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HomeMy WebLinkAbout12/20/1994 Study Session MinutesMARANA TOWN OF MARANA PLACE AND DATE: Marana Town Hall, December 20, 1994. I. CALL TO ORDER By Mayor Ora Ham. Time: 6:11 P.M. II, ROLL CALL COUNCIL Ora Harn Sharon Price Tom Clark Ed Honea Betty Horrigan Herb Kai Helen Key Mayor Vice-Mayor Council Member (excused} Council Member Council Member Council Member (absent) Council Member STAFF: Hurvie Davis Dan Hochuli Joe Lizardi Marcia King Michelle Hailer Sandra Groseclose 19 Members of the Public Town Manager Town Attorney Town Engineer Assistant to the Manager Receptionist/Clerk Town Clerk (excused} III. STUDY SESSION The Mayor directed the proceedings over to Hurvie Davis, Town Manager. Hurvla Davis introduced the Special Study Session to discuss the Westinghouse and US Homes Community Facilities District in the area of Tangerine Rd. and Tortolita Parkway. He stated that several meetings have been held on this subject, including staff and Council meetings. This study session is for the presentation of the actual development which is taking place in that area. Ron Dillon, Executive Vice-President of WCA Communities, Inc., 4220 N. Campbeil Ave. Tucson, AZ. Mr. Dillon introduced: Mike Grassinger, from the Planning Center, Craig Johnson and Gary Aalen from US Homes Corporation, Doug Seeley, bond underwriter, also two attorneys, Scott Ruby and Steve Betts. He thanked the Council for coming out early for the meeting. Mike Gl'assinEer, 450 W. Paseo Redondo, Tucson AZ. He refreshed Council's memory on the property {showed drawings of property layout). The 5500 acres purchased by Westinghouse was annexed in three phases: 1. specific Plan 2. canyon piece 3. remainder of property. 1989 Specific Plan adopted by the Town, included provisions for a variety of land uses. He reminded Council of how Westinghouse, US Homes and the Town have gotten to this point. Gary Aalen, US Homes, 800 E. Wetmore, Tucson AZ. Mr. Aalen is a Land Manager for US Homes and has been overseeing duties for 10 years. Reviewed figures showing that the population between the ages of 55-64 years of age wiil almost double between 1990 and 2020. US Homes is looking for the perfect property for this senior age group, US Homes believes that the Tortolita Mountains is that area. US Homes was established in 1954 and has built over 35,000 homes and 65 active adult communities, totaling over 250,000 houses. Referring to the maps of the property on display for the Council. Heritage Highlands at Red Hawk Canyon is the name established for the project and it will cover approximately 620 gross acres, of those, 70 acres will not be age restricted. The project wfll include a championship golf course, clubhouse with rec. center, pool, spa, etc. and will incorporate no more than 1750 units, and about 80% will be age restricted to buyers of 55 or greater age. There wiil be three or more product offerings, priced from lower $100,000's to low $200,000's. Upon completion the project will be valued at one-quarter of a billion dollars. US Home is proud of the development team that has been put together for this project. He gave information on each company that will be involved with each phase of the project. General Contractor for the clubhouse is Sundt Corporation here in Arizona. Scott Ruby, Attorney with Gust Rosenfeld, 291 N. Central Ave., Phoenix, AZ Gust Rosenfeld has acted as Bond Counsel for most of all Arizona's cities, counties and school districts. He briefly walked through the process of forming a community facilities district. Mr. Ruby referred to the three documents given to the Council: a petition, a general plan and a resolution, for each proposed district. Statutes require forming a CFD states upon receiving a petition from 25% of the landowners, the Town Council can consider and schedule for a hearing for the petition for formation of a CFD. In our case, where 100% of the landowners si~:~n the petition, some of the procedural requirements can be waived, particularly the notice ~iven to people residing in the CFD area, and can waive the elections required for consent of landowners and qualified voters in the district. In this case there are no qualified voters and 100% of the landowners signed petition. The Petition states there is a request to form a district, the petition was filed with the Town Clerk yesterday {12-19-94), and a copy given to Dan Hochuli, Town Attorney. On record as having meeting the statute only requiring the presentation of a petition, and believes that has been done. A General Plan has been filed, two pages, listing what type of public infrastructure might be constructed and financed by the district. Those items, water