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HomeMy WebLinkAbout4.4 Approval of Deposit and Reimbursement AgreementAgenda Item 4.4 DUBLIN CALIFORNIA STAFF REPORT CITY COUNCIL DATE: September 19, 2023 TO: Honorable Mayor and City Councilmembers FROM: Linda Smith, City Manager SU B.ECT : Approval of Deposit and Reimbursement Agreement Prepared by: Jay Baksa, Finance Director EXECUTIVE SUMMARY: The City Council will consider approving a Deposit and Reimbursement Agreement with TH East Ranch Dublin LLC, for costs associated with the potential formation of a Community Facilities District (CFD) at the East Ranch project location. STAFF RECOMMENDATION: Adopt the Resolution Approving a Deposit and Reimbursement Agreement with TH East Ranch Dublin LLC. FINANCIAL IMPACT: Approval of the agreement will provide the City a mechanism for receiving a developer deposit in order to recover City costs associated with the possible formation of a Community Facilities District at the East Ranch project location. All costs associated with the formation of a Community Facilities District are ultimately borne by the developer. DESCRIPTION: Background The 165.5-acre East Ranch development project site is an undeveloped parcel located within the Fallon Village area of the Eastern Dublin Specific Plan (EDSP). The site is located north of Interstate 580, east of Fallon Road and the Jordan Ranch development, south of the Positano development, and adjacent to the City's eastern boundary. The project site generally increases in elevation from south to north with knolls and hilly terrain in the northeastern portion of the site. The City Council has received two presentations, on April 18, 2023 and June 20, 2023, from TH East Ranch Dublin, LLC on the project, which included a discussion on the formation of two types of Community Facilities Districts (CFDs). A Services CFD would fund the maintenance of public Page 1 of 3 28 streets and a Facilities CFD would help fund construction of certain public infrastructure and development impact fees associated with the project. The City Council expressed general support for the CFDs and specifics of the proposed CFDs will be brought back to the City Council at a future Council meeting as detailed below. The first step in the CFD formation process is to enter into a reimbursement agreement with the developer. Requested Approval - Deposit and Reimbursement Agreement The Deposit and Reimbursement Agreement will ensure all CFD formation costs are borne by the developer. The proposed agreement would require TH East Ranch Dublin LLC to deposit $160,000 with the City to offset costs incurred on the project. CFD Formation Team Due to the complexity of the CFD formation process and any subsequent bonded indebtedness, the City will rely on its financing team of experts and consultants that have worked on the Dublin Crossing CFD and on the City's issuance of revenue bonds to fund energy efficiency improvements. The team is as follows: 1. Financial Advisor— Fieldman, Rolapp and Associates (James Fabian) Assists with all aspects of the proposed CFD formations and preparation for bond issuance. 2. Bond Counsel / Disclosure Counsel — Jones Hall (James Wawrzyniak and David Fama) Provides legal advice and consultation related to the formation of the proposed CFDs, prepares associated legal documents, and prepares the official statement and continuing disclosure agreement for the bond market. 3. Special Tax Consultant— Goodwin Consulting Group (Susan Goodwin) Collects various data on the tax base in the proposed CFDs and assists in the development of appropriate special tax rate and method of apportionment, CFD Boundary Map, and Special Tax Lien. 4. Market Absorption Consultant - RCLCO/ Real Estate Advisors (Derek Wyatt) Performs a study of the proposed development within the CFD, and prepares estimates, based on specified economic and demographic data, of the prices at which the finished products (lots or completed buildings or units) can be sold, relative to current and future market conditions. 5. Appraiser- Seevers Jordan Ziegenmeyer (Kevin Ziegenmeyer) Performs an appraisal of the proposed CFD property in order to estimate its market value subject to the hypothetical condition improvements to be financed by the CFD. The estimate of value also considers the impact of the Lien of the Special Tax securing the Bonds. 6. Underwriter— Craig Bettencourt Assists in the structuring of the bond issue, including marketing and underwriting the bonds. Page 2 of 3 29 Next Steps - Tentative CFD Formation Schedule Staff anticipates scheduling the next set of formal actions for City Council consideration during the October and December meetings, as follows: October 17 • Resolution approving CFD boundary • Resolution of Intention to Establish CFD • Resolution of Intention to Incur Bonded Indebtedness December 5 • Public Hearing and resolution forming the CFD • Call and conduct landowner -voter election and declare results • Give first reading to ordinance authorizing levy of the special tax within the CFD December 19 • Second reading of Special Tax Ordinance STRATEGIC PLAN INITIATIVE: Strategy 3: Infrastructure Maintenance and Reinvestment Objective D: Explore use of funding mechanisms like community facilities districts for capital and ongoing maintenance needs. NOTICING