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CITY.if"'F INDIO
100 CIVIC CENTER MALL INDIO, CA 92201
760.342.6500 FAX 760.342.6556 www.indio.org
October 16, 2006
Mr. Gary Williams
Vice President
SunCal Companies
74130 Country Club Drive
Palm Desert, CA 92260
RE: Community Services District Improvement Area Two
Mr. Williams:
As you are aware, on August 2, 2006 the City Council approved a Resolution
approving a Deposit and Reimbursement Agreement necessary to initiate
Improvement Area Two Community Facilities District (CFD) Financing.
Earlier today, you asked for clarifying language to specific wording contained in
paragraph two of the analysis section reading, "staff is also negotiating with the
Master developer for a contribution to the cost of certain water storage facilities
needed to serve the Terra Lago development." This issue has been satisfied
with the approval of the Resolution of Intention on September 20, 2006
(attached). Specifically, the Resolution of Intention staff report contains language
in paragraph two of the analysis section outlining discretional monies in the
amount of $1,750,000 which the City intends to allocate to new water storage
facilities within the Terra Lago development. It is my understanding our
negotiations are complete and both parties are satisfied.
Should you have any questions or need additional information, please feel free to
call me directly at (76 342-6560.
Michael P. Busch
Management Services Director
Attachments: Staff Report ROI: September 20, 2006
CC: File
INDIO CITY COUNCIL
AGENDA REPORT
TO: Glenn D. Southard, City Manager
FROM: Jim L. Smith, Director of Engineering/Public Works
DATE: September 20, 2006
SUBJECT: Resolution of Intention to Incur Bonded Indebtedness in the
Amount Not to Exceed S33,500,000 within Improvement Area No.
2 of the City of Indio Community Facilities District No. 2004-3
(Terra Lago)
SUMMARY
Community Facilities District No. 2004-3 (Terra Lago) was formed in July 2005.
CFD No. 2004-3 (Terra Lago) contains two improvement areas corresponding to
the two phases of development of homes contemplated by the Suncal Companies,
the Master Developer. A total of 1,484 homes are expected to be built, 635
homes in Phase 1 and 849 homes in Phase 2.
As part of the foiniation process, the City Council approved a Resolution of
Intention to Incur Bonded Indebtedness in the Amount Not to Exceed
$30,000,000 and $30,000,000 within Improvement Area No. 1 and Improvement
Area No. 2, respectively, for a maximum bonded indebtedness limit of
S60,000,000 for Community Facilities District No. 2004-3 (Terra Lago).
In September 2005, the District issued Special Tax Bonds for Improvement Area
No. 1 in the amount of $26,330,000. At that time, it was expected that the
District would issue a second series of bonds in 2006 to finance certain public
facilities related to Improvement Area No. 2. The bonds for Improvement Area
No. 2, when issued, will be secured by Special Taxes levied on taxable parcels
within Improvement Area No. 2.
For City Council Agenda
ITEM NO. 7
ui-u NO. zUU4-3 (I erra Lam
September 20, 2006
PAGE 2
At this time, in order to capitalize on the current additional bonding capacity
expected to be generated by the Phase 2 development, the Master Developer is
requesting that the amount of bonded indebtedness authorized to be incurred
within Improvement Area No. 2 be increased from $30,000,000 to $33,500,000.
In order to offset the increase in bonded indebtedness authorized for
Improvement Area No. 2, staff is recommending that the authorized bonded
indebtedness limit for Improvement Area No. 1 be reduced to $26,500,000,
limiting the total authorized bonding capacity for the overall CFD to the original
$60 million approved in 2005.
The additional capacity realized from the proposed increase in bonded
indebtedness for Improvement Area No. 2 will be divided equally between the
Master Developer and the City. The Master Developer will use the additional
proceeds to fund infrastructure costs of the development, while the City may use
the proceeds for its own public facilities.
