Report.
TASK 7--THIS FINAL REPORT ON THE OAKLEY AREA FINANCING PLAN WAS
' PREPARED
The preceding review of the Draft Final Report resulted in sug-
gested changes and clarifications which were incorporated into
this final Oakley Area Financing Plan Report that analyzes the
financing needs for Phase I improvements, lists all applicable
alternatives, specifically includes the recommended financing
method, and describes an implementation plan.
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' CHAPTER II--NATURE AND COST OF FACILITIES TO BE FINANCED
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This chapter describes the facilities to be financed by the recom-
mended Oakley Area Financing Plan. The nature and cost of these
facilities were identified through a series of meetings with Contra
Costa County staff, as well as meetings with staff and other repre-
sentatives of the Liberty Union High School District, Oakley Union
School District, and Oakley Fire Protection District. The following
presents a discussion of the timeframe for facilities financing, and
the specific nature and cost of the park, fire protection, school ,
and roadway facilities to be financed.
TIMEFRAMIE FOR FACILITIES FINANCING
Full build-out of the Oakley Area is estimated to occur over a per-
iod in excess of 20 years. Under the proposed Oakley Area General
Plan Option A. approximately 5,800 acres will be developed and will
include nearly 20,000 residential dwelling units; in addition, nearly
1 ,600 acres would be agricultural or public/semi-public uses.
Because of the uncertainties relating to the timing and nature of
facilities needed for ultimate development in 20 years or more, the
County decided to have the current Oakley Area Infrastructure
Financing Plan focus on the facility needs projected for the next 10
years. At the same time, the financing methods included in the
current Plan could also be utilized when the longer term needs are
known.
Therefore, the recommended Oakley Area Financing Plan addresses the
financing needs for park , fire protection, school , and roadway
facilities that will be required to serve Oakley Area development
occurring over the next 10 year timeframe.
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NATURE AND COST OF FACILITIES
In order to identify the nature and cost of
,arkfire protection,
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school , and roadway facilities that will be required to serve the
Oakley Area over the next ten years, consultant staff received input
from the respective agencies that are responsible for these facili-
ties. This was accomplished through a series of meetings with staff
and other representatives of the following:
. Contra Costa County
. Oakley Fire Protection District
. Oakley Union School District
. Liberty Union High School District.
Based upon the input received from the above agencies, facility
requirements and costs were developed for inclusion in the Oakley
Area Financing Plan for the next 10 years. Exhibit A on the next
page summarizes these capital costs, in 1985 dollars, for each type
of facility. As indicated in Exhibit A, total capital costs for the
Oakley Area Financing are projected to be $25,789,000. Of this
total , the largest components are schools (52.7%) and roads (34.5%)
which together comprise approximately 87% of the total capital
costs. Park and fire protection facilities together are
approximately 13% of the financing needs. The following provides a
description of the needs and costs for each type of facility within
the scope of the Financing
Plan:
. PARKS--The parks financing anticipates funding the development
of two local parks which would be four acres and nine acres
each, and a 20-acre community park. The local parks would
require development costs only (estimated at $40,000 per acre)
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EXHIBIT A--OAKLEY AREA FINANCING PLAN
CAPITAL COSTS FOR 10-YEAR TIMEFRAME
Type of Facility Total 1985 Costs
PARKS
One 20-Acre Community Park $2,002,500
. Two local Parks (combined
use with drainage detention
basins) 520,000
TOTAL: PARKS $2 ,522,500
FIRE PROTECTION
. Expansion/Upgrade of Existing
Station 1695500
. Additional New Station &
Equipment 5959000
TOTAL: FIRE PROTECTION 764,500
SCHOOLS
. Oakley Union School District:
- One Middle School (balance
after State funds) 525002000
- One Elementary School 4,000,000
- Next Elementary School
(first phase) 2,500,000
Sub-total $1210001000
�. . Liberty Union High School
District
- High School Site (land
only) 1 ,600,000
TOTAL: SCHOOLS 1396002000
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EXHIBIT A--OAKLEY AREA FINANCING PLAN
CAPITAL COSTS FOR 10-YEAR TIMEFRAME (Continued)
Type of Facility Total 1985 Costs
ROADS
. Existing Deficiencies 2,237,000
. Additional Improvements
for Growth 6,665,000
TOTAL: ROADS 8,902,000
t
TOTAL FACILITY CAPITAL COSTS $25.789,000
r
SOURCE: Contra Costa County Community Development Department;
Oakley Fire Protection District; Oakley Union School Dis-
trict; Liberty Union High School District; and Ralph Ander-
sen & Associates.
11
since it is anticipated that two drainage detention facilities
(Detention Basins 29-C and 30-A) can be utilized as multi-use
facilities. Since these drainage detention basins are already
owned by the County Flood Control District, there would be no
acquisition costs and the projected total amount of $520,000
for these local parks would be only the costs for development
as passive-use parks (landscaping, picnic tables, benches,
barbecues, etc. ) .
The community park is anticipated to be a 20-acre facility
developed for active use (multi-purpose baseball/soccer
fields, tennis, etc. ). Total acquisition and development
costs are projected to be approximately $2.0 million (in 1985
dollars) . Based upon information provided by County staff,
site acquisition is estimated to cost $802,500 (at $40,000 per
acre plus real estate processing costs of approximately
$2,500) . Development as an active-use park would cost
approximately $1 .2 million (at $60,000 per acre).
. FIRE PROTECTION--The projected fire protection facility costs
anticipate expanding and upgrading the existing fire station
at the corner of 2nd and Ruby Streets in Oakley, and building
and equipping a new station in the Northwest Oakley Area. The
Oakley Fire District has indicated that upgrading and expand-
ing the existing station would cost a total of approximately
$169,000 and include (1 ) the addition of 2,700 square feet to
the current building at a cost of $94,500 and (2) the purchase
of one Power Wagon fire truck and miscellaneous related
equipment costing a total of $75,000.
To further serve the projected development in Oakley over the
next 10 years, the fire protection financing anticipates con-
structing and equipping a new fire station which would be
12
located on a one-acre site. A 3,000-square-foot, two-bay sta-
tion would be constructed on a one-acre site, and be equipped
with one Power Wagon and one Pumper. The total cost is pro-
jected to be $595,000 for site acquisition, construction,
equipment and furnishings, as follows:
- Land acquisition (one acre) $ 40,000
- Two-bay firestation (3,000 sq. ft.
at $100/sq. ft. ) 300,000
' - Furnishings & Equipment 409000
- Pumper 150,000
- Power Wagon 655000
$595,000
. SCHOOLS--The planned financing for schools includes funds for
isite acquisition and construction for a Middle School , one
Elementary School , and the first phase of a second Elementary
School , as well as acquiring the land for a High School site.
These capital costs are projected to total $13.6 million.
�} These facilities would be for the two school districts which
serve the Oakely Area. The following summarizes the
anticipated financing for each district:
OAKLEY UNION SCHOOL DISTRICT--An additional Middle School
is considered the highest priority by the District. To
date the District has received approval for $2.5 million
in State funding for this facility based on current
enrollment. However the entire cost of the Middle School
is estimated to be $8.0 million and the balance of $5.5
million is included- for funding in the Oakley Area
Financing Plan. In addition, funding is included in the
amount of $4.0 million for acquisition and construction
costs for an Elementary School and another $2.5 million
13
for the first increment of a second Elementary School .
These costs total $12.0 million for the Oakley Union
School District, which is the amount expected to be
necessary for the next 10 years of development in the
Oakley Area.
- LIBERTY UNION. HIGH SCHOOL DISTRICT--An amount of
$1 ,600,000 is included for acquisition of a 40 acre High .
School site. Based upon information provided by County
staff, acquisition costs are assumed at $40,000 per
acre. Funding includes land acquisition only because the
District has not finalized plans for the type of facility
needed nor has the District determined how much, if any
State funds might be available. However, District
representatives have indicated that a site would likely
be located in the Southern portion of the Oakley Area
near Brentwood.
�j. ROADS--County Transportation Planning staff have identified the
roadway needs in. the Oakley Area over the next 10 years. In
�j general , there will be a need for approximately $2,237,000 to
finance deficiencies in the roadways by providing for the
safety and traffic circulation needs of approved development
in the area. Secondly, approximately $8,902,000 is included
for the projected additional road improvements needed to serve
projected additional development in the Oakley Area over the
next 7-10 years. The following details the roadway improve-
ments included in each of these two general categories:
- EXISTING ROAD DEFICIENCIES (1-6 Years) 1985 Costs
1 . State Highway 4--Widen to provide left
turn c anne lzation at Gehringer School
entrance and three nearby intersections. $ 130,000
.14
2. State Highway 4--Signals at Cypress Road 150,000
3. State Highway 4--Signals at O'Hara Avenue 130,000
4. State Highway 4--Realign and signalize
Empire/Oakley Road intersections 300,000
5. State Highway 4--Widen to 3 lanes from
Empire Avenue to O'Hara Avenue 3209000
6. Neroly Road--Realign two curves between
LaurelRoa and Terra Verde Lane 225,000
7. Cypress�Road_--Adjust vertical alignment
along g 1000 feet of roadway approximately
1/5 mile east of Empire Avenue 2009000
8. Lone Tree Way--Widen to 44 feet from State
Highway T to Antioch city limits . 7322000
9. State Highway 4--Construct a dual left
urn fromO'Hara Avenue to Rose Avenue . 501000
Sub-total : Existing deficiencies $2,2379000
- ADDITIONAL ROAD IMPROVEMENTS FOR ADDITIONAL 1985 Costs
GROWTR (7-10 YEARS)
1 . State Highway 4--Widen to 4 lanes from
�Te Route Tbu to Laurel Road 3 ,500,000
2. State Highway 4--Signals at Lone Tree Way 1002000
3. State Highway 4--Signals at SR 160 Inter-
change 270,000
4. Contra Costa Canal Crossings--Widen to
ultimate requiremen s e crossings at
Neroly Road, Empire Ave. , O'Hara Ave. ,
and Rose Avenue 395,000
5. O'Hara Avenue--Widen to 72 feet from SR 4
to 1/4 mi a south 300,000
6. Laurel Road--Widen to 44 feet from SR 4 to
Neroly Roa 1 ,600,000
\\ 15
l�
7. Empire Avenue--Widen to 44 feet from SR 4
to Laurel Road 540,000
Sub-Total : Additions for Growth $606659000
TOTAL ROAD COSTS 58,942,000
The next chapter of this report presents the recommended and alter-
native financing methods which can be utilized to provide the pre-
ceding facilities needed in the Oakley Area during the next 10 years.
16
CHAPTER III--OBJECTIVES.FOR FINANCING PLAN AND OTHER
FACTORS AFFECTING AVAILABLE ALTERNATIVES
j
,i
This chapter describes the objectives for the financing plan, and
other important factors that should be taken into consideration in
identifying appropriate financing methods to specifically meet the
funding needs for facilities in Oakley. In order to develop a
financing, plan that is practical and capable of being implemented,
the project team of Ralph Andersen & Associates and Jones Hall Hill
& White reviewed the nature and cost of improvements to be included
in the Oakley Area Infrastructure Financing Plan relative to the
criteria for financing methods outlined in Chapter I of this report,
\� and the particular objectives and other factors concerning the
financing which are described below. All potential financing meth-
ods were analyzed to determine those which could effectively accom-
plish these objectives and criteria.