REQUIREMENTS/PUBLIC OUTREACH: A copy of this Staff Report was provided to TH East Ranch Dublin LLC and the City Council Agenda was posted. ATTACHMENTS: 1) Resolution Approving a Deposit and Reimbursement Agreement with TH East Ranch Dublin LLC 2) Exhibit A to the Resolution - Deposit and Reimbursement Agreement with TH East Ranch Dublin LLC Page 3 of 3 30 Attachment I RESOLUTION NO. XX — 23 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN APPROVING A DEPOSIT AND REIMBURSEMENT AGREEMENT WITH TH EAST RANCH DUBLIN LLC WHEREAS, TH East Ranch Dublin LLC (Trumark Homes) (the "Developer") submitted an application to the City to initiate and conduct proceedings for establishment of a community facilities district, pursuant to the Mello -Roos Community Facilities Act of 1982 (the "Act"), related to its planned "East Ranch" project in the City (such community facilities district, the "CFD"), and to issue and sell special tax bonds of the City, acting on behalf of the CFD, in one or more series over time (the "Bonds") pursuant to the Act and upon the security of the unpaid special tax revenues derived from the levy of the special tax levied upon the taxable property in the CFD, which (among other things) is to be levied to finance the cost and expense of acquiring, constructing and installing certain authorized public capital improvements and the reimbursement of certain authorized fees; and WHEREAS, the Developer shall be responsible for all the costs of forming the CFD, including the costs of legal counsel, special tax consultants, and price point consultants (collectively, the "Proceedings Costs"); and WHEREAS, to provide the terms and conditions under which the Developer will make an initial deposit and subsequent deposits, if needed, to pay for the Proceedings Costs, a form of Deposit and Reimbursement Agreement has been prepared, filed with the City Clerk and submitted to the members of this City Council for consideration at this meeting. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby approve the Deposit and Reimbursement Agreement with TH East Ranch Dublin LLC, attached hereto as Exhibit A, and authorize the City Manager to execute the agreement. BE IT FURTHER RESOLVED that the City Manager is authorized make any necessary, non -substantive changes to carry out the intent of this Resolution. {Signatures on the following page} Reso. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 1 of 2 31 PASSED, APPROVED AND ADOPTED this 19th day of September 2023, by the following vote: AYES: NOES: ABSENT: ABSTAIN: Mayor ATTEST: City Clerk Reso. No. XX-23, Item X.X, Adopted XX/XX/2023 Page 2 of 2 32 DocuSign Envelope ID: DAF767FF-C4AC-41 DD-BA02-9D8621139B96 Exhibit A Attachment 2 CITY OF DUBLIN DEPOSIT AND REIMBURSEMENT AGREEMENT Community Facilities District No. 2023-1 (East Ranch) (Trumark Homes) THIS DEPOSIT AND REIMBURSEMENT AGREEMENT (this "Agreement"), dated for convenience as of August 1, 2023, is by and between TH East Ranch Dublin LLC, a California limited liability company (the "Developer"), and the City of Dublin, a municipal corporation and general law city organized and existing under the laws of the State of California ("City"). RECITALS WHEREAS, the Developer submitted an application to the City to initiate and conduct proceedings for establishment of a community facilities district, pursuant to the Mello -Roos Community Facilities Act of 1982 (the "Act"), related to the above -referenced project (such community facilities district, the "CFD"), and to issue and sell special tax bonds of the City, acting on behalf of the CFD, in one or more series over time (the "Bonds") pursuant to the Act and upon the security of the unpaid special tax revenues derived from the levy of the landowner -voter - approved special tax levied upon the taxable property in the CFD, which (among other things) is to be levied to finance the cost and expense of acquiring, constructing and installing certain authorized public capital improvements and the reimbursement of certain authorized fees (together, the "Authorized CFD Public Improvements"); and WHEREAS, if the City is able to accomplish sale and delivery of Bonds on terms and conditions satisfactory to the City, the City intends to utilize the proceeds of sale thereof to finance the acquisition, construction and installation of, and/or the reimbursement for, the Authorized CFD Public Improvements, including certain authorized incidental expenses related to the Authorized CFD Public Improvements, such as the costs of issuance of the Bonds and forming the CFD. AGREEMENT NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein, and for other consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: Section 1. The Denosit. The Developer hereby agrees to provide, or cause to be provided, to the City an initial deposit of $160,000 (the "Initial Deposit"), to be used by the City toward the payment of the documented, out-of-pocket costs of the City and its consultants that are incurred in conducting proceedings described below to create the CFD (the "Initial Costs"). The Initial Deposit, together with any subsequent deposits made pursuant to a writing mutually agreed between the Developer and the City, is collectively known as the "Deposit." The City shall at all times maintain records as to the expenditures of the Deposit. The Deposit shall be held by the City, and shall be disbursed as set forth in this Agreement. 