STAFF RECOMMENDATION
Staff recommends adopting the Resolution of Intention to Incur Bonded
Indebtedness in the Amount Not to Exceed $33,500,000 within Improvement
Area No. 2 of the City of Indio Community Facilities District No. 2004-3 (Terra
Lago) and setting November 1, 2006 as the date for the public hearing and special
election by property owners.
ANALYSIS
The Terra Lago development consists of two improvement areas corresponding
with the two development stages of the project: Improvement Area No. 1 is
expected to contain 635 homes and Improvement Area No. 2 is expected to
contain 849 homes. Homesites within Improvement Area No. 1 have been sold to
merchant builders and homes are under construction. The Master Developer is
currently negotiating the sale of property within Improvement Area No. 2 with
merchant builders. Construction of models and the first phase of production
homes in Improvement Area No. 2 is expected to commence in early 2007.
In connection with Improvement Area No. 2, special tax bonds are expected to be
issued in December 2006. In addition to $1,000,000 funded with special tax
bonds issued for Improvement Area No. 1, an additional $3,000,000 toward the
Ul-U NO. ZUU4-3 (I errs Lago)
September 20, 2006
PAGE 3
cost of a fire station will be funded when the special tax bonds are issued for
Improvement Area No. 2. Approximately 53,364,000 in City development impact
fees for parks and streets will also be funded. The City's share of the additional
bonding capacity of $1,750,000 can be used at the City's discretion for additional
public facilities.
The issuance of special tax bonds for Improvement Area No. 2 is expected to be
considered by the City Council in November 2006. At this time it is requested
that the amount of bonded indebtedness authorized to be incurred within
Improvement Area No. 2 be increased from S30,000,000 to S33,500,000. In order
to offset the increase in bonded indebtedness authorized for Improvement Area
No. 2 and limit the bonded indebtedness for the Community Facilities District to
$60,000,000 in total, the authorized bonded indebtedness limit for Improvement
Area No. 1 would be reduced to $26,500,000.
The additional capacity realized from the proposed increase in bonded
indebtedness for Improvement Area No. 2 will be divided equally between the
Master Developer and the City. The Master Developer will use the additional
proceeds to fund infrastructure costs of the development, while the City will use
the proceeds for its own public facilities.
Prior to the issuance of the Improvement Area No. 2 Bonds, a determination will
be made that the homes to be built within the CFD can support the estimated
special taxes in the amount necessary to repay this second series of bonds and that
such special tax does not cause the total effective tax rate (including ad valorem
taxes, the City's CFD payment for public safety and all other special assessments)
to exceed the maximum allowable rate of 2% of the estimated purchase price of
homes in the CFD. It is estimated that the average special tax per house will be
$2,500 for interior homes and $4,100 for view lot homes.
FINANCIAL REVIEW
The property owner posted a deposit in order to cover City costs incurred in
connection with these change proceedings and for costs relating to the appraisal
of property within Improvement Area No. 2. Approval of this resolution does not
in any way commit the City to any financial contribution or liability to repay any
bonded indebtedness issued by the CFD. The City's cost to administer the CFD
annually will be reimbursed through annual special taxes charged to property
owners.
CFD No. 2004-3 (Terra Lago)
September 20, 2006
PAGE 4
The special tax bonds will fund approximately $3,364,000 of development impact
fees of the City, $3,000,000 toward the cost of a fire station, and another
$1,750,000 of other City public facilities, as well as sewer fees of Valley Sanitary
District, school fees and certain of the Master Developer's infrastructure costs.
LEGAL REVIEW
The Mello-Roos Community Facilities Act of 1982 (the "Act") provides clear
authority, in section 53318(c), for the initiation of the establishment of
community facilities districts or changes thereto upon receipt by the City of a
petition requesting the proceedings by the owners of not less than 10% of the area
of land within the district. The City has received the signed petition from Land
Ventures, LLC, the property owner of land within Improvement Area No. 2.
The Act provides that, if there are less than 12 registered voters currently within
the district, the vote to increase the bonded debt limit shall be by the landowners
within such district and each landowner shall have one vote for each acre or
portion of an acre of land owned within the district.
