BP 7212.11 — ^Community Facilities Districts
General Provisions Pursuant to Section 53312.7 of the California Government Code, the Governing Board ("Board") of the Redlands Unified School District ("school district") shall set forth guidelines for the establishment of Community Facility Districts ("CFD") as set forth the Mello-Roos Community Facilities Act of 1982, as amended ("Act"). The use of the Act by the school district shall be to finance developer mitigation obligations for the construction and/or acquisition of public K-12 school facilities, to serve the students within the Redlands Unified School District.
The school district may, at the discretion of the Board, form one or more CFDs which will fund school mitigation obligations for the school district in connection with new development occurring within the school district and/or to meet other school facilities needs. Additional development may, under certain circumstances, be annexed into an existing CFD for the purpose of funding similar school mitigation obligations.
All School Facilities will be financed in accordance with the provisions of the Act and sound municipal financing practices.
The school district intends that all administrative expenses incurred in relation to the formation of, or annexation to, a CFD to be funded by the CFD. Funding by the CFD may include an initial deposit from a developer(s) based on estimated costs. No administrative expenses will be funded by the school district's general fund.
Types of Facilities to be Financed
The Act authorizes the school district to form CFDs for the funding of School Facilities.
The priority of the school district is for public financing by the school district of School Facilities, including school sites and related structures, furniture, equipment, technology and buses, as well as support facilities and maintenance of CFD financed School Facilities. The Board reserves the right to expand or delete projects from this list on a case-by-case basis. Should additional types of School Facilities be authorized under the Act by future action of the State Legislature it is the intention of the Board that such shall be encompassed in this district Finance Policy without requirement of amendment hereto.
It is the policy of the school district that its CFDs shall be formed and operate to finance School Facilities and not facilities of or for other public agencies.
Bond Issuance
Credit Quality. Any bonds, or equivalent securities, issued by (on or behalf of) a CFD must satisfy certain credit requirements. The purpose thereof being not only compliance with statutory requirements, but also the protection of the school district's credit rating(s) and general support and protection of public agency financing practices. Simple satisfaction of applicable credit requirements will not compel the Board to issue Bonds (or any type of securities), and such decision shall rest with the Board in each case. The ultimate security for Bonds (or equivalent securities) of the CFD is the value of the land, including the value of existing improvements. In the event of a default, the school district shall have the right to commence foreclosure proceedings and the property will be sold to pay off the outstanding delinquent special tax lien.
Value of Debt Ratio. The value of the real property that would be subject to the levy of the special tax to pay debt service on the bonds will be at least three times the principal amount of the bonds to be sold and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on such real property.
Bond Reserve Fund. The bond reserve fund will be set at a maximum of 10 percent of the principal amount of the bonds or the maximum allowed by law.
Developer Continuing Disclosure Obligation. Each Developer involved with a school district CFD shall cooperate with the CFD and the school district in complying with the requirements of Rule 15c12-12 of the Securities and Exchange Commission in connection with the issuance and sale of the Bonds. Each Developer involved with a school district CFD shall provide information to the CFD and the school district regarding its operations and financial condition, including, if available, an audited financial statement for its most recently completed fiscal year, for inclusion in the preliminary official statement and the final official statement for the Bonds. Subject to development status of the project a Developer may be an "obligated person" for purposes of compliance with Rule 15c12-12(b)(5) of the Securities and Exchange Commission and it may therefore be necessary for that Developer to enter into a continuing disclosure undertaking that so long as it remains an obligated person it will annually, at the time specified in such undertaking, provide information to the CFD and the school district regarding the Developer's financial condition.
Special Taxes
It is the goal of the school district that each taxpayer owning property within the boundaries of any Community Facilities district hereafter established by the school district pay special taxes which reflect, as nearly as practicable such taxpayers fair and reasonable share of their projected benefit from, and/or burden upon, the improvements to be financed by such Community Facilities district. It is the further goal of the school district that the maximum tax obligation, i.e., the aggregate amount of all ad valorem taxes, special assessments and special taxes, on any developed residential parcel within a Community Facilities district shall not exceed two percent of the sale price of such parcel.
