Title
Adoption of Resolution Amending the Alameda Landing Community Facilities District (CFD 13-1) 2021 Bonds Fund (806) and the General Liability Internal Service Fund (611) Budgets for Fiscal Year 2022-23. (Finance 10024051)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
In September 2021, City Council authorized the issuance of $24.6 million in 2021 Special Tax Subordinate Bonds for the Alameda Landing Public Improvements Community Facilities District 13-1 (CFD). The debt service payments were not included in the Fiscal Year (FY) 2022-23 Mid-Cycle Budget Update. Additionally, the General Liability part-time pay budget was inadvertently reduced by $120,000 in FY 2022-23. Staff identified the need for a budget amendment to address these technical corrections.
BACKGROUND
2021 Special Tax Subordinate Bonds for Alameda Landing
Pursuant to a Disposition and Development Agreement entered into in December of 2006, among the City, the Successor Agency to the Community Improvement Commission of the City (“Successor Agency”) and Catellus, in 2014 the City of Alameda (City) formed the CFD and determined that the City could issue up to $20,000,000 in special tax bonds for the CFD to finance public improvements constructed by Catellus in connection with the development of Alameda Landing. At the time of formation of the CFD, the City and Catellus entered into an Acquisition Agreement whereby the City agreed to use the proceeds of special taxes levied on property in the CFD and proceeds of bonds issued by the City for the CFD to acquire public improvements constructed by Catellus and otherwise eligible to be financed by the CFD. In April of 2015, the City Council approved the annexation of 40 acres in Annexation Area Phase 2 of Alameda Landing into the CFD; added to the facilities authorized to be financed by the CFD; and increased the bonded indebtedness limit of the CFD to $40,000,000.
TRI Pointe Homes, Inc. acquired property in the CFD from the Successor Agency in 2013-2015 and has constructed 91 single-family homes and 162 multifamily residential units in the area of the CFD. In March of 2016, the City issued the 2016 Bonds and used the proceeds of the 2016 Bonds to acquire public improvements constructed by Catellus pursuant to the Acquisition Agreement.
Catellus has been developing the Annexation Area of Alameda Landing in three phases, proceeding with the construction of public improvements authorized to be funded by the CFD in order for each phase to then be sold to a homebuilder. In that regard, in August of 2020, Pulte Home Company, LLC (“Pulte”) acquired 7.5 acres of property in the CFD from the Successor Agency. Pulte acquired an additional 6.0 acres in June of this year and is anticipating acquiring 3.7 acres more in April of 2022. It is expected that Pulte will ultimately construct 357 residential units on its property.
To assure funds are available for the CFD to acquire the public improvements from Catellus when completed, Catellus requested that the City issue the remaining special tax bonds authorized to be issued on a subordinate basis to the 2016 Bonds.
On September 7, 2021, the City Council granted Catellus’ request and authorized the issuance of 2021 Special Tax Subordinate Bonds for the Alameda Landing CFD 13-1. The bonds were issued in October 2021 with total proceeds of $24,397,457.73, which includes the improvements, deposit to reserve fund, cost of issuance, and funded interest. Since the bonds were issued after preparation of the FY 2021-23 Biennial Budget, the debt service payments were not included in the baseline budget, and the update was missed during the FY 2022-23 Mid-Cycle Budget Update.
General Liability Part-Time Pay Budget
Staff requests restoration of the part-time staffing budget in the General Liability Fund. In FY 2021-22, the General Liability Fund had a part-time pay budget of $133,500. During the budgeting process, this number was inadvertently reduced by $120,000. Upon further analysis, this reduction is not appropriate given the continued need for part-time staff and the overall savings they bring to the City’s legal expenditures. As an example, the City pays its part-time attorneys in the range of $50 to $120 per hour, as compared to $250 to $450 in the outside counsel marketplace.
DISCUSSION
Staff is seeking City Council approval to amend the FY 2022-23 Mid-Cycle Budget in the Alameda Landing CFD 13-1 2021 Bonds Fund (806) to provide for debt service payments associated with the bonds issued in October 2021. The debt service payment due in FY 2022-23 totals $942,457.78, which includes a principal payment of $185,000 and an interest payment of $757,457.78.
Staff is also seeking an increase of $120,000 in the FY 2022-23 General Liability Internal Service Fund (611) budget for part-time staffing in order to reflect the previous fiscal year’s level of $133,500.
ALTERNATIVES
• Authorize the budget amendments proposed in the staff report.
• If no action is taken, the City may be subject to audit comments or would have to reduce the amount of legal work performed by part-time staff and thus likely cause an increase in outside counsel expenditures beyond $120,000.
FINANCIAL IMPACT
The debt service payments for Alameda Landing CFD 13-1 are funded by the special taxes levied on properties within the district. In FY 2022-23, special tax revenues are expected to be at least $964,300. Debt service payments and special tax revenue estimates will be included in future budgets presented to City Council for appropriations approval through the maturity of the 2021 bonds, which is expected in 2051 (see Exhibit 1).
The General Liability is funded by interdepartmental charges to City departments that receive insurance coverage and legal services as part of the City’s General Liability program. The General Liability Internal Service Fund has sufficient fund balance for the proposed appropriation of $120,000 to the FY 2022-23 Mid-Cycle Budget.
MUNICIPAL CODE/POLICY DOCUMENT CROSS-REFERENCE
This action is in conformance with the Alameda Municipal Code and all policy documents.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15378 (b) (4) of the CEQA Guidelines because it involves governmental fiscal activities which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
CLIMATE IMPACTS
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Adopt a resolution amending the Fiscal Year 2022-23 Mid-Cycle Budget in the Alameda Landing CFD 13-1 2021 Bonds Fund and the General Liability Internal Service Fund.
Respectfully submitted,
Margaret O’Brien, Finance Director
By:
Jennifer Tell, Budget Manager
Exhibit:
1. Debt Service Schedule