33 DocuSign Envelope ID: DAF767FF-C4AC-41 DD-BA02-9D8621139B96 Exhibit A Attachment 2 The Deposit shall be sent via check as follows: City of Dublin Attn: Jay Baksa, Finance Director 100 Civic Plaza Dublin, CA 94568 Section 2. Use of Deposit. The Deposit shall be used by the City as follows: (a) Initial Costs. The City may draw upon the Deposit to pay for the Initial Costs, which include, but are not limited to, reimbursement for the time and expenses of City staff and related costs, as well as the fees and expenses of any consultants to the City (such as legal, municipal advisor, and special tax consultant fees) employed in connection with the formation of the CFD, costs of appraisals, studies and other reports necessary or deemed advisable by the City staff in forming the CFD, costs of publication of notices, preparation and mailing of ballots and other costs related to any election for the CFD, any special tax to be levied or any bonded indebtedness thereof, the costs of any action prosecuted in court to validate any aspect of the CFD, its special tax and/or any Bonds, charges of the City for an allocable share of administrative expenses of the City staff in connection with the CFD, and any and all other costs of the City associated with the creation of the CFD or otherwise incurred in order to carry out the authorized purposes of the CFD. (b) CFD Formed; Bonds Issued. If the CFD is formed and Bonds are issued under the Act, the City shall promptly reimburse the Developer, without interest, all amounts charged against the Deposit, such reimbursement to be made solely from the proceeds of such Bonds and only to the extent otherwise permitted under the Act. As soon as practicable after the date of issuance and delivery of any such Bonds, the City shall return to the Developer the then -unexpended Deposit, if any, without interest, less an amount equal to any costs incurred by the City in accordance with Section 2(a) above or that the City is otherwise committed to pay, which costs would be subject to payment under Section 2(a) above but have not yet been so paid by the City. (c) CFD Formed; No Bonds. If the qualified electors of the CFD do not approve the proposed special tax for the CFD or the CFD is not formed for any other reason, the City shall promptly return to the Developer the then -unexpended Deposit, if any, without interest, less an amount equal to any funds which have been committed by the City by the time of the election or other event terminating the proceedings, which costs would be subject to payment under Section 2(a) above but have not yet been so paid by the City. (d) CFD Formed; Subsequent Abandonment. If the CFD is formed, but for any reason is terminated after formation and before the levy of any special tax, the City shall, as soon as practicable after adoption of the resolution stating the intent of the City Council of the City (the "City Council") to terminate proceedings under the Act, promptly return to the Developer the then -unexpended Deposit, if any, without interest, less an amount equal to any costs incurred by the City in accordance with Section 2(a) above or that the City is otherwise committed to pay, which costs would be subject to payment under Section 2(a) above but have not yet been so paid by the City. -2- 34 DocuSign Envelope ID: DAF767FF-C4AC-41 DD-BA02-9D8621139B96 Exhibit A Attachment 2 Section 3. Additional Denosits. If the Initial Deposit is insufficient to pay the City's documented, out-of-pocket costs to be incurred by the City in connection with the City's consideration, creation or formation of the CFD, the City may request an additional deposit from the Developer. The Developer shall have fifteen (15) days to provide the additional deposit. If the City has not received the additional deposit by the end of that 15-day period, the City will cease work on the formation of the CFD until the additional deposit is paid, at which time the City will resume the formation process. Any additional deposits made shall be become part of the Deposit subject to reimbursement in this Agreement. The failure to provide any additional deposit shall not be deemed a breach of this Agreement and the only remedy available to the City for failure to provide the deposit shall be to cease the CFD formation process. Section 4. No Debt or Liability of City. This Agreement is not a debt or liability of the City, as provided in Section 53314.9(b) of the Act. The City shall in no event be liable hereunder other than for the return of the unexpended and uncommitted portions of the Deposit as provided in Section 2 above and reimbursement from Bond proceeds as contemplated herein. The City shall not be obligated to advance any of its own funds with respect to the establishment of the CFD or for any of the other purposes listed in Section 2(a) hereof. No member of the City Council or officer, employee or agent of the City shall in any event be personally liable hereunder. Section 5. No Obligation to Form CFD. The provisions of this Agreement shall in no way obligate the City Council to form the CFD or to take any action with respect thereto, including the issuance of any Bonds. However, subject to compliance with the City's policies, City staff shall utilize its best