As described further in the next chapter, there are relatively few
' financing methods presently available that can encompass all of the
types of facilities which have been included within the scope of this
study. This chapter, therefore, describes the objectives for the
■` Financing Plan and factors which affect the selection of appropriate
financing methods from among the various potential financing
approaches.
OBJECTIVES FOR FINANCING PLAN
As described in Chapter I of this report, the work plan for this
study included a description of criteria used to evaluate the effec-
tiveness and practicality of various potential financing methods.
In addition to those evaluative criteria, the following objectives
became apparent during the course of the study:
17
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i
. To the extent possible the financing method(s) should be
equitable. The method should attempt to allocate the costs of
financing among landowners/developers in proportion to their
requirements for, or benefits derived from, the facilities
financed. To the extent possible and practicable, any fees,
taxes or charges which are a part of the financing method
should be levied on an equitable basis.
. The impact on the cost of housing should be minimized, The
County has identified the Oakley Area as having a high poten-
tial and priority for affordable housing. Therefore, the
financing method should be selected and/or implemented in a
way that minimizes the burden on the cost of housing. This
would imply that longer term, tax-exempt debt financing would
be preferable in that it would spread the cost over a longer
period of time and not be passed on in the price of housing.
By contrast financing by fees or charges paid as part of
development costs would tend to be passed on by developers and
become a part of the cost of housing.
. The financing method should be practical and capable of being
implemented. The financing method should be capable of pro-
viding for all of the identified costs, and be capable of
implementation, both from a practical and legal standpoint.
It should be noted that if new, creative or untried methods
are utilized, this objective may become more difficult to
accomplish.
In developing the recommended and alternative financing methods, the
above objectives were taken into consideration as were the several
evaluation criteria listed in Chapter I.
'� 18
.1
FACTORS AFFECTING THE SELECTION OF FINANCING METHODS
In addition to the preceding objectives, there are other important
factors which affect and/or limit the number of financing methods
which can be utilized. The following summarizes these significant
practical factors:
_ THE TYPE OF FACILITIES TO BE FINANCED--The scope of facilities
to be financed by the Oakley Area Infrastructure Financing
Plan is broad and diverse. The California statutes provide
for a number of particular financing methods that are only for
specifically authorized types of public capital improvements.
There are relative few available financing methods that pro-
vide for a full range of facilities. Particularly problematic
is the financing of schools, because there is presently only
one debt-financing method available that can include schools
along with the other facilities within the scope of this
analysis.
THE MIX OF DEVELOPED AND UNDEVELOPED LAND IN THE OAKLEY AREA--
A mix of developed and undeveloped areas implies different
Ineeds and different approaches for equitably allocating the
cost of financing. If all of an area is either developed or
undeveloped, appropriate and relatively equitable distribu-
tions of cost can be implemented. However, if an area is a
mix of both developed and undeveloped (as in Oakley) , an
equitable approach for financing becomes more problematic.
Also, many financing methods are relatively easy to implement
in vacant, undeveloped land which require only landowners'
consent rather than a popular vote which is more typically
required in more populated areas.
�, . 19
OTHER PRACTICAL FACTORS AFFECTING THE SELECTION OF FINANCING
1 METHODS--The study's work plan outlined in Chapter I described
a number of other practical criteria which were used in evalu-
ating potential financing methods. These criteria are import-
ant additional factors which affect the selection of financing
methods, and are summarized for reference as follows:
- Costs of the financing method relative to other alterna-
tives
- Ease of implementation and administration
- Ability of the financing method to provide for the speci-
fic types of facilities, and provide the funding so that
they can be constructed/acquired when needed
- Capability of the financing method to provide for infla-
tion over the time that facilities will be acquired/con-
structed
- Consistency of the financing method with County policies
and objectives
- Compatibility with other alternative or existing financ-
ing methods which could be effectively utilized
- Ability to provide for all costs, such as administrative,
design, engineering, and other related costs in addition
to construction/acquisition costs.
The preceding factors, together with the objectives summarized
earlier in this chapter, were taken into consideration in evaluating
potential financing methods for inclusion in the recommended Oakley
Area Infrastructure Financing Plan described in the next chapter.
�I
20
PROJECTED DEVELOPMENT IN OAKLEY
Another important factor affecting the viability of various financ-
ing alternatives is the amount of development that will occur in
Oakley, particularly over the 10-year timeframe for the identified
facility needs. If development is to provide for the cost of
financing these facilities to serve development, it is important to
estimate the amount of development that will occur, so as to esti-
mate the level of tax, fee, etc. that would be necessary for the
selected financing methods.
For the purposes of this study, the Contra Costa County Community
Development Department selected Option A of the proposed Oakley Gen-
eral Plan as the basis for projecting the amount of development in
the Oakley Area. Exhibit B presents the Community Development
Department' s general estimate of the acreage in Oakley which is pre-
sently developed and the amount that would be developed for each
land use category under Option A of the Oakley General Plan. These
data should be considered as preliminary, pending adoption of the
final Oakley General Plan. Also, it should be noted that more
refined data on current and planned development must be prepared as
part of the implementation of the recommended Oakley Financing Plan.
Of the estimated total of 7,345 acres, approximately 973 acres
(13.2%) is presently developed, and another 6,371 acres (86.8%) will
1 be developed as the Oakley Area is built-out.
Approximately 1,572 acres (21 .4%) of the total would be agricultural
or public/semi-public uses, and it is assumed that these uses would
not necessitate or be responsible for financing the identified park,
fire protection, school or roadway facilities. Therefore, develop-
ment of the residential , commercial and industrial land uses is
assumed to require these facilities and would provide for the
necessary funding under the selected financing method. Exhibit C
projects the amount of residential , commercial , and industrial
�, 21
EXHIBIT B--OAKLEY AREA GENERAL PLAN
OPTION A
ESTIMATES OF
DEVELOPED vs. UNDEVELOPED ACRES
BY LAND USE CATEGORY
' DEVELOPED UNDEVELOPED ADJUSTED
ZONE ACRES ACRES TOTAL ACRES
SFR-VLD 121 1062 1183
SFR-LD 18 488 506
SFR-MD 144 1071 1216
SFR-HD 424 916 1340
MFR-MD 0 157 157
PH 0 177 177
PD 0 132 132
H-I 66 223 289
L-I 26 357 383
OFF 68 29 97
NC 0 48 48
COMM 71 1 174 245
P/SP 35 29 64
AG RES 0 1186 1186
AG REC 0 229 229
AG CORE 0 93 93
973 6371 7345
SOURCE: Contra Costa County Community Development Department
�, 22
EXHIBIT C--OAKLEY AREA GENERAL PLAN--OPTION A
PROJECTED RESIDENTIAL, COMMERCIAL AND
INDUSTRIAL DEVELOPMENT
1
Total New
Total Acres % of Total Total Acres Less: Current Development
Zone At Buildout In 10 Yrs. In 10 Yrs. Development In 10 Yrs.
Residential :
SFR-VLD 1 ,183 710 121 589
SRF-LD 506 304 18 286
SFR-MD 19216 730 144 586
SFR-HD 1 ,340 804 424 380
MFR-MD 157 94 0 94
PH 177 106 0 106
PD 132 79 0 79
Sub-total 4,711 60% 20827 707 2,120
Commercial :
CFF 97 73 68 5
NC 48 36 0 36
COMM 245 184 71 113
Sub-total 390 75% 293 139 154
Industrial :
LI 383 153 26 127
HI 289 115 66 49
Sub-total 672 40% 268 92 176
NOTE: Totals may be slightly different than the sum of parts due to i ndepen-
dent rounding.
SOURCE: Contra Costa County Community Development Department; Ralph Andersen
& Associates.
23
i
development at build-out and in 10 years, based upon the Community
Development Department's estimates for Option A of the Oakley Gen-
eral Plan.
The data in Exhibits B and C provide the basis for analyzing the
impact of various financing alternatives in terms of projected fees,
taxes, etc. that would be paid by various land uses relative to the
selected financing alternatives presented in Chapter IV of this
report.
POTENTIAL FINANCING METHODS EVALUATED FOR THE FINANCING PLAN
1 In developing the recommended and alternative financing methods for
the Oakley Area Infrastructure Financing Plan , the project consult-
ants developed a comprehensive list of financing methods that could
be potentially applicable to the types of facilities described in
' the preceding chapter. This list of potential financing methods was
then evaluated relative to the preceding objectives and factors.
The following lists the financing methods that were initially con-
sidered:
1 . Mello-Roos Community Facilities Act of 1482
. Mitigation fees/charges
. In-Lieu dedication fees
. School impact fees, e.g. , SB2O1 fees
24
. Leroy F. Greene State School Building Lease-Purchase Law of
1976
. Emergency Classroom Act of 1979
1 . Non-Profit Corporation Revenue Bonds
' . Non-Profit Corporation Lease Revenue Bonds
. Redevelopment Agency Lease Revenue Bonds
. Joint Powers Authorities Lease Revenue Bonds
. Tax Allocation Financing
. Federal and State Grants
. Tax Benefit Sale/Lease-Back Transactions
1� . Municipal Improvement Act of 1913/Improvement Bond Act of 1915
. Improvement Act of 1911
' . County Service Area Law
. Community Services District Law
. Bridges and Major Thoroughfares Fund Fees (Section 66484 of
the Government Code)
'. . Quimby Act Fees In Lieu of Dedication of Land for Park
Purposes (Section 66477 of the Government Code) .
25
Some of the above financing methods are presently being utilized to
accumulate funds toward some of the financing needs identified in
Chapter I. This includes School Impact Fees, Bridges and Major
Thoroughfares Fund Area of Benefit fee assessments, and fees in lieu
of park land dedication. These are discussed further in the follow-
ing chapter.
1
26
CHAPTER IV--RECOMMENDED FINANCING
PLAN AND SELECTED ALTERNATIVES
This chapter presents a discussion of a recommended Oakley Infra-
structure Financing Plan as well as alternative financing methods
that could be utilized for the park, fire protection, school , and
roadway funding needs identified in Chapter II . The various poten-
tial financing methods for these funding needs were analyzed rela-
tive to the objectives for the Oakley Infrastructure Financing Plan
1 and relative to the other practical factors discussed in Chapter
III . As a result of this analysis three basic policy approaches
were identified and discussed with the Oakley Infrastructure Finance
Program Advisory Committee. After considering the basic policy
approaches and specific implementation alternatives, the Committee
selected a recommended Oakley Area Financing Plan for presentation
to the Board of Supervisors. Accordingly, this chapter presents the
recommended financing plan, as well as two alternative financing
methods. Prior to presenting the specific recommendations and
alternatives, the following summarizes the basic policy approaches
that were considered by the Committee prior to selecting the recom-
mended Financing Plan
ALTERNATIVE POLICY APPROACHES FOR FACILITIES FINANCING
In considering financing methods for the Oakley facilities (or any
other capital costs) , there are essentially three basic policy
alternatives available, which are:
. Pay-As-You Use Financing (debt financing)
' . Pay-As-You-Go Financing (taxes, fees, charges, etc. )
. Combination of the above.