This item has been reviewed by Don Hunt of Fulbright & Jaworski, L.L.P, the
City's bond counsel.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Copies of this report are available at the City Hall public counter and the Indio
Public Library.
ALTERNATIVES
1. Determine not to adopt resolution of intention to incur bonded
indebtedness in the amount not to exceed $33,500,000 within improvement
Area No. 2 of the Terra Lago development.
CFD No. 2004-3 (Terra Lago)
September 20, 2006
PAGE 5
Submitted by: Financial Review:
ed,
Jim L. Smith, P.E.
Director of Engineering/Public Works
Michael P. Busch
Management Services Director
Reviewed by:
Don Hunt, Bond Counsel
List of Attachments:
A. Resolution of Intention to Incur Bonded Indebtedness in the Amount Not to
Exceed $33,500,000 within Improvement Area No. 2 of the City of Indio
Community Facilities District No. 2004-3 (Terra Lago)
ATTACHMENT "A"
RESOLUTION NO.
RESOLUTION OF INTENTION OF THE CITY COUNCIL OF THE CITY
OF INDIO TO INCUR BONDED INDEBTEDNESS IN THE AMOUNT
NOT TO EXCEED $33,500,000 WITHIN IMPROVEMENT AREA NO. 2
OF THE CITY OF INDIO COMMUNITY FACILITIES DISTRICT NO.
2004-3 (TERRA LAGO)
WHEREAS, the City Council (the "Council") of the City of Indio (the "City") has
received a petition from the landowner of Improvement Area No. 2 of the City of Indio
Community Facilities District No. 2004-3 (Terra Lago) (the "CFD") to institute proceedings to
increase the amount of bonded indebtedness authorized to be incurred within Improvement Area
No. 2 from $30,000,000 to $33,500,000, the proceeds of which will be used to finance the
purchase, construction, expansion or rehabilitation of certain real and other tangible property
with an estimated useful life of five years or longer, including public infrastructure facilities and
other governmental facilities, which are necessary to meet increased demands placed upon the
City as a result of development or rehabilitation occurring within the proposed CFD (the
"Facilities").
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LNDIO DOES
HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS:
Section 1. It is necessary to incur bonded indebtedness within Improvement Area No.
2 of the CF'D in the amount not to exceed $33,500,000 to finance the costs of the Facilities for
Improvement Area No. 2.
Section 2. The indebtedness will be incurred for the purpose of financing the costs of
designing, constructing and acquiring the Facilities, the acquisition of necessary equipment and
property therefor and fulfilling contractual commitments and carrying out the powers and
purposes of the CFD, including, but not limited to, the financing of the costs associated with the
issuance of the bonds and all other costs necessary to finance the Facilities which are permitted
to be financed pursuant to the Mello-Roos Community Facilities Act of 1982, as amended,
commencing with Section 53311 of the Government code of the State of California.
Section 3. Improvement Area No. 2 shall pay for its bonded indebtedness.
Section 4. It is the intent of the Council to authorize the sale of bonds in one or more
series in the maximum aggregate principal amount not to exceed $33,500,000 for Improvement
Area No. 2 at a maximum interest rate not in excess of 12 percent per annum or such rate not in
excess of the maximum rate permitted by law at the time the bonds are issued. The temi of the
bonds shall be determined pursuant to a resolution of the Council authorizing the issuance of the
bonds, but such term shall in no event exceed 40 years or such longer term as is then permitted
by law.
45821073.1 1
Section 5. As an off-set to the increase in amount of authorized bonded indebtedness
for Improvement Area No. 2, the amount of bonded indebtedness authorized to be incurred
within Improvement Area No. 1 is hereby reduced to $26,500,000.
Section 6. A public hearing (the "Hearing") on the proposed increase in debt issue
shall be held on November 1, 2006 at 6:00 o'clock p.m., or as soon thereafter as practicable, at
the chambers of the City Council of the City of Indio, 150 Civic Center Mall, Indio, California
92202.
