The Vanguard will have a more comprehensive commentary on Friday about the Cannery CFD (Community Facilities District) discussion. One of the issues that has been raised is whether there was some sort of mislead to the public or the council as to who would pay for the infrastructure.
Two members of the 2013 Davis City Council have told the Vanguard they were unaware of discussions of a CFD at the time that the vote was taken to approve Cannery. However, the city manager at the time told the Vanguard that he always believed there would be a CFD.
Councilmember Lucas Frerichs called the assertion that this was a bait and switch, at best, unfair as well as untrue. He said that there has certainly been a notion in the community that the CFD was not part of the conversation at all, that it was something that came after the fact.
“I take umbrage with that, it was something that was actually part and parcel to the entire process. It’s in the developer agreement,” Mr. Frerichs told his colleagues on Tuesday.
To buttress his perspective, it was noted that within the development agreement was the possibility that the developers could seek a CFD.
While the timing was probably inadvertent, one of the councilmembers noted on Wednesday that, at 10:41 pm on Tuesday, the council was emailed “CFD Policies” from city staff.
In May of 2007, a council comprised of Mayor Sue Greenwald, Mayor Pro Tem Ruth Asmundson, and Councilmembers Lamar Heystek, Stephen Souza and Don Saylor, unanimously passed resolution 07-079 which adopted “local goals and policies concerning the use of the Mello-Roos Community Facilities Act of 1982.”
“California Government Code requires that the City of Davis consider and adopt local goals and policies concerning the use of the Act, prior to the initiation of proceedings to establish a new community facilities district under the Act,” the resolution reads. “The City Council has determined that it is in the best interests of the City that its practices for establishment and administration of community facilities districts be updated and described by the adoption of a goals and policies document.”
Goals and Policies Concerning the Use of the Community Facilities Act of 1982:
Policy 1; It is the policy of the City of Davis that development pay for the infrastructure necessary to serve that development. The City may consider issuing Mello-Roos or assessment bonds on behalf of developers for backbone infrastructure. Backbone infrastructure is defined to include major arterials, sewer trunks, water mains and major drainage facilities. On site infrastructure includes such improvements as curb and gutter, and local service mains and collectors.
Policy 2; It is the policy of the City of Davis to require that the developer provide through a combination of an escrow deposit, a letter-of-credit (LOC) (or other security acceptable to the City) and/or a debt service reserve fund money sufficient to pay the maximum annual debt service on all undeveloped land within the proposed district for up to three years. It is anticipated that the debt service reserve fund normally funded in such a bond issue will provide coverage for at least one year of undeveloped land tax/assessment. The City, when appropriate, would consider a reduction in the level of security based on factors such as value-to-lien ratio of parcels within the district, age or maturity of the district and history of payments.
Policy 3: It is the policy of the City of Davis to require compensation in consideration of the benefit conferred through the tax exempt financing provided, and the risk to the City’s credit image in the event of a default. Such benefit may include developer participation in a tax or assessment on undeveloped land to support an improvement of benefit to the entire community.
Policy 4; It is the policy of the City of Davis to minimize and keep reasonable any special tax or assessment on single family residential property.
Policy 5: It is the policy of the City of Davis that the value of all property included within a community facilities district or assessment district exceed the par value of any bonds issued by an approximate ratio of 3:1, including any and all over-lapping debt, as required by Government Code Section 53345.8. Such value shall be determined by an MAI appraiser selected with the concurrence of the City, or the assessed value of the parcel.
In October, the presentation by staff in addition to conversations that the Vanguard had with staff and council suggested that, in light of the problems at Mace Ranch and public opinion surrounding the Mello-Roos, there was a general opposition to implementing a CFD.
Something changed so that, last Thursday, the staff recommendation clearly favored the CFD. Something changed and it is not clear what.
While nothing nefarious has occurred, we are also concerned that the conversation with the public did not occur in November 2013 prior to the approval of the Cannery project. Would it have changed anything? Hard to know. In general, we believe public discussion about the possibilities may have framed the discussion differently.
While the issue has gotten a lot of interest now, there were only a few speakers on Tuesday about the CFD, compared with dozens when Cannery was approved in 2013.
—David M. Greenwald reporting