' 27
t
t�
t
Financing capital projects may be accomplished by a variety of meth-
ods ranging from pay-as-you-go to total financing by bonds or other
debt instruments which can be referred to as pay-as-you-use. Most
agencies use a combination of these methods for accomplishing the
purchase or construction of capital improvements. Whether an agency
uses either approach or a combination of both is largely a policy
decision based on selecting the approach . considered to be most
appropriate, considering the practical advantages and disadvantages
of each. Later in this chapter is a review of the specificly recom-
mended financing method and alternatives that would implement each
of these basic policy approaches. First, the following provides a
general description of the three basic policy alternatives:
PAY-AS-YOU-USE FINANCING--Through the use of debt financing,
capital costs can be financed immediately and then payed for
over a long period of time as they are used. The debt is
typically repaid by a continuing revenue source, e.g. taxes or
assessments, that is pledged as security for the bonds or
other debt instruments. This financing approach enables the
consumer to pay-as-you-use, and tax rates or assessments can
be set at varying levels that- reflect the benefit derived from
the facilities. Principal advantages/disadvantages for pay-
as-you-use financing are:
- Advantages:
. . Sufficient funding can be assured when facilities
need to be constructed
.. Costs can be financed at relatively low tax-exempt
interest rates
. . Costs are spread over a long period of time as the
' facilities are used
In inflationary periods, facilities are built at
today' s costs and funds are repaid with dollars of
lesser value than those which are borrowed
' 28
. . Costs can be paid through tax rates, assessments or
service charges which can reflect the benefit
derived from the facilities
. . Taxes used to repay debt are potentially deductable
from personal income taxes.
- Disadvantages:
.. If debt is repaid by service charges/rates, suffi-
cient revenues must be available for debt service
at the time debt is issued (if taxes or assessments
are used this can be assured, even in advance of
development)
. . Debt issuance costs can be relatively high for
small projects.
. PAY-AS-YOU-GO FINANCING--As the name implies, pay-as-you-go
financing is a policy whereby the total funds needed for capi-
tal projects are accumulated over a period of time and, when
accumulated, these resources are applied to specific capital
facility needs. This method is most feasible and appropriate
for smaller, less expensive facilities that won't be needed
until all of the required funds can be accumulated. For major
capital facilities that may be needed in advance of all of the
funds becoming available, pay-as-you-go financing becomes more
difficult if not impossible. This is particularly true when
the funding source can fluctuate (as with development fees)
i� and sufficient accumulated revenues cannot be assured when
needed. Various forms of development fees are the most common
method of pay-as-you-go financing, since they can be collected
as development occurs, which is preferable to accumulating
' revenue from taxes, assessments , or service charges which
would not be available until after development occurs. Prin-
cipal advantages/disadvantages for pay-as-you-go financing .are:
r29
- Advantages:
. . No financing costs for agency, (however there
would be a financing cost to the consumer to the
extent that fees become a cost of property and are
financed at relatively high mortgage interest
rates)
. . Relatively easy to administer
' . . Construction/acquisition of facilities occurs only
when funds are in-hand (if available when needed)
- Disadvantages:
Sufficient funds may not be available at the time
they are needed
. . Fees must be adjusted regularly in recognition of
inflation in capital costs , different rates and
intensities of development, and changes in plans
. . Can be inequitable to the extent that costs vary
by area, or costs are not attributable only to new
development
' .. Pay-as-you-go development fees cannot be pledged
as security for debt financing should it become
necessary (due to the uncertainty of each year's
jrevenue being sufficient for debt service) .
. COMBINATION FINANCING APPROACH--A combination of the two pre-
ceding financing methods can be utilized with the resulting
advantages and disadvantages of each. In forecasting capital
facility needs, a decision can be made to provide for a speci-
fic portion of those facilities with accumulated funds (pay-
as.-you-go) , while other facilities are funded through debt
financing (pay-as-you-use) . A typical combination financing
policy could establish general guidelines for funding by each
method, e.g.. that all capital facilities that can be built
incrementally as development occurs should be financed by
accumulated development fees; while major facilities which
30
serve the entire area, and are needed as a whole or in major
' phases, should be funded by debt repaid over time by taxes or
assessments. Principal advantages and disadvantages of a com-
bination approach to financing are:
- Advantages:
. . Lower connection fees than a total pay-as-you-go
approach
.. Lower taxes or assessments than a total pay-as-
you-use debt financing
.. A close relationship can be established between
benefit and cost
. . Flexibility in responding to changing economic con-
ditions affecting development and need for capital
facilities
- Disadvantages:
.. Potentially higher total cost to consumers compared
to total debt financing (but less than total fee
financing)
. . Doesn ' t maximize advantages of either alternative
approach (but minimizes disadvantages of either)
After considering the advantages and disadvantages of the preceding
basic policy approaches, and the specific methods available to
implement each, the Oakley Infrastructure Finance Program Advisory
Committee selected the following recommended and alternative financ-
ing methods for presentation to the Board of Supervisors.
31
RECOMMENDED OAKLEY INFRASTRUCTURE FINANCING PLAN
The Oakley Infrastructure Finance Program Advisory Committee has
recommended that a pay-as-you-use debt financing approach be used
for all facilities of the Oakley Infrastructure Financing Plan. A
primary concern of the committee was the impact on the cost of hous-
ing. The cost to the ultimate consumer can be less for debt
financing than development fees (pay-as-you-go financing) , to the
extent that development fees become a part of the cost of property
and are typically financed at relatively high mortgage interest
rates. Public debt financing paid through taxes or assessments are
at relatively low, tax-exempt interest rates of public bonds. To
illustrate this difference, the following compares the total cost
per dwelling unit, when a $2,000 facility cost per unit is financed
at average mortgage rates vs. average public debt rates:
. Total cost, development fees (financed by a typical 30 year
mortgage at current average interest of 11 .16%) : $6,044
. Total cost, public debt financing (assuming a typical 25 year
public debt averaging 9.25%) : $5,194.
The above data demonstrate that the consumer' s cost could be as much
1 as 34% more if public facilities are financed by development fees
and become a part of mortgage costs.
Of all the potential financing methods under consideration, only the
Mello-Roos Community Facilities Act of 1982 (hereafter referred to
ias Mello-Roos) can provide debt-financing for all of the needs as
one package. If schools were not included, or can be financed using
1 other methods, then the remaining park, road, and fire protection
facilities could be financed by methods other than Mello-Roos (see
discussion of other debt-financing alternatives later) . It should
be noted that a school district is authorized to act alone in using
32
i
Mello-Roos financing for school facilities, and school financing
need not be done in concert with other facilities ' financing.
The Mello-Roos financing method offers the advantages of pay-as-you-
use financing and meets most of the objectives and evaluation fac-
tors referenced earlier in the preceding chapter; particularly the
potential for reducing the impact on the purchase price of housing.
As stated in Section 53311 .5 of the Government Code, this Act
" . . .provides an alternative method of financing certain capital
facilities and services, especially in developing areas and areas
' undergoing rehabilitation.. .a local government may use the provi-
sions of this chapter instead of any other method of financing part
or all of the cost of providing the authorized kinds of facilities
and services. " The Mello-Roos Act is contained in Chapter 2.5 of
the Government Code, commencing with Section 53311 et. seq. (all
Mello-Roos Sections referenced hereafter are to the Government Code,
unless otherwise indicated) .
' In general , the Mello-Roos Act authorizes local governments to levy
I special taxes (or charges instead of a tax) within a community
facilities district, which is the creation of a new public entity
under law. The funds raised from a special tax or charge within the
district can be used to pay for virtually any capital construction
(including schools) as well as services (including operations,
maintenance, and repair activities) .
The Mello-Roos funds can be used to repay tax-exempt bonds issued to
construct the public facilities, thereby utilizing a pay-as-you-use
' approach. Zones or Improvement Areas may be established within the
district for the purpose of providing certain facilities or services
i33
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1
within that zone. A two-thirds approval of voters within the dis-
trict/zone is required for a special tax, unless there are less than
12 registered voters (if so, approval is required by owners of two-
thirds of the acreage) . A charge may be assessed instead of, or in
addition to, a tax and does not require voter approval , but does
require a public hearing and protest procedures (as required for a
County Service Area's charges for miscellaneous services) .
Once a community facilities district is formed pursuant to Mello-
Roos, it becomes a "legally constituted governmental entity" (Sec.
53312) with the continuing power to levy a special tax and/or
charges once such taxes/charges become duly authorized. The special
tax may be levied so long as needed to pay for services authorized
by the law.
Formation proceedings generally include (1 ) a resolution of inten-
tion or petition, (2 ) a notice of hearing by publication and mail-
ing, (3) a public hearing, and (4) a two-thirds approving vote for
the special tax. If a charge is used instead of a special tax,
additional legal research and possible court validation may be
1 necessary in order to determine the legality of using such a charge
for debt service. The Appendix of this report provides a more
complete summary of the Mello-Roos Community Facilities of 1982.
The procedures for district formation and a . special tax election
pursuant to Mello-Roos are summarized here as follows:
1 . INITIATION OF PROCEEDINGS--Proceedings may be initiated by
the Board of Supervisors on its own initiative, or must be so
initiated when (a) a written request made by two Supervisors
is filed with the Board, (b) a registered voter petition is
filed with the County Clerk, or (c) a landowner's petition is
filed with the County Clerk. A petition under (b) or (c)
must be accompanied by a fee to cover costs and is therefore
34
recommended in those circumstances. It should be noted that
' approval by the Local Agency Formation Commission is not
required (Sec. 53318.3) .
Any petition must contain a legal description of boundaries,
' which may include non-contiguous areas (Sec. 53325(a)) , and
must be signed by either 10% of the registered voters resid-
ing in the area described or the owners of 10% of the land
area (Secs. 53318, 53319).
2. RESOLUTION OF INTENTION--Within 40 days after the petition is
' filed, the Board must adopt a resolution of intention to form
the district stating, among other things, (a) the boundaries
and proposed formation (b) the name of the district, (c) the
types of services, (d) that a special tax is proposed, speci-
fying the rate and method of apportionment, and (e) a time
and place of hearing, which must be no less than 30 nor more
than 60 days after adoption of the resolution (Sec. 53321 ) .
' 3. REPORTS--The Board of Supervisors must also direct its
responsible officers to study the proposed district and to
file reports at or before the hearing describing the proposed
services, the estimate of their cost and how the tax would be
1 levied (this report provides the basis for developing much of
this information) .
4. NOTICE OF HEARING--Notice must be given by publication in a
' newspaper published in the area once at least seven days
prior to the hearing (Secs. 53322 , 6061 ) and by mail at least
15 days prior to the hearing (Sec. 53322.4) .
i35
i
1
1
5. PROTESTS AND HEARING--If 50% of the registered voters or six
registered voters, whichever is more, or the owners of more
than one-half of the land area, file written protests against
' the district, it must be abandoned (Sec. 53324) .
The hearing may be continued no more than 30 days. At its
conclusion , the Board of Supervisors may proceed (absent a
' majority protest) or abandon the proceedings. (Sec. 53325 )
6. FORMATION AND ELECTION--If the Board of Supervisors deter-
mines to proceed, the Board may adopt a resolution of forma-
tion establishing the district (Sec. 53325.1 ) and submit the
question of a special tax to the qualified electors at the
next general election or at a special election at least 90
' but no more than 180 days following the protest hearing. If
12 or more registered voters reside in the district at the
time of the hearing and for at least the preceding 90 days,
the vote must be by registered voters with each voter to have
one vote; otherwise, the vote is by landowner with one vote
per acre or portion thereof (Sec. 53326) . If approved by the
voters, the applicable election costs can be reimbursed from
Mello-Roos tax revenues.
7. APPROPRIATIONS LIMIT--The Board of Supervisors may also sub-
mit a proposition to establish an appropriations limit under
Article XIIIB of the Constitution (Sec. 53325.7).
8. TAX LEVY--If two-thirds of the voters voting at the election
favor the tax, it may be levied annually thereafter ( Sec.
