ADOPT AN ORDINANCE AUTHORIZING THE LEVY OF A SPECIAL TAX WITHIN COMMMUNITY FACILITIES DISTRICT NO. 10 (ONTARIO AIRPORT TOWERS)

SUBJECT:

ADOPT AN ORDINANCE AUTHORIZING THE LEVY OF A SPECIAL TAX WITHIN COMMMUNITY FACILITIES DISTRICT NO. 10 (ONTARIO AIRPORT TOWERS)

RECOMMENDATION: That City Council adopt the attached Ordinance authorizing the levy of a special tax within Community Facilities District No. 10 (Ontario Airport Towers) in accordance with the Second Amended and Restated Rate and Method of Apportionment adopted on March 3, 2009.

COUNCIL GOALS: Develop Strategies And Take Actions To Minimize The Negative Impacts Of The Global Financial Downturn On Ontario’s Economy And The City’s Fiscal Health

Invest In The Growth And Evolution Of The City’s Economy

Invest In The City’s Infrastructure (Water, Streets, Sewers, Parks, Storm Drains And Public Facilities)

FISCAL IMPACT: Pursuant to the authorization of a negotiated purchase of the CFD No. 10 special tax bonds by the City as an investment, approved in Resolution No. 2008-119, the financing is expected to generate approximately $8.4 million for funding the extension of Guasti Road between Archibald Avenue and Turner Avenue, and approximately $9,300 annually for funding City services within the District. Since Mello-Roos bonds are not a direct responsibility of the City and are paid from special taxes levied on each taxable parcel in the District, there is no General Fund obligation from the issuance of Mello-Roos bonds. However, there are projected annual interest earnings from the purchase of the bonds; projected to be $715,275 for the first year, with this amount to decline gradually as the outstanding principal is paid down over time.

BACKGROUND: On March 3, 2009, as part of proceedings to amend the existing rate and method of apportionment of special tax for CFD No. 10 (Ontario Airport Towers), the City Council introduced the attached Ordinance authorizing the levy of a special tax within the District. Staff recommends that the City Council now take final action on the Ordinance.

The Mello-Roos Community Facilities Act of 1982 provided local government, with the consent from a majority of the property owners, the authority to establish community facilities districts for the purpose of levying special taxes to finance various kinds of public infrastructure facilities and governmental services.

Ontario Airport Center, LLC (J.R. Wetzel, RREEF America REIT), provided a written petition to the City requesting the formation of a community facilities district to fund the extension of Guasti Road, which was required to facilitate the development of the Ontario Airport Towers project. The Ontario Airport Towers project addresses the development of approximately 25 acres and is generally located on the south side of Interstate 10, north of Guasti Road, east of Archibald Avenue and west of Turner Avenue. Ontario Airport Center, LLC proposes to develop in 5 phases: 850,000 square feet of Class A office space (five buildings), 10,000 square feet of retail space, and a 175 room hotel. At this time, the extension of Guasti Road has been completed, and accepted by the City, and a 150,000 square foot Class A office building, and a 10,000 square foot retail facility have been substantially completed, with approximately one-third of the office building, as well as approximately 15% of the retail facility, having already been leased to tenants.

Over the past year and a half, the City Council, in accordance with the Mello-Roos Act, adopted several resolutions and ordinances to form Community Facilities District No. 10 (Ontario Airport Towers), establish special tax rates, authorize the levy of special taxes, authorize the issuance of bonds for the District, and to alter the rate and method of apportionment of special taxes.

To address any potential risks resulting from the current downturn in the commercial real estate market, the City requested an updated appraisal of the property in the District. The updated appraisal, completed by Harris Realty Appraisal on January 15, 2009, concluded that property values in the District had declined since the previous appraisal. To address the decline, the City Council, on January 20, 2009, adopted Resolution No. 2009-008, a resolution of consideration to alter the existing rate and method of apportionment of special taxes, in order to make the adjustments necessary to achieve the required 4:1 value to lien ratio per parcel based on the updated appraisal. On March 3, 2009, after a Public Hearing and an election in which the landowners approved the proposed changes to the existing rate and method of apportionment, the City Council adopted the Second Amended and Restated Rate and Method of Apportionment of Special Tax, and pursuant thereto, introduced the attached Ordinance authorizing the levy of a special tax within the District. Adoption of the Ordinance will conclude the change proceedings initiated to replace the Amended and Restated Rate and Method of Apportionment with the Second Amended and Restated Rate and Method of Apportionment.

City staff has presented and discussed the Second Amended and Restated Rate and Method of Apportionment of Special Tax with Ontario Airport Center, LLC. (J.R. Wetzel, RREEF America REIT) who provided a written petition to the City (on file with the Records Management Department) requesting the institution of proceedings to alter the existing rate and method of apportionment.

STAFF MEMBER PRESENTING: Grant D. Yee, Administrative Services/Finance Director