efforts to present the CFD formation proposal to the City Council, to implement the proposed establishment of the CFD and to accomplish issuance and sale of the Bonds to finance the authorized purposes of the CFD, including but not limited to reimbursement to the Developer for the Deposit and other payments made by the Developer pursuant to this Agreement and to acquire, construct and install the facilities. The Developer acknowledges that the City Council retains complete discretion over the terms and conditions of issuance of the Bonds and that if for any reason the Bonds are not issued on terms and conditions deemed satisfactory to the City, the Developer will have no right to recover any amounts deposited hereunder. Section 6. Indemnification. Developer shall assume the defense of, indemnify and hold harmless, the City and its officers, employees and agents, and each and every one of them, from and against all actions, damages, claims, losses or expenses of every type and description to which they may be subjected or put, by reason of, or resulting from, any breach by Developer with respect to this Agreement, or the transactions contemplated hereby and thereby; provided, however, that Developer shall not be required to indemnify any person or entity as to damages resulting from negligence or willful misconduct of such person or entity or their officers, agents or employees. Section 7. Amendment and Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. In the event the Developer shall assign its rights to receive reimbursement, the Developer agrees to provide the City with such assurances as the City may reasonably require from the assignee of the Developer as to the rights of reimbursement and the City reserves the right to make any reimbursements payable jointly to such persons as the City may reasonably expect to be paid. This Agreement may be assigned, in whole or in part, by the Developer to the purchaser of any parcel of land within the Property; -3- 35 DocuSign Envelope ID: DAF767FF-C4AC-41 DD-BA02-9D8621139B96 Exhibit A Attachment 2 provided, however, such assignment shall not be effective unless and until the City has been notified, in writing, of such assignment. Section 8. Entire Agreement. This Agreement contains the entire agreement between the parties with respect to the matters provided for herein and supersedes all prior agreements and negotiations between the parties with respect to the subject matter of this Agreement. Section 9. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally delivered or seventy-two hours following deposit of the same in any United States Post Office in California, registered or certified, postage prepaid, addressed as follows: City: Developer: City of Dublin 100 Civic Plaza Dublin, CA 94568 Attn: Jay Baksa, Finance Director Email: Jay.Baksa@dublin.ca.gov Trumark Homes LLC 3001 Bishop Dr., Ste.100 San Ramon, CA 94583 Attn: Croak -Pamela Nieting/Tony Bosowski Email: pnieting@trumarkco.com Email. tbosowski@trumarkco.com Each party may change its address for delivery of notice by delivering written notice of such change of address to the other party hereto. Section 10. Attorneys' Fees. In the event of the bringing of any action or suit by any party against any other party arising out of this Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the losing party all costs and expenses of suit, including reasonable attorneys' fees. Section 11. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible. Section 12. Governing Law. This Agreement and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California. Section 13. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party hereto, or the failure by a party to exercise its rights upon the default of another party, shall not constitute a waiver of such party's right to insist and demand strict compliance by such other party with the terms of this Agreement thereafter. Section 14. No Third -Party Beneficiaries. No person or entity shall be deemed to be a third -party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than the City and the Developer (and their -4- 36 DocuSign Envelope ID: DAF767FF-C4AC-41 DD-BA02-9D8621139B96 Exhibit A Attachment 2 respective successors and assigns, exclusive of individual homebuyers), any rights, remedies, obligations or liabilities under or by reason of this Agreement. Section 15. Effective. This Agreement shall be effective upon its execution by the parties hereto. Section 16. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which shall constitute but one instrument. To facilitate execution of this Agreement, the parties may execute and exchange by facsimile or electronic mail counterparts of the signature pages, which facsimile or electronic mail counterparts shall be binding as original signature pages. [Signatures on following pages] -5- 37 DocuSign Envelope ID: DAF767FF-C4AC-41DD-BA02-9D8621139B96 Exhibit A Attachment 2 IN WITNESS WHEREOF, the parties have executed this Agreement to be effective as of the day and year written above. CITY OF DUBLIN TH East Ranch Dublin LLC, a California limited liability company FAD:7:7Signed by: FRB4&FR-IN... Linda Smith, City Manager Tony Bosowski, Division President, Trumark Attest Marsha Moore, City Clerk Approved as to Form: City Attorney 3070365.1 [Deposit and Reimbursement Agreement] S-1 38