53330.5) .
36
9. ANNEXATION PROCEEDINGS--Annexation requires a procedure very
similar to the formation of a Community Facilities District.
Territory, whether contiguous or not, may be added to a
district (under Article 3.5 , commencing with Sec. 53339) .
The proceedings require (a) a resolution of intention adopted
by the Board of Supervisors on its own motion or in response
to a voter's or landowner's request (Sec. 53339.2) , (b)
' notice of hearing by publication and mailing (Sec. 53339.4) ,
(c) protest and hearing (Secs. 53339.5 and 53339.6) and (d) a
' two-thirds vote approval of the qualified electors within the
area to be annexed. It should be noted that if 50 percent or
' more of the registered voters, or six registered voters,
whichever is more, residing within the existing community
' facilities district, or if 50 percent or more of the regis-
tered voters or six registered voters, whichever is more,
residing with the territory proposed for annexation, or if
the owners of one-half or more of the area of land in the
territory included in the existing district, or if the owners
of one-half or more of the area of land in the territory pro-
posed to be annexed, file written protests against the pro-
posed addition of territory to the existing community facili-
ties district, the Board of Supervisors must abandon the pro-
posed annexation of that territory to the community facili-
ties district (Sec. 53339.6) .
There is relatively little experience to look to as guidance for a
typical Mello-Roos financing. As of September 1985, only eight
' Mello-Roos bond issues had been sold (for a total of nearly $50 mil -
lion) , and at least another three were proposed. The majority of
' Mello-Roos financings that have been completed and/or attempted have
been where the District has less than 12 registered voters, and the
vote was therefore by landowners. This does not appear possible in
' 37
Oakley, since a District, even if limited to undeveloped area would
likely have more than 12 registered voters and thereby require a
two-thirds approval by popular vote.
The time required for implementing a Mello-Roos financing can be
relatively lengthy. Under the best of circumstances, where all
concerned with the district are in favor of the project, it could be
' done in as little as three and one-half months. However, under more
typical conditions, as might be expected in the Oakley Area, the
' formation procedures as summarized earlier are conservatively esti-
mated to require approximately 210 days (about seven months) , as
indicated by the following:
Action Estimated Time
' Preparation of legal description and 30 days
petition
Resolution of Intention 20 days
Reports and Notice 40 days
Hearing 14 days
Election 100 days
Canvass of Returns 6 days
' TOTAL 210 days
Exhibit D on the following page provides a graphic depiction of a
typical timeframe (in weeks) for implementing a Mello-Roos Financ-
ing. Despite the disadvantage of a relatively complex and extended
procedure, Mello-Roos is the only alternative that can clearly pro-
vide one debt-financing package for pay-as-you-use funding of all
the types of facilities intended for the Oakley Area Infrastructure
Financing Plan.
38
4z
9z
Ge
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az
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W ¢ 9
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2 � �va 4 Ory
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39
1
' An important consideration is the cost and required annual tax
necessary for the recommended debt financing of all these facilities
' through a Mello-Roos District. Exhibit E shows the estimated annual
debt service costs that would be required for repayment of bonds.
If all facilities were financed by Mello-Roos bonds as recommended,
' the estimated annual debt service cost for 25-year bonds is pro-
jected to be approximately $3.9 million per year. If only schools
and fire protection facilities were funded by debt financing (see
Alternative 2, discussed later) the annual debt service costs would
' be approximately $2.2 million per year.
' In order to estimate the amount of Mello-Roos Tax that would be
required for financing the debt service costs in Exhibit E, it is
' necessary to make assumptions as to how costs would be spread to
areas and land uses within an Oakley Community Facilities District.
Based upon input provided by the Oakley Infrastructure Finance Pro-
gram Advisory Committee, it is assumed that a Community Facilities
District would be established for the entire Oakley Area, and that
benefit zones would be established within the District with differ-
enttax rates for each zone corresponding to the. particular facili-
ties that would benefit those zones. Similarly, different tax rates
are assumed within each zone for existing development and new devel-
opment based on the facilities attributed to each. The Advisory
Committee asked that tax rate estimates be developed using the
following assumptions:
1
1 . COMMUNITY PARK--The Community Park, which is 7.8 percent of
total costs, should be attributed to the entire District,
including both existing and new development. In this way,
' existing deficiencies in parks can be financed as a first
priority by existing development as well as new development
that would also utilize the Community Park.
40
EXHIBIT E--OAKLEY AREA INFRASTRUCTURE FINANCING PLAN
' ESTIMATE OF BOND FINANCING COSTS
' RECOMMENDED ALTERNATIVE 2,
BOND FINANCING COMBINATION
FOR ALL FACILITIES BONDS AND FEES*
' I . TOTAL ESTIMATED COSTS
Parks $ 2 ,522,500 $ -0-
Fire Protection 764,500 7643500
Schools 13,6002000 1336003000
Roads 82902,000 -0-
Total Cost - 1985 Dollars $25,789,000 $14,364,500
Estimated Inflation (5 years at 5%) 7,1259000 3,9689500
' TOTAL CONSTRUCTION COSTS TO BE FINANCED $32,914,000 $18,333,000
' II. BOND SALE COSTS AND RESERVE FUND $ 6,583,000 $ 3,667,000
' (e.g. , legal fees, bond printing,
registration, bond reserve fund,
and related administration and
issuance fees are estimated
to total 20%)
III . TOTAL ESTIMATED AMOUNT OF BOND ISSUE $399497,000 $22,000,000
' IV . ESTIMATED ANNUAL DEBT SERVICE $ 3 .859,000 $ 2 ,150 .000
(assumes 25 years at 8.5%)
*NOTE: Alternative 2 to the recommended Financing Plan, would involve a com-
bination of (1 ) bond financing for fire protection and school facili-
ties, and (2) development fees to finance parks and roads.
SOURCE: Ralph Andersen & Associates
' 41
1
2. MIDDLE SCHOOL--The amount required for the middle school , which is
21 .3 percent of total costs, should be attributed to all areas of
the District within a zone that is equivalent to the boundaries. of
the Oakley Union School District, including both existing and new
' development. In this way, the existing deficiency in school
facilities can also be financed as a first priority by existing
development as well as new development that would also benefit
from the school .
' 3. OTHER SCHOOL CONSTRUCTION--The remaining Oakley Union School Dis-
trict costs which are 25.2 percent of the total , should be
' financed by only new development within a zone equivalent to the
school districts' boundaries that are within the Community Facili-
ties District. In this way, new development can finance the
schools needed to serve development.
4. ALL OTHER FACILITIES--All other facilities (fire protection, high
school site, local parks, and roads), which are 45.7 percent of
' total costs, should be attributed to only new development through-
out the entire Community Facilities District. In this way, new
development can also finance these additional facilities needed
for new development.
As a result of the above assumptions, two tax zones would be established
within the Oakley Community Facilities District. Zone 1 would correspond
to all portions of the Oakley Study Area that are within the Oakley Union
' School District boundaries. Zone 2 would correspond to all portions of
the Oakley Study area that are outside the Oakley Union School District.
It should be noted that while the cost of facilities are attributed to
' the respective zones of a recommended Community Facilities District, the
42
1
' Mello-Roos law does not require that the facilities to serve the area
must be constructed within the District (for example, high school facili-
ties serving Oakley need not be located within the Oakley Area). Consis-
tent with the preceding assumptions, costs are therefore allocated to
each zone in proportion to the amount of existing and new development
within each zone.
' Exhibit F shows estimated amounts of new and existing development within
each zone, based upon Option A of the Oakley Area General Plan. Only
residential , commercial and industrial land uses are shown since it is
assumed that the public/semi-public, and agriculture land uses would be
' exempted from financing the Oakley infrastructure costs. It should be
emphasized that the data in Exhibit F are preliminary rough estimates and
' will need to be refined as an early part of the, implementation process
using actual data, and the adopted Oakley Area General Plan.
' Exhibit G then utilizes the land use data in Exhibit F to allocate
debt-service costs to new and existing development, consistent with the
' preceding assumptions of the Oakley Infrastructure Finance Program
Advisory Committee. The cost allocations in Exhibit G result in
' approximately $2,887,103 (74.8% of the total annual debt service costs)
being allocated to Zone 1 . This is because all elementary and middle
school costs (nearly $1 .8 million) are for the Oakley Union School
District, whose boundaries correspond to Zone 1 .
In order to estimate the tax necessary for new and existing development
in each zone, the cost allocations of Exhibit G are distributed to the
land uses in each zone by Exhibit H and I. The estimated tax takes into
consideration the projected amounts of development that will occur in 10
' years and at build-out (see Exhibit C in Chapter III) , in order to esti-
mate maximum tax rates in 10 years, and average tax rates at full build-
out. The tax rate estimates calculated in Exhibits H and I are sum-
marized for new and existing development in each zone as follows:
' 43
1
1
Estimated Tax At Full Development:
' Zone 1 Estimated Annual Tax Zone 2 Estimated Annual Tax
Existing NewExisting New
Land Use Development Development Development Development
Residential $ 60/unit $ 195/unit $31/unit $165/unit
' Commercial 306/acre 1 ,055/acre 52/acre 417/acre
Industrial 306/acre 1 ,055/acre 52/acre 417/acre
Estimated Maximum Tax In 10 Years:
Existing New Existing New
Land Use Development Development Development Development
Residential $ 60/unit $ 395/unit $31/unit $ 286/unit
tCommercial 306/acre 1 ,702/acre 52/acre 694/acre
Industrial 306/acre 3,330/acre 52/acre 1 ,380/acre
The estimated taxes for Zone 1 are considerably higher than those
' for Zone 2 because Oakley Union School District costs (approximately
50% of the total ) are attributed only to Zone 1 , where boundaries
' would be coterminous with the boundaries of the Oakley Union School
District. Also, Zone 1 has considerably less industrial development
to bear a proportionate amount of costs.
Again, it should be emphasized that the estimated taxes in Exhibit H
' and I are based on preliminary estimates of the land uses in each
zone, and the cost allocation methodologies in Exhibits G through I
' recommended by of the Oakley Infrastructure Finance Program Advisory
Committee. Both the land use data and tax allocation calculations
should be further refined as an early step in the implementation
process, particularly as the required reports are prepared prior to
' the public hearing (see Exhibit D earlier in this chapter) . Also,
it should be noted that Mello-Roos Act provides considerable flexi-
bility in how a tax is allocated and levied and final implementation
could use alternative allocation methods.
' 44
' EXHIBIT F--ESTIMATED NEW AND EXISTING LAND USES
' FOR ZONES OF OAKLEY AREA GENERAL PLAN, OPTION A
1
' Total Oakley Acres(1 ) Zone 1 Acres(2 ) Zone 2 Acres(3 )
Residential Developed Undeveloped Developed U-nd-ey-e-T-o-p-e7eve ope n eve ope
Residential :
SFR-VLD 121 1 ,062 49 0 72 1 ,062
' SFR-LD 18 488 15 388 3 100
SFR-MD 144 1 ,071 124 584 20 487
SFR-HD 424 916 424 916 0 0
MFR-MD 0 157 0 91 0 66
PH 0 177 0 177 0 0
PD 0 132 0 132 0 0
Sub-Total 707 4,003 612 20288 95 1 ,715
1
Commercial :
OFF 68 29 27 16 41 13
NC 0 48 0 26 0 22
' Comm 71 174 48 102 23 72
Sub-Total 139 251 75 144 64 107
1 Industrial :
' L-I 26 357 0 0 26 357
H-I 66 223 14 101 52 122
Sub-Total 92 580 14 101 78 479
TOTALS 938 41834 701 2.533 237 2 .301
Notes: (1 ) Totals from Exhibit B, Oakley Area General Plan Option A estimates.
