Santa Paula Council: First East Area 1 Schedule and Mello-Roos Funding

By Sheryl Hamlin

Limoneira was the major force in three items on the April 4, 2016 Santa Paula City Council meeting:

  • The Mission Rock Energy Center, where they have agreed to provide recycled water, as previously reported here.
  • The East Area 1 (EA1) Schedule (Item 10A starting at 00:22:58 on the video)
  • The Mello-Roos Implementation for East Area 1 (Item 10B starting at 2:14:18 on the video)

East Area 1 Schedule (10 A)

Council Member Procter recused himself from this item saying that “although there will be no voting”, he would recuse himself in “an abundance of caution”.

Planning Director Minsk introduced the item saying that the voters had approved the project in 2008. A history of the project can be reviewed here as previously reported.

Mike Penrod of the Parkstone Group presented the following schedule. Tim Jones of Lewis was present but did not speak.


Mr. Penrod said that although this had been a “long process”, they are going to start “actual work” later this year after the grading permits are submitted in May 2016. The first item on the schedule “Demo Structures” refers to “old houses” on the property scheduled for demolition, which may be used by the SPFD as a burn drill where the Fire Department will practice fire extinguishing. Mr. Penrod said that the above schedule related only to Phase I which consists of the 500 to 600 homes closest to State Route 126 and Hallock.

Under the point “Sell Lots to Builders”, he said they anticipated four to five different builders with different products. As for the K-8 school, he said that this depends on the passage of the June 7, 2016 school bond measure, which will cost homeowners $59 per each assessed $100,000. Therefore a home assessed at $400,000 will see a bill of $236 on the annual property tax bill or about $20 a month. Apartments are not planned, but there is land reserved for apartments, depending on market conditions.

He stressed that there are hurdles in obtaining the grading permit including the CLOMR (Conditional Letter of Map Revision) for Haun Creek, Army Corps, California Fish and Game, Watershed Protection District, LOMR(Letter of Map Revisions) for Santa Paula Creek. This takes the property out of A99 zoning, although he did not describe the mitigation measures for this flood control. Because of this action, flood insurance will not be required, said Mr. Penrod. He also mentioned the sewer, the drainage and the Santa Paula Street bridge.

He discussed the “Joint Use Agreement” between the city and SPUSD, which allows the city to use the gym, the park and other facilities, depending of course, if the bond measure passes, saying the community outreach to the configuration of the park is essential. The cost is $11 million for this park.

Saying they were “really excited”, there will be more community outreach meetings in the future to keep the public apprised of “what’s really going on”.

One public speaker, Richard Rudman, suggested that two items be added to the plan: a transportation hub for those commuting to work and a permanent farmers’ market. He said that the market would be a destination place to grow the city; the hub would allow more people to get in and out of Santa Paula easily.

Council Member Gherardi asked about the next update, to which Mr. Penrod said would be June, when he will hopefully show the product types and maps. Theoretically their status reports would be quarterly, he said.

Item 10B Community Facilities District

Finance Director Easley introduced Terry Maas of FirstSouthwest, the city’s bond specialist and financial advisor, who has been working for years with the city to provide financing through the municipal bond market. This agenda item is the first time the public has been exposed to the notion of a “Community Facilities District (CFD)” for East Area 1 (part of the Mello-Roos legislation of 1982) which allows a specially created district to pay for infrastructure through public financing. Note that Section 6.3 of the Development Agreement for EA1 describes funding types. The homeowners will pay a fee that will be enough to satisfy the bond interest payments plus an amount sufficient to repay the principal when the bonds are due.

Mr. Procter said that the CFD was comparable to an HOA, to which Mr. Maas explained that an HOA fee was monthly, but the CFD was assessed on the property tax bill.

The motion on the agenda which is the first step is the adoption of a CFD Policy. Mr. Terry Maas was instrumental in developing this policy for the city using the standard California Template. The Act requires guidelines be in place before the CFD is formed. The template is very specific. For example, it now requires a 3:1 value to lien, which is a conservative appraisal. This means that the property must be appraised three times the proposed bond amount.

Council Member Procter asked about the voting process to approve the CFD. Lauren Langer responded saying that the petition is signed by 10% of the owners which is then processed by the city. The petition must describe what facilities are covered. Eventually the costs will be calculated. The owners of properties affected will be allowed to vote.

Mr. Maas explained that there are several types of districts: streets, sidewalks and sewer lines are generally included. Some may also include maintenance. Paygo financing could also be used to repay the developer, which essentially means pay out of available cash flow and defer the rest, which is how pensions and health benefits are funded. Click here for an overview of development financing and options.

Council Member Gherardi asked how homeowners were notified. Mr. Maas said it should be part of the sale disclosures. There was another question about who was responsible in the event no homeowners were available to pay the bond interest and principal accrual. The response was that there would be no recourse to the General Fund. In a subsequent conversation, Mr. Maas explained that initially, there is only one voter, the landowner Limoneira, who will be responsible for all interest and accrual of principal, until the lots are sold.

There was a discussion about retroactive funding. Ms. Lauren Langer, attorney, was unsure; but it was generally agreed that it would behoove Limoneira to move quickly. Additionally, Mr. Maas said that there will be an item in the funding proposal for an administrative fee to pay for city staff time.

The policy was approved.

Note, that Council Member Procter did not recuse himself from this discussion even though Limoneira would benefit from the repayment of fees through the CFD bonds.



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5 years ago

There are two school bonds. The November 2016 is here and is for new construction …

The bond on the June 2016 is for local maintenance of schools.