Special Tax Inflators. The school district shall generally include an annual increase in the maximum Special Tax prior to the development of an individual parcel of property, or issuance of a building permit. This shall be in an amount equal to the percentage change in a referenced index or two percent, whichever is greater, or as otherwise set forth in the applicable rate and method of apportionment of the Special Tax prepared for, or applicable to, a CFD.
Special Tax Coverage Levy. All Special Tax formulas shall be subject to approval of the school district in consultation with its consultants to the extent that the application of the rate and method of Special Tax generates revenue in excess of gross debt service on the Bonds. Such excess funds may be utilized by the CFD to fund pay-as-you-go facilities. Special tax revenues from any Community Facilities district established by the school district are reasonably expected to provide at least 110 percent debt service coverage for each year during the term of such bonds.
Treatment of Delinquencies. A foreclosure covenant will be adopted which will provide the school district with maximum flexibility when necessary to protect the credit quality of the Bonds and to be flexible otherwise.
Credit Enhancement. The school district, as to any sale of Bonds or financing of a CFD, may require a letter of credit, a tax surety bond, or equivalent, to secure payment of special taxes pending actual development.
Preparation of Yearly Fiscal Status Report. Whenever bonds are issued by a CFD, the school district will take all action necessary to facilitate the completion and filing of a Yearly Fiscal Status Report ("Report") with the California Debt and Investment Advisory Commission ("Commission") as required by Section 53359.5 of the Government Code and any continuing disclosure requirements.
Disclosure Requirements
The school district shall require (to the extent required by law) that prospective purchasers of property in the CFD be informed of the levy and purpose of the special tax. The school district shall take such actions as are needed to encourage the compliance of all sellers of property in the CFD with the requirements of the law with respect to notice of the special tax.
Builders and Developers. Builders who are selling new homes and developers who are selling lots or parcels that are within a CFD shall provide disclosure notice to purchasers of property that complies with all of the requirements of Section 53341.5 of the Government Code, as amended from that time. Builders and developers are required to keep an executed copy of each disclosure document to prove that disclosure has been provided to all purchasers of property within a CFD. Builders and developers shall forward a copy of each disclosure document to the school district.
Resale of Homes or Lots. The district shall provide a notice of special taxes to sellers of property (other than builders or developers) which will enable them to comply with their notice requirements under Section 1102.6 of the Civil Code. A reasonable fee may be charged by district for providing the notice.
Criteria for Appraisals
Definition of Appraisal. An appraisal is a written statement independently and impartially prepared by a qualified appraiser setting forth an opinion of defined value of an adequately described property as of a specific date, supported by the presentation and analysis of relevant market information.
Adoption of CDIAC Standards for Appraisals. An appraisal shall be prepared where required under the "Credit Quality" provisions of this Finance Policy. In compliance with Government Code Section 53312.7(a)(5) and 53345.8, the Board hereby adopts the Appraisal Standards for Land Secured Financings published by the California Debt and Investment Advisory Commission and dated May, 1994, and as those standards shall be updated or amended from time to time, as the standards and policies for the appraisal of real property with school district CFDs. The Board may, in its discretion, elect to adopt or utilize different or updated appraisal standards in the future.
Conflict of Interest
No appraiser or review appraiser shall have any interest, direct or indirect, in the real property being appraised for the school district that would in any way conflict with the preparation or review of the appraisal. Each appraiser being considered shall be required to provide a written confirmation of the absence of any such conflict of interest.
Compensation for making an appraisal shall not be based on the amount of valuation.
Priority Attendance Policy
Pursuant to the provisions of California Government Code Section 53312.7(b), and to the extent not inconsistent with applicable state or federal laws, the school district shall give priority attendance access to students residing within a CFD in such a manner as to permit those students to attend school facilities financed with, or through, CFD special taxes on a first priority basis. Such policy shall be consistent with the obligations and authority of the school district to establish fair and reasonable attendance boundaries from time to time.
This priority shall reflect, to the extent that such can be reasonably determined, the proportion of each school's financing provided through that particular community facilities district.
The priority attendance access policy is subject to other school district goals and policies, including goals and policies to achieve ethnic, racial and socio-economic diversity, federal or state court mandates, transportation needs, safe pedestrian routes, grade levels for which the school facilities are designed and ensuring that students have continuity of education within a single year.