lines, sewer lines, landscaping, roads, walkways, come directly from the statutes. The Pan included everything the statues will allow to finance, with the exception of school sites. This document again was signed by all the owners of the land and was flied yesterday, a formality on record to 2 show what type of infrastructure might be considered for financing. The last document is a resolution. The resolution actually forms the community facilities district. The draft names the potential Board of Directors. The resolution forms the districts, so they can operate and exercise the powers given to them under the statute. CFDs under the statutes are twofold, they are established for financing public infrastructure and for financing the maintenance of the infrastructure, they can do no more. They cannot zone, regulate land use, or impose restrictions, they are only financing vehicles used to develop public infrastructure. In the US Homes and Westinghouse cases, focused on particular portions of those powers, CFDs must choose between three methods of financing the infrastructure, issue revenue bonds, supported by a revenue stream such as a water or sewer company, general obligation bonds, supported by an ad valorem tax, levied against the real property located solely in the boundaries of the district, or assessment bonds, same as a city or county can issue. Assessment bonds are common in county and city financing. Assessment bonds are supported by a lien which is placed upon the land. The landowner is required to pay off lien in installments, if not paid up front in cash. Over a period of time that relates directly to the period of time that the bonds that were sold come due. Assessment lien is the first lien subject only to the lien for general taxes. Assessment bonds are preferred in the case of the US Home district, district number one. They propose a single financing of assessment bonds in order to construct a water line, sewer line and Tortolita Parkway and all the accouterments, street lights, landscaping, etc. The bonds would be sold and proceeds placed in a fund with a Trustee who would pay out only after showing that it is going towards construction costs. Used exclusively for improvements, the improvements would go out for public bid, surety and performance bonds with the bids for construction contracts. Proceeds would be used for construction, with the exception of some of them. Some would be used to pay costs of issuance. Also a reserve fund would be established and in the event that there was a failure to pay the assessment the reserve fund could be tapped. Assessment bonds proposed by US Homes would also be unique in that the bond or lien is extinguished prior to a homeowner coming in and buying property. The lien then is not passed over to the homeowner. A feasibility report must be presented to the Board, showing financial impact, how the bonds will be repaid, and information on the project. If the landowners don't pay, the lien rests against the land assessed. The Trustee would dip into the reserve fund, also the Trustee or appointed official would begin the process of foreclosure on that land. They would try to sell the particular parcel that has been liened, for the full amount of the assessment, similar to a deed of trust on a house. Proceeds go to pay of the lien. If it does not generate enough funds to pay the assessment, there is a deficiency. At this time, the greatest concern the Town has raised comes up. Now what does the bond holder do, are they coming after the Town? ~'irst and foremost these are district obligations not Town obligations. The Town has no part of these transactions, either morally, legally or otherwise. They could try and find liability on the Town's side, but in our opinion they could only find that if they could find some wrong doing under the securities laws committed by the Town. Remember, this is a district obligation, the Town is removed from the issuance of the bonds and it's going to be a very difficult nexus to create, a point of protection being negotiated by Dan Hochuli relative to the Town's prospective. Finally, both landowners have agreed to give the Town a full indemnity for any type of securities law claims which comes out of the issuance of the bonds by the district. This is a brief walk through of the documents and the assessment bond process. I would be glad to answer any questions now or later. · lalror Ora llarn: When talking about building the infrastructure, what is going to be put in for the continued maintenance of the landscaping and other infrastructure you will have in that area? Scott Ruby: CFDs have the authority to levy a .30 cent per $100.00 assessed valuation tax for maintenance and