Section 7. At the Hearing at the time and place set forth above, any interested
persons, including all persons owning land within Improvement Area No .2, may appear and be
heard at the Hearing.
Section 8. The proposition to incur bonded indebtedness in the maximum aggregate
principal amount not to exceed $33,500,000 for Improvement Area No. 2 shall be submitted to
the qualified electors of Improvement Area No. 2. A special election shall be conducted on
November 1, 2006. The special election shall be conducted by hand delivered or mailed ballot
election. The ballots shall be returned to the office of the election officer no later than 11:00
o'clock p.m. on November 1, 2006.
Section 9. The Clerk is hereby directed to publish a copy of this resolution, which
shall serve as notice ("Notice") of the Hearing and the special bond election, pursuant to Section
6061 of the Government Code in a newspaper of general circulation in the proposed CFD.
PASSED, APPROVED and ADOPTED this day of , 2006
by the following votes:
AYES:
NOES:
GENE GILBERT, MAYOR
ATTEST:
CYNTHIA HERNANDEZ
CITY CLERK, CMC
3
TO: CITY COUNCIL OF THE C11 Y OF 11NT)I0
FROM: INDIO LAND VENTURES, LLC
PETITION (INCLUDING CONSENT AND WAIVER)
REQUESTING THE ESTABLISHMENT OF A
COMMUNITY SERVICES DISTRICT
The undersigned landowner does hereby certify under penalty of perjury that the
following statements are all true and correct:
1. The undersigned is authorized to represent the landowner identified below (the
"Landowner") and is its designated representative to petition the City Council (the "Council") of
the City of Indio (the "City") and to give the consent and waiver contained herein with respect to
City of Indio Community Facilities District No. 2004-3 (Terra Lago) (the "CFD") formed under
the provisions of the Mello-Roos Community Facilities Act of 1982 (the "Act"), being Chapter
2.5 of Part 1 of Division 2 of title 5 (commencing with Section 53311) of the California
Government Code.
2. The undersigned hereby certify that as of the date indicated opposite his signature,
the landowner listed herein is the owner of the property within Improvement Area No. 2 of the
CFD described in Exhibit "A" hereto (the "Improvement Area No. 2").
3. Pursuant to a special election held within Improvement Area No. 2, the
Landowner has previously approved the incurring of bonded indebtedness in the amount of not
to exceed $30,000,000 within Improvement Area No. 2. Due to changes in the development plan
for Improvement Area No. 2, additional bonded indebtedness will need to be incurred within
Improvement Area No. 2.
4. The undersigned, pursuant to Section 53318 of the Act, hereby requests that
proceedings be commenced to increase the maximum authorized amount of bonded indebtedness
within Improvement Area No. 2 to $33,500,000.
5. In accordance with the provisions of the Act, and specifically Sections 53326(a)
and 53327(b) thereof allowing certain time and, conduct requirements relative to a special
landowner election to be waived with the unanimous consent of all the landowners to be
included in a community facilities district and concurrence of the election official conducting the
election, the undersigned (i) expressly consents to the conduct of the special election at the
earliest possible time and (ii) expressly waives any requirement to have the special election
conducted within the time periods specified in Section 53326 of the Act or in the California
Elections Code.
6. The undersigned waives any requirement for the mailing of the ballot for the
special election and expressly agree that said election may be conducted by mailed or hand-
delivered ballot to be returned as quickly as possible to the designated election official, being the
office of the City Clerk and the undersigned request that the results of said election be canvassed
45821143.1
and reported to the Council at the same meeting of the Council as the public hearing on the
fatination of the CFD or the next available meeting.
7. The undersigned expressly waives all applicable waiting periods for the election
and waives the requirement for analysis and arguments relating to the special election, as set
forth in Section 53327 of the Act, and consents to not having such materials provided to the
landowner in the ballot packet, and expressly waives any requirements as to the form of the
ballot.
