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Wednesday, November 28, 2012

City Council Certifies CFD Election Resolution
•  Bonds Will Be Issued to Fund Construction Sewer Plant Design Phase


The Malibu City Council, at its meeting this week, on a 4-1 vote with Councilmember Skylar Peak dissenting, adopted a resolution certifying the results of the November 20, 2012 special tax and bond election for the Community Facilities District for the Malibu Civic Center Wastewater Treatment Plant Design Phase One.
Council members made no comments about the matter, nor did the public speak to the issue. Peak was mum about his lone dissenting vote.
The council voted on what will be known as Ordinance 371 authorizing the levy of a special tax within the CFD and direct staff to schedule a second reading and adoption of Ordinance 371 for the December 10 city council meeting.
Several months ago, the council, on a 4-1 vote with Peak dissenting, approved forming a Community Facilities District to levy special taxes on 15 properties that are within the CFD boundary for the Civic Center wastewater treatment plant design phase for the purpose “to issue bonded indebtedness.”
The city council’s apparent intention was to form a CFD in order to levy special taxes within the district utilizing bonds to pay for $6.5 million worth of design work for the wastewater plant.
According to Assistant City Manager Reva Feldman, the bonds that will be issued are a special obligation of the CFD and are payable and secured by a pledge of special taxes levied on property within the CFD.
“Neither the faith nor credit of the city is pledged or responsible for the repayment of the bonds,” wrote Feldman in a staff report, adding that the city will be responsible for paying consultant fees incurred in forming the CFD and submitting the special tax and bond measure to the voters in the CFD.
“The city will be responsible for the cost of the annual administration of the CFD, which is estimated not to exceed $10,000 a year. The cost for the annual administration will be reimbursed by the CFD to the city each year,” Feldman added.
The city has already spent $2.5 million to date for the Civic Center wastewater plant designs and does not plan on getting it all back.
”The net funding amount will enable the city to complete the design effort and allow the city to be reimbursed up to $1 million for funds that have already been expended.”
The city has “contributed” $2.5 million for the design to date and hopes it will be reimbursed for a portion of the costs incurred. The city's net “contribution” will be $1.5 million toward the design. “It is anticipated that the city parcels will be a part of the future assessment district,” Feldman wrote.
Currently, both city-owned land and county-owned parcels within the prohibition boundary are not included in the CFD since it is prohibited by state law.
Feldman indicated that a proposed assessment district is expected to be formed within the next 18 months to pay for the construction and design of the centralized wastewater system.
In the past, council members have asked when the city would get its money back and were told the $1 million invested by the city for design work already performed would come back when the bonds are sold.
Feldman indicated the exact amount of bonds to be issued will be determined based on bond market conditions at the time of sale. It is expected that bonds will be issued in late January 2013 in the principal amount not to exceed $6.5 million.
The maximum annual tax rate as proposed is $12,495.74 per acre for commercial property and $2,499.15 per acre for residential property. “These are the maximum rates that would support $6.5 million in bonds based on conservative interest rate assumptions,” the assistant manager noted.
Several different financial entities could be utilized for the CFD bonds to be taken out with proceeds from a future assessment district consisting of all the property in phase one. “Either structure assumes takeout financing by a larger assessment district that would refund the CFD bonds and pay for the construction of the treatment plant,” Feldman added.
The resolution sets forth the rate and method of apportionment of the special tax for the district and the special tax to finance the plant design and the incidental expenses.
Beginning with fiscal year 2012-2013 and for each following fiscal year, the special tax will be levied in equal percentages on each assessor's parcel, up to the applicable maximum special tax. The maximum special tax shall not be levied after fiscal year 2052-2053. 
Each landowner within the CFD was entitled to cast one vote for each acre of land or portion owned within the community facilities district. For a proposition to be adopted, two-thirds of the votes cast at the election must favor passage, according to city officials.
Feldman said the CFD would not attempt to collect the tax payments until after a benefits assessment district could be formed.

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