operation of its various assets. In this case, US Homes and Westinghouse have agreed to bear the expenses of maintaining the street lights and landscaping ali along Tortolita Parkway. District #1 has proposed that the developer will assume that obligation until such time as a Homeowners Association has become obligated to the satisfaction of the Town Attorney to pay their portion of that bill. District #2, the Westinghouse District, proposes to immediately implement a .30 cent tax on its property so as to begin to generate the proceeds needed to maintain the landscaping. Raw land may not generate enough to cover the maintenance expenses of that parkway. The developer, Westinghouse will make up any shortfall in that amount, until such time the assessed valuation has grow to the point where the .30 cents will cover the amount of the maintenance obligation. That is the primary reason for the Westinghouse District to be created at this time, to get that tax on board so that the maintenance obligation can continue. Council Member Helen Key: Say a district is created and a board appointed, Westinghouse and US Homes now want to tap into the money to create the infrastructure. They make an application to the Board? Scott Ruby: That is correct. Under the development agreements back in 1989, that is how it would work. But in this case, again through negotiations both developers have agreed to put significant governors on their ability to do exactly what you have suggested without the Town's consent. Both Districts have agreed to not issue revenue bonds without the consent of the Town. Distr/ct #1, US Homes has agreed not to issue general obl/~ation bonds without the consent of the Town. District #2, Westinghouse has agreed not to issue general obligation bonds if the issuance of the bonds would increase the tax rate by more than $3.00 per $100.00 of assessed valuation without the consent of the Town. We could go to the District, and say here is the financing we want to do, we would still have to come before the Town and get approval. Mayor Ora Ham: Does all bonding money come in and you draw on it, you have it there and available as you need it? Scott Ruby: Yes. Bonds are sold for the entire principle amount of the cost of constraction of ail the public improvements. Based on firm construction estimates and actual bids that have been received and awarded. The sizing of the bond issue is pretty precise to the cost of the public infrastructure. Money is held by a Trustee and certain certifications and evidence of payment of costs must be shown before they dip into the bond proceeds and pay off the contract. Mayor Ora Harn: Is the Trustee an employee of US Homes, who is the Trustee? Scott Ruby: The Trustee is a bank, an independent bank with assets that are substantial enough that they are not going to go under, a major bank. One that has construction lending type of expertise. Steve Betts~ Attorney with Stretch Lang, 2 North Central, Phoenix, AZ. Known as the Father of the CFD Act. Gave Council a hand out. In 1988 Westinghouse first got involved and entered into an annexation agreement with the Town. Late 1988, the Town annexed the first part of the property. He referred to map of the land in question and made the Bullwiukle comparison. 1988 annexed Bullwinkle's face, with a Specific Plan. 1089 came in with a separate development agreement with how a CFD would be used on that property. Talked about possibility 4 of more than one CFD, but hadn't anticipated that there would be more than one master developer. US Homes stepped in as a second master developer. So we now have two CFDs that could work together side by side. Two page summary of comnfttments, linfitations and assurances have been put into the new development agreement that provides the limitations. A lot of time has been spent with staff talking through concerns about financing. This is a list of things built into the new set of documents (2 1/2 page hand out). I am happy to answer questions regarding the hand out or any others. Ron Dillon: This concludes the presentation to the Council. We appreciate the time and effort the Town has put into this. We are not going to create a monster. Thank you. Mayor Ora Ham; Any questions? Ed Honea: Suggested holding questions until general order of business at regular meeting. IV. ADJOURNMENT A motion was made by Ed Honea, seconded by Helen Key and carried unanimously to adjourn. Time: 7:15 P.M. AUDIO TAPES OF THE MEETING ARE AVAILABLE AT THE MARANA TOWN HALL, CLERK'S OFFICE. CERTIFICATION 1 hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Council Special Study Session of the Marana Town Council held on December 20, 1994. 1 further certify that a quorum was present.