8. The undersigned expressly waives all notice requirements relating to hearings and
special elections, whether by posting, publishing or mailing, and whether such requirements are
found in the California Elections Code, the California Government Code or other laws or
procedures, including but limited to any notice provided for by compliance with the provisions
of Section 4101 of the California Elections Code.
9. The undersigned hereby consents to and expressly waives any and all claims
based on any irregularity, error, mistake or departure from the provisions of the Act or other laws
of the State and any and all laws and requirements incorporated therein, and no step or action in
any proceeding relative to Improvement Area No. 2 or the special election therein shall be
invalidated or affected by any such irregularity, error, mistake or departure.
IN WITNESS WHEREOF, I hereunto set my hand this day of , 2006.
INDIO LAND VENTURES, LLC,
a California limited liability company
Gary C. Williams
Vice President
SunCal Companies
FILED IN THE OFFICE OF THE CITY CLERK OF THE CITY OF INDIO THIS
DAY OF , 2006.
City Clerk
45821143.1
REIMBURSEMENTANDDEDICATION
AGREEMENT
FOR PUBLICIMPROVEMENTS
Terra Lago Master Planned Water Facilities Improvements
February 21, 2006
This Reimbursement Agreement for Public Improvements (the "Agreement") is made
this 1st day of March, 2006, by and between the City of Indio, a California Municipal
Corporation ("City") and Indio Land Ventures, LLC, a California Limited Liability
Company ("Developer"). City and Developer are sometimes referenced herein jointly as
the "Parties" and each is sometimes alternatively referenced as a "Party."
RECITALS
A. Developer is the master developer of that certain real property commonly known
as the Terra Lago Project and located in the City of Indio, County of Riverside,
State of California (the "Property").
B. Developer is currently engaged in the project of developing the Property (the
"Project") in conformance with the terms and conditions of City entitlements,
including but not limited, to Tract Map No. 32341 (TM 32341) and that certain
development agreement dated December 18, 1996 and recorded in the Official
Records of Riverside County on September 18, 1998 (collectively, the
"Conditions").
C. The Conditions require Developer to construct certain public improvements that
benefit the Project and other properties within the area, subject to reimbursement
by the City of certain resulting costs.
D. Based on recent water analysis and water model Master Plan studies conducted by
the City, upgrades to the water distribution system are needed to serve the
Property and properties adjacent to the Property.
E. City desires to have Developer design (in cooperation with City), construct,
install, and dedicate to City certain public facilities related to the necessary
upgrade of the water distribution system to serve and benefit the Property and
properties adjacent to the Property (the "Water Facilities Improvements"), for
which City will provide plan check, design review, and inspection services. The
Water Facilities Improvements consist of two separate components, the
construction of a domestic water pump station (the "Pump Station") and the
construction of a 24-inch ductile iron water transmission main (the "Water Line").
The nature and scope of the Water Facilities Improvements are more specifically
described in Exhibit A attached hereto and incorporated by reference herein.
REIMBURSEMENT AGREEMENT SUNCAL WATER FACILITIES IMPROVEMENTS
Page 1 of 20
F. Developer has requested that City enter into a reimbursement agreement to set
forth the terms and conditions under which the City will reimburse Developer for
design and construction of the Water Facilities Improvements.
G. Developer's projected costs arising from and related to each component of the
Water Facilities Improvements is reflected in the itemized list provided as
Exhibit B, and incorporated herein. Developer's total projected costs related to
design, construction, and installation of the Water Facilities Improvements, as
reflected on Exhibit B and subject to approval of the Director of Public Works of
the City, are hereinafter referred to as the "Estimated Costs."
H. The Pump Station will be constructed on property currently owned by Developer
(the "Pump Station Property"). The Pump Station Property is more particularly
described in Exhibit C attached hereto and incorporated herein.
I. City and Developer agree that the Water Facilities Improvements will not cause
any actual or potential environmental impacts beyond those arising from and
related to the Project and previously addressed in Environmental Assessment No.