(2) Estimated Acres within Oakley Union School District boundaries.
' (3) Estimated Acres outside the Oakley Union School District boundaries.
SOURCE: Contra Costa County Community Development Department; Ralph Andersen &
Associates
45
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47
EXHIBIT H (Continued)
NOTES:
(1 ) This column represents the estimated totals of existing
development currently, and new development at full build-out.
(2) This column includes the projected number of dwelling units
for each residential land use, and the number of acres of
each commercial and industrial land . use.. Residential units
are calculated on the basis of the mid-point of the range of
units per acre permitted for each category.
(3) This column represents the estimated amount of development in
10 years, using assumptions provided by the Contra Costa
County Community Development Department as follows:
Residential : 60% of total build-out
. Commercial : 75% of total build-out
M . . Industrial : 40% of total build-out.
(4) This column applies the same density factors in column 2 , to
the projected developed acreage in 10 years (column 3) , to
estimate the number of residential units and commercial/in-
dustrial acres for each land use in 10 years.
(5) Annual debt service cost allocations for new and existing
development in Zone 1 ( from Exhibit G) are distributed to
each land use as the proportion (percent) that each category
is of the total acres developed at build-out.
(6 ) The estimated tax at build-out is calculated for each land
use by dividing the cost in column 5 by the units/acres in
column 2 .
(7) The estimated maximum tax in 10 years is calculated for each
land use by dividing the cost in column 5 by the units/acres
in column 4.
48
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�� 49
EXHIBIT I (Continued)
I�
NOTES:
(1 ) This column represents the estimated totals of existing
development currently, and new development at full build-out.
(2 ) This column includes the projected number of dwelling units
for each residential land use, and the number of acres of
each commercial and industrial land use. Residential units
are calculated on the basis of the mid-point of the range of
units per acre permitted for each category.
(3) This column represents the estimated amount of development in
10 years, using assumptions provided by the Contra Costa
County Community Development Department as follows:
. Residential : 60% of total build-out
. Commercial : 75% of total build-out
. Industrial : 40% of total build-out.
(4) This column applies the same density factors in column 2 , to
the projected developed acreage in 10 years (column 3) , to
estimate the number of residential units and commercial/in-
dustrial acres for each land use in 10 years.
(5) Annual debt service cost allocations for new and existing
development in Zone 2 (from Exhibit G) are distributed to
each land use as the proportion (percent) that each category
is of the total acres developed at build-out.
�j (6) The estimated tax at build-out is calculated for each land
use by dividing the cost in column 5 by the units/acres in
column 2 .
(7) The estimated maximum tax in 10 years is calculated for each
land use by dividing the cost in column 5 by the units/acres
in column 4.
50
While the estimated tax needed for Mello-Roos financing of all
facilities is a significant amount, much higher taxes have been
approved for Mello-Roos financing, as in the Town of Tiburon where
�{ the maximum annual tax was estimated at $4,433.78 per residential
unit ( this was a district approved by landowner vote rather than
popular vote) . As noted earlier, only the Mello-Roos Community
Facilities Act of 1982 provides the broad range of debt-financing
authority that could include, on a comprehensive basis, all of the
facility financing intended for the Oakley Area Infrastructure
Financing Plan. If schools were not included in the financing there
would be several other debt-financing methods that could be poten-
tially applicable to the parks, roads and fire protection facil-
ities. Unfortunately, there are relatively few viable financing
methods for schools, and Mello-Roos is currently the only practical
alternative for debt-financing.
The following describes potential alternative debt-financing methods
for the facility needs other than schools which could be used for
the recommended Oakley Infrastructure Financing Plan if schools were
not included. It should be noted that roads could readily be
financed by any of the following, but inclusion of parks, and in
particular, fire protection facilities may require court validation.
COMMUNITY SERVICE DISTRICTS--The California Government Code
(Sections 61000 et. seq. ) permits the formation of a community
service district which may exercise a broad range of municipal
powers. Section 61600 of the Government Code enumerates the
powers of a Community Services District, and includes facilities
and services for the following purposes:
. To supply the inhabitants of the district with water
. The collection, treatment and disposal of sewage waste
and storm water
51
r�
. The collection or disposal of garbage or refuse matter
. Protection against fire
. Public recreation by certain specified means
. Street lighting
. Mosquito abatement
. The equipment and maintenance of a police department or
other police protection
. Libraries
. Streets, subject to the consent of the governing body of
the county or city
' Bridges, culverts, curbs, gutters and other facilities
incidental to streets
�1 . Underground conversion
. Ambulance service
�( . Public airports
. Transportation.
�i
A community services district may prescribe, revise, and collect
rates or other charges for the services and facilities furnished
by it, and may provide for the payment of any revenue bonds
issued pursuant to a district's authority to incur debt (Sec-
tions 61613 and 61621 ) . Financing mechanisms include virtually
all of those available to the County. In addition, there is
wide authority to form improvement districts and issue bonds, if
a two-thirds approval is received from voters within the improve-
ment district.
SPECIAL ASSESSMENTS--A variety of public improvements or
facilities may be financed by special assessment proceedings
conducted by the Board of Supervisors under various general laws
of the State of California. These laws are classified as either
special assessment laws or special assessment bond laws. The
most commonly used special assessment laws are the Municipal
52
r�
Improvement Act of 1913 and the Improvement Act of 1911 . Appli-
cable special assessment bond laws are the Improvement Bond Act
of 1915 and the Improvement Act of 1911 (which is both a special
assessment law and a special assessment bond law) . In general ,
the special assessment bond laws provide the mechanism for sell-
ing bonds, and the special assessment laws provide the mechan-
ism for collecting fees or charges to pay the debt service on
the bonds. The types of improvements or facilities which may be
financed by special assessment districts are various and are
defined by the particular special assessment laws as follows:
. The Municipal Improvement Act of 1913 authorizes the
following improvements:
- Water service, including mains, pipes, conduits,
i tunnels, hydrants, other works and appliances
- Electric power service, including lines, conduits,
other necessary works and appliances
- Gas service, including all necessary works and
appliances
- Lighting service, including poles, posts, wires,
conduits, lamps, etc.
�1 - Transportation facilities designed to serve an area
of not to exceed three square miles
- Any other works, utility or appliance necessary or
convenient for providing any other public service.
. Improvement Act of 1911 authorizes the following
improvements:
- Grading
- Sidewalks and structures ( including a wide variety,
such as ". . . all structures, buildings and facili-
ties necessary to make parks and recreation areas
useful . . ." ) .
53
- Sanitary sewers and facilities
- Drains, including all related facilities
- Lighting, including related facilities
- Fire protection pipes, hydrants and appliances for
fire protection
- Flood protection
- Water supply
- Gas supply
- Bomb or fallout shelters
jr - Retaining walls and embankments
- Ornamental vegetation
- Navigation facilities
1 - Stabilization of land
- Transportation facilities to serve an area not to
exceed three square miles
Other necessary improvements deemed necessary to
improve the whole or any portion of County streets,
places, public ways, property, easements, or rights-
of-way'
- Auxillary work needed to carry out any of the above.
From the above it can be seen that the special assessment
district laws provide the County with the authority to finance
essentially any public improvement which accomplishes a public
purpose and which imparts a local benefit on nearby property and
the cost of which may be assessed on an area-of-benefit basis.
General provisions or considerations relative to special assess-
ment district financing include the following:
i� . Interest rates are limited.
. There is no public sale requirement.
54
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. They are applicable only to certain geographic areas
where an area of benefit can be demonstrated.
. Implementation is by adoption of an ordinance by the
Board of Supervisors after a public hearing,. subject to
/ property owner protest provisions at the hearing, and
referenda provisions relative to ordinances.
With the above general provisions in mind, the following summar-
izes the authority by which the County can implement special
assessments:
. The Municipal Improvement Act of 1913 is authorized b
� Y
the Streets and Highways Code, Division 12, commencing
with Section 10,000. This Act is an assessment law which
provides for the assessment of liens on an
area-of-benefit basis to finance specified improvements
(described earlier). This Act does not include authority
for issuance of bonds and therefore must be used in
concert with one of the special assessment bond laws
( Improvement Act of 1911 or the Improvement Act of
1915). Implementation is by the Board of Supervisors
providing notice to property owners and conducting a
hearing to affix a special assessment lien. The amount
of special assessment lien is based upon the estimated
cost of work proposed to be done.
The Improvement Act of 1911 is authorized by the Streets
and Highways Code, Division 5, commencing with Section
5000. This Act is similar to the Municipal Improvement
Act of 1913 in that the County has the authority to
establish a special assessment district and affix a
special assessment lien on each parcel of real property
55
within the district. This Act also includes authority to
issue bonds with the special assessment liens as secur-
ity. This Act also differs from the Municipal Improve-
ment Act of 1913 in that special assessment liens are
affixed after the work has been performed and are based
on the actual cost.
. The Improvement Act of 1915 is authorized by the Streets
and Highways Code, Division 10, commencing with Section
8500. This act is only a bond act, and has no authority
to set or collect special assessment liens for repay-
ment of bond debts. Therefore, this Act is typically
used in concert with the Improvement Act of 1911 or the
Municipal Improvement Act of 1913 in order to provide the
r, necessary vehicle for collection of special assessment
liens for repayment of bond debt.
ALTERNATIVE 1 : DEVELOPMENT FEES
As an alternative to the recommended Mello-Roos debt-financing
�} approach, a pay-as-you-go approach could be used through development
fees. The County has presently implemented developer fees which are
intended to apply to some of the Oakley Area facility financing
needs. Such fees have been assessed for purposes of parks, roads
and temporary school facilities. No current fees are charged
relative to fire protection. These fees are summarized as follows:
56
Type of Fee Amount of Current Development Fees
Parks $400 per residential dwelling unit
Roads $1 ,315 per residential dwelling unit
$1 .55 per commercial square foot
$4,535 per industrial acre
Temporary Schools $700 per bedroom beyond one bedroom, up
to four bedrooms, per dwelling unit
1
If these fees continue to be applied to all new development in the
Oakley Area, some of the funds necessary for these facilities would
be available. Exhibit J projects the amount of revenue that would
be generated from existing fees, if applied to the development that
is projected to occur in Oakley over the next 10 years (based on the
amount of development forecast in Exhibit C of Chapter III). From
Exhibit J. it can be seen that the current fees would generate more
than enough revenue to finance anticipated park and road costs over
the next 10 years (it should be noted that the current road fees are
established to finance Oakley road needs beyond the next 10 years,
` through build-out and the difference would finance road needs beyond
10 years).
Current fees are either insufficient or not applicable to fire pro-
tection or school needs. There is presently no development fee for
fire protection facilities. Also, school fees are presently for
temporary facilities only, but as indicated in Exhibit J, substantial
revenues for temporary schools would be generated, amounting to
approximately 82.5 percent of the estimated 10-year financing
requirements for permanent facilities. Again, these school impact
fees are for temporary facilities, but many communities have enacted
fees to apply to permanent school facility needs in order to
mitigate the impact of development.
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While the level of current development fees is substantial , an
increase over current levels could provide sufficient revenue for
the facility needs of the Oakley Area over the next 10 years. Exhi-
bit K illustrates the level of fees that would be necessary (in 1985
dollars) to finance all of these costs within the 10 year time-
frame. A significant increase would be necessary to finance all
facilities. From Exhibit K it can be seen that to include all
facilities, the fees for residential uses would total $3,488 per
unit on the average, compared to the current average of $2,115 per
unit (which does not include fire protection or permanent school
_ facilities). If development fees were used as financing for all
four types of facilities, the average amount for a three-bedroom
dwelling unit would need to increase nearly 65 percent (from $2,115
to $3,488). This obviously has an impact on the purchase price of
housing and would tend to be inconsistent with the previously-stated
objective that the. Financing Plan should minimize the impact on the
cost of housing. Also, the fees would have to be increased regularly
to keep pace with inflation of construction costs.
Another disadvantage of utilizing fees entirely as a financing
method is that this is a pay-as-you-go method, and facilities could
be constructed only as development occurs. If the fees were
assessed at the time of filing the final subdivision map, some lead-
time would be provided to begin planning and constructing facili-
ties. However, some facilities (such as fire protection) should
ideally precede development, although others (such as parks) could
be constructed as development occurs.
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EXHIBIT K--ESTIMATED FEES TO FINANCE 10-YEAR
NEEDS FOR PARKS, FIRE PROTECTION, SCHOOLS AND ROADS
(In 1985 Dollars)
Type of Facility Residential Commercial Industrial
Parks (1 ) $ 400 per unit -- --
Fire Protection (2) $ 77 per unit $313 per acre $313 per acre
Schools (3) $1 ,696 per unit -- --
Roads (4) $1 ,315 per unit $1 .55 per sq ft $4,535 per acre
Notes:
(1 ) Current fee is sufficient.
(2) Assumes fire costs allocated in proportion to acreages in each
' land use for Oakley General Plan Option A, development in 10
years.
(3) Assumes that a 21 .2% increase in current temporary classroom
fees (from $700 to $848) would be necessary to cover costs if
applied to permanent facilities. Assumes average of 3 bedrooms
per unit, and that fees would continue to be applied to bedrooms
!,- over one, up to four bedrooms.
(4) Current fee is sufficient.
,1 60
ALTERNATIVE 2: A COMBINATION FINANCING APPROACH
A second alternative to the recommended Mello-Roos debt financing of
all facilities, would be to combine development fees and Mello-Roos
debt financing. A combination approach could match the financing
with the type of facilities needed and provide a balance between
debt-financing and development fees, with the inherent advantages
and disadvantages of both. A combination financing approach could
consist of two components as follows:
Mello-Roos Bond Component for Schools and Fire Protection--As
noted earlier, there are fewer alternatives available to
finance these facilities and only the Mello-Roos Community
Facilities Act of 1982 can provide debt financing for school
construction. Similarly, fire protection facilities are not
readily financed by fees or assessment districts without
additional legal research and court validation. By limiting
debt financing to only the fire protection and school facil-
ities, the annual tax necessary for debt service can be
reduced significantly. Earlier in this chapter, Exhibit E has
projected the total annual debt service costs to be approx-
imately $2.2 million for school and fire protection facilities
only. Exhibits L and M project the annual tax necessary to
finance these annual debt service costs using the same cost
allocation methodology as for the recommended Mello-Roos
financing (see Exhibits G, H, and I ) . The projected tax
requirements for school and fire protection costs only which
are summarized as follows:
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Estimated Tax at Full Development (School and Fire Facilities Onlv) :
Zone 1 Estimated Annual Tax Zone 2 Estimated Annual Tax
Existing New Existing New
1 Land Use Development Development Development Development
Residential $ 50/unit $ 132/unit 0 $ 12/unit
Commercial 255/acre 712/acre 0 67/acre
Industrial 312/acre 712/acre 0 67/acre
Estimated Maximum Tax In 10 Years (School and Fire Facilities Only) :
Zone 1 Estimated Annual Tax Zone 2 Estimated Annual Tax
Existing New Existing New
Land Use Development Development Development Development
Residential $ 50/unit $ 267/unit 0 $ 25/unit
Commercial 255/acre 1 ,148/acre 0 107/acre
Industrial 312/acre 2,247/acre 0 210/acre
As can be seen from the above data, the tax would be consider—
ably more for new and existing development in Zone 1 . This is
because Mello—Roos debt financing under Alternative 2 would be
limited to school and fire protection facilities, and approx—
imately 84% of this total ($1 .8 million out of $2.2 million)
are for school facilities of the Oakley Union School District,
all of which are attributed to Zone 1 (which corresponds to
the school district's boundaries) . On the other hand, in Zone
2 no costs would be attributed to existing development under
Alternative 2 (the community park would be financed by fees
and all other facilities are attributed only to new develop—
ment under the Committee' s assumptions) . In Zone 2, new
development would finance only a proportionate share of fire
protection and high school site acquisition costs.
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EXHIBIT L (Continued)
NOTES:
1 (1 ) This column represents the estimated totals of existing
development currently, and new development at full build-out.
(2 ) This column includes the projected number of dwelling units
for each residential land use, and the number of acres of
each commercial and industrial land use. Residential units
are calculated on the basis of the mid-point of the range of
units per acre permitted for each category.
(3) This column represents the estimated amount of development in
10 years, using assumptions provided by the Contra Costa
County Community Development Department as follows:
. Residential : 60% of total build-out
. Commercial : 75% of total build-out
. Industrial : 40% of total build-out.
(4) This column applies the same density factors in column 2 , to
the projected developed acreage in 10 years (column 3) , to
estimate the number of residential units and commercial/in-
dustrial acres for each land use in 10 years.
(5) Annual debt service cost allocations for new and existing
development in Zone 1 (from Exhibit G) are distributed to
each land use as the proportion (percent) that each category
is of the total acres developed at build-out.
(6) The estimated tax at build-out is calculated for each land
use by dividing the cost in column 5 by the units/acres in
column 2.
(7) The estimated maximum tax in 10 years is calculated for each
land use by dividing the cost in column 5 by the units/acres
in column 4.
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EXHIBIT M (Continued)
NOTES:
(1 ) This column represents the estimated totals of existing
development currently, and new development at full build-out.
1 (2 ) This column includes the projected number of dwelling units
for each residential land use, and the number of acres of
each commercial and industrial land use. Residential units
area calculated on the basis of the mid-point of the range of
units per acre permitted for each category.
(3) This column represents the estimated amount of development in
10 years, using assumptions provided by the Contra Costa
County Community Development Department as follows:
. Residential : 60% of total build-out
. Commercial : 75% of total build-out
. Industrial : 40% of total build-out.
(4) This column applies the same density factors in column 2 , to
the projected developed acreage in 10 years (column 3) , to
estimate the number of residential units and commercial/in-
dustrial acres for each land use in 10 years.
(5) Annual debt service cost allocations for new and existing
development in Zone 1 (from Exhibit G) are distributed to
each land use as the proportion (percent) that each category
is of the total acres developed at build-out.
(6 ) The estimated tax at build-out is calculated for each land
USE! by dividing the cost in column 5 by the units/acres in
column 2 .
(7) The estimated maximum tax in 10 years is calculated for each
land use by dividing the cost in column 5 by the units/acres
in column 4.
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. Development Fees Component for Parks and Roads--Existing fees
would be sufficient to finance anticipated park and road
facility needs, both in the near term and at ,build-out. By
limiting development fee financing to only these facilities,
the one-time fees on new development could be reduced and
minimize the impact on the purchase price of housing. If the
recommended Mello-Roos Bond financing is approved by the
voters, the present school fee for temporary facilities could
be reduced or eliminated (particularly those of the Oakley
Union School District). As a minimum, the school fees. could
be reduced significantly, since the current level would raise
enough revenue to finance approximately 83 percent of perma-
nent facility needs over the next 10 years. As the Mello-Roos
financing of schools is implemented, the new permanent facili-
ties could then reduce or eliminate the need for temporary
classrooms and the corresponding fees.
Should park or road facilities be needed in advance of devel -
opment, assessment district bond financing (see discussion in
Alternative 1 earlier) could be readily utilized for these
type facilities. Properties participating in assessment dis-
trict financing for such facilities should not be required to
pay the related development fees. Also, it should be noted
that development fees for park and roads should be collected
no later than at the time of filing the final subdivision map,
as is currently the case for road fees. In this way, revenue
can be received in advance of actual development in order to
begin design and construction of needed facilities.
1 The above two components therefore represent a combination financing
approach (Alternative 2 to the recommended financing plan). The
combination approach is an attempt to balance between one-time
development fees and annual taxes so as to keep both at an optimum
level .
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FINANCING OPERATIONS AND MAINTENANCE COSTS
The Mello-Roos Community Facilities Act includes provisions for
financing operations and maintenance costs for authorized services
through the annual special tax, or assessing fees and charges as a
supplement or substitute for the tax. Also, as discussed under The
recommended financing plan, a Community Service District can be
formed for the provision of operation and maintenance costs, and
assess fees and/or special taxes within their boundaries. Finally,
if special assessment district financing (Municipal Improvement Act
of 1913, or the Improvement Act of 1911 ) is used to provide facili-
ties , there is also the capability of providing for the operation
and maintenance of the specified facilities within' the assessment
district.
Under the recommended Oakley Infrastructure Financing Plan, a
Mello-Roos Community Facilities District could be formed with the
authority to finance some or all of the operations and maintenance
costs. It is assumed that operations and maintenance of road and
school facilities would continue to be financed as they have been.
Operation and maintenance costs for parks and/or fire protection
could be included within the Mello-Roos District financing, by
assessing annual charges. Charges would be preferable to the annual
tax for operations and maintenance costs, in that they can be
adjusted more easily from year to year so as to match costs (in fact
this must be done pursuant to the statute) . Also, a public hearing
process is required to establish charges rather than the two-thirds
vote required for a special tax.
Annual maintenance costs for parks are estimated by County staff to
be approximately $165,000 per year in 1985 dollars (based on $6,000
per acre annually for the Community Park's active-use facilities,
and $4,000 per acre for the passive-use parks) . If the Oakley Fire
68
District remains primarily a volunteer fire protection service,
annual operation and maintenance costs for the additional facilities
are projected not to exceed $80,000 per year; however, full-time
staffing could be as much as $500,000 per year. Based on current
service levels, parks and fire protection costs for operation and
maintenance are estimated to total $245,000 per year. This would
imply an estimated annual tax/charge of $9.80 per residential unit,
and $46.00 per commercial/industrial acre at full build-out, if park
and fire protection operations and maintenance costs were applied to
the entire Oakley Area for all land uses, except public/semi-public
and agriculture.
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CHAPTER V--IMPLEMENTATION OF RECOMMENDED
FINANCING PLAN
The preceding chapters have provided an analysis and review of a
recommended Oakley Infrastructure Financing Plan, as well as avail-
able alternatives. The recommended approach is bond financing
through formation of a Mello-Roos Community Facilities District for
park, school , fire protection, and roadway facilities. This chapter
describes how the recommended Financing Plan should be implemented,
how responsibilities and costs for implementation should be assigned,
and the timing for implementation.
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HOW THE RECOMMENDED FINANCING PLAN SHOULD BE IMPLEMENTED
The recommended Oakley Infrastructure Financing Plan consists of
bond financing through formation of a Mello-Roos Community Facili-
ties District. The legal procedures for implementation of Mello-Roos
bond financing are detailed in Chapter IV and the Appendix of this
report. Consistent with these required procedures, implementation
of the Mello-Roos Bond Financing for the Oakley Infrastructure
Financing Plan should include completion of the following steps:
1 . Upon approval of the recommended Oakley Infrastructure
■ Financing Plan, the Board of Supervisors should designate and
direct appropriate County staff to be responsible for coor-
dinating implementation of the Mello-Roos proceedings. The
designated County staff should be assisted by a task force of
key officials, affected departments, and community represen-
tatives (described further under discussion of section on
Responsibilities for Implementation) .
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2. The County should retain a bond counsel and an investment
banker/underwriter to provide the necessary legal and techni-
cal assistance for the specific formation of a Community
Facilities District and structuring subsequent bond sales
3. Working in concert with bond counsel and the investment ,
banker/underwriter, County staff should prepare the legal
description of the Community Facilities District boundaries
(based on a district covering the entire Oakley area, with
two improvement zones as described' in Chapter IV ) , and the
necessary documents (as described in 4 below) to formally
initiate proceedings pursuant to the Mello-Roos Act.
4. Based upon the preceding task, formal initiation of proceed-
ings for Mello-Roos bond financing should be accomplished,
pursuant to the Act. It is assumed that proceedings would be
initiated under the method of a written request filed with
the Board by two Supervisors (the alternative methods for
initiating proceedings are a registered voter petition or a
landowner petition) . The written request must describe the
boundaries and specify the types of facilities and services
to be provided. Preparation of the reports required under
step 6 below should also begin at this time, due to the
otherwise short timeframe for those reports (no more than 60
days from passing the Resolution of Intention in task 5).
5. Within 40 days of initiating proceedings (task 4 above) , The
Board of Supervisors must adopt a resolution of intention to
form the Community Facilities District. The resolution must
state that a Community Facilities District is proposed to be
established and: (a) describe the boundaries of the proposed
district, (b) state the name of the district, (c) state the
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types of facilities and services to be provided, (d) state
that a special tax is proposed, specifying the rate and
method of apportionment in sufficient detail to allow each
landowner/resident to estimate the annual amount he or she
will have to pay, (e) make a finding that the proposed
fatalities are necessary as a result of new development or
rehabilitation, and (f) fix a time and place of a hearing,
which must be no less than 30 nor more than 60 days after
adoption of the resolution.
6. At the same time as adopting the Resolution of Intention, the
1 Board of Supervisors must direct its responsible officers to
study the proposed district and to file reports at or before
the hearing on the proposed District formation. These
reports must describe the proposed services and the estimate
of their cost (this report provides the basis for these
reports, as well as much of the information needed for the
preceding task.
7. Notice of the public hearing must be given by mail at least
15 days prior to the hearing, and by publication in a news-
paper published in the area once at least seven days prior to
the hearing.
8. The Board of Supervisors must receive any written protests
rand conduct the hearing on the proposed formation of the Dis-
trict. If 50% of the registered voters or six registered
voters, whichever is less, file written protests against the
district, proceedings must be abandoned; otherwise the Board
may proceed.
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9. At the conclusion of a successful hearing, the Board would
adopt a resolution of formation establishing the District and
must schedule an election to submit the question of a special
e\�J tax to the qualified electors. The election may be at the
next general election, or at a special election which is at
least 90 days but no more than 180 days following the protest
hearing.
10. If the proposed special tax is approved at the election by
the required two-thirds of the qualified voters, the County
would then begin collecting the tax annually in the same man-
ner as it collects property taxes within the newly formed
District. County staff will need to adjust the tax as neces-
sary each year in order to reflect development within the
District and scheduled bond sales and resulting actual debt
service requirements. Adjustments to the tax must not exceed
the maximum amount approved by the voters.
11 . Upon a successful election and levying of the annual tax,
designated County staff would work in concert with bond coun-
sel and the investment banker/underwriter to schedule and
conduct bond sales based upon the revenue stream available
from the annual tax. Bond proceeds would then be used to
finance the specified school and fire protection facilities.
Since it will take a while for sufficient revenues to accumu-
late, a series of bond sales would likely be required.
If the election should not be successful , the County would need to
look to 'the other alternatives discussed in Chapter IV of this
' report, and utilize development fees and/or special assessment dis-
trict financing ( such as 1911 or 1913 Act proceedings) . Since the
Mello-Roos Act is the only method by which schools could be financed
by bonds, one or both of the Oakley Area school districts may wish
73
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to separately submit to the voters a Mello-Roos District tax speci-
fically for schools. Fire protection facilities could be financed
be fees and/or special assessment proceedings, although as noted in
rChapter II/, special assessment district financing of fire protection
facilities would likely require additional legal research and court
validation.
RESPONSIBILITIES AND COSTS FOR IMPLEMENTATION
' As indicated earlier, certain key County staff should be assigned
the responsibility for directing and coordinating implementation of
the recomnended Oakley Infrastructure Financing Plan. Overall dir-
ection should be provided by the County Administrative Office or
another key finance official of the County. In addition, it is
recommended that a task force be established to provide all neces-
sary technical assistance and coordination. It is suggested that
the task force include representatives of the school districts, fire
district, Community Development Department, and affected service
departments, as well as appropriate community representatives from
the Oakley Area.
All costs associated with implementing and administering the Mello-
Roos Bond Financing of the recommended Oakley Infrastructure Financ-
ing Plan can be included in the special tax and/or charges levied by
the District.
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TIMING FOR IMPLEMENTATION
As indicated in Chapter IV , the Mello-Roos Bond Financing Component
of the Plan requires a relatively long series of legally required
procedures. Under the most favorable circumstances (when all con-
cerned are in favor of the process and procedures can be expedited)
the process can take as little as three and one-half months. How-
ever a more realistic timeframe for forming a Community Facilities
District and beginning to administer the associated special tax
would be approximately seven months (about 210 days) from the time
the Board of Supervisors approves implementation of the recommended
Oakley Infrastructure Financing Plan. A more precise description of,
' the necessary timing for implementing a Mello-Roos bond financing is
presented in Chapter IV (Exhibit D in Chapter IV provides a graphic
timeline -to illustrate the sequence and timing of implementation
procedures) .
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APPENDIX--SUMMARY OF THE
MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982
' (Prepared by Jones Hall Hill & White, Bond Counsel )
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THE MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982
I . INTRODUCTION
' A. General . The Mello-Roos Community Facilities Act of 1982 (§§
53311-53365.5 of the California Government Code) (the "Act") , provides a way
of financing certain public facilities and services, especially in
developing areas and areas undergoing rehabilitation. A local government
may use the provisions of the Act instead of any other method of financing
part or all of the cost of providing the authorized kinds of capital
facilities and services (Sec. 53311.5)
B. Definition. A community facilities district (a "District")
formed under the Act is a legally constituted governmental entity
established for the purpose of carrying on specific activities within
defined boundaries. (Sec. 53312) A District is the district of land in
' which public facilities and authorized services are to be provided, and in
which special taxes and charges may be levied pursuant to the Act to pay for
those facilities and services (Sec. 53317(b)) A District may include areas
' of territory that are not contiguous. (Sec. 53325.5(a))
II . PURPOSES
A. Services. A District may be established to provide for:
(1) Police protection services, including criminal justice
facilities limited to jails, detention facilities and juvenile halls;
(2) Fire protection and suppression services and ambulance
' and paramedic services;
(3) Recreation program services and the operation and
maintenance of parks and parkways (provided that a special tax to provide
these services may only be levied if 2/3 of the voters voting on the special
tax or 100 voters, whichever is more, vote in favor of levying the special
tax for that purpose) ; and
(4) Flood and storm protection services including the
operation and maintenance of storm drainage systems.
A District, however, may only provide the facilities and levels of
services to the extent that they are in addition to those provided in the
' territory of the district before the district was created and may not
supplant those: services already available within that territory. (Sec.
53313)
iB. Facilities. A District may also provide for the : .purchase,
construction, expansion or rehabilitation of any real or other tangible
' property with an estimated useful life of at least five years which is
' necessary to meet increased demands placed upon local agencies as the result
of development; or rehabilitation occurring within the district. These
facilities include, but are not limited to:
(1) Local park, recreation or parkway facilities;
(2) Elementary and secondary school sites and structures
provided that the facilities meet the building area and cost standards
established by the State Allocation Board;
(3) Libraries;
(4) The District may finance the construction of natural gas
pipeline facilities, telephone lines and facilities for the transmission or
distribution of electrical energy to provide access to those services to
customers who do not have access to those services. The District may
contract with a public utility to utilize those facilities to provide a
particular service and to reimburse the district for the cost of the
facilities, provided that any reimbursement must be used to reduce or
minimize the special tax within the District; and
(5) Any other governmental facilities which the legislative
body creating the District is authorized by law to construct, own or
' operate. (Sec. 53313.5)
C. Costs Includable in Bonded Indebtedness. The amount of the
proposed bonded indebtedness of a District may include all costs related to
the purpose for which the debt is to be incurred, including costs of
construction or acquisition of buildings; acquisition of land, rights-of-
way, water, sewer or other capacity or connection fees; lease payments for
school facilities . that are relocated; satisfaction of contractual
obligations relating to advancements of funds; architectural , engineering,
inspection, legal , fiscal and financial consultant fees; bond and other
reserve funds; discount fees; interest on bonds of the district for up to
two years; election costs; and all costs of issuance of the bonds, including
bond counsel fees, bond assurance premiums and printing costs.
D. Joint Exercise of Powers. The legislative bodies of two or more
local agencies or Districts, or any combination thereof, may enter into a
joint exercise of powers agreement to exercise any power authorized by the
Act if the legislative body of each entity adopts a resolution declaring
that such a joint agreement would be beneficial to the residents of that
entity. (Sec. 53316.2(a)) . A party to the joint exercise of powers
agreement may use the proceeds of any special tax or charge levied under the
Act or of any bonds or other indebtedness issued under the Act to provide
facilities or services which that contracting party is otherwise authorized
by law to provide, even though another party to the joint exercise of powers
agreement does not have the power to provide those facilities or services
(Sec. 53316.2(b)) .
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' III . CREATING A COMMUNITY FACILITIES DISTRICT (§§ 53318-53329) .
A. General . A District is established by proceedings before a local
agency.. A "local agency" is defined as any city or county, whether general
or chartered, special district, school district, joint powers entity or any
other municipal corporation or district. (Sec. 53317(f)) After its
formation, a District is governed by the legislative body of the local
' agency. "Legislative body" is defined as the legislative body or governing
board of any local agency. (Sec. 53317(e))
' B. Sta.rtinq. The legislative body of a local agency may start
proceedings to establish a District on its own initiative. However, a
legislative body must start proceedings to establish a District when any of
' the following occurs:
(1) A written request is filed with the legislative body
signed by two of its members, describing the boundaries of the proposed
District and specifying the type or types of facilities and services to be
provided; or
1;2) A petition is filed with the clerk of the legislative
body requesting the institution of proceedings and signed by not less than
10% of the registered voters residing within the proposed District or by
' owners of at least 10% of the land within the proposed District (Sec. .
53318, 53319)
If a petition is filed, the petition must request institution of
proceedings to establish a community facilities district, describe the
proposed boundaries of the district, state the type or types of facilities
and services •to be provided. A written request or petition to form a
district must be accompanied by a fee in an amount which the legislative
body determines is sufficient to compensate the legislative body for all
cost incurred in conducting proceedings to create the District.