04-11-404 relating to Developer's proposed development of the Property (the
"Environmental Assessment").
J. City and Developer have agreed that Developer will construct the Water Facilities
Improvements and dedicate the Water Facilities Improvements and Pump Station
Property to City, City will provide design review, plan check, and inspection
services. City will reimburse Developer from those funds related to the City of
Indio Community Facilities District No. 2004-3 (hereinafter "CFD 2004-3")
account attributable to Water Capital Improvement Fees (hereinafter "Available
CFD Funds) for the cost of the Water Facilities Improvements, and City will
accept the Water Facilities Improvements and Pump Station Property, all as
provided in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, the receipt and legal sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
1. Agreement to Reimburse.
The Parties intend this Agreement to serve as the contract pursuant to which City shall
reimburse Developer from funds related to the CFD 2004-3 account attributable Water
Capital Improvement Fees for expenses incurred in the design, construction, and
installation of the Water Facilities Improvements. The City shall pay said reimbursement
in the amount of Developer's actual costs and expenses, which shall also include
Developer's costs for a contract administrator / construction manager as set forth below
in Section 4.2, for any unknown conditions encountered as set forth below in Section
4.6.1, if required, and for any design, construction and installation cost overruns
attributable to any Force Majeure event, as that term is defined below in Section 5, in
REIMBURSEMENT AGREEMENT SUNCAL WATER FACILITIES IMPROVEMENTS
Page 2 of 20 _
conformance with the terms of this Agreement; however, said amount shall not exceed
one hundred ten percent (110%) of the Estimated Costs (as approved by the Director of
Public Works pursuant to Section 5, below), without approval of the City Council of the
City of Indio and/or amendment to the Agreement (in either event, the
"Reimbursement"). In making its commitment to the Reimbursement, City specifically
declines to commit any funds attributable to interest. As a foundation for this Agreement
and City's payment of the Reimbursement, the Parties agree that the Recitals above are
true and correct and that they mutually accept same as binding contractual terms,
incorporated by reference, together with Exhibits A, B, and C, and the definitions set
forth, herein.
2. Design, Construction and Installation of Improvements and Water Facilities
Improvements.
Developer shall be responsible for designing (in cooperation with City), constructing, and
installing the Water Facilities Improvements. City shall provide plan check, design
review, and inspection services. Developer shall submit plans, conforming to all
applicable legal authority and standards, for the Water Facilities Improvements, in accord
with established City policies and procedures and compliance with all applicable
authority, to City's Director of Public Works (the "Director") for approval prior to
construction. The construction and installation of the Water Facilities Improvements
shall be to the City's satisfaction, reasonably exercised in its sole discretion.
3. Obligations of Developer.
3.1. Scope of Services
The obligations of Developer pursuant to this Agreement may collectively be
referred to herein as "Services" or "Work." Developer may select a contractor or
contractors (collectively, "Contractor") to assist in the construction and
installation of the Water Facilities Improvements and to perform Services and
Work hereunder. Developer shall be responsible for Contractor's compliance
with and satisfaction of all of Developer's obligations underthis Agreement. As a
material inducement to the City entering into this Agreement, Developer
represents and warrants that Contractor is a provider of first class work and
services and is experienced in performing the Work and Services contemplated
herein. Developer also warrants and represents that all materials will be of good
quality, fit for the purpose intended.
3.2. Compliance with Law and City Requirements.
All Services rendered hereunder shall be provided in accordance with all
ordinances, resolutions, statutes, rules, and regulations of the City and any
Federal, State or local governmental agency having jurisdiction in effect at the
time service is rendered. Developer understands and agrees that this Agreement
shall not be construed or interpreted by City or any party as relieving Developer
REIMBURSEMENT AGREEMENT SUNCAL WATER FACILITIES IMPROVEMENTS
Page 3 of 20
of its general obligations arising from or related to the design (in cooperation with
the City), construction and installation of public facilities and infrastructure, e.g.,
to provide City with various bonds (the "General Obligations").