(Sec.53318(d))
If a written request or a petition is filed, the legislative body
' must adopt a resolution of intention to establish a District within 40 days
after receipt of the filing. (Sec 53320)
C. The Resolution of Intention. The resolution of intention to
establish the District is adopted by the legislative body of the local
agency and must:
(1) State that a community facilities district is proposed to
be established and describe its proposed boundaries;
' (2) State the name of the proposed District:
(3) State the type or types of public facilities and services
proposed to be provided within the District:
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1 (4) State that, except where funds are otherwise available, a
special tax sufficient to pay for all the facilities and services will be
annually levied within the district and specify the rate and method of
apportionment of the special tax in sufficient detail to allow each
landowner or resident within the proposed district to estimate the annual
amount that he or she will have to pay;
(5) Make a finding that the proposed facility is necessary to
meet increased demands put upon the local agency as a result of new
development or rehabilitation; and '
(6) Fix a time and place for a public hearing on the
establishment of the proposed District which must be not less than 30 nor
more than 60 days after the adoption of the resolution. (H 53320-53321)
(7) Direct appropriate officers to study the proposed
district and to file a report containing a brief description of the
facilities and services required to meet the needs of the district and the
estimated cost therefor. The report will be made a part of the record of
the hearing on the resolution of intention to establish the District. (Sec.
1 533215)
(E) Notice of Public Hearing. After adoption of the resolution of
' intention, the clerk of the legislative body must publish a notice of the
public hearing in a newspaper of general circulation published in the area
of the proposed District, at least 7 days before the date of the hearing.
The notice must contain:
(1) The text of the resolution of intention to establish the
District;
(2) State the time and place of the hearing and state that at
' the hearing the testimony of all interested persons or taxpayers for or
against the establishment of the district, the extent of the district or the
furnishing of specified types of the public facilities or services will be
t heard. (Sec. 53322) Notice also may be given by first class mail to each
registered voter and landowner within the proposed district. This notice
must be mailed at least 15 days before the hearing and contain the same
information as is in the published notice. (Sec. 53322.4)
F. The Public Hearing. At the public hearing, protests against the
establishment. of the district, the extent of the district or the furnishing
of specified types of public facilities or services within the district may
be made orally or in writing by any interested persons or taxpayers. (Sec.
53323)
' (1) Protest Rules. If 50% or more of the registered voters
residing within the proposed district, or 6 registered voters, whichever is
more, or if the owners of one-half or more of the area of land within the
proposed district file written protests against the .establishment of the
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district, the legislative body must abandon the proposed District. If a
' majority of voters or landowners protests only against the furnishing of a
specified type or types of facilities or services within the proposed
district, or against levying a specified special tax, those types of
facilities or services or the specified special tax must be eliminated from
the resolution finally establishing the district. (Sec. 53324)
(2) After the Hearing. The hearing may be continued, but
must be completed within 30 days. At the conclusion of the hearing, the
legislative body may abandon the proposed District or may, after passing
upon all protests, determine to proceed with establishing the District. If
the legislative body determines to proceed, it must adopt a resolution of
formation of the district. The resolution of formation must contain all the
information contained in the resolution of intention to establish the the
district. If a special tax is proposed to be levied in the district, the
resolution of formation must state that fact and identify any facilities or
services proposed to be funded with the special tax. (§§ 53324-53325.1)
G. Election. If the legislative body adopts the resolution of
formation, it must submit the levy of the special tax to the qualified
electors of the proposed District in the next general election or in a
special election to be held within 90 to 180 days following the . close of the
hearing, whichever election date occurs first.
(1) If 12 or more registered voters reside within the
territory of the proposed District at the time of the close of the hearing,
and for at least the preceding 90 days, the vote must be by the registered
voters of the proposed district, with each voter having one vote.
(2) If fewer than 12 registered voters reside within the
proposed district at the time of the close of' the hearing, and have for at
least the preceding 90 days, the vote must be by the landowners of the
proposed District with each landowner having one vote for each acre or
portion thereof of land that he or she owns within the proposed district.
' (3) Ballots for a special election for this purpose may be
distributed to qualified electors by mail with return postage prepaid.
(Sec. 53326) Except as otherwise provided in the Act, the provisions of the
Elections Code will govern the election with respect to the special tax.
(Sec. 53327)
(4) After the canvas of returns of the election, the
legislative body may levy the special tax if 2/3 of the votes cast upon the
' question of levying the tax are in favor. If less than a 2/3 favorable vote
is received, the legislative body cannot take further action on levying any
specified special tax for a period of one year from the date of the
election. (§§ 53328-53329)
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IV. SPECIAL 'TAX (§§ 53340-53343) .
A. General . In the resolution of intention, the legislative body
must specify the rate and method of apportionment of the special tax. (Sec.
53321) Under the Act, the formula for the rate and method of apportionment
of the special tax is left to the ingenuity of the legislative body. A tax
imposed under the Act is a special tax and not a special assessment and
there is no requirement that the tax be apportioned on the basis of benefit
to any property. (Sec. 53325.3) The election places practical limits on
the rate and method of apportionment of the special tax. The special tax
' must not be an ad valorem tax under Article XIIIA of the California
Constitution. Since Article XIIIA excepts a "special tax" authorized by a
2/3 vote of the qualified electors and not based upon the value of real
property, the validity of a particular special tax under the Act should be
tested in court by a validation proceeding.
B. Levy of the Special Tax. After a District has been created and
authorized to levy specified special taxes, the legislative body ny
ordinance may levy the special taxes at the rate and apportion them in the
manner specified in the resolution and approved by voters. The legislative
' body may levy the special tax at a lower rate. Properties or entities of
the state, federal or other local governments are exempt from any special
tax. The special tax proceeds may only be used to pay, in whole or in part,
the cost of providing public facilities and services under the Act. (Sec.
53340)
C. Collection and Enforcement of Special Tax. The special tax may
be collected in the same manner as ordinary ad valorem property taxes are
collected and may be subject to the same penalties and the same procedure
and sale in case of delinquency as provided ad valorem taxes, or another
' procedure may be adopted if the legislative body prefers. The tax collector
may deduct the reasonable administrative costs incurred in collecting the
special tax. (Sec. 53340) If bonds are issued by a District, additional
' remedies are provided for delinquent special taxes. If any amount levied as
a special tai; for payment of bond interest or principal is not paid when
due, the legislative body may, not later than four years after the due date
of the last principal installment, order that the delinquent special tax be
collected by an action brought in superior court or foreclose any lien
therefor. In addition, the legislative body may by resolution adopted prior
to issuance of bonds covenant for the benefit of bondholders to commence and
' diligently pursue to completion any foreclosure action regarding delinquent
installments of special tax levied for the payment of interest or principal
on the bonds. The resolution may specify a deadline for commencement of
that foreclosure action and such other terms and conditions as the
legislative body may determine to be reasonable for the foreclosure action.
(Sec. 53365.5)
V. ISSUING BONDS (§§ 53345-53365.5)
A. General . the proceedings to issue bonds are similar to the
proceedings for the formation of a District, and require action by the
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legislative body, a public hearing and an election. The proceedings to form
the district and to issue bonds may be undertaken concurrently.
' B. Starting. Whenever the legislative body deems it necessary for
the District to incur a bonded indebtedness, it must adopt a resolution
stating:
(1) A declaration of the necessity for the indebtedness;
' (2) The purpose for which the proposed debt is to be
incurred;
(3) The amount of the proposed debt; and
(4) The time and place for a hearing on the proposed debt
issue. (Sec. 53345)
C. Notice of Hearing. After adoption of the resolution to incur
bonded indebtedness, the clerk of the legislative body must publish a notice
A of the hearing in a newspaper of general circulation circulated within the
district. (Sec. 53346) The notice must:
(1) Contain the text of the resolution;
' (2) ' State that the hearing referred to in the resolution
will be at the time and place specified in the resolution; and
' (3) State that at that time and place any person interested,
including all persons owning property in the District, will be heard upon
the proposed debt issue. (Sec. 53347)
D. The Public Hearing. The legislative body conducts the hearing
and any person interested may appear and present any matters material to the
questions set forth in the resolution declaring the necessity for incurring
the bonded indebtedness. (H 53348-53349)
' E. After the Hearing. After the public hearing, if the legislative
body deems it necessary to incur the bonded indebtedness, it must adopt a
resolution stating:
(1) That it deems it necessary to incur the bonded
indebtedness;
(2) The purpose for which the bonded ;indebtedness will be
incurred;
' (3) Either that the whole of the District will pay for the
bonded indebtedness or that a portion of the District (i .e. , an improvement
area) will pay for the bonded indebtedness;
' (4) The amount of debt to be incurred;
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' (5) The maximum term of the bonds (not exceeding forty
years;)
(6) The maximum annual rate of interest to be paid, payable
annually or semi-annually, or in part annually and in part semi-annually;
(7) That the proposition will be submitted to the voters;
and
(8) The date of the election at which time the proposition
will be submitted to the voters and certain information relating to the
conduct of the election. (Sec. 53351)
F. Notice of Election. the resolution described above will
constitute the notice of the special bond election and must be published in
a newspaper of general circulation within the District. (Sec. 53352)
' Except as otherwise provided in the Act, the provisions of the Elections
Code govern the conduct of the special bond election. (Sec. 53353)
Propositions relating to the levy of a special tax and the incurring of
bonded indebtedness under the Act may be combined into one ballot
proposition whenever convenient, at the direction of the legislative body.
(Sec. 53353.5) The bond proposition must be approved by 2/3 vote. After
' election approval (and successful validation, if required) bonds may be
issued by resolution. (Sec. 53356)
G. Sale of Bonds. The district may sell the bonds at the time or in
the manner the legislative body deems to be in the public interest. All
bonds must be sold on sealed proposals to the highest bidders after
advertising for bids by publications of notice of sale not less than 10 days
' prior to the date of sale in a newspaper of general circulation circulating
in the area. If no bids are received or if the legislative body determines
that the bids received are not satisfactory as to price or responsibility of
the bidders, the legislative body may reject all bids received, if any, and
either readvertise or sell the bonds at private sale (Sec. 53360) Until
January 1, 1987, the legislative body may sell bonds at private sale,
without advertising for bid, if it determines that such action would result
in a lower interest cost on the bonds. (Sec. 53360.4)
H. Repayment of Bonds. Each year at the time that the legislative
body fixes and levies special taxes and charges of the district, it must
also fix and levy the amount of special taxes and charges within the
District which are required for the payment of the principal of and interest
on any outstanding bonds of the District becoming due and payable during
next year. The special tax may not exceed the formula approved by the
voters within the District. The special tax or charge will be levied and
' collected by the same officers and at the same time and in the same manner
that all other special taxes and charges are levied and collected for the
District. all collections of the special tax and charges will be paid into
the District bond fund and will be used solely for the payment of the
principal of and interest on the outstanding bonds of the district. (Sec.
' 53358)
I . CDAC Notice. No later than ten days prior to the sale of any
bonds pursuant to the Act, the legislative body must give written notice of
the proposed sale to the California Debt Advisory Commission. (Sec.
53359.5)
J. Variable Interest Rate. The legislative body may provide that
bonds will bear a variable interest rate, and for the manner and intervals
at which the rate will vary. The variable rate may not exceedapplicable
provisions of law limiting the maximum interest rate on bonds. (Sec.
53360.7)
' K. Refunding Bonds and Bond Anticipation Notes. The legislative
body may issue new bonds to refund any or all of the district bonds
outstanding under circumstances set forth in the Act. (H 53362-53365.5)
Bond anticipation notes may also be issued by a district in certain
circumstances. (